PREDICTORS OF ISLAMIC FINANCIAL INCLUSION IN THE NORTHWEST NIGERIA: FURTHER EVIDENCE

Abstract

This paper investigates the determinants of Islamic financial inclusion in the Northwest Nigeria which composed of seven (7) states. Guided by existing evidences in the literature, the paper uses four measures of financial inclusion as constructs: owning an account with Islamic bank, request for financing from an Islamic bank, owning an ATM and frequency of the usage of ATM card of an Islamic bank. Accordingly, it employs four logistic regression models to investigate how socioeconomic, demographic, demand and supply variables affect the research constructs in the study area using cross-sectional survey data of 800 households in the study area. Results show that gender, size of the household, years of business experience and distance of banks, impact significantly on the likelihood of having an Islamic bank account. Specifically, females are more likely to own an Islamic bank account. Years of business experience increase the chance of owning an account, but distance reduces such probabilities. In the second model, gender and household size are the demographic factors affecting the likelihood of a respondent’s request for financing facility from an Islamic bank, with females more likely to request for financing than their male counterparts; while size of the household reduces the likelihood. Other determinants of financing request include years of business experience and duration of banking with an Islamic bank. The results also indicate that females who recently joined businesses, as well as customers residing far away from the service provider are more likely to use ATM card frequently than otherwise. From the findings the paper posits that improved provision of financial infrastructure, increase in the number of bank branches in the rural areas and reduction in the costs of services of the Islamic banks are pertinent for improved Islamic financial inclusion in the zone.