Islamic Banking and Finance: Recent Empirical Literature and Directions for Future Research

By Pejman Abedifar, S. Ebrahim, Phil Molyneux, Amine Tarazi. 2015

215 citations recorded by the source corpus.

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 and loss-sharing (PLS) 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. Some recent evidence, however, suggests that Islamic bond (Sukuk) issuance destroys value for shareholders.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/3e5d0eb9ce57aeb8ab337db037c28973b3bdcd58

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Citations in the corpus

Islam and Economic Performance: Historical and Contemporary Links (2018, background): “All these articles and many others (for a survey, see Abedifar et al. 2015) agree that Islamic banking differs from conventional banking mainly in symbolism and terminology.”
Islamic Banking Sustainability: A Review of Literature and Directions for Future Research (2016, result): “Unlike the previous Islamic finance and banking survey of literature (Abedifar et al. 2015; Bellalah and Ellouz 2004; Belouafi, Bourakba, and Saci 2015; Mohamad and Ab Rahman 2014; Moisseron, Moschetto, and Teulon 2015; Nawi, Yazid, and Mohammed 2013; Odeduntan and Adewale 2015; Tahir 2007; Zaher…”
Developments in Risk Management in Islamic Finance: A Review (2019, background): “Small IBs may face less risk than similar sized CBs (Abedifar et al. 2015).”