Growth, Islamic Banking and Schumpeterian Vision: An Empırıcal Evidence from the Gulf Arab States

Year 2018, Volume: 4 Issue: 1, 41 - 56, 31.03.2018

Nalan Işık

https://doi.org/10.25272/j.2149-8407.2018.4.1.03

Abstract

The rapid growth of Islamic banking has attracted much
attention lately in the economic literature. The main goal of this paper is to
investigate the relationship between the Islamic banking, economic growth and
innovation using data for the five Gulf Arab States (Bahrain, United Arab
Emirates, Kuwait, Qatar and Saudi Arabia) in the period of 2001–2015. In the
empirical analysis where the panel data method is used, unit root and
co-integration tests were applied to the variables. It is postulated that according
to the test findings, economic growth is co-integrated with Islamic banking and
patent application. Long run co-integration coefficients of the variables were
analysed throughout the panel using the method of Panel Dynamic Ordinary Least
Squares (PDOLS). The conclusion of the empirical study indicates that Islamic
banking funds and innovation in chosen Gulf Arab states have positive and
significant relations with economic growth. 

Keywords

Islamic banking, economic growth, Schumpeterian perspective, panel data, Gulf Arab States

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