Abstract
Islamic banking in Algeria has experienced gradual expansion in recent years, driven by increasing financial awareness and growing demand for financial products that comply with Islamic principles. This study aims to evaluate the legislative and legal framework governing Islamic banking in Algeria, highlighting its strengths and weaknesses while assessing its potential role in promoting financial inclusion and supporting economic development. The research adopts a qualitative doctrinal and analytical approach based on the examination of primary legal sources, including laws, regulations and decrees issued by the Bank of Algeria, as well as secondary materials such as academic studies and international reports. A document analysis method was used to assess the adequacy and coherence of the regulatory framework. The findings indicate that Islamic banking has received official recognition within the Algerian financial system, supported by regulatory guidelines that enable banks to provide Sharia-compliant financial products. Key strengths of the framework include institutional legitimacy, the gradual expansion of Islamic banking products, increasing levels of deposits and the establishment of Sharia supervisory mechanisms. However, several structural challenges remain, including the absence of a comprehensive law dedicated specifically to Islamic banking, underdeveloped regulations for sukuk and takaful, taxation issues affecting certain Islamic financial contracts and the lack of a regulatory framework for digital Islamic finance. The study concludes that while Islamic banking in Algeria has made notable progress, its long-term growth and competitiveness depend on further legislative and institutional reforms aimed at strengthening legal certainty, improving dispute resolution mechanisms, adjusting taxation rules and supporting financial innovation.
Keywords: Algeria, Financial Inclusion, Islamic Banking, Legislative Framework, Sharia-compliant.