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Islamic financial inclusion determinants in Indonesia: an ANP approach

Mohammad Mahbubi Ali (International Institute of Advanced Islamic Studies Malaysia, Kuala Lumpur, Malaysia and Tazkia Institute, Bogor, Indonesia)
Abrista Devi (Ibn Khaldun University, Bogor, Indonesia)
Hafas Furqani (Universitas Islam Negeri Ar-Raniry, Banda Aceh, Indonesia)
Hamzah Hamzah (Pakuan University, Bogor, Indonesia)

International Journal of Islamic and Middle Eastern Finance and Management

ISSN: 1753-8394

Article publication date: 14 July 2020

Issue publication date: 8 September 2020

1709

Abstract

Purpose

This study aims to uncover the determinants of Islamic financial inclusion in Indonesia.

Design/methodology/approach

This study uses the analytic network process (ANP) to gather expert opinions and responses from academics, regulators and practitioners.

Findings

The ANP analysis discovered that the level of Islamic financial inclusion in Indonesia is influenced by two main drivers: the supply and the demand. The demand factors for Islamic financial inclusion, ranked based on their level of significance, are as follows: financial literacy (0.27), religious commitment (0.22), socioeconomic factor (0.19) and social influence (0.17), respectively. From the supply side, primary catalysts for Islamic financial inclusion based on their level of importance are human capital (0.32), product and services (0.24), infrastructure (0.18) and policies and regulation (0.17), respectively.

Research limitations/implications

The present study does not include the Islamic insurance sector in its determinant framework of Islamic financial inclusion in Indonesia.

Practical implications

This study serves as a reference for regulators in formulating appropriate policy strategies to strengthen the Islamic financial inclusion in Indonesia.

Originality/value

This study is a pioneer attempt to identify distinctive factors that influence the level of Islamic financial inclusion in Indonesia by analyzing expert opinions from diverse groups of Islamic finance stakeholders.

Keywords

Acknowledgements

This paper is part of a research project funded by the Central Bank of Indonesia – Bank Indonesia Institute under the Research Grant Bank Indonesia Program 2018. The authors would like to thank Dr M. Rizky Prima Sakti and Witri Aulia Maudy for their assistantship to this project.

Citation

Ali, M.M., Devi, A., Furqani, H. and Hamzah, H. (2020), "Islamic financial inclusion determinants in Indonesia: an ANP approach", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 13 No. 4, pp. 727-747. https://doi.org/10.1108/IMEFM-01-2019-0007

Publisher

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Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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