Abstract
The research aims to address a fundamental issue related to the impact of Islamic finance on economic development. Islamic finance has witnessed a significant increase in the volume of its financial transactions, especially after the global crisis of 2008, making it a key source for financing various economic activities and driving growth in many countries. Islamic banks were selected as the focus of the study because they represent the core component of the Islamic financial industry in Iraq.
The research adopts the inductive approach by focusing on the development of the Islamic banking sector in Iraq, its various patterns, and its impact on economic development. The development of the Islamic banking sector is expressed through a set of indicators (total assets and financing volume), while economic development is measured through the non-oil GDP indicator. The data cover the period (2013–2022).
The study concludes that there is a statistically significant positive effect of credit volume on economic development, while no impact of total assets in Islamic banks on economic development was found. The researcher recommends the need to develop the operational mechanisms of Islamic banks in a manner that ensures strengthening their positive impact on economic development.