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Is there a role for Islamic finance and R&D in endogenous growth models in the case of Indonesia?

journal contribution
posted on 2020-09-01, 00:00 authored by S M Juhro, Paresh Narayan, Bernard Njindan Iyke, B Trisnanto
© 2020 The validity of growth models is debatable, more so in developing than in developed economies. We contribute to this debate by testing the relevance of semi-endogenous growth models in explaining Indonesia's economic growth transformation. Using historical time series data (1968 to 2018), we test growth models from a unique perspective by examining the roles of the Islamic financial market, the conventional financial system, and structural changes. We show that Indonesia's growth experience is best characterized by a semi-endogenous growth model driven by research activity and access to the financial system, particularly the Islamic financial market. We conclude that while linear models fail to support semi-endogenous growth models, nonlinear models do support them.

History

Journal

Pacific Basin Finance Journal

Volume

62

Article number

101297

Pagination

1 - 21

Publisher

Elsevier

Location

Amsterdam, The Netherlands

ISSN

0927-538X

Language

eng

Publication classification

C Journal article; C1 Refereed article in a scholarly journal