Islamic Banking Industry Research Articles

This research paper examines the antecedents of brand loyalty in the Islamic banking industry in Pakistan, and the study will cover the roles of perceived quality, emotional value, and financial perception, with a brand image as the intermediary variable. Using a structured questionnaire as the method of collecting data with 266 respondents, the research uses regression and correlation analyses to investigate the correlation between these constructs. The results indicate that all the three aspects of perceived value are important sources of brand loyalty, and that brand image is the key mediator of reinforcing these relationships. The work will add to the literature by presenting a holistic framework that will combine marketing and faith-based approaches and offer valuable practical information that could be applied by Islamic financial institutions aimed at improving customer retention and brand differentiation in an increasingly competitive and digitally transformative environment.

This research paper examines the antecedents of brand loyalty in the Islamic banking industry in Pakistan, and the study will cover the roles of perceived quality, emotional value, and financial perception, with a brand image as the intermediary variable. Using a structured questionnaire as the method of collecting data with 266 respondents, the research uses regression and correlation analyses to investigate the correlation between these constructs. The results indicate that all the three aspects of perceived value are important sources of brand loyalty, and that brand image is the key mediator of reinforcing these relationships. The work will add to the literature by presenting a holistic framework that will combine marketing and faith-based approaches and offer valuable practical information that could be applied by Islamic financial institutions aimed at improving customer retention and brand differentiation in an increasingly competitive and digitally transformative environment.

Purpose This study examines the mediating role of board gender diversity in the relationship between environmental, social and governance (ESG) performance and bank risk-taking within the Gulf Cooperation Council (GCC) region. It aims to assess whether inclusive leadership enhances the effectiveness of ESG initiatives in promoting financial stability across Islamic and conventional banking systems. Design/methodology/approach Using a panel dataset of 56 GCC banks from 2015 to 2022, the research applies the Baron and Kenny (1986) mediation framework, alongside generalized method of moments (GMM) regressions and structural equation modeling (SEM). The analysis examines ESG scores, gender diversity metrics, and risk indicators (Z-scores and credit risk), controlling for firm-specific and macroeconomic factors. Findings The results show that strong ESG performance significantly lowers both insolvency and credit risk. Additionally, ESG engagement correlates positively with board gender diversity, and gender-diverse boards are linked to reduced risk-taking and partially mediate the ESG-risk relationship. This pattern holds for both Islamic and conventional banks. Practical implications The findings support policy reforms that integrate ESG and promote gender diversity in banking governance, thereby reducing risk exposure and improving financial resilience. Social implications By emphasizing women's leadership, this research aligns with broader societal goals of equity and inclusion, and shows how sustainability and diversity initiatives can foster inclusive governance cultures in the GCC region. Originality/value This study provides unique empirical insights from a region with distinct institutional and cultural contexts. It positions board gender diversity as a functional governance mechanism that effectively translates ESG commitments into risk mitigation strategies, enriching the theoretical discourse on ESG and inclusive leadership.

The growth of the Islamic banking industry in the digital era demands a deeper understanding of the factors influencing customer decision-making, especially among younger generations. This study aims to examine the extent to which trust, Islamic financial literacy, and customer satisfaction affect the decision of customers to use Islamic banking services.A quantitative approach was employed using a survey method, with data collected from 122 Islamic bank customers in South Tangerang through an online questionnaire. The data were analyzed using Structural Equation Modeling (SEM) based on the Partial Least Square (PLS) technique. The results reveal that trust and Islamic financial literacy significantly influence satisfaction but do not directly affect customer decisions. In contrast, satisfaction has a significant impact on decision-making regarding the use of services. These findings highlight the critical role of delivering a satisfying customer experience as a key driver of customer decisions. This research contributes to the development of Islamic consumer behavior theory and offers practical implications for improving service quality in Islamic banking. Future research is recommended to examine mediation and moderation variables to gain a more comprehensive understanding.Keywords: Trust; Islamic Financial Literacy; Satisfaction, Customer Decision; Islamic Bank

The Islamic banking industry's rapid global growth, driven by increasing demand for Sharia-compliant financial solutions, has exposed a significant challenge: talent shortage. This study addresses a research gap by systematically reviewing and synthesising 42 studies published between 2000 and 2023 that examine the multidimensional causes of talent shortages in Islamic banking. Data were collected from Scopus, Web of Science, Google Scholar, and industry reports, applying thematic coding to identify key patterns. Results reveal that lack of awareness and education (76% of reviewed studies), cultural and religious barriers (54%), compensation discrepancies (48%), regulatory complexities (43%), and regional disparities in talent availability (39%) are the most cited causes. The findings are framed using Human Capital Theory and Institutional Theory to provide both practical and theoretical insights. The study proposes strategic recruitment, retention, skill development, and industry competitiveness enhancement initiatives to address these shortages. Practical implications for policymakers, HR managers, and education providers are discussed to ensure long-term sectoral sustainability.

