Potentials of Islamic Banking in Enhancing Financial Inclusion in Northern Nigeria

Abstract

Financial exclusion renders many underprivileged and sometimes religious-minded populace financially excluded, especially by the conventional financial institutions. Thus, it has been a stumbling block to the development and realization of the contribution these groups of people can provide 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 expose these groups limitations to financial inclusion, On the other hand, quite many of them shun relationships with the commercial banks for their inability to provide the required needs based on religious consideration. Sometimes, a lack of easy accessibility distances these groups from being financially inclusive. Using a questionnaire survey and deceptive analysis with the help of SPSS, this study identifies the major causes of financial Exclusion Also, this study highlights how Islamic banking could be a better alternative to those desiring to get access to finance and a suitable and Shari’ah compliant one and provide a favorable ground, thereby enhancing the financial Inclusion among these vulnerable groups.