Using the World Bank’s Global Findex database, we provide an exploratory analysis of the patterns of financial inclusion and the gender gap among 56 Islamic and 101 non-Islamic countries during the period 2011 to 2017. We show that financial inclusion is still relatively low in our sample, but it is particularly challenging in the sampled Islamic countries and for women. Our study suggests that the strength of the economy, social and institutional environment, as well as banking market conditions and technology are among the potential determinants of financial exclusion in Islamic countries compared to their non-Islamic counterparts.
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The SDGs were adopted in 2015 by the United Nations and they are a collection of 17 “global goals” aimed at ending poverty, protecting the planet, and ensuring prosperity of all people by 2030 (https://sdgs.un.org/).
The Global Financial Inclusion (Global Findex) database is the world’s most comprehensive source of data on saving, borrowing, making payments, and managing risks among adults. The data set has been published every three years since 2011; it is gathered from more than 150,000 adults in over 140 economies which are part of nationally representative surveys (see https://globalfindex.worldbank.org/).
In Islamic finance, qard al-hassan is essentially a non-rewarding (interest-free) loan that is provided on a goodwill basis to those who need financial assistance, in line with sharia rules that dictate that interest (riba) payments are not permissible; waqf is a charitable endowment that typically involves assets that are donated for being held in trust, with no intention of reclaiming them, for charitable causes that are socially beneficial; and zakat refers to an obligatory contribution or tax which is prescribed by Islam on all Muslim people having wealth above an exemption limit at a rate fixed by the sharia.
Access indicators reflect the depth of outreach of financial services (such as the penetration of bank branches and automated teller machines (ATMs)), in addition to barriers faced by customers such as transaction costs and information. Usage indicators measure the depth of use of financial services and products (such as the number of accounts, transactions, and electronic payments). Quality indicators measure the extent to which financial products and services meet customers’ needs and understanding. For more details see World Bank (2015).