Role of Financial Inclusion to Stability: The Case of Indonesia’s Sharia Banking

Widarwati, Estu; Sari, Pindykurnia; Nurmalasari, Nunik

doi:10.2478/hjbpa-2019-0001

Cited by 6 publications

(11 citation statements)

References 7 publications

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“…Further, respondents agreed that banks are able to keep certain amount of money that satisfy withdrawals, usage of bank accounts by customers affects bank stability, banks can create money to increase money supply in the economy and that banks earns interest rates from the borrowers depending on the category of the loan. These findings approve the research inferences by Widarwati, Sari and Nurmalasari (2019) which showed that financial inclusion proxy deposits positively affected financial stability. www.ijcab.org Results on assessing on service delivery revealed that there is improved utilization of resources with commercial banks listed in NSE thus resulting in effective cost-cutting, customers have access to all relevant information on financial services and products to permit them make informed decisions on usage, there is ease and comfort of accessing and using financial services and that there is improved delivery of service by commercial banks listed in NSE thus leading to enhanced customer satisfaction.…”

Section: Discussion Of Study Findingssupporting

confidence: 91%

“…Further, majority of participants felt that banks are able to keep certain amount of money that satisfy withdrawals, usage of bank accounts by customers affects bank stability, banks can create money to increase the money supply in the economy and that banks earns interest rates from the borrowers depending on the category of the loan. These findings are in accord with the study findings by Widarwati, Sari and Nurmalasari (2019) which showed that financial inclusion positively affected financial stability.…”

Section: Source: Research Data (2020)supporting

confidence: 92%

“…The result emphasizes the function of the absence of financial exclusion or financial inclusion in the banking sector's non-development and non-promotion of economic growth during the study period in Algeria and Tunisia. This compares to Widarwati, Sari and Nurmalasari (2019) who investigated the role of financial use for stability, the case of sharia banking in Indonesia and showed that financial inclusion proxy deposits positively affected financial stability. Danjuma (2018) investigated the financial survey and financial inclusion survey of the Nigeria's financial system.…”

Section: Financial Usage and Bank Stabilitymentioning

confidence: 70%

“…Park and Mercado, (2015) indicate that many factors have an impact on both a country's financial development and financial inclusion level, such as regulatory environment, information availability, institutional quality, good governance, and per capita income. Therefore, when financial inclusion is perceived to be the financial services use, individual financial restrictions from investments would be loosened for their own benefit, such as education for business training (Widarwati, Sari & Nurmalasari, 2019). Financial inclusion not only influences stability of commercial banks but also lead to an increase in Gross Domestic Product growth rate which encourages more financial inclusion.…”

Section: Introductionmentioning

confidence: 99%

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Financial Inclusion and Bank Stability of Commercial Banks Listed in Nairobi Securities Exchange, Kenya

Kinyua

Omagwa²

2020

IJCFA

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Following the global financial crisis of 2007-2009, policy makers, regulators and financial institutions have heavily invested in initiatives and reforms aimed at improving the financial stability of the banking sector. However, despite these initiatives, many of the listed commercial banks in the recent past have continued to report dismal performance. Additionally, the stability levels of the banks remain low despite implementation of financial inclusion policies which raises concern. The study sought to determine the effect of financial inclusion on bank stability of Commercial banks listed in Nairobi Securities Exchange, Kenya. The specific objectives were to establish the effect of financial availability, financial accessibility, financial usage, and service delivery on bank stability. The study employed a descriptive research design and targeted 11 commercial banks listed in Nairobi Securities Exchange, Kenya. The period scope was year 2014 to year 2018 and purposive sampling was applied in picking a sample of 55 respondents. Primary data was collected using questionnaires while secondary data was gathered utilizing a document review guide. Multiple regression analysis, correlation analysis, and descriptive statistics were applied in the data analysis. The study found that financial availability (p=0.033), financial accessibility (p=0.015), financial usage (p=0.039) and service delivery (p=0.023) all had significant effects on bank stability of commercial banks listed in Nairobi Securities Exchange, Kenya. The study concludes that financial availability, financial accessibility, financial usage, and service delivery play a crucial role in fostering stability of listed commercial banks in Kenya. The study recommends that central bank should ensure compliance on Central Bank of Kenya policies that govern capital adequacy to avert risks associated with Non-Performing Loans. Commercial banks listed in Nairobi Securities Exchange are recommended to embrace latest technologies in service provision. In addition, financial institutions need to invest in customer service by first providing employees with the right skills and technology to provide exceptional customer service. Further, banks are recommended to put in place strong lending policies as well as debt recovery measures which will improve their stability levels.

