Islamic banking-growth nexus: evidence from Toda-Yamamoto and bootstrap granger causality test

Abdul Manap, Turkhan Ali and Abduh, Muhamad and Omar, Mohd. Azmi (2012) Islamic banking-growth nexus: evidence from Toda-Yamamoto and bootstrap granger causality test. Journal of Islamic Finance, 1 (1). pp. 59-66. ISSN 2289-2117 (O), 2289-2109 (P)

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Abstract

This paper examines the causal relationship between Islamic banking development and economic growth and between Islamic banking development and capital formation in the case of Malaysia. Different with other studies, this paper uses Toda-Yamamoto and bootstrap granger non-causality test to reduce the size distortion in the data and provide more precise test inference than the commonly used asymptotic method especially in the case of small sample size. The results demonstrate a significant Granger causality from Islamic financial development to economic growth but the converse is not true, which supports the Schumpeter’s supply-leading view. The empirical evidence indicates further development of Islamic finance will contribute to the economic growth in the case of Malaysia.

Item Type:	Article (Journal)
Additional Information:	5324/26088
Uncontrolled Keywords:	Granger non-causality, Islamic banking, economic growth, Toda-Yamamoto, bootstrap
Subjects:	B Philosophy. Psychology. Religion > BP Islam. Bahaism. Theosophy, etc > BP1 Islam > BP173.75 Islam and economics H Social Sciences > HG Finance > HG1501 Banking
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Institute of Islamic Banking & Finance (IIiBF) Kulliyyah of Economics and Management Sciences > Department of Economics
Depositing User:	Dr Muhamad Abduh
Date Deposited:	29 Oct 2012 14:13
Last Modified:	06 Nov 2012 18:07
URI:	http://irep.iium.edu.my/id/eprint/26088

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