Does Islamic bank financing lead to economic growth: An empirical analysis for Malaysia
Bm Hakim and
Md Akther Uddin
MPRA Paper from University Library of Munich, Germany
The purpose of this paper is to empirically examine the impact of the Islamic Bank Financing on Malaysia’s economic growth. Using Malaysia as a case in point, this paper employs Advance time-series ARDL bound testing technique, Vector error correction model (VECM) and variance decompositions (VDCs) to explore short-and long-run relationship and causal relationships between the development of Islamic banks and the economic growth using Islamic bank financing to the private sectors, gross domestic product as a proxy of economic growth, Gross fixed capital formation and the consumer price index variables. The paper documents significant role played by the economic growth to the development of Islamic Banks in Malaysia, supporting the growth-Islamic finance led hypothesis or the demand following view. The policy implication of this paper is to improve the efficiency of Malaysian Islamic banks as financial intermediaries that facilitate the capital accumulation and the economic growth; moreover the paper suggests strengthening the weight of the profit loss sharing instruments in the loan portfolios of the Malaysian Islamic banks.
Keywords: Supply leading; Demand following; Causality; Islamic banks; Malaysia. (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fdg and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/69075/1/MPRA_paper_69075.pdf original version (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:69075
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().