ISLAMIC BANK AND ECONOMIC GROWTH IN NIGERIA AND MALAYSIA SIMILARITIES

Abstract

Islamic Bank has become increasingly interested in developing and developed countries around the globe. The global financial system is gradually attracting the attention of global financial services towards the development of Islamic finance and it’s been recognized as a recent phenomenon where financial institutions are creating windows for Muslim and Non- Muslim to participate at their convenience. The paper aims to explore the contribution of Islamic Banking on the Nigerian economy growth indicating Malaysia as modern and example for imitation. Malaysian Islamic bank would be considered and analyzed its influence and same with Nigerian content. Series of data from 2005-2018 Thirteen years (13 years) used on an annual basis for Gross Domestic Product (GDP) as an explanatory variable while Islamic Banking and Finance (IBFinance) used to measure the relationship between two country’s economic growths. For the analysis, ganger causality, correlation, regression and time series test were used. The findings revealed that there is a strong positive relationship between Islamic Bank and economic growth in Nigeria as indicated in Malaysia respectively; furthermore, the causal relationship focuses on both directions from an Islamic bank to economic growth. The paper recommends the standard and codes redevelopment and creation of Islamic banks in Nigerian and more of Islamic products under Shariah compliant, application of Islamic finance and develops Shariah- compliant money market and capital market.