Research Proposal:

Impact of Interest Prohibition in Islamic Finance on Economic Growth

Title:
Exploring the Economic Implications of Interest Prohibition in Islamic Finance

Introduction:
Islamic finance, guided by principles that prohibit interest (riba), presents a
unique alternative to conventional interest-based banking. This research aims to
investigate the economic implications of interest prohibition in Islamic finance,
focusing on its impact on economic growth within Muslim-majority countries. By
utilizing readily available data sources and analytical tools, this study seeks to
provide insights into the potential benefits and challenges of interest-free
financing mechanisms.

Objectives:
1.To analyze publicly available macroeconomic data and financial indicators to
compare the performance of Islamic finance institutions with conventional
banking systems in encouraging economic growth.
2.To examine the resilience of Islamic finance institutions to financial crises and
their contribution to financial stability within their respective markets.
3.To identify practical recommendations for policymakers and market participants
on leveraging Islamic finance principles to support sustainable economic
development.
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Methodology:
1.Data Collection: Utilize publicly available data sources such as World Bank
databases, central bank reports, and financial market Guide To gather relevant
macroeconomic and financial data.
2.Quantitative Analysis: Conduct statistical analysis to compare economic growth
rates, investment levels, and financial market performance between countries
with significant Islamic finance sectors and those with conventional banking
systems.
3.Literature Review: Review existing research studies and academic literature on
Islamic finance and economic development to inform the theoretical framework of
the study.
4.Simple Comparative Analysis: Perform straightforward comparisons of
economic indicators between countries with prominent Islamic finance sectors
and those mostly relying on conventional banking.
5.Online Surveys: Implement online surveys targeting university students or
individuals with basic knowledge of finance to gather insights into perceptions of
Islamic finance and its potential impact on economic growth.
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Expected Outcomes:
1.Identification of observable differences in economic performance between
countries with substantial Islamic finance sectors and those mainly relying on
conventional banking.
2.Insights into the potential mechanisms through which interest prohibition in
Islamic finance may influence investment behaviors and capital allocation
decisions.
3.Recommendations for policymakers and stakeholders on promoting the
adoption of Islamic finance principles to support inclusive economic
development.