Conventional Bank

This research is to conduct a study on the Business Strategy Transformation of PT Bank Jago Tbk (Bank Jago); A transformation from a Conventional Bank (previously Bank Artos) to a digital bank, the current Bank Jago. This research carries a relatively new research topic, namely digital transformation at banks in Indonesia. The research population is all digital banks in Indonesia, with a total of 5 digital banks and 7 banks in the process of going digital. However, with the limitations of existing data regarding digital banks, discussions were conducted on Bank Jago from the financial side, five digital transformation domains according to Rogers (2016), and comparative studies of bank performance on a limited basis with Book III bank (of which Bank Jago is one of The Book III banks) and aggregate bank in general. The result of this research is that Bank Jago has carried out the right business strategy in accordance with the five domains of digital transformation according to Rogers ( ), where with digital transformation has achieved better business growth compared to Book III banks and aggregate banks in general. Practical implications: (1) the success of Bank Jago can be used as a role model for other digital banks and conventional banks that want to change the business model through digital transformation, (2) For OJK: make further regulations for digital bank reporting, which is separate from commercial bank reporting so that Indonesian banks have data on the development of digital banks.

This study aims at empirically exploring the short- and long-run relationships between economic growth, non-performing loans, interest rates and the credit demand by the small and medium enterprises (SMEs) in Aceh province, Indonesia. The quarterly data for the period 1995 to 2015 were analyzed by the cointegration and vector error correction model (VECM). The study documented that there was a cointegration among the economic growth, non-performing loans, interest rates and the credit demand, implying the existence of long-run equilibrium among the variables. In addition, in short-run, the study found a unidirectional causality from economic growth to credit demand, a bidirectional causality between interest rates and credit demand, while no causality existed between non-performance loan and credit demand by the SMEs in Aceh, Indonesia. Thus, to enhance the SMEs, the government should focus on promoting the economic growth by managing the stability of interest rates in the province.

This paper aims to identify the effects of Islamic banking on economic growth and industrial development in Turkey. For this purpose, quarterly data for the periods between 2005 and 2016 were taken into the consideration. Additionally, VAR Granger causality analysis was used in this study. It was concluded that Islamic banks' loans do not have a significant effect on the improvement of economy and industry in Turkey. The main reason for this result is that Islamic banking has a very low percentage in Turkish banking sector. Thus, it can be said that Islamic banking in Turkey should be so developed that it can contribute to GDP growth and industrial development.

The main business of bank financial institutions is to mobilize funds in the community through their savings and loan products. During the Covid-19 Pandemic, where the spread of the virus was speedy and a health protocol policy that limited community mobility, all economic sectors experienced a slowdown. Therefore, this study aims to analyze trends in third-party funds (liquidity) and loans (distribution of funds) during the Covid-19 Pandemic. The method used is qualitative by using descriptive statistics, namely analyzing trends in liquidity and distribution of funds in the banking industry, both Islamic banks and conventional banks. Based on the results of this study, it is known that the banking industry during the Covid-19 Pandemic experienced excess liquidity while loan disbursement experienced a decline. Furthermore, Islamic banks and conventional banks during the Covid-19 Pandemic had higher liquidity growth compared to the period before the Covid-19 Pandemic. However, compar...

The purpose of this study is to find out the system of calculation and distribution of SHU (Remaining Business Results) on employee cooperatives "Regional Regulation of Asia" and then develop a system of calculation and distribution of the remaining operating results that are correct and in accordance with the standard calculation of the remaining results of savings and loan cooperatives. this is research and development (R & D) research, where the research subject is the Prime Asia Employee Cooperative and the object of research is a system of calculation and division of the remaining results of the business. The method of data collection consists of interviews and observations. The analytical method used is data reduction by analyzing the existing system then the presentation of data in the form of a comparison of systems that are being used with the development of the system that will be used which will then provide results that are appropriate to the requirements and i...

