Rodrigo Bochner
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Islamic Banks as Agents of Economic Growth: An Econometric Analysis of Islamic Economy Rodrigo Bochner
AL-FALAH : Journal of Islamic Economics Vol. 10 No. 2 (2025)
Publisher : Institut Agama Islam Negeri (IAIN) Curup

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.29240/alfalah.v2i10.14653

Abstract

This study scrutinizes the role of Islamic banks as dynamic agents fostering economic growth underpinned by Shariah-compliant principles, notably risk-sharing, prohibition of interest (riba), and avoidance of excessive uncertainty (gharar). Utilizing advanced econometric methodologies including stationary tests (ADF, KPSS), Johansen co-integration error correction mechanisms, Granger causality, fully modified ordinary least squares (FMOLS), and quantile regressions on a broad panel dataset from 1990– 2023 covering Muslim-majority economies and GCC , the analysis confirms a statistically positive nexus between Islamic banking development and macroeconomic growth indicators such as GDP and capital formation. Incorporating mathematical models of profit-and-loss sharing (PLS) and asset-backed finance within stochastic optimization frameworks, elucidates the mechanisms by which Islamic finance bolsters financial stability, deepens financial inclusion, and promotes sustained development. The findings underscore the critical moderating impact of inflation and economic policy uncertainty, highlighting the necessity of macroeconomic stability to optimally leverage Islamic finance’s potentials. Policy recommendations include enhancing Shariah governance, expanding inclusive finance infrastructure, and reinforcing regulatory environments. This paper advances the literature by integrating Islamic economic theory with econometric modeling to delivering an interdisciplinary framework for future research, policy making and proposes a new understanding from an econometric perspective about impact of islamics economics in economic development.
The Islamic banking system as a stabilizing force in contemporary countries Rodrigo Bochner
Journal of Islamic Economic Insights Vol. 1 No. 2 (2025): July 2025
Publisher : PRIVIETLAB

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.55942/jiei.v1i2.634

Abstract

The Islamic banking system offers a distinctive financial alternative rooted in Islamic law (Sharia) and emphasizes ethical finance, equity, and social justice. This study argues that Islamic banking can serve as a stabilizing force in a country’s economy, particularly during financial crises. By examining the unique principles and mechanisms of Islamic banking, including risk sharing and asset-backed financing, this study aims to highlight how these features contribute to economic resilience. Through a comprehensive literature review, case studies, and empirical analysis, this study identifies the potential of Islamic banks to mitigate economic instability and promote sustainable growth. The findings indicate that Islamic banking not only provides financial services but also fosters social cohesion and economic inclusivity in the banking sector. This study concludes with recommendations for policymakers and financial institutions to create KPI indexes that show the training of new scholars for the public and investors who will create new products for Islamic banking systems to enhance economic stability.