The Role of Awareness and Perception of Islamic Banking on Financial Inclusion in Nigeria: An Empirical Evidence

Abstract

In recent years, Nigeria has seen significant transformations in its financial sector, notably with the introduction of Islamic banking. This shift towards more inclusive financial platforms is seen as essential for increasing economic participation and reducing poverty. This research delves into how awareness and perception of Islamic banking influence financial inclusion in Nigeria. Utilizing an exploratory research design and purposive and cluster sampling methods, the study gathered data through questionnaires. The analysis, conducted using Partial Least Squares Structural Equation Modeling (PLS-SEM) via SmartPLS software version 4, applied Path Modeling to explore the relationships among the study variables. Findings demonstrate that both awareness (β=0.355, p<0.00) and perception (β=0.476, p<0.00) of Islamic banking are significantly associated with financial inclusion. Based on these insights, the study suggests several strategies to improve financial inclusion, enhancing public awareness about Islamic banking, strengthening regulatory frameworks, promoting financial literacy, encouraging partnerships to drive inclusion, and investing in research and development for innovative financial products.