Money management is a difficult task, and it has detrimental ramifications if the decisions are not made accurately. The aim of this study is to examine the short and long-term relationships between the participation index operating in the capital markets and the Borsa Istanbul00 index. The relationship between the BIST100 index, which gives information about the general situation of the capital markets, and the logarithmic values of the Participation30 Index, which operates in accordance with Islamic principles in Turkiye, were analyzed by considering the weekly data covering the working days between 2011-2020. Data obtained from the independent online source called, investing.com, was used in the analysis of the study, a cointegration test, causality test, and unit root test were applied, and results were found through an error correction model. The findings were interpreted in line with the results confirming a correlation between the Participation30 and Borsa Istanbul100 indexes. We believe this research will contribute to the scientific literature and money managers greatly.

The main business of bank financial institutions is to mobilize funds
in the community through their savings and loan products. During
the Covid-19 Pandemic, where the spread of the virus was speedy and
a health protocol policy that limited community mobility, all
economic sectors experienced a slowdown. Therefore, this study aims
to analyze trends in third-party funds (liquidity) and loans
(distribution of funds) during the Covid-19 Pandemic. The method
used is qualitative by using descriptive statistics, namely analyzing
trends in liquidity and distribution of funds in the banking industry,
both Islamic banks and conventional banks. Based on the results of
this study, it is known that the banking industry during the Covid-19
Pandemic experienced excess liquidity while loan disbursement
experienced a decline. Furthermore, Islamic banks and conventional
banks during the Covid-19 Pandemic had higher liquidity growth
compared to the period before the Covid-19 Pandemic. However,
compared to the intermediation function between conventional banks
and Islamic banks, the intermediation function of conventional banks
(LDR) during the Covid-19 pandemic was still better than the
intermediation function of Islamic banks (FDR).

T his study examines the relationship between Foreign Direct Investment (FDI) and employment in the Indonesia construction service sector. The method used in this study is Panel VECM Granger. The data used are the data of FDI inflow and employment in the construction sector in some provinces, namely North Sumatra, Riau, Jakarta, West Java, East Java, and Bali from 2000 to 2014. The share of the six provinces is 80% of the total national FDI in the construction sector. The results showed that there is unidirectional causality in the short-term and long-term between FDI and labor. That relationship is the inflow of FDI strongly influenced by employment. In other words, Indonesian human resources can encourage investors to invest in Indonesia and not vice versa.

Researchers have written chain of research papers about the dynamics of financial development and economic growth. The financial capital plays a productive role when it delivers to economic agents who are facing shortage or excess of funds.  This study explores the linkages among Islamic financing and economic growth for Pakistan, by using annual time series data from 2005-2018. Islamic banks’ financing funds used as a proxy of Islamic financing, Gross Domestic Product (GDP), Gross Fixed Capital Formation (GFCF), labor force (LF),Broad money(M) and Trade openness (TO) to presents real sector of an economy. For the exploration, the unit root test, Ordinary least square technique and Granger causality test are applied. The results validate a substantial causal relationship of Islamic financing and GDP, which supports the Schumpeter’s supply-leading view. The results indicate that Islamic finance contributed towards economic growth.  

Researchers have written chain of research papers about the dynamics of financial development and economic growth. The financial capital plays a productive role when it delivers to economic agents who are facing shortage or excess of funds.  This study explores the linkages among Islamic financing and economic growth for Pakistan, by using annual time series data from 2005-2018. Islamic banks’ financing funds used as a proxy of Islamic financing, Gross Domestic Product (GDP), Gross Fixed Capital Formation (GFCF), labor force (LF),Broad money(M) and Trade openness (TO) to presents real sector of an economy. For the exploration, the unit root test, Ordinary least square technique and Granger causality test are applied. The results validate a substantial causal relationship of Islamic financing and GDP, which supports the Schumpeter’s supply-leading view. The results indicate that Islamic finance contributed towards economic growth.  

