Islamic banking and economic growth in GCC &amp; East Asia countries

Yusof, Rosylin Mohd; Bahlous, Mejda

doi:10.1108/jiabr-07-2012-0044

Cited by 75 publications

(37 citation statements)

References 50 publications

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“…This study revealed that Islamic bank has positive impact on Indonesian economics growth. The study's results agree with the studies of Atici (2018), Hachicha and Ben Amar (2015), Mohd. Yusof and Bahlous (2013), and Rafay and Farid (2017) who reveal that Islamic banks positively affect the economic growth in long-run, however, in the short-run the impact is insignificant.…”

Section: Discussionsupporting

confidence: 89%

Revisiting the Contribution of Islamic Banks’ Financing to Economic Growth: The Indonesian Experience

Supriani

Fianto

Fauziah

et al. 2021

Shirkah

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The contribution of Islamic banking towards economic growth remains debatable amongst academicians and practitioners. This study investigates the relationship between Islamic banks’ financing and economic growth in Indonesia which is the largest Muslim population country. This study adopts Autoregressive-Distributed Lag (ARDL) and utilizes time-series quarterly data from 2011Q1 to 2019Q3. The study uses four predictors: financing to deposit ratio; inflation; gross capital fixed formation; and trade openness. The results from the auto-regressive distributed lag model indicate that, in the long-run, Islamic banks' financing has a significant impact on the Indonesian economy. However, in the short-run, financing does not make a substantial contribution to Indonesian economic growth. The study’s key implication is that financing by Islamic banks still makes a limited contribution to economic growth in Indonesia. This study enhances the literature review, specifically on evaluating the contribution of Islamic banks towards economic growth. Numerous existing studies on this topic covering the crisis period data, which might suffer from data bias. Therefore, this study addresses this topic, excluding the global financial crises period such as 1998, 2008, and 2020, to demonstrate Islamic banks' evident contribution to Indonesian economic growth.

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Section: Discussionsupporting

confidence: 89%

Revisiting the Contribution of Islamic Banks’ Financing to Economic Growth: The Indonesian Experience

Supriani

Fianto

Fauziah

et al. 2021

Shirkah

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“…Just like Conventional Banks, Islamic banks function as intermediaries for channeling and there is a deficit saving sector to encourage activities in the economic sector. The difference is that the financial instrument is interest-free and runs according to Islamic law (Mohd. Yusof & Bahlous, 2013) Islamic finance can play an important role in encouraging economic growth in Indonesia, namely by financing the real sectors.…”

Section: ________________________________________________________________________________________________________________________________mentioning

confidence: 99%

The Impact of Financing in Islamic Banking on Indonesian Economic Growth

Pertiwi¹,

Syathiri²,

Yulianita³

et al. 2021

Modecon

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Abstract. Introduction. Islamic finance can play an important role in encouraging economic growth in Indonesia, namely by financing the real sectors. The role of Islamic banking in providing capital assistance for real sectors is one of the locomotives of economic growth in Indonesia. This research will focus on financing strategic sectors to support the development of a higher and more competitive economy. So that it is known which sectors have played a major role in boosting Indonesia’s economic growth. The sectors to be studied are agriculture, mining, construction, industry, electricity, gas and water in Islamic banking. This study uses descriptive and quantitative analysis using Eviews 9 to simplify data calculations and estimation and using time series data with Ordinary Least Square Approach. Purpose. This research is conducted to investigate the impact of Islamic bank financing on agriculturer sector, mining, industry, electricity, gas and water supply and Construction sector to Indonesia economic growth over the period 2011Q1 -2019Q4. Results. Based on the results of data processing, it is known that Islamic banking financing in the agricultural sector, mining, electricity, gas and water and conctruction sector has a positive effect on economic growth. Meanwhile industrial sector in Islamic banking does not have a significant effect on economic growth. An increase in industrial sector financing by 1 percent is able to reduce GDP by 0.46940 percent. Conclusion: This estimation shows R-Square value is 98 percent influenced by variable financing in the agricultural sector, mining sector, industrial sector, electricity sector, gas and water and the construction sector, while the remaining 2 percent is influenced by other variables outside the model. The agriculture, mining, electricity, gas & water and construction sectors have a positive influence on economic growth. Meanwhile, the industrial sector has a negative influence on economic growth. Keywords: economic growth; Islamic banking; sectoral financing; Ordinary Least Square.

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“…Limited studies on Islamic banking development includes; Abduh and Omar (2012), Abduh and Chowdhury (2012), Boukhatem and Moussa (2018), Farahani and Dastan (2013), Furqani and Mulyany (2012), Kassim (2016), Manap et al (2012), Tabash and Anagreh (2017) and Yusof and Bahlous (2013) which established a positive impact. Boukhatem and Moussa (2018) further stated that the institutional framework of IB should be well developed for this impact to be more significant.…”

Section: Literature Reviewmentioning

confidence: 99%

Nexus between Economic Growth, Investment, and Islamic Banking Development: The Case of Dual Banking System

Nosheen

Rashid

2020

J. Islam. bus. manag.

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This research aims to study the impact that banking development attributed to Islamic banks is instigating on the economic growth and domestic investment in a dataset consisting of 20 countries having Islamic and conventional banks operating side by side over the period 1995 to 2014, using the "two-step system GMM" technique. Furthermore, it also inspects the difference in the impact that Islamic banking development is asserting on economic activity as compared to the impact attributed to conventional banking development using four measures of banking sector development namely, depth of financial intermediation, size of financial intermediation, credit to the private sector, and the ratio of assets of banks to the total banking assets. Our findings suggest that Islamic banks promote economic growth and domestic investment by increasing the depth and size of their intermediation, and by extending more credit to the private sector. Conventional banking development also stimulates economic growth and domestic investment by increasing its assets as a percentage of total banking assets. Islamic banking has a more meaningful impact on economic activity as its transactions are based on physical assets and linked to the real economy. Sharī'ah promotes social justice and equity and prohibits them from undertaking harmful products and activities.

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Islamic banking and economic growth in GCC & East Asia countries

Cited by 75 publications

References 50 publications

Revisiting the Contribution of Islamic Banks’ Financing to Economic Growth: The Indonesian Experience

Revisiting the Contribution of Islamic Banks’ Financing to Economic Growth: The Indonesian Experience

The Impact of Financing in Islamic Banking on Indonesian Economic Growth

Nexus between Economic Growth, Investment, and Islamic Banking Development: The Case of Dual Banking System

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