An Empirical Literature Survey of Islamic Banking

This article reviews empirical studies on Islamic banking and concentrates on their main findings while highlighting future research directions. The earlier literature of Islamic banking built a foundation using normative judgment, descriptive analysis, theoretical development, and appraisal of country experiences. Subsequent research focuses on the empirical investigations without extensive analytical and theoretical exploration in the area. Recent studies focus on the financial crisis, solvency, disclosure, and financial inclusion. Even with the spillover effect on the Islamic banks after the crisis, few pieces of evidence shows that the system performs less than a conventional counterpart. The paper discusses relevant issues to Islamic banking and identifies other avenues for future research.