This paper analyses the effect of bank lending and fee income on Islamic and conventional bank's performance. The paper builds a theoretical model and provides empirical evidence to show that Islamic banks as compared to conventional banks can have a greater reliance on fee-based income than returns from loans to increase their profitability. Using data from a sample of 20 countries for the period from 2000 to 2015 for Islamic and conventional banks, we find that the bank fee is an important determinant of the profitability of an Islamic bank. Interestingly, many commonly used measures such as loan to deposit ratio do not affect the Islamic banks' profitability as much as they do for conventional banks. Our findings imply that Islamic banks' lower sensitivity to loan to deposit ratio may contribute to lower credit risk. However, an over-reliance on fee-based income may affect their growth, profitability and sustainability in the long run.

Islamic financing is a new phenomenal and one of the fastest growing component on financial system. The aim of this study is to examine the relationship between Islamic financing and economic growth of 4 OIC countries by using panel data from 1990 to 2012.This study employed panel unit root test and two stages least square (2SLS) as a method. The empirical results show that government expenditure and net export have impact to economic growth. Islamic financing is positive and significantly correlated with economic growth in 4 OIC countries which reinforces the idea that a well-functioning banking system through of financial development will promotes economic growth. This study can be used by the government to take noted in offering more Islamic financing because it’s profitable to improve their income and later will increase economic growth.

This study aims at empirically exploring the short- and long-run relationships between economic growth, non-performing loans, interest rates and the credit demand by the small and medium enterprises (SMEs) in Aceh province, Indonesia. The quarterly data for the period 1995 to 2015 were analyzed by the cointegration and vector error correction model (VECM). The study documented that there was a cointegration among the economic growth, non-performing loans, interest rates and the credit demand, implying the existence of long-run equilibrium among the variables. In addition, in short-run, the study found a unidirectional causality from economic growth to credit demand, a bidirectional causality between interest rates and credit demand, while no causality existed between non-performance loan and credit demand by the SMEs in Aceh, Indonesia. Thus, to enhance the SMEs, the government should focus on promoting the economic growth by managing the stability of interest rates in the province.

T his study examines the relationship between Foreign Direct Investment (FDI) and employment in the Indonesia construction service sector. The method used in this study is Panel VECM Granger. The data used are the data of FDI inflow and employment in the construction sector in some provinces, namely North Sumatra, Riau, Jakarta, West Java, East Java, and Bali from 2000 to 2014. The share of the six provinces is 80% of the total national FDI in the construction sector. The results showed that there is unidirectional causality in the short-term and long-term between FDI and labor. That relationship is the inflow of FDI strongly influenced by employment. In other words, Indonesian human resources can encourage investors to invest in Indonesia and not vice versa.

Researchers have written chain of research papers about the dynamics of financial development and economic growth. The financial capital plays a productive role when it delivers to economic agents who are facing shortage or excess of funds.  This study explores the linkages among Islamic financing and economic growth for Pakistan, by using annual time series data from 2005-2018. Islamic banks’ financing funds used as a proxy of Islamic financing, Gross Domestic Product (GDP), Gross Fixed Capital Formation (GFCF), labor force (LF),Broad money(M) and Trade openness (TO) to presents real sector of an economy. For the exploration, the unit root test, Ordinary least square technique and Granger causality test are applied. The results validate a substantial causal relationship of Islamic financing and GDP, which supports the Schumpeter’s supply-leading view. The results indicate that Islamic finance contributed towards economic growth.  

This paper aims to identify the effects of Islamic banking on economic growth and industrial development in Turkey. For this purpose, quarterly data for the periods between 2005 and 2016 were taken into the consideration. Additionally, VAR Granger causality analysis was used in this study. It was concluded that Islamic banks’ loans do not have a significant effect on the improvement of economy and industry in Turkey. The main reason for this result is that Islamic banking has a very low percentage in Turkish banking sector. Thus, it can be said that Islamic banking in Turkey should be so developed that it can contribute to GDP growth and industrial development.

Islamic finance has grown rapidly in the recent years particularly in the Middle East and the world. It receives a great attention of bankers and financial scholars due to its stability during financial shocks and crises. The paper uses empirical analysis to test the role of Islamic banking in enhancing the economic growth of United Arab Emirates (UAE). Gross Domestic Product (GDP), Gross formation (GF), and Foreign Direct Investment (FDI) are used as representatives for economic growth, while Islamic banks’ investments are used as a representative for Islamic financial sector in the UAE. The study uses time series techniques to test the link between the variables. In the current study, co-integration along with error correction models is utilized. All econometric work is done using Eviews. The findings reveal that the causal relationship between Islamic banks’ investments and economic growth of UAE is supply-leading direction. Furthermore, the findings depict that Islamic investmen...

