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Financial Exclusion and Saving Motives in Brunei: A Need to Re-Define Zakat & Awqaf Institutions. Ak Md Hasnol Alwee Pg Md Salleh Universiti Brunei Darussalam. 9th International Conference on Islamic Economics and Finance 9-10 September 2013.
AkMd Hasnol Alwee Pg Md Salleh
Universiti Brunei Darussalam
9th International Conference on Islamic Economics and Finance
9-10 September 2013
Research: Looks at financial exclusion issues and saving motives of welfare recipients in Brunei, to ascertain how best zakat and awqaf institutions can facilitate financial inclusion and their saving needs.
To gauge financial exclusion, 16 financial products were presented to respondents, which fall under the category of:
Bank accounts & credit facilities: Net deficit households are more likely to be financially excluded, compared to net surplus households.Financial Exclusion (FE): Percent of Households with FE, vis-à-vis Net Surplus/Deficit Categorisation
Main theme -financial exclusion on bank accounts: Affordability.
< Highlights importance of saving for emergencies and children’s/grandchildren’s education for both groups of respondents, though the emphasis on saving for children/grandchildren’s education is distinctly higher for net deficit respondents.Pre-Coding: Weighted Scores of Ranked Saving Motives
< Net surplus households are more likely to save for retirement, emergencies and purchase of assets…
< …while net deficit households are more likely to report saving for purchase of goods/services, saving for their children/grandchildren’s education and daily expenses.Saving Motives (SM): Percent of Households with Ranked SM, vis-à-vis Net Surplus/Deficit Categorisation
Implications of Findings: Role of zakat & awqaf institutions on financial inclusion and savingsNote: Only 2 main implications are presented (See paper for full discussion)
Understanding financial needs of net deficit households are important, to effectively improve their financial situation.
From the two analyses, there are two saving motives that appear in both analysis: Saving for children or grandchildren’s education, and Saving for daily/living expenses.
Taking both proxies of financial needs= One may contend zakatand awqaf institutions can assist welfare recipients to fulfil their needs, by the provision of bank accounts and credit facilities that assist to meet living expenses and children’s/grandchildren’s education needs.
These latter two types should be included, as the earlier pre-coded showed that saving for emergencies is ranked as the second most important reason for saving, by net deficit respondents.(1) Facilitate creation of bank accounts & credit facilities
Analysis on financial exclusion of bank accounts = Described a situation where zakat recipients are required to open a bank a/c with an Islamic bank before receiving zakat disbursements.
Financial situations and challenges changes from era to era, and there is a need for welfare institutions to continuously adapt and innovate their approaches.