Correlation of Islamic Financing and Economic Growth through A Panel Data Approach
1Okta Dian Sari, 2Anna Yulianita, 3Imam Asngari
1,2,3Sriwijaya University, Indonesia
https://doi.org/10.47191/jefms/v7-i8-58ABSTRACT:
One of the strengthening of the financial sector is through financing, therefore what factors are needed that can encourage financing growth. This study aims to analyze economic growth, assets and Non-Performing Financing affecting Islamic financing during the period Q1 2017 to Q4 2022. The research went through the unit root test stage, panel data estimation, then panel data regression was selected using the Fixed Effect Model method. Based on the results of the research, it was concluded that economic growth, assets and NPF together affect Islamic financing in Malaysia, Saudi Arabia, Bahrain, the United Arab Emirates and Qatar. Economic growth and assets have a positive and significant influence on financing. Meanwhile, NPF has a negative influence on financing. The higher the NPF will affect the quality of financing, so it can lower the bank's health level.
KEYWORDS:
Islamic Financing, Economic Growth, Asset, Non-Performing Financing
REFERENCES:
1) Andespa, R., Yeni, Y. H., Fernando, Y., & Sari, D. K. (2024). A systematic review of customer Sharia compliance behaviour in Islamic banks: determinants and behavioural intention. Journal of Islamic Marketing, 15(4), 1013–1034. https://doi.org/10.1108/JIMA-06-2023-0181
2) Asngari, Imam. (2015). Analisis Determinan Struktur, Perilaku dan Kinerja Industri Perbankan Syariah di Indonesia. Jurnal Ekonomi Pembangunan Vol. 32, No.2, hal. 60-74. https://doi.org/10.29259/jep.v13i2.4853
3) Dickey, David A; Fuller, Wayne A. (1979). Distribution of the Estimators for Autoregressive Time Series with a Unit Root. Journal of the American Statistical Association Vol. 74. No. 366. pp.427-431. https://doi.org/10.2307/2286348.
4) Ghroubi, Mohamed. (2023). Linkages between Capital, bank Financing and Econommic Growth: The Case of Islamic and Conventional Banks from a Panel of Muslim Countries. Journal of Islamic Accounting and Business Research Emerald Publishing Limited 1759-0817. https://doi.org/10.1108/jiabr-01-2023-0036.
5) Gujarati, Damodar; Porter, Dawn C. (2009). Basic Econometrics. McGraw-Hill Irwin.
6) Kismawadi, Early Ridho. (2022). Contribution of Islamic Banks and Macroeconomic Variables to Economic Growth in Developing Countries: Vector Error Correction Model Approach (VECM). Journal of Islamic Accounting and Business Research Vol. 15 No. 2, 2024 pp.306-326. https://doi.org/10.1108/jiabr-03-2022-0090.
7) Mansour, W., Ajmi, H., & Saci, K. (2021), “Regulatory policies in the global Islamic banking sector in the outbreak of COVID-19 pandemic”, Journal of Banking Regulation, Vol. 23 No. 3, pp. 265-287. https://doi.org/10.1057/s41261-021-00147- 3
8) Minneapolis, MN. (2016). Principles of Economics. University of Minnesota Libraries Pubblishing Edition.
9) Miyajima, Ken. (2020). What Influensces Bank Lending in Saudi Arabia? Islamic Economic Studies Vo. 27 No.2, 2020 pp. 125- 155 Emerald Publishing Limited. https://doi.org/10.1108/IES-07-2019-0018
10) Muhammad. (2014). Manajemen Dana Bank Syariah (edisi 1). PT. Rajagrafindo Persada. Jakarta.
11) Nahar, Shamsun., & Sarker, Niluthpaul. (2016). Are Macroeconomic Factors Substantially Influential for Islamic Bank Financing? Cross-Country Evidence. IOSR Journal of Business and Management Vol. 18 Issue 6 Ver. I (Jun, 2016), pp 20-27. http://dx.doi.org/10.9790/487X-1806012027
12) Rafay,A., & Farid, S. (2017). Dynamic Relationship between Islamic Banking System and Real Economic Activity: Evidence from Pakistan. Journal of King ABudulaziz University, Islamic Economics 30(2),97-114. http://dx.doi.org/10.4197/Islec.30- 2.10
13) Sarker, M. N. I., Khatun, M. N., & Alam, G. M. (2020). Islamic banking and finance: potential approach for economic sustainability in China. Journal of Islamic Marketing, 11(6), 1725–1741. https://doi.org/10.1108/JIMA-04-2019-0076.
14) Shah et al (2020). The Role of Islamic Finance in Achieving Economic Growth: A Pakistani Econometric Analysis. Echancing Financial Inclusion through Islamic Fiancé, Vol. II. pp. 241-258.
15) Siddiqi, M. N. (2019). Shariah-Compliance, Risk Management and Legal Documentation in Islamic finance. Journal of Islamic Financial Studies, 5(1), 47-60.
16) Soedarmono, Wahyoe., Yusgiantoro, Inka. (2023). Islamic Bank Procyclicality in An Emerging Market Economy: Do Bank Size and Financing Contracts Matter?. Quarterly Review of Economics and Finance 92 (2023) 132-121. https://doi.org/10.1016/j.qref.2023.09.003
