| Summary: | Syariah banking system is one of the exciting research objects and has the potential to continue to be developed. Sharia banking is a new way out of banking. On a more macro level, the banking system affects banking performance on economic growth. Islamic banking is also stated to contribute better than conventional banking in achieving SDG points. The primary purpose of this study is to examine the development of conventional and Islamic banks in the future for short-and long-term analysis. The analysis will discuss how productive assets, bank profits, and third-party funds are both types of banking and how these three things contribute to economic growth for the next five years. Research analysis will be able to provide a comparison of the application of the short and long-term performance of sharia concepts to economic growth. Furthermore, it will be seen how the contribution of the two existing periods of the term of banking to economic growth, which one has a more significant impact on economic growth. Data was gathered for eleven years to test these relationships and analyzed accordingly. Besides descriptive analysis, correlations, and regression, mediation analysis was carried out using Vector Autoregression (VAR). VAR is a model that can analyze the interdependence relationship between time series variables. The results proved that profits, credits and assets significantly affect the short and long term. This study has some meaningful contributions towards both short and long practical knowledge of the subject matter, especially for banking and Government. © 2023, World Scientific and Engineering Academy and Society. All rights reserved.
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