The Role of Islamic Banks in Economic

Said AL-Hallaq

Abstract

The current study is designed to investigate the practice of Jordan Islamic Bank (JIB) as a case study during the period 1980-2000. The Two Stage Ordinary Least Square has been used to capture the direct and indirect effects of Jordan Islamic Bank (JIB) on the real per capita income as a proxy to economic growth. The indirect effect of total financing and investment by (JIB) as a percentage of total credit was relatively small (0.048) compared to that by conventional bank (0.50). However, this contribution should be looked at as a good start by Islamic Banks given the fact that their experience is only 20 years compared to that of Conventional Banks.

 

1. Introduction:

The history of Islamic financial institutions in Jordan is not that old. Jordan Islamic Bank (JIB) for Finance and Investment was established in 1979 with a capital of JD (4) Million divided into (4) Million shares. The Bank’s capital increased over the years to reach JD (38.5) Million in the year 2000. The Bank aims at accommodating the diversified economical and social needs of citizens in the fields of banking, financing and investment on a non- usurious basis. This is realized through the Bank (51) branches and (11) offices, widespread all over the kingdom. The Jordan Islamic Bank has been growing rapidly; the number of clients as well as the volume of funds mobilized and invested reflects this rapid growth. The success made by Jordan Islamic Bank, however, encouraged the Arab Bank Corporation (the largest financial institution in Jordan), to establish The International Arab Islamic Bank in 1996: to conduct murabaha transactions, leasing and other investment instruments according to the Islamic principles.

 

The entrance of such an institution is expected to increase competition and reduce the monopolistic position role of Jordan Islamic Bank as the only Islamic Bank in the country. Thus, it is expected that the performance of Jordan Islamic Bank will tend to improve even better due to the presence of this new competition.

 

However, we must keep in mind that Jordan Islamic Bank is facing the following obstacles (AL- Omar and Abdel-Haq, 1996):

 

JIB has found, itself forced in order to make up the disadvantage of non being able to use the central bank as lender of last resort, to make most of it financing operations short or medium term, and to hold high levels of cash in notes in case of emergencies.

 

Lack of enough financial instruments like bonds, for example, if the (JIB) could hold listed securities issued by high-quality corporations; this could be a substitute for cash.

 

3. The JIB has found itself forced to take a tougher line on guarantees when it agrees to finance any project. The reason for this is that, in the past, some clients have tried to take advantage of the fact that the (JIB) is not able to charge interest on late payments of bills as conventional banks. There is no penalty for late payment under Islamic Law.

 

Thus, when comparing the impact of (JIB) on the economic growth of Jordan relative to conventional banks, we should not be surprised if the impact of (JIB) showed less effect. However, given the above-mentioned obstacles, this is highly expected.

 

The importance of this study comes from the fact that there is a serious lack of empirical studies on the evaluation of Islamic Banks performance compared to that of conventional banks. Munawar Iqbal (2001) has pointed this out in his attempt to compare the performance of Islamic Banks relative to conventional banks. Iqbal study was a serious and a leading study in empirical studies on Islamic Banking. Iqbal study includes in its sample 12 Islamic banks and 12 conventional banks to fulfill the purpose of his study. The conclusion reached by Iqbal showed that the in general Islamic banks have done fairly well during the period 1990-1998. This study will be an attempt to help in filling the existing gab in empirical studies on Islamic Banking.

2. Data and Methodology

 

The current study will attempt to examine the role of Jordan Islamic Bank in economic growth during the period 1980-2000. Data are gathered from the annual reports of the Jordan Islamic Bank, and the annual reports and quarterly statistical bulletins of Central Bank of Jordan. The suggested model is a simultaneous macro-econometric model consists of two behavioral equations, which will be estimated using Two Stage Ordinary Least Square methods (2SLS).

 

3. Development of Jordan Islamic Bank Activities

 

Before examining how (JIB) could contribute in the economic growth of the Jordanian economy through its financing and investment, it is worth providing an over view about the development of (JIB) during the period under consideration.

