Islamic Finance and Financial Inclusion : Measuring Use of and Demand for Formal Financial Services among Muslim Adults

In recent years, the Islamic finance industry has attracted the attention of policy makers and international donors as a possible channel through which to expand financial inclusion, particularly among Muslim adults. Yet cross-country, demand-side data on actual usage and preference gaps in financial services between Muslims and non-Muslims have been scarce. This paper uses novel data to explore the use of and demand for formal financial services among self-identified Muslim adults. In a sample of more than 65,000 adults from 64 economies (excluding countries where less than 1 percent or more than 99 percent of the sample self-identified as Muslim), the analysis finds that Muslims are significantly less likely than non-Muslims to own a formal account or save at a formal financial institution after controlling for other individual- and country-level characteristics. But the analysis finds no evidence that Muslims are less likely than non-Muslims to report formal or informal borrowing. Finally, in an extended survey of adults in five North African and Middle Eastern countries with relatively nascent Islamic finance industries, the study finds little use of Sharia-compliant banking products, although it does find evidence of a hypothetical preference for Sharia-compliant products among a plurality of respondents despite higher costs.

Bibliographic Details

Main Authors:	Randall, Douglas, Demirguc-Kunt, Asli, Klapper, Leora
Language:	English en_US
Published:	World Bank, Washington, DC 2013-10
Subjects:	ACCESS TO INFORMATION, ACCOUNT OWNERSHIP, ACCOUNTING, ACCOUNTING PRINCIPLES, ASSET FINANCING, ASSET QUALITY, BALANCE SHEET, BANK ACCOUNT, BANK ACCOUNTS, BANK ASSETS, BANK CUSTOMERS, BANK LOAN, BANK MARKETING, BANKING ASSETS, BANKING LAWS, BANKING PRODUCTS, BANKING SECTOR, BANKING SECTOR ASSETS, BANKING SERVICE, BANKING SERVICES, BANKING SYSTEMS, BANKS, BARRIER, BIASES, BUSINESS CREDIT MARKET, BUSINESS CYCLE, BUSINESS TRANSACTIONS, CAPITALIZATION, CENTRAL BANK SUPERVISION, COLLEGE DEGREE, COMMERCIAL BANKING, COMMERCIAL BANKS, CONSUMER LENDING, CONVENTIONAL BANK, CONVENTIONAL BANK LOAN, CONVENTIONAL BANKING, CONVENTIONAL BANKS, CONVENTIONAL FINANCE, CONVENTIONAL FINANCING, CORRUPTION, COUNTRY FIXED EFFECT, COUNTRY FIXED EFFECTS, CREDIT MARKET, CREDIT MARKETS, CREDIT PRODUCT, CREDIT PRODUCTS, CREDIT UNION, CREDITWORTHINESS, CUSTOMER SATISFACTION, DEBIT CARD, DEMOGRAPHIC, DEPOSIT, DEPOSITS, DISCRIMINATION, DISCRIMINATION IN CREDIT, DUMMY VARIABLES, ECONOMIC ATTITUDES, EMPLOYER, EMPLOYMENT, EMPLOYMENT STATUS, ENTREPRENEUR, EQUALITY, EQUITY INVESTMENT, EUROPEAN CENTRAL BANK, FEDERAL RESERVE, FIFTH, FINANCE CORPORATION, FINANCE PRODUCTS, FINANCIAL ASSETS, FINANCIAL CRISIS, FINANCIAL DEVELOPMENT, FINANCIAL DIFFICULTIES, FINANCIAL ILLITERACY, FINANCIAL INSTITUTIONS, FINANCIAL MARKETS, FINANCIAL PRODUCT, FINANCIAL PRODUCTS, FINANCIAL SECTOR, FINANCIAL SERVICE, FINANCIAL STABILITY, FINANCIAL SUPPORT, FINANCIAL SYSTEMS, FINANCING ARRANGEMENTS, FORMAL CREDIT, FORMAL FINANCIAL INSTITUTION, FORMAL FINANCIAL INSTITUTIONS, FORMAL FINANCIAL SERVICES, FORMAL LOAN, FORMAL SAVING, FORMAL SAVINGS, GENDER, GENDER GAP, HARDSHIP, HOUSEHOLD FINANCE, HOUSEHOLDS, INCOME, INCOME DISTRIBUTION, INCOME LEVELS, INCOMES, INFORMAL BORROWING, INHERITANCE, INSTALLMENT, INSTALLMENTS, INTEREST PAYMENT, INTEREST RATE, INTERNATIONAL BANK, INTERNATIONAL BUSINESS, INTERNATIONAL FINANCE, INVESTMENT ACCOUNT, ISLAM, ISLAMIC BANK, ISLAMIC BANK CUSTOMERS, ISLAMIC BANKING, ISLAMIC BANKING PRODUCTS, ISLAMIC BANKS, ISLAMIC ECONOMICS, ISLAMIC FINANCE, ISLAMIC FINANCE INDUSTRIES, ISLAMIC FINANCE INDUSTRY, ISLAMIC FINANCIAL INDUSTRIES, ISLAMIC FINANCIAL INSTITUTIONS, ISLAMIC FINANCIAL PRODUCTS, ISLAMIC FINANCIAL SERVICES, ISLAMIC FINANCING, ISLAMIC JURISPRUDENCE, ISLAMIC LAW, ISLAMIC LOAN, ISLAMIC LOANS, ISLAMIC MICROFINANCE, ISLAMIC PRODUCTS, LACK OF ACCESS, LAWS, LIFE EXPECTANCY, LIMITED LIABILITY, LIQUIDITY, LOAN, LOSS SHARING, MARKET STRUCTURE, MFIS, MICROFINANCE, MICROFINANCE INSTITUTION, MICROFINANCE INSTITUTIONS, MINORITY POPULATION, MOBILE PHONE, MORTGAGE, MORTGAGE LENDING, MUDARABA, MUDARABA CONTRACT, MURABAHA, MUSHARAKA, MUSLIM, MUSLIM BANK, MUSLIMS, OUTREACH, PATRONAGE, PAYMENT OF INTEREST, POST OFFICE, PRICE SENSITIVITY, PRINCIPAL-AGENT PROBLEMS, PRIVATE LENDER, PRIVATE SECTOR DEVELOPMENT, PROFIT SHARING, PUBLIC INSTITUTIONS, QURAN, RECEIPT, REGULATORS, REGULATORY REGIME, REGULATORY REGIMES, RELIGIOUS BELIEFS, RELIGIOUS CONSTRAINT, RELIGIOUS FACTORS, REMITTANCES, REPAYMENT, REPAYMENT RATES, REPUTATION, RESERVE BANK, RESERVE BANK OF INDIA, RESERVES, RETAIL BANKING, RIBA, SAVINGS, SAVINGS ACCOUNTS, SAVINGS BEHAVIOR, SAVINGS PRODUCT, SAVINGS PRODUCTS, SHARIA, SHARIA-COMPLIANT FINANCE, SHARIA-COMPLIANT SAVINGS, SMALL BUSINESS, SMALL BUSINESS CREDIT, SMALL BUSINESSES, TRANSITION ECONOMIES, URBAN AREA, URBAN AREAS, VILLAGES, WAGES, WAQF,
Online Access:	http://documents.worldbank.org/curated/en/2013/10/18405190/islamic-finance-financial-inclusion-measuring-use-demand-formal-financial-services-among-muslim-adults https://hdl.handle.net/10986/16875
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