A quantitative reassessment of the dual banking-growth nexus in Indonesia: Comparative analysis

Abstract

Economists who considered the growth performance in the past estimated that Indonesia would preserve its high growth rate performance in the long term. However, the national economy can be currently considered as a developing nation. In addition to public sources, domestic and foreign resources are also needed in the financing of high growth rate. Dual banking offers alternative financial capital opportunities for the developing Islamic countries. It could be argued that the IF serves as an alternative in Indonesia to finance investments. To better measure the probable impacts of the loans they offer upon the GDP, seemingly unrelated regression model has been utilized. A review of the both correlation matrix reveals that there is a strong positive relationship between the loans offered for the sectors and the GDP.