Islamic banking and economic growth in Libya

Abstract EN

The main aim of this article is to critically examine the interactions between Islamic banking and economic growth in Libya, also to find whether it influences economic growth and transforms the operation of the financial system and trade activities to enhance the Libyan economic sector in the long-run.

The author discovered that in the short-run only fixed investment that cause Islamic banking to develop, where as in the long-run, there is evidence of a relationship between Islamic banking and fixed investment with a promising chance to strategically support gross domestic product (GDP) in Libya.

Both qualitative and quantitative data collection methods were used while undertaken this research and the primarily results indicated that Islamic banking is the way forward to increase the turnover and profit margin in the short run.

Meanwhile, the final results have revealed the significant relationship between Islamic banking and economic in the long run.

However, more studies are needed to discover the unknown about the impact of Islamic banking on the Libyan economy.