ASSESSMENT OF THE IMPACT OF ISLAMIC AGENCY BANKING ON FINANCIAL INCLUSION IN MAIDUGURI METROPOLIS BORNO STATE, NIGERIA

Abstract

This study examines the impact of Islamic Agency Banking (IAB) on financial inclusion in Maiduguri Metropolis, Borno State, Nigeria. Using a descriptive survey research design, primary data were collected from 383 bank customers through structured closed-ended questionnaires. The data were analyzed using the Multinomial Logistic Regression (MNLR) technique to assess the multidimensional effects of IAB on financial inclusion indicators. The findings reveal that Islamic Agency Banking has significantly enhanced financial inclusion, particularly through expanded geographical coverage and improved security measures. Geographical coverage increased the likelihood of account ownership and improved service quality by 107% and 95%, respectively, while enhanced security reduced service complaints by 62.5%. However, liquidity demonstrated mixed effects, positively influencing service quality by 18% but decreasing the likelihood of account opening by 32%. This study contributes to the literature by addressing the limited evidence on the relationship between Islamic Agency Banking and financial inclusion in crisis-prone areas, a context that has received far less attention than countries in the Middle East, North Africa, and Asia. Methodologically, it introduces the application of Multinomial Logistic Regression to capture multidimensional outcomes, offering an alternative to the conventional use of least squares, binary, and thematic approaches. Furthermore, the study shifts the focus from conventional agency banking to Islamic Agency Banking, providing novel insights into how Shariah-compliant financial structures can promote financial inclusion. The findings offer valuable implications for policymakers and managers of Islamic financial institutions in designing effective strategies to reduce financial exclusion and expand access to financial services.