Islamic Finance Versus Conventional Finance, From Macroeconomic Perspective: A Review

Abstract

The 21st century world witnessed global financial crisis (GFC), which was inaugurated in late last quarter of 2007. Its impacts still can be seen everywhere until now and has left severe impacts on the macroeconomic variables such as, the Level of Production, Gross Domestic Product (GDP), Level of Employment, Per Capita Incomes, Inflation Rate, Net of Trading, Exchange Rate, Public Debt, and another macroeconomic variables. This paper attempts to investigate the relationship between Islamic Finance (IF) and Macroeconomic variables on one hand, and the relationship between Conventional Finance (CF) and the Macroeconomic variables on another hand. The Macroeconomic variables that selected in this study are: Interest Rate, External Debt (ED), Public Debt (PD), GDP, Net of Trading (NT), Inflation Rate (INR), Unemployment Rate (UEMP), Exchange Rate (XR), and Industrial Sector Production (ISP). The data for this study was collected from various international databases such as: International Monetary Fund (IMF) and The World Bank. The time series of 1990-2010 was chosen as the study duration.