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ORIGINAL ARTICLE
The Impact Of Gross Enrollment Ratio (Ger) Of Tertiary Education In Indonesia On The Literacy And Inclusion Index: A Case Study Of Islamic Finance In Indonesia
Zulfikar Hasan | Ahmad Azam Sulaiman | and Mutia Rosiana Nita Putri
Department of Islamic Banking and Center for Research and Community Service at STAIN Bengkalis Riau Indonesia
Department of Sharia and Economics, Academy of Islamic Studies, University of Malaya, Kuala Lumpur, Malaysia
Monash University Australia.
Correspondence*
- Department of Islamic Banking and Center for Research and Community Service at STAIN Bengkalis Riau Indonesia
- Email: [email protected]
Abstract
The inclusion and literacy of Islamic finance is an index that can use as a guide in assessing whether people living in a country know about Islamic finance. Multiple variables can conclude whether a nation knows Islamic banking. The Financial Services Authority does a review that can use as additional analysis on the knowledge of the Indonesian personalities about Islamic Banking. Overall, the Third National Financial Literacy Survey (SNLIK) accompanied by the Financial Services Authority (OJK) this year revealed that the financial literacy index equaled 38.03%, including the financial inclusion index of 76.19%. Based on geographical levels, during urban financial literacy index equaled 41.41% and economic inclusion of urban ranges amounted to 83.60%. OJK will use the results of the 2019 financial literacy survey to improve the national financial literacy developing policy that is further practical and targeted. In comparison, the literacy index and financial inclusion of rural communities were 34.53% and 68.49%. This pattern developed compared to the results of the 2016 OJK survey, precisely the financial literacy index 29.7% and the financial inclusion index 67.8%. The questionnaire effects further designated that based on gender literacy index and economic inclusion of men were 39.94% and 77.24%, comparatively higher than women at 36.13% and 75.15%.
Keywords
tertiary education, literacy, Gross Enrollment Ratio (GER), inclusion, islamic finance,
INTRODUCTION
Background
Today, Indonesia is the world’s fourth most populous nation, the world’s 10th largest economy in terms of purchasing power parity, and a member of the G-20. Furthermore, Indonesia has made enormous gains in poverty reduction, cutting the poverty rate by more than half since 1999, to just under 10 percent in 2020. Indonesia is a country that has high economic potential; the potential that started to be noticed by the international community. Indonesia has various characteristics that put this country in a unique position to experience accelerated economic development (Xu, Lisa, & Zia, 2012).
From the banking side in the last few years, the development of bank business has begun to fade. Growth in third party funds (DPK) and lending began to slow down. Even since 2013, DPK growth has been below 10%. In 2013, DPK growth fell sharply from 15.59% to only 8.89%. While the credit increase fell from 22.64% to 16.57%, the slowing trend continues to this day, namely the growth of deposits and lending is still trying to return to the pattern before 2013. In a country's economy, especially Indonesia today, financial institutions have many functions that are so important and strategic. A bank is considered the largest financial institution that can collect funds from third parties and distribute them to the people who need them so that they can provide great benefits to the community. The funds from the community are called Third-Party Funds and are distributed back to the people who need funds in the form of credit. Credit given to the community is expected to improve the financial welfare of the community, which in turn can strengthen economic growth (Shafi, Mohammad, & Mudabesh, 2012)
The development of the Islamic financial industry in Indonesia advances to increase until presently. Data from the Financial Services Authority (FSA) records in 2017, the total Islamic financial assets in Indonesia relinquished Rp 992.80 trillion with the Islamic banking industry leading Rp. 375.75 trillion, sharia capital market Rp. 522.42 trillion and Sharia IKNB Rp. 94.63 trillion. The symbolizes that people increasingly believe in the existence of Islamic financial institutions, especially in the Islamic banking sector. The latest results from the OJK National Literacy and Financial Survey in 2016 show that the Islamic financial literacy index in Indonesian society is 8.1%. However, the increase in Islamic financial assets is not comparable to the public's understanding of Islamic financial products and services. The research shows that the level of Islamic financial literacy in Indonesia is still low, meaning that only 8 out of 100 people understand Islamic financial products and services. (Otoritas, Implementasi Strategi Nasional Literasi Keuangan Indonesia. , 2014).
Based on data from the Financial Services Authority (OJK), the financial literacy index in 2019 reached 38.03 per cent. This figure increased compared to the same survey in 2016, which was 29.7 per cent. Indonesia also recorded an increase in the financial inclusion index from 67.8 per cent in 2016 to 76.19 per cent in 2019. Access to financial products and services has become an essential requirement for modern society.
