The growing demand for Islamic banking and finance (IBF) around the world, particularly in Muslim-majority countries and in regions with significant Muslim populations is expected to continue as more people seek out financial products that are in line with their religious and moral values (Zucchelli, 2022). The IBF sector has grown significantly in recent decades and is progressively being offered in Western countries as well (Alharbi, 2016). The emergence of Islamic banking and finance in the contemporary financial scene, presents a unique blend of financial practices guided by Islamic law (Sharia). IBF has received considerable attention because it offers an alternative to the conventional financial system and can attract investors who are looking for other ways to invest money. (Lanzara, 2021)

Despite the growing interest in the IBF industry and a huge body of research in the field, there is still a gap in understanding the legal and regulatory framework in a non-Islamic environment. The current body of research focuses on economic analyzes and comparative studies on the efficiency of IBF with the conventional financial sector. While previous studies provide valuable insights into the central characteristics of IBF, there is a lack of comprehensive research that examines legal understanding and opportunities, for implementing IBF in Europe ((Biancone et al., 2020); (Hassan & Aliyu, 2018)). This research gap necessitates a closer analysis of the legal and regulatory framework of IBF using the example of Finland.

This study explores the field of IBF in Finland, particularly exploring the dimensions that underpin the perceptions and behaviours of individuals towards Islamic financial products and services.

The motivation behind this study stems from the need to bridge the gap in the literature concerning the intricacies of Islamic banking within the Finnish legal context. By examining market opportunities for IBF in Europe, this research seeks to present new possibilities to develop the IBF sector and inform policymakers, legal practitioners, and scholars interested in the field of Islamic finance law.

Employing a mixed-methods approach, this study combines quantitative survey data and qualitative analysis to offer a comprehensive understanding of the legal aspects surrounding IBF in Finland. Through an exploration of legal regulations, consumer attitudes, and industry practices, this research contributes to the evolving discourse on Islamic finance law and its application in the Finnish financial landscape.

This paper is structured into several main sections. The Introduction provides an overview of the study's purpose, methods, and focus on perceptions towards Islamic banking in Finland. The Literature Review contextualizes the study within existing scholarship. The Methods section outlines the research design and data analysis techniques. Results present findings on participant attitudes and experiences towards Islamic banking, with a legal perspective. The Discussion synthesizes findings and implications for policymakers and practitioners. The Conclusion summarizes key findings and emphasizes the study's contributions, highlighting the need for further research in Islamic finance law.

On 16 March 2023, the left-wing parliamentarian Suldaan Said Ahmed submitted a written question ‘KK 828/2022 vp’ to the Finnish Finance Minister (Ahmed, 2023), asking about the possibility of having Islamic banks in Finland and whether the public sector has opportunities to influence the financial possibilities of Muslim believers in the absence of a market operator (Hanska, 2023-03-16). According to Ahmed, there is no bank in Finland offering services according to Islamic principles, which is why believing Muslims cannot take out, for example, a standard mortgage (Rinne, 2023-03-25). This may lead to the presumption that if Islamic banks are operating in other EU Member States, the potential establishment of Islamic financial institutions (IsFIs) in Finland should be possible as well. The written question, which is of both socioeconomic and juridical importance, raised several legal questions: among them, first, do IsFIs bring a plus on a socioeconomic level to Finland? Second, is it legally possible to establish Islamic banks in Finland?

The main peculiarity of the IBF system is that interest-taking is not allowed because it is considered a form of riba. Conversely, this is not the only feature of the IBF system. Riba is often translated as ‘usury’; however, according to most Muslim scholars, raising the interest rate is one form of riba because raising the amount of debt in return for a longer delay repaying a loan or any other financing contract is considered riba (Iqbal & Mirakhor, 2007: 53; Jackson-Moore, 2009: 13; Vogel & Hayes, 1998: 72-73). The prohibition of riba in Islamic law is based on Quranic texts (2:275–281), (3:130), (4:161), (30:39); this means that the prohibition is a clear legal rule from a primary source that needs no further interpretation (Lumban Gaol, 2023). This implies that all types of interest rates are not allowed, be they variable or fixed rates. (Alwazna, 2016)