Islamic financing is a new phenomenal and one of the fastest growing component on financial system. The aim of this study is to examine the relationship between Islamic financing and economic growth of 4 OIC countries by using panel data from 1990 to 2012.This study employed panel unit root test and two stages least square (2SLS) as a method. The empirical results show that government expenditure and net export have impact to economic growth. Islamic financing is positive and significantly correlated with economic growth in 4 OIC countries which reinforces the idea that a well-functioning banking system through of financial development will promotes economic growth. This study can be used by the government to take noted in offering more Islamic financing because it’s profitable to improve their income and later will increase economic growth.

The current paper examines the impact of oil price (OP) fluctuations on Islamic banking investments growth in the UAE. Besides, OP, the study also uses other variables like Gross Domestic Product and Foreign Direct Investment to identify the determinants of the Islamic banking investments growth in the emerging economy, UAE. The study is based on econometric analysis with the help of annual time series data from 1990 to 2015 for the study variables. Stationary tests, cointegration methods, vector error correction model, and Granger causality tests are used in the analysis. The major findings of the study revealed that OPs have long-term and short-term relationships on the Islamic banking investments in the UAE. Our results explore the importance of OP stabilization in enhancing growth and progress in the UAE economy. The Government of UAE should reform policies and procedures to minimize the effect of such volatility in OPs which in turn leads to positive impacts on the UAE economy as well.

This paper examines empirically the relationship between the development of Islamic finance system and economic growth in Qatar. Using econometric analysis, annually time-series data of economic growth and Islamic banks’ financing from 1990 to 2008 were used. We use Islamic banks’ financing funds given by Islamic banks to private sector through modes of financing as a proxy for the development of Islamic finance system and Gross Domestic Product, Gross Fixed Capital Formation and Foreign Direct Investment inflow as proxies for real economic growth. For the analysis, the unit root test, cointegration test and Granger causality tests were done. The empirical results generally signify that in the long run, Islamic banks’ financing is positive and significantly correlated with economic growth in Qatar. This reinforces the idea that a well-functioning banking system promotes economic growth. Furthermore, the results show that Islamic banks’ financing has contributed to the increase of in...

This paper analyzes empirically the relationship between the development of Islamic finance system and growth of the economy in the United Arab Emirates (UAE). To document the relationship between development of Islamic finance and economic growth, time series data from 1990 to 2010 were used. We use Islamic banks’ financing credited to private sector through modes of financing as a proxy for the development of Islamic finance system and Gross Domestic Product (GDP), Gross Fixed Capital Formation (GFCF), as proxies for real economic growth. For the analysis, the unit root test, cointegration test and Granger Causality tests were done. Our empirical results show that there is a strong positive association between Islamic banks’ financing and economic growth in the UAE, which reinforces the idea that a well-functioning banking system promotes economic growth. However, our results indicate that a causal relationship happens only in one direction, i.e., from Islamic banks’ financing to ...

Islamic finance has grown rapidly in the recent years particularly in the Middle East and the world. It receives a great attention of bankers and financial scholars due to its stability during financial shocks and crises. The paper uses empirical analysis to test the role of Islamic banking in enhancing the economic growth of United Arab Emirates (UAE). Gross Domestic Product (GDP), Gross formation (GF), and Foreign Direct Investment (FDI) are used as representatives for economic growth, while Islamic banks’ investments are used as a representative for Islamic financial sector in the UAE. The study uses time series techniques to test the link between the variables. In the current study, co-integration along with error correction models is utilized. All econometric work is done using Eviews. The findings reveal that the causal relationship between Islamic banks’ investments and economic growth of UAE is supply-leading direction. Furthermore, the findings depict that Islamic investmen...

