Research Article Open Access

Islamic Finance Development and Economic Growth Nexus: The Case of the United Arab Emirates (UAE)

Abdelghani Echchabi1 and Dhekra Azouzi2
  • 1 Effat University, Saudi Arabia
  • 2 El-Manar University, Tunisia

Abstract

Islamic Banking presently knows a great success and new Islamic banks are opening every day all over the world. This Shari’ah (It is the bod of Islamic law, it literally means “way” or “path”) compliant banking is expected to withstand the financial crises and to enhance economic growth. In this paper, the purpose is to analyse the relationship between Islamic banking development and economic growth in the UAE from Q1: 2004 to Q4: 2011 using co-integration and Granger causality tests. This study reveals that no relationship does exist between Islamic banking development and economic growth in the UAE. Such a result can be attributed to the small component of Islamic banking in the global banking sector and to its declining profitability in the period of study. The study enriches the literature on Islamic finance development and economic growth, which is still an under-researched area, especially in the MENA region.

American Journal of Economics and Business Administration
Volume 7 No. 3, 2015, 106-111

DOI: https://doi.org/10.3844/ajebasp.2015.106.111

Submitted On: 28 May 2015 Published On: 11 August 2015

How to Cite: Echchabi, A. & Azouzi, D. (2015). Islamic Finance Development and Economic Growth Nexus: The Case of the United Arab Emirates (UAE). American Journal of Economics and Business Administration, 7(3), 106-111. https://doi.org/10.3844/ajebasp.2015.106.111

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Keywords

  • Islamic Banking
  • Islamic Finance
  • Economic Growth
  • UAE