Muhammad, MansurBaita, Abubakar JamiluHussain, Tufail2025-02-072025-02-072024-02-082025-02-072956-7742https://doi.org/10.61351/mf.v2i1.98https://hdl.handle.net/20.500.14576/408The 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.enCreative Commons Attribution 4.0 International LicenseSukukIslamic banks’ assetsIslamic financial developmentInstitutional qualityFixed effectsDriscoll-Kraay estimatorArticle