Financial Inclusion, Microcredit Access, and Islamic Social Finance in Enhancing Household Welfare

Siti Khaneishia; Yunaita Rahmawati

doi:10.69725/jebi.v2i2.271

Authors

Siti Khaneishia Department of Sharia Accounting, Faculty of Islamic Economics and Business, State Islamic Institute of Ponorogo, Ponorogo, Jawa Timur, 63492, Indonesia
Yunaita Rahmawati Department of Sharia Accounting, Faculty of Islamic Economics and Business, State Islamic Institute of Ponorogo, Ponorogo, Jawa Timur, 63492, Indonesia

DOI:

https://doi.org/10.69725/jebi.v2i2.271

Keywords:

Financial Inclusion, Islamic Social Finance, Household Welfare, Financial Literacy

Abstract

Purpose: It empirically examines the mediating role of financial literacy in the direct and indirect consequences of financial inclusion, microcredit access, and Islamic social finance on household welfare.
Method: A quantitative cross-sectional survey design was used to gather data from household heads. An structured questionnaire measured all constructs by standard scales. Data analyses were conducted in two steps wherein the measurement model was verified first, followed by testing the hypothesized direct and mediation effects using regression-based path analysis.
Findings: The results indicate that financial literacy is the leading determinant of household well-being and a much stronger influence than direct access to financial resources. Financial inclusion (FI) and access to microcredit show the direct and indirect influences, but for social Islamic finance on welfare are totally mediated by financial awareness. This suggests that the Islamic social instruments are operating not as consumption smoothing transfers, but as transformative inputs into financial capabilities.
Novelty: Addressing these gaps and contradictions are among the novelties of this study; it presents a new Integrated Capability-Maqasid al-Shari’ah framework, in which financial literacy is considered the key mediator to convert varied financial resources into welfare opportunities.
Implications: The paper offers a blueprint to strategically uplift the developmental power of Islamic finance. It persuasively makes the case for bundling financial education with product delivery and organizing philanthropy, giving Islamic financial institutions the ability to move households from subsistence to sustainable resilience and thus delivering on the ethical aims of fuller human welfare.

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Author Biographies

Siti Khaneishia, Department of Sharia Accounting, Faculty of Islamic Economics and Business, State Islamic Institute of Ponorogo, Ponorogo, Jawa Timur, 63492, Indonesia

Siti Khaneishia is a dedicated researcher and student in the Faculty of Islamic Economics and Business at UIN Kiai Ageng Muhammad Besari Ponorogo, Indonesia. Her academic focus lies at the intersection of Islamic finance, financial inclusion, and household welfare. With a strong commitment to advancing the practical application of Sharia economic principles, her research aims to bridge theoretical frameworks with real-world socio-economic outcomes. She is actively involved in scholarly activities and contributes to the academic discourse on enhancing community resilience through ethical financial systems.
Yunaita Rahmawati, Department of Sharia Accounting, Faculty of Islamic Economics and Business, State Islamic Institute of Ponorogo, Ponorogo, Jawa Timur, 63492, Indonesia

Dr. Yunaita Rahmawati is a renowned academic and researcher at the Institut Agama Islam Negeri Ponorogo, specialising in Sharia Accounting. Many of her scientific works discuss Islamic financial reporting standards, governance of Islamic financial institutions, and Islamic micro-enterprise development. Her research not only contributes significantly to the scientific field, but also offers practical solutions for policy makers and industry players. As an educator, Dr Yunaita is committed to transferring the values of Islamic business ethics and fostering a new generation of Islamic accountants who are competent and have high integrity.

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