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Exploring financial inclusion in MENA countries: an entropy weight approach

Author

Listed:
  • Naveenan Ramaian Vasantha
  • Chee Yoong Liew
  • Ploypailin Kijkasiwat
Abstract
Purpose - Research on financial inclusion (FI) in Islamic countries has evolved and gained prominence. This study aims to construct an extensive multidimensional FI index to ascertain the level of inclusion and trends in the Middle East/North Africa (MENA) countries. Additionally, this study examines the potential role of Islamic finance in improving access to financial services. Design/methodology/approach - Data for the study were collected from databases covering MENA countries for the period 2010–2020. An inclusion index has been constructed using the entropy method. Findings - Key findings indicate that the overall FI has improved in Islamic countries. However, it should be noted that all MENA countries fall within the low or medium levels of the inclusion index. It was observed that insurance access and penetration savings were poor in the Islamic MENA countries. Social implications - The authors recommend that policymakers focus on insurance access and saving behaviour in their respective countries. Based upon these observations, policymakers should promote the economic benefits of Islamic finance, which will help improve FI and economic development in Islamic countries. This study emphasises the necessity of policy framework reform to provide Islamic financial services to the poorest in society at low or no cost for better economic benefits. Originality/value - Most studies tend to overlook important indicators such as insurance, savings and credit penetration while calculating the index. These indicators add value to the existing literature. The majority of prior studies used United Nation Development Programme methodology or principal component analysis for Inclusion Index measurements. The adoption of the entropy weighting method is the novelty of this study.

Suggested Citation

  • Naveenan Ramaian Vasantha & Chee Yoong Liew & Ploypailin Kijkasiwat, 2023. "Exploring financial inclusion in MENA countries: an entropy weight approach," International Journal of Islamic and Middle Eastern Finance and Management, Emerald Group Publishing Limited, vol. 16(6), pages 1219-1247, August.
    • Handle: RePEc:eme:imefmp:imefm-11-2022-0451
    DOI: 10.1108/IMEFM-11-2022-0451
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    Cited by:

    1. R. V. Naveenan & Chee Yoong Liew & Ploypailin Kijkasiwat, 2024. "Nexus Between Financial Inclusion, Digital Inclusion and Health Outcomes: Evidence from Developing Economies," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 174(1), pages 367-408, August.

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