This study reveals that IAIN Kerinci students' awareness of Islamic banking services is still limited, mainly due to their lack of knowledge about the Islamic banking system and services. Although most students have a good understanding of the basic concepts of Islamic banking, their limited knowledge of the mechanisms and actual services makes them less interested in using Islamic banking services. In addition, external factors such as the lack of ATMs in Sungai Penuh City and the lack of convenience and communication between banks and students also contribute to this low level of interest. This study aims to: (1) Identify the level of awareness among students at IAIN Kerinci regarding the use of Islamic banking services. (2) Analyze the strategies used by Islamic banks in improving the quality of their products and services to students. (3) Identify the factors that influence the interest of IAIN Kerinci students in using Islamic banking services. Data analysis was conducted using a qualitative descriptive approach, namely by collecting data through observation, interviews, and documentation. A decentralized model was used to carry out the data analysis process, which included domain analysis, taxonomy, composition, and cultural themes. To ensure the accuracy of the research results, the researchers also applied various data verification and triangulation methods. Research shows that Islamic banks still need to improve service quality and expand access in order to better meet the needs of students and the wider community. Thus, the lack of communication, limited access, and service quality are the main obstacles that cause students to be less interested and reluctant to use Islamic banking services at this time.

Research Originality: This research is unique in that it consolidates macroeconomic and institutional studies to better understand how Islamic banks absorb and recover from financial shocks. Research Objectives: To investigate the conceptual and empirical development of Islamic banking resilience over the past 14 years, concentrating on dominating variables and thematic clusters. Research Method: The research examines 42 peer-reviewed journal articles indexed in Scopus through a comprehensive systematic literature review (SLR) methodology utilizing bibliometric instruments. Empirical Results: Internal factors like capital adequacy, liquidity, and profitability, as well as macroeconomic indices like GDP and inflation, influence resilience. The keyword “bank resilience” is underused, implying a lack of conceptual consistency in the literature. JEL Classification: G21, G32, E44, E58, Z12 Implications: An integrated view of resilience in Islamic finance and the requirement for specialized regulatory frameworks and resilience-based performance metrics customized to Islamic banking principles has substantial implications for researchers, policymakers, and regulators.

This study aims to examine the impact of the merger of Islamic banks on competition and efficiency within the Islamic banking industry in Indonesia. The research focuses on the merger of PT Bank BRI Syariah Tbk, PT Bank Syariah Mandiri, and PT Bank BNI Syariah, which resulted in the establishment of Bank Syariah Indonesia (BSI). The analysis is conducted to assess whether the merger has strengthened market competition and improved operational efficiency in the industry. Using quantitative methods and secondary data, this study evaluates the level of competition through market concentration ratios and efficiency through financial performance indicators before and after the merger. The findings of this research are expected to provide valuable insights for policymakers, industry players, and stakeholders in formulating strategies for sustainable growth in the Islamic banking sector.

Sharia financing is a key instrument that Islamic banks must promote in channeling third-party funds. This aligns with the basic principles of Islamic banking, which emphasize fairness, partnership, and business sustainability. Therefore, it is crucial to examine how various Islamic financing schemes impact Islamic bank profitability. This study focuses on Bank Mega Syariah, using secondary data sourced from quarterly financial reports for the period 2017 to 2024. The financing variables analyzed include musyarakah, mudharabah, murabahah, and ijarah, while profitability is measured using relevant financial performance indicators. The analysis method used is a quantitative approach using regression techniques to examine the effect of each type of financing on bank profitability. The results show that musyarakah, mudharabah, and murabahah-based financing have a positive and significant impact on profitability, meaning that the higher the distribution of these three types of financing, the greater their contribution to increasing bank profits. These findings indicate that the business partnership model, profit-sharing system, and profit margin stipulated in the murabahah contract significantly contribute to maintaining profit growth. Conversely, ijarah financing did not significantly impact profitability. This may be due to the characteristics of ijarah, which tends to be oriented towards fixed assets or leases, resulting in a relatively limited contribution to increasing short-term profits. Overall, this study provides important implications for Islamic bank management to further optimize the proportion of musyarakah, mudharabah, and murabahah financing as a strategy to boost financial performance and maintain business continuity amidst the competitive Islamic banking industry.

