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The financial crisis at the end of the past decade resulted in downturns in stock markets and the collapse of many large banks around the world. It encouraged economists worldwide to consider alternative financial solutions. Attention has been focused on Islamic finance as an alternative model. This study examines the performance of Islamic banks in 10 Middle Eastern and North African (MENA) countries over the period of 2005–2010.

It is an intertemporal analysis where it compares the profitability, liquidity, risk and solvency, and efficiency of 43 Islamic banks before and after the financial crisis.

The results show that the financial crisis negatively affected the performance of Islamic banks. The profitability and liquidity of Islamic banks in Gulf Cooperation Council (GCC) countries decreased drastically after the crisis. Islamic banks in non-GCC countries were efficient and more profitable compared to GCC countries. However, they took excessive risk during and after the financial crisis. The chapter concludes that Islamic financial institutions are not immune from the effects of the global recession.

The financial crisis has led to a greater recognition of the importance of liquidity risks. Reinforcing regulations and setting up a strong liquidity management framework are needed to improve the Islamic financial industry.

Several studies link Islamic finance to economic growth. There are at least two major limitations in these investigations. First, the proxy used to measure Islamic finance may not represent the whole impact of Islamic finance on economic growth because it only considers a subset of variables like Islamic banks’ deposits or sukuk issuance, etc. Second, it is difficult to extrapolate findings to other markets because most studies were conducted in just one nation or a small group of countries. Overcoming these issues is the driving force behind this research. In doing so, the study aims to use the overall Islamic Financial Development Index as a proxy for Islamic finance. The index measures the quantitative growth, knowledge, corporate social responsibility, governance and awareness of the Islamic financial sector.

Using a panel data set of 67 countries starting from 2012 to 2020, this study investigates the relationship between Islamic finance and economic growth.

The authors find that Islamic finance contributes to economic growth. This connection is more robust in Muslim and developing nations than it is in non-Muslim and developed nations.

To promote a country’s economic growth, the authors propose that regulators should focus on development of Islamic finance. To increase the reach of Islamic products, the government should take initiatives to raise public awareness of Islamic finance.

The findings imply that Islamic finance may have a more significant impact on socio-economic development in countries with a higher concentration of Muslim population and those in the developing stage. It highlights the potential role of Islamic finance in addressing socio-economic challenges and promoting inclusive growth in these regions.

This is the first study to use a more comprehensive sample of countries, covering both Muslim and non-Muslim nations, as well as both developing and developed nations. In addition, this study, unlike its predecessors, used a more robust and comprehensive index of Islamic finance developed by Thomson Reuters.

Several studies focus on asymmetric impact of shocks on conventional stocks. However, only few studies explore Islamic stocks, but none has examined the asymmetric impact of shocks on Islamic stocks. This study aims to fill the gap by investigating the asymmetric impact of shocks on Islamic stocks. Specifically, it identifies the effect of good and bad news on Islamic stock market. The study also aims to examine the returns and volatility spillover effects across different Islamic markets.

To carry out the empirical analysis, the authors have applied the exponential generalized autoregressive conditional heteroscedasticity (ARCH) model on daily Islamic stock indices of 18 countries. The study covers the period from July 2009 to July 2016. The authors have started their empirical analysis by examining the time series properties and testing the presence of ARCH effects. Further, the authors have applied several post-estimation tests to ensure the robustness of the results.

The results indicate that there is significant leverage effect in Islamic stocks traded in the sampled countries. That is, negative shocks or bad news have stronger effects on Islamic stock returns’ volatility as compared to positive shocks or good news. The authors also found that there are significant mean spillover effects for the examined countries. This finding implies that increased Islamic stock returns in country have significant and positive effects in Islamic stocks’ returns in another other. Similarly, the results regarding the volatility spillover effects suggest that there are significant volatility spillover effects across all examined countries. However, the authors found both positive and negative volatility spillover effects. It should also be noted that in some cases, the authors did not find any significant volatility spillover effect.

The findings of this study have several important policy implications for both investors and policymakers. As the findings suggest that Islamic stock indices are integrated across countries both in terms of returns (mean) and risk (volatility), they are useful for investors to design well-diversified portfolios. The significant volatility spillovers suggest policymakers to design such policy that may help in reducing the adverse effects of increased volatility of Islamic stock of other/foreign countries on the Islamic stocks of the home countries. The significant evidence of the presence of leverage (asymmetric) effects suggest investors to use effective and active hedging instruments to hedge risk, particularly, in bad times.

