Economic and to be used to end poverty


Economic
growth is the ability for an economy to increase its capacity of production of
goods and service from time to time. The increase of demand and supply marks
the expansion of the economy thus creating a higher income. The economic growth
can be measured in terms of gross national product (GNP) or gross domestic
product (GDP). However, this term can be calculated to be in nominal or real
terms which depending on the levels of inflation. Based form the video, the
Malaysian Islamic Finance system is helping to increase the economy by pooling
or channelling funds through reasonable investment. Islamic finance or banking
strives to achieve global socio-economic development as well as greater justice
as Islamic financial system is a method to catalyst higher economic growth and
human well-being. Islamic finance facilitates a way by replacing debt financing
to risk sharing instead, Islamic finance can reduce poverty and social
inequalities which is the important objective that has to be focused by the
authority. Islamic banks responsible to handle fund to investor using Islamic
teaching of finance.

From
the video, the economic growth concept that can be portrayed is Malaysia as a
leader in Islamic finance is utilizing the system to invest into property to
develop and induce economic performance. The investment then be used to create
profit and to be used to end poverty and inequalities. The Islamic financing
method are designed to be compliance of the Sharia law such as Mudharabbah,
Musharakah, Ijarah, Istisna and Salam which is different modes of Islamic
finance. Furthermore, financial intermediation is perfect indicator of economic
growth and development. During the global financial crisis, Islamic finance
institution were less affected, protected by their fundamental operating
principles of risk sharing and the avoidance of leverage and speculative
financial products. This has led to a greater appreciation of the role of
Islamic finance in supporting economic growth across the globe. With its
in-built principle that support financial stability, inclusiveness and economic
development Islamic finance lends itself well to catalysing and promoting
economic. (BNM, 2015)

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            Exemplary role of Malaysia as global
leader in Islamic finance keeps increasing the presence of Islamic banking and
finance within Malaysia’s financial sector. This exceptional performance calls
for evaluation for the contribution to real economic activity from Islamic
finance industry. Empirical investigation has been carried out to measure the
impact of Islamic finance on major macroeconomic indicator’s performance. The
results show that Islamic finance helps to improve economy by contributing to
the real economy by carrying intermediation role of flowing funds to profitable
investment activities (Kassim, 2016). However, the
important aspect is to keep continuous efforts in helping to expand the Islamic
finance industry such as refinement of the legal and regulatory framework in
order to keep improving healthy levels of growth to further toughen Malaysia’s
throne as the head of global level in Islamic finance industry.

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