The increasing global geopolitical tensions, economic policy uncertainty, oil price volatility, and post-pandemic economic instability have created significant challenges for the Islamic banking industry, particularly in Organization of Islamic Cooperation (OIC) countries. This study aims to examine the influence of geopolitical risk (GPR), economic policy uncertainty (EPU), world oil prices (WTI), inflation, and economic growth (GDP) on the profitability of Islamic banks measured by Return on Assets (ROA). This research employs a quantitative approach using balanced panel data from 20 Islamic banks across 10 OIC countries during the 2020–2024 period, consisting of 100 observations. Data were collected from annual reports, Bloomberg, World Bank, U.S. Energy Information Administration (EIA), Caldara and Iacoviello’s GPR Index, and Baker et al.’s EPU Index. The analysis method uses panel data regression through Common Effect Model (CEM), Fixed Effect Model (FEM), and Random Effect Model (REM), with model selection conducted using Chow, Hausman, and Lagrange Multiplier tests.The results show that REM is the most appropriate model. Geopolitical risk and inflation have a positive and significant effect on ROA, while world oil prices negatively and significantly affect ROA. Meanwhile, EPU and GDP growth do not significantly influence Islamic bank profitability.This study implies that Islamic banking demonstrates relatively strong resilience against global uncertainty due to its asset-backed financing and risk-sharing principles, thereby strengthening the role of Islamic finance as a stabilizing force in the financial system of OIC countries.

The article examines the historical aspects of the development of the Islamic banking system, which is based on the rules of Sharia and Islamic ethics, as well as the legal framework that regulates the activities of Islamic financial institutions. The study explores the fundamental principles and conceptual categories that characterize the unique model of banking. Based on the analysis of operations inherent in Islamic banking, the main items of the formation of liabilities are determined, and the structure of the assets of the balance sheet is presented. Based on the study of the set of economic relations and connections between the participants of the credit and financial system within the framework of the Islamic model of banking, the factors that form Islamic banking are substantiated and the prospects for its application for the development of national economies of Arab countries are assessed.

The implementation of Sustainable Development Goals (SDGs) proposed by the United Nations has encouraged banks to adopt sustainability practices. Although previous research mainly focuses on the performance implications of SDG adoption, there is little data on the impact of sustainability on the risk of banks, especially in comparison with Islamic and conventional banks. This research fills this gap by making a comparative analysis of the effect of SDG adoption on the risk profile of Islamic and conventional banks in the Asia-Pacific region. SDGs are measured by construction an ESE Index from the indicators proposed by the United Nations. The two-step system GMM (Generalized method of moments) method is used to analyze panel data of Islamic and conventional banks in the Asia-Pacific region to compare the relationship between SDGs and the risk of Islamic and Conventional banks. The results show that SDGs are negatively related to the risk of conventional banks as compared to the Islamic banks, as the conventional counterparts are more mature and have good risk management practices. In contrast, Islamic banks already operate under Shariah principles that emphasize ethical investment, risk sharing, and socially responsible financing, which are already aligned with sustainability goals. The present work is relevant to the sustainable banking literature by providing comparative evidence of the effect of SDG adoption on risk in banking models and by employing it in a dual banking framework. The results give important implications for regulators, policymakers, and banking institutions by highlighting the role of SDGs adoption on the risk mitigation of Islamic and Conventional banks so that the financial stability is enhanced within the banking operations.

