Catalyzing Financial Stability and Unveiling the Influence of Financial Inclusion in Pakistan's Islamic Banking Sector

Abstract

The objective of this study is to analyse the financial inclusion impacts on the financial stability of Islamic banks in Pakistan. This study used balance panel data of 15 full-fledged Islamic banks and Islamic windows from 2011 to 2021 by employing the feasible generalized least squares (FGLS) estimation technique to count the heteroskedasticity and potential endogeneity issue. The results of the present study lend support to the notion that financial inclusion as assessed by bank branches, financing, and availability of ATMs plays a substantial role in stimulating the financial stability of Islamic banks.