Does domestic credit of the banking sector promote economic growth? Evidence from Bangladesh

The objective of the study is to investigate the relationship between domestic credit and economic growth for Bangladesh economy. The paper attempts to link between financial development and economic growth in answering a question whether the credit channeling through banking system goes to producti...

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Main Authors:	Al Mamun, Mohammad Salim, Ariffin, Muhammad Irwan, Hamid, Zarinah
Format:	Article
Language:	English
Published:	Islamic Business School, Universiti Utara Malaysia 2018
Subjects:	HD72 Economic growth, development, planning HF3000 By region or country HG1501 Banking HG3368 Islamic Banking and Finance
Online Access:	http://irep.iium.edu.my/64607/ http://irep.iium.edu.my/64607/ http://irep.iium.edu.my/64607/1/64607_Does%20domestic%20credit.pdf

id	iium-64607
recordtype	eprints
spelling	iium-646072018-07-22T06:48:22Z http://irep.iium.edu.my/64607/ Does domestic credit of the banking sector promote economic growth? Evidence from Bangladesh Al Mamun, Mohammad Salim Ariffin, Muhammad Irwan Hamid, Zarinah HD72 Economic growth, development, planning HF3000 By region or country HG1501 Banking HG3368 Islamic Banking and Finance The objective of the study is to investigate the relationship between domestic credit and economic growth for Bangladesh economy. The paper attempts to link between financial development and economic growth in answering a question whether the credit channeling through banking system goes to productive activities that bring economic growth in a country. Sample data was taken for the period 1975-2016 for year-wise trend analysis while econometric specification applies autoregressive distributed lag (ARDL) model and uses quarterly data for the period 1980Q1-2016Q2. The Bangladesh economy experienced structural changes initiated at the beginning of the 1990s that are addressed in the specification by dividing the full sample period into two subsamples (19980Q1-1990Q4 and 1991Q1-2016Q2). Overall, the paper finds that an increase in real domestic credit impacts positively on real GDP and the impact is found to be statistically highly significant. On the other hand, the results indicate that an increase in real lending rates decreases real GDP. However, this result is not statistically significant. Respective policy-makers need to initiate appropriate market-based policy rates that can impact GDP growth through domestic credit channel since this paper finds that domestic credit effectively enhances GDP growth. Islamic Business School, Universiti Utara Malaysia 2018-06-30 Article PeerReviewed application/pdf en http://irep.iium.edu.my/64607/1/64607_Does%20domestic%20credit.pdf Al Mamun, Mohammad Salim and Ariffin, Muhammad Irwan and Hamid, Zarinah (2018) Does domestic credit of the banking sector promote economic growth? Evidence from Bangladesh. International Journal of Islamic Business, 3 (1). pp. 33-55. E-ISSN 0127-662X http://ijib.uum.edu.my/julai2018/Vol.%203%20Issue%201%2033-55.pdf
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	HD72 Economic growth, development, planning HF3000 By region or country HG1501 Banking HG3368 Islamic Banking and Finance
spellingShingle	HD72 Economic growth, development, planning HF3000 By region or country HG1501 Banking HG3368 Islamic Banking and Finance Al Mamun, Mohammad Salim Ariffin, Muhammad Irwan Hamid, Zarinah Does domestic credit of the banking sector promote economic growth? Evidence from Bangladesh
description	The objective of the study is to investigate the relationship between domestic credit and economic growth for Bangladesh economy. The paper attempts to link between financial development and economic growth in answering a question whether the credit channeling through banking system goes to productive activities that bring economic growth in a country. Sample data was taken for the period 1975-2016 for year-wise trend analysis while econometric specification applies autoregressive distributed lag (ARDL) model and uses quarterly data for the period 1980Q1-2016Q2. The Bangladesh economy experienced structural changes initiated at the beginning of the 1990s that are addressed in the specification by dividing the full sample period into two subsamples (19980Q1-1990Q4 and 1991Q1-2016Q2). Overall, the paper finds that an increase in real domestic credit impacts positively on real GDP and the impact is found to be statistically highly significant. On the other hand, the results indicate that an increase in real lending rates decreases real GDP. However, this result is not statistically significant. Respective policy-makers need to initiate appropriate market-based policy rates that can impact GDP growth through domestic credit channel since this paper finds that domestic credit effectively enhances GDP growth.
format	Article
author	Al Mamun, Mohammad Salim Ariffin, Muhammad Irwan Hamid, Zarinah
author_facet	Al Mamun, Mohammad Salim Ariffin, Muhammad Irwan Hamid, Zarinah
author_sort	Al Mamun, Mohammad Salim
title	Does domestic credit of the banking sector promote economic growth? Evidence from Bangladesh
title_short	Does domestic credit of the banking sector promote economic growth? Evidence from Bangladesh
title_full	Does domestic credit of the banking sector promote economic growth? Evidence from Bangladesh
title_fullStr	Does domestic credit of the banking sector promote economic growth? Evidence from Bangladesh
title_full_unstemmed	Does domestic credit of the banking sector promote economic growth? Evidence from Bangladesh
title_sort	does domestic credit of the banking sector promote economic growth? evidence from bangladesh
publisher	Islamic Business School, Universiti Utara Malaysia
publishDate	2018
url	http://irep.iium.edu.my/64607/ http://irep.iium.edu.my/64607/ http://irep.iium.edu.my/64607/1/64607_Does%20domestic%20credit.pdf
first_indexed	2023-09-18T21:31:41Z
last_indexed	2023-09-18T21:31:41Z
_version_	1777412552861417472

Does domestic credit of the banking sector promote economic growth? Evidence from Bangladesh

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