Financial Inclusion across Muslim- and Non-Muslim-Majority Economies: Evidence on Account Ownership, Access Pathways, and Digital Enablement
Using Global Findex 2024 data from 38 lower-middle-income economies, this study reveals that Muslim-majority countries exhibit significantly lower financial inclusion than their non-Muslim counterparts across account ownership, a stronger reliance on bank-only access pathways, and reduced digital enablement among account holders, highlighting the need for ecosystem-specific policy interventions.
Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer
Having a bank account is often the first step toward building a secure financial life. It allows people to save money safely, receive wages, and pay bills without carrying cash. However, simply opening an account does not guarantee that a person is fully included in the financial system. True inclusion also depends on how easily a person can access that account and whether they can use it through modern tools like smartphones. In many parts of the world, people face barriers not just because they are poor, but because the financial products available do not match their needs or beliefs. For instance, in some cultures, people may avoid conventional banks if they feel the services conflict with their religious principles. Understanding these layers of access—owning an account, choosing how to reach it, and using it digitally—is crucial for policymakers who want to ensure everyone has a fair chance to participate in the economy.
A new study examines these layers of financial inclusion by comparing economies where the majority of the population is Muslim with those where it is not. The researchers focused specifically on lower-middle-income countries, a group where financial progress varies wildly. Using data from over 40,000 adults across 38 different nations, the team looked at three specific questions: Do people in Muslim-majority countries own accounts at the same rate as those in non-Muslim countries? If they do own accounts, do they use different methods to access them, such as visiting a bank branch versus using a mobile phone? And finally, among those who have accounts, are they using digital tools to manage their money as frequently as their counterparts elsewhere? The study treats the religious makeup of a country not as a measure of individual belief, but as a way to understand the broader environment in which financial services are offered and perceived.
The findings reveal a clear pattern of difference across all three layers of inclusion. First, adults living in Muslim-majority economies are significantly less likely to own any formal bank account compared to those in non-Muslim economies. In the non-Muslim group, about two-thirds of adults have an account, whereas in the Muslim-majority group, only about half do. This gap persists even when the researchers account for factors like age, gender, education, income, and whether a person lives in a city or a rural area. The difference is not explained by these personal characteristics alone; it suggests that the broader institutional environment in Muslim-majority countries presents unique hurdles to simply opening an account.
For those who do manage to open an account, the way they access their money tells a different story. In non-Muslim-majority economies, account holders often use a mix of channels. Many rely solely on mobile phones, while others use both bank branches and mobile services together. In contrast, account holders in Muslim-majority economies are much more likely to rely exclusively on traditional bank branches. They are far less likely to use mobile-only services or to combine mobile and bank access. This suggests that while people in these countries may be entering the financial system, they are doing so through a narrower door, often bypassing the mobile money options that have driven inclusion in other parts of the world. The data shows that in some Muslim-majority nations, over 80 percent of account holders use only bank branches, whereas in some non-Muslim nations, mobile-only usage is nearly half of all access.
The third layer of the study looks at what happens after someone has an account and a way to access it. The researchers found that even among account holders, those in Muslim-majority economies are less likely to use digital features to manage their money. This means that while they may have an account, they are not using it as actively or as digitally as people in other countries. This gap in digital usage remains even after controlling for whether a person has a phone or internet access. It indicates that the issue is not just about having the technology, but about how the financial ecosystem is set up to encourage its use. The study suggests that in these economies, the digital tools available may not feel as reliable, relevant, or trustworthy to the average user.
The authors argue that these differences are not about individual choices or a lack of desire to participate. Instead, they point to the structure of the financial systems themselves. In Muslim-majority economies, the available products may not feel like a good fit for the population, or the systems that support mobile and digital finance may not be as developed or coordinated. The study highlights that simply counting how many people have accounts is not enough to measure financial health. To truly understand inclusion, one must look at how people access their money and how deeply they engage with digital tools. The results suggest that for financial inclusion to improve in these regions, regulators and providers need to focus on making the entire system more interoperable and reliable, ensuring that mobile and digital options are as robust and accessible as traditional banking. This approach would help bridge the gap between simply having an account and truly being part of the modern financial world.
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