An Appraisal of the Role of Islamic Banking Development and Economic Growth

2020 ◽  
Vol 4 (4) ◽  
pp. 215-236
Author(s):  
Talat Hussain ◽  
Noman Arshed ◽  
Rukhsana Kalim
Keyword(s):  
Economic Growth ◽  
Resource Mobilization ◽  
Financial Inclusion ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Promoting Effect ◽  
Efficient Resource ◽  
Growth Promoting ◽  
Banking Development

Literature is well-versed with the contribution of financial inclusion from the deposit and financing size and its role in economic growth. These contributions include a boost in economic transactions and efficient resource mobilization. Islamic financial system is different from conventional banking as it distributes the risk equitably and promotes fairness in dealings. It helps in the integration of business gains as a borrower of Islamic capital with the earnings of savers as depositors. This study has proposed two channels via which Islamic financial development may incur growth. First is bank financing penetration, and second is depositor financial inclusion. Based on the data of 41 full-fledged Islamic banks between 2012 and 2017, the results show that both increases in bank and depositor returns have a growth-promoting effect. This prompts the policymakers with new insights. Policymakers should increase Islamic banking penetration to different sectors and regulate for increased extraction of the depositor contribution from the banking financing activity.

scholarly journals The Impact of Islamic Banking on the Jordanian Economy Compared with Commercial Banks

2016 ◽  
Vol 8 (3) ◽  
pp. 244
Author(s):  
Taha Barakat Al-shawawreh
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Commercial Banks ◽  
Annual Reports ◽  
Islamic Banking ◽  
Islamic Banks ◽  
The Impact

<p>This research aims to evaluate the role of Islamic Banking in supporting the economic growth in Jordan, compared y commercial banks. Data was collected from the literature and the annual reports of two Jordanian banks representing Islamic and commercial banks. By analyzing the figures of the two banks, the results showed that Islamic banks have more ability to support the economic development in the Kingdom.</p>

scholarly journals Peran Perbankan Syariah Dalam Mengimplementasikan Keuangan Inklusif di Indonesia

ETIKONOMI ◽  
2015 ◽  
Vol 14 (2) ◽  
Author(s):  
Novia Nengsih
Keyword(s):  
Low Income ◽  
Financial Inclusion ◽  
Islamic Banking ◽  
Ratio Analysis ◽  
Islamic Banks ◽  
Financial Ratio ◽  
Financial Condition ◽  
Financial Ratio Analysis ◽  
Axial Coding

The Role of Islamic Banks in Financial Inclusion ImplementationThis study aimed to analyze the role of islamic banks in implementing financial inclusion in Indonesia. Financial inclusion is a process to provide formal financial access for the poor and low income people (unbankable people). This study was designed which approached qualitatively and quantitatively (mixed research). The qualitative data analyzed by using Straruss and Corbin’s theory consisted three major  steps: open coding, axial coding, and selective coding. Quantitative analyzed by using comparative analysis of financial statements and financial ratio analysis such as CAR, ROA, ROE, NPF, and FDR period of 2010-2014. This study proved that Islamic banking had great potential in implementing financial inclusion, it was indicated by a significant increase in funding and financing since 2010-2014 and results of financial ratio analysis also shows the performance of Islamic banking and financial condition is good.DOI: 10.15408/etk.v14i2.2272

scholarly journals Does Islamic Banking Augment Financial Inclusion in Pakistan? A Reinforcement Analysis

2020 ◽  
Vol 6 (4) ◽  
pp. 739-758
Author(s):  
Muhammad Hanif Akhtar ◽  
Imran Sharif Chaudhry ◽  
Muhammad Ramzan Sheikh
Keyword(s):  
Public Policy ◽  
Financial Inclusion ◽  
Policy Implications ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Panel Ardl ◽  
Ardl Approach ◽  
Specific Factors ◽  
Bank Specific Factors

This study spells out the role of financial inclusion (FI) to accelerate the efficiency of Islamic banks in Pakistan for the period of 2007 to 2016. It examines the effect of a specially developed broad-based FI index on technical efficiency of Islamic banks through panel ARDL approach along with to explore the macroeconomic as well as bank-specific factors of efficiency. The findings exhibit the possible connection between Islamic banking and financial inclusion in Pakistan. The study offers a variety of useful policy implications for public policy towards effective progress on the National Financial Inclusion Strategy in the country.

scholarly journals Do Islamic banks contribute to growth of the economy? Evidence from United Arab Emirates (UAE)

2017 ◽  
Vol 12 (1) ◽  
pp. 113-118 ◽  
Author(s):  
Mosab I. Tabash ◽  
Suhaib Anagreh
Keyword(s):  
Economic Growth ◽  
United Arab Emirates ◽  
Banking Sector ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
The World ◽  
Suitable Environment

