Financial Inclusion in Islamic vs. Non-Islamic Countries, FinTech and Bank Competition

This thesis consists of three empirical papers on contemporary issues associated with factors that explain differences in financial inclusion. In particular the focus is on the determinants of financial inclusion and differences in account ownership according to gender, Financial Technology (FinTech) and bank competition and stability. The first empirical chapter examines the determinants of financial inclusion across Islamic and non-Islamic countries measured as differences in account ownership with a focus on gender differences from 2011 to 2017. This chapter investigates the patterns of financial inclusion and considers potential determinants of financial inclusion across five dimensions: macroeconomic, social, institutional, technological, and banking. The main findings suggest that most of our chosen determinants (non-discrimination against women, human development index, gender inequality, government integrity, mobile subscription, and individuals using the internet) are important drivers of financial inclusion across the full sample. Focusing on differences in determinants of financial inclusion across male and female account ownership in Islamic and non-Islamic countries, we find that GDP per capita positively influences male and female account ownership in non-Islamic countries. The second empirical chapter investigates the relationship between FinTech and FI using a global dataset of 46 countries over the period 2007-2019. Results demonstrate that FinTech strongly improves financial inclusion. In addition, the effects of FinTech on financial inclusion appear stronger in countries with relatively low levels of economic development, low levels of income inequality and high levels of FinTech. The third empirical chapter explores the association between financial inclusion and bank stability taking into the account the effect of bank competition. We use a sample of 241 banks in Middle East and North Africa countries (MENA) countries for the period 2012-2021. We construct a country-level index of financial inclusion using Principal Component Analysis (PCA). Our evidence illustrates a positive and significant relationship between financial inclusion and bank stability in MENA countries. Our results also suggest that high market power (measured using the Lerner index) is positively associated with bank stability. In addition, our result also indicates that bank competition only improves financial inclusion strategies that involve credit growth.