Islamic finance is one of the fastest growing sectors of the global banking industry and has risen to prominence recently through its distinctive characteristics. The emergence of Islamic finance can be traced back to 1963 in Egypt, while its importance comes to the global financial system only after the global financial crisis occurred in 2008. This paper explores empirically the relationship between the development of Islamic finance and economic growth in the Middle East. Three of the most important countries for Islamic finance growth from Middle East, namely Qatar, Bahrain, and United Arab Emirates (UAE), are selected for the study. To document the relationship between development of Islamic finance and economic growth, annually time-series data of economic growth and Islamic banks' financing were used. We use Islamic banks' financing credited to private sector through modes of financing as a proxy for the development of Islamic finance system and Gross Domestic Product (GDP), as a proxy for economic growth. For the analysis, the unit root test, co-integration test and Granger causality tests were done. Our empirical results generally signify that in the long run Islamic banks' financing is positive and significantly correlated with economic growth in the select countries which reinforces the idea that a well-functioning banking system promotes economic growth. The results obtained from Granger causality test reveals a causal relationship between Islamic finance and economic growth in these countries. It is neither Schumpeter's supply-leading nor Robinson's demand-following. It appears to be a bi-directional relationship from Islamic banks' financing to economic growth and vice versa for Bahrain and Qatar. The results obtained from Granger causality test for UAE indicates that a causal relationship happens only in one direction, i.e., from Islamic banks' financing to economic growth, which supports Schumpeter's supply-leading theory. Our results also indicate that improvement of the Islamic financial institutions in the Middle East countries will benefit from economic development, and it is important in the long run for the economic welfare, and also for poverty reduction. Furthermore, the results of study are quite significant as it is one of the pioneering studies of Islamic finance.

Islamic financing is a new phenomenal and one of the fastest growing component on financial system. The aim of this study is to examine the relationship between Islamic financing and economic growth of 4 OIC countries by using panel data from 1990 to 2012.This study employed panel unit root test and two stages least square (2SLS) as a method. The empirical results show that government expenditure and net export have impact to economic growth. Islamic financing is positive and significantly correlated with economic growth in 4 OIC countries which reinforces the idea that a well-functioning banking system through of financial development will promotes economic growth. This study can be used by the government to take noted in offering more Islamic financing because it’s profitable to improve their income and later will increase economic growth.

Islamic finance has become an increasingly integral part of the global financial system and gradually growing and having attention of the global financial system. The development of Islamic finance in Nigeria, as a recent phenomenon, the paper investigates the contribution of Islamic finance towards the growth of Nigeria economy. Series of data from 2012-2015 was used on annually basis for Gross Domestic Product and Trade as explanatory variable while IBFinancing used to measure the relationship between the country’s economic growth, for the analysis, granger causality and ordinary least square (OLS) tests were used. The findings results show that there is a strong positive relationship between Islamic bank’s financing and economic growth in Nigeria, which reinforces the idea that a well-functioning banking system promotes economic growth. Furthermore, the causal relationship happens only in both directions that form Islamic bank’s financing to economic growth. The paper recommend t...

The liberalization thesis has generated a lot of debate in theoretical and empirical literature. In this paper we construct an index of financial liberalization from 1981 to 2012 to investigate its impact on economic growth in Nigeria using the McKinnon–Shaw framework. The ordinary least squares methodology and cointegration analysis are adopted in the study. The result reveals that financial liberalization (FINDEX) and private investment (PINV) have significant positive impact on economic growth in Nigeria. However, real lending rate (LDR) proved to be negatively related to economic growth in Nigeria within the period under review. We therefore conclude that the monetary authorities and policy makers in Nigeria need to support the liberalization process by formulating complementary policies and financial sector reform measures that will help in strengthening the impact of the liberalization process on the economy and also ensure that the benefits of the liberalization exercise is m...

