Unconventional banking and poverty reduction: A regression analysis with policy recommendations for Hail

Abstract

The present study addresses a significant omission in the literature by examining the role of non-traditional financial organizations in poverty reduction. Previous research has primarily focused on the direct impact of commercial banks on poverty, neglecting the contribution of other types of financial institutions. This research posited that Islamic banks are anticipated to assume a pivotal function in mitigating poverty; nonetheless, more studies on the topic need to be conducted. This research used the Partial Least Squares Regression technique to investigate the impact of Islamic banks on poverty alleviation in several developing nations from 2013 to 2019. The empirical data demonstrates a direct correlation between the overall assets of Islamic banks and some evident characteristics. The heightened acquisition of holdings by Islamic banks indicates a decrease in poverty. Furthermore, a statistically significant correlation exists between the legal framework and poverty alleviation. It is crucial to acknowledge that the research is limited by the intrinsic limits imposed by the accessible information on Islamic banks and the specific temporal limitations of the study. Future academic research should aim to increase the sample size and cultural and social factors and expand the time frame to understand the intricate function of Islamic banks in reducing poverty entirely. This paper is helpful to many policymakers in developing countries, including Hail development plans in Saudi Arabia.

Keywords

• Financial development
• Bank performance
• Poverty
• Economic growth
• GDP
• Legal origin