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- Title
Islamic Finance, Financial Deepening and Economic Growth: Evidence from Twelve OIC Member Countries.
- Authors
Minhaj-ud-Din; Khan, Muhammad Azam; Ibrahim, Yusnidah
- Abstract
This study aims to examine the impact of Islamic finance and financial deepening on the economic growth in twelve OIC (Organization of Islamic Cooperation) member countries. Shariah-compliant financing of the Islamic banks is used as an indicator of growth in Islamic finance, whereas the total assets of Islamic banks are used as representative of financial deepening. The impacts of these indicators are examined within the framework of neoclassical production function. The unavailability of data on Shariah-Compliant financing and assets of the Islamic banks constrained us to choose a sample size spanning from 2012-2019. The Hausman test preferred to use the random-effects estimator. To confirm the empirical estimates of random-effects, we also employed the Robust Least Squares and panel DOLS (dynamic ordinary least square) estimators. The empirical findings revealed that growth in Islamic finance and financial deepening are essential for stimulating the economic growth in these countries. These findings suggest that the management authorities of these countries need not to consider the Islamic banking industry as a niche market disconnected from the mainstream policy; rather, they should treat it as an integral part of the financial system and should emphasize on its growth and development.
- Subjects
ISLAMIC finance; ECONOMIC expansion; BANKING industry; LEAST squares; ISLAMIC bonds; BANK assets
- Publication
Journal of Economic Cooperation & Development, 2022, Vol 43, Issue 3, p1
- ISSN
1308-7800
- Publication type
Article