Degree

Master of Science in Islamic Banking & Finance

Department

Department of Finance

Faculty/ School

School of Business Studies (SBS)

Date of Submission

Fall 2022

Supervisor

Dr. Irum Saba, Professor, Institute of Business Administration, Karachi

Co-Supervisor

Dr. Maqsood Ahmad, Co-Supervisor, University of Okara, Okara

Committee Member 1

Dr. Falik Shear, Examiner, Assistant Professor, National Textile University, Faisalabad

Committee Member 2

Dr Ameenullah Aman, Examiner, Associate Professor, SZABIST

Committee Member 3

Dr. Ashar Saleem, Director Graduate Programs SBS, Institute of Business Administration (IBA), Karachi

Keywords

Real Gross Domestic Product per Capita, Lending Interest Rate, Inflation, Domestic Credit to Private Sector, Unemployment, Gross Domestic Product (Purchasing Power Parity) Growth, Broad Money, Export of Goods and Services, Gross Savings, Official Exchange Rate and Foreign Direct Investment, Vector Error Correction Model, Fixed Effect, Random Effects, Generalized Method of Moments

Abstract

A strong financial system is very important for any country to foster economic growth. Banking nowadays is considered as one of the main components of any financial system because it ensures efficient capital flow, effective financial inclusion, secured investment opportunities, various payment solutions, approach to foreign markets and so on. This study attempts to review effect of banking system over different economies across the globe. Considering extensiveness of the topic the study included 50 different countries and obtained secondary data from ‘World Development Indicators’. Initially, the study selected key variables i.e. Gross Domestic Product per Capita (Constant LCU), Inflation, Lending Interest Rate, Domestic Credit to Private Sector % of GDP & Unemployment % of Total Labor Force of 50 years from 1973-2022 and observed relationship between different dependent cum independent variables through ‘Vector Error Correction Model’ and observed long run relationship between variables. Then study also reviewed behavior of all dependent variables of each country in 02 different eras i.e. first 25 years (1973-1997) and last 25 years (1998-2022) to compare their performance. After that, study applied Fixed Effects, Random Effects and Generalized Method of Moments over 33 years data 1990-2022 of 50 countries and used following variables “Gross Domestic Product (Purchasing Power Parity) Growth, Broad Money % of GDP, Domestic Credit to Private Sector % of GDP, Export of Goods and Services % of GDP, Lending Interest Rate %, Gross Savings % of GDP, Official Exchange Rate and Foreign Direct Investment, net inflows % of GDP” to check effect of banking and various independent variables over GDP growth. The results of the study in general showed that growth of banking system has adversely affected the economies however increase in exports is significantly positive for economic growth of the countries.

Document Type

Restricted Access

Submission Type

Thesis

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