The Effect of Islamic Financing on the Growth of Iran's Economic Sectors

Document Type : Research Article

Authors

Department of Economics, Islamic Azad University, Qazvin Branch, Iran

Abstract

Islamic financing is an alternative to conventional financing to meet the specific requirements of Muslims to provide financial services in accordance with Islamic religious law. The main purpose of this study is to investigate the impact of Islamic financing on the growth of Iran's economic sectors. For this purpose, the effect of the volume of issued sukuk and the volume of issued Islamic debt securities has been studied separately in three economic sectors, industry, agriculture and services. Therefore, the quarterly data for the years 2012 to 2019 were analyzed with two recordings of time series and data panel. The results of this study showed that Islamic financing, ie the sum of sukuk and debt securities, has a significant effect on the economic growth of the three sectors. The estimated probability for the total issued sukuk is less than 0.05 (0.00). However, in the analysis of different sectors separately, it was found that Islamic sukuk and debt securities have a significant impact on the economic growth of the agricultural sector and the industrial sector. While it has no significant effect on the service sector.

Keywords

References

Abdollahi, A., & Mostafaloo, M. (2020). Corporate Governance and Dimensions of Stocks Liquidity: A case of Iranian Firms. Journal of Humanities Insights, 4(03), 129-135.
Adhitya H. P. and Abidin, Z. (2021). The Effect of Disclosure Corporate Social Responsibility (CSR) To Financial Performance of Conventional Commercial Banks Book 3 (Three) in Indonesia Period 2017-2019. International Journal of Innovative Science and Research Technology, 6(7), 1136-1142
Ali Asar, N., (2013). A Study of Types of Sukuk in Islamic Banking, Economic Journal, 13(3), 32-21.
Anetor, F. O. (2020). Financial development threshold, private capital inflows and economic growth: Evidence from sub-Saharan African countries. International Journal of Development Issues.
Bhuiyan, R. A., Puspa, M., Saiti, B., & Ghani, G. M. (2020). Comparative analysis between global sukuk and bond indices: value-at-risk approach. Journal of Islamic Accounting and Business Research.
Boubker, O., Douayri, K., & Ouajdouni, A. (2021). Factors affecting intention to adopt Islamic financing: Evidence from Morocco. MethodsX, 8, 101523.
Boukhatem, J., & Moussa, F. B. (2018). The effect of Islamic banks on GDP growth: Some evidence from selected MENA countries. Borsa Istanbul Review, 18(3), 231-247.
Djennas, M. (2016). Business cycle volatility, growth and financial openness: Does Islamic finance make any difference?. Borsa Istanbul Review, 16(3), 121-145.
Fazeli, H., Najafpour, A. and Pourasmail, M. (2017). The Impact of Islamic Financing on the Markets of Selected Middle Eastern Countries, Islamic Economics Quarterly, 18(70) 203-187.
Gazdar, K., Hassan, M. K., Safa, M. F., & Grassa, R. (2019). Oil price volatility, Islamic financial development and economic growth in Gulf Cooperation Council (GCC) countries. Borsa Istanbul Review, 19(3), 197-206.
Ghaffari Fard, M., Rahmati, A. & Yousefzai, D. (2017). The Role of Islamic Financing on the Economic Growth of Selected Islamic Countries Using Panel Data (Case Study of Islamic Sukuk), Scientific Quarterly of Islamic Economics and Banking, 29, 103-120.
Ghlamallah, E., Alexakis, C., Dowling, M., & Piepenbrink, A. (2021). The topics of Islamic economics and finance research. International Review of Economics & Finance.
Goaied, M., & Sassi, S. (2010). Financial development and economic growth in the MENA region: What about Islamic banking development. Institut des Hautes Etudes Commerciales, Carthage, 1-23.
Habibi, F. & Amidi, S. (2020). Islamic Finance and Economic Growth: The Iranian Experience. Islamic Economics & Banking, 9(30), 141-159.
Hossain, A. A. (2016). Inflationary shocks and real output growth in nine Muslim-majority countries: Implications for Islamic banking and finance. Journal of Asian Economics, 45, 56-73.
Kapaya, S. M. (2020). Stock market development and economic growth in Tanzania: an ARDL and bound testing approach. Review of Economics and Political Science.
Kassim, S. (2016). Islamic finance and economic growth: The Malaysian experience. Global Finance Journal, 30, 66-76.
Khan, N., Kchouri, B., Yatoo, N. A., Kräussl, Z., Patel, A., & State, R. (2022). Tokenization of sukuk: Ethereum case study. Global Finance Journal, 51, 100539.
Lahsasna, A., Hassan, K. M., & Ahmad, R. (2018). Forward lease Sukuk in Islamic capital markets. Springer Books.
Marshall, A. (1890). Principles of Economics. London: Macmillan and Co.
Muharam, H. (2021). Peer Review Dr. Harjum Muharam, SE., ME.: Islamic Stock Market and Sukuk Market Development, Economic Growth, and Trade Openness (The Case of Indonesia and Malaysia).
Naemi, M., Sohaili, K., & Karimi, M. S. (2019). Interaction Relationship Between Development of Islamic Financial Instruments (Sukuk) and Economic Growth. Islamic Economics, 19(73), 217-238.
Ogbuji, I. A., Mesagan, E. P., & Alimi, Y. O. (2020). The Dynamic Linkage between Money Market, Capital Market and Economic Growth in Ghana: New Lessons Relearned. Econometric Research in Finance, 5(2), 59-78.
Razak, S. S., Saiti, B., & Dinç, Y. (2019). The contracts, structures and pricing mechanisms of sukuk: A critical assessment. Borsa istanbul review, 19, S21-S33.
Schumpeter, J. (1942), Capitalism, Socialism and Democracy. Harper and Row.
Smaoui, H., & Ghouma, H. (2020). Sukuk market development and Islamic banks’ capital ratios. Research in International Business and Finance, 51, 101064.
Smaoui, H., & Nechi, S. (2017). Does sukuk market development spur economic growth?. Research in International Business and Finance, 41, 136-147.
Zain, N. S., & Sori, Z. M. (2020). An exploratory study on Musharakah SRI Sukuk for the development of Waqf properties/assets in Malaysia. Qualitative Research in Financial Markets.
Environmental Energy and Economic Research
Volume 6, Issue 3
August 2022
Pages 1-16

Files

Share

How to cite

Statistics