The Financial Services Authority (OJK) has explained the opportunities and challenges of Islamic banking in Indonesia are (Otoritas, OJK, 2020): (1). Global conditions. (2). International standards and commitments. (3). Financial sector integration. (4). Sustainable growth. (5). Equitable development. (6). Financial stability. (7). Demography bonus. (8). Financing gaps, market potential and deepening. (9) (Mandira & Pais, 2014).
The reason is that the availability of access allows individuals or organizations to conduct a variety of financial transactions, both productive and wasteful. Easy access to finance will enable transactions to take place quickly so that the volume of financial transactions becomes more prominent, and vice versa. At the micro-level, productive financial transactions can create employment opportunities and provide opportunities for the community to increase their income. At the macro level, the accumulation of financial transactions will contribute to a country's economic growth. Unfortunately, the condition of public access to products and financial services are not the same in all states (Rapih, 2016). Communities in developed countries generally have high access, but this is not the case with residents in developing and underdeveloped countries. Differences in access cause financial inclusiveness to differ between countries. Authorities in each country are periodically working from time to time to increase the level of financial inclusion among their people. Some managed to do it well, but some others still face a variety of constraints. The Government of Indonesia also experiences this condition, so it is interesting to study the development of the level of financial inclusion compared to development indicators.
Figure 1.Literacy Financial Index 2016
FIGURE 1 Literacy Financial Index 2016
Figure 2.Inclusion Financial Index 2016
FIGURE 2 Inclusion Financial Index 2016
Based on figure 1 shows the low level of community inclusion, even the level of ownership of financial services accounts of the younger generation of Indonesia is still lagging compared to Singapore, Malaysia and Thailand. According to (Otoritas, OJK, 2020), literacy level new student finance around 28% with a financial inclusion rate of 44%. Yet according to Bank Indonesia (2016), inclusive finance can produce various advantages that can be used by the public, regulators, government, and the private sector viz among others flattering economic response strengthening financial policy protection, reducing shadow banking, preparing financial market increasing, providing the current market potential for banks, supporting increasing Human Development Index, provide confidently to local and national economic growth that is sustainable.
The latest data also reveals that there are only 36% or nearly 90 million Indonesian adults who have accounts in banks (World Bank Data, 2017). This number is far behind Malaysia, which reaches 81%, China 79%, India 53% (Database, 2020). These problems indicate that financial literacy and financial inclusion will not appear by themselves. That is because financial literacy facilitates the effective use of products and helps businesses develop skills and financial products that best suit their needs, these conditions as a condition for increasing financial inclusion. Financial inclusion is a person's ability to get access to various financial products and services that are affordable and as needed. Financial inclusion can make changes in the mindset of economic actors in seeing money and profits. Financial literacy is an interesting issue in both developed and developing countries and has led to rapid changes in the financial industry.
Financial literacy is the ability for someone to read, analyze, manage and communicate economic conditions that affect their welfare. An understanding of basic financial concepts is good, so when making decisions about finance do not experience problems in the future to be able to show economic behaviour healthy to determine the priority needs are not just desires
Figure 3.Percentage of population that has a bank account in ASEAN in 2017 (Global Financial Inclusion Database 2017)
FIGURE 3 Percentage of population that has a bank account in ASEAN in 2017 (Global Financial Inclusion Database 2017)
The APK for women at the tertiary level preceding men has taken place since 2012. The Gross Enrollment Rate (APK) at the tertiary level is indeed far from the target set by the government at 35% in 2015. It will be throughout 60-70% in 2045. Although it is however low, the Higher Education Gross Enrollment Rate (APK) proceeds to rise every year, as in 2013 to 23.06% from the previous year 18.85% due to the extension of student quotas. As the accelerated development of information technology, it required that campuses could be distance lecture programs to improve the Gross Enrollment Rate (APK) at the college level.
Higher education is a means to improve the quality of Indonesian Human Resources for the future. For this idea, further severe steps are needed for the Ministry of Research, Technology and Education to be able to increase the Gross Enrollment Rate (GER) in tertiary institutions which are still low when compared to South Korea which reaches 92%. According to BPS data, APKs at the tertiary level in Indonesia is just 27.98%. The means that the fulfilment of education in high schools has not transferred one-third of the population with active age (19-23 years). When observed based on gender relations, the gross participation of women at the higher education level has reached 30.05%, beating male students who only enter 26%.