Islamic economic law stands at the intersection of faith, finance, and socio-economic development, offering a unique framework grounded in Islamic principles for addressing contemporary economic challenges. In recent years, there has been a growing interest among scholars, policymakers, and practitioners across the globe in understanding and applying the principles of Islamic economics especially IBF to various facets of economic life ((Bananuka et al., 2019); (Bananuka et al., 2019); (Belwal & Al Maqbali, 2019); (Islam & Rahman, 2017); (Narayan & Phan, 2019);(Oladapo et al., 2022)). Research results have contributed to advancing knowledge and fostering dialogue on Islamic banking industry. However, little research has been conducted in Europe, especially in Nordic countries ((Alharbi, 2016);(Antoniazzi, 2022); (Aqib Ali, 2023); (Mauro et al., 2013);(Kadi, 2023); (Kamdzhalov, 2022); (Kurochkina, 2021); (Kuznetsov et al., 2017)). This study will encourage further research, policy discourse, and practical initiatives aimed at harnessing the potential of Islamic economic principles for promoting inclusive and sustainable economic development by the following; firstly, understanding the financial behaviours and preferences of individuals within the Muslim community in Finland, particularly regarding banking and investment practices, secondly; surveying the level of awareness and adherence to Islamic finance principles, such as the prohibition of riba (interest), among Muslim individuals in Finland, thirdly, investigating the factors influencing individuals' decisions regarding homeownership, mortgage acquisition, and engagement with traditional and Islamic banking services, fourthly, examining the potential barriers or challenges faced by Muslim individuals in accessing and utilizing Islamic banking services in Finland, lastly, assessing the cultural and religious backgrounds of respondents and their impact on financial decision-making processes, particularly in relation to banking and investment choices.

This paper aims to provide understandings of the financial behaviours, attitudes, and preferences of Muslim individuals in Finland, with a specific focus on their engagement with banking and financial services, adherence to Islamic finance principles, and homeownership considerations.

To understand these study purposes from a legal perspective, it is important to understand the differences between IsFIs and conventional financial institutions. Since Finland’s financial regulatory system is designed around conventional finance principles, introducing IsFIs based on Sharia law may need a special focus on examining the legal frameworks and regulatory environments surrounding IBF in Finland. Establishing IsFIs in Finland will have many legal implications, especially regarding licensing and regulatory compliance, and taxation laws. It is important to understand how Islamic finance principles, such as the prohibition of interest (riba) and speculative transactions (gharar) align with or diverge from conventional banking practices and regulations. IsFIs may face legal challenges or barriers in operating within the Finnish legal framework, including issues related to regulatory compliance, double taxation, consumer protection, and contractual arrangements (Calandra et al., 2022), however, given that IsFIs have been successfully implemented in other EU countries, its implementation in Finland should also be possible. The role of legislation and legal frameworks in promoting or hindering the growth and development of IBF in Finland is crucial (Kadi, 2023), and potential legislative reforms or policy measures are necessary to support the expansion of Islamic finance activities in the country. Furthermore, the Finnish Minister of Finance has promptly answered to the written question addressed by the Member of the parliament, stating that there are no restrictions on the establishment of banks based on religion or ideological orientation as long as they comply with European and Finnish laws and regulations. This means that on the juridical level, IsFIs can be legally established in Finland if they comply with EU regulations and directives and Finnish laws (Saarikko, 2023).

After examining these legal aspects in conjunction with the study's purposes, the study aims to assess the financial behaviours, preferences, and cultural factors among Muslim individuals in Finland, the research provides a comprehensive understanding of the legal and regulatory landscape surrounding IBF in the country (Kadi, 2023).

A study was conducted using a structured questionnaire comprising 40 questions from October 1^st, 2022, to December 31^st, 2024, the study gathered responses from a total of 138 participants. The objective was to investigate respondents' perceptions, attitudes, and behaviours regarding Islamic banking services in Finland, and understand their views on the ethicality, accessibility, and potential utilization of IBF products and services within the Finnish financial landscape.

The questionnaire covered a wide range of topics, including respondents' background, their knowledge of Islamic banking principles, their financial behaviours, their preferences regarding conventional and Islamic banks, and their willingness to engage with Islamic financial products. By exploring these dimensions, the study aims to assess the market opportunities of IBF in Finland.

To analyze the results and their significance for research on IBF in Finland, we break down the data by gender, age, origin, and citizenship of the respondents.

The primary purpose of this study was to explore various aspects related to IBF in Finland, including the awareness, perceptions, and experiences of individuals within the Muslim community, regarding their financial practices. Through the questionnaire administered to 138 respondents from October 1, 2022, to December 31, 2024, this research tried to contribute to the existing literature on Islamic finance in Europe and assess market opportunities for IBF in Finland.

