Can Islamic Financing Ease in Monetary Policy Uncertainty – A Proposal for Islamic Monetary Policy
Year: 2025
Type: article
Abstract: Purpose: The impact of monetary policy uncertainty in Pakistan on economic conditions, financial markets, and investor confidence is substantial. Historically, the conventional monetary system has failed to manage inflation, which has led to an uncertain monetary policy environment. The primary objective of this document is to offer a comprehensive analysis of monetary policy uncertainty determinants using the quadratic function of Islamic financing. Methods: The bound-testing ARDL assessment confirmed a U-shaped effect of overall producer and consumer financing on uncertainty. Findings: The results highlight that Islamic financing management can help reduce monetary policy uncertainty while increasing production can assist in exacting gains from Islamic financial development for monetary policy effectiveness. Originality/Value: This study is instrumental in highlighting the ability of the Islamic financial system to reduce monetary policy uncertainty.
DOI: 10.63740/k52vmw60
Authors: Sadia Yasmin, Noman Arshed
Institutions: University of Management and Technology, Sunway University
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4413272973