DETERMINANT OF ISLAMIC FINANCIAL INCLUSION IN DIGITAL ERA: CROSS-PROVINCE ANALYSIS

In recent years, the Islamic financial sector has become one of the most vital sectors in the Islamic economic system in Indonesia. Therefore, more attention needs to be paid to the measurement of Islamic financial inclusion and its and policy making, especially in facing the digitalization of economy, because the digitalization can be a momentum that provides opportunities as well as threats to Islamic finance. This study attempts to measure Islamic financial inclusion at the provincial level in Indonesia through the dimensions of accessibility, availability and utilization and analyzes the impact of digitalization on Islamic financial inclusion. Measurements are made using the Sarma Index, while the analysis of the impact of digitalization on Islamic financial inclusion employs the fixed effect model on the balanced panel data. The measurement results show that developed provinces tend to have higher levels of Islamic financial inclusion compared to developing provinces. Furthermore, provinces with a Muslim majority have a higher level of Islamic financial inclusion compared to provinces with a Muslim minority populations. In the panel data analysis, it was found that internet penetration has a negative and significant effect on Islamic financial inclusion, which shows that the majority of people in Indonesia still use the internet to access entertainment content and that internet use has not been optimized to access financial services. Nevertheless, the presence of the Islamic fintech platforms has a significant positive effect on Islamic financial inclusion in Indonesia. The variable level of cell phone usage has no significant effect on the level of Zaki Abdullah: Determinant of Islamic.... [61] ж Vol. 08, No.01, April 2021 ж Islamic financial inclusion and the average length of schooling has a significant negative effect on Islamic financial inclusion.

. The above conditions can be caused by disproportionate development in Indonesia which is overly centered in the Province of the Special Capital Region of Jakarta, resulting in development inequality and which subsequently leads to under-development of the Islamic financial sector in other provinces that are less affected by national development. Apart from that, the geographical context of Indonesia, which is archipelagic in nature may also be a barrier to Islamic financial inclusion, as these geographical conditions set Indonesia apart from those of the comparable countries in the chart above.  148 countries using Global Findex data, this research also proves that high-income countries tend to have more inclusive financial services, besides that it was also found that 50% from a sample of adults have not been reached by financial services due to high costs, distance reason and lack of documentation 16 .
In addition to the above factors, individual variables such as education quality, gender, age and economic welfare of a person also have a positive relationship with financial inclusion 17 . Not only individual factors, the macroeconomic conditions of a country will also affect the level of financial inclusion in the country, that financial inclusion is positively correlated with economic growth. Even the financial system stability of a country is also related to financial inclusion in that country 18 .  After measuring the contribution of each dimension (di), it is assumed that each dimension has equal priority so that it is given the same weight (wi), namely 1/3, so that the total weight is 1. Next, the calculation is carried out as follows:

Result and Discussion
After calculating the three dimensions of Islamic financial inclusion in 33 provinces in Indonesia from 2014-2019, through calculations that adopt indicators from Sarma (2012), the level of Islamic financial inclusion in each province in Indonesia is obtained as shown in Table 3. DKI Jakarta Province has the highest level of Islamic financial inclusion, followed by Aceh and West Nusa Tenggara. This is reasonable because DKI Jakarta is the center of government whose advancend in its development, so that the entire community is inclusive of Islamic  Based on Table 4, it can be concluded that the best model in panel data analysis in this study is the Fixed Effect Model. Furthermore, descriptive analysis is carried out first before estimating the model. Table   5 below is a descriptive analysis of each variable in the model. Source: Author's Calculation (2020) The results of the descriptive analysis show that there are a total of 33 provinces (n) and 5 units of time (years) in the panel data estimation to be carried out. So that a total of 165 data with 4 independent variables.
The estimation results of the fixed effect model can be seen in Table 6 below. The results of panel data regression analysis in Table 6 show an Although internet penetration has a negative and significant effect, the presence of the application of Islamic financial technology or fintech has a positive and statistically significant effect at the 1% significance level. This makes sense because based on Fintech statistics from the Financial Services Authority, people are using fintech to make investments or online loans. Investing through fintech can provide a higher return, making loans is also easy. So that people need to come to banking services to make financial interactions with fintech applications, such as making transfers or withdrawing funds.
The next digitalization variable is control of cellular telephones, where this variable has a positive but not statistically significant. This is very reasonable because the higher rate of the cell phone penetration will make easier and wider to access to information. So that it is easier for people to access and get information on the availability of Islamic The last variable which is the control variable, namely the average length of schooling year has a negative effect on the level of Islamic financial inclusion in the provinces in Indonesia with a significance value of 5%, this could happen because the longer a person is educated, the chance to get a better job will be higher, and good jobs are generally found in the Jakarta area. Currently there is a phenomenon of centralized economic growth in Jakarta, so it is natural that people in the regions choose to migrate to the capital to seek better income, but this actually has a negative impact on Islamic financial inclusion in their home regions. Constants in the model also show a positive and significant effect at the 1% significance level, so it can be concluded that there are other variables outside the model that contribute to the level of Islamic financial inclusion in every province in Indonesia.

Conclusion
The level of Islamic financial inclusion in each province in Indonesia varies widely from year over year, but tends to have a downward trend. Islamic financial services are increasingly inclusive in provinces that have a good level of economic development. In addition, provinces with Muslim majority populations also have high levels of Islamic financial inclusion, in contrast to provinces with Muslim communities as a minority which tend to have low levels of Islamic financial inclusion. The level of Islamic financial inclusion is measured through three dimensions, namely accessibility, availability and utilization. In taking the measurement, it was found that the dimensions It can be concluded that the availability of Islamic financial institutions is already good through its branch offices compared to the use by the community through the provision of financing and its accessibility as measured by the amount of third party funds. Therefore, one of the priority ways to increase inclusion of Islamic finance at this time is by increasing the amount of third party funds, of course this is done without neglecting the utilization factor by the public available through the service channels of Islamic financial institutions.
In current digital era, the digitization variable does not have a direct impact on the level of Islamic financial inclusion but has a positive and significant impact with the existence of a sharia fintech service platform. The presence of fintech has proven to be able to increase the level of Islamic financial inclusion.