This study examines the opportunities and challenges presented by the incorporation of artificial intelligence (AI) technology into the Islamic finance industry. In terms of research methods, literature review and conceptual analysis are employed. The results indicate that the incorporation of AI technology into Islamic finance and presents both significant opportunities and obstacles that must be surmounted. Among these obstacles are adherence to Islamic law, ethical concerns, risk mitigation, and the possibility of bias in decision-making. The contribution of this study is to cover a gap in the literature regarding the incorporation of AI technology in Islamic finance and to provide practitioners, policymakers, and academics with valuable insights. The findings of this study could aid them in investigating the potential of AI technology in Islamic finance and formulating solutions to overcome the obstacles associated with AI adoption. In addition, this research has the potential to contribute to a larger body of literature on the general application of AI in finance.

The transmission mechanism of monetary policy is explained through the relationships between a change in money supply and the level of real income. Monetary policy transmits to the real sector through several different channels. Such channels include the interest rate channel, the exchange rate channel, the asset-pricing channel, the credit supply channel, and the bank balance sheet channel. This paper empirically investigates the credit supply channel of monetary policy and explores the differential impact of monetary policy on credit supply of Islamic banks in Pakistan versus Malaysia. The robust two-step System-Generalize Method of Moments (GMM) estimator is applied on an unbalanced panel dataset over the period 2005-2016. While estimating the effects of three alternative measures of monetary policy on banks’ credit supply, several bank- specific variables are included in the specification as control variables. We provide strong evidence on the existence of credit supply channel in the baseline models for both countries and differential impact of monetary policy through Islamic banks in Pakistan versus Malaysia in the extended models. Our findings suggest that there is a vital need to consider the nature of Islamic banks while devising the instruments of an effective monetary policy in countries with dual banking system like Pakistan, Malaysia, Indonesia, Bahrain, Saudi Arabia, Qatar and others.

This study explores the impact of corporate governance (CG) indicators on the financial performance of Islamic and conventional financial institutions. It also scrutinizes the impact of institutional quality (IQ) as a moderator in the nexus between corporate governance and performance. The study also examines a panel dataset of Pakistani financial institutions for the period 2006-2017. The estimation of a two-step system GMM signifies that CG significantly contributes towards improving the overall performance of financial institutions (FIs). However, the results display differential effects of CG on the performance of Islamic financial institutions (IFIs) and conventional financial institutions (CFIs). Moreover, institutional quality (IQ) significantly moderates and shapes the impact of CG on the performance of both types of FIs. Hence, institutional quality is an important element in strengthening the contributions of CG in increasing the performance of FIs. The study provides important suggestions to policymakers to improve the quality of institutions by implementing the rule of law and controlling corruption. This may enhance the effectiveness of CG and consequently institutional performance.