What Drive Islamic Financial Inclusion in Banda Aceh City?
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Published:
Jun 27, 2024
Keywords:
Digital finance, financial technology, Islamic financial inclusion, Islamic financial literacy, social capital
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Abstract
This empirical study explores the role of Islamic financial literacy in strengthening Islamic financial inclusion through financial technology, digital finance, and social capital. Analyzing 385 respondents using Structural Equation Modeling (SEM), the findings reveal significant direct effects of Islamic financial literacy on financial technology, digital finance, and social capital. Additionally, these factors collectively impact Islamic financial inclusion. Mediating effects demonstrate that financial technology, digital finance, and social capital mediate the influence of Islamic financial literacy on Islamic financial inclusion. Implications include the prioritization of Islamic finance education to enhance public understanding and the need for collaborative efforts to establish Shariah-compliant financial technology infrastructure. Fostering social capital is crucial, reducing resistance to change and increasing participation in Islamic financial services. The study underscores an integrated approach, combining education, technological innovation, and social capital development for robust Islamic financial inclusion, promoting sustainable economic growth.
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References
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Rizky, R. & Rachmatan, R. (2016). Correlation between body image and consumptive behavior on adolescents in Banda Aceh. Jurnal Psikogenesis, 4(2), 182–191.
Sadari & Hakim, A. (2019). Revitalisasi keuangan inklusif dalam sistem perbankan syariah di era financial technology. Journal of Islamic Economics, Finance, and Banking, 1(1), 1–24.
Shen, Y., Hu, W. & Zhang, Y. (2022). Digital finance, household income and household risky financial asset investment. Procedia Computer Science, 202, 244–251.
Shen, Y., Hueng, C. J., & Hu, W. (2020). Using digital technology to improve financial inclusion in China. Applied Economics Letters, 27(1), 30–34.
Tok, Y. W., & Heng, D. (2022). Fintech: Financial inclusion or exclusion?. IMF Working Paper.
Wulandari, A. S., Darwin, M., Moeljono, D., & Sukamdi. (2020). Enhancing financial inclusion through social capital in Indonesia: A case study of women micro enterprise group in Bogor Regency, West Java. International Journal of Society, Development and Environment in the Developing World, 4(2), 31–44.
Ansori, M. (2019). Perkembangan dan dampak financial technology (fintech) terhadap industri keuangan syariah di Jawa Tengah. Wahana Islamika: Jurnal Studi Keislaman, 15(1), 31–45.
Arner, D. W., Buckley, R. P., Zetzsche, D. A., & Veidt, R. (2020). Sustainability, fintech and financial inclusion. European Business Organization Law Review, 21(1), 7–35.
Atkinson, A. & Messy, F.-A. (2013). Promoting financial inclusion through financial education: OECD/INFE evidence, policies and practice. Working Papers on Finance, Insurance and Private Pensions). https://doi.org/10.1787/5k3xz6m88smp-en.
Bank Indonesia. (2016). Surat Edaran No.18/22/DKSP. Penyelenggaraan Layanan Keuangan Digital.
Basrowi, Suryanto, T., Anggraeni, E., & Nasor, M. (2020). The effect of Islamic financial literation and financial technology on Islamic financial inclusion. AL-FALAH : Journal of Islamic Economics, 5(2), 231–263.
Bire, A. R., Sauw, H. M., & Maria. (2019). The effect of financial literacy towards financial inclusion through financial training. International Journal of Social Sciences and Humanities, 3(1), 186–192.
Bongomin, G. O. C., Munene, J. C., Ntayi, J. M., & Malinga, C. A. (2018). Nexus between financial literacy and financial inclusion: Examining the moderating role of cognition from a developing country perspective. International Journal of Bank Marketing, 36(7), 1190-1212.
Bongomin, G. O. C., Ntayi, J. M., Munene, J. C., & Nkote Nabeta, I. (2016). Social capital: mediator of financial literacy and financial inclusion in rural Uganda. Review of International Business and Strategy, 26(2), 291–312.
Cai, W., Polzin, F., & Stam, E. (2021). Crowdfunding and social capital: A systematic review using a dynamic perspective. Technological Forecasting and Social Change, 162.
Dinh, M. T. P. (2022). Financial Literacy and Fintech Adoption Among the Young. (Master Thesis, Eastern International University, Thủ Dầu Mộ, Vietnam).
Dwiastanti, A. (2015). Financial literacy as the foundation for individual financial behavior. Journal of Education and Practice, 6(33), 99–105.
Fafchamps, M. (2006). Development and social capital. Journal of Development Studies, 42(7), 1180–1198.
Fukuyama, F. (2000). Social capital and civil. IMF Working Paper.
Goenadi, G. F., Murhadi, W. R. & Ernawati, E. (2022). The influence of financial literacy on financial inclusion: Social capital as mediating variable. Media Ekonomi Dan Manajemen, 37(2), 195-209.
