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The Impact Of Islamic Capital Market Development On Economic Growth: The Case Of Indonesia

Author

Listed:
  • Novita Sari

    (Magister Economic Science, Sriwijaya University, Indonesia)

  • Syamsurijal AK

    (Magister Economic Science, Sriwijaya University, Indonesia)

  • Marlina Widiyanti

    (Magister Economic Science, Sriwijaya University, Indonesia)

Abstract

The purpose of this study was to determine the short and long term effects of three Islamic capital market instruments, namely the corporate sukuk, the Jakarta Islamic Index, and Islamic Mutual Funds on economic growth. The data set is built based on the Badan Pusat Statistik Indonesia and Otoritas Jasa Keuangan Indonesia (OJK) and runs from January 2011 to December 2017. This research uses the co-integration test to examine the long-term relationship, as well as the error correction model to analyze the existence of a short-term relationship. The results show that in the long-term there is a significant positive influence of the corporate sukuk, the Jakarta Islamic Index and Islamic Mutual Funds on economic growth, while in the short-term there is a significant impact of the corporate sukuk, Jakarta Islamic Index, and Islamic Mutual Funds on economic growth in Indonesia. The ECM results indicate that in the long term the Islamic capital market is able to provide alternative capital to support economic growth in Indonesia.

Suggested Citation

  • Novita Sari & Syamsurijal AK & Marlina Widiyanti, 2018. "The Impact Of Islamic Capital Market Development On Economic Growth: The Case Of Indonesia," Journal of Smart Economic Growth, , vol. 3(2), pages 21-30, December.
    • Handle: RePEc:seg:012016:v:3:y:2018:i:2:p:21-30
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    References listed on IDEAS

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    1. Yener Coskun & Unal Seven & H. Murat Ertugrul & Talat Ulussever, 2017. "Capital market and economic growth nexus: Evidence from Turkey," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 17(1), pages 1-19–29.
    2. Graeme Smith, 2011. "Chinese Economic Development – By Chris Bramall," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 51(2), pages 208-210, July.
    3. Yilmaz Bayar & Abdulkadir Kaya & Murat Yildirim, 2014. "Effects of Stock Market Development on Economic Growth: Evidence from Turkey," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 5(1), pages 93-100, January.
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    Cited by:

    1. Hoang Thanh Hanh & Dinh Tran Ngoc Huy & Pham Minh Dat, 2020. "Utilization of Energy Sources, Financial Stability and Prosperity in the Economy of Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 10(5), pages 631-637.

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