Real Sector Growth owed to Islamic Finance


  • Madiha Riaz Assistant Professor, Department of Economics, The Islamia University of Bahawalpur, Pakistan
  • Syed Mumtaz Ali Kazmi National College of Business Administration and Economics, Bahawalpur Campus
  • Aboubakar Mirza Bahauddin Zakariya University, Multan, Pakistan
  • Abid Mehmood Iqra University, Karachi



Islamic Finance, Economic Growth, ARDL Model, Industrial Production Index


Islamic finance is growing rapidly not only in Islamic world but also around the globe. Foreseeing the popularity of Islamic finance, the current study intends to explore the relationship between Islamic financing and economic growth. To entertain the objectives, the study used data of United Arab Emirates, Malaysia, and Indonesia for the years 1980-2018. The ARDL approach to co-integration was used in order to obtain the empirical results for exploring the relationship between the Industrial Production Index, Islamic banks deposits, Islamic bank financing, gross fixed Capital formation, trade openness, government expenditures, and inflation. Industrial production index is taken as a proxy of growth that represents real sector growth. Study findings illustrated a strong positive relationship between industrial production indices, Islamic bank deposits & financing, gross fixed capital formation and negative significant relation with trade openness in the study period. Whereas, government expenditure has insignificant relation and inflation has shown negative relation. It is recommended that Islamic banks should design their deposit instruments in terms of long-run. The Islamic banks may follow the path of conventional banking in this regard. Deposit’s negotiable certificates should be issued similar to the conventional banks.

Author Biography

Aboubakar Mirza, Bahauddin Zakariya University, Multan, Pakistan

Assistant Professor, School of Economics




How to Cite

Riaz, M., Kazmi, S. M. A., Mirza, A., & Mehmood, A. (2022). Real Sector Growth owed to Islamic Finance. Review of Applied Management and Social Sciences, 5(4), 573-585.