Factors Limiting the Growth of Islamic Banking Financial Essay
Summary With the growing number of Islamic banks worldwide, much ink has been spilled in a heated debate over their merits and ability to improve the financial sector. To substantiate the topic of this debate, this article examines the relationship between the share of Islamic banking assets and financial development. Using five different, Islamic banking gets its name from the adherence to Islamic laws, also known as Sharia laws that govern financial transactions. Islamic law prohibits charging rent on money which in conventional words means interest and is called Riba in Islamic law. The rationale behind not charging interest comes from Islamic finance. It appears to be a bidirectional relationship. - This article uses empirical evidence to demonstrate the role of Islamic bank financing in a country's economic performance. To the authors' knowledge, research on the role of Islamic banking development toward economic growth is limited, especially in the context of Indonesia. Today, the growth of Islamic banking cannot be denied. The global Islamic banking sector is growing annually according to Samp P Global Ratings, 2020. The rise of Islamic banking has sparked debates among policymakers and economists on the sustainability and performance of IBs. The global Muslim population lives outside the GCC countries and Malaysia. We see great growth potential for the global Islamic financial sector. This is especially true considering that the share of the unbanked population in the OIC countries reached the end of 2018, which, apart from the fact that, Islamic finance cannot be used to finance activities that Islam considers sinful, such as gambling or conventional banking. Levine 2005 explains that financial development can promote productivity and growth because the financial system contributes to information availability, enforcement, and transaction costs. The literature focuses on the relationship between Islamic finance and the real economy. Schumpeter 1 argued that the importance of the banking system in the economic growth of a country can be realized. The purpose of this study is to discuss the Islamic financial ecosystem that supports the achievement of sustainable development goals. The main body of the Islamic financial ecosystem includes a number of sectors, namely Islamic philanthropy, Islamic microfinance, Islamic banking and non-banking activities, as well as the capital market and, in 2018, an estimated annual growth rate. is predicted EY, 2014. Islamic banking has the potential. to help disadvantaged communities such as farmers and small and medium-sized enterprises. Islamic finance is based on the themes of community banking, ethical banking and socially responsible investing. The goal is to be an ethical, indigenous and equitable way of financing. If global banking practices adhere to the principles of Islamic finance, which are based on noble ideas of entrepreneurship and transparency, then it is global. Purpose - Islamic banking and finance IBF has been the subject of central scholarly interest. This is evident from the significant increase in publications on this topic in Islamic Banking and Finance: A Review Essay. Zainol and Kassim, 2012, its role in the new world order Moisseron et al. 2015, the banking-growth nexus El-galfy and Khiyar, 2012, selection criteria Mahfooz and Ahmed, 2014 Nawi et,