An econometric analysis of islamic banking development in Saudi Arabia

الملخص EN

The paper re-examines relationship between Islamic Banking Development and Economic Growth in Saudi Arabia for a period (2000 : 1-2013 : 3), by utilizing the bound testing approach of co-integration, error correction models, and multivariate granger causality between Islamic Banking Financing, Gross Domestic Product, Fixed Investment and Trade Activities, respectively, developed within an autoregressive distributed lag (ARDL) approach.

The findings show that there is a significant relationship between Islamic financial development and economic growth, and all variables are co-integrated Granger-causes each other in Saudi Arabia and there is a bi-directional relationship between the variables.

The empirical evidence indicates further development of Islamic finance will contribute to the economic growth in Saudi Arabia 30 / 4 / 2014.