Islamic banking stability amidst the COVID-19 pandemic: the role of digital financial inclusion

Purpose This paper aims to explore the role of digital financial inclusion (DFI) in stabilizing Islamic banking sector amidst current COVID-19 pandemic. Design/methodology/approach study has used Panel-Corrected Standard Errors (PCSE), Two-Stage Panel Least Squares-Instrumental Variables (2SLS-IV) and Two-Step System Generalized Method Moments (2SGMM) dynamic panel estimation method investigate DFI-Islamic stability nexus using an unbalanced data 65 banks from six countries over period 2011–2020. Findings The result suggests that greater implementation DFI promotes stability, which reduces default risk studied region. Consequently, incorporating into encourages inclusive economic growth can keep sustainable even a crisis like Originality/value Unlike previous studies, authors have focused mainly on sector. is one first how contribute productivity during Also, this provides fresh evidence supply demand side impact stability.