Islamic banking and economic growth: the Indonesian experience
Purpose – The purpose of this paper is to examine the short-run and the long-run relationships between Islamic banking development and economic growth in the case of Indonesia. Design/methodology/approach – Using quarterly data (2003:1-2010:2), this paper utilizes the bound testing approach o...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Emerald Group Publishing
2012
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| Subjects: | |
| Online Access: | http://irep.iium.edu.my/23696/ http://irep.iium.edu.my/23696/1/Islamic_banking_%26_growth%2C_Indonesia.pdf |
| _version_ | 1848779199481905152 |
|---|---|
| author | Abduh, Muhamad Omar, Mohd. Azmi |
| author_facet | Abduh, Muhamad Omar, Mohd. Azmi |
| author_sort | Abduh, Muhamad |
| building | IIUM Repository |
| collection | Online Access |
| description | Purpose –
The purpose of this paper is to examine the short-run and the long-run relationships between Islamic banking development and economic growth in the case of Indonesia.
Design/methodology/approach –
Using quarterly data (2003:1-2010:2), this paper utilizes the bound testing approach of cointegration and error correction models, developed within an autoregressive distributed lag (ARDL) framework.
Findings –
The results demonstrate a significant relationship in short-run and long-run periods between Islamic financial development and economic growth. The relationship, however, is neither Schumpeter’s supply-leading nor Robinson’s demand-following. It appears to be bi-directional relationship.
Originality/value –
This paper uses empirical evidence to show the role of Islamic banks’ financing towards economic performance of a country.To the best of the authors’ knowledge, the study on the role of Islamic banking development towards economic growth is limited, particularly in the context of Indonesia.
Keywords: Indonesia, Islam, Banking, Islamic banking, Islamic finance, Economic growth |
| first_indexed | 2025-11-14T15:13:59Z |
| format | Article |
| id | iium-23696 |
| institution | International Islamic University Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-14T15:13:59Z |
| publishDate | 2012 |
| publisher | Emerald Group Publishing |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | iium-236962012-05-07T00:58:59Z http://irep.iium.edu.my/23696/ Islamic banking and economic growth: the Indonesian experience Abduh, Muhamad Omar, Mohd. Azmi BP173.75 Islam and economics HB131 Methodology.Mathematical economics. Quantitative methods HG1501 Banking Purpose – The purpose of this paper is to examine the short-run and the long-run relationships between Islamic banking development and economic growth in the case of Indonesia. Design/methodology/approach – Using quarterly data (2003:1-2010:2), this paper utilizes the bound testing approach of cointegration and error correction models, developed within an autoregressive distributed lag (ARDL) framework. Findings – The results demonstrate a significant relationship in short-run and long-run periods between Islamic financial development and economic growth. The relationship, however, is neither Schumpeter’s supply-leading nor Robinson’s demand-following. It appears to be bi-directional relationship. Originality/value – This paper uses empirical evidence to show the role of Islamic banks’ financing towards economic performance of a country.To the best of the authors’ knowledge, the study on the role of Islamic banking development towards economic growth is limited, particularly in the context of Indonesia. Keywords: Indonesia, Islam, Banking, Islamic banking, Islamic finance, Economic growth Emerald Group Publishing 2012-01 Article PeerReviewed application/pdf en http://irep.iium.edu.my/23696/1/Islamic_banking_%26_growth%2C_Indonesia.pdf Abduh, Muhamad and Omar, Mohd. Azmi (2012) Islamic banking and economic growth: the Indonesian experience. International Journal of Islamic and Middle Eastern Finance and Management, 5 (1). pp. 35-47. ISSN 1753-8394 http://www.emeraldinsight.com/journals.htm?articleid=17024832 10.1108/17538391211216811 |
| spellingShingle | BP173.75 Islam and economics HB131 Methodology.Mathematical economics. Quantitative methods HG1501 Banking Abduh, Muhamad Omar, Mohd. Azmi Islamic banking and economic growth: the Indonesian experience |
| title | Islamic banking and economic growth: the Indonesian
experience |
| title_full | Islamic banking and economic growth: the Indonesian
experience |
| title_fullStr | Islamic banking and economic growth: the Indonesian
experience |
| title_full_unstemmed | Islamic banking and economic growth: the Indonesian
experience |
| title_short | Islamic banking and economic growth: the Indonesian
experience |
| title_sort | islamic banking and economic growth: the indonesian
experience |
| topic | BP173.75 Islam and economics HB131 Methodology.Mathematical economics. Quantitative methods HG1501 Banking |
| url | http://irep.iium.edu.my/23696/ http://irep.iium.edu.my/23696/ http://irep.iium.edu.my/23696/ http://irep.iium.edu.my/23696/1/Islamic_banking_%26_growth%2C_Indonesia.pdf |