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Financial Inclusion, Institutional Quality, and Financial Development: Empirical Evidence from OIC Countries

In: INTRODUCTION TO ISLAMIC ECONOMICS AND FINANCE

Author

Listed:
  • Minhaj Ali
  • Muhammad Imran Nazir
  • Shujahat Haider Hashmi
  • Wajeeh Ullah

Abstract

This unique study examines the moderation effect of institutional quality (IQ) on the relationship between financial inclusion (FI) and financial development (FD) of 45 Organization of Islamic Cooperation (OIC) countries. For empirical analysis, panel data are used for the period 2000–2016. We use the Arellano–Bond generalized method of moments (GMM) and two-stage least-squares (2SLS) method in our estimations to draw multidimensional results. The empirical results confirm the significant positive relationship between FI, IQ and FD. Interestingly, we find that IQ moderates FI and has a significant positive impact on FD. Our findings are robust to alternative econometric specifications of FI, IQ and FD. Therefore, policymakers must sensibly understand the pivotal role of FI and IQ in establishing sustainable future development of OIC countries.

Suggested Citation

  • Minhaj Ali & Muhammad Imran Nazir & Shujahat Haider Hashmi & Wajeeh Ullah, 2025. "Financial Inclusion, Institutional Quality, and Financial Development: Empirical Evidence from OIC Countries," World Scientific Book Chapters, in: M Kabir Hassan (ed.), INTRODUCTION TO ISLAMIC ECONOMICS AND FINANCE, chapter 13, pages 303-330, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789819813735_0013
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