 

Table (1 -A)

 

Development of (JIB) activities during the period (1980-2000)

 

Financ-ial year

Total Assets

Total Deposits

Total financing and investment by JIB (1)

Total financing by conventional banks

(2)

(1/2)% (RAT)

Growth rates of total Assets

Growth rates of total deposits

(%)

Growth rates of total financing and investment by (JIB)

1980

15.5

11.6

6.8

563.9

1.2

1981

31.6

25.3

14.2

721 .3

2.0

103.8

118.0

108.8

1982

45.2

35.8

26.5

887.2

3.0

43.0

40.0

86.7

1983

71.5

58.6

37.6

1030.9

3.6

58.2

63.7

41.9

1984

102.0

82.8

63.0

1184.8

5.4

42.7

41.3

67.6

1985

126.8

102.8

71.0

1274.4

5.7

24.3

24.5

12.7

1986

161.7

127.6

95.5

1395.4

5.7

27.7

24.1

34.5

1987

197.4

158.5

109.0

1513.0

7.0

22.2

24.3

14.2

1988

222.6

177.8

124.1

1634.0

7.2

12.8

12.2

13.9

1989

242.3

187.2

144.1

1729.2

8.0

9.0

5.8

15.9

1990

244.8

190.3

148.9

1863.5

8.3

4.6

1.8

3.4

1991

356.7

296.9

193.1

1965.8

8.0

22.2

56.3

29.7

1992

435.3

369.5

243.1

2218.3

10.0

21.4

24.8

25.9

1993

528.3

420.6

306.7

2616.9

11.0

8.0

14.0

26.2

1994

570.0

462.1

356.1

3248.4

12.0

9.1

10.0

16.2

1995

621.9

508.5

418.2

3705.7

11.0

-0.3

9.9

17.5

1996

618.7

502.3

422.1

3920.3

12.0

5.3

1.7

7.0

1997

650.6

513.4

461.8

3979.7

11.0

8.7

2.2

9.4

1998

706.7

527.8

481.4

4285.3

12.0

7.1

2.7

4.5

1999

756.7

543.6

490.2

4466.6

11.0

12.8

3.0

2.0

2000

853.3

564.6

531.8

4546.5

12.0

11.2

3.8

8.4

Sources: (1) Central Bank of Jordan, Monthly Statistical Bulletin, different issues.

(2) Jordan Islamic Bank for Finance and Investment, Annual Reports, different issues

 

This item comprises the following: Murabaha financing, Murabaha and Musharaka financing, among after investments. The sectoral distribution of financing and financing operations comes as follows: Agriculture, Industry and mining, General trade, construction and transportation.

 

3.1 Total Deposits of (JIB)

 

It is very important to mention that total deposits rate of growth was (118%) in 1981 (see table 1), this high rate can be explained by the fact that the exiting of (JIB) increases the amounts of deposits and reduce the amounts of hoarded savings by individuals. This is because many individuals prefer to keep their savings outside the banking sector rather than engaging in any interest dealings (Rawashdeh, Hallaq, and others, 1999). On the same regard, those who used to deal with conventional banks are forced to do so in the absence of Islamic banking system. Thus, once the system has been founded most of these funds are believed to have moved to Islamic banks (Bashir, 1984). Where as, the rate of growth of total deposits started to decline after words and showed cyclical behavior (see Fig (1)).

 

 

 

However, Iqbal (2001) provides an explanation for this decline in the growth rates of total deposits mainly after 1990s due to the increase in the number of conventional banks started offering Islamic product. The Arab Bank Corporation, for example, which is the biggest financial institution in Jordan, starts to offer Islamic products and becomes a real competitor to (JIB).

 

3.2 (JIB) Total Financing and Investment:

 

The rates of growth in total investment are highly dependent on the amount of total deposits. In 1981, for example, the rate of growth reached its maximum at 108%. This could be explained by the same reasons mentioned in the previous: JIB attracted savings, which were not deposited in conventional banks for religious reasons. On the same regard, in 1990 this rate was only 3.4%, this low rate could be explained as direct impact of the Gulf War (II), which negatively effected the entire region.

 

However, This rate starts to fluctuate after 1996 due to the existence of Arab Bank Corporation as a real competitor in providing Islamic products (see Fig (2)).

 

(JIB) total investment comprises the followings: Murabaha financing, Musharakah and Murabaha financing, promissory note balance financing, Installments from leases ending in ownership. However, the sectoral distribution of total investment and financing operations come as follows: Agriculture, Industry and Mining, General trade, Construction and Transport.

