DETERMINANTS OF ISLAMIC FINANCIAL EXCLUSION IN INDONESIA

Mohammad Mahbubi Ali (), Abrista Devi () and Hamzah Bustomi ()
Additional contact information
Mohammad Mahbubi Ali: International Institute of Advanced Islamic Studies, Malaysia
Abrista Devi: Ibnu Khaldun Bogor University, Indonesia
Hamzah Bustomi: Pakuan University Bogor, Indonesia

Journal of Islamic Monetary Economics and Finance, 2020, vol. 6, issue 2, 373-402

Abstract: The study aimed to uncover the determinants of Islamic financial exclusion in Indonesia by gathering responses from financially-excluded respondents. A total of 110 respondents were surveyed, representing five provinces: West Java, South Sulawesi, Aceh, East Kalimantan, and North Maluku. The criteria of the selected participants included those who were financially-excluded, those who did not own any Islamic financial products, those without savings or financing, and those with no capital market products. The study employs Confirmatory Factor Analysis (CFA) to identify indicators explaining Islamic financial exclusion determinants in Indonesia. The paper found that location is the key barrier to obtaining financing from and being able to build savings in Islamic banks/Islamic microfinance, while a lack of financial knowledge is identified as the critical barrier when dealing with Islamic capital market products. Overall, most respondents perceived human capital and products and services to be the two most significant determinants of Islamic financial exclusion in Indonesia, followed by infrastructure, policies and regulation, financial literacy, social influence, and religious commitment. The originality of the paper lies in its detailed insight into the perception of being financially excluded on factors leading to Islamic financial exclusion.

Keywords: Islamic financial exclusion; Product and services; Human capital; Infrastructure; Policies and regulation (search for similar items in EconPapers)
JEL-codes: D14 G20 G23 G28 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://jimf-bi.org/index.php/JIMF/article/view/1093/807 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:idn:jimfjn:v:6:y:2020:i:2f:p:373-402

DOI: 10.21098/jimf.v6i2.1093

Access Statistics for this article

Journal of Islamic Monetary Economics and Finance is currently edited by Dr. Ali Sakti

More articles in Journal of Islamic Monetary Economics and Finance from Bank Indonesia Contact information at EDIRC.
Bibliographic data for series maintained by Lutzardo Tobing ( this e-mail address is bad, please contact ) and Jimmy Kathon ().