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

34 Pages Posted: 19 Aug 2015

See all articles by Pejman Abedifar

Pejman Abedifar

University of St Andrews - School of Management

Shahid M. Ebrahim

Durham Business School

Philip Molyneux

University of Sharjah - College of Business Administration

Amine Tarazi

University of Limoges - Faculty of Law and Economic Science

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Date Written: September 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‐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.

JEL Classification: G21, G23

Suggested Citation

Abedifar, Pejman and Ebrahim, Shahid M. and Molyneux, Philip and Tarazi, Amine, Islamic Banking and Finance: Recent Empirical Literature and Directions for Future Research (September 2015). Journal of Economic Surveys, Vol. 29, Issue 4, pp. 637-670, 2015, Available at SSRN: https://ssrn.com/abstract=2646225 or http://dx.doi.org/10.1111/joes.12113

Pejman Abedifar (Contact Author)

University of St Andrews - School of Management ( email )

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

Shahid M. Ebrahim

Durham Business School

Mill Hill Lane
Durham, Durham DH1 3LB
United Kingdom

Philip Molyneux

University of Sharjah - College of Business Administration ( email )

University City Road
Sharjah, 27272
United Arab Emirates

Amine Tarazi

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

5 rue Felix Eboue
Limoges, 87000
France

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