Islamic banking development and economic growth: a case of Indonesia

Meri Anggraini ()

Asian Journal of Islamic Management (AJIM), 2019, vol. 1, issue 1, 51-65

Abstract: 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 2003–2014Methodology: 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 developmentOriginality/contributions: This is the first study to used Islamic banks in Indonesia that are listed in Bank of Indonesia in 2003-2014.

Keywords: Islamic banking development; economic growth; Indonesia; Vector Error Correction Model (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations:

Downloads: (external link)
https://journal.uii.ac.id/AJIM/article/view/14534/9857 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:uii:jrajim:v:1:y:2019:i:1:p:51-65:id:14534

Access Statistics for this article

More articles in Asian Journal of Islamic Management (AJIM) from Center for Islamic Economics and Development Studies [P3EI]
Bibliographic data for series maintained by Deni Eko Saputro ().