Impact of The Islamic Banks’ Performances on Economic Growth of Bangladesh_ Panel Data Analysis

Abstract

The research investigates the impact of Islamic banks' performance on Bangladesh's economic growth by analyzing panel data from selected banks between 2010 and 2019. A quantitative approach was used, focusing on financial ratio analysis (FRA) due to the secondary nature of the data. The study employed various methods such as Covariance Analysis, Unit Root tests, ARDL tests, and Granger Causality Analysis to evaluate the data from five Islamic banks selected as samples. The findings show a positive and significant impact on economic growth during this period, with a notable increase in profitability within the banking sector over the last decade. The research indicates that financial performance indicators play a crucial role in influencing economic growth. Therefore, policymakers should pay attention to the factors that affect financial performance and prioritize strategies that support rapid economic growth through effective risk management. This study offers valuable insights into the financial performance of Islamic banks, highlighting the significance of profitability in their roles within the broader economic system.