Unlike other studies on Islamic stocks, this study takes into account the asymmetric effects of positive and negative shocks. Further, the study examines the mean and variance spillover effects for a large panel of countries having Islamic stocks. Finally, several pre- and post-estimation tests are applied to ensure the robustness of the results.

Purpose – This paper aims to analyze the nature, mechanisms, conventional and modern instruments, dynamics, and the future possibilities of the contemporary phenomenon of financial globalization from the point of view of identifying and addressing the corresponding real politico‐economic challenges confronted by the contemporary Islamic world. In this context, the paper focuses on the institutional responses of the contemporary Islamic world to the challenges of financial globalization. Design/methodology/approach – The approach of the paper is to develop a theoretical treatise on its subject, in the light of research work of Ali Khan who points to the imperative of an Islamic institutional response to financial globalization, by treating the institution of Islamic banking as the concrete proxy of the Islamic financial institution, and to highlight the actual and prospective responses of the Islamic financial institutions to the challenges of financial globalization. Findings – Financial globalization is an evolving reality. Because of its atheistic, materialistic, undemocratic, non‐universal and interest‐based world view and character, financial globalization has been posing a serious challenge to the contemporary Islamic countries’ agenda of economically empowering and developing themselves through the integration of their economies along the universal Islamic lines exhibited in the form of one Islamic Ummah. Research limitations/implications – Research limitations are embodied in the overwhelming problem of finding the latest comprehensive set of data in the context of the relevant Islamic economic variables. Practical implications – The interest‐based Bretton Woods institutions and the conventional‐cum‐new instruments as well as the interest‐based mechanism of financial globalization are determined to be Islamically useless and irrelevant for the Islamic countries. Therefore, the Islamic countries are left with only the financial instruments of Islamic interest‐free foreign direct investment/workers’ remittances/equities along with the several additional Islamic instruments of financial globalization which have the potential of ensuring the Islamic countries’ development according to the Islamic ideals without compromising the sovereignty and integrity of the Islamic Ummah. Originality/value – The paper presents an objective Islamic critique of the capitalist financial globalizations as well as documenting a progressive institutional‐cum‐development policy response to the challenges of financial globalization from the point of view of ensuring the development and empowerment of both the Islamic Ummah and the whole of humanity in the Islamic universal frameworks.

This paper aims to investigate a fundamental research question of whether the Islamic banking business model makes corporate earnings more uncertain. This question arises because prior research shows that Islamic banks do well in loan performance but incur more operational costs than conventional banks, indicating the systemic limitation of Islamic banks in business risk management.

The study used a sample of banks to conduct the panel regression analysis with 15 years of data for 532 banks (129 Islamic and 403 conventional) from 23 Muslim countries across the world. The authors estimate earnings uncertainty in two ways: the spread and standard deviation of the country-adjusted return over the sample period and applied the difference-in-difference approach interacting cost to income ratio with the Islamic bank dummy, checking if Islamic bank’s high operational costs contribute to more earning uncertainty.

Islamic banks’ returns on assets are significantly more uncertain than conventional banks due to higher operational costs. Consistent with earlier evidence, the study also finds that Islamic banks generally have fewer nonperforming loans than conventional banks. The authors conclude that Islamic banks trade-off between reducing credit risk and escalating business risk.

This study documents that the Islamic banking model helps build a safer asset portfolio but gives rise to the uncertainty of corporate earnings. Therefore, the choice between Islamic and conventional banking models involves a trade-off between credit and business risks. It is a new finding that we add to the literature body on Islamic finance.

The aim of this paper has twofold: (1) to explain and compare the financial evolution of Islamic and conventional banking sector in the Gulf Cooperative Council (GCC) countries before and during the COVID-19 pandemic and (2) to explore the key success factors that might affect Islamic and conventional banks performance before and mainly during COVID-19 pandemic period.

Orbis Bank Focus database and annual financial reports are used to collect financial information of Islamic and conventional banks in GCC countries over four years: 2017, 2018, 2019 and 2020. Descriptive statistics, T-test, multiple regression, and 2SLS and GMM models are employed to analyze the financial structure and performance of Islamic and conventional banks before and during the COVID-19 pandemic period.

Results of this study reveal that (1) there is a significant difference between Islamic banks and conventional banks during the crisis of COVID-19, where the conventional banks have presented a higher level of financial performance and financial liquidity than their Islamic counterparts, (2) conventional banks have revealed higher capacity to manage their financial risk during the crisis period, and (3) a high level of non-performing loan, high inflation rate and high percentage of non-important cost have a negative impact on the financial performance of Islamic banks mainly during the pandemic period of COVID-19. However, the result indicates that a high level of liquidity risk increased the performance of Islamic banks but this impact falls sharply during the pandemic period.

