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The Impact of the Islamic Banking Industry on Economic Growth and Poverty Reduction in Pakistan

In: Enhancing Financial Inclusion through Islamic Finance, Volume II

Author

Listed:
  • Muhammad Abubakar Siddique

    (International Islamic University)

  • Mirajul Haq

    (International Islamic University)

  • Memoona Rahim

    (International Islamic University)

Abstract

Pakistan’s banking sector has been under Islamic financial paradigm since 2004. According to various studies, it is performing well in terms of efficiency, profitability, and growth. Limited focus is placed on its role in achieving Sustainable Development Goals (SDGs) of poverty eradication and economic growth—the basis for this chapter. The study uses Salam, Murabaha, Diminishing Musharakah (DM), Ijarah, and Istisna as dependent variables. Four fully fledged and five standalone branches of conventional banks were selected. It employs annual unbalanced panel data for 2004 to 2017. Based on the findings for Im, Pesaran, and Shin panel unit root test, Breusch-Pagan LM test, and Hausman test, random-effect (RE) estimation technique is applied. The results show that Islamic bank-specific and macroeconomic variables have significant impact on poverty reduction and economic growth implying that Islamic Banking Industry (IBI) has potential in the achievement of SDGs and therefore recommends for its promotion.

Suggested Citation

  • Muhammad Abubakar Siddique & Mirajul Haq & Memoona Rahim, 2020. "The Impact of the Islamic Banking Industry on Economic Growth and Poverty Reduction in Pakistan," Palgrave Studies in Islamic Banking, Finance and Economics, in: Abdelrahman Elzahi Saaid Ali & Khalifa Mohamed Ali & Mohamed Hassan Azrag (ed.), Enhancing Financial Inclusion through Islamic Finance, Volume II, chapter 0, pages 259-279, Palgrave Macmillan.
    • Handle: RePEc:pal:psibcp:978-3-030-39939-9_11
    DOI: 10.1007/978-3-030-39939-9_11
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    Cited by:

    1. Ataul Karim Patwary & Fauzan, 2020. "The Impacts of Human, Structural and Relational Capital on Product Development Performance in Manufacturing Organizations in Indonesia: Mediating Role of Organizational Learning Capabilities and R&D R," iRASD Journal of Management, International Research Alliance for Sustainable Development (iRASD), vol. 2(2), pages 69-78, December.
    2. Clement Olalekan Olaniyi & James Temitope Dada & Nicholas Mbaya Odhiambo & Xuan Vinh Vo, 2023. "Modelling asymmetric structure in the finance-poverty nexus: empirical insights from an emerging market economy," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(1), pages 453-487, February.
    3. Dr. Waseem Ul Hameed & Javed Iqbal & Dr. Nadeem Maqbool & Dr. Hisham Bin Mohammad & Shazma Razzaq, 2020. "The Impact of Human, Structural, and Relational Capital on Product Development Performance in Manufacturing Organizations in Indonesia: Mediating Role of Organizational Learning Capabilities and R&D R," iRASD Journal of Management, International Research Alliance for Sustainable Development (iRASD), vol. 2(2), pages 56-68, December.

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