Islamic banking development and economic growth: a case of Indonesia
Purpose: In this research, an attempt has been conducted to explore the relation between Islamic banking development and economic growth of Indonesia over the periods of 2003–2014 Methodology: Two models have been formulated which are financing and deposit models to indicate the relation. The anal...
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| Format: | Article |
| Language: | English |
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P3EI-Center for Islamic Economics Studies and Development
2020-01-01
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| Series: | Asian Journal of Islamic Management |
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| Online Access: | http://journal.uii.ac.id/AJIM/article/view/14534 |
| Summary: | Purpose: In this research, an attempt has been conducted to explore the relation between Islamic banking development and economic growth of Indonesia over the periods of 2003–2014
Methodology: Two models have been formulated which are financing and deposit models to indicate the relation. The analysis are using unit root test, co-integration test, and Granger causality test within the context of VECM framework. For this purpose, financing and deposit are used as a measure of Islamic Banking development, while gross domestic product (GDP) and gross fixed capital formation (GFCF) used the indicators of economic growth.
Findings: The results show that there is bi-directional causality between financing and GDP also deposit and GDP reflecting the bi-directional causality between Islamic banking development and economic growth. Further results show that there is significant short-run and long-run causality running from Islamic banking development to economic growth so as short-run and long-run causality running from economic growth to Islamic banking development
Originality/contributions: This is the first study to used Islamic banks in Indonesia that are listed in Bank of Indonesia in 2003-2014.
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| ISSN: | 2746-0037 2722-2330 |