Developing the Islamic Financial Services sector in Italy: An institutional theory perspective

The growth of the Islamic Financial Services (IFS) sector has received much attention recently due to the resilience demonstrated by the sector during the financial crisis. While IFS continue to grow rapidly in much of Asia, there has been limited institutional support for the development of the sector in Europe, which has historically been slow to realize the sector's potential. Italy is one such country in Europe that has a growing Muslim population but has yet to develop the IFS sector. Using the institutional theory perspective, we highlight the role the Italian government can play in developing the regulative elements that facilitate the establishment of the IFS sector, and the introduction of Islamic financial products in the country. We propose that a developed IFS sector in Italy would help attract investment from countries in the Middle East and North African region, and would also facilitate the financial inclusion of the Muslim population in the domestic market.