Islamic Finance

The Islamic finance industry is estimated around $1.7 trillion with substantial growth momentum over the past decades. It is now, particularly in the Middle and Far East, too important to be ignored. In this chapter we review the most salient features of Islamic finance, including the key differentiating features from the rest of the conventional financial universe. A significant volume of research focuses on the comparative performance of Islamic and conventional banks across a wide range of metrics, such as profitability, risk and efficiency. Islamic stock and bonds markets are also an important segment of the related comparative literature and we review these studies too. The aim of this chapter is to provide a comprehensive and up-to-date review of the extant literature, useful for academics and practitioners with little or significant experience in the Islamic finance sector.