Objective
The ranking of the education system carried out by the United Nations is carried out based on the level of literacy and the gross enrollment ratio (GER), which is the ratio between all residents who have completed primary school and those who will continue to higher education. In the 2019 National Financial Literacy Survey (SNLK), it was noted that the level of conventional financial inclusion rose dramatically from 65.6 percent in 2016 to 75.28 percent in 2019. Nationally, the rate of financial inclusion rose from 67.8 percent to 76.19 percent. On the same data, the level of Islamic financial literacy edged up from 8.1 percent to 8.93 percent. While conventional from 29.3 percent to 37.72 percent (Poppy, Kusdi, & Mohammad, 2019). Education is the driving power for the development of a nation. That has been proven where developed countries are likely to have a solid education system. It is most hospitable to settle this out by comparison. Based on the latest education system rankings issued by the United Nations (UN) in 2019, the five countries with the best education systems are New Zealand, Finland, Denmark, Australia, and Cuba (Ayoung, Burge, & Baada, 2020). Nationally, the literacy rate increased from 29.7 percent to 38.03 percent. So the index of literacy and inclusion of Islamic finance in Indonesia needs to be improved, especially for college graduates who are the driving force for the future progress of the Indonesian nation.
LITERATURE REVIEW
Background Theory
The evidence for some groups in developing countries has better access to education than others, but the factors that determine such access dissent between countries. As an illustration of the discrepancies in individual education participation classified according to gender, socio-economy, city, village, ethnicity, language, and religion. For example in Malaysia, inequalities exist not only in men and women, as well as in geographic areas but also between Malay and Chinese ethnic groups. In Sri Lanka, ethnic and religious differences have an important role to play education. In Peru, language is the determining factor. Income levels are a significant factor in Columbia, Malaysia and across countries, enrollment rates range widely between urban and rural areas. In conclusion, the distribution of education depends on how the population is classified and also how educational participation is covered.
Equitable access to educational services means providing equal opportunities for everyone to obtain an education. Equality of opportunity to obtain education has two aspects, namely equality of opportunity (equality) and justice (equity). Equal opportunity to receive education evaluates whether access to education has been equitable, while equity in acquiring education reflects whether the opportunities to get an education are the same between various groups. That equity review is carried out by comparison between genders (male/female), geographic location (rural/urban), and between rich and poor people.
The section of the government expenditure budget in the education sector is a real form of investment to increase community productivity. Development expenditures in the development sector can be allocated for the procurement of educational infrastructure and the provision of educational services to the complete population. Government investment in education aims to increase the expertise and knowledge of the community (human capital) so that in the future, it is hoped that it can increase the wages earned while working and increase worker productivity. Government involvement in financing and providing educational facilities and infrastructure has a major influence on the accumulation of a country's human capital
To show the level of education equity, an equalization indicator is used. An indicator is a number indicating the level equalization. The indicator that is oftentimes used to analyze the distribution of education services is the assistance rate. The participation rate is the ratio within the number of students and the population of learning age. The population of 9 years of basic education is children aged 7 to 15 years. There are two kinds of enrollment rates, namely: the gross enrollment rate (APK) and the net enrollment rate (NER). The gross enrollment rate is the ratio between the number of students (notwithstanding of age) and the total population of school-age at a certain level. Therefore, the NER for SMP / MTs / equivalent is the ratio between the total number of students SMP / MTS / equal to the total population of SMP / MTs / equivalents age (13 to 15 years) in an area, while the Net Enrollment Rate (NER) is the ratio within the number of students in the proper age group and the total population of school-age at a certain level. Therefore, the NER for SMP / MTs / equivalent is the ratio between the number of students aged 13 to 15 years with a population of 13 to 15 years
Another indicator that is often used to measure the achievement of gender equality in education is the Gross Enrollment Rate (GER). GER according to "The UN Guidelines Indicators for Monitoring the Millenium Development Goals", this figure is better than the ratio of the entire number of boys and girls. According to the Central Bureau of Statistics (BPS), the Gross Enrollment Rate (GER) is the proportion of school children at a specific level to the population in a certain age group. Since 2007 Non-Formal Education (Package A, Package B, and Package C) participated be taken into account. Which is used to show the level of general population participation at a given level of education? This means that a high GER designates a high level of school participation, despite the accuracy of school age at the level of education ,. If the GER value is more alike to or more than 100 percent it intimates that there are citizens who have not gone to school is of adequate age and or exceeds the age it should be. That can also indicate that the area can provide more than the actual target school-age population.
