Is Turkey Looking Fronting in Contribution of Islamic Banks Toward Economic Growth: Latest Insights Based on Comparative Analysis
Islamic Banks and Economic Growth
DOI:
https://doi.org/10.59051/joaf.v17i1.988Keywords:
Sukuk, Takaful, Economic Growth, HDIAbstract
Purpose:
This study investigates the contribution of Islamic banking to economic growth in selected leading Islamic finance countries—Türkiye, Kuwait, Qatar, the UAE, Oman, Malaysia, Indonesia, and Nigeria—using data from 2015 to 2021. It also examines whether Türkiye’s Islamic banking sector contributes differently to economic growth by incorporating a country-specific dummy variable.
Method:
Panel data were analyzed using the least square dummy variable (LSDV) model in Stata 18. The model includes Islamic banking profitability, sukuk issuance, inflation, and political stability to assess their relationship with gross domestic product per capita (GDPpc).
Results:
The findings reveal three major outcomes: (1) Türkiye’s Islamic banking profitability contributes more strongly to GDP compared to the other countries in the sample; (2) sukuk has a positive and significant relationship with GDPpc; and (3) inflation shows a positive association with GDP when moderated by political stability.
Originality Relevance:
The study adds new cross-country empirical evidence on how Islamic banking promotes economic growth, with a specific comparative focus on Türkiye. By combining Islamic banking indicators, sukuk, and political stability within an LSDV framework, the research offers relevant insights for policymakers, regulators, and Islamic finance institutions seeking to strengthen the growth-enhancing role of Islamic banking.
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