The The Impact Of Interest Rates On Thailand's Real Economy, as Measured by Real GDP, Consumption, and Investment

English

Abstract

The goal of this research is to determine how interest rates affect the real economy, as measured by real GDP, consumption, and investment. This is important to do to see the impact of interest rates on the real sector because interest rates are prohibited in the Islamic financial system. We use vector analysis for the influence between variables so that we can understand the direction of influence between interest rates, GDP, investment, and consumption. The direction of interest rates' effects on GDP and consumption shows that they have a strong negative impact on the real sector. The direction of the negative association suggests that the financial system of Islam, which has zero or no based on interests interest rates on capital, can encourage the real sector to thrive better than the traditional financial system, which uses interest as a cost of capital.