DO ISLAMIC GREEN FINANCE AND REGULATORY GOVERNANCE DRIVE ENVIRONMENTAL SUSTAINABILITY? PERSPECTIVES FROM MUSLIM-MAJORITY COUNTRIES

Basri Basri (Postgraduate Program, Sunan Kalijaga State Islamic University, Yogyakarta, Indonesia)
Endra Kasni Laila Yuda (Sunan Kalijaga State Islamic University, Yogyakarta, Indonesia)
Syahrul Gunawan (Raden Fatah State Islamic University (UIN) Palembang, Indonesia)
Akmal Asman (Postgraduate Student, Lughawiyyat, Al ulum Al-Islamiah bi Jaamiiatil Azhar As-Syaarif, Egypt)

JURNAL EKONOMI DAN BISNIS AIRLANGGA
Vol. 36 No. 1 (2026): JURNAL EKONOMI DAN BISNIS AIRLANGGA

Introduction: This study aims to analyze the dynamic impact of GDP per capita, Regulatory Quality, Islamic Green Finance (IGF), and Oil Revenue on sustainable economic performance in Islamic countries.  Methods: Using panel data from 24 OIC member countries over 2012–2023, this study applies the Panel Autoregressive Distributed Lag (ARDL) model to distinguish short-run adjustments and long-run equilibrium relationships.  Results: Regulatory Quality is a significant positive determinant in the long run under the Dynamic Fixed Effects (DFE) estimator. The Error Correction Term (ECT) is negative and significant, indicating stable adjustment toward long-run equilibrium. Short-run country-specific analysis shows heterogeneous effects: Regulatory Quality positively influences Iran and Iraq, while IGF demonstrates varying impacts in Bahrain and Malaysia.  Conclusion and suggestion: Strengthening institutional governance and implementing context-specific green finance policies are essential to enhance sustainable economic resilience in OIC countries. Policymakers should balance resource dependence with financial and regulatory innovation.