Purpose This study aims to examine how income, assets and funding diversification affect bank systemic risk contribution in conventional and Islamic banks in Indonesia. Design/methodology/approach Fixed effects-panel least squares regression analysis of quarterly Indonesian banking data (2016–2022), measuring systemic risk contribution (ΔCoVaR) across three diversification strategies in conventional and Islamic banks. Findings The empirical results reveal that income diversification increased systemic risk contribution in Indonesian banks, while funding diversification reduced it, and asset diversification showed no effect. Surprisingly, Islamic banks mirrored conventional banks’ risk patterns, attributable to Indonesia’s unique banking system, where their origins as Sharia business units within conventional banks later spun off or converted into standalone Islamic banks. The COVID-19 pandemic structurally transformed diversification effects, reversing protective benefits and amplifying systemic risk. Two-step System GMM robustness checks confirmed the reliability of these findings. Research limitations/implications The study period excludes earlier crises; future research should incorporate multiple crisis periods and cross-country data to strengthen generalizability. Practical implications Effective regulatory oversight should include careful evaluation of banks’ diversification strategies, proactive support for funding diversity and ensure protective measures are strong enough to withstand extreme financial shocks. Originality/value To the best of the authors’ knowledge this is the first study to simultaneously analyze all three diversification dimensions on systemic risk contribution effects in both conventional and Islamic banking systems, with novel findings about Islamic banks’ nonmoderating role and COVID-19’s amplifying impact.

This study investigates the determinants of customer trust in Islamic banking system of Pakistan. Islamic banking is an ethical and Shari‘ah-based system whereby trust is a cornerstone of these institutions as customers depend on them to meet their Shari‘ah-compliant financial requirements. This research is based on pragmatist epistemology combining positivism and interpretivism paradigms with two simultaneous phases of qualitative exploration and quantitative measures. The first stage utilizes Interpretative Phenomenological Analysis (IPA) approach and inductive research design to investigate stakeholders’ experiences and interpretation of trust in Islamic banking. Semi-structured interviews from different stakeholders of Islamic banks were conducted. Findings reveal a significant trust deficit and that Islamic banks need to improve on Shari‘ah governance, visibility and initiate awareness programs and communicate more openly so that customers become more informed resulting in reducing the trust gap. The second phase utilizes survey method and deductive research design to empirically measure the relationship of trust with commitment and loyalty. Closed-ended questionnaire is implied for data collection. Findings demonstrate the significance of trust as an important factor for frequent usage of Islamic Banking (IB) services, customer engagement and positive impression of IBs. These insights are helpful for both borrowers and investors, and they could help Islamic banks build their credibility and strengthen their ties with customers in practice.

Purpose This study aims to investigate antecedents of the intention to adopt the Islamic banking system in an emerging economy. Design/methodology/approach Here, the theory of the planned behavior model was extended with some additional constructs. Primary data were collected from a sample of 313 respondents with a structured questionnaire and analyzed with structural equation modeling using SMART PLS 3 software. Findings Results indicate that awareness, bank image, complexity, religiosity and Sharia compliance significantly affect attitude, while attitude, perceived behavioral control and subjective norms affect intention, which is consistent with theory of planned behavior models. In addition, awareness, bank image, complexity, religiosity and Sharia compliance can influence the intention only when they are mediated by attitude. Research limitations/implications The study is cross-sectional in design and cannot account for changes in customers’ intentions over time, and it did not consider any moderating effect of any variable. Practical implications This study contributes significantly to the field of Islamic banking by describing context-specific constructs and relationships and explaining the consumer’s attitude and behavioral intention toward adopting an Islamic banking system. Social implications The study highlights the significance of the factors that influence attitude and intention, which may guide in developing customer insight. Originality/value To the best of the authors’ knowledge, this is the first study empirical effort in Bangladesh to explore the variables influencing attitudes and intentions for the adoption of Islamic banking.

The rapid development of digital technology requires young generations to possess adequate digital and financial literacy, including an understanding of Islamic banking systems. However, the level of Islamic banking literacy and the use of digital financial services among vocational high school students remains relatively low. This community service activity aims to enhance students' understanding of basic Islamic banking concepts and improve digital literacy in utilizing digital-based financial services safely and wisely. The methods used include counseling, interactive lectures, discussions, and hands-on practice with digital banking platforms. The results indicate an increase in students' knowledge of Islamic banking principles, such as the prohibition of usury (riba), profit-sharing mechanisms, and basic use of digital financial services. This activity is expected to foster financially and digitally competent students who can act as educational agents in their communities.

