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Central European Management Journal

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Year 2015 
Volume 23 
Issue 3

The Contribution of Islamic Banking to Indonesia’s Economic Growth: The Evidence from the Vector Error Correction and Variance Decomposition Methods

2015 23 (3) Central European Management Journal

DOI 10.7206/mba.ce.2084-3356.152

Abstract

Purpose: The aim of this study is to empirically understand whether Islamic banks have a positive
relationship to economic growth in Indonesia.

Methodology: This study examines the causal relationship amongst several selected variables: real
GDP (RY), total deposit (TD), the change in the Consumer Price Index as an inflation proxy (INF),
and the ratio of total imports and exports to nominal GDP (OE). In order to accomplish the research
objectives of this study, a time series quarterly data spanning from the first quarter of 2003 to the
last quarter of 2011 comprising of 36 data points has been used to perform an effective analysis.

Findings: The inference deduced here is twofold; First Islamic banks in Indonesia are still unable
to contribute significantly to Indonesia’s economic growth. Second, the relationship between Islamic
banks and economic growth in Indonesia is positively but weakly correlated.

Research Limitations: For this time series research, the researcher is limited by the small amount
of data (2003.Q1 to 2011.Q4).

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APA style

Wardhany, N. , K. , & Arshad, S. . (2015). The Contribution of Islamic Banking to Indonesia’s Economic Growth: The Evidence from the Vector Error Correction and Variance Decomposition Methods. Central European Management Journal, 23(3), 89-104. https://doi.org/10.7206/mba.ce.2084-3356.152 (Original work published 2015)

MLA style

Wardhany, N. , K. , and S. Arshad. “The Contribution Of Islamic Banking To Indonesia’S Economic Growth: The Evidence From The Vector Error Correction And Variance Decomposition Methods”. 2015. Central European Management Journal, vol. 23, no. 3, 2015, pp. 89-104.

Chicago style

Wardhany, Nurhastuty, Kesumo , and Shaista Arshad. “The Contribution Of Islamic Banking To Indonesia’S Economic Growth: The Evidence From The Vector Error Correction And Variance Decomposition Methods”. Central European Management Journal, Central European Management Journal, 23, no. 3 (2015): 89-104. doi:10.7206/mba.ce.2084-3356.152.