Islamic banking’s contribution to the Malaysian real economy. ISRA International Journal of Islamic Finance, 13 (1). pp. 6-25. ISSN 0128-1976 (2020)
Abstract
Malaysia is one of the fastest-growing Asian economies with a properly designed and developed Islamic financial system. This unique feature of the Malaysian economy made it an important case study, and the purpose of this study is to assess for the dynamic contribution of Islamic finance to the growth of the real economy. The study uses a quarterly data set of 20 years analysed via the autoregressive distributive lag bounds test approach to cointegration. The results in the short-run show a non-significant relationship between Islamic banking indices and the real economy. However, in the long-run, financing and deposits of Islamic banks are favourable and contribute significantly to the growth of the Malaysian economy. There was an accumulation of meaningful and wide-ranging investment over the period of the study and productivity of capital was also extra-efficient. The direction of causality is found to be bidirectional between Islamic banking deposits and Malaysian gross domestic product (GDP), but there is a weak causal effect from Islamic banking financing to GDP.
| Item Type: | Article |
|---|---|
| Keywords: | Islamic Banking, Economic growth, Islamic finance |
| Taxonomy: | By Niche > Islamic Banking > Banks and Banking > Finance |
| Local Content Hub: | Niche > Islamic Banking |
| Depositing User: | Ilya Nur Fateen Othman |
| Date Deposited: | 31 Mar 2024 18:04 |
| Last Modified: | 31 Mar 2024 18:04 |
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