The Role of Islamic Banking in the Development of Financial Inclusion: Calculation of Islamic Banking Financial Inclusion Index

Murat Gunduz and Yunus Ozyildirim

Journal of BRSA Banking and Financial Markets, 2020, vol. 14, issue 2, 119-144

Abstract: In emerging economies, creating a market where all adults can access financial products and services and provide their savings through financial instruments is becoming a priority for policy makers and regulators. The inclusion of adults who think that their financial beliefs are not available or have limited financial products and services and therefore exclude them from financial services is of great importance in increasing the financial inclusion dimension. With the financial inclusion index that Sarma’s (2008) has brought to the literature, it has become possible to measure financial inclusion through the accessibility, usability and usage dimensions of banking services. The index takes values between 0 and 1 and 0 indicates that the financial inclusion is excluded and 1 indicates that the financial inclusion is fully achieved. In this study the Islamic banking for financial inclusion index of 81 provinces in Turkey, covering the years 2007 to 2019 was established. It has been determined that the created index values are generally very low. This can be explained by the fact that Ýslami Banking has just started to become widespread in the provinces. According to the Ýslami Banking financial inclusion index values, the three provinces with the highest financial inclusion were Istanbul, Ankara and Konya, while the three with the lowest financial inclusion were Hakkari, Artvin and Tunceli.

Keywords: Islamic Microfinance; Microfinance; Participation Banks; Islamic Finance; Poverty. (search for similar items in EconPapers)
JEL-codes: D53 D64 E44 G21 (search for similar items in EconPapers)
Date: 2020
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