Exploring asymmetric relationship between Islamic banking development and economic growth in Pakistan: Fresh evidence from a non‐linear ARDL approach

2020 ◽  
Author(s):  
Assad Ullah ◽  
Xinshun Zhao ◽  
Muhammad Abdul Kamal ◽  
Adeel Riaz ◽  
Bowen Zheng
Keyword(s):  
Economic Growth ◽  
Islamic Banking ◽  
Ardl Approach ◽  
Non Linear ◽  
Banking Development

Finance-growth nexus: Islamic finance development in Indonesia

2019 ◽  
Vol 12 (5) ◽  
pp. 698-711
Author(s):  
Ryanda Al Fathan ◽  
Tika Arundina
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Causal Relationship ◽  
Market Development ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Content Type ◽  
Finance Development ◽  
Banking Development ◽  
Finance Growth Nexus

Purpose There are many studies related to finance-growth nexus, but existing empirical evidences still have not provided conclusive result of the nature and direction of this relationship. Moreover, there are only few studies about finance-growth nexus seen from Islamic finance perspective, especially in Indonesia. Therefore, this study aims to examine the nature of causal relationship between Islamic finance development and economic growth in Indonesia seen from the development of Islamic banking, sukuk market and Islamic stock market. Design/methodology/approach By using quarterly data from 2002Q3 to 2017Q4, this study uses vector autoregressive (VAR) model, then uses granger causality and impulse response function to analyze the causal relationship between Islamic finance development and economic growth and also among three main sub-sectors of Islamic finance. Findings This study found that Islamic banking development and Islamic stock market development support neutrality hypotheses view, while sukuk market development supports supply-leading hypotheses view. Moreover, this study also found that there are unidirectional causalities from sukuk market development to Islamic banking development and from sukuk market development to Islamic stock market development. Research limitations/implications This study focuses only on the development of Islamic finance viewed from a macro perspective and only looks at how the three main sub-sectors in Islamic finance develop. In addition, the results of research related to finance-growth nexus are also sensitive to the object of research, the method and the proxies of variables used. Originality/value To the best of the authors’ knowledge, there is no study that examines the causal relationship between Islamic finance development and economic growth in Indonesia based on its three main sub-sectors simultaneously. So, this study gives empirical evidence to contribute on finance-growth nexus discussion based on three main sub-sectors of Islamic finance development in Indonesia.

scholarly journals Interactions between Economic Growth, FDI and Islamic Banking Development in Turkey

2016 ◽  
Vol 11 (8) ◽  
pp. 230 ◽  
Author(s):  
Salih Kalayci ◽  
Behic Efe Tekin
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Linear Regression Analysis ◽  
Granger Causality Test ◽  
Islamic Banking ◽  
Causality Test ◽  
Bank Deposits ◽  
Integration Test ◽  
Considerable Impact ◽  
Banking Development

<span lang="EN-US">In this research paper, the quarter data has been collected from Turkish Central Bank in order to determine the relationship between economic growth, FDI and participation banks of Turkey over the periods of 2002 - 2014. Several econometrical models have been implemented to reveal this relation among variables. In this context, it has been found that there is a long-term linkage between economic growth, FDI and breakdown of participation funds in Islamic banking by implementing Johansen co-integration test. On the other hand, according to Granger causality test (GCT), when the lag number is 3, there is a bidirectional relationship between GDP and participation funds in Islamic banking. According to results of both Johansen co-integration and Granger causality test, the contribution of Islamic banking to*the economic growth of Turkey is so vital. The linear regression analysis has to be used to reply the research questions. The results indicated that there is the considerable impact of GDP on Islamic bank deposits in Turkey which is founded 0.0006.</span>

An Appraisal of the Role of Islamic Banking Development and Economic Growth

2020 ◽  
Vol 4 (4) ◽  
pp. 215-236
Author(s):  
Talat Hussain ◽  
Noman Arshed ◽  
Rukhsana Kalim
Keyword(s):  
Economic Growth ◽  
Resource Mobilization ◽  
Financial Inclusion ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Promoting Effect ◽  
Efficient Resource ◽  
Growth Promoting ◽  
Banking Development

Literature is well-versed with the contribution of financial inclusion from the deposit and financing size and its role in economic growth. These contributions include a boost in economic transactions and efficient resource mobilization. Islamic financial system is different from conventional banking as it distributes the risk equitably and promotes fairness in dealings. It helps in the integration of business gains as a borrower of Islamic capital with the earnings of savers as depositors. This study has proposed two channels via which Islamic financial development may incur growth. First is bank financing penetration, and second is depositor financial inclusion. Based on the data of 41 full-fledged Islamic banks between 2012 and 2017, the results show that both increases in bank and depositor returns have a growth-promoting effect. This prompts the policymakers with new insights. Policymakers should increase Islamic banking penetration to different sectors and regulate for increased extraction of the depositor contribution from the banking financing activity.

scholarly journals ISLAMIC BANKING AND ECONOMIC GROWTH: APPLYING THE CONVENTIONAL HYPOTHESIS

2019 ◽  
Vol 5 (1) ◽  
Author(s):  
Ahmad Jawad ◽  
Klein Christian
Keyword(s):  
Economic Growth ◽  
Positive Result ◽  
Empirical Work ◽  
Estimation Procedure ◽  
Islamic Banking ◽  
Annual Data ◽  
Reverse Causality ◽  
Banking Development ◽  
Empirical Framework

Growth in Islamic banking has gained lot of interest and attention during last fewyears. The debate currently shifts from theoretical to empirical framework. Thegrowth in empirical work has given rise to a new concept, which can be called as“Islamic banking development” (IBD). It will be interesting to test nexus betweenIBD and growth, since literature suggests a positive result for conventionalfinance and growth. Our study uses a panel of 24 countries for a period of 11years using annual data (2004-2014) to test conventional hypothesis of supplyleading or demand following between IBD and growth. In addition, we alsoinvestigate direction of causality in a panel setting between the two. Apart fromthe topic, this paper differs from existing limited literature, on the basis of datasetused and the estimation procedure to assess the nexus. Our results suggest thatIBD affect growth positively. Comprehensive tests suggest the presence of a longrun relationship between IBD and growth. Moreover, the direction of causalityseems to follow supply leading hypothesis: IBD affects economic growth, and thatevidence on a reverse causality was not found. This is true, even when we controlfor CFD.

scholarly journals The Impact of Jordan’s Conventional and Islamic Banking Development Factors on Economic Growth

2016 ◽  
Vol 8 (9) ◽  
pp. 148 ◽  
Author(s):  
Nafith Fayez AL-Hersh
Keyword(s):  
Economic Growth ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Investment Opportunity ◽  
Variance Inflation Factor ◽  
Inflation Factor ◽  
Conventional Banks ◽  
The Impact ◽  
Banking Development ◽  
Regression Correlation

This study aimed to explore the impact of Jordan’s Conventional and Islamic Banking Development Factors on Economic Growth during the period (2000-2015). A sample of four Islamic banks and eight conventional banks was tested. A group of statistical methods such as Multiple Regression, Correlation, Variance Inflation Factor (VIF), T-Test, were applied. The study found that there is significant different between the impact of Conventional and Islamic Banking Factors on RGDP attributed to Total Assets, Liquid Assets, Total Deposits and Total Facilities.In addition, Islamic banks had a much impact on Economic growth as compared to conventional banks. The study recommended the Islamic Banking Sectorto introduce a new innovative financial instruments and tools to push the economic growth forward and to increase the investment opportunity and lead to higher contribution to Economic Growth in Jordan.

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