Studying the causal relationship between islamic banking finance and economic growth in Saudi Arabia

Abstract

This study aims to determine the causal relationship between Islamic banking finance and economic growth in the Kingdom of Saudi Arabia during the period from the first quarter of 2014 to the last quarter of 2021, where the study used test methodology of toda yamamoto for causol testing and VAR model, using a program eviews 9.

The study found a two-way relationship positive between the musharkah financing formula and RGDP, and single –trend causal relationship that moves from RGDP to murabahah islamic finance formula, the study has also reached that shocks occur in islamic banking finance have a different value impact on economic growth, according to the periods.