DOES ISLAMIC BANKING PROMOTE FINANCIAL INCLUSION AMONG WOMEN IN OIC MEMBER COUNTRIES?
Keywords:financial exclusion, gender equality, women empowerment, sustainable development goals (SDG), Islamic banking , Muslim countries
Previously, women in Organization of Islamic Cooperation (OIC) member countries were reported to be more financially excluded compared to the global average. Hence, this study aims to have a closer look at the aspect of gender inequality in financial inclusion in OIC member countries. Specifically, it seeks to examine the role of Islamic banking in enhancing financial inclusion among women in selected OIC member countries empirically. This study frames its analysis based on annual economic and financial data for OIC member countries from several sources including the World Bank Global Findex and World Development Indicators for each respected country for the years 2011 and 2014 using ordinary least squares (OLS) estimation. The findings show significant improvement in the growth of women’s account penetration for 2014, suggesting Islamic banking deepening has had a positive effect on financial inclusion among women in the OIC member countries under study. The significant positive effect of Islamic banking presence and accessibility of Muslim women to financial services indicates pivotal role of Islamic banking in promoting financial inclusion among women, enhance economic activities for women and reduce gender gap in finance. The finding helps to promote gender equality, empowerment and financial inclusion among Muslim women in OIC countries through Islamic banking services. The findings call for Islamic finance industry players to expand their outreach to Muslim clients and help policymakers to define their role more clearly in expanding financial inclusion, Islamic or otherwise, to Muslim adults.
Ahmed Shaikh, S., Ismail, M. A., Mohd. Shafiai, M. H., Ismail, A. G., & Shahimi, S. (2017). Role of Islamic Banking in Financial Inclusion: Prospects and Performance, In Alam, N. & Rizvi, S. A. R. (Eds.). Islamic Banking: Growth, Stability and Inclusion, 33- 49. Palgrave Macmillan. Ahmed, H., & Salleh, M. H. (2016). Inclusive Islamic Financial Planning; A Conceptual Framework. International Journal of Islamic and Middle Eastern Finance and Management, 9(2): 170-189.
Aportella, F. (1999). Effects of Financial Access on Savings by Low-Income People, Banco De Mexico.
Ardic, O., Heimann, M., & Mylenko, N. (2011). Access to Financial Services and the Financial Inclusion Agenda around the World, Policy Research Working Paper No. 5537. Washington, DC: World Bank.
Ashraf, N., Karlan, D., & Yin, W. (2006). Tying Odysseus to the Mast: Evidence from a Commitment Savings Product in the Philippines. The Quarterly Journal of Economics, 121: 635-672. Ashraf, N., Karlan, D., & Yin, W. (2010). Female empowerment: Impact of a commitment savings product in the Philippines. World Development, 38: 333-344.
Banerjee, A. V., & Newman, A. (1993). Occupational Choice and the Process of Development. Journal of Political Economy, 101: 274-298.
Beck, T. & Feyen, E. (2013). Benchmarking Financial Systems; Introducing Financial Possibility Frontier. Policy Research Working Paper No. 6615. Washington, DC: World Bank.
Beck, T. Demirgüç-Kunt, A. & Maksimovic, V. (2005). Financial and Legal Constraints to Growth: Does Firm Size Matter? The Journal of Finance, 60(1): 137-177.
Beck, T., Demirguc-Kunt, A., & Levine, R. (2007). Finance, Inequality and the Poor. Journal of Economic Growth, 12(1): 27-49.
Beck, T., Demirguc-Kunt, A., & Peria, M. M. (2007). Reaching out: Access to and use of banking services across countries. Journal of Financial Economics, 85(1): 234-266.
Ben Naceur, S., Barajas, A., & Massara, A. (2015). Can Islamic Banking Increase Financial Inclusion?, Policy Research Working Paper No. 15/31. International Monetary Fund.
Bhattacharya, R., & Wolde, H. (2010). Constraints on Trade in the MENA Region, IMF Working Papers, 10(31): 1-18.
Demirguc-Kunt, A., & Klapper, L. (2013). Measuring Financial Inclusion: Explaining Variation Across and Within Countries, Washington, DC: World Bank.
Demirguc-Kunt, A., Klapper, L., & Randall, D. (2013). Islamic Finance and Financial Inclusion: Measuring Use of and Demand for Formal Financial Services among Muslim Adults. Policy Research Working Paper No. 6642. Washington, DC: World Bank.
Demirguc-Kunt, A., Klapper, L., & Randall, D. (2013). The Global Findex Database: Islamic Finance and Financial Inclusion (English), Findex Notes No. 12. Washington DC: World Bank. Retrieved from: http://documents.worldbank.org/curated/en/634371468163441059/The-Global-Findex-database-Islamic-finance-and-financial-inclusion
Demirguc-Kunt, A., Klapper, L., & Singer, D. (2013). Financial Inclusion and Legal Discrimination Against Women: Evidence from Developing Countries. Policy Research Working Paper No. 6416. Washington, DC: World Bank.
Demirguc-Kunt, A., Klapper, L., & Singer, D. (2013), The Global Findex Database - Women and Financial Inclusion, Findex Notes No. 09. Washington DC: World Bank.
