THE IMPACT OF THE ISLAMIC BANKS PERFORMANCES ON ECONOMIC GROWTH: USING PANEL DATA

Abstract

Islamic banking saw rapid growth during the last two decades. There are many contributory factors for such growth, most notable of which are the financial liberalization. The prohibition of interest payments by Islamic Sharia has instead made equity and profit sharing the cornerstones of its operational structure activities. Furthermore, the risk-sharing principle provides theoretically better long-term allocation of funds for investments with higher risk- return profiles and subsequently greater economic growth. The purpose of this research is to provide empirical evidence concerning the impacts of liberalization Financial and the Islamic bank performance on economic growth. The study indicates that effects are positive and significant on economic growth during the period 2001-2012 in term of financial liberalization

Keywords

• Performance Islamic banks, economic growth, Within and GLS regression analysis

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