The growth of the Islamic banking industry in Indonesia is increasingly significant, but the financial performance of several Islamic banks still shows fluctuations, especially in terms of profitability and problematic financing. One factor that is believed to play a role in creating financial stability and sustainability is the implementation of Islamic corporate governance (ICG), especially the role of the Sharia Supervisory Board (SSB). This study aims to analyze the effect of the number of SSBs on the financial performance of Islamic commercial banks in Indonesia, using data from 13 Islamic banks listed on the Indonesia Stock Exchange (IDX) during the 2020–2023 period. The method used is multiple linear regression, with financial performance indicators in the form of capital adequacy ratio (CAR), return on assets (ROA), non-performing financing (NPF), financing to deposit ratio (FDR), and operating expenses to operating income (beban operasional pendapatan operasional, BOPO). The results show that the number of SSBs has a significant positive effect on profitability (ROA) and a significant negative effect on NPF. This finding aligns with Mollah and Zaman (2015), who stated that “a better Sharia supervisory board’s effectiveness could increase Sharia compliance in Sharia banks” (p. 418). This study emphasizes the urgency of strengthening the role of the SSB in supporting financial stability and Sharia compliance of Islamic banks in Indonesia.

This research is motivated by the Bank Syariah Indonesia (BSI) integration policy, a strategic step taken by the government to strengthen the national Islamic banking structure to address the challenges of financial stability, global competitiveness, and sustainable Islamic economic development. This study aims to analyze the implications of BSI institutional integration on strengthening the Islamic banking system, financing the real sector, and transforming governance and digitalization to support the national Islamic economy. The research method used is qualitative with a descriptive approach through a literature review of scientific journals, academic books, and relevant official reports. The research findings indicate that BSI integration has a positive impact on increasing business scale, strengthening capital, operational efficiency, and optimizing risk management, which contributes to the stability of the Islamic financial system and global competitiveness. Furthermore, integration strengthens the intermediation function of Islamic finance by increasing the financing capacity of the real sector, particularly MSMEs, expanding profit-sharing contracts, and accelerating financial inclusion through digitalization. The research findings also confirm that the success of integration is largely determined by the synergy between Sharia governance and compliance, the use of digital technology, and effective change management based on leadership and alignment of organizational culture. The implications of this research indicate that BSI integration not only strengthens Islamic banking institutions but also serves as an important foundation for the development of a just, inclusive, and sustainable national Islamic economy.

This study aims to examine the effects of hard skills and soft skills on the work readiness of Islamic banking alumni, both directly and indirectly through work motivation as an intervening variable. A quantitative research design was employed using a census approach involving 196 alumni of the Islamic Banking Study Program at UIN Mahmud Yunus Batusangkar who had entered the workforce. Data were collected using structured questionnaires and analyzed using Structural Equation Modeling–Partial Least Squares (SEM-PLS) with SmartPLS 4.0.The results indicate that hard skills and soft skills significantly influence work motivation and work readiness. Soft skills demonstrate a stronger effect on work motivation, while motivation plays a crucial mediating role in strengthening the relationship between both types of skills and work readiness. Furthermore, work motivation significantly enhances graduates’ preparedness to meet professional demands, particularly in the Islamic banking sector. These findings contribute theoretically by reinforcing the role of motivation as a key mediating variable linking technical and non-technical competencies with work readiness. Practically, this study provides important implications for higher education institutions and the Islamic banking industry in designing curricula and development programs that integrate the enhancement of hard skills, soft skills, and motivational aspects to improve graduate employability and career alignment with the Islamic financial sector

This study aims to explore trends and map knowledge on corporate governance (CG) in Islamic banking written by academics worldwide. This study is crucial for identifying the map and gaps in CG research in the Islamic banking industry. The method used is library research, focusing on thematic literature examining CG in Islamic banking. Primary data sources include journal articles, books, and proceedings published from 2005 to 2024, primarily by reputable publishers. The data were then analyzed using an R-based bibliometric approach (Donthu et al., 2021), the bibliometrics web interface, and Biblioshiny. The results indicate that academics from various affiliations and countries still have a high interest in the theme of Islamic banking governance (Bui & Krajcsák, 2024). However, the authors’ affiliations and countries are not evenly distributed, with a concentration in the Middle East, Southeast Asia, and the UK. From the aspect of the study articles, the sustainable development approach emerges as a new direction in Islamic financial governance, along with the coherence of keywords such as banking and Islamism, which indicates a strong thematic relationship with Islamic values.