Bahrain's banking system has both Conventional Banks and Islamic Banks and is the chief constituent of the monetary system, totaling for more than 85% of the total monetary assets. In 1979, Bahrain Islamic Bank is established in Bahrain which is the first-ever Islamic commercial bank in Bahrain and the third bank in Gulf Cooperation Council (GCC). Bahrain is the home to the biggest cluster of institutions of Islamic finance in the region of Middle East. Today, Bahrain Islamic Bank had emerged into an international leader in the field of Islamic finance. Islamic banks in Bahrain offer a wide range of products such as Mudaraba, Musharaka, Murabaha, Ijara, Al Salam and Istitsna'a and other structures employed in conservative finance, suitably customized in accordance with Shariah principles. The aim of this study is to examine and the compare the growth and financial performance of Islamic Banks (IB) with that of Conventional Banks (CB) in Kingdom of Bahrain. The variables considered for the study are Total Value Assets, customers’ current account in IB and customer deposits in CB, Total Value of Financing and Investing Activities in IB and Total Value of Loans and advances in CB, Total Value of Income generated from financing and investing in IB and Total Net Interest Income in CB and Operating profits etc.,. The outcome of this study exhibits that Islamic banks in the kingdom of Bahrain have been showing better performance, higher growth rate. The growth rate of total value of financing and investing activities in IB is higher when compared to the total value of loans and advances in CB.

Today, companies operate in a highly competitive and changing global business world, needing an information system that offers fast answers to the complex business problem. Many businesses have adopted the accounting information system extensively to simplify and to optimize their business processes. The key aim of many companies to implement this method is to increase their operating performance and enhance profitability. After examining more than 500 papers, we focused on integrating the results of more than 155 studies. In this study. While some researchers have found no direct link between the accounting information system and operational efficiency, others have done so. It has been confirmed in this regard that the implementation of a proper Accounting Information System is a competitive advantage. Indeed, causal links between the accounting information system and operational efficiency have been established. This research aims to review the literature relating to these connections. The findings of the current study are presented and further fields of research are also addressed.

The study aims to investigate conventional and Islamic banking in Pakistan over the period (2009-2019) using accounting ratios to measure performance in terms of profitability. Regression analysis is used to measure the influenced of CAMEL variables as independent variables and ROA and ROE used as dependent variables to measure the performance of Conventional and Islamic Banks. The results revealed that the Islamic banks allocated a greater share of their assets for financing activities as compared to conventional banks moreover, their resources are also better capitalized. Besides, the profitability of Islamic banks has gradually improved than conventional banks. Thus, the bank’s and shareholder’s market value in respective systems have progressively enhanced by executing different approaches. Islamic banking system deals in asset-based financing whereas, the conventional banking system deals in loans and advances. Inspiring factors for clienteles of Islamic banking are following Shari’a compliance, whereas an extensive range of products and services are offered in the case of the conventional banking system.

Islamic banking may be an industry developed supported by Islamic law or Sharia compliance; In Indonesia, the Islamic banking industry is proliferating, including in the province of East Kalimantan. This study aims to look at the variables that affect customer satisfaction and loyalty of Islamic commercial banks in East Kalimantan at Bank Rakyat Indonesia Syariah, Bank Negara Indonesia Syariah, and Bank Syariah using 400 respondent data. This research uses Structural Equation Modeling WarpPLS, which examines measurement models and structural models using a population of 91,596 with a sample of 400 bank customers. Hypothesis testing is done by using inferential statistical test tools that will produce or draw conclusions. The independent variables include Banking Service Quality (X1), Sharia Compliance (X2), Switching Barriers (X3), Religious Influence (X4), while the endogenous variables are Satisfaction (Y1) and Loyalty (Y2). The results showed that Banking Service Quality (BSQ), Shariah Compliance (S.C.), Switching Barriers (S.B.), and Religious Effects (RE) had a significant positive effect on satisfaction. Shariah Compliance and Switching Barriers and satisfaction have a significant positive effect on loyalty. On the other hand, Banking Service Quality and Religious Influence do not significantly affect loyalty. It is suggested to management to increase customer loyalty in terms of service quality and religious influence to maintain loyalty.

