Islamic Banking And Economic Growth: A Review

Abstract

Many previous studies have focused on the impact of finance on economic growth. However, few studies have examined the impact of Islamic banking on economic growth. To fill this gap in literature, this paper investigates the potential effects of Islamic banking on economic growth. The paper has two main results. The first result is that previous studies show mixed support for the hypothesis that Islamic banking is a main channel of economic growth. The second result is that previous studies on the impact of Islamic banking on growth are single-country studies and their findings are difficult to generalize. In addition, the results of this paper point to several implications for policy. One of its implications for policy is that Islamic banking positively contributes to countrys macroeconomic stability.