Dupas, P., & Robinson, J. (2013). Savings Constraints and Microenterprise Development: Evidence from a Field Experiment in Kenya. American Economic Journal: Applied Economics, 5(1):163-192. Evans, O., & Adoeye, B. (2016). Determinants of Financial Inclusion in Africa: A Dynamic Panel Data Approach. University of Mauritius Research Journal, 22: 310-336.
Galor, O., & Zeira, J. (1993). Income Distribution and Macroeconomics. Review of Economic Studies, 60(1): 35-52.
Ghazal, R., & Zulkhibri, M. (2016). Islamic Inclusive Growth Index for the Organisation of Islamic Cooperation (OIC) Member Countries. Journal of Economic Cooperation and Development, 37(2): 51-80. Hendriks, S. (2019). The Role of Financial Inclusion in Driving Women’s Economic Empowerment. Development in Practice, 29(8): 1029-1038.
Ismail, A. G., Ismail, M. A., Shahimi, S., & Ahmed Shaikh, S. (2015). Financial Inclusiveness in Islamic Banking: Comparisons of Ideals and Practices Based on Maqasid-e-Shari’ah, The 4th Conference on Inclusive Financial Sector Development, 17-18 November 2015, Islamabad, Pakistan.
Jouti, A. T. (2018). Islamic finance: financial inclusion or migration?. ISRA International Journal of Islamic Finance, 10(2): 277-288.
Kairiza, T., Kiprono, P., & Magadzire, V. (2016). Gender Differences in Financial Inclusion Amongst Entrepreneurs in Zimbabwe. Small Business Economics, 48(1): 259-272.
Kempson, E., & Whyley, C. (1999). Kept Out or Opted Out. Understanding and Combating Financial Exclusion. Bristol, Policy Press.
Kendall, J., Mylenko, N., & Ponce, A. (2010). Measuring Financial Access around the World. Policy Research Working Paper 5253. Washington, DC: World Bank.
Lebdaoui, H., & Wild, J. (2016). Islamic banking presence and economic growth in Southeast Asia. International Journal of Islamic and Middle Eastern Finance and Management, 9(4): 551-569.
Leyshon, A., & Thrift, N. (1993). Geographies of Financial Exclusion: Financial Abandonment in Britain and the United States. Transactions of the Institute of British Geographers, 20(3): 312-341.
Martinez, C., & Krauss, A. (2015). What Drives Financial Inclusion at the Bottom of the Pyramid? Empirical Evidence from Microfinance Panel Data. CMF Working Paper Series, 02-2015.
Mohd. Nor, S. (2016), Islamic Social Bank: An Adaptation of Islamic Banking?. Jurnal Pengurusan, 46(2): 43- 52.
Mohieldin, M., Iqbal, Z., Rostom, A., & Fu, X. (2016). The Role of Islamic Finance in Enhancing Financial Inclusion in OIC Countries. Islamic Economic Studies, 20(2): 55-120.
Orbis Bank Focus - Login. (n.d.), Retrieved April 14, 2017, from: https://bankscope.bvdinfo.com/
Oxoby, R. (2009). Understanding social inclusion, social cohesion, and social capital. International Journal of Social Economics, 36(12): 1133-1152.
Sarma, M. (2008). Index of Financial Inclusion. Indian Council for Research on International Economic Relations (ICRIER) Working Paper 215. Retrieved from: www.icrier.org.
Sarma, M., & Pais, J. (2011). Financial Inclusion and Development. Journal of International Development, 23: 613-628.
Thomson Reuters. (2018). Islamic Finance Development Report 2018, Thomson Reuters. Retrieved from: https://ceif.iba.edu.pk/pdf/Reuters-Islamic-finance-development-report2018.pdf
United Nations, (2015). Sustainable Development Goals, Retrieved from: https://www.un.org/sustainabledevelopment/gender-equality/
World Bank & Islamic Development Bank Group (IDBG) (2016). Islamic Finance: A Catalyst for Shared Prosperity?, Global Report on Islamic Finance. Jeddah: IDBG. Retrieved from: http://www.irti.org/English/News/Documents/438.pdf
World Bank (2013). Global Financial Development Report 2014: Financial Inclusion, Retrieved from: http://documents.worldbank.org/curated/en/225251468330270218/Global-financial-developmentreport-2014-financial-inclusion
World Bank, (2017). The Global Findex Database 2017. Retrieved from: https://globalfindex.worldbank.org/
World Bank, (2017). World Development Indicators 2017. Retrieved from: https://databank.worldbank.org/source/world-development-indicators
Zhang, Q., & Posso, A. (2017). Microfinance and Gender Inequality: Cross-Country Evidence, Applied Economics Letters, 24: 1-5.
Zulkhibri, M. (2016). Financial Inclusion, Financial Inclusion Policy and Islamic Finance. Macroeconomics and Finance in Emerging Market Economies, 9(3): 303-320.
Copyright (c) 2022 International Journal of Islamic Business
This work is licensed under a Creative Commons Attribution 4.0 International License.