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Evaluating the effect of Islamic financing to financial development: evidence from OIC countries

The development of Islamic finance is governed by Islamic laws (Shariah). The main principles that regulate all forms of transactions in Islamic banking activities include the prohibition of interest or usury (riba),the use of excessive risk (gharar), and gambling (maysir). The Islamic finance indus...

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Main Authors: Hasan, Hafnida, Maamor, Selamah, Abdullah, Hussin
Format: Article
Language:English
Published: Universiti Utara Malaysia 2018
Subjects:
HG Finance
Online Access:http://repo.uum.edu.my/26953/1/IJMS%2025%202%202018%2071-89.pdf
http://repo.uum.edu.my/26953/
http://ijms.uum.edu.my/index.php/previous-issues/175-international-journal-of-management-studies-ijms-vol-25-no-2-july-2018
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spelling my.uum.repo.269532020-04-23T06:59:25Z http://repo.uum.edu.my/26953/ Evaluating the effect of Islamic financing to financial development: evidence from OIC countries Hasan, Hafnida Maamor, Selamah Abdullah, Hussin HG Finance The development of Islamic finance is governed by Islamic laws (Shariah). The main principles that regulate all forms of transactions in Islamic banking activities include the prohibition of interest or usury (riba),the use of excessive risk (gharar), and gambling (maysir). The Islamic finance industry has become a prominent sector and is one of the fastest growing components of financial developments over the last decade in the global financial system. The availability of large numbers of Islamic finance products will increase significantlyas there have been a growing demand throughout the world, especially in OIC participating countries. Hence, the objective of this study is to identify the important factors that enhances financial development in the selected OIC countries (Malaysia, Indonesia, Jordan, Kuwait, Saudi Arabia, Sudan and Yemen). Three indicators of financial development were used; Islamic finance, broad money and liquid liabilities. The data used in this study is the panel data from the year 1990 to 2012 which were obtained from the International Monetary Fund, Islamic Banks and Financial Institutions Information (IBIS), and World Bank databases. This study employed pooled OLS, fixed and random effect model. The results indicate that there are significant relationships between Islamic finance and financial development. Specifically, this study found that liquid liabilities and Islamic finance are two factors that have significantly influenced financial development in the OIC countries. Furthermore, the findings suggest that the OIC governments are required to develop policies that would integrate Islamic finance into their financial system. These policies should be centred around regulatory framework and supervisory role to utilize Islamic finance for greater economic growth. Universiti Utara Malaysia 2018-07 Article PeerReviewed application/pdf en http://repo.uum.edu.my/26953/1/IJMS%2025%202%202018%2071-89.pdf Hasan, Hafnida and Maamor, Selamah and Abdullah, Hussin (2018) Evaluating the effect of Islamic financing to financial development: evidence from OIC countries. International Journal of Management Studies (IJMS), 25 (2). pp. 71-89. ISSN 0127-8983 http://ijms.uum.edu.my/index.php/previous-issues/175-international-journal-of-management-studies-ijms-vol-25-no-2-july-2018
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Institutional Repository
url_provider http://repo.uum.edu.my/
language English
topic HG Finance
spellingShingle HG Finance
Hasan, Hafnida
Maamor, Selamah
Abdullah, Hussin
Evaluating the effect of Islamic financing to financial development: evidence from OIC countries
description The development of Islamic finance is governed by Islamic laws (Shariah). The main principles that regulate all forms of transactions in Islamic banking activities include the prohibition of interest or usury (riba),the use of excessive risk (gharar), and gambling (maysir). The Islamic finance industry has become a prominent sector and is one of the fastest growing components of financial developments over the last decade in the global financial system. The availability of large numbers of Islamic finance products will increase significantlyas there have been a growing demand throughout the world, especially in OIC participating countries. Hence, the objective of this study is to identify the important factors that enhances financial development in the selected OIC countries (Malaysia, Indonesia, Jordan, Kuwait, Saudi Arabia, Sudan and Yemen). Three indicators of financial development were used; Islamic finance, broad money and liquid liabilities. The data used in this study is the panel data from the year 1990 to 2012 which were obtained from the International Monetary Fund, Islamic Banks and Financial Institutions Information (IBIS), and World Bank databases. This study employed pooled OLS, fixed and random effect model. The results indicate that there are significant relationships between Islamic finance and financial development. Specifically, this study found that liquid liabilities and Islamic finance are two factors that have significantly influenced financial development in the OIC countries. Furthermore, the findings suggest that the OIC governments are required to develop policies that would integrate Islamic finance into their financial system. These policies should be centred around regulatory framework and supervisory role to utilize Islamic finance for greater economic growth.
format Article
author Hasan, Hafnida
Maamor, Selamah
Abdullah, Hussin
author_facet Hasan, Hafnida
Maamor, Selamah
Abdullah, Hussin
author_sort Hasan, Hafnida
title Evaluating the effect of Islamic financing to financial development: evidence from OIC countries
title_short Evaluating the effect of Islamic financing to financial development: evidence from OIC countries
title_full Evaluating the effect of Islamic financing to financial development: evidence from OIC countries
title_fullStr Evaluating the effect of Islamic financing to financial development: evidence from OIC countries
title_full_unstemmed Evaluating the effect of Islamic financing to financial development: evidence from OIC countries
title_sort evaluating the effect of islamic financing to financial development: evidence from oic countries
publisher Universiti Utara Malaysia
publishDate 2018
url http://repo.uum.edu.my/26953/1/IJMS%2025%202%202018%2071-89.pdf
http://repo.uum.edu.my/26953/
http://ijms.uum.edu.my/index.php/previous-issues/175-international-journal-of-management-studies-ijms-vol-25-no-2-july-2018
_version_ 1665896907273142272
score 13.211869

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