The effect of financial Islamization index on income distribution and economic growth

Economic growth and income distribution are among the most important variables reflecting the economic status of a society, and much of the economic literature is devoted to studying the variables affecting these two economic criteria. One of the factors influencing these two variables is the financial system. Although many studies have been conducted on the impact of different indicators of financial development on economic growth and income inequality, the impact of the Islamization of financial sytem on these two variables has not received much attention. The main purpose of this study is to investigate the effect of Islamicization of financial markets in Iran and some Islamic countries on economic growth and income distribution of these countries. The results of this study can be used in the economic planning of Islamic countries to advance the goals of economic growth and income distribution. To this purpose, we propose a theoretical framework using a regression model of panel data in selected Islamic countries in the period 2012-2017 and by appling the FGLS method to estimate the effect of Islamization of financial sytem index on Gini coefficient and GDP per capita. The results show that this index has a positive effect on improving income distribution but its effect on GDP growth is not significant.