Measuring the Contribution of Full-Fledged Islamic Banking to the Growth and Development of Bangladesh Economy

Summary / abstract of thesis: Islamic Banking is a new Industry which has attracted the attention of many economists in the world regarding its ability to operate successfully and its instruments for mobilizing and allocating monetary resources. The present study has been conducted to measure the Contribution of full-fledged Islamic Banking to the Growth and Development of Bangladesh Economy.

In this study qualitative and quantitative analysis methods have been followed. The structured interview has been taken on 55 interviewees using Likert Scale Survey method. Structured interviews were carried out with the 55 interviewees including Managers of 16 branches of 8 full-fledged Islamic Banks (8 Managers of the City and 8 Managers out of the City), 4 Official of Central Bank from the level of General Manager to Deputy Director, 3 Academicians (Professor to Assistant Professor) and 32 deposit and investment clients of the said Banks situated in Dhaka City and outside Dhaka City i.e. Narayangonj City. The results of the interviews were the introduction of several instruments used in the Banking system in Bangladesh for the supervision of Banking activities and to ensure their Shariah-Compliance. A new issue in this research is that being Shariah-compliant does not only mean utilizing appropriate contracts but also using deposits for the most efficient and profitable vendor. This is because banks are the agents of the depositors and therefore they must use their deposits for the best possible projects.

Though the study period was 2012-2016 but the data have been used from 2011-2012 to 2015-2016, in order to make a comparative study among the data of 8 full-fledged Islamic Banks and the Government Fiscal data. For more accurate study, not only the figure of deposits and financial facilities in these periods was considered but also the other activities were focused. My research target was to find out and to measure how the 8 full-fledged Islamic Banks of Bangladesh are contributing to the different major economic sectors i.e. Agriculture, Industry and Services Sectors of Bangladesh Economy. For qualitative analysis in respect of Shariah and general aspects discussion has been made on the structured questionnaires using 5 points Likert Scale (chapter eight and nine).

From the quantitative analysis (chapter seven) the set forth data for the period 2011-2012 to 2015-2016 it is measured and found that the contribution of full-fledged Islamic Banks is very insignificant i.e. 0.37% to 0.44% to the size of total Gross Domestic Product of our economy. But there is a significant role in contributing to the Agriculture, Industry and also Service sectors. For the year 2012,2013,2014,2015 and 2016 to the Agriculture sector it is 1.60%, 1.74%, 1.34%, 1.68% & 1.77%, to Industrial sector it is 22.40%, 19.67%, 18.39%, 17.69% & 17.93% and to the Service Sector it is 76.00%, 78.59%, 80.27%, 80.63% & 80.30% to the economy of our country. It is seen that percentage share of Islamic Banks to the agri-sector is gradually increasing but percentage share to the industrial sector is gradually decreasing day by day. As on December 31 2016, the contribution to the total deposit is 21.46% and in investment it is 22.92%, in agriculture it is 29.16% and in total Branches it is 10.85%.

Though the contribution of Islamic Banking to the Economic Growth and Development is very insignificant, successfully Islamic Banks contributing to the Economic Growth and Development of Bangladesh Economy since inception to this industry.