Investigating the Relationship between Islamic Financial Instruments (Sukuk) and Economic Growth

Economic growth and development can offer a broad perspective of a country's economy. Developing countries, such as Iran, can attain financial development and economic growth through foresight, planning, and identifying the factors affecting monetary policies. The relationship between inflation and economic growth matters for formulating and directing monetary policies. Various financial instruments are employed to secure economic growth worldwide. By contrast, many of these instruments are not used in Iran, as they are usurious (Rabavi). Instead, Islamic financial instruments are utilized as suitable tools for banking and economic transactions in Iran. The present study examines the relationship between Islamic financial instruments (Sukuk) and economic growth in Iran. It draws on the ARDL approach. It evaluates seasonal data from early 2010 to the last season of 2018. The results of the model's estimation indicate that Sokuk has significantly and positively affected Iran's economic growth during the period under investigation.