ANALISIS HUBUNGAN KAUSALITAS PERKEMBANGAN SEKTOR KEUANGAN (DUAL BANKING SYSTEM) DAN PERTUMBUHAN EKONOMI DI INDONESIA

Abstract

This study is aimed at examining the causality relationships between both Islamic and conventional financial development (dual banking system) with the economic growth in the Indonesia. Using quarterly data (2007.1-2016.4), this paper used Vector Error Correction Model (VECM) to uncover the long-run and short-run relationships between Islamic and conventional financial development and economic growth. The results show that there is a significant positive relationship between Islamic finance and economic growth in the long-run. However, there is no evidence on the short-run relationships between them. The conventional finance relationships with economic growth in Indonesia appears to be a bi-directional relationships. Conventional finance has a significant relationship with economic growth, both in the long-run and short-run.