Bahrain's banking system has both Conventional Banks and Islamic Banks and is the chief constituent of the monetary system, totaling for more than 85% of the total monetary assets. In 1979, Bahrain Islamic Bank is established in Bahrain which is the first-ever Islamic commercial bank in Bahrain and the third bank in Gulf Cooperation Council (GCC). Bahrain is the home to the biggest cluster of institutions of Islamic finance in the region of Middle East. Today, Bahrain Islamic Bank had emerged into an international leader in the field of Islamic finance. Islamic banks in Bahrain offer a wide range of products such as Mudaraba, Musharaka, Murabaha, Ijara, Al Salam and Istitsna'a and other structures employed in conservative finance, suitably customized in accordance with Shariah principles. The aim of this study is to examine and the compare the growth and financial performance of Islamic Banks (IB) with that of Conventional Banks (CB) in Kingdom of Bahrain. The variables considered for the study are Total Value Assets, customers’ current account in IB and customer deposits in CB, Total Value of Financing and Investing Activities in IB and Total Value of Loans and advances in CB, Total Value of Income generated from financing and investing in IB and Total Net Interest Income in CB and Operating profits etc.,. The outcome of this study exhibits that Islamic banks in the kingdom of Bahrain have been showing better performance, higher growth rate. The growth rate of total value of financing and investing activities in IB is higher when compared to the total value of loans and advances in CB

Bahrain's banking system has both Conventional Banks and Islamic Banks and is the chief constituent of the monetary system, totaling for more than 85% of the total monetary assets. In 1979, Bahrain outcome of this study exhibits that Islamic banks in the kingdom of Bahrain have been showing better performance, higher growth rate. The growth rate of total value of financing and investing activities in IB is higher when compared to the total value of loans and advances in CB.

The main purpose of this study is to focus on the concept of economic growth with special reference to the case of Turkey, relies on an approach from the perspective of participation banks and conventional banks to examine the institution of banking and economic growth. Using quarterly data for the period of 2006-2017, the study uses the loan volumes of the conventional and participation banks in order to measure the impact of GDP representing economic growth and of the banks upon the financial system. The series are tested for stationarity via ADF unit root test and then their structural breakpoints are identified by using Zivot-Andrews test. Then Johansen cointegration and Granger causality test are applied. As the result, no trace of cointegration correlation is identified in the long term between the variables subjected to Johansen cointegration test. The causality correlation of the variables is tested via Granger causality test. Although it can be said that there is one-directional causality correlation as reverse for conventional banks, there is no bidirectional causality correlation between the variables for the participation banks in the long term.

This study aims at empirically exploring the short-and long-run relationships between economic growth, non-performing loans, interest rates and the credit demand by the small and medium enterprises (SMEs) in Aceh province, Indonesia. The quarterly data for the period 1995 to 2015 were analyzed by the cointegration and vector error correction model (VECM). The study documented that there was a cointegration among the economic growth, non-performing loans, interest rates and the credit demand, implying the existence of long-run equilibrium among the variables. In addition, in short-run, the study found a unidirectional causality from economic growth to credit demand, a bidirectional causality between interest rates and credit demand, while no causality existed between non-performance loan and credit demand by the SMEs in Aceh, Indonesia. Thus, to enhance the SMEs, the government should focus on promoting the economic growth by managing the stability of interest rates in the province.

This paper mainly focused in comparing the role of conventional and Islamic banking on the development of real sectors in Indonesia. This study also included the analysis for economic sector growth. The Growth Regression Cross Sectional was used as quantitative analysis to capture the significant effect of both conventional and Islamic banking credit on the development of economic sector in different provinces in Indonesia. This research captured the lending activity of Islamic banks and conventional banks in 9 provinces with the highest Islamic banking activities from 2007 until 2010. Although overall Islamic bank financing activity did not affect output in province samples significantly, based on economic sector analysis Islamic banks had a major role in the development of agricultural, transportation, and services sectors. Lending activity from Islamic banking statistically affect the increase of output in those sectors, with the confidence level of 95%. The increase of Rp. 1 billion lending value from Islamic banks will give impact as follows: 1) an increase in agricultural sector output of Rp. 10.5