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

Journal of Economic Surveys, Forthcoming

Posted: 8 Jun 2015

See all articles by Pejman Abedifar

Pejman Abedifar

University of St Andrews - School of Management

Philip Molyneux

University of Sharjah - College of Business Administration

Muhammed Shahid Ebrahim

Durham Business School

Amine Tarazi

University of Limoges - Faculty of Law and Economic Science

Multiple version iconThere are 2 versions of this paper

Date Written: April 1, 2015

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 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.

Keywords: Islamic Banking, Islamic Finance

JEL Classification: G21, G23

Suggested Citation

Abedifar, Pejman and Molyneux, Philip and Ebrahim, Muhammed Shahid and Tarazi, Amine, Islamic Banking and Finance: Recent Empirical Literature and Directions for Future Research (April 1, 2015). Journal of Economic Surveys, Forthcoming . Available at SSRN: https://ssrn.com/abstract=2614181

Pejman Abedifar

University of St Andrews - School of Management ( email )

The Gateway, North Haugh
St Andrews, Fife KY16 9RJ
United Kingdom

Philip Molyneux (Contact Author)

University of Sharjah - College of Business Administration ( email )

University City Road
Sharjah, 27272
United Arab Emirates

Muhammed Shahid Ebrahim

Durham Business School ( email )

Mill Hill Lane
Durham, Durham DH1 3LB
United Kingdom

Amine Tarazi

University of Limoges - Faculty of Law and Economic Science ( email )

5 rue Felix Eboue
Limoges, 87000
France

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