Performance, Islamization, and Trust: Pakistan’s Evolving Banking Sector
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2025-01-03
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Abstract
Out of the global Muslim population of 1.6 billion, just 14% utilize banking services. In Pakistan, only 21% of adults had bank accounts as of December 2017. While there are multiple factors behind the low bank account penetration in Muslim-majority nations, religion plays a pivotal role. The Federal Shariat Court of Pakistan (SCP) issued a directive in 2022 instructing the Government of Pakistan to begin removing interest (Riba or usury) from its economic apparatus by December 2027 to Islamize the country. Well before this judgment, the conventional banking industry was opposed to wealth concentration. To illustrate, in 1974, the government claimed that 22 influential families, possessing 66% of the country’s industrial wealth and 87% of its banking and insurance, held dominion over Pakistan’s industry. Under such unfavorable circumstances, is it possible for Pakistan to boost its financial inclusivity and hence economic development by getting people to trust the interest-based banking system? If so, how can trust theories explain this?
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Scholars@Duke
Fasih Zulfiqar
I'm an M.A. student in Analytical Political Economy (GPA: 3.95) at Duke, where I am also collaborating with Professor Timur Kuran, coauthoring several papers and working on a public opinion project. My research explores the political economy of beliefs and institutional traps, combining applied microeconomics theory with empirical political economy to explain why Pareto-inefficient equilibria persist.
My primary research strand formalizes the concept of habitual preference falsification; by fusing rational addiction models with public choice theory, I derive the dynamic stability conditions under which societies become locked into "falsification traps" despite exogenous shocks. I apply similar game-theoretic tools to the study of modern autocracy in my work on sacralized digital authoritarianism, modeling how regimes use information design and "sacred" signaling to solve coordination problems among security agents and crowdsource repression.
Beyond individual strategic behavior, I examine the macro-institutional constraints on development. In collaboration with Timur Kuran, I investigate the modernization of the Muslim world, challenging linear development models by conceptualizing modernization as a sector-specific process that generates uneven institutional outcomes. Across these strands, I employ rigorous identification strategies—from difference-in-differences to regression discontinuity designs—to empirically validate how repression, governance, and social norms jointly warp economic incentives in fragile states.
I was honored to be selected as a Bastiat Fellow by the Mercatus Center and to receive an Emergent Ventures grant from Tyler Cowen for my research agenda. Before Duke, I graduated summa cum laude (B.S. in Econ and Math) as valedictorian for class of 2024 at IBA Karachi. I have applied my analytical training in professional settings across 11 different organizations, either in part-time or full-time roles. For instance, I developed quantitative forecasting models as a Market Research Strategist at Aromasong USA, provided strategic consulting to over 100 entrepreneurs for Alibaba, generating over $370,000 in new trade and sales, and analyzed depositers' retention rate at Self-Help Credit Union, providing actionable suggestions to stabilize our primary funding sources.
Beyond academia and work, I'm passionate about philosophy, particularly Stoicism and Existentialism, and I enjoy powerlifting, watching and playing soccer, dogs, hiking, and trying new cafes.
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