The Impact of Selected Islamic Banking Performance on Economic Growth of Bangladesh

Abstract

The aim of this study is to provide empirical evidence regarding the influence of Islamic bank performance on economic growth. As per the research, the effects of selected 9 Islamic bank performances on economic development of Bangladesh between 2016 and 2022 using panel data were both significant and considerable. This paper uses random-effects GLS regression for panel data analysis following the model used in the research paper of Badri et al. (2016) and Rashid et al. (2017). The present analysis incorporates the following variables: performance measurement variables (ROA, ROE, BOPO, and CAR); ethical measurement variables (RPR, RPZ); and macroeconomic variables (IPI, CPI, and TMM) comprise the three categories of dependent variables. As an independent variable, GDP is utilized.
Islamic banks' financial performance has a substantial impact on the economic development of Bangladesh, according to the findings of this study. Regarding the performance variables, however, the coefficients are negative because Islamic banks of Bangladesh have not performed well, with many blaming low investment prospects, liquidity crisis, inefficient cost structures, non-performing loans, etc.