The merger of three state-owned Islamic banks under Himbara—BRIS, BNIS, and BSM—into Bank Syariah Indonesia (BSI) in 2021 represents a pivotal development in the consolidation and strengthening of Indonesia’s Islamic banking industry. This study aims to evaluate and compare the financial performance of Islamic banks in Indonesia before and after the merger by employing the Economic Value Added (EVA) method, which incorporates the Weighted Average Cost of Capital (WACC) to provide a more accurate assessment of value creation. The research period spans from 2018 to 2023, covering three years prior to the merger (2018–2020) and three years following the merger (2021–2023). The findings reveal that EVA values remained negative throughout the entire observation period. However, there was a slight improvement in negative EVA values prior to the merger, whereas a further deterioration was observed in the post-merger period. These results suggest that the merger has not yet led to an enhancement in financial value creation, and they highlight the need for a critical reassessment of BSI’s financial strategies moving forward

Purpose: The emergence of Islamic banking (IB) in sub-Saharan Africa has been viewed as a catalyst for the economic growth and development of the sub-region. This study investigates the motivation, willingness to adopt, and determinants of IBs adoption in Liberia, a non-Islamic country in West Africa. Design/Methodology/Approach: Primary data were sourced from 210 Liberian citizens, accidentally sampled across four major counties, using semi-structured survey questionnaires. Descriptive statistics, simple percentages, statistical mean and the chi-square test of independence were used to analyse the data. Research Limitations: One of the main research limitations is that not all counties were included in determining the study sample size. Furthermore, specific components of the sample frame were not considered for selection because a convenience sampling approach was used. Findings: The results showed that the majority of the survey respondents (93.8%) were willing to acquire knowledge about the operation of the Islamic banking system. The decision to adopt the Islamic banking system was influenced by respondents’ socio-demographic characteristics, such as age, gender, educational attainment, employment status, and marital status. The findings provide critical insights into the incorporation of certain aspects of the Islamic banking system into Liberia's banking sector. Practical Implications: Thus, stakeholders such as the Bank of Liberia should consider implementing pertinent governance structures and rules for IBs operations for risk minimisation, and resistance to economic crises in the country’s banking sector. Social Implications: The operationalisation of IBs will lead to job creation, economic growth and revenue mobilisation through corporate tax. Originality/Value: It contributes to the existing literature by highlighting the high interest of the respondents to adopt and practice the Islamic banking system in a non-Islamic country like the Republic of Liberia, defeating the general misconception about the non-adoption of Islamic bank principles, particularly the Sharia principle, by non-Islamic countries in the developing world.

Non-Performing Financing (NPF) is a serious challenge in the Islamic banking industry as it directly impacts financial stability and the financing performance of banks. This study aims to analyze the strategy for preventing problematic financing through the 7P approach (Personality, Purpose, Prospect, Payment, Party, Profitability, and Protection) implemented by Bank Sumut KCP Syariah Kisaran, as well as to evaluate its effectiveness in optimizing risk management and maintaining healthy financing performance in accordance with Sharia principles. This research uses a qualitative descriptive method with a phenomenological approach. Data were collected through in-depth interviews and open-ended questionnaires filled out by bank leaders, account officers, surveyors, marketing staff, and customers of Bank Sumut KCP Syariah Kisaran. Data analysis was conducted through data reduction, data presentation, and drawing conclusions using triangulation techniques for validity. The results show that the implementation of the 7P strategy (Personality, Purpose, Prospect, Payment, Party, Profitability, and Protection) at Bank Sumut KCP Syariah Kisaran has proven effective in reducing non-performing financing (NPF). The initially high NPF of 10.99% in 2020 was successfully reduced to 1.16% in 2023, although it slightly increased again to 1.8% in 2024. This strategy was applied through comprehensive customer assessment stages, ranging from interviews, feasibility analysis, to post-disbursement monitoring. The bank’s main focus was on analyzing the customer’s repayment ability (Payment) and collateral feasibility assessment (Protection). To optimize risk management and financing performance at Bank Sumut KCP Syariah Kisaran, the bank also conducts periodic evaluations and post-disbursement maintenance activities to support the effectiveness of the strategy.

