ISLAMIC BANKING SOUNDNESS AND SUSTAINABLE DEVELOPMENT IN BAHRAIN: A SMALL-SAMPLE ANALYSIS

Amna  Mohamed J Alfardan; Ashurov Sharofiddin; Fahd Mohammed Obad Al-Shaghdari

doi:10.64757/alqanatir.2026.3510/1565

Authors

Amna Mohamed J Alfardan Faculty of Business Administration, University College of Bahrain, Manama, Kingdom of Bahrain
Ashurov Sharofiddin IIUM Institute of Islamic Banking and Finance, International Islamic University Malaysia
Fahd Mohammed Obad Al-Shaghdari Institute of Islamic Banking and Finance, International Islamic University Malaysia

DOI:

https://doi.org/10.64757/alqanatir.2026.3510/1565

Keywords:

Islamic, development, Bahrain, inference, disaggregation

Abstract

This paper examines whether the financial soundness of Bahrain's Islamic banking sector is associated with the country's sustainable development outcomes, at the composite level and across its economic, social and environmental dimensions, using annual data from 2015 to 2024. A sector-level composite index of Islamic banking soundness is regressed on standardised composite and dimension-level development indices, controlling for the oil price, public debt and economic diversification, using ordinary least squares with permutation-based inference, leave-one-out analysis and a complete specification grid. Banking soundness is positively associated with the composite development index and, more strongly, with its environmental dimension, while no association is detected for the social or economic dimensions; both significant associations, however, depend materially on exclusion of the final sample year.

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Author Biographies

Amna Mohamed J Alfardan, Faculty of Business Administration, University College of Bahrain, Manama, Kingdom of Bahrain

Lecturer

Ashurov Sharofiddin, IIUM Institute of Islamic Banking and Finance, International Islamic University Malaysia

Associate Professor

Fahd Mohammed Obad Al-Shaghdari, Institute of Islamic Banking and Finance, International Islamic University Malaysia

Associate Professor

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