Monitoring of Islamic Finance Activity to Economic Growth

Abstract

Increasing users of Sharia financial products can provide a stimulus for economic growth contribution in Indonesia. Considering that fact, this study aims to monitoring Islamic Finance activities on Economic Growth in the long and short term. Granger causality and VECM tests are appropriate analytical tools to determine the purpose study. The data from this research was taken from Indonesia financial service authority and Indonesia central bureau of statistics from 2009Q1 to 2023Q1. The results obtained show that the Islamic capital market influences economic growth, because investment can develop countries and at the end increase people's income. The implication research is that the government is expected to increase the stability of capital market conditions so that investors will generate capital gains from investment activities which in turn will increase economic growth. In addition, innovation and regulation are needed to increase the contributions of the Islamic banking and Islamic insurance sector to the Indonesian economic growth.