Financial inclusion barriers in upper-middle-income countries: a comparison between Muslim-majority and non-Muslim-majority economies

Waqas Shair, Abrista Devi, Aamir Hayat and Madieha Akram

International Journal of Development Issues, 2026, vol. 25, issue 3, 505-534

Abstract: PurposeFinancial inclusion gaps persist even in middle-income settings where formal financial systems and digital channels have expanded, and non-ownership often reflects multiple, non-mutually exclusive demand-side constraints that aggregate account indicators cannot reveal. This study aims to compare reported barriers among unbanked adults in upper-middle-income countries across Muslim-majority and non-Muslim-majority economies, focusing on six barriers (distance, fees, documentation, lack of money, family constraints and trust) and on a cumulative burden measure that captures the intensity of simultaneous constraints.Design/methodology/approachThe analysis uses Global Findex 2024 microdata for roughly 8,940 unbanked adults who report barrier reasons. Barrier-specific associations are estimated with separate logit models reported as average marginal effects, complemented by a multivariate probit model that allows correlated barrier reporting, and an ordered logit model for burden intensity.FindingsThe results indicate heterogeneous patterns across barriers rather than a uniform shift: Muslim-majority economies are associated with lower reporting of distance, fees, documentation and trust barriers; higher reporting of lack of money; and no statistically discernible difference in family-related reasons. Consistent with these patterns, burden estimates indicate a shift towards lower overall barrier intensity.Originality/valueThis study moves beyond aggregate account ownership by identifying six specific barriers faced by unbanked adults and comparing them across Muslim-majority and non-Muslim-majority upper-middle-income economies. It further contributes by introducing a cumulative barrier-burden measure to capture the intensity of layered financial exclusion. The evidence highlights the value of analysing both barrier composition and barrier burden to characterize layered exclusion among the unbanked.

Keywords: Financial inclusion; Unbanked adults; Demand-side barriers; Barrier burden intensity; Muslim-majority economies (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijdipp:ijdi-04-2026-0136

DOI: 10.1108/IJDI-04-2026-0136

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