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Institutional quality and Islamic financial development

Author

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  • Mansur Muhammed

  • Abubakar Jamilu Baita

  • Tufail Hussain

Abstract

The Islamic financial system has become an important source of financing for many Muslim and non-Muslim countries. Therefore, this paper examines the role of institutions in facilitating the development of Islamic financial institutions. The study covers the period 2013-2021 for a panel of 11 leading economies in Islamic finance and employs fixed effects with the Driscoll and Kraay (1998) estimator. The results show a positive impact of effective governance on the development of Islamic finance. However, regulatory quality has a significant negative impact on the development of Islamic finance. Thus, we argue for the improvement of critical institutions that include political, legal, governmental, and regulatory aspects.

Suggested Citation

  • Mansur Muhammed & Abubakar Jamilu Baita & Tufail Hussain, 2024. "Institutional quality and Islamic financial development," Modern Finance, Modern Finance Institute, vol. 2(1), pages 69-83.
    • Handle: RePEc:bdy:modfin:v:2:y:2024:i:1:p:69-83:id:98
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    References listed on IDEAS

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    Cited by:

    1. Hebah Shalhoob, 2025. "ESG Disclosure and Financial Performance: Survey Evidence from Accounting and Islamic Finance," Sustainability, MDPI, vol. 17(4), pages 1-26, February.

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