This study provides information that supports investors, regulators and executive managers in GCC countries. A well-structured balance sheet would improve the financial performance and risk management of the banking sector in GCC countries, especially in times of crisis and pandemics.

This study aims to assess the performance of domestic and foreign Islamic banks as well as the influence of foreign banks’ home country development influence on the performance of foreign banks.

This study uses data of 17 domestic Islamic banks and 11 foreign Islamic banks from Bahrain, Malaysia and Pakistan from 2010 to 2018. Pooled ordinary least square is used to investigate the relationship between home country development and performance of foreign Islamic banks.

Results from this paper suggest domestic Islamic banks in Malaysia have higher performance than their foreign counterparts while foreign Islamic banks from Pakistan have higher performance than their domestic counterparts. However, as a whole, the performance of domestic and foreign Islamic banks is not significantly different from one another. Development of foreign banks’ home country measured by gross national income per capita and gross domestic product per capita show significant positive influence on the performance of foreign Islamic banks.

Higher level of development of the home country of foreign banks appears to influence the performance of foreign banks in the host country.

The purpose of this paper is to indicate the current state of studies on Islamic finance and management through a bibliometric analysis of the only social science citation index (SSCI)-indexed journal in this field.

The paper uses a bibliometric analysis, collecting data from the 319 papers published in the International Journal of Islamic and Middle Eastern Finance and Management (IMEFM) from 2008 to 2019. Moreover, VOSviewer software has been used to illustrate the citation analysis (including most cited papers, most cited authors and authors’ affiliated institutions and countries) and the keyword map.

The number of papers published in each issue of the IMEFM is found to have significantly increased owing to its unique situation being the only SSCI-indexed journal in this domain. The share of the empirical researches in total papers published annually has steadily risen, reaching 95% in 2019. In terms of case countries, although Malaysia is the most examined country in the papers, other countries such as Indonesia and Turkey are found to have been used as a case country by researchers recently. Islamic banking-related papers are the most prevalent studies, as expected, with mainly their performance being examined. Meanwhile, the number of papers about Islamic social financial institutions has notably grown in recent years. Finally, technology-based initiatives such as crowdfunding and cryptocurrencies are noted to have not yet been the subject of any paper.

The main contribution of this study is its analysis of the only SSCI-indexed journal on Islamic finance and management using bibliometrics. Also, all the papers published in the journal have been reviewed in terms of methodology, case country/country groups and topics/subtopics to lead the way for future research.

This paper aims to examine the impact of financial liberalization and foreign Islamic bank entry on the performance of domestic Islamic banks, and credit availability to the private sector.

The authors use the weighted least squares method to estimate four models. These models are suggested by Lee. For this, the inverse of the number of domestic Islamic banks in each period is used to weight the observations in the regressions to correct for varying number of bank observations in each country.

The results indicate that foreign Islamic banks, on average, follow aggressive financing in host countries and enjoy higher net profit margin. Banking sector returns play an important role in the entry decision and presence of foreign banks. Moreover, favorable macro‐economic conditions play a supportive role while higher tax policies play a hostile role for the entry and presence of foreign Islamic banks. The recent financial crisis does not seem to affect the entry decision significantly. But the profitability of domestic Islamic banks has been seriously affected by the recent crisis. Also domestic tax policy and macro‐economic environment play important roles in determining the domestic Islamic bank performance. Results also indicate that private sector credit availability seems to suffer because of higher tax and reserve rate.

The authors' findings suggest that host Islamic economies should strive for an efficient capital market with supportive macro‐economic environment, which in turn helps the local banking sector to develop and benefit from the foreign Islamic bank entry.

This is the first paper to analyze the entry of foreign Islamic banks in the host countries with Islamic banking sector.

In this chapter, the authors investigate the correlation between social and economic indicators and Islamic finance, to see whether increasing Islamic banking will increase account penetration in Muslim majority countries. Inclusive financial services are beneficial to a country as a whole, especially for poorer individuals, giving them more access to investment and financing opportunities. Shari’ah law has guidelines for banking that Muslims must follow and many believe that commercial banks do not follow these guidelines. As many individuals cite religious reasons as their excuse for exclusion, there is potential to develop Islamic finance as a means of improving financial access in certain countries. The authors find that individuals from the countries in our study tend to be more religious and that there are potential economic and social benefits to an increase in Islamic banking in this region.