The Effect of Geographical Factors on Islamic Banking Sustainability Performance: An Instrumental Variable Quantile Regression Analysis

There is an ongoing debate on how Islamic banks contribute to bank sustainability. Theoretically, ethics promote sustainability, also called Maqasid al-shari'ah. This paper investigates the effect of geographical factors A theoretical and empirical model was developed assess this relationship. It hypothesized that affect Countries in specific locations are dominated by rules, such as Middle East, have different magnitudes compared east Asian countries fewer rules. risk according al-Shari'ah concept employed based a microeconomic banking portrays variety risks for 159 ten countries. We constructed variables from macroeconomic databases, World Development Indicators, financial indicators environmental, social, governance (ESG) data Thomson Reuters 2012 2019. The analysis conducted using panel instrumental variable regression test hypothesis; however, produced biased results affecting financing. method refined with IV quantile regression. found strongly related improvement financing East regions, whereas eastern regions vice versa. indicate geopolitical stimulate Sustainable Goals.