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Does Digital Financial Inclusion Matter for Bank Risk-Taking? Evidence from the Dual-Banking System

Journal of Islamic Monetary Economics and Finance · Vol. 7 No. 2 (2021) · hlm. 401–430

DOI
10.21098/jimf.v7i2.1320
ISSN
2460-6618, 2460-6146
Terbit
2021-04-21
Penerbit
Bank Indonesia
Bahasa
eng

Abstrak

This paper examines the nexus between digital financial inclusion (DFI) and levels of bank risk-taking, using a sample of 283 commercial banks (Islamic and conventional) from six countries over the period 2011 to 2019 and deploying panel-corrected standard errors, two-stage least squares-instrumental variables and dynamic panel two-step generalized method of moments estimators. The findings suggest that Islamic banks take more risks than their counterpart conventional banks. The empirical evidence also indicates that an increase in the DFI index score reduces the overall level of bank risktaking and increases that of banking stability for commercial and conventional banks compared to Islamic ones. A strong association between DFI and bank risk-taking suggests that DFI not only reduces the default risk, leverage risk and portfolio risk of banks, but also increases financial mobility in the sample countries. Consequently, an inclusive digitalised banking industry ensures sustainable economic growth, which is likely to help maintain financial sustainability in times of crisis such as the Covid-19 pandemic. Our results are shown to be robust by various robustness checks. The study contributes to both the Islamic and conventional banking, as well as the digital financial inclusion, literature. The findings of the study provide various policy implications for policymakers and standard-setters in the countries examined.

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7 penulis · 9 tautan kepenulisan bersama · 6 lintas organisasi

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  • LSU New Orleans
  • Bank Indonesia
  • Manchester Metropolitan University
  • University of Malaya
  • Organisasi berbeda
  • Organisasi sama
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Rekan penulisOrganisasiArtikel bersama
M. Kabir HassanLSU New Orleans2
Ahmed W. AlamLSU New Orleans1
Hassan BatainehLSU New Orleans1
Masagus M. RidhwanBank Indonesia1
Rudy MarhastariBank Indonesia1

Afiliasi berasal dari OpenAlex; metadata OAI-PMH jurnal tidak memuatnya. Penulis tanpa ID OpenAlex dicocokkan berdasarkan nama, sehingga dua orang bisa tergabung atau satu orang bisa terpisah.

Sumber metadata: OAI-PMH (metadata jurnal) http://www.jimf-bi.org/index.php/JIMF/oai, pertama di-harvest 9 Nov 2026, terakhir terlihat 9 Nov 2026.
Metadata asli (oai_dc) 
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	<dc:title xml:lang="en">Does Digital Financial Inclusion Matter for Bank Risk-Taking? Evidence from the Dual-Banking System</dc:title>
	<dc:creator xml:lang="en">Banna, Hasanul</dc:creator>
	<dc:creator xml:lang="en">Alam, Md Rabiul</dc:creator>
	<dc:subject xml:lang="en">Digital Financial Inclusion Index</dc:subject>
	<dc:subject xml:lang="en">Dual-Banking</dc:subject>
	<dc:subject xml:lang="en">Bank Risk-Taking</dc:subject>
	<dc:subject xml:lang="en">Covid-19</dc:subject>
	<dc:description xml:lang="en">This paper examines the nexus between digital financial inclusion (DFI) and levels of bank risk-taking, using a sample of 283 commercial banks (Islamic and conventional) from six countries over the period 2011 to 2019 and deploying panel-corrected standard errors, two-stage least squares-instrumental variables and dynamic panel two-step generalized method of moments estimators. The findings suggest that Islamic banks take more risks than their counterpart conventional banks. The empirical evidence also indicates that an increase in the DFI index score reduces the overall level of bank risktaking and increases that of banking stability for commercial and conventional banks compared to Islamic ones. A strong association between DFI and bank risk-taking suggests that DFI not only reduces the default risk, leverage risk and portfolio risk of banks, but also increases financial mobility in the sample countries. Consequently, an inclusive digitalised banking industry ensures sustainable economic growth, which is likely to help maintain financial sustainability in times of crisis such as the Covid-19 pandemic. Our results are shown to be robust by various robustness checks. The study contributes to both the Islamic and conventional banking, as well as the digital financial inclusion, literature. The findings of the study provide various policy implications for policymakers and standard-setters in the countries examined.</dc:description>
	<dc:publisher xml:lang="en">Bank Indonesia</dc:publisher>
	<dc:date>2021-04-21</dc:date>
	<dc:type>info:eu-repo/semantics/article</dc:type>
	<dc:type>info:eu-repo/semantics/publishedVersion</dc:type>
	<dc:type xml:lang="en">Peer-reviewed Article</dc:type>
	<dc:format>application/pdf</dc:format>
	<dc:identifier>https://jimf-bi.org/JIMF/article/view/1320</dc:identifier>
	<dc:identifier>10.21098/jimf.v7i2.1320</dc:identifier>
	<dc:source xml:lang="en">Journal of Islamic Monetary Economics and Finance; Vol. 7 No. 2 (2021); 401-430</dc:source>
	<dc:source>2460-6618</dc:source>
	<dc:source>2460-6146</dc:source>
	<dc:source>10.21098/jimf.v7i2</dc:source>
	<dc:language>eng</dc:language>
	<dc:relation>https://jimf-bi.org/JIMF/article/view/1320/858</dc:relation>
	<dc:rights xml:lang="en">Copyright (c) 2021 Hasanul Banna, Md Rabiul Alam</dc:rights>
</oai_dc:dc>