 

3.3 Total Assets of (JIB)

Growth rate of total assets of Jordan Islamic Bank was 103.8% in 1981, after that it started to decline, it declined to reach 4.6 % in 1990 for the same reasons affected growth rates of both total deposits and total financing and investment (see Fig (3))

 

 

Theoretical Background:

 

4-1 Economic Growth

 

Classical economists believed in Say’s law, which argues that demand always automatically adjusts to supply. Thus, they had no worries about lack of demand, but they discussed growth only in terms of supply. In its simplest terms, classical economist visualized the supply of output as equal to amount of capital times the productivity of capital, according to the classical economists (Hunt and Sherman, 1990). The rate of growth is defined as the change in output as a percentage of current output.

 

Growth rate = change in output/ current output.

 

Classical economists, concerned as they were about economic growth, called for as much saving as possible. However, Keynes pointed out that more savings will lead to amore rapid increase of capital and consequently to more rapid economic growth only if we assume full employment and the rule of Say’s law, which claims that demand is always enough for any supply of goods and that all savings is automatically invested (Branson, 1989).

 

There is no doubt that capital formulation is a major determinant of economic growth. However, in Developed countries labor is clearly more productive the more machinery and equipment, it has to work with. Whereas in the underdeveloped the situation is different, since developing countries tend to increase their capital formation in order to stimulate economic growth with no provision is made for repairs, spare parts, and efficiently combining capital with other factors of production. For example most developing countries was fascinated by the post-Keynesian growth theories developed particularly those of Roy F. Harrod and Evsey D. Domar. These theories have been quite useful in explaining the optimum growth rate of productive capacity in developed countries. But when economists applied these analytical tools to developing countries, their conclusion was very misleading (Zuvekas, 1979). On the same regard, Robert M. Slow emphasized the same point in his latest article “ Applying Growth Theory a Cross-Countries” (June 2001).

 

In my view growth theory was conceived as a model of the growth of an industrial economy. Its parameters certainly could not be regarded as fixed forever, but may be they would need to be considered only over intervals of 30-50 years, Long enough so that the differences between endpoints could not be dominated by demand-driven business cycles. So for as I can remembers I have never applied such a model to a developing economy, because I thought the underlying machinery would apply mainly to a planned economy or a well -developed market economy.”

 

The above discussion indicates that we cannot simply apply ready made models to developing countries without any modification to suit the country in question. This study will build a simultaneous macro econometric model to capture both the direct and indirect effects of the role of Jordan Islamic Bank in economic growth for the period 1980-2000.

 

4-2 Banking Systems and Economic Growth

 

The importance of the financial system has occupied economists and policymakers since the beginning of financial history. The primary purpose of banks is to mobilize otherwise idle resources for use in productive investment. As pointed out by Fohlin (1998) a wide array of theoretical models has appeared in the growth and development literature in the past decade to formalize the link between financial-system functions and the growth of real economy. In comparison to the traditional growth models- in which output was seen as a function of capital, labor, and disembodied technological progress- the current models provide a richer framework for interpreting the potential impact of financial system. Pagano (1993) provides a simple way to summarize the newer models of finance and growth. He used several simplifying assumptions, the model yields the growth rate of output per capita as a function of three variables: savings rate, return on investment, and costs of intermediation. Thus, according to Pagano the financial institutions may enhance economic growth by raising the total quantity of financial capital available to entrepreneurs, improving the quality of investment and increasing the efficiency of intermediation lowering costs between the sources and uses of funds. On the same regard, Levine (1997) showed that as financial intermediaries, banks pay a crucial role in the operation of most economies. Thus, the efficiency of financial intermediaries can effect economic growth. Thus, we can conclude by arguing that given the fact those banks influence the accumulation of physical capital by “directing funds” to entrepreneurs who wish to invest. Such capital mobilization proceeds in two stages: Capital collection through deposit-taking and fund dispersal through loans. By repeating this process, the banking system multiplier expands the money supply and redistributes the economy’s capital. These banking functions increase the share of resources targeted to productive investment. It is worth emphasizing that Islamic Bank’s role cannot be only tied to the role of mobilizing capital, rather their role can be extended through decisions about how to lend and invest fund (i.e., the quality of investment). Thus, Islamic bank’s can influence the quality of capital formation.

 

5. The Model

 

The suggested model is a simultaneous macro-econometric model includes the following variables: real per capita income as a proxy for economic (Per) (i.e. the dependent variable), where as the independent variables are: real interest rate (Rt), Net transfer from abroad (Re), (JIB) total financing and investment as a percentage of total credits by conventional banks (RAT), Gross investment (It)-which is calculated as gross fixed capital formation plus change in stock (I)- and gross domestic product (GDP).

