Islamic Banking: A New Approach for Financial Inclusion

  •  Khaled Zamer    


This study aimed to explore using Islamic banking as a new approach to tackle the challenges of financial inclusion in Middle east and sub-Saharan Africa where the majority of populations are Muslims and have challenges in accessing the financial instruments. There are different barriers to financial inclusion, one of these is the voluntary exclusion due to religious reasons and the other is the high cost of interest charged to small borrowers. Islamic banking seems to offer reasonable solution to these challenges where the interest is replaced with other tools based on partnerships and social cooperation. However, banks might be facing different type of challenges such as the regulation and customer reach in absence of profitable margins. The other factors impacting adoption will be to offer an economic access to the service without heavy investments from the banks, and maintain high service standard to create trust and drive adoption.

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