Analyzing the impact of Islamic finance on economic growth

One of the macroeconomic objectives of countries is sustainable and reliable economic growth. For this purpose, policies are implemented to increase financial development and solutions are sought for the savings deficit problem, especially in developing and underdeveloped countries. In addition, religious reasons and distance from the traditional financial system are cited as reasons for the lack of utilization of financial resources in Islamic countries. In recent years, in line with these discussions, some countries have started to develop the Islamic finance system and have started to investigate the effects of this system on economic growth. This study investigates the impact of Islamic finance on economic growth in 13 Islamic countries (Sudan, Saudi Arabia, Brunei, Kuwait, Malaysia, Nigeria, Bangladesh, United Arab Emirates, Jordan, Pakistan, Oman, Indonesia, Indonesia and Turkey). It analyzes the impact of the sources of Islamic finance on economic growth using panel data analysis method. In the analysis covering the period 2013-2021, the economic growth effects of the net income variable expressing the development of Islamic finance, gross capital formation and foreign direct investment variables are evaluated. The findings show that Islamic finance has a positive and statistically significant impact on economic growth in these countries. Policymakers can pursue policies that support the development of Islamic finance markets to promote sustainable economic growth.