Impact of Macroeconomic Variables on Growth of Assets in Islamic Banks: A Case of Pakistan

Abstract

The foremost intention of this study is to investigate the influence of macroeconomic variables on the growth of assets in Islamic banks of Pakistan for 11 years from 2008-2018. Descriptive statistics, correlation matrix, and ordinary least square technique are used for data analysis. Thus, the findings indicate that the provision of domestic credit (% GDP) has positive and a significant influence on the growth of assets in Islamic banks in Pakistan. The consumer price index has a negative influence on the growth of assets in Pakistan because as the consumer’s price index has been risen up, consumers reduce their expenditures on goods and services, thus gathering assets in Islamic banks will be reduced. Thus, the consumer’s price index has negative effect on the growth of assets in Islamic banks. The outcomes of this research are consistent with the previous studies and shows same results. Keywords: Macroeconomics Variables, Growth of Assets in Islamic Banks, Domestic Credit, Consumer Price Index, Pakistan.