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Section: Discussion Of Study Findingssupporting

confidence: 91%

Section: Source: Research Data (2020)supporting

confidence: 92%

Section: Financial Usage and Bank Stabilitymentioning

confidence: 70%

Section: Introductionmentioning

confidence: 99%

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Financial Inclusion and Bank Stability of Commercial Banks Listed in Nairobi Securities Exchange, Kenya

Kinyua

Omagwa²

2020

IJCFA

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“…From an international viewpoint, this action is anticipated to maintain additional comprehensive and sustainable economic development, and can help the people wellbeing. Furthermore, financial inclusion is anticipated to sustain the financial strength as basis of firm economic progress (Widarwati, Sari & Nurmalasari, 2019). Kigsley (2013) has tinted the function of financial inclusion in tackling concerns such as worldwide poverty, income discrimination, under progress and wellbeing.…”

Section: Literature Reviewmentioning

confidence: 99%

Financial Inclusion and Financial Literacy in Low Income Group in Emerging Economy

Affandi

Malik

2020

JAFEE

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Purpose: Financial institutions engage in performing imperative part in the economic development of an economy through circulation of funds that resulting in employment and fair distribution of limited resources. Financial literacy results in usage of financial product and services provided by financial institutions that lead to pervasive growth of an economy. Financial inclusion takes into loop the excluded segment of a developing country to attain the desired financial and economic outcomes. Recognizing the importance of financial inclusion, this study is executed to investigate the impact of financial literacy on financial inclusion in street vendors. Design/methodology/approach: This study was conducted in twin cities Islamabad and Rawalpindi. Snowball and purposive sampling technique has been used in this study. Primary data has been collected from street vendors through semi structure interviews and questionnaire. Participatory action research design is used in this study. Deductive approach has been used for qualitative data analysis. Findings: The results of this study found that street vendors only name financial institutions. They don’t have knowledge about financial products and services provided by those financial institutions. Because of inadequate knowledge, majority of the street vendors do not use financial products and services which are available to them. A very small number of street vendors are using financial products and services. The expected outcomes of this study set a direction for policy makers of financial institutions about how to increase financial inclusion by considering the observed relations in this study. Practical implications: The results will help policy makers in formulating effective strategies to bring into the net that excluded segment, which if included will not only improve their quality of life but also augment to the sustainability and growth of economy through financial inclusion. Originality/value: As suggested by the recent relevant literature, the study is an attempt to identify those antecedents of financial inclusion, which has not been explored earlier in context of Pakistan, to extend the earlier findings through qualitative research method and to establish how financial inclusion can be made a success in achieving its desired outcomes in a developing economy.

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Financial inclusion, economic freedom and financial stability in sub‐Saharan Africa

Frimpong

Yusuf

Boateng

et al. 2023

Thunderbird Intl Bus Rev

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Executive Summary The study examines the role of economic freedom in the relationship between financial inclusion and stability in sub‐Saharan African economies. By employing the System General Method of Moment and data from 39 sub‐Saharan African countries between 2004 and 2017, the study examines whether economic freedom (i.e., financial and business freedom) conditions the effect of financial inclusion on stability. Results from the study show evidence of a positive impact of financial inclusion on financial stability in sub‐Saharan African economies. Again, the results depict that financial inclusion could better enhance financial stability in economies with a high level of economic freedom (i.e., financial and business freedom). The results suggest that policymakers should allow financial institutions to operate with the level of freedom required to provide services at the lowest possible price. Further, it is recommended that policymakers should ensure that administrative requirements are minimal, bureaucracy costs are lesser, and licensing regulations for startups and expansion of existing firms are friendly. With this, associated increases in business and financial freedom would have promising implications for the relationship between financial inclusion and stability. Managerial Implications of the Study This research is very vital for firms in both the financial and nonfinancial. Specifically, managers of firms in the financial sector can embrace the level of financial freedom that would be allowed by the government, to come up with new and inclusive financial products, while putting in measures not to endanger the stability of the financial sector. Managers in the business sector could also take advantage of the business freedom that would be allowed by the government to diversify business operations, increase profitability and avoid causing nonperforming loan problems to banks. Originality/Value The study provides the first insight into how economic institutions condition the effect of financial inclusion on financial stability, which has not been previously studied.

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Role of Financial Inclusion to Stability: The Case of Indonesia’s Sharia Banking

Cited by 6 publications

References 7 publications

Financial Inclusion and Bank Stability of Commercial Banks Listed in Nairobi Securities Exchange, Kenya

Financial Inclusion and Bank Stability of Commercial Banks Listed in Nairobi Securities Exchange, Kenya

Financial Inclusion and Financial Literacy in Low Income Group in Emerging Economy

Financial inclusion, economic freedom and financial stability in sub‐Saharan Africa

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