Despite huge global growth rates and a rapidly increasing importance ofIslamic banking and finance, research in this area still needs to be classified asnascent. Recent economic events have led to an increasingly critical attitudetowards the conventional banking and finance system, whereas Islamic banking isconsidered to be an ethical alternative not only in Muslim economies but alsoprogressively in the “western” world. As their business models have their originsin religious and ethical ideals, Islamic banks struggle to observe the foundationalShariah principles while simultaneously meeting applicable guidelines such asBasel III and flexibly adapt to the ever changing customer demands. Due to theincreasing importance of Islamic banking and finance, this article aims to analyseand summarise various aspects of current research and sets out to identify both,congruence and inconsistencies between the implied promise of an “ethical”alternative and the actual market.