This study aims to analyze the influence of Islamic Corporate Governance (ICG) on the growth of Islamic banking in Indonesia, with audit quality as a moderating variable. ICG in this study is measured through three main components: the Audit Committee (AC), the Sharia Supervisory Board (SSB), and the Board of Directors (BOD). This research is motivated by the need to strengthen governance and transparency in the Islamic banking system, which still has a relatively small market share compared to conventional banking. This study uses an explanatory quantitative approach with secondary data obtained from the annual reports of twelve Islamic commercial banks in Indonesia during the period 2018–2022. Data analysis was conducted using Moderated Regression Analysis (MRA) with the help of EViews software to test the direct and moderating effects of audit quality on the relationship between ICG and Islamic banking growth. The results of the study indicate that Islamic Corporate Governance (ICG) as measured by the Audit Committee , the size of the Sharia Supervisory Board (SSB), and the Board of Directors (BOD) on the growth of Islamic banking in Indonesia. In addition, this study also examines the role of audit quality as a moderating variable. The data used are secondary data from the annual reports of Islamic Commercial Banks (BUS) registered with the Financial Services Authority (OJK) during the 2018–2022 period with a purposive sampling technique . The analysis was conducted using Moderated Regression Analysis (MRA) with the help of the EViews application.

Purpose This study aims to investigate the behavioral aspects of Indonesian Muslims that hinder them from switching from conventional to Islamic banks, leading to a low market share of the Islamic banking industry in Indonesia. Design/methodology/approach This study used a quasi-experimental design with a full factorial 2 × 2 between-subjects setup with three scenario-based treatments (operational, income and legal perception) to test the robustness of heuristic decision-making patterns. A total of 320 participants from Islamic and conventional bank customers in Indonesia took part in the experiment. Data analyzed using a one-sample t-test and descriptive statistical comparison to examine heuristic-based behavioral differences across treatments. Findings The empirical results reveal that Indonesian Muslims consistently rely on heuristic reasoning when evaluating banking options. Initial beliefs strongly shape responses to new information, leading to overreaction to belief-consistent information and underreaction to contradictory information. Although switching behavior toward Islamic banks is evident, many consumers continue to maintain accounts in conventional banks due to religious norms, emotional aversion to riba, limited Islamic financial literacy, and institutional constraints such as payroll systems, resulting in a stagnant Islamic banking market share. Sensitivity testing further shows that respondents reacted most strongly when the statement “trade is the same as usury” was framed in legal or Sharia terms, highlighting the dominant influence of the religious status of riba. Practical implications This study implies that Islamic banks should adopt communication strategies that address belief misperceptions of “trade equals riba” by applying cognitive framing, segment marketing based on consumers’ heuristic responses and collaborate with institutions to reduce structural dependence on conventional banks. Originality/value This study is the first to investigate the behavioral aspect that explains the stagnancy of the Islamic banking industry in Indonesia using a theory-driven conceptual framework. In addition, this study simultaneously applies the heuristic theory of representativeness and anchoring adjustment.

Islamic Rural Banks (henceforth BPRS) represent a rapidly expanding segment of the Islamic banking industry in Indonesia, marked by increasing adoption of their financial products. While customer religiosity is often assumed to be a key determinant of Islamic banking adoption, its influence is not always direct and may operate through more complex mechanisms, such as banks’ brand personality. Accordingly, this study examines the mediating role of Islamic banks’ brand personality in the relationship between customer religiosity and the adoption of BPRS products. Using a quantitative approach, survey data were collected from 400 BPRS customers across seven provinces in Indonesia. Respondents were selected using a non-probability sampling technique, with the sample size determined by the Slovin formula to ensure representativeness at a 5% margin of error. The data were analyzed using Structural Equation Modeling with Partial Least Squares (SEM-PLS). The results indicate that brand personality has a positive and significant effect on the adoption of BPRS products, whereas religiosity does not exert a significant direct influence. Importantly, brand personality is found to mediate the relationship between religiosity and product adoption. These findings suggest that developing a strong and distinctive brand personality is strategically crucial for Islamic rural banks, enabling them to translate customers’ inherent religiosity into actual service adoption beyond purely ideological appeals.

