What is it about?
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.
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Why is it important?
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.
Perspectives
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.
Dr Muhamad Abduh
Universiti Brunei Darussalam
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This page is a summary of: Islamic banking and economic growth: the Indonesian experience, International Journal of Islamic and Middle Eastern Finance and Management, March 2012, Emerald,
DOI: 10.1108/17538391211216811.
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