Islamic Finance and Regional Development in MENA Region

Abstract

This article investigates whether the Islamic finance and economic growth relationship is supported by our sample data of some Golf Cooperation countries in the Middle East and North Africa region. Specifically, the research uses a dataset of fifteen Islamic banks in five MENA countries for different periods ranging from 1994 to 2009. The growth rate of gross loans and the ratio of M2/GDP are taken into account to explore the causal and/or the long-run relationships between them. Our key findings generated by these two empirical tests show that Islamic finance has no effect on economic growth in the selected GCC's banks. Therefore, policies to improve the Islamic banking efficiency in the region are suggested.