 

The structural form of the suggested model consists of two behavioral equations and will be estimated using the Two Stage Ordinary Least Square method (2SLS).

 

The economic growth function, measured by the change in the real per capita income, Which could be explained by the change of the following factors : investment volume, net transfer from aboard, and the total credits by conventional banks (see for example: Branson, 1989, p.528),

 

Pert = f (TCB t -1, Re t-1, It)

We can rewrite the above function in the power form as follows:

Pert = B0 TCBB1 t –1 ReB2 t-1 ItB3 eut1 ……………… …(1)

 

Where:

Per t: refers to the real per capita income as a proxy for the economic growth,

TCB t –1 = total credit by conventional banks.

Re t –1 : net transfers from abroad

It = volume of investment and

Ut1= error term

 

It must be pointed out that the lag form in the first equation was used to indicate that the effects of the transfers from abroad as well as the total credit by conventional banks takes time to prevail, the logarithmic form will be used for the above equation so as to reflect the change in dependent variable (Per t) on the independent variables (TCB t -1, Re t -1 and I t). Then using the log form,

 

Log Per t = log B0 + B1 Log TCB t-1 + B2 Log Re t-1+ B3 Log It + Ut1 …(2)

 

It must be clear that all the coefficients of the independent variables are “elasticities.” Such that the partial derivative of the dependent variable to with respect to any of the independent variables measures the responsiveness or the sensitivity of change in the dependent variable as a result of the change in the independent variable in question.

 

Table (1-B)

 

Variables used in the suggested model

 

Financial year

Real Per Capita income (Per)

Real Interest

Rate(Rt)

 

Net Transfers

From abroad

(Re)

Population

(POP)

Total Financing and Investments

By

(JIB)

Total Credits by Conventional

Banks (SDCB)

Gross

Investment

(I)

Gross

Domestic

Product

(GDP)

1980

1065.9

6.5

236.7

2.92

6.8

563.9

493.9

1151.2

1981

1352.3

6.5

340.9

3.01

14.2

721.3

701.0

1426.7

1982

1530.4

6.5

381.9

3.10

26.5

887.2

679.4

1638.1

1983

1592.4

6.5

402.9

3.20

37.6

1030.9

623.4

1765.8

1984

1691.1

6.5

457.0

3.30

63.0

1184.8

577.6

1891.4

1985

1727.8

8.5

402.9

3.41

71.0

1274.4

426.8

1969.8

1986

1754.9

8.5

414.5

3.52

95.5

1395.4

447.9

2114.6

1987

1785.2

7.5

317.7

3.63

109.0

1513.0

544.6

2162.7

1988

1812.9

7.5

335.7

3.75

124.1

1634.0

569.1

2218.4

1989

1944.6

7.5

358.3

3.88

144.1

1729.2

602.3

2329.9

1990

2038.7

8.5

331.8

4.01

148.9

1863.5

751.5

2612.5

1991

2653.6

8.5

424.6

4.15

193.1

1965.8

667.9

2779.4

1992

3770.3

8.5

514.6

4.29

243.1

2218.3

1039.4

3234.2

1993

4229.3

8.5

666.6

4.35

306.7

2616.9

1082.2

3595.7

1994

4562.7

8.5

698.7

4.39

356.1

3248.4

1451.0

3857.7

1995

4943.9

8.5

796.7

4.40

418.2

3705.7

1554.4

4246.9

1996

5279.3

8.5

1024.0

4.44

422.1

3920.3

1497.4

4711.0

1997

5548.7

7.75

1132.5

4.60

461.8

3979.7

1322.3

4954.8

1998

5795.4

9.0

983.5

4.75

481.4

4285.3

1261.0

5642.9

1999

6144.1

9.0

1035.2

4.90

490.2

4466.0

1087.8

5723.9

2000

6341.0

9.0

1268.2

5.04

531.8

4546.5

1199.0

5912.9

Source: (1) Central Bank of Jordan, Monthly Statistical Bulletin, different issues.

(2) Jordan Islamic Bank for Finance and Investment, Annual Reports, different issues

5.1.2 Investment Function

 

The investment function is measured by the change in gross investment, which could be explained by real interest rate (Rt), gross

 

Domestic product (GDP), and (JIB) total financing and investment as a percentage of total credits by conventional banks (RAT). (Maisel, 1982).

