Religion, social desirability bias and financial inclusion: Evidence from a list experiment on Islamic (micro-)finance

Syedah Ahmad, Robert Lensink and Annika Mueller

Journal of Behavioral and Experimental Finance, 2023, vol. 38, issue C

Abstract: In recent years, academic and policy research has placed increasing focus on the study of the attitudes of the Muslim poor towards Islamic and non-Islamic (micro-)finance to inform financial inclusion strategies. Survey questions are a common way to measure these attitudes and have been included into large-scale surveys such as the Global Findex. However, survey-based measures that ask about non-Islamic finance in an Islamic context may be affected by social desirability bias. In this paper, we propose a possible solution to this issue. We conduct the first list experiment designed to measure attitudes towards the usage of non-Islamic financial products and services, with 2,145 poor Muslims from Multan, Pakistan. Our list experiment uncovers that 37 percent of our sample use non-Islamic finance, almost twice as many as respond affirmatively to a similar direct survey question. Using our rich survey data on demographics, socio-economic factors and religiosity, we are further able to document substantial heterogeneity in the magnitudes of underreporting this usage in the direct survey question and in the usage of non-Islamic finance. We conclude by discussing the significance of our results in terms of (policy) implications and for the measurement of the demand for Islamic finance.

Keywords: List experiment; Islamic (micro-) finance; Social desirability bias; Field experiment; Pakistan (search for similar items in EconPapers)
JEL-codes: C83 C93 G28 G51 P43 Z12 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:38:y:2023:i:c:s2214635023000096

DOI: 10.1016/j.jbef.2023.100795

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