Gomber, P., Koch, J. A., & Siering, M. (2017). Digital finance and fintech: Current research and future research directions. Journal of Business Economics, 87, 537-580.
Goyal, K. & Kumar, S. (2021). Financial literacy: A systematic review and bibliometric analysis. International Journal of Consumer Studies, 45(1), 80-105.
Grohmann, A., Klühs, T. & Menkhoff, L. (2018). Does financial literacy improve financial inclusion? Cross country evidence. World Development, 111(1), 84–96.
Hasan, M., Le, T., & Hoque, A. (2021). How does financial literacy impact on inclusive finance? Financial Innovation, 7(1), 1–23.
Li, Y., Wang, C., Xiang, J., & Fang, Z. (2020). Limited rationality of traders, information disclosure quality and price discovery efficiency. Xitong Gongcheng Lilun yu Shijian/System Engineering Theory and Practice, 40(7), 1682–1693.
Lusardi, A. (2019). Financial literacy and the need for financial education: Evidence and implications. Swiss Journal of Economics and Statistics, 155(1), 1–8.
Muneeza, A., & Mustapha, Z. (2021). Islamic fintech and financial inclusion. Islamic FinTech: Insights and Solutions, 173-190.
Nguyen, Q. T. T., Ho, L. T. H., & Nguyen, D. T. (2023). Digitalization and bank profitability: evidence from an emerging country. International Journal of Bank Marketing, 41(7), 1847-1871.
Nugroho, A. P. & Apriliana, R. M. (2022). Islamic financial literacy and intention to use Gopay in Yogyakarta: Extended theory of acceptance models. KnE Social Sciences, 329-338.
[OJK] Otoritas Jasa Keuangan. (2016). National Survey on Financial Literacy and Inclusion 2016 (SNLIK) [online]. [accessed 2023 Jan 02]. Retrieved from https://www.ojk.go.id/id/berita-dan-kegiatan/siaran-pers/Documents/Pages/Siaran-Pers-OJK-Indeks-Literasi-dan-Inklusi-Keuangan-Meningkat/17.01.23%20Tayangan%20%20Presscon%20%20nett.compressed.pdf.
[OJK] Otoritas Jasa Keuangan. (2017). Indonesia’s National Financial Literacy Strategy [online]. [accessed 2023 Jan 02]. Retrieved from: https://www.ojk.go.id/id/berita-dan-kegiatan/publikasi/Documents/Pages/Strategi-Nasional-Literasi-Keuangan-Indonesia-(Revisit-2017)-/SNLKI%20(Revisit%202017).pdf.
[OJK] Otoritas Jasa Keuangan. (2019). National Survey on Financial Literacy and Inclusion (SNLKI) [online]. [accessed 2023 Jan 02]. Retrieved from: https://ojk.go.id/id/berita-dan-kegiatan/publikasi/Pages/Survei-Nasional-Literasi-dan-Inklusi-Keuangan-2019.aspx.
[OJK] Otoritas Jasa Keuangan. (2021). Indonesia Financial Services Sector Master Plan 2021-2025 [online]. [accessed 2023 Jan 02]. Retrieved from: https://ojk.go.id/id/berita-dan-kegiatan/info-terkini/Pages/Master-Plan-Sektor-Jasa-Keuangan-Indonesia-2021-2025.aspx.
Ozili, P. K. (2018). Impact of digital finance on financial inclusion and stability. Borsa Istanbul Review, 18(4), 329–340.
Palmié, M., Wincent, J., Parida, V., & Caglar, U. (2020). The evolution of the financial technology ecosystem: An introduction and agenda for future research on disruptive innovations in ecosystems. Technological Forecasting and Social Change, 151.
Rahim, S. H. A., Rashid, R. A., & Hamed, A. B. (2016). Islamic financial literacy and its determinants among university students: An exploratory factor analysis. International Journal of Economics and Financial Issues, 6, 32–35.
Rizky, R. & Rachmatan, R. (2016). Correlation between body image and consumptive behavior on adolescents in Banda Aceh. Jurnal Psikogenesis, 4(2), 182–191.
Sadari & Hakim, A. (2019). Revitalisasi keuangan inklusif dalam sistem perbankan syariah di era financial technology. Journal of Islamic Economics, Finance, and Banking, 1(1), 1–24.
Shen, Y., Hu, W. & Zhang, Y. (2022). Digital finance, household income and household risky financial asset investment. Procedia Computer Science, 202, 244–251.
Shen, Y., Hueng, C. J., & Hu, W. (2020). Using digital technology to improve financial inclusion in China. Applied Economics Letters, 27(1), 30–34.
Tok, Y. W., & Heng, D. (2022). Fintech: Financial inclusion or exclusion?. IMF Working Paper.
Wulandari, A. S., Darwin, M., Moeljono, D., & Sukamdi. (2020). Enhancing financial inclusion through social capital in Indonesia: A case study of women micro enterprise group in Bogor Regency, West Java. International Journal of Society, Development and Environment in the Developing World, 4(2), 31–44.