Does domestic credit of the banking sector promote economic growth? Evidence from Bangladesh
The objective of the study is to investigate the relationship between domestic credit and economic growth for Bangladesh economy. The paper attempts to link between financial development and economic growth in answering a question whether the credit channeling through banking system goes to producti...
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| Format: | Article |
| Language: | en |
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Islamic Business School, Universiti Utara Malaysia
2018
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| Online Access: | http://irep.iium.edu.my/64607/1/64607_Does%20domestic%20credit.pdf http://irep.iium.edu.my/64607/ http://ijib.uum.edu.my/julai2018/Vol.%203%20Issue%201%2033-55.pdf |
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| _version_ | 1834513434644840448 |
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| author | Al Mamun, Mohammad Salim Ariffin, Muhammad Irwan Hamid, Zarinah |
| author_facet | Al Mamun, Mohammad Salim Ariffin, Muhammad Irwan Hamid, Zarinah |
| author_sort | Al Mamun, Mohammad Salim |
| building | IIUM Library |
| collection | Institutional Repository |
| content_provider | International Islamic University Malaysia |
| content_source | IIUM Repository (IREP) |
| continent | Asia |
| country | Malaysia |
| description | The objective of the study is to investigate the relationship between domestic credit and economic growth for Bangladesh economy. The paper attempts to link between financial development and economic growth in answering a question whether the credit channeling through banking system goes to productive activities
that bring economic growth in a country. Sample data was taken for the period 1975-2016 for year-wise trend analysis while econometric specification applies autoregressive distributed lag (ARDL) model and uses quarterly data for the period 1980Q1-2016Q2. The Bangladesh economy experienced structural changes initiated at the beginning of the 1990s that are addressed in the specification by dividing the full sample period into two subsamples (19980Q1-1990Q4 and 1991Q1-2016Q2). Overall, the paper finds that an increase in real domestic credit impacts positively on real GDP and the impact is found to be statistically highly significant. On the other hand, the results indicate that an increase in real lending rates decreases real GDP. However, this result is not statistically significant. Respective policy-makers need to initiate appropriate market-based policy rates that can impact GDP growth through domestic credit channel since this paper finds
that domestic credit effectively enhances GDP growth. |
| format | Article |
| id | my.iium.irep-64607 |
| institution | Universiti Islam Antarabangsa Malaysia |
| language | en |
| publishDate | 2018 |
| publisher | Islamic Business School, Universiti Utara Malaysia |
| record_format | dspace |
| spelling | my.iium.irep-646072018-07-22T06:48:22Z http://irep.iium.edu.my/64607/ Does domestic credit of the banking sector promote economic growth? Evidence from Bangladesh Al Mamun, Mohammad Salim Ariffin, Muhammad Irwan Hamid, Zarinah HD72 Economic growth, development, planning HF3000 By region or country HG1501 Banking HG3368 Islamic Banking and Finance The objective of the study is to investigate the relationship between domestic credit and economic growth for Bangladesh economy. The paper attempts to link between financial development and economic growth in answering a question whether the credit channeling through banking system goes to productive activities that bring economic growth in a country. Sample data was taken for the period 1975-2016 for year-wise trend analysis while econometric specification applies autoregressive distributed lag (ARDL) model and uses quarterly data for the period 1980Q1-2016Q2. The Bangladesh economy experienced structural changes initiated at the beginning of the 1990s that are addressed in the specification by dividing the full sample period into two subsamples (19980Q1-1990Q4 and 1991Q1-2016Q2). Overall, the paper finds that an increase in real domestic credit impacts positively on real GDP and the impact is found to be statistically highly significant. On the other hand, the results indicate that an increase in real lending rates decreases real GDP. However, this result is not statistically significant. Respective policy-makers need to initiate appropriate market-based policy rates that can impact GDP growth through domestic credit channel since this paper finds that domestic credit effectively enhances GDP growth. Islamic Business School, Universiti Utara Malaysia 2018-06-30 Article PeerReviewed application/pdf en http://irep.iium.edu.my/64607/1/64607_Does%20domestic%20credit.pdf Al Mamun, Mohammad Salim and Ariffin, Muhammad Irwan and Hamid, Zarinah (2018) Does domestic credit of the banking sector promote economic growth? Evidence from Bangladesh. International Journal of Islamic Business, 3 (1). pp. 33-55. E-ISSN 0127-662X http://ijib.uum.edu.my/julai2018/Vol.%203%20Issue%201%2033-55.pdf |
| spellingShingle | HD72 Economic growth, development, planning HF3000 By region or country HG1501 Banking HG3368 Islamic Banking and Finance Al Mamun, Mohammad Salim Ariffin, Muhammad Irwan Hamid, Zarinah Does domestic credit of the banking sector promote economic growth? Evidence from Bangladesh |
| title | Does domestic credit of the banking sector promote economic growth? Evidence from Bangladesh |
| title_full | Does domestic credit of the banking sector promote economic growth? Evidence from Bangladesh |
| title_fullStr | Does domestic credit of the banking sector promote economic growth? Evidence from Bangladesh |
| title_full_unstemmed | Does domestic credit of the banking sector promote economic growth? Evidence from Bangladesh |
| title_short | Does domestic credit of the banking sector promote economic growth? Evidence from Bangladesh |
| title_sort | does domestic credit of the banking sector promote economic growth? evidence from bangladesh |
| topic | HD72 Economic growth, development, planning HF3000 By region or country HG1501 Banking HG3368 Islamic Banking and Finance |
| url | http://irep.iium.edu.my/64607/1/64607_Does%20domestic%20credit.pdf http://irep.iium.edu.my/64607/ http://ijib.uum.edu.my/julai2018/Vol.%203%20Issue%201%2033-55.pdf |
| url_provider | http://irep.iium.edu.my/ |