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Issues and challenges of financial inclusion among B40 in the rural areas of Malaysia

Sharizan, Salihah and Redzuan, Nur Harena and Rosman, Romzie (2020) Issues and challenges of financial inclusion among B40 in the rural areas of Malaysia. In: International Conference on Islamic Social Finance: Pandemic Crisis and Possible Solutions, 29th-30th September 2020, Kuala Lumpur. (Unpublished)

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Financial inclusion appears to be one of the main global agenda as it is an essential way for the reduction of poverty and increasing the economic growth of a country. Looking at the progress of financial inclusion in Malaysia, it is observed that there is a positive rate of financial inclusion in which in 2015, Bank Negara Malaysia (BNM) reported that Malaysia recorded a higher financial inclusion index of 0.9 out of 1 compared to 0.77 out of 1 in 2011. However, the recent report showed that there were remaining small segments of the society in Malaysia who still have limited access to FIs specifically the poor people, people living in the rural areas and workers with the low level of education. This study, therefore, analyzes the issues and challenges faced from the two perspectives of the financial institutions (FIs) and the rural B40 group concerning the way of pursuing the exclusive of FI. By using qualitative methodology, primary data is collected by conducting the semi-structured interview on four expert bankers from the financial institutions, a representative from AIM’s members (SAHABAT) and a representative from the B40 people in the rural areas of Malaysia. Based on the finding of the study, several barriers faced by the supply sides of the FIs includes: 1) high risk of cost and security 2) barriers in communication and understanding the financial education 3) lack of proof of documents. The other challenges are 1) competition with the conventional institutions 2) default risk due to non-payment and 3) internet connection problem. On the demand sides, the issues and challenges found include 1) lack of confidence 2) lack of proof of documents 3) lack of financial illiteracy 4) misuse of capital. Henceforth, the findings have significant implications to the Islamic banking and finance industry in exploring the current barriers faced in delivering financial inclusion to the lower segment of the society in Malaysia.

Item Type: Conference or Workshop Item (Plenary Papers)
Additional Information: 8441/83594 Presentation via online
Uncontrolled Keywords: Financial inclusion, rural areas, Malaysia
Subjects: H Social Sciences > HB Economic Theory > HB848 Demography. Population. Vital events
H Social Sciences > HG Finance > HG3368 Islamic Banking and Finance
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button): Institute of Islamic Banking & Finance (IIiBF)
Depositing User: Nur Harena Redzuan
Date Deposited: 13 Oct 2020 11:01
Last Modified: 19 Nov 2020 15:42
URI: http://irep.iium.edu.my/id/eprint/83594

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