This study investigates the comparative resilience and contagion risk profiles of Islamic banking systems during two major global economic crises: the 2008 Global Financial Crisis (GFC) and the 2020 COVID-19 pandemic. . However, profitability declined significantly in 2009 when the crisis affected the real economy. Conversely, during the COVID-19 pandemic, Islamic banks exhibited comparable systemic vulnerabilities to conventional banks when facing exogenous shocks, though with significantly reduced spillover effects. CAR increased from 24.0% to 26.5% while NPF improved from 2.1% to 2.0% during COVID-19, demonstrating structural resilience despite ROA declining from 1.9% to 1.4%. CoVaR analysis reveals Islamic banks receive significant directional risk spillover from conventional banks but transmit substantially less contagion. These findings suggest that while Islamic banking's profit-loss sharing principles and asset-backed financing provide buffer against financial sector crises, the system remains vulnerable to real economy disruptions, challenging the prevailing narrative of unconditional Islamic banking superiority during economic turbulenceThis study investigates the comparative resilience and contagion risk profiles of Islamic banking systems during two major global economic crises: the 2008 Global Financial Crisis (GFC) and the 2020 COVID-19 pandemic. However, profitability declined significantly in 2009 when the crisis affected the real economy. Conversely, during the COVID-19 pandemic, Islamic banks exhibited comparable systemic vulnerabilities to conventional banks when facing exogenous shocks, though with significantly reduced spillover effects. CAR increased from 24.0% to 26.5% while NPF improved from 2.1% to 2.0% during COVID-19, demonstrating structural resilience despite ROA declining from 1.9% to 1.4%. These findings suggest that while Islamic banking's profit-loss sharing principles and asset-backed financing provide buffer against financial sector crises, the system remains vulnerable to real economy disruptions, challenging the prevailing narrative of unconditional Islamic banking superiority during economic turbulence

Islamic banking, particularly in Bangladesh, is one of the service industries that is expanding at the fastest rate. This banking system does not charge interest on funding and is based on profit-and-loss sharing. Islamic banks frequently offer their customers services that comply with Islamic Shariah, which prohibits the payment of interest. Investigating how the Islamic banking system is progressively becoming more and more popular in Bangladesh is the aim of this study. Using a systematic literature review (SLR) methodology, the data for this qualitative study were gathered from a range of reputable publications and conference proceedings. The findings of the study shed light on the significant elements driving Bangladesh's Islamic banks' sharply rising market share.

This paper provides a comprehensive comparative analysis of the theological and ethical doctrines surrounding usury within the three Abrahamic traditions: Judaism, Christianity, and Islam. The primary objective of this study is to investigate how these ancient scriptural prohibitions navigate the functional demands of modern commercial finance and to identify the persistent tensions between moral economies and market-driven capital requirements. The methodology employs a four-part analytical framework. It begins with a critical review of foundational sacred texts—specifically the Torah, the New Testament, and the Qur'an—to establish the scriptural bedrock of the prohibition. This is followed by a historical analysis of the strategies used by adherents to interpret and circumvent these laws over centuries. Finally, the study applies these historical insights to contemporary case studies, including the UK payday lending crisis and the evolution of the global Islamic banking and finance (IBF) industry. The results indicate that while each faith maintains a foundational condemnation of exploitative lending, they have all developed remarkably similar methods of reinterpretation and contractual innovation. These include narrowing the legal definition of usury, creating exemptions for out-group lending, and utilizing "legal fictions"—such as the Heter Iska in Judaism, the contractum trinius in Medieval Christianity, and Murabahah in modern Islamic finance—to replicate the economic outcomes of interest-bearing loans while maintaining formal religious compliance.The study concludes that the debate over usury is a rich intellectual heritage with direct relevance to 21st-century economic justice. Paradoxically, the Islamic tradition, which holds the most absolute prohibition against riba, has established the most formalized system of circumvention through the global Islamic banking sector. Ultimately, the conflict between protecting the vulnerable and the systemic requirements of capital remains an unresolved and defining challenge for human society, offering a framework for designing more ethical global financial systems.

