Financial inclusion barriers in upper-middle-income countries: a comparison between Muslim-majority and non-Muslim-majority economies

Purpose Financial inclusion gaps persist even in middle-income settings where formal financial systems and digital channels have expanded, and non-ownership often reflects multiple, non-mutually exclusive demand-side constraints that aggregate account indicators cannot reveal. This study aims to compare reported barriers among unbanked adults in upper-middle-income countries across Muslim-majority and non-Muslim-majority economies, focusing on six barriers (distance, fees, documentation, lack of money, family constraints and trust) and on a cumulative burden measure that captures the intensity of simultaneous constraints. Design/methodology/approach The analysis uses Global Findex 2024 microdata for roughly 8,940 unbanked adults who report barrier reasons. Barrier-specific associations are estimated with separate logit models reported as average marginal effects, complemented by a multivariate probit model that allows correlated barrier reporting, and an ordered logit model for burden intensity. Findings The results indicate heterogeneous patterns across barriers rather than a uniform shift: Muslim-majority economies are associated with lower reporting of distance, fees, documentation and trust barriers; higher reporting of lack of money; and no statistically discernible difference in family-related reasons. Consistent with these patterns, burden estimates indicate a shift towards lower overall barrier intensity. Originality/value This study moves beyond aggregate account ownership by identifying six specific barriers faced by unbanked adults and comparing them across Muslim-majority and non-Muslim-majority upper-middle-income economies. It further contributes by introducing a cumulative barrier-burden measure to capture the intensity of layered financial exclusion. The evidence highlights the value of analysing both barrier composition and barrier burden to characterize layered exclusion among the unbanked.