The Role of Financial Inclusion in Islamic Bank Efficiency: Evidence from Asian OIC Countries

Taufiq Taufiq, Razali Razali

Abstract


The role of financial inclusion in determining the efficiency of Islamic banks remains understudied despite its significance. This study seeks to bridge this gap by introducing financial inclusion as a novel variable influencing Islamic bank performance. Analyzing panel data from Sharia banking across OIC Asian countries from Q3 2018 to Q1 2023, the research employs random effect model regression analysis (GLS) to assess the impact of financial inclusion on two efficiency measures, operational and cost efficiency. The analysis reveals that financial inclusion positively impacts cost efficiency but negatively affects operational efficiency. This indicates that financial inclusion in these banks is low due to factors such as high participation of low-income customers, interest rate restrictions, and limited product offerings by Islamic banks. In addition, cultural and economic factors also contribute to this trend. To enhance cost efficiency, it is recommended that Islamic banks improve service accessibility for customers. Furthermore, operational efficiency is positively influenced by capital adequacy, loans, profitability, and bank size, while negatively affected by banking risk. Policymakers should focus on strengthening financial infrastructure and legal systems to promote greater financial inclusion. Bank managers are advised to exercise caution in loan issuance to avoid inefficiencies, and identifying key efficiency factors is crucial for developing effective strategies for sustainability in Islamic banking.

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ABSTRAK – Peran Inklusi Keuangan dalam Efisiensi Bank Syariah: Bukti dari Negara-negara OKI di Asia. Walaupun dianggap penting, peran inklusi keuangan syariah dalam menentukan efisiensi bank syariah masih belum banyak dikaji. Oleh karena itu, penelitian ini bertujuan untuk menguji pengaruh variabel inklusi keuangan syariah terhadap efisiensi bank syariah di negara-negara Organisasi Kerjasama Islam (OKI) yang ada di Asia dari kuartal 3-2018 sampai kuartal 1-2023. Penelitian ini mengumpulkan data panel dari sejumlah bank syariah di negara-negara tersebut untuk kemudian dilakukan analisis regresi dengan random effect model (GLS), menggunakan dua ukuran efisiensi, yaitu efisiensi operasional dan efisiensi biaya. Hasil penelitian menunjukkan bahwa inklusi keuangan berdampak positif terhadap efisiensi biaya tetapi berdampak negatif terhadap efisiensi operasional. Hal ini berarti bahwa rendahnya inklusi keuangan pada perbankan syariah disebabkan oleh sejumlah faktor seperti tingginya jumlah nasabah berpenghasilan rendah, pembatasan suku bunga, dan kurangnya variasi produk yang ditawarkan oleh bank syariah. Selain itu, faktor budaya dan ekonomi juga berperan signifikan terhadap hasil ini. Untuk meningkatkan efisiensi biaya, disarankan agar bank syariah meningkatkan aksesibilitas layanan bagi pelanggan. Selain itu, efisiensi operasional dipengaruhi secara positif oleh kecukupan modal, pinjaman, profitabilitas, dan ukuran bank, sementara dipengaruhi secara negatif oleh risiko perbankan. Pembuat kebijakan harus fokus pada penguatan infrastruktur keuangan dan sistem hukum untuk mendorong inklusi keuangan yang lebih baik. Pihak bank disarankan untuk berhati-hati dalam penerbitan pinjaman untuk menghindari inefisiensi, dan mengidentifikasi faktor-faktor utama yang dapat meningkatkan efisiensi sehingga dapat merumuskan strategi keberlanjutan bagi perbankan syariah.

 

Keywords


Efficiency, CAR, Financial Inclusion, Loan, Risk, Profitability, Bank Size

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DOI: http://dx.doi.org/10.22373/share.v13i2.22894

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