Financial inclusion can be understood as a dimension of financial services in the form of access to all financial service products, such as savings, capital/credit, and other services. Access to financial services is intended for people with low incomes and who have not been able to reach financial institutions. This access to the community can provide equal opportunities to all elements of society in accessing capital. Access to financial services is not only affordable in terms of distance to financial institutions but also affordable in terms of the cost of financial service products. Financial inclusion in the perspective of sharia is an effort to increase public accessibility to Islamic financial institutions so that people can manage and distribute financial resources following sharia principles. The financial inclusion program in Indonesia was officially launched in 2014. This program was initiated by Bank Indonesia as an effort to expand public access to the use of financial services.
APK shows the participation of residents who are currently studying according to their level of education (Kemristekidkti, 2018). BPS (2013) states that the GER measures the proportion of the population in a certain age group at a certain level of education (for example, tertiary institutions) who are still studying to the population of a certain age group. GER is useful for showing the level of general population participation at a given level of education. Regarding the level of higher education, the Higher Education APK is the percentage of the total population currently studying at a university to the total population of college-age (19-23 years) .
Financial literacy, which means financial literacy, according to the National Strategy for Financial Literacy in Indonesia, what is meant by financial literacy is a series of processes or activities to increase the knowledge, confidence, and skills of consumers and the wider community so that they can manage finances better. Based on this understanding, it can be concluded that consumers of financial products and services, as well as the wider community, are expected not only to know and understand service institutions finance and financial products and services, but can also change or improve people's behavior in financial management to improve their welfare.
Previous Studies
Financial literacy according to the Indonesian Financial Literacy National Strategy handbook, what is expected by financial literacy is a range of rules or activities to develop the knowledge, determination and abilities of consumers and the larger community so that they can maintain investments more desirable. Based on this understanding, it can conclude that consumers of financial products and services as well as the public. It hoped that it would not only know and understand commercial service institutions and financial products and services but also can change or improve people's behaviour in business management so that they can improve their welfare. The success of the development is marked by the creation of a system of financial stability and benefit all levels of society. In this case, financial institutions play an important role through their intermediary functions to encourage economic growth, income distribution, poverty alleviation and financial system stability achievement. It's just that the financial industry that is increasing not necessarily accompanied by access to adequate finance.
According to , survey results from the Authority Financial Services in 2016, meaning that the level of literacy and Islamic financial inclusion of the Indonesian people is still low, it is imperative to have a policy of every financial services business actor to improve the index of Islamic financial literacy and inclusion so that Islamic financial products and services frequently identified and used by the society. Specific strategies such as education and outreach activities are still a duty for the Islamic financial services industry so that the public can increase their knowledge of Islamic finance. The Financial Services Authority seeks to improve financial literacy through the blueprint National Financial Inclusive Strategy (SNLKI) program launched in 2013. This strategy aims to increase the high financial literacy index (well literate) in the community. The targets of the SNLKI strategy are housewives, MSMEs, students, students, professions, employees, and retirees. However, along with the development of the concept of financial literacy in various countries, the idea of financial literacy in Indonesia made improvements by publishing the National Literacy Strategy Financial Indonesia (Revisit 2017) by the Financial Services Authority in November 2017. Besides, the results of the 2016 OJK survey on the Indonesian people's financial literacy index that have not yet reached the target, are another consideration in revising SNLKI.
Even though access to financial services is an essential requirement for the involvement of society at large in the economic system. The banking sector plays a significant role in economic development in Indonesia, namely, to become the driving force for inclusive financial activities. Indonesian banks have a share of commercial activities by up to 80%. However, involvement in inclusive finance is not only related to the tasks of Bank Indonesia, but also the Government in efforts to provide financial services to the broader community.
states that achieving financial inclusion not only helps development but also to make social inclusion. Financial inclusion and inclusive economic growth have become the priority list of governments in all developing countries. In other studies compiled by , , , , can show that growing bank functions can accelerate the process of resource allocation and growth. Furthermore, Hans and Deepika (2011) assert that the equitable distribution of resources can create for all segments of society with financial inclusion. Hence, Dev (2010) explains that financial inclusion can lead to more prominent efficiency from the financial intermediation process.
On other research, various countries in the world have carried out literacy movements finance successfully. They are of the view that Literacy Finance is a strategic program that is as important as other national programs. Financial literacy is one of the priority programs in many countries, such as Canada, Australia, India, USA, United Kingdom. The financial literacy movement is a long-term national program whose implementation involves various parties. Sharia, financial literacy development program, is a strategic effort to support the government (OJK) to realize a federal program to build and improve financial literacy. The purpose of the Islamic financial literacy development program is to expand and increase knowledge, understanding and community participation in the use of Islamic financial products and services. Islamic financial literacy expected to be able to increase public awareness and change people's behaviour in managing finances better, competent and smart in choosing halal and profitable investments, able to prevent people from following fraudulent investments.
