Can Islamic philanthropy increase financial inclusion ?

Abstract EN

Financial inclusion has become an integral part of many development institutions and multilateral development banks (MDBs) in an effort to promote inclusive growth.

Many countries introduce their financial inclusion policies and strategies.

Studies that report on financial inclusion are not sufficient.

Furthermore, studies that specifically aim to address financial inclusion for the Islamic financial system are very limited too.

The studies are limited to banking services.

From the institutional perspective, these studies only look at the partial aspects of Islamic finance; whereas the definition of Islamic finance should institutionally cover philanthropy.

This study aims to explain theoretically how philanthropy instruments can increase financial inclusion.

Our study shows that: first, philanthropy instruments increase the range of financial services available to underserved markets.

Second, the more philanthropy instruments available, the more the number of the poor to have an account with Islamic financial institutions and at the same time the poor also get access to financing from the Islamic financial institutions.