scholarly journals INCOME INEQUALITY AND REGIONAL INDEX OF FINANCIAL INCLUSION FOR ISLAMIC BANK IN INDONESIA

2019 ◽  
Vol 11 (1) ◽  
Author(s):  
Prastowo Prastowo ◽  
Diyah Putriani
Keyword(s):  
Income Inequality ◽  
Low Income ◽  
Poverty Alleviation ◽  
Regional Level ◽  
Financial Inclusion ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Limited Access ◽  
Income Household ◽  
Regional Index

This research is proposed to measure financial inclusion index in 2 dimensions (2D-FII) in Indonesia Islamic banks. This research contributes on the measurement 2D-FII in regional level in Indonesia. The result shows that value of FII in Islamic banking in Indonesia is still low. Previous works show one of the determinant on increasing inequality in any country is a limited access to financial sector, especially for low income household (Akimov, Wijeweera, and Dollery 2006; Kenourgios and Samitas 2007; Levine 2003; D. Park and Shin 2015).  In other words, low level of FII in Indonesia perhaps is caused by inequality of income. Therefore, this research recommends policymaker to have more concern on poverty alleviation program and open new Islamic banks branches in the regional level.

scholarly journals Peran Perbankan Syariah Dalam Mengimplementasikan Keuangan Inklusif di Indonesia

ETIKONOMI ◽  
2015 ◽  
Vol 14 (2) ◽  
Author(s):  
Novia Nengsih
Keyword(s):  
Low Income ◽  
Financial Inclusion ◽  
Islamic Banking ◽  
Ratio Analysis ◽  
Islamic Banks ◽  
Financial Ratio ◽  
Financial Condition ◽  
Financial Ratio Analysis ◽  
Axial Coding

The Role of Islamic Banks in Financial Inclusion ImplementationThis study aimed to analyze the role of islamic banks in implementing financial inclusion in Indonesia. Financial inclusion is a process to provide formal financial access for the poor and low income people (unbankable people). This study was designed which approached qualitatively and quantitatively (mixed research). The qualitative data analyzed by using Straruss and Corbin’s theory consisted three major  steps: open coding, axial coding, and selective coding. Quantitative analyzed by using comparative analysis of financial statements and financial ratio analysis such as CAR, ROA, ROE, NPF, and FDR period of 2010-2014. This study proved that Islamic banking had great potential in implementing financial inclusion, it was indicated by a significant increase in funding and financing since 2010-2014 and results of financial ratio analysis also shows the performance of Islamic banking and financial condition is good.DOI: 10.15408/etk.v14i2.2272

The key players’ perception on the role of Islamic microfinance in poverty alleviation

2015 ◽  
Vol 6 (2) ◽  
pp. 244-267 ◽  
Author(s):  
Kausar Abbas ◽  
Nasim Shirazi
Keyword(s):  
Low Income ◽  
Poverty Alleviation ◽  
Business Community ◽  
Islamic Banking ◽  
Top Management ◽  
Islamic Banks ◽  
Content Type ◽  
The Poor ◽  
Key Players ◽  
Islamic Microfinance

