Systematic Literature Review of The Role of Islamic Financial Institutions Towards the Growth of Islamic Public Finance

Abstract

This research aims to analyze the role of Islamic Financial Institutions or IFI in facilitating the growth of Islamic public finance worldwide. The research method used is a qualitative method through Systematic Literature Review approach and is described comprehensively through PRISMA flow diagram. The flow diagram potrays information flow through the different stages of a systematic review. It maps out the number of records identified, included and excluded, and the reasons for exclusions. Various templates are available dependent upon the type of review (new or updated) and sources used to identify research. We selected articles from credible and relevant Scopus Q1-Q4 databases that met the standard eligibility criteria. The selected articles were analyzed using the VOSviewer tool to map the article titles, author names, country of origin, and keyword trends related to Islamic Financial Institutions (IFI) and Islamic Public Finance (IPF). The results yielded 76 articles which were then filtered through several stages resulting in seven final articles for further analysis. We critically examined the research findings in these articles and addressed them based on the research questions i.e. the role of IFI, the approach used to measure the role of IFI, and the factors influencing the role of IFI in the growth of IPF. Our analysis revealed that IFI plays a crucial role in the growth of IPF as multi-institutional entities collectively responsible for the social welfare of the ummah. Additionally, the measurement approach to IFI's role can utilize various Islamic public policy instruments such as zakah and waqf. Factors influencing the role of IFI include the need for intensive government-led programs in socializing and improving financial literacy among the public to ensure that Islamic financial inclusivity reaches all segments of society.