The Impact of Religious Conflicts on Financial Institutions and Property Rights in Post-war Kosovo and Pakistan

This research examines how religion-based conflicts shape public trust in economic systems and alter the functioning of financial and property institutions, focusing on the comparative cases of Kosovo and Pakistan. It explores how deeply embedded religious or sectarian divisions can fragment economies, erode institutional legitimacy, and drive populations toward informal systems of finance and governance. By tracing both historical and contemporary developments, the paper argues that the legacies of religious conflict extend far beyond violence itself — they continue to distort post-war recovery and economic participation long after fighting ends.

The study employs a comparative framework supported by quantitative and qualitative data from central banks, international development bodies, and human rights organizations. Through this dual approach, it investigates two distinct contexts: Kosovo, where Orthodox Christian–Muslim tensions and ethnic divisions after the Yugoslav Wars produced parallel economic systems; and Pakistan, where ongoing sectarianism within Islam, reinforced by state policies such as blasphemy laws and faith-based governance, entrenches exclusion in financial and property domains. In Kosovo, the persistence of Serbian-financed parallel institutions and mistrust in Kosovar governance reveal how ethnic-religious conflict undermines integration into formal economies. In Pakistan, similar patterns of distrust have fueled reliance on informal systems like hawala, religious charities, and kinship lending, as marginalized groups navigate discrimination in access to finance and land rights.

The paper’s analysis shows that religious conflict not only disrupts economies during wartime but also institutionalizes exclusion afterward. The destruction of property records, biased legislation, and religiously driven discrimination weaken both financial stability and equitable property restitution. Informal economies become survival mechanisms but also perpetuate division, as faith-based trust networks replace state legitimacy. The author concludes that rebuilding trust in post-conflict societies requires hybrid, inclusive institutions — those that operate beyond sectarian lines and embed faith-neutral governance principles into financial and property systems. In connecting religious conflict to the durability of economic exclusion, the study makes a compelling case for integrating transitional justice with economic reconstruction to foster lasting stability and participation.