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The Determinants of Financial Inclusion among Indonesian Muslim Households

Author

Listed:
  • Novat Pugo Sambodo

    (Lecturer of Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada)

  • Riswanti Budi Sekaringsih

    (Lecturer of Faculty of Islamic Economics and Business, State Islamic University (UIN) Sunan Kalijaga Yogyakarta, and Research Associate at Pusat Kajian Ekonomika dan Bisnis Syariah (PKEBS/Center for Islamic Economics and Business Studies) of Faculty of Economics and Business, Universitas Gadjah Mada)

  • Meikha Azzani

    (Research Associate at Pusat Kajian Ekonomika dan Bisnis Syariah (PKEBS/Center for Islamic Economics and Business Studies) of Faculty of Economics and Business, Universitas Gadjah Mada)

  • Esa Azali Asyahid

    (Academic Assistant of Department of Economics and General Assistant at Pusat Kajian Ekonomika dan Bisnis Syariah (PKEBS/Center for Islamic Economics and Business Studies) of Faculty of Economics and Business, Universitas Gadjah Mada)

  • Maulana Ryan Nurfahdhila

    (Student of Department of Economics and Research Assistant at Pusat Kajian Ekonomika dan Bisnis Syariah (PKEBS/Center for Islamic Economics and Business Studies) of Faculty of Economics and Business, Universitas Gadjah Mada)

Abstract

This study empirically examines the determinants of financial inclusion among Indonesian Muslims using individual-level panel data. We investigated financial inclusion indicators such as borrowing from financial institutions, bank account ownership, the borrowed amount, and savings in financial services. We analysed data from the Indonesian Family Life Survey (IFLS) fourth (2007) and fifth (2014) waves, offering a comprehensive dataset with unique socio-economic variables. We used Ordinary Least Squares and Logit estimations to identify factors influencing individuals' access to financial services and the average borrowed amount. Our findings indicate that urban residents with higher wealth, predominantly males, have better access to financial services. Banks remain the primary source for loans among Indonesian Muslims. Access to commercial banks significantly impacts loan accessibility. Notably, Baitul Maal WatTamwil (BMT), an Islamic microfinance institution, enhances the probability of Indonesian Muslims accessing formal loans.

Suggested Citation

  • Novat Pugo Sambodo & Riswanti Budi Sekaringsih & Meikha Azzani & Esa Azali Asyahid & Maulana Ryan Nurfahdhila, 2023. "The Determinants of Financial Inclusion among Indonesian Muslim Households," Gadjah Mada Economics Working Paper Series 202312013, Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada.
    • Handle: RePEc:gme:wpaper:202312013
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Financial Inclusion; Islamic Finance; Household; Muslim; Indonesia;
    All these keywords.

    JEL classification:

    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

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