Differential impact of adopting Islamic banking: A quasi-experimental approach

IF 6.3 2区经济学 Q1 BUSINESS, FINANCE

Research in International Business and Finance Pub Date : 2025-02-12 DOI:10.1016/j.ribaf.2025.102793

Adil Saleem , RM Ammar Zahid , Judit Sagi

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Abstract

This study examines the treatment effect of the adoption of Islamic banking system in Pakistan. Compared to traditional banks, the distinct involvement of Islamic banks in real trading, along with its risk-sharing attributes, necessitates an examination of whether these differences impact economic growth. We applied a novel quasi-experimental research design using the synthetic control method (SCM) to examine the incremental effect of Islamic banking adoption on economic growth from 1990 to 2022. Results confirm that the Islamic financial system contributed differentially to economic growth in Pakistan, compared to the control group (51 countries), in the post-adoption period. The counterfactual effect on economic growth is estimated to be between 23% and 32% compared to the countries where Sharia banking is absent. The results are consistent and robust to alternative analysis, SCM with additional covariates, and placebo tests. The results also provide crucial implications for countries and central banks to implement Sharia-based banking, complementing the United Nations’ Sustainable Development Goal 8.

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来源期刊

Research in International Business and Finance BUSINESS, FINANCE-

CiteScore

11.20

自引率

9.20%

发文量

240

期刊介绍： Research in International Business and Finance (RIBAF) seeks to consolidate its position as a premier scholarly vehicle of academic finance. The Journal publishes high quality, insightful, well-written papers that explore current and new issues in international finance. Papers that foster dialogue, innovation, and intellectual risk-taking in financial studies; as well as shed light on the interaction between finance and broader societal concerns are particularly appreciated. The Journal welcomes submissions that seek to expand the boundaries of academic finance and otherwise challenge the discipline. Papers studying finance using a variety of methodologies; as well as interdisciplinary studies will be considered for publication. Papers that examine topical issues using extensive international data sets are welcome. Single-country studies can also be considered for publication provided that they develop novel methodological and theoretical approaches or fall within the Journal''s priority themes. It is especially important that single-country studies communicate to the reader why the particular chosen country is especially relevant to the issue being investigated. [...] The scope of topics that are most interesting to RIBAF readers include the following: -Financial markets and institutions -Financial practices and sustainability -The impact of national culture on finance -The impact of formal and informal institutions on finance -Privatizations, public financing, and nonprofit issues in finance -Interdisciplinary financial studies -Finance and international development -International financial crises and regulation -Financialization studies -International financial integration and architecture -Behavioral aspects in finance -Consumer finance -Methodologies and conceptualization issues related to finance