Promoting financial inclusion through the intention to adopt Islamic microfinance in Nigeria: a study of selected states

Abstract

Financial inclusion, which includes the availability, accessibility and usage of formal financial services, has in recent years, been one of the major subjects attracting attention from governments and other development agencies. This is due to its role in the reduction of extreme poverty, increasing shared prosperity and supporting inclusive and sustainable development. This study, therefore, examined the determinants of intention to adopt Islamic microfinance (IMF) among prospective customers in Nigeria, in order to promote access to formal financial services. The quantitative study employed the proportionate stratified random sampling technique to collect data from 450 respondents, using close-ended questionnaires. The data was analyzed using Analysis of Moment Structures-Structural Equation Modeling (AMOS-SEM). The decomposed theory of planned behavior (DTPB) was used as the underlying theory to test 13 hypotheses. Results showed the intention towards the adoption of Islamic microfinance is high in Nigeria. Similarly, nine of the 13 hypotheses were supported, out of which attitude, subjective norm and perceived behavioral control were found to have positive and significant influence on the behavioral intention to adopt Islamic microfinance. The results also showed that religiosity moderates the relationship between subjective norms and behavioral intention. Overall, 69.2% of the hypotheses in the study were supported. Consequently, the study recommends the need for stakeholders in the Nigerian financial system to embark on enlightenment campaigns that will improve the public attitude on the role of Islamic microfinance banks in the promotion of financial inclusion and poverty reduction. There is also the need for government to ensure the provision of basic infrastructure to ensure easy access to financial institutions and services for prospective users. Finally, Islamic microfinance banks Islamic microfinance banks should improve their marketing operations highlighting the benefits to be derived from adopting their products and services. Overall, the findings of the study have provided additional insights to the growing literature of Islamic finance in Nigeria. For the government and policy makers, it will assist in shaping Islamic microfinance policy direction. The study also revealed the role of referents, especially among highly religious people, in influencing the behavioral intention to adopt Islamic microfinance.