It = ƒ (Rt, GDP t, RATt)

 

We can rewrite the above function in the power form as follows:

 

It = A0 Rt A1 GDPtA2 RATtA3 eut2 ………………………………… (3)

Where:

I t : is the investment level,

Rt: is the real interest rate,

GDPt: is the gross domestic product, and

Ut2: error term

This function shows the importance of investment as a major component of aggregate demand. However, the logarithmic form will be used for the two simultaneous equations so as to measure the impact of the independent variables throughout their coefficients (i.e, elasticities) on the dependent variables under consideration, which will be used latter on to determine both direct and indirect effects of these variables.

Then,

Log I t = logA0 + A1 Log Rt + A2 Log GDPt + A3 Log RATt + Ut2 …(4)

 

6.Variables of the model and their estimation:

The model consists of two endogenous variables and six exogenous variables. Table (2) describes these variables.

 

Table (2)

 

Endogenous Variables

 

Exogenous Variables

The change in the real per capita income (Log Per).

The change in total volume of investment (Log I)

The change in transfers from a broad (Log Re).

The change in total credit by conventional banks (Log TCB).

The change in the gross domestic product (Log GDP)

The change in real interest rate (Log R)

The change in (JIB) financing and investment as a percentage of total credit by conventional banks (Log RAT)

 

The model approved to be measured after investigating the problem of identification. Both of the above two endogenous equations were over identified, thus it is more convenient to use the two stage least square approach to measure the endogenous variables of the model.

 

7. The results of the estimation

 

Using the data available in table (1-B) through the Two-Stage Least Square approach for the economic growth function and the investment function, the following tables summarizes the results:

 

Table (3)

 

The economic growth function (Log Per) (Dependent variable)

 

Independent variables

Estimated coefficients

T – values

– Total credit by conventional banks (Log DCB t-1 )

Gross investment (Log I)

Net transfers from a board (Log Re)

 

0.50

0.22

0.24

 

(6.83)*

(4.26)**

(8.5)*

Notes: (a) F-test = 179, constant = 2.2, (b) *: Significant at 1% level

**: Significant at 5% level

 

Table (4)

 

The investment function (Log I) (Dependent variable)

 

Independent variables

Estimated coefficients

T – values

Gross domestic product (Log GDP).

(JIB) total financing and investment as a percentage of total credits by conventional bank (Log RAT)

real interest rate (Rt)

 

0.96

 

 

0.16

-0.14

(3.43)**

 

 

(0.45)

(-0.25)

Notes: (a) F-test= 112, constant = -1.12, (b) **: Significant at 5% level

 

From the above two tables we can reach the following conclusions:

Both the change in total investment (Log I) and the change in net transfers from abroad (Re) prove to have a positive and significant impact on the dependent variables (Log Per) such that if gross investment increased by 1 % the per capita income will increase by 30 %, whereas the increase in net remittances by 1 % will lead to increase per capita income by 34%.

 

The impact of total credit by conventional banks proves to be insignificant, even though it shows a positive coefficient. This can be explained by the fact that conventional banks are interested only in getting its predetermined rate of interest regardless of the type of projects borrowers will choose to implement. In Jordan, unfortunately, the large portion of investments is devoted to the service sector, where it reduces the chances of increasing Job opportunities and thus reduce the level of employment

 

The impact of change in (JIB) financing and investment as a percentage of total credit by conventional banks was positive but insignificant. This can be explained by the fact that most of its financing operations (short or medium terms), and it has to hold high levels of cash in notes in case of emergencies a long with the lack of enough financial instruments as in the case of conventional banks.

 

Also we must remember that (JIB) was established 20 years ago, so it is unfair to compare its impact on the economy with those effects of conventional banks, which have been established in Jordan for more than 50 years ago.

 

8. The reduced form

 

The structured form is always used to explain the direct effect of the independent variables of any model on the dependent variables, but the reduced form explains both direct and indirect effects of independent variables on the dependent variables. This study will use reduced form to analyze the direct effects of Jordan Islamic Bank financing and investments on the total investment and the indirect effect of Jordan Islamic Bank financing and investment on real per capita income.

 

Log Per = 2.23 + 0.50 Log DCB (-1) + 0.30 Log I + 0.34 Log Re

Log I = -1.11 + 0.96 Log CDP + 0.16 Log RAT – 0.14 Rt

 

In order to capture the indirect effects on the independent variables on the change in real per capita income (Log Per). We can use the chain rule to do that (Chiang, 1988) as follows:

 

1. d Lper = δ LI * d L Per = (0.96) (0.30) = 0.288 > 0

d GDP δ GDP dLI

 

It is very clear that total investment will effect positively the level of GDP, which will in turn effect the per capita income. That is, the indirect effect of GDP on per will associate positively, through the level of investment.

