Development of Islamic Banking in Indonesia In the past decade increasing attentionhas been given to Islamic banking system, one major reason of this growingpopularity of Islamic banking system was the resilience of Islamic banking aswitnessed during global financial crises (GFC). Despite the financial turmoilin 2008, that crippled most of the Western institutions, Islamic bankscontinued to grow in size and distinction.
Asian Banker Research states thatthe world?s 100 largest wholly Islamic banks, ranked by assets, held more than$580 billion in assets in 2008, a 66% increase from the $350 billion they heldin the previous year, which clearly depicts that Islamic banks came out of thiscrises quite unscathed as opposed to its conventional counterparts. The Global Islamic Finance Report (2014) 1 estimated thesize of the global Islamic financial services industry at $1.813 trillion atthe end of 2013 with an estimated annual growth of more than 15% per annum.
Presently, Islamic banking growth rate is 50% faster than overall bankingsector in several core markets and Islamic banks are now operating in more than83 countries around the world which includes Muslim countries i.e Bahrain, UAE,Saudi Arabia, Malaysia, Brunei and Pakistan etc. and non-Muslim countries likeUSA, UK, Canada, Switzerland, Australia, South Africa and others. Existing literature lacks the comprehensiveresearch on examining the financing portfolio of whole Islamic banking industry. This study will bridge this gapby discussing different macro-level factors that influence the lendingdecisions of Islamic Banks, so that it contributes to the researchers? andpolicy makers? notion. It is evident from theliterature that numerous studies have focused on determinants of conventionalbank lending while neglecting determinants of Islamic banks financing.
Thereare macroeconomic factors that influence the Islamic bank credits. Thus, inthis study we include macroeconomic factors- conventional banks? interest rate,GDP growth rate, inflation and exchange rate, in order to study the impact ofthese variables on Islamic bank lending in 48 countries having establishedIslamic banking setup for the period from 2004 to 2013.WU1 WU1Butthis is not what you seem to be studying…