One of the service sectors in Muslim nations with the quickest rate of growth is Islamic banking. This banking system is profit-and-loss sharing-based and does not charge interest on financing. Islamic banks often provide their clients with services in accordance with Islamic Shariah, which forbids receiving interest. Although Islamic banks' market share is increasing quickly in Bangladesh, the system's development is not up to par. Therefore, the purpose of this study is to investigate the present obstacles facing Islamic banking in Bangladesh and the most effective strategies for overcoming them. This study has adopted a qualitative approach, and the information is taken from a variety of reputed journals and conference proceedings using a systematic literature review (SLR) approach. The study's conclusions highlight the regulatory, Shariah, and governance issues that Bangladesh's Islamic banks are now dealing with. This analysis also identifies the most effective strategies that Bangladeshi Islamic banks can use to successfully address these issues.

Purpose The purpose of this paper is to analyse key reasons as to why Islamic banks use special purpose vehicles (SPVs) within their transactions, from the perception of industry practitioners. Design/methodology/approach This research uses a qualitative methodology, and the Kingdom of Bahrain as a case study. Thirty-five industry practitioners (interviewees) took part in this study, where face-to-face semi-structured interviews were conducted to obtain interviewee feedbacks. Findings The findings reveal that shareholding and bankruptcy remote structures, regulatory and compliance, taxation, legal and Shari’a compliance aspects are among key reasons for Islamic banks to routinely use SPVs within their transactions. Research limitations/implications The findings in this research are limited to the Islamic banking industry in the Kingdom of Bahrain. Separate studies are required for different jurisdictions pertaining to the same matter, or for comparative purposes. Originality/value This study contributes to knowledge by providing perspectives of industry practitioners in the Kingdom of Bahrain.

Digital transformation and the dynamics of customer needs demand adaptive and customer-oriented marketing strategies in the Islamic banking industry. This study aims to analyze the customer-centric differentiation strategy implemented by Bank Syariah Indonesia (BSI) KCP Tuban in marketing pre-retirement financing products. With a qualitative approach through interviews and field observations, this study reveals that personalized advisory strategies, hybrid services (offline and online), and the use of digital technology such as the BSI Mobile application and chatbots are key to increasing customer engagement and satisfaction. Innovation through the #SiapPensiunTenang digital campaign and the use of customer data for service personalization also strengthen the competitive position of BSI KCP Tuban. The results of the study show that a customer-centric marketing approach can significantly increase interest in pre-retirement financing products and strengthen customer loyalty in the midst of a competitive digital era. These findings provide theoretical contributions to the development of Islamic marketing literature as well as practical implications for Islamic bank strategies in optimizing the pensioner market segment

This study aims to analyze the implementation of content marketing strategies in the Islamic banking industry in Indonesia, with a focus on the effectiveness of content in enhancing audience engagement and building the image of Islamic brands. The research was conducted through a literature review of various academic sources and previous studies, as well as an analysis of the content marketing of Bank Syariah Indonesia (BSI) on its YouTube channel as the main object. In the digital context, the types of content used include educational videos, marketing videos, and collaborations with influencers. The findings indicate that visual, educational, interactive, and authentic content has a significant impact on driving digital engagement and increasing brand awareness. Meanwhile, promotional content delivered through influencers tends to be more effective when preceded by strong brand image reinforcement, enabling consumers to develop a more positive perception of the institution. Further analysis reveals that BSI’s YouTube channel has demonstrated consistency in branding, Islamic positioning, and delivering educational messages. However, audience interaction remains limited, as reflected in the minimal responses to comments, underutilization of community features, and subscriber growth lagging behind major banks such as BCA. This situation highlights the need to optimize strategies through strengthening two-way communication, delivering serial educational content, employing more strategic calls-to-action (CTA), and integrating with the official website and other digital platforms.The study concludes that the success of content marketing in Islamic banking heavily depends on value relevance, publication consistency, and the ability to build sustainable interaction with audiences, thereby supporting increased loyalty and customer acquisition. These findings provide important contributions to designing effective and sustainable digital communication strategies that align with ethical principles and Islamic values.

