Exploring Trust in Pakistan’s Financial Institutions

Abstract

The existing literature on Pakistan's financial institutions, especially the banking sector, primarily focuses on comparative performance, overlooking the essential question of how banks gained acceptance in a society where they are labeled non-compliant with Islamic principles. This paper fills this gap by using existing literature and performing an ordered logit regression on survey data. It shows that despite religious challenges, banks gained trust through performance, job creation, and ongoing Islamization since 2002. The paper concludes that the banking sector's successful, subtle integration into a conservative society can be used as a model to liberalize other institutions without causing rifts with religion.