This paper investigates the possibilities of institutionalizing Islamic banking in Serbia. The research offers a rationale based on needs and an explanation for the establishment of Islamic banking in Serbia and the Sandžak region. In addition, this study attempts to explain how the basic economic laws of supply and demand can affect conditions and provide commercial and rational justifications for establishing the option of Islamic banking. There are currently no Islamic banking and related financial industries in Serbia, but the previously poor socio-political-economic situation has improved somewhat since 2001, when democratic openings and wider political participation allowed new political groups to take the lead. In addition, Muslims are in fact demanding substantial changes that will affect the socio-economic development of Muslim minorities in Serbia. In this regard, the research will offer an important contribution to finding an original solution for religious communities in order to achieve their economic sustainability and achieve full social inclusion. The case study aimed to analyze observations of questionnaire participants in addition to collecting artefacts and texts, to evaluate and optimally utilize this data. Results have clearly shown readiness and willingness of questionnaire participants that Islamic banking is welcome enterprise in Serbia and Sandzak.

This study aims to shed light on the experience of banking transformation in Libya to evaluate and 2weakness of political, security, and administrative. The two researchers assessed the level of transformation performance based on the available data and information, as well as, on the distribution of a questionnaire targeting 50 employees of the leaders of Islamic banking in the main banks that practiced in Islamic banking activity in Libya. Accordingly, the study concluded that the experience of banking transformation in Libya is weak. Also, it fluctuated between adopting the concept of bank transfer, which means obligating banks to implement the transformation and approving their business in line with the requirements of the law on preventing usurious transactions No. 1 of 2013 and the concept of voluntary transformation adopted by Law No. 46 of 2012, which adopted the concept of a mixed system and opened the way for banks wishing to convert to initiate this with their own will and capabilities. Moreover, In the light of the blurring of the vision and the lack of clarity of the strategy, and the absence of a transformation plan approved by the concerned authorities and sponsors of the transformation project, which the legislation has not clearly defined and in an environment that witnessed weak security, political, and administrative instability, the banking transformation project in Libya was negatively affected, as banks were unable to handle their traditional credit portfolios, despite the achievement of some achievements, for instance, the volume of Islamic bank financing reached 27% of the total financing volume in 2016. The study recommended the necessity of working on formulating a vision and strategy with clear features and objectives, identifying the bodies responsible for sponsoring the transformation project, and working on evaluating the existing stage and building upon it in the development of Islamic banking in order to achieve the adoption of an Islamic banking and financial system that meets the requirements of the stage and benefits from previous experiences and stages, and seeks to achieve Practical and realistic goals that can be reached.

Cryptocracy is a payment system that is realized with virtual/digital currencies based on encryption techniques. Today, the participation (or interest-free) banking sector, which operates according to the principles of Islamic finance and money, cannot remain independent of cryptocurrencies. This reality has various dimensions such as the globalizing and expanding money market, the developing financial technology (fin-tech) depending on Industry 4.0 and Web 3.0, and the attractiveness of speculative investments with the concern of “‘halal earning”’ sensitivity. The subject and purpose of this study are to draw an initial thematic framework of the postmodern relationship between interest-free or participation banking and the cryptocurrency system, which is tangential to political economy in terms of government interventions. In this study, induction is used as the method of thought, and abstraction-description is used as the research method. One of the findings is that the Islamic (interest-free or participatory) banking system, which is open to global finance capital, will take reformist initiatives in accordance with the cryptocurrency reality. Considering that it is predicted that encrypted currencies will enter portfolios like national currencies and foreign currencies to the extent permitted by governments and fin-tech all over the world, participation banks, which are a component of the financial sector, should also be sufficiently prepared for this innovative and surprise-filled encrypted currency system.