The Islamic financial system has become an important source of financing for many Muslim and non-Muslim countries. Therefore, this paper examines the role of institutions in facilitating the development of Islamic financial institutions. The study covers the period 2013-2021 for a panel of 11 leading economies in Islamic finance and employs fixed effects with the Driscoll and Kraay (1998) estimator. The results show a positive impact of effective governance on the development of Islamic finance. However, regulatory quality has a significant negative impact on the development of Islamic finance. Thus, we argue for the improvement of critical institutions that include political, legal, governmental, and regulatory aspects.

The paper examined the influence of leverage and capital adequacy on fintech's financial stability in Indonesia. We utilize both quantitative and qualitative methods. The findings showed that leverage significantly constrained the financial stability of the fintech industry in the short run. Contrarily, capital adequacy has no significant effect on financial stability. Specifically, the qualitative results indicated that a high liability-to-asset ratio depressed the financial stability of the fintech industry. However, the influence of the asset-to-equity ratio on financial stability depends on asset quality, liquidity, and riskiness. Furthermore, the respondents noted the insufficiency of capital requirements in the fintech industry. Thus, fintech firms should focus on asset quality, while regulators should tighten capital regulation.

The chapter aims to investigate the sustainable and social impacts of micro Fintech in Indonesia. To achieve the research goal, the chapter utilized the case of Amartha Micro Fintech firm based in Indonesia. Data were collected from the annual Amartha's social accountability/sustainability reports between 2016 and 2022. The chapter employed both descriptive and SWOT analyses to evaluate the sustainable impacts of Fintech in terms of social services, financial models, empowerment of women entrepreneurs, environmental awareness campaign, as well collaboration with external partners. The results of findings revealed substantial sustainable impacts of Amartha Fintech, particularly in providing social impact services such as health and education and the empowerment of women micro entrepreneurs. In addition, it has pushed its frontier in collaborating with external partners and donors in both domestic and international spheres. However, the SWOT analysis showed that the firm needs to integrate a green digital innovation framework into its business model.

Purpose: Extreme and recurring climate hazards may pose risks to the stability of banking industry, including Islamic banks. Therefore, this study aims to explore the effect of climate risk on the stability of Islamic banks. Design/methodology/approach: We used unbalanced panel data from a sample of 60 Islamic banks drawn from 16 countries over 10 years (2013–2022). Based on regional distribution, 32 banks are in West Asia, 14 banks in South Asia, 12 banks from Southeast Asia and 2 banks from Africa. We employed the feasible generalized least square (FGLS) regression as the primary major regression model. Besides, a two-step system generalized method of moments estimator was applied for the results’ robustness check as well as evaluated subsample analysis using FGLS model. Findings: The findings revealed that climate risk has a significant negative effect on Islamic bank stability. By examining the components of climate risk, the results confirmed that exposure to climate risk and adaptive capacity significantly decreased ZSCORE (implying an increase in insolvency risk). However, sensitivity to climate risk heightened credit risk (CR), while adaptive capability mitigated CR in the sampled Islamic banks. Research limitations/implications: We utilized only a sample of 60 full-fledged Islamic banks operating in 16 countries in Asia and Africa between 2013 and 2022. However, we did not delve into the climate risk implications of various Islamic banking products and contracts. Practical implications: The findings will be useful to regulators and managers. It informs local regulators and international regulatory bodies to develop unified local and international frameworks for climate risk stress-testing for Islamic banks. The study recommends that Islamic banks’ managers should set financing limit for industries prone to climate risks to avoid excessive risk exposure. Moreover, Islamic banks should streamline climate risk governance (through risk management departments and Shari’a supervisory board [SSB]) and embed climate mitigation conditions depending on climate risk exposure of Islamic financing contracts. Originality/value: This study contributes to literature on Islamic finance sustainability as previous studies focused mainly on conventional banks excepting few studies that explore Indonesian Islamic banks and MENA dual banking. In addition, this study decomposes the climate risk index to assess the specific impacts of climate risk components on Islamic bank stability. This is advantageous because exposure and sensitivity amplify instability, while adaptive capacity should enhance stability. However, this study exposes the weakness of adaptive capacity that requires adequate funding to safeguard Islamic bank from climate impacts.

Purpose: The research aims to provide additional insights to practitioners and professionals in the ṣukūk markets on its effectiveness in financing economic projects. It further aims to provide evidence-based information to the policymakers on the link between sovereign ṣukūk and infrastructure development using a case study of Nigeria's road sector ṣukūk. Methodology: In respect of methods, the research employed qualitative methods including document analysis and case study methods. Findings: The results showed that sovereign ṣukūk were economically and financially viable in financing infrastructure. Regarding the road infrastructure deficit, ṣukūk funded only 8.6% of the federal road's deficit. The ṣukūk projects covered 1,882 km, which represented 97.7% completion rate in a four-year period. This success was because the ṣukūk issuances were directly linked to project execution and completion. Otherwise, the instrument will not appeal to ethical investors. At the same time, ṣukūk benefits the country by ensuring project continuity. Research Limitations: The research is limited by short span time series data on sovereign ṣukūk whose issuance began in 2017. This constrained the authors from applying mixed method research. Practical and Social Implications: The research contributes to the empirical evidence on the practical utility of sovereign ṣukūk in a developing economy with limited fiscal space and limited infrastructural capacity. It highlights the significance of ethical financial instruments tied down to project implementation in Nigeria.