Issues and challenges of financial inclusion among low-income earners in rural areas of Malaysia

Sharizan, Salihah and Redzuan, Nur Harena and Rosman, Romzie (2021) Issues and challenges of financial inclusion among low-income earners in rural areas of Malaysia. Turkish Journal of Islamic Economics, 8 (Special Issue). pp. 277-299. ISSN 2147-9054 E-ISSN 2148-3809

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Abstract

Financial inclusion (FI) appears to be one of the main global agendas as it is an essential way of reducing poverty and increasing the economic growth of a country. FI is the provision of financial services to all segments of society in a more convenient, quality, and affordable way. In this study, the authors analyzed 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. Primary data was collected by conducting semi-structured interviews with four expert bankers from the Financial Institutions (FIs) in Kuala Rompin, Pahang, and two representatives from the B40 customers in the rural areas of Pekan, Pahang, Malaysia. Based on the findings, barriers faced by the supply sides of the FIs include 1) high risk of cost and security, 2) barriers in communication and lack of financial education, and 3) lack of proof 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 side, the issues and challenges found include 1) lack of confidence, 2) lack of proof documents, 3) misuse of capital, and 4) lack of financial literacy. Henceforth, the findings have significant implications for 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:	Article (Journal)
Additional Information:	8720/91516
Uncontrolled Keywords:	Financial Inclusion, rural areas, poverty, Financial Institution, Malaysia
Subjects:	H Social Sciences > HG Finance 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:	Dr. ROMZIE ROSMAN
Date Deposited:	16 Aug 2021 08:34
Last Modified:	16 Aug 2021 08:34
URI:	http://irep.iium.edu.my/id/eprint/91516

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