Dynamic panel analysis reveals poverty reduction depends on Islamic financial inclusion coupled with fintech, indicating digital platforms amplify faith-based anti-poverty tools.
Key Points
To examine how provincial-level Islamic financial inclusion and fintech development interact to influence poverty reduction across Indonesia.
Constructed an Islamic Financial Inclusion Index (IFII) covering 33 provinces from 2015 to 2023 across accessibility, availability, and usage using Delphi weighting and geometric mean aggregation.
Applied a two-step System Generalized Method of Moments (GMM) with dynamic panel modeling and lagged specifications to control for endogeneity and poverty persistence.
Direct associations between Islamic financial inclusion or fintech development alone and poverty reduction were statistically insignificant.
The interaction between Islamic financial inclusion and fintech was negative and statistically significant, with marginal-effects analysis confirming poverty reduction occurs only at high levels of fintech development.