Islamic finance has grown rapidly in the recent years particularly in the Middle East and the world. It receives a great attention of bankers and financial scholars due to its stability during financial shocks and crises. The paper uses empirical analysis to test the role of Islamic banking in enhancing the economic growth of United Arab Emirates (UAE). Gross Domestic Product (GDP), Gross formation (GF), and Foreign Direct Investment (FDI) are used as representatives for economic growth, while Islamic banks’ investments are used as a representative for Islamic financial sector in the UAE. The study uses time series techniques to test the link between the variables. In the current study, co-integration along with error correction models is utilized. All econometric work is done using Eviews. The findings reveal that the causal relationship between Islamic banks’ investments and economic growth of UAE is supply-leading direction. Furthermore, the findings depict that Islamic investments have contributed in increasing investments and in bringing FDI into the country in the long-term. The study also shows that there is two-way association between Islamic banks’ investments and FDI. It shows that FDI supports Islamic banking and Islamic banking brings FDI. The paper concludes that authorities of the UAE should devote more attention for this growing banking sector by facilitating regulations for establishing new Islamic banks and then creating a suitable environment for their growth and progress in the UAE.

scholarly journals The Impact of Jordan’s Conventional and Islamic Banking Development Factors on Economic Growth

2016 ◽  
Vol 8 (9) ◽  
pp. 148 ◽  
Author(s):  
Nafith Fayez AL-Hersh
Keyword(s):  
Economic Growth ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Investment Opportunity ◽  
Variance Inflation Factor ◽  
Inflation Factor ◽  
Conventional Banks ◽  
The Impact ◽  
Banking Development ◽  
Regression Correlation

This study aimed to explore the impact of Jordan’s Conventional and Islamic Banking Development Factors on Economic Growth during the period (2000-2015). A sample of four Islamic banks and eight conventional banks was tested. A group of statistical methods such as Multiple Regression, Correlation, Variance Inflation Factor (VIF), T-Test, were applied. The study found that there is significant different between the impact of Conventional and Islamic Banking Factors on RGDP attributed to Total Assets, Liquid Assets, Total Deposits and Total Facilities.In addition, Islamic banks had a much impact on Economic growth as compared to conventional banks. The study recommended the Islamic Banking Sectorto introduce a new innovative financial instruments and tools to push the economic growth forward and to increase the investment opportunity and lead to higher contribution to Economic Growth in Jordan.

scholarly journals PHILANTHROPY OF ISLAMIC BANKING: A STRATEGY IN STRENGTHENING THE ECONOMIC GROWTH AND PROSPERITY

2019 ◽  
Vol 8 (2) ◽  
Author(s):  
Binti Nur Asiyah ◽  
M. Ridlwan Nasir ◽  
Muhamad Ahsan
Keyword(s):  
Economic Growth ◽  
Market Share ◽  
The Other ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Spearman Correlation ◽  
Correlation Test ◽  
Spearman Correlation Test ◽  
Conventional Banks

Islamic banking has philanthropy values presented in zakat and other virtue funds as it aims at enhancing economic growth and prosperity. These philanthropy instruments are one of the differences between Islamic banks and conventional banks. However, the role of zakat and other funds in enhancing people’s welfare needs to be analyzed since the market share of Islamic banks is still growing slowly. This paper is intended to analyze the influence of zakat and the other virtue funds towards the realization of social welfare. In specific, this paper also intends to find a strategy for strengthening welfare through the role of philanthropy of Islamic banks. This study utilizes a quantitative approach that is analyzed using the Spearman correlation test. The results of the paper are: first, zakat has no significant correlation on welfare; second, other virtue funds have a significant correlation with welfare. The strategy proposed is to empower zakat collection agencies funds and establish channeling that link to Islamic banks so that the productive zakat allocation can be managed by Islamic bank customers.==============================================================================================Filantropi Perbankan Syariah: Suatu Strategi dalam Penguatan Pertumbuhan Ekonomi dan Kesejahteraan.  Bank syariah memiliki nilai filantropi dalam zakat dan dana kebajikan lainnya dimana instrumen tersebut bertujuan untuk meningkatkan pertumbuhan ekonomi dan kemakmuran masyarakat. Instrumen ini merupakan salah satu yang membedakan antara bank konvensional dengan bank syariah. Akan tetapi, sejauhmana peran zakat dan instrumen filantropi dalam meningkatkan kesejahteraan masyarakat masih harus dianalisis lebih lanjut mengingat pertumbuhan market share dari bank syariah masih sangat rendah. Paper ini bertujuan untuk menganalisis pengaruh zakat dan dana kebajikan lainnya terhadap terwujudnya kesejahteraan masyarakat. Paper ini sekaligus bermaksud menemukan suatu strategi dalam penguatan kesejahteraan melalui peran sosial finance bank syariah. Paper ini ditulis dengan pendekatan kuantitatif yang dianalisis dengan spearman correlation test. Hasil kajian menunjukkan bahwa: pertama, zakat memiliki korelasi yang tidak signifikan terhadap kesejahteraan; kedua, dana kebajikan memiliki korelasi yang signifikan terhadap kesejahteraan. Adapun strategi penguatan yang perlu dilakukan adalah meningkatkan alokasi dana zakat kepada lembaga amil zakat dan membangun chaneling dengan bank syariah agar alokasi zakat produktif dapat dikelola oleh nasabah bank syariah.