Purpose – This study aims to know the present structure and move of the Islamic banks of Pakistan as well as current issues and challenges for Islamic microfinance. However, this is based on perceptions of the Islamic bankers, regulators and micro-entrepreneurs and petty traders, as they are the key players in the credit market. Design/methodology/approach – The study gathered relevant information through conducting field survey. Two questionnaires were designed for the survey. One questionnaire was administered to survey 270 micro-entrepreneurs and petty traders in three major cities of Pakistan. Another survey deals with the perceptions of Islamic bankers. In total, 100 people from middle and top management were surveyed from five full-fledged Islamic banks of Pakistan. The SPSS software, version 16, was used for questionnaire reliability and descriptive analysis to analyse the data. Findings – In general, the study found the strong opinions of the respondents speak in favour of Islamic microfinance under a system of profit and loss sharing. Conversely, the majority of the clients also feel that Islamic banks do not encourage lower-income micro-entrepreneurs. In addition, the study found that Islamic microfinance is constrained by lack of knowledge, experience and professionalism of the supporting staff; however, Islamic bankers have shown great consensus that Islamic banks should offer Islamic microfinance products and instruments to respond to the needs of the poor for poverty alleviation. Research limitations/implications – The first limitation of the study is the meagre interest of micro-entrepreneurs and petty traders to participate in the survey. The second limitation of this work concerns the extremely busy schedule of top management and administrative impediment to approach and fix an appointment. Despite these limitations, the findings of this study provide insights to Islamic banks in diversifying their products by offering Islamic microfinance to the low-income entrepreneurs but with proper guidelines and policies. Practical implications – There is a need to educate the community towards the merits of Islamic banking system by developing a good information system using good visuals and professionally presented seminars, banners and arranging regular sessions with the business community. The growth and development of Islamic banking in the country largely depend on its customers’ enhanced knowledge and awareness about its products and services. Social implications – It is the responsibility of the community as well as of government to change the mindset of the poor that banks are meant to serve the interest of everybody, regardless of social, economic and political status. Originality/value – Theoretically, this study contributes to the existing body of knowledge in the area of Islamic microfinance by examining the perceptions of Islamic bankers and micro-entrepreneurs. This can help Islamic banks of Pakistan to design and formulate new administrative as well as operational procedures to serve the interest of the poor with commitment towards Islamic values.

scholarly journals DEVELOPING ISLAMIC FINANCIAL INCLUSION INDEX FOR ISLAMIC BANKS IN INDONESIA: A CROSS-PROVINCE ANALYSIS

2019 ◽  
Vol 5 (4) ◽  
pp. 691-712
Author(s):  
M. Mahbubi Ali ◽  
Muhammad Rizky Prima Sakti ◽  
Abrista Devi
Keyword(s):  
Low Income ◽  
National Level ◽  
Financial Inclusion ◽  
Three Dimensions ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Financial Industry ◽  
Policy Makers ◽  
Banking Services ◽  
The Relationship

This study measures Islamic financial inclusion index in Indonesia based on three dimensions, namely: the accessibility, the availability, and the usage of Islamic banking services. Additionally, it also measures the relationship between Islamic financial inclusion index and human development index. The study found that the level of Islamic financial inclusion in Indonesia is relatively low at a national level. DKI Jakarta is the most financially inclusive province in Indonesia, followed by East Java and Nanggroe Aceh Darussalam. In contrast, East Nusa Tenggara has the lowest average of Islamic financial inclusion index. The findings of the present study suggest that the policy makers and Islamic financial industry should play greater role in improving financial access to low-income segment especially in the Eastern part of Indonesia, such as East Nusa Tenggara and Papua provinces.    

scholarly journals Murābaḥah-Taꜥāwun Financing: An Innovation in Islamic Personal Financing

2019 ◽  
Author(s):  
International Journal of Fiqh and Usul al-Fiqh Studies
Keyword(s):  
Financial Inclusion ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Critical Factors ◽  
Distribution Of Wealth ◽  
Financial Products ◽  
Muslim Countries ◽  
The World ◽  
Financial Contract ◽  
Up Scaling

Entrepreneurs, especially in developing societies, which include many Muslim countries among their fold, face a herculean task in up-scaling their businesses due to a lack of capital to procure relevant assets to grow their businesses. The world Islamic banks’ competitiveness report (2016) identified poor financial inclusion as one of the critical factors responsible for the uneven distribution of wealth in the Muslim world. This study presents the Murābaḥah-Taʻāwun financing product as an innovative addition to the range of financial products available on the Islamic banking shelf to reduce the incidence of poverty. Murābaḥah-Taʻāwun is operationalized where a group of entrepreneurs contribute funds together under a recognized Islamic bank while allowing every partner access to the fund on a rotational basis for the purchase of an asset according to a pre-defined arrangement. The study highlighted the importance of Murābaḥah-Taʻ''āwun as an Islamic financial contract by reviewing relevant extant literature. The proposed product shows that greater financial inclusion can be achieved without recourse to riba and thus will reduce poverty among Muslims.

