Exploring financial inclusion in MENA countries: an entropy weight approach
International Journal of Islamic and Middle Eastern Finance and Management
ISSN: 1753-8394
Article publication date: 21 August 2023
Issue publication date: 30 October 2023
Abstract
Purpose
Research on financial inclusion (FI) in Islamic countries has evolved and gained prominence. This study aims to construct an extensive multidimensional FI index to ascertain the level of inclusion and trends in the Middle East/North Africa (MENA) countries. Additionally, this study examines the potential role of Islamic finance in improving access to financial services.
Design/methodology/approach
Data for the study were collected from databases covering MENA countries for the period 2010–2020. An inclusion index has been constructed using the entropy method.
Findings
Key findings indicate that the overall FI has improved in Islamic countries. However, it should be noted that all MENA countries fall within the low or medium levels of the inclusion index. It was observed that insurance access and penetration savings were poor in the Islamic MENA countries.
Social implications
The authors recommend that policymakers focus on insurance access and saving behaviour in their respective countries. Based upon these observations, policymakers should promote the economic benefits of Islamic finance, which will help improve FI and economic development in Islamic countries. This study emphasises the necessity of policy framework reform to provide Islamic financial services to the poorest in society at low or no cost for better economic benefits.
Originality/value
Most studies tend to overlook important indicators such as insurance, savings and credit penetration while calculating the index. These indicators add value to the existing literature. The majority of prior studies used United Nation Development Programme methodology or principal component analysis for Inclusion Index measurements. The adoption of the entropy weighting method is the novelty of this study.
Keywords
Acknowledgements
Funding statement: There is no funding support for this study.
This study has been exempted from ethics approval as the secondary data is used. There is no funding support for this article. All authors have no conflict of interest.
Citation
Ramaian Vasantha, N., Liew, C.Y. and Kijkasiwat, P. (2023), "Exploring financial inclusion in MENA countries: an entropy weight approach", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 16 No. 6, pp. 1219-1247. https://doi.org/10.1108/IMEFM-11-2022-0451
Publisher
:Emerald Publishing Limited
Copyright © 2023, Emerald Publishing Limited