The distribution of education and current occupation provides context for understanding the respondents' potential exposure to financial concepts and their likelihood of engaging with Islamic banking services. Respondents with higher education levels, such as university graduates, may have a greater understanding of financial principles, including Islamic finance, compared to those with lower education levels. Individuals in professional occupations, such as businessmen and employees, may have more financial resources and access to information about Islamic banking compared to those in non-professional or unemployed roles.

The presence of students in the sample indicates a segment that may be receptive to learning about IBF and incorporating it into their financial practices as they transition into the workforce. The diverse range of occupations, including retirees and individuals on leave, suggests that factors beyond education, such as life stage and employment status, may also influence respondents' financial behaviours and attitudes towards IBF.

The study's main contributions lie in highlighting the level of awareness and utilization of Islamic banking services among the Finnish Muslim population. The findings indicate that while a significant portion of respondents were aware of Islamic banking principles, a notable proportion had not utilized Islamic banking services. This suggests a potential gap between awareness and adoption that could be further explored.

The results revealed that most respondents identified themselves as Muslim and expressed familiarity with the concept of riba. However, there was a substantial proportion of respondents who were uncertain about whether Islamic banks are truly Islamic and ethical, emphasizing a need for further clarification and education on Islamic finance principles.

The analysis of the respondent demographics reveals a varied and nuanced opinion on interest and engagement with IBF in Finland. The findings highlight the importance of considering gender, age, origin, and citizenship factors when studying the dynamics of IBF within a multicultural society like Finland. Further research could delve deeper into understanding the specific financial needs, preferences, and challenges faced by different demographic groups within the context of IBF in Europe. Additionally, exploring the reasons behind the varying levels of interest and engagement among different demographic groups could be useful for the development and promotion of Islamic financial products and services in the European market.

The distribution of responses regarding the length of time lived in Finland provides understandings of the diverse backgrounds and experiences of the respondents in relation to IBF. It highlights the importance of considering the varying levels of familiarity and exposure to the Finnish financial system among individuals with different lengths of residence when analyzing their perspectives and behaviours related to IBF in Finland. The findings suggest that a significant portion of the surveyed individuals rely on rental accommodations and may not actively seek mortgage financing for homeownership. This information is valuable for understanding the housing preferences and financial behaviours of the respondents, offering visions that can inform strategies for IsFIs and policymakers in addressing the needs of individuals in the Finnish financial market.

The findings indicate diverse financial behaviours among respondents regarding loan applications and interest payment. The data suggests that a significant portion of respondents have not applied for loans to purchase real estates, vehicles, or other equipment. This could indicate several possibilities, such as the high cost of real estates, or the difficulty in obtaining loans, cultural and religious beliefs, financial factors, or simply preference for renting, or not needing loans for such purchases. Among those who did apply for loans, a notable percentage (28%) reported paying interest when repaying the loan. This indicates that while a portion of loan applicants opted for interest-bearing loans, a significant number either secured loans without interest or paid off their loans early to avoid accruing interest. Moreover, the negative perceptions of riba in questions 25-26 may reflect broader societal attitudes towards practices related to lending, interest, and financial ethics.

The results show that most respondents have heard about riba, indicating a level of awareness within the surveyed group. However, perceptions of riba are predominantly negative, with associations of unfairness, immorality, usury, and evil being commonly cited.

Despite a majority expressing uncertainty about the ethicality of Islamic banks, a vast majority claimed not to have utilized their services. This may indicate a disconnect between respondents' perceptions and actual engagement with Islamic banks. The findings prompt further exploration into the factors influencing individuals' perceptions and behaviours regarding Islamic banking, including cultural, religious, and informational influences (Minhas, 2022). Understanding these dynamics is crucial for identifying barriers to the adoption of Islamic banking services and for effectively promoting awareness and understanding of Islamic financial principles among the population.

Questions 38 and 39 provide valuable perceptions about respondents' willingness to engage with Islamic banking services in Finland and their preferences regarding conventional banks offering Islamic financial products. Both questions underscore the respondents' interest in accessing Islamic financial products and services in Finland, whether through dedicated Islamic banks or conventional banks offering Islamic windows. The findings suggest a potential market opportunity for both Islamic banks and conventional banks to cater to the needs and preferences of individuals interested in Islamic finance in Finland.

