Public awareness and the role of Islamic deposit insurance in promoting financial inclusion

• Main Authors: Hamisu, Salisu, Hassan, Rusni
• Format: Book Chapter
• Language: English
• Published: Springer 2020
• Subjects: BPH Islamic Economics
• Online Access: http://irep.iium.edu.my/88154/5/88154%20Public%20awareness%20and%20the%20role%20of%20Islamic%20deposit%20insurance.pdf; http://irep.iium.edu.my/88154/; https://link.springer.com/chapter/10.1007%2F978-3-030-39939-9_6

Deposit Insurance Scheme is a safety-net instrument used by governments to ensure the stability of the banking systems and protect depositors in the event of bank failure. Islamic deposit insurance is a Shariah-compliant system that provides protection to depositors against this type of failure and reinforces consumer protection aspects inherent to Islam. The inculcation of Islamic deposit insurance will boost the potential and value proposition of Islamic finance, motivating non-users excluded due to lack of trust. This empirical research examines how a deposit insurance scheme for Islamic banks can enhance confidence and facilitate participation in the financial system. A sample of 412 depositors from both Islamic and conventional banks in Nigeria was used to determine the awareness level, knowledge and understanding of the potential of the Islamic deposit insurance scheme. The results suggest that the scheme offers a great opportunity and can lead to increase in access.