Financial inclusion and wealth accumulation under another dual banking system

Using unique survey data from Malaysia from 2021 to 2024, this study examines household financial inclusion in standard commercial banks and Islamic banks, identifying both similarities and differences. First, households are more likely to open accounts at standard commercial banks with geographically distributed branches; this pattern does not apply to Islamic banks. Second, banked households, regardless of account type, hold larger financial assets and liabilities and have higher homeownership rates than unbanked households. Third, the dual banking system increases overall financial inclusion, with standard commercial banks serving middle-income households and Islamic banks serving low-income households.