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Muhammed, Ismail Aremu
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Economics, Econometrics & Finance

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INFORMAL ECONOMY, ISLAMIC FINANCE DEVELOPMENT, AND SUSTAINABLE DEVELOPMENT IN MUSLIM-MAJORITY COUNTRIES Muhammed, Ismail Aremu; Khalid, Ahmed Masood; Premaratne, Gamini
Journal of Islamic Monetary Economics and Finance Vol 10 No 1 (2024)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jimf.v10i1.1987

Abstract

The paper focuses on the impact of informal economy and Islamic finance development on sustainable development using a panel dataset of 15 Muslim-majority countries from 2016 to 2022. The results based on the feasible GLS and panel quantile regression methods reveal that Islamic finance development has a positive impact on sustainable development. Meanwhile, the informal economy has a negative impact on sustainable development. Assessing the components of Islamic finance development, we further note that only quantitative development/financial performance and knowledge indicators are effective in achieving sustainable development. Besides these key results, GDP per capita, trade openness, and foreign direct investment emerge to be positive factors while the natural resource rents a negative factor in sustainable development. We reason that low productivity and precarious working conditions associated with informal economy may have hindered economic, social, and environmental wellbeing. The positive contribution of the Islamic finance development especially those related to Islamic financial performance and knowledge sharing to sustainable development hints the importance of further development of the Islamic financial sector in these countries.
INNOVATIVE CAPACITY IN MUSLIM-MAJORITY COUNTRIES: DOES ISLAMIC FINANCE PLAY A ROLE? Muhammed, Ismail Aremu
Journal of Islamic Monetary Economics and Finance Vol. 11 No. 2 (2025)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jimf.v11i2.2375

Abstract

The paper examines the influences of Islamic finance and overall financial development on innovative capacity of Muslim-majority nations. It employs a panel dataset comprising 15 Muslim-majority countries over the period 2016-2022. Innovative capacity is measured by the number of patent applications, decomposed into applications made by residents and non-residents. Employing the Feasible GLS technique and taking into account the presence of heteroskedastic and serially correlated errors, we find that the development of Islamic finance is vital for innovations. More specifically, we find robust evidence suggesting that Islamic finance positively affects innovations by non-residents while it has no influence on innovations by residents. Furthermore, overall financial development also significantly influences innovations by non-residents but not innovation by residents. Moreover, there is evidence that trade openness and foreign direct investment positively influence innovations and natural resource rents exert negative impact on innovations. The study concludes that financial system policies that encourage the awareness, accessibility, and depth of Islamic finance operations are needed to boost innovative capacity. Awareness campaign and policies aimed at developing technical education in these countries should be pursued to boost the innovative capacities of residents, which is considerably lower when compared to innovative activities from abroad.
INFORMAL ECONOMY, ISLAMIC FINANCE DEVELOPMENT, AND SUSTAINABLE DEVELOPMENT IN MUSLIM-MAJORITY COUNTRIES Muhammed, Ismail Aremu; Khalid, Ahmed Masood; Premaratne, Gamini
Journal of Islamic Monetary Economics and Finance Vol. 10 No. 1 (2024)
Publisher : Bank Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21098/jimf.v10i1.1987

Abstract

The paper focuses on the impact of informal economy and Islamic finance development on sustainable development using a panel dataset of 15 Muslim-majority countries from 2016 to 2022. The results based on the feasible GLS and panel quantile regression methods reveal that Islamic finance development has a positive impact on sustainable development. Meanwhile, the informal economy has a negative impact on sustainable development. Assessing the components of Islamic finance development, we further note that only quantitative development/financial performance and knowledge indicators are effective in achieving sustainable development. Besides these key results, GDP per capita, trade openness, and foreign direct investment emerge to be positive factors while the natural resource rents a negative factor in sustainable development. We reason that low productivity and precarious working conditions associated with informal economy may have hindered economic, social, and environmental wellbeing. The positive contribution of the Islamic finance development especially those related to Islamic financial performance and knowledge sharing to sustainable development hints the importance of further development of the Islamic financial sector in these countries.
Co-Authors Khalid, Ahmed Masood Premaratne, Gamini