IMPACTS OF FINANCIAL INCLUSION ON POVERTY AND INCOME INEQUALITY IN DEVELOPING ASIA

2021 ◽  
pp. 1-17
Author(s):  
WARATTAYA CHINNAKUM
Keyword(s):  
Developing Countries ◽  
Income Inequality ◽  
Low Income ◽  
Financial Services ◽  
Trade Openness ◽  
Generalized Method Of Moments ◽  
Principal Component ◽  
Financial Inclusion ◽  
Poor Households ◽  
Low Income Groups

This study investigates the impacts of financial inclusion on poverty and income inequality in 27 developing countries in Asia during 2004–2019 based on a composite financial inclusion index (FII) constructed using principal component analysis (PCA). The generalized method of moments (GMM) was employed for the estimation. The results show that financial inclusion can influence the reduction in both poverty and income inequality. The empirical findings also reveal the contribution of such control variables as economic growth in decreasing income disparity and trade openness in helping improve the standard of living of poor households despite its tendency to co-vary with income inequality. The present empirical evidence supporting the role of financial inclusion in reducing poverty and income inequality in developing countries has led to a policy implication that financial sector development should focus on the availability, usage, and depth of credit to cover all poor households or low-income groups to help improve their access to financial services, enable them to increase their income, and reduce the income gap between poor and rich households.

DOES FINANCIAL INCLUSION DRIVE THE ISLAMIC BANKING EFFICIENCY? A POST-FINANCIAL CRISIS ANALYSIS

2020 ◽  
pp. 1-26
Author(s):  
HASANUL BANNA ◽  
MD RABIUL ALAM ◽  
RUBI AHMAD ◽  
NORHANIM MAT SARI
Keyword(s):  
Financial Crisis ◽  
Banking Sector ◽  
Middle Eastern ◽  
Economic Recession ◽  
Financial Inclusion ◽  
Islamic Banking ◽  
Data Envelopment ◽  
Islamic Banks ◽  
Banking Efficiency ◽  
Regression Techniques

Considering the reverberations of financial crisis of 2007–09 that the banking industry terribly witnessed, this paper aims to estimate both the non-bias-corrected and bias-corrected efficiency by employing the data envelopment analysis and Simar–Wilson double bootstrapping regression techniques over the period of 2011–2017 and see how the financial inclusion impacts on Islamic banks. This study finds that most of the countries, except some Asian and Middle-Eastern countries, have inconsistent efficiency trends in Islamic banking sector. It also shows that financial inclusion is significantly allied with Islamic banking efficiency. Eventually, the results propose that Islamic banks are still bearing the consequence of that economic recession and, therefore, bank should focus more on financial inclusion since those banks having sound and inclusive financial environment are seen enjoying higher level of financial efficiency.

FINANCIAL INCLUSION, RATHER THAN SIZE, IS THE KEY TO TACKLING INCOME INEQUALITY

2018 ◽  
Vol 63 (01) ◽  
pp. 167-184 ◽  
Author(s):  
DAVID MARTÍNEZ TURÉGANO ◽  
ALICIA GARCÍA HERRERO
Keyword(s):  
Economic Development ◽  
Income Inequality ◽  
Low Income ◽  
Significant Degree ◽  
Financial Inclusion ◽  
Policy Implications ◽  
Key Factors ◽  
Broad Definition ◽  
Data Limitations ◽  
Definition Of

