Using the Fully Modified Least Square to assess the relationship between Sukuk issuance and economic growth

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Slimene Nadia
Ahmed Alqatan
Sghaier Asma
Sherif El-Halaby


In this paper, in addition to the Islamic finance indicators: total deposits and total assets, we propose another indicator to study the relationship between Islamic finance and economic growth. Specifically, we examine the impact of Islamic Sukuk emissions on GDP using the Fully Modified Least Square (FMOLS) estimator. To test the validity of the chosen technique, we conducted the unit root tests and co -integration tests of Pedroni on a sample of 9 countries (Bahrain, United Arab Emirates, Kuwait, Qatar, Saudi Arabia, Malaysia, Oman, Pakistan and Turkey) during the period 2003-2018. The results found indicate that Islamic banking deposits negatively affect economic growth. Despite its relatively small size relative to all economic depths, the Sukuks variable is positively correlated with economic growth.

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