Digital transformation, which is the integration of digital technology into all aspects of business operations, fundamentally changes the way organizations operate and deliver value to customers. This research aims to analyze the transition strategy to a digital system at PT BPRS Al-Washliyah Medan, with a focus on identifying opportunities, challenges, and optimal strategies that can be applied in the digital transformation process. The method used is descriptive qualitative with a case study approach, through interviews, observations, and document studies. The research results show that although BPRS Al-Washliyah faces internal limitations such as technological infrastructure and human resources, this institution has great potential to develop through a gradual digital approach, adaptive strategies, and regulatory support. Digital transformation is deemed important to strengthen competitiveness, communication effectiveness, and the institution's image amidst the dynamics of the Islamic banking industry.

Islamic law is known as a divine legal system that has high flexibility in responding to the dynamics of society. In the modern era, challenges in the fields of family law, human rights, and the economy—especially the Islamic finance sector—demand contextual adjustments to keep Islamic law relevant. This article aims to examine how the flexibility of Islamic law is applied in dealing with these challenges through the maqashid sharia approach. This research uses a descriptive qualitative method with a normative-theological approach, through a literature study of classical and contemporary literature. The results of the study show that the principles of sharia maqashid, which include the protection of religion, soul, intellect, descent, and property, are an important foundation in answering modern problems. In the context of family law, the flexibility of Islamic law is reflected in regulatory updates such as the Compilation of Islamic Law (KHI) that is responsive to the needs of women and children. On human rights issues, the principles of justice and respect for human dignity have been embedded in Islamic teachings, although they still face challenges of interpretation. Meanwhile, the economic sector has shown significant success through the growth of an inclusive and adaptive Islamic banking industry. With the approach of sharia maqashid and contextual ijtihad, Islamic law has proven to be able to transform into a legal system that is not only normative, but also solutive and humanist in modern life.

Islamic banks are modern financial institutions that operate based on the principles of Islamic law, especially the prohibition of usury, gharar, and maisir. Although at the time of classical fiqh scholars there was no banking institution in its current form, the basic concepts they formulated in fiqh muamalah became an important foundation for the development of Islamic banks. Classical scholars such as Abu Hanifah, Malik bin Anas, Shafi'i, and Ahmad bin Hanbal agreed that any addition required in a loan contract is forbidden usury. The thoughts of Ibn Taymiyyah and Al-Ghazali also confirm that money is not a commodity to be traded for interest, but only a medium of exchange that serves to maintain the smooth running of economic activity. Principles such as justice ('adl), mutual consent, transparency, and cooperation in risk and profit formulated by classical scholars have proven to be relevant to the modern Islamic banking system. Through halal contracts such as murabahah, mudharabah, musyarakah, and ijarah, Islamic banks are a fairer and more ethical alternative to conventional banks. This study shows that the thinking of classical scholars remains relevant as a normative and ethical foundation in developing a contemporary financial system with social justice.

General Background: The Islamic banking industry plays a pivotal role in financial inclusion, particularly for micro, small, and medium enterprises (MSMEs), through Sharia-compliant financing schemes. Specific Background: PT BPRS Puduarta Insani Medan Tembung, as a regional Sharia microfinance institution, actively distributes working capital and investment financing using murabahah contracts. Knowledge Gap: However, empirical studies examining the direct impact of such financing on community business income, especially within localized contexts like Medan Tembung, remain limited. Aims: This study investigates how working capital and investment financing under murabahah contracts affect the business performance of local MSMEs. Results: Findings show a positive correlation between murabahah-based financing and increased business income, improved financial capacity, and enhanced operational performance among recipients. Novelty: The study provides in-depth qualitative evidence on the effective implementation of murabahah bi al-wakalah contracts in grassroots banking operations, emphasizing customer empowerment and Sharia adherence. Implications: These insights support policy and institutional strategies aimed at expanding Sharia-based financial services, reducing poverty, and promoting sustainable regional economic growth through inclusive Islamic finance mechanisms.Highlight : Working capital and investment financing using murabahah contracts significantly increased MSME income in Medan Tembung. PT BPRS Puduarta Insani’s financing strategy aligns with national goals for Islamic banking growth and inclusion. Murabahah bi al-wakalah structure ensures sharia compliance and operational simplicity for both bank and customers. Keywords : Working Capital Financing, Investment Financing, Murabahah Contract, Business Income, Islamic Microfinance