Islamic banking and finance: recent empirical literature and directions for future research

Pejman Abedifar, Shahid Ebrahim, Philip Molyneux, Amine Tarazi

Research output: Contribution to journalArticlepeer-review

72 Citations (Scopus)

Abstract

This paper examines the recent empirical literature in Islamic banking and finance, highlights the main findings and provides a guide for future research. Early studies focus on the efficiency, production technology and general performance features of Islamic versus conventional banks, whereas more recent work looks at profit-sharing and loss-bearing behaviour, competition, risks as well as other dimensions such as small business lending and financial inclusion. Apart from key exceptions, the empirical literature suggests no major differences between Islamic and conventional banks in terms of their efficiency, competition and risk features (although small Islamic banks are found to be less risky than their conventional counterparts). There is some evidence that Islamic finance aids inclusion and financial sector development. Results from the empirical finance literature, dominated by studies that focus on the risk/return features of mutual funds, finds that Islamic funds perform as well, if not better, than conventional funds – there is little evidence that they perform worse than standard industry benchmarks.
Original languageEnglish
Pages (from-to)637-670
Number of pages34
JournalJournal of Economic Surveys
Volume29
Issue number4
Early online date1 Jun 2015
DOIs
Publication statusPublished - Sept 2015

Keywords

  • G21; G23

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