Averting Risk or Building Morality? Islamic Finance in Kazakhstan and Kyrgyzstan

May 23, 2013

May 15, 2013

Аisalkyn Botoeva, PhD student, Sociology Department, Brown University, USA

Proponents of Islamic banking have claimed that it represents a healthy solution to the hegemonic force of capitalism with its inclination to financial crises, while opponents have criticized such statements, demonstrating empirically that banks working according to Shariah principles are no more risk-averse than conventional ones. Rather, they argue, the growing popularity of Islamic banks is due to the increasing identities of a devout Muslim across the world that are motivating more and more people to choose market transactions that are in line with their religious beliefs. Based on the preliminary analysis of my findings in an ongoing study of Islamic financial organizations in Kazakhstan and Kyrgyzstan, I argue that the expansion of Islamic finance in new contexts is driven neither by economic rationality nor by forces of cultural identity alone. 

Drawing from interviews conducted with imams and theology experts, managers and clerks of Islamic banks and microfinance companies, I will discuss how “Islamic principles of finance” are being framed as instruments for securing alternative financial flows, but are also being conceptualized as more morally diligent, and inherently concerned with the equal sharing of risks between lender and borrower. In my presentation, I will primarily focus on the findings of a recent 1-month participant observation within an Islamic microfinance organization in Osh, which open space for discussing issues of broader concern within the domain of credit-lending in poor countries - those of perpetual search for profit through new models of risk-assessment, customer evaluation and securing high rates of payback through motivations of targeted use of the credit.

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