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The aim of this paper is to make a critical review of the selected customer related studies in Islamic banking.

In accordance with the aim, the selection criteria is decided to include the studies which have at least one citation according to a publicly available citation count database as of January 2013 and the subjectively selected uncited studies from recent years. According to the selection criteria, in total, 50 journal articles for the period of 1989-2013 are reviewed.

This work identifies the main research subjects, the distribution for these subjects, the general characteristics of research methodologies and methods, the strengths and weaknesses of the studies and the direction of the research area.

The foremost contributions of this work are that a researcher or someone who is interested in Islamic banking based customer related studies can attain a detailed picture about the most common research subjects, methodologies, methods and the country in which the study is conducted. And, the general evaluation can be utilized as a directive element for future research.

The basic implication of this work is the call for more industry connections, i.e. to conduct customer related studies due to the needs, reservations and concerns of Islamic banks.

There is not yet a literature review work regarding to the research area of Islamic banking based customer related studies. This work is an attempt to fill in this gap.

The purpose of this paper is to determine the rate difference required to persuade Islamic banking customers to switch to conventional banks.

A choice-based conjoint analysis survey was administered to 300 UAE Islamic banking customers. Customer utilities for Islamic and conventional banks, products and prices were developed to test hypotheses while a market simulation estimated the impact of rate changes on choice shares.

Overall, Muslim customers of Islamic banks strongly preferred Islamic banks and products. However, 43 percent were willing to switch to conventional banks to obtain better rates. Indeed, the share choosing conventional banks rose from 25 percent when rates were the same to 68 percent when conventional products offered 2 percent better rates.

This research requires replication and extension in appropriate contexts such as Malaysia and Indonesia. Moreover, the existence of price sensitivity tiers implies underlying benefit segments that should be studied.

As so many Islamic banking customers would switch to conventional banks for better rates, it seems that conventional banks compete with Islamic banks for most clients. Islamic banks should price accordingly.

This is the first study to quantify the loyalty of Islamic banking customers in terms of price and, consequently, the first to demonstrate the existence of price sensitivity tiers. It is also the first in this field to apply conjoint analysis and market modeling.

The concept of Islamic banking (IB) as a discipline and the introduction of the full-fledged Islamic banks and Islamic windows are relatively newer developments in the banking sector in Oman. This paper aims to assess customers’ perceptions of the Islamic banks and IB windows in Oman.

Following the interpretive paradigm and an exploratory research design, data collected through personal interviews with a group of 60 respondents in two of the prominent cities in Oman were analysed qualitatively.

The study found that customers in Oman had mixed feelings about the Islamic Banks. While some of them were not sure if the banks follow the Islamic principles, a majority of them had not opened an account with the Islamic banks or Islamic windows. The study revealed some vulnerabilities in the areas of their operations, marketing practices, staff knowledge of products and customer-dealings, as well as customers’ understanding of Islamic banks, their principles and practices.

As the advent of IB is relatively new to Oman, the insights gained by this study will have wider implications for the growth of IB locally. The outcomes of this study would appraise the officials and regulators of Islamic banks and Islamic windows with customers’ perception of IB. The elimination of the identified weaknesses would help them to improve the knowledge, quality and the marketing and promotion of products and services while competing with the conventional banks.

This study is a pioneering effort to know the status of IB and customers’ motivations in Oman towards IB.

The purpose of this paper is to discuss the process of interaction with the Muslim customers in developing new Islamic financial services in a secular and non-Muslim majority emerging country, India.

Data were collected using a multiple case study methodology in which the service managers of 23 financial service firms and their customers were interviewed. A total of 46 managers and 31 Muslim customers provided data for this paper.

A service firm must interact with its Muslim customers to obtain key input and information for developing new Islamic financial services, particularly in a Muslim minority country. The Muslim customers are willing to work with the financial service firms for the purpose of new service development and are a good source of information for new Islamic financial services.

The paper has implications for the financial service firms interested in achieving growth and prosperity by developing and marketing new services to the growing population of Muslim customers in the emerging markets, particularly India.

The issue of customer interaction in new service development is a key concept in the extant literature, yet no study has explored this concept for the Islamic banking and financial products in a non-Muslim majority emerging market. This is the first paper that has applied the customer interaction in new service development theory to the interaction process of Muslim customers in a non-Muslim majority country and, thus, addressed a worthwhile research gap.

This paper aims to provide a new approach for the credit risk management process of profit and loss sharing instruments in Islamic banks.

Three credit risk management steps are elaborated for profit and loss sharing instruments.

First, a new credit risk definition compatible with profit and loss sharing instruments is done. Connected to this definition, possible credit risk factors are identified. Second, in terms of credit risk measurement, a general framework for credit scoring of prospective customer‐agents is drawn. Lastly, three groups of credit risk mitigation tools are suggested.

The paper can be developed further by empirical analyses and case studies.

Even though credit risk is a well‐known and deeply elaborated financial concept in conventional literature, its unique characteristics in terms of profit and loss sharing instruments have not been sufficiently elaborated in Islamic finance literature. This paper is an attempt to fill in this gap.