Human capital and Islamic banking: a systematic literature review

Abstract

Purpose There are many areas of research that are untapped in Islamic banking, and human capital is one of them. This paper aims to systematical review the relevant literature on human capital and Islamic banking. Design/methodology/approach The review process involved a structured search using well-established academic databases, Scopus and Web of Science, resulting in the selection of relevant articles. The paper has been divided into three major themes, besides other discussions on the literature, including methods of measuring human capital, determinants of human capital and human capital and performance of Islamic banks. Findings A few pioneering studies have explicitly examined human capital in the Islamic banking domain, while others have encompassed it under the broader umbrella of intellectual capital. The most common method of measuring human capital is accounting based, while few have adopted disclosure and survey methods as well. There are few studies that explored the determinants of human capital having focus on corporate governance, while many of the studies have explored the nexus of human capital and financial performance. Practical implications This review strongly highlights the need for more focused research on human capital within the Islamic banking sector. As Islamic banking necessitates unique human capital characteristics, it is essential to delve deeper into this aspect. Furthermore, there is a call to expand the human capital index by incorporating comprehensive aspects relevant to Islamic banking. An important area that requires further exploration is the role of Shariah governance in shaping human capital development within Islamic finance, understanding the reasons behind the observed negative correlation. Originality/value Despite its significance, the relationship between human capital and Islamic banking has received limited attention. This review paper not only addresses this gap but also lays the groundwork for future studies in this important and emerging field.

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