The relationship between Islamic banking development and economic growth in Central Asia: Causality analysis in a case of Kazakhstan

In this study, the causation relationship between financial development and economic growth in Islamic banking was analyzed for Central Asian countries involved in emerging markets for the period 2010-2020 with the Toda Yamamoto Causation Test and Frequency Area Causation Test in the case of Kazakhstan. In this study, the causation relationship between Islamic banking development and economic growth was tested with the Toda Yamamoto causation test. In the context of determining the existence of transient and lasting effects of causation, the Frequency Area Causality test, developed by Breitung and Candelon (2006), was tested by short, medium and long term separation, providing causation analysis. The causation relationship between the development of Islamic banking and growth in the economy of Kazakhstan in this study was examined with monthly data for the period 2010:1 to 2020:04. For the development of Islamic banking, loans made by Islamic banks to the private sector were used. The analysis used secondary data to be obtained from databases of Kazakhstan statistical institution and Islamic banks. Data from the National Bureau of Statistics of the Strategic Planning and Reforms Agency of the Republic of Kazakhstan, the first Islamic bank in the CIS, Islamic Bank Al Hilal JSC (Al Hilal Bank) - from annual reports of Kazakhstan and monthly reports of the Islamic Bank Zaman-Bank JSC. Study consist of three chapters. The first chapter, under the conceptual framework title; the concept of economic growth includes definition, fishery, indicative factors, traditional growth theories, modern growth theories, financial integration, and economic growth theory. In the second chapter, under the theoretical framework title; In the Turkish Republics of Central Asia, the issues of their financial and economic development and the development of Islamic banking are included. The third part is under the application title; dataset and model, method and econometric analysis results from empirical application.