Islamic Finance and Financial Inclusion: International Empirical Evidence and Implications for Morocco

Islamic finance — or participative finance in Moroccan regulatory vocabulary — is often presented as a lever for financial inclusion. This claim, widespread in public debate, must be subjected to empirical scrutiny. The purpose of this note is not to establish an automatic link with employment, which is difficult to isolate empirically, but to assess the extent to which the development of Islamic finance broadens access to and use of formal financial services, particularly for populations that previously excluded themselves for religious or ethical reasons.

Since the work of Beck, Demirgüç-Kunt and Levine, the analytical framework of financial inclusion has distinguished two channels through which financial development can reduce poverty and support more inclusive growth: a direct channel (access to payments, savings and possibly credit) and an indirect channel (a more efficient allocation of resources to productive firms) (Beck, Demirgüç-Kunt & Levine, 2007; Demirgüç-Kunt & Singer, 2017). Within this framework, Islamic finance acts first and foremost as an extension of the contractual offering: risk-sharing contracts (mushārakah, muḍārabah), cost-plus sales (murābaḥah), leasing (ijārah), and redistributive instruments (zakat, waqf) that may, under certain institutional conditions, reach underserved segments.

At the international level, the empirical results are mixed. In an IMF working paper, Ben Naceur, Barajas and Massara (2015) show that OIC countries remain, on average, less financially inclusive than the rest of the world, partly because of religious self-exclusion. The presence of Islamic banking is associated, in some dimensions (household credit, financing of firms’ investment), with greater inclusion; however, once per capita income and structural determinants are controlled for, the effect is not systematically significant across all indicators. This result calls for caution: the mere existence of an Islamic offering is not enough to close inclusion gaps.

More recent work on panels of OIC countries nevertheless tends to document a positive effect of Islamic banking development on financial inclusion. Using system GMM and causality tests, Kamalu and Ibrahim (2020, 2021) find a positive impact and unidirectional causality running from Islamic banking to inclusion over the 2013–2018 period. Panel logit analyses for a subset of OIC countries (2011–2021) likewise associate the number of Islamic banks and the size of their assets with a higher probability of improved inclusion, with a more moderate effect of takaful (recent studies based on composite inclusion indicators). These results are consistent with the hypothesis of Mohieldin, Iqbal, Rostom and Fu (2012): risk-sharing and redistributive instruments can, in theory, bring previously excluded agents into the formal system.

The Moroccan case should be read in light of this comparative literature. Since the entry into force of the framework for participative banks (Law 103-12, with licenses granted from 2017), the sector has become institutionalized under the supervision of Bank Al-Maghrib, but its share remains limited — around 2% of banking assets according to recent statements by the central bank. The network of participative branches has grown (from 176 in 2021 to 206 in 2024), while the conventional network contracted, bringing the share of participative branches to about 3.6% of the total (Bank Al-Maghrib, 2025). The National Financial Inclusion Strategy (SNIF) now explicitly incorporates the monitoring of participative services into its evaluation framework.

The available legal and economic analysis nevertheless suggests that the contribution of participative banks to banking penetration is, at this stage, more qualitative than quantitative: a broadening of contractual pluralism and a potential reduction in religious self-exclusion, rather than the large-scale inclusion of the SNIF’s priority segments (young people, women, rural populations, micro-entrepreneurs). The concentration of outstanding financing in murābaḥah, to the detriment of risk-sharing instruments, further limits the inclusive reach of the model (analyses of the legal framework and of the structure of participative portfolios). Studies on the attractiveness of participative banks in Morocco also highlight a gap between latent demand and actual adoption, linked to financial literacy, market liquidity and product diversification.

Two analytical implications follow. First, Islamic finance should be evaluated as an instrument of financial inclusion — access, use and quality of services — and not as a substitute for employment policy. Second, its inclusive effectiveness is conditional: it depends on institutional depth, on diversification beyond murābaḥah, on its articulation with microfinance and digital channels, and on the ability to target genuinely underserved populations. Panel results indicating a stronger effect in certain institutional contexts (Kamalu & Ibrahim) are a reminder that inclusive “potential” is not automatic.

In conclusion, the international literature and the Moroccan experience converge on a measured diagnosis. Islamic finance can contribute to financial inclusion by reducing religious self-exclusion and broadening the contractual offering; its quantitative impact in Morocco nevertheless remains limited and conditioned by the structure of products, liquidity and the governance of the sector. The research and public policy agenda therefore consists in measuring gains in access and use more precisely — rather than postulating a broad, undifferentiated effect on the real economy.