Achieving Sustainable Economic Growth: Analysis of Islamic Debt and the Islamic Equity Market

Adil Saleem, Budi Setiawan, Judit Bárczi and Judit Sági
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Adil Saleem: Doctoral School of Economics and Regional Studies, Hungarian University of Agriculture and Life Sciences, H-2100 Gödöllő, Hungary
Budi Setiawan: Doctoral School of Economics and Regional Studies, Hungarian University of Agriculture and Life Sciences, H-2100 Gödöllő, Hungary
Judit Bárczi: Institute of Economics, Hungarian University of Agriculture and Life Sciences, H-2100 Gödöllő, Hungary
Judit Sági: Faculty of Finance and Accountancy, Budapest Business School—University of Applied Sciences, H-1149 Budapest, Hungary

Sustainability, 2021, vol. 13, issue 15, 1-12

Abstract: The financial sector is divided into two broad categories: equity and banking markets. The healthy functioning of these sectors plays an imperative role in any economy. This study aimed to examine the short- and long-term relationship between the Islamic financial sector (Islamic debt and Islamic equity market), and sustainable economic growth of the two economies with the largest Muslim populations. Quarterly data were collected from 2010 to 2019 for Indonesia and Pakistan. The study used autoregressive distributive lag (ARDL) and the error correction method (ECM). The results revealed that in the long run, the Islamic banking sector imparts a significant and positive effect on achieving sustainable economic growth in both countries. However, in the short run, the Islamic stock market was found to have a positive relationship with Pakistan, while the Islamic banking sector had a positive and significant relationship with economic growth in Indonesia.

Keywords: Islamic banking; Islamic stocks; ARDL; bound test; sharia banking; SDG8 (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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