The findings reveal a complex landscape of perceptions, knowledge, and behaviours among the respondents. Several key conclusions can be drawn from these results. First, there is a broad range of perceptions among respondents regarding Islamic banking, with varying levels of certainty and agreement on its Islamic, ethical, and practical dimensions. Second, a significant part of respondents expresses uncertainty or lack of knowledge about Islamic banking, indicating a need for increased awareness and education about Islamic financial principles and practices.

Moreover, despite the uncertainty, only a small number of respondents exhibit skepticism or reluctance to engage with Islamic banking services. Also, the low percentage of respondents who report having used such services may be due to the lack of access to Islamic banking services. Likewise, cultural background, religious beliefs, and access to information play major roles in shaping respondents' perceptions and behaviours regarding Islamic banking.

Conclusively, the findings highlight opportunities for educational initiatives and awareness campaigns aimed at enhancing understanding and promoting the adoption of Islamic banking services among diverse communities in Finland. Overall, the survey results underscore the need for further research to delve deeper into the factors influencing perceptions and behaviours related to Islamic banking in Finland, including exploring the role of cultural, religious, and informational factors.

In relating the findings to existing literature, the study aligns with previous research indicating a growing interest in Islamic finance globally and the challenges associated with its implementation in non-Muslim majority countries ((Aqib Ali, 2023); (Sain et al., 2016)). The results also echo findings from other studies regarding the need for increased awareness and understanding of Islamic banking principles among both Muslims and non-Muslims ((Akbar et al., 2012); (Kaakeh et al., 2018); (Muslichah & Sanusi, 2019); (Naser et al., 2013); (Shome et al., 2018)). Possible explanations for unexpected or non-significant findings could include factors such as cultural perceptions, lack of access to Islamic banking services, or limited availability of information about Islamic finance options in Finland. On the institutional level, the study highlights the importance of financial institutions and policymakers in promoting awareness and facilitating access to Islamic banking services to provide services for diverse communities within the country.

Going back to the question whether IsFIs bring a plus on a socioeconomic level to Finland, the findings show and confirm previous findings stating that it is necessary to provide such services. (Agustin et al., 2023) On the legal level, it is possible to establish Islamic banks in Finland, if IsFIs comply with the legal provisions and regulations governing banking and financial operations in Finland, including any specific laws or guidelines that facilitate or regulate the establishment and operation of Islamic banks or Islamic banking windows within conventional banks. Islamic financial institutions must ensure adherence to established legal frameworks and regulations. At the same time, they must offer Sharia-compliant financial products and services. This has legal implications of Islamic finance principles on the products and services, such as the prohibition of riba, within the Finnish legal system, and how these principles align with or diverge from conventional banking practices and regulations. Islamic banks and financial institutions can also face legal challenges or barriers when operating within the Finnish legal framework, involving issues related to regulatory compliance, taxation, consumer protection, and contractual arrangements.

As legislation and legal frameworks play a major role in promoting or hindering the growth and development of IBF in Finland, potential legislative reforms or policy measures can be necessary to support the development of Islamic financial activities in Finland.

The study has certain limitations that should be acknowledged. These include the relatively small sample size and the potential for respondent bias in self-reported data. Additionally, the study's focus on a specific geographical context may limit its generalizability to other regions or countries with different socio-economic characteristics and regulatory environments.

In terms of future research directions, there is a need for longitudinal studies to track changes in awareness and utilization of Islamic banking services over time. Furthermore, qualitative research methods could provide deeper understandings of the factors influencing individuals' perceptions and decision-making regarding IBF in Finland. Additionally, comparative studies across different countries or regions could offer valuable insights into the contextual factors shaping the adoption of Islamic banking practices.

The main findings confirm that even if a significant proportion of respondents expressed uncertainty or lack of knowledge about Islamic banking, most respondents express their willingness to become customers of an Islamic bank if such institutions were available in Finland. The study concludes that despite the limited knowledge about IBF among the Muslim community in the country, there is a readiness to become customers if Islamic banks were to open in Finland. This desire for access to Islamic banking services highlights a crucial opportunity for financial institutions to address the needs of this underserved demographic.

For future research, it is important to conduct longitudinal studies to track changes in awareness and utilization of IBF services over time. Also, qualitative research methods could offer deeper understandings of the factors shaping individuals' perceptions and decision-making regarding the implementation of Islamic financial institutions in Finland. Additionally, comparative studies across different EU countries or regions could offer valuable contributions into the contextual elements shaping the adoption of IBF in Europe.

I extend my thanks to all the respondents to the survey, supervisors, and reviewers who have contributed to the publication of this research paper.