Few countries have both conventional and Islamic banks, making it difficult to obtain data on individual households’ financial behavior. Therefore, this study uses original survey data collected in Malaysia from 2021 to 2024 to examine household financial inclusion in conventional and Islamic banks, and to clarify similarities and differences. First, households are more likely to open bank accounts in conventional banks with geographically distributed branches. In the case of Islamic banks, religious reasons are more important than geographical distribution of branches as a motivation for opening an account. Second, households that rely solely on Islamic banks, which may not have bank accounts in countries with only conventional banks, tend to have more financial assets and a higher rate of homeownership than households with no bank accounts. Third, the dual banking system promotes overall financial inclusion through conventional banks targeting middle-income households and Islamic banks targeting low-income households.
Nagano et al. (Sat,) studied this question.