scholarly journals ISLAMIC BANKING DEVELOPMENT AND FINANCIAL INCLUSION IN OIC MEMBER COUNTRIES: THE MODERATING ROLE OF INSTITUTIONS

2021 ◽  
Vol 7 (3) ◽  
Author(s):  
Kabiru Kamalu ◽  
Wan Hakimah Binti Wan Ibrahim
Keyword(s):  
Cross Section ◽  
Method Of Moments ◽  
Generalized Method Of Moments ◽  
Institutional Quality ◽  
Financial Inclusion ◽  
Islamic Banking ◽  
Causality Test ◽  
Banking Development ◽  
Moderating Role

This study argues that the effect of Islamic banking development on financial inclusion is enhanced when there exist better quality institutions. A cross section dependency test, cointegration test, causality test, and system GMM (generalized method of moments) are applied to achieve this objective. Employing panel data from 30 Organisation of Islamic Cooperation (OIC) member countries over the period 2013-2018, the analysis suggests that Islamic banking promotes financial inclusion. Furthermore, it documents evidence which suggests negative and significant coefficients of the interaction between Islamic banking development and institutional quality.  This means that Islamic banking development works well in promoting financial inclusion in countries with low institutional quality. 

scholarly journals Standard Quality Banking Services of Islamic Banks

2018 ◽  
Vol 8 (1) ◽  
pp. 301
Author(s):  
Haneen A. Al-Khawaja ◽  
Barjoyai Bardai
Keyword(s):  
Islamic Law ◽  
Theoretical Aspect ◽  
Islamic Banking ◽  
Islamic Banks ◽  
High Confidence ◽  
Banking Services ◽  
Standard Quality ◽  
Definition Of

This research discusses in detail the theoretical aspect of the quality standards of banking services of traditional Islamic banks. The criterion of "Shari'ah Compliance" was added by the researcher to the importance and role of dealing with Islamic banks, the definition of this standard and its importance, how to test it for banks as well as how, without the legitimate commitment of these banks to what is classified as Islamic from the foundation, we focus on the importance of the existence of a legal commitment to any Islamic bank to achieve the quality of Islamic banking services of high quality in accordance with Islamic law and laws to achieve a high confidence in the customers who belong to him and deal with his Conspiracy.

scholarly journals Murābaḥah-Taꜥāwun Financing: An Innovation in Islamic Personal Financing

2019 ◽  
Author(s):  
International Journal of Fiqh and Usul al-Fiqh Studies
Keyword(s):  
Financial Inclusion ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Critical Factors ◽  
Distribution Of Wealth ◽  
Financial Products ◽  
Muslim Countries ◽  
The World ◽  
Financial Contract ◽  
Up Scaling

Entrepreneurs, especially in developing societies, which include many Muslim countries among their fold, face a herculean task in up-scaling their businesses due to a lack of capital to procure relevant assets to grow their businesses. The world Islamic banks’ competitiveness report (2016) identified poor financial inclusion as one of the critical factors responsible for the uneven distribution of wealth in the Muslim world. This study presents the Murābaḥah-Taʻāwun financing product as an innovative addition to the range of financial products available on the Islamic banking shelf to reduce the incidence of poverty. Murābaḥah-Taʻāwun is operationalized where a group of entrepreneurs contribute funds together under a recognized Islamic bank while allowing every partner access to the fund on a rotational basis for the purchase of an asset according to a pre-defined arrangement. The study highlighted the importance of Murābaḥah-Taʻ''āwun as an Islamic financial contract by reviewing relevant extant literature. The proposed product shows that greater financial inclusion can be achieved without recourse to riba and thus will reduce poverty among Muslims.

scholarly journals Islamic Bank Financing and Its Effects on Economic Growth: A Cross Province Analysis

2019 ◽  
Vol 8 (2) ◽  
Author(s):  
Muhammad Anif Afandi ◽  
Muhammad Amin
Keyword(s):  
Economic Growth ◽  
Fixed Effects ◽  
Islamic Banking ◽  
Fixed Effects Model ◽  
Islamic Bank ◽  
Bank Financing ◽  
Panel Data Regression ◽  
Data Regression ◽  
Almost All

Islamic banking industry shows a reasonably good development, one of which is marked by an increase in service coverage in almost all provinces in Indonesia. However, the question is how far Islamic banking capable of contributing to the improvement of Indonesia's economic growth? The purpose of this research is to examine the role of Islamic banking in promoting inclusive economic growth with a sample of 33 provinces in Indonesia. The method used in this research is panel data regression using the fixed effects model. The results show that Islamic bank financing does not have an impact on Indonesia's economic growth. In other words, the results of the research provide information that the existence of Islamic banking in Indonesia has not yet give a significant impact on the welfare of Indonesian society

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