IMPACT OF ISLAMIC FINANCE ON ECONOMIC GROWTH: A STUDY OF THE SAARC NATIONS AND KEY TAKEAWAYS FOR INDIA

Dheenabhandhan S , Rebecca Ann Saji , Sunil MP

Islamic Finance, economic growth, Granger Causality, Johansen Co- integration, Financial Inclusion

Purpose: This paper is a quantitative study of the relationship between the development of Islamic Finance and economic growth in the SAARC nations wherein Islamic Finance is adopted and established. Design/Methodology: Annual time-series data of Gross Domestic Product (GDP) growth rate and Gross Fixed Capital Formation (GFCF) growth rate was taken from the World Bank whereas Islamic Finance Development indicator was taken from Zawya and IBFinancing for the period between 2005 to 2022. GDP growth rate and GFCF growth rate were variables taken as proxies for economic growth and Islamic Finance Development indicator as proxy for development in Islamic Finance. For the analysis, Johansen Co-integration test and Granger Causality test were conducted. Findings: The results from the Johansen’s Co-integration test proved that there exists a long term correlation between the Islamic Finance Development variable and economic growth variables and hence they are co-integrated with each other. The Granger tests’ results showed that the growth in Islamic Finance caused growth in the economy too. Furthermore, the results suggested that Islamic Finance also contributed to higher investments in the SAARC nations. Research Limitations: The study presents its suggestions by testing the Islamic Development indicator and economic growth variables of the countries following Islamic Finance in SAARC nations which may or may not be true for India or the rest of the world. Hence this study is only indicative and remotely conclusive for India. Originality/Value: The results of the study will be of importance to economists and policy makers striving to achieve countries’ economic growth.

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"IMPACT OF ISLAMIC FINANCE ON ECONOMIC GROWTH: A STUDY OF THE SAARC NATIONS AND KEY TAKEAWAYS FOR INDIA", IJNRD - INTERNATIONAL JOURNAL OF NOVEL RESEARCH AND DEVELOPMENT (www.IJNRD.org), ISSN:2456-4184, Vol.9, Issue 6, page no.b46-b54, June-2024, Available :https://ijnrd.org/papers/IJNRD2406106.pdf

Volume 9 Issue 6, June-2024

Pages : b46-b54

Paper Reg. ID: IJNRD_223263

Published Paper Id: IJNRD2406106

Downloads: 000152

Research Area: Social Science and Humanities 

Country: Bangalore, Karnataka, India

Published Paper PDF: https://ijnrd.org/papers/IJNRD2406106

Published Paper URL: https://ijnrd.org/viewpaperforall?paper=IJNRD2406106

DOI: http://doi.one/10.1729/Journal.40109

ISSN: 2456-4184 | IMPACT FACTOR: 8.76 Calculated By Google Scholar | ESTD YEAR: 2016

An International Scholarly Open Access Journal, Peer-Reviewed, Refereed Journal Impact Factor 8.76 Calculate by Google Scholar and Semantic Scholar | AI-Powered Research Tool, Multidisciplinary, Monthly, Multilanguage Journal Indexing in All Major Database & Metadata, Citation Generator

Publisher: IJNRD (IJ Publication) Janvi Wave

This work is licensed under a Creative Commons Attribution 4.0 International License and The Open Definition