Sharia Finance Industry: Role and Contribution in Indonesia's Economic Development Currently

The existence of sharia banking is now an alternative for the development of the financial sector in several countries. The development of sharia banking industry is expected to provide an alternative development and complement the current banking. The research conducted to measure the role and contribution of sharia banking using the observation period 2010-2015, research design is quantitative research, using multiple regression analysis, unit root test, and Granger Causality Test. Based on the results of the study, 1. Using TF and TD on the panel data, showed no significant and insignificant effect between the banking sector and GDP. The inability of banking sector indicators to affect GDP in accordance with the independent hypothesis. 2. The results of a dynamic relationship study between the banking sector and GDP (Granger Causality test) both to TF as well as TD, show the growth led finance hypothesis. This suggests that economic growth (GDP) has an impact on increasing demand for the banking sector. Economic expansion will boost demand for banking sector products. 3. Continuity of the development of the sharia banking sector in Indonesia is currently very dependent on economic development, and not vice versa. Therefore, in order to make sustainability of sharia banking sector in the future, it is expected that the big role of this sector will be toward the economic development in Indonesia by optimizing the role and contribution of sharia banking which is still limited.

Full Text: PDF     DOI: 10.15640/jibf.v5n2a8