Achieving Sustainable Economic Growth: Analysis of Islamic Debt and the Islamic Equity Market

Saleem, Adil; Setiawan, Budi; Bárczi, Judit; Sági, Judit

doi:10.3390/su13158319

Cited by 11 publications

(16 citation statements)

References 36 publications

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“…Finally, the ARDL long-run estimation of Ln(ISM) resulted in a positive coefficient of (0.149) and p ≥ 0.0000** towards Ln(GDP) which validates 1% change in Islamic stock market increases 0.149% of Ln(GDP) . The outcomes are consistent with the results of Marsi and Wardani (2020) and Saleem et al (2021). Hence, H5 is fully supported.…”

Section: Results and Analysissupporting

confidence: 88%

“…This finding supports the notion that there is a strong and positive long-run relationship between Islamic bank financing Ln(IBF) and economic growth Ln(GDP) . Thus, H3 is accepted, parallel with the outcomes of Saleem et al (2021), Ledhem and Mekidiche (2022) and Naz and Gulzar (2022a). This implies that the economic development in Pakistan can be promoted through Islamic bank financing.…”

Section: Results and Analysismentioning

confidence: 84%

“…Abduh and Sukmana (2015) conducted a comparative study on the conventional and Islamic stock markets in Malaysia and found a significant bidirectional cointegration among Islamic stock market and economic growth. More recently, Saleem et al (2021) investigated the relationship of Islamic debt and equity market with economic growth in Pakistan and Indonesia. The ARDL and ECM disclosed that Islamic equity financing contributed negatively and insignificantly to the Indonesian economic growth, but it has added significantly positive effect to the Pakistan's economy.…”

Section: Islamic Stock and Economic Growthmentioning

confidence: 99%

“…Additionally, proxies for Islamic banking development (IBD) include Islamic banking assets, Islamic banking deposits and Islamic bank financing. While some previous papers have studied this correlation of Islamic finance and economic growth by taking one or two parameters, either Islamic banking or Islamic bonds or Islamic stock (Zahid and Basit, 2018; Nawaz et al , 2019; Raza et al , 2019; Saleem et al , 2021; Naz and Gulzar, 2022a), none of them analyzed combined impact of Islamic banking, the Islamic bond market and the Islamic stock market. Hence, this study bridges the gap by adopting holistic approach which may produce more generalized results for understanding the connection between Islamic financial development and economic growth.…”

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Islamic financial development & economic growth: the emergence of Islamic financial market in Pakistan

Naz

Gulzar

2023

JIABR

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Purpose The impact of Islamic finance on economic growth is an ongoing debate. The purpose of this study is to empirically evaluate how the development of Islamic finance affects the long- and short-run economic growth of Pakistan. Design/methodology/approach The institutional variables, Islamic banking development (IBD), Islamic bond market development (IBM) and Islamic stock market development (ISM), are considered as measures of Islamic financial development, and real gross domestic product (GDP) is taken as measurement proxy of economic growth. The quarter time series data from Q1:2006 to Q4:2021 is analyzed through Autoregressive distributed lag model, Bounds test, ECM and Pairwise granger causality test. Findings The findings of this study indicate that in the long run, there is a significant and positive correlation between IBD and ISM with the real GDP, though ISM negatively cointegrated with real GDP in the short run. In contrast, IBM and real GDP did not find cointegrated in the long run, though the relationship is significant but negative in the short run. Practical implications The findings highlight Islamic financial development in Pakistan can contribute to the country's economic development, and this can be achieved by improving the infrastructure, increasing skilled professionals, creating a favorable legal environment and ensuring financial sector stability. Investors can diversify their investments and mitigate risk by adding Islamic financial instruments to their portfolios. Originality/value This pioneering study simultaneously measures the cause and effect relationship between Islamic financial development indicators (Islamic banking, Islamic bond and Islamic stock) and economic growth in Pakistan.

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Section: Results and Analysissupporting

confidence: 88%

Section: Results and Analysismentioning

confidence: 84%

Section: Islamic Stock and Economic Growthmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Islamic financial development & economic growth: the emergence of Islamic financial market in Pakistan

Naz

Gulzar

2023

JIABR

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“…Saleem et al (2021a) evaluate the role of Islamic financial depth (IFD), Islamic financial intermediation (IFI) and asset quality in economic growth while considering dual banking system. Saleem et al (2021b) analyze the impact of Islamic financial sectors (Islamic debt and the Islamic equities market) and sustainable economic growth for Indonesia and Pakistan.…”

Section: Introductionmentioning

confidence: 99%

Does Islamic financial development foster economic growth? International evidence

Butt

Sadaqat

Shear

2023

JIABR

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Purpose Several studies link Islamic finance to economic growth. There are at least two major limitations in these investigations. First, the proxy used to measure Islamic finance may not represent the whole impact of Islamic finance on economic growth because it only considers a subset of variables like Islamic banks’ deposits or sukuk issuance, etc. Second, it is difficult to extrapolate findings to other markets because most studies were conducted in just one nation or a small group of countries. Overcoming these issues is the driving force behind this research. In doing so, the study aims to use the overall Islamic Financial Development Index as a proxy for Islamic finance. The index measures the quantitative growth, knowledge, corporate social responsibility, governance and awareness of the Islamic financial sector. Design/methodology/approach Using a panel data set of 67 countries starting from 2012 to 2020, this study investigates the relationship between Islamic finance and economic growth. Findings The authors find that Islamic finance contributes to economic growth. This connection is more robust in Muslim and developing nations than it is in non-Muslim and developed nations. Practical implications To promote a country’s economic growth, the authors propose that regulators should focus on development of Islamic finance. To increase the reach of Islamic products, the government should take initiatives to raise public awareness of Islamic finance. Social implications The findings imply that Islamic finance may have a more significant impact on socio-economic development in countries with a higher concentration of Muslim population and those in the developing stage. It highlights the potential role of Islamic finance in addressing socio-economic challenges and promoting inclusive growth in these regions. Originality/value This is the first study to use a more comprehensive sample of countries, covering both Muslim and non-Muslim nations, as well as both developing and developed nations. In addition, this study, unlike its predecessors, used a more robust and comprehensive index of Islamic finance developed by Thomson Reuters.

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Characterising the Islamic Financial Cycle in Indonesia Post-Pandemic Era: Markov Switching Approach

Nurfalah,

Rusydiana,

Laila

et al. 2024

Lecture Notes in Networks and Systems

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Achieving Sustainable Economic Growth: Analysis of Islamic Debt and the Islamic Equity Market

Cited by 11 publications

References 36 publications

Islamic financial development & economic growth: the emergence of Islamic financial market in Pakistan

Islamic financial development & economic growth: the emergence of Islamic financial market in Pakistan

Does Islamic financial development foster economic growth? International evidence

Characterising the Islamic Financial Cycle in Indonesia Post-Pandemic Era: Markov Switching Approach

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