The Mediating Effect of Products and Services on Growth Rate of Malaysian Islamic Financial System

The purpose of this research comprises three areas, namely, an examination of the specific factors of growth in the Islamic financial system, an assessment of the relationship between the development factors of an Islamic financial system, and the identification and analysis of the mediating role of banking assets and equity funds for financial development. To investigate the factors of growth, a structural equation model is developed that incorporates the main determinants of growth of banking assets and equity funds. The empirical investigation by a structural model revealed that the mediating variables, financial assets, and Islamic equity fund are significant at a level of .05 for the outcome variable of growth. The findings of the study generated greater awareness among organizations of Malaysia on the importance of strengthening the current Islamic financial system as a vehicle for organizational effectiveness.