In this paper, we assess empirically whether financial inclusion contributes to reducing income inequality when controlling for other key factors, such as economic development and fiscal policy. We conclude that financial inclusion contributes to reducing income inequality to a significant degree, while the size of the financial sector does not. Although our results are still preliminary and constrained by data limitations, they still bear significant policy implications. More specifically, fostering financial inclusion has one more important by-product, which had hardly been analyzed yet, namely reducing income inequality. More specifically, given the broad definition of financial inclusion used in our analysis, promoting financial inclusion implies facilitating the use of credit to low-income households, as well as granting credit to small and medium-sized enterprises.

scholarly journals Effect of Financial Inclusion on Income Inequality in Sub-Saharan Africa

2020 ◽  
pp. 1-15
Author(s):  
Kipoh Mpele Esther
Keyword(s):  
Income Inequality ◽  
Low Income ◽  
Low Cost ◽  
Panel Study ◽  
Generalized Method Of Moments ◽  
Financial Inclusion ◽  
Sub Saharan Africa ◽  
African Countries ◽  
Negative Effect ◽  
Sub Saharan

Aims: To analyze financial inclusion as a channel to alleviate inequality in order to provide insight into the edifice of inequality reduction. Study Design:  Dynamic panel study. Place and Duration of Study: Sub-Saharan African countries over the period 2004-2018. Methodology: Using the generalized method of moments (GMM) on a sample of 27 Sub-Saharan African countries. Results: The results show that the estimated financial inclusion index has a negative effect on income inequality. Therefore, the depth of commercial bank branches and the effective use of bank accounts reduce income inequality. Conclusion: Increase financial inclusion as well as the development of financial infrastructure and the provision of specific low-cost services tailored to low-income households.

scholarly journals Does Islamic Banking Augment Financial Inclusion in Pakistan? A Reinforcement Analysis

2020 ◽  
Vol 6 (4) ◽  
pp. 739-758
Author(s):  
Muhammad Hanif Akhtar ◽  
Imran Sharif Chaudhry ◽  
Muhammad Ramzan Sheikh
Keyword(s):  
Public Policy ◽  
Financial Inclusion ◽  
Policy Implications ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Panel Ardl ◽  
Ardl Approach ◽  
Specific Factors ◽  
Bank Specific Factors

This study spells out the role of financial inclusion (FI) to accelerate the efficiency of Islamic banks in Pakistan for the period of 2007 to 2016. It examines the effect of a specially developed broad-based FI index on technical efficiency of Islamic banks through panel ARDL approach along with to explore the macroeconomic as well as bank-specific factors of efficiency. The findings exhibit the possible connection between Islamic banking and financial inclusion in Pakistan. The study offers a variety of useful policy implications for public policy towards effective progress on the National Financial Inclusion Strategy in the country.

An Appraisal of the Role of Islamic Banking Development and Economic Growth

2020 ◽  
Vol 4 (4) ◽  
pp. 215-236
Author(s):  
Talat Hussain ◽  
Noman Arshed ◽  
Rukhsana Kalim
Keyword(s):  
Economic Growth ◽  
Resource Mobilization ◽  
Financial Inclusion ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Promoting Effect ◽  
Efficient Resource ◽  
Growth Promoting ◽  
Banking Development

Literature is well-versed with the contribution of financial inclusion from the deposit and financing size and its role in economic growth. These contributions include a boost in economic transactions and efficient resource mobilization. Islamic financial system is different from conventional banking as it distributes the risk equitably and promotes fairness in dealings. It helps in the integration of business gains as a borrower of Islamic capital with the earnings of savers as depositors. This study has proposed two channels via which Islamic financial development may incur growth. First is bank financing penetration, and second is depositor financial inclusion. Based on the data of 41 full-fledged Islamic banks between 2012 and 2017, the results show that both increases in bank and depositor returns have a growth-promoting effect. This prompts the policymakers with new insights. Policymakers should increase Islamic banking penetration to different sectors and regulate for increased extraction of the depositor contribution from the banking financing activity.

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