Islamic Banking And Economic Growth: A Panel Data Approach

Document Type : Research Paper

Author

Faculty of Islamic Economics and Business, IAIN Langsa, Aceh, Indonesia.

10.22059/ier.2023.365739.1007815

Abstract

The purpose of this investigation is to determine how Islamic banking affects economic expansion. To delve deeper into the research, a total of 90 Islamic institutions from 21 countries were chosen in accordance with specific criteria. An analysis of 953 observations was subsequently conducted. Explanatory variables include Return on assets, Return on equity, the ratio of a company's market value to its assets, asset quality, total deposits, total assets, bank size, and bank age. The Ordinary Least Square (OLS) estimation procedure is employed. The results of the study suggest that several economic indicators have a significant influence on GDP, including Return on Assets (ROA), Tobin's q, Asset Quality, Total Deposits, Total Assets, Bank Size, and Bank Age. The outcomes of this research provide a significant contribution to the body of knowledge regarding the influence of Islamic banking on economic expansion. This contribution to the scientific literature addresses a knowledge vacuum, thereby facilitating the formulation of novel theories and approaches concerning the interplay between Islamic finance and economic expansion. In addition, policymakers and practitioners involved in the management of the Islamic financial sector should consider these implications.

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Main Subjects

Iranian Economic Review

Articles in Press, Accepted Manuscript
Available Online from 04 December 2023

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