 

2. d Lper = δ LI * d L Per = (0.16) (0.30) = 0.048 > 0

d LRAT δ LRAT dLI

 

The indirect effect of total investment as a percentage of total financing and investment by (JIB) is relatively small, only (0.048) on the real per capita income. It must be looked at as a good start. However, the direct impact of total credit by conventional banks is (0.50), which is higher than that of the (JIB); This can be justified by the fact of (JIB) scale and the surrounding economic environment mentioned in the introduction of this paper (see for example Vogel and Hayes, 1998).

 

3. dLper = δ LI * dL Per = (-0.14) (0.30) = (-0.042) <0

dLRt δ Rt dLI

 

The direct effect of real interest rate was negative (-0.14), this result is consistent with the negative relationship between the interest rate and the level of investment

 

The indirect effect of real interest rate on the real per capita income negative and relatively small due to the fact that real interest rate was fixed and controlled by the monetary authority for a very long period of time (Hallaq, 1997).

 

9. Conclusions

This study was designed to investigate the practices of Jordan Islamic Bank (as a case study) during the period of 1980-2000. The Two Stage Ordinary Least Squares were used to capture the direct and indirect effects of (JIB) on the real percept income, which has been used as proxy to economic growth. Several results been found.

 

Growth rates of total deposits, total assets and total financing and investment by (JIB) in 1981 showed a very high growth rates at an absolute sense due to the fact that many individuals were hoarding their private savings outside the banking formal sector rather than engaging in any interest dealings. After wards, these growth rates start to take a normal pattern of growth. The Arab Bank Corporation in Jordan, the biggest financial institution starts to offer Islamic product, which effects the growth, rates after 1995.

 

The study used a simultaneous macro-econometric model to capture the direct and indirect effects on economic growth during the period under consideration:

 

The suggested model consists of two behavioral equations and will be estimated using the two stage ordinary least square method.

 

The economic growth function, which is measured by the change in real per capita income, could be explained by the change in the following variables. Investment, net transfers from a broad and total credits by conventional banks.

 

The Investment function, which is measured by the change in gross investment, was explained by the following variables: real interest rate, gross domestic product, and total financing and investment by JIB as a percentage of total credits by conventional banks.

 

9.3.The statistical results showed that

 

9.3.1 Both changes in total investment and net transfers from abroad proved to have a positive and significant impact on the change in real per capita income.

 

The total credit by conventional banks proved to be insignificant, even though it shows a positive coefficient. This can be explained by the fact that a large portion of such credits goes to the service sector. Thus, their direct effect on real per capita income was small and insignificant.

 

The impact of the change in (JIB) financing and investment as a percentage of total credit by conventional banks on the investment level was positive but insignificant. This is expected since most of (JIB) financial operations was short or medium, so that the bank has to hold high levels of cash in notes in case of emergencies.

 

The reduce form has been used to explain both direct and indirect effects of the independent variables on the dependent variable.

 

Volume of investment affects positively the level of gross domestic product, which in turn affects the real per capita income. Thus, the indirect affect of GDP on per capita income will associate positively through the level of investment.

 

9.4.2 The indirect effect of total financing and investment by (JIB) as a percentage of total credits by conventional banks was relatively small (0.048) on the real per capita income. But this rate must be looked at as a good start by Islamic banks compared to (0.50) by conventional banks total credits.

 

The indirect effect of real interest rate on the real per capita income was negative and relatively small due to the fact that real interest rate was fixed and controlled by the monetary authority for a very long period of time.

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Fohlin, Caroline (1998), ‘Banking Systems and Economic Growth: Lessons from Britain and Germany in the Pre-World War Era’, Review, Federal Reserve Bank of Saint Louis, 80 (3), 27-54

Hallaq-al, Said and Nadera Murayan (2000), ‘The Impact of Private Investment in Economic Growth: The Case of Jordan’, Dirasat, University of Jordan, 22(2),359-374.

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Chair, Economics & Islamic Banking Dept., Yarmouk University, Irbid, Jordan.

One thought on “The Role of Islamic Banks in Economic

  1. This research is very usefull …. i have learned alot from it, i myself writing a report on JIB and i would like you to tell us some more relevant information on JIB..

    Like

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