Islamic Banking and Financial Inclusion: Evidence from Asian and African Markets.

Abstract

Very few researchers have attempted to assess the impact of Islamic banking on both the demand and the supply sides of financial inclusion. Our study fills this gap by investigating 14 middle and 14 lower income countries from Asia and Africa over the period 2005-2014. Random effects panel regression technique based on Hausman’s specification test has been used to analyse the data. Results indicate that Islamic banking is significantly contributing to the demand side of financial inclusion (borrowers’ side or the users of banks financing). This research has important policy implications for regulatory authorities of Muslim countries to enhance financial inclusion.