The purpose of this study is to analyse the impact of Islamic banking and conventional banking on Pakistan’s economic growth and to determine which sector exhibits greater resilience in the context of the COVID-19 pandemic.
This study uses time series data spanning the period from 2017 to 2022, divided into pre-COVID-19 and during-COVID-19 phases. The data is analysed using the Autoregressive Distributed Lag (ARDL) model. Economic growth, represented by real GDP, serves as the dependent variable, while the independent variables encompass the development of both Islamic and conventional banking sectors.
The findings reveal that before the onset of the crisis, both Islamic and conventional banking sectors played a significant role in driving economic growth. However, during the pandemic, the Islamic banking sector demonstrated greater support for economic development.
This study emphasises the importance of policymakers and regulators prioritising the growth of the Islamic banking sector as a strategic measure to enhance economic resilience and promote sustainable development.
The findings underscore the practical implication of leveraging Islamic banking as a strategic tool to promote economic growth, enhance crisis management and ensure economic stability, especially during global disruptions such as pandemics.
This study introduces a novel perspective by conducting a comparative analysis of Islamic and conventional banking and their impact on economic growth in the context of COVID-19 in Pakistan, by identifying the sector that exhibits greater resilience during the crisis.
