Theorizing the Conundrum of Emerging Islamic Financial Regulation: Manifestation from Pakistan


  • Pir Qasim Shah Center for Excellence in Islamic Finance Institute of Management Sciences Peshawar Pakistan
  • Dr. Zohra Jabeen,
  • Dr. Shafiullah Jan


Financial Regulation, Regulatory Compliance, Market Discipline, Central Banking, Islamic Finance, Financial Intermediation



The current frameworks of regulatory discipline being used by the financial regulatory bodies in Pakistan, confront challenges in regulating Islamic financial institutions. This paper synthesizes these problems and theorizes regulatory interventions. This qualitative study is operationalized by collecting primary data through 20 face-to-face in-depth narrative interviews of senior leadership working in financial regulatory bodies and through regulatory reports. Contribution to the indigenous literature was maneuvered through computer assisted qualitative content analysis tools. The study finds that multifaceted regulatory challenges prevail in the Pakistani financial market, due to stern supervisory interventions. The regulators and financial market stakeholders offer some incentives to supplement progression and expansion of the sector. However, extortionate internal and external compliance expectations increase regulatory costs for the novice financial institutions. The study interprets first-hand input of regulatory bodies by providing a holistic picture of financial regulation in the emerging field of Islamic finance for a developing economy where such eruditions are scarce.

      Keywords: financial regulation, regulatory compliance, market discipline, central banking, Islamic finance, financial intermediation


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