The impact of Islamic finance on economic growth: a literature review

Abstract

In Morocco, the advent of Islamic finance in May 2017, through the launch of five banks and three windows, marked the beginning of the construction of a new Shariah-compliant financial and banking engineering ecosystem.

The aim of this article is to examine the potential contribution of Islamic banking to economic growth in Morocco. To do so, we will rely on a descriptive methodology, consisting of an in-depth exploration of existing literature and empirical studies dealing with this issue.

First, we will present the characteristics of Islamic finance, and discuss its emergence and track record in Morocco. We will then use a literature review to examine the relationship between financial development and economic growth, and whether the financial sector contributes to the process of economic development.

Finally, we will analyze the results of empirical studies that have examined the role of the development of Islamic finance in economic growth in the countries of the Middle East and Southeast Asia.