It is a question that might surprise many: could a financial system rooted in Islamic principles hold the key to greater economic inclusion across the Caribbean? According to new research from IES, the answer is a compelling yes.
The study, led by our PhD student Elie Daher alongside IES colleagues, is the first of its kind to examine Islamic banking in the Commonwealth Caribbean through the eyes of those who know the regional banking sector best. Drawing on in-depth interviews with ten senior banking executives across Trinidad and Tobago, Jamaica, Guyana, and Barbados, the research uncovers both the barriers holding Islamic finance back and the genuine appetite for something different.
The findings are striking. Caribbean banking leaders are not opposed to Islamic finance; many are genuinely intrigued by it. What holds institutions back is not a lack of interest but a lack of clarity. Regulatory ambiguity leaves banks in a kind of paralysis, with executives reluctant to make the first move without clearer guidance from policymakers.
Knowledge gaps within institutions add to the challenge, with Islamic finance often misunderstood as little more than interest-free banking, obscuring its broader potential as a tool for ethical, community-centred finance.
Yet the opportunities are just as clear. The research finds that Islamic finance’s emphasis on fairness, transparency, and shared risk resonates deeply with Caribbean values, making it appealing well beyond Muslim communities. Perhaps most tellingly, younger Caribbean consumers are already turning to Islamic fintech platforms based in the UK and UAE to meet needs that local banks are not serving.
The research team argues that the Caribbean is not just capable of embracing Islamic finance; it may be uniquely positioned to benefit from it. They call on regulators to provide clearer frameworks, on institutions to invest in education and capacity building, and on policymakers to treat Islamic finance as a serious tool for financial inclusion and regional development.
The full study is available at https://doi.org/10.47556/B.OUTLOOK2025.23.16.
