The role of Islamic finance in international trade and economic growth: An application on Islamic economies

The concept of İslamic finance is gaining importance day by day both in the world and in Turkey, and a great increase is observed in the share of İslamic finance in all financial systems, especially in İslamic countries and even in countries where Muslims are a minority. In this research, the effects and mutual interactions of İslamic finance on the economic growth and foreign trade of the countries in which they are located are examined. In the research part of the study, the effects and mutual interactions of İslamic finance on the economic growth and foreign trade of the countries they are in were tried to be revealed by econometric analysis using the data of 20 countries that have the highest share in the financial system of the participation banks in their own country, according to the latest 2020 report of the IFSB. The results show that there is a cointegration relationship between the percentage share of participation banks in the whole country's banking system and the annual percentage change in GDP and the percentage share of foreign trade in GDP, from the percentage share of participation banks in the whole country's banking system to the annual percentage change in GDP and GDP. The relationship between the annual percentage change and the percentage share of participating banks in the whole country's banking system is bidirectional and shows that there is a one-way causality relationship from the percentage share in the whole country's banking system to the percentage share of foreign trade in GDP. In addition, it has been found that the percentage share of participating banks in the whole country's banking system has a significant and positive effect on the annual percentage change in GDP and the percentage share of foreign trade in GDP.