Role of Religion as a Barrier to Digital Financial Inclusion

Digital financial services (DFS) are dramatically changing the financial inclusion map of the world. Given the promise of DFS, policymakers are prioritizing the rapid expansion of mobile banking by reducing the adaptation barriers. These barriers are often considered economic (such as transaction cost and mobile phone access). However, there could be other critical non-economic barriers to DFS adoption, such as religion. In the Muslim world, religious beliefs and practices could hinder financial inclusion, primarily due to certain groups' preferences against traditional commercial financial products. However, existing research on religious considerations on financial decision-making is limited. To address this knowledge gap in the literature, in this proposed project development proposal, we plan to explore the role of religion as a potential barrier to DFS adoption. We additionally plan to understand whether the Shariah-compliant DFS product could play an influential role in improving financial inclusivity for a particular population. We plan to do this in Indonesia, a country with the world's largest Muslim population.