Does Islamic Banking Augment Financial Inclusion in Pakistan? A Reinforcement Analysis

Abstract

This study spells out the role of financial inclusion (FI) to accelerate the efficiency of Islamic banks in Pakistan for the period of 2007 to 2016. It examines the effect of a specially developed broad-based FI index on technical efficiency of Islamic banks through panel ARDL approach along with to explore the macroeconomic as well as bank-specific factors of efficiency. The findings exhibit the possible connection between Islamic banking and financial inclusion in Pakistan. The study offers a variety of useful policy implications for public policy towards effective progress on the National Financial Inclusion Strategy in the country.