Islamic Banking: A Panacea for Financial Inclusion in Northern Nigeria

Abstract

The issue of financial exclusion which renders lot of the underprivileged and sometimes religious minded populace to be financially excluded, especially by the convention financial institutions, has been a stumbling block to development and realization of the contribution these groups of people are capable of providing to the economic growth and development of developing countries like Nigeria. This is because most formal financial mediators considered low-income households as too poor and incapable of satisfying the criteria laid by the commercial banks in terms of financial dealings. These reasons, consequently exposes these groups' limitation to financial inclusion. On the other hand, quiet a number of them shun relationship with the commercial banks for its inability to provide to them the required needs based on religious consideration and sometimes lack of easy accessibility, distances these group from being financially inclusive. Using a questionnaire survey and descriptive analysis with the help of SPSSM the research was able to identify the major causes of financial exclusion and highlighted how Islamic banking could be a better alternative to those desiring to get not only access to finance but also a suitable and Shari'ah compliant one as well as providing a favorable ground thereby enhancing the financial inclusion among these vulnerable groups.