Financial literacy improvement in the long term aims to enhance the literacy of someone who was earlier limited literate. This goal also certainly applies to the development of Islamic financial literacy. Hence, the purpose of sharia financial literacy is that consumers and the wider community can determine sharia financial products and services that fit their needs. Islamic financial literacy reflects one's cognitive knowledge and abilities in finance. The strength of financial literacy can interpret as the ability to use business knowledge possessed to make decisions and describe the ability to recognize and apply concepts that are relevant to finance.
However, states that factors such as habits, cognitive, economic, family, peers, community, and institutions can have an impact on financial habits. Someone is said to be financially literate when having knowledge and the ability to apply that knowledge. Meanwhile, according to , explaining the factors that influence financial literacy consists of socio-demographic, cognitive skills, family background, wealth, and time preference. Whereas mention several dimensions of financial literacy, namely general knowledge of finance, savings and loans, insurance, and investment. Furthermore, on the other hand, the potential and growth of the enormous Islamic financial industry require human resources who have competence in the field of Islamic financial sector. Based on this, then several universities established majors or Islamic banking study programs spread in various regions of the archipelago. Through education in higher education, students gain knowledge about the Islamic finance industry, especially Islamic banking. By knowing, you should have understanding, belief and skills in managing sharia finance.
Apart from that, there are also internal factors such as demographics describing the characteristics of a population. Within these demographic variables, different sub-cultures will know. At present, demographics are an essential part of consumer behaviour because they are easily accessible and relatively cheaper information to identify market segmentation . Gender is what influences financial literacy. Gender is a concept about differences between men and women, including their respective levels of financial literacy . But the results of Krishna's research, find different results, namely that women understand better financial literacy compared to men. Research by Research by , states that men have higher financial knowledge than women. research also found that the level of sharia financial literacy of men is more leading than women.
Knowledge obtained by someone certainly will bring different impact on understanding. If a person knows a lot about sharia financial institutions, his intelligence will ultimately shape decisions in choosing Islamic financial products and services. If literacy occurs well, then Islamic financial inclusion is also good. Before someone wants the products and services of Islamic financial institutions, one must first know about the management of Islamic finance.
stated that financial inclusion is considered a key tool for poverty alleviation. Financial inclusion, which is generally focused on the middle to upper class, can actually be applied to low-income people. The requirements are the availability of various instruments and products that comply with sharia for money management, emergency planning, investing for certain purposes and transferencee planning. in his research stated that Islamic microfinance can actually target groups that have so far not been accessed by conventional financial institutions. Having access to sharia microfinance can prevent poverty for poor families. The implementation of this strategy requires in the long term not in the short term. So program continuity is necessary guarded for complete success. An inclusive financial system should have as many users as possible. So an inclusive financial system must reach a wide range of para users. The proportion of the population that has a bank account is a measure of banking penetration.
RESEARCH METHODOLOGY
Data analysis techniques in this study carried out with a model SEM (Structural Equation Modeling). This study uses the SEM model because this study aims to look at the relationship between variables where the variables in this study can be measured directly, but require indicators as a measurement tool. This research examines the literacy index and Islamic financial inclusion with the level of education through the gross enrollment ratio (GER) in Indonesia in the period 2016-2019 explicitly.
Data
The data used by the author is secondary data where the primary data has been processed by the Central Statistics Agency and the Financial Services Authority. The secondary data related to is the gross enrollment ratio (GER), as well as the literacy and inclusion index.
Model Development
SmartPLS is widely used to analyze component-based SEM. It is an alternative technique to variance-based SEM such as AMOS and LISREL. The use of Smart PLS is highly supported when the researcher has a limited number of samples while the model standing built is very complex. Another advantage of Smart PLS is its capacity to process data for both formative and reflective SEM models. The formative SEM model has features including latent variables or constructs built by indicator variables where arrows point from the constructed variable to the indicator variable.
Method
The method that researcher use in this research is to use a quantitative approach that uses SmartPLS. The secondary data that I got was from the Central Statistics Agency (BPS) and the Financial Services Authority (OJK).
For example, X is a matrix of size n x p and Y is a matrix of size n x q. Then the PLS procedure will extract the factors from X and Y respectively so that the extracted factors have the maximum covariance. The PLS method can also work with multiple response variables. With this Partial Least Square technique, we will try to find a linear decomposition of X and Y. So the formula is:
X: TPT + E
Y: UQT + F
TABLE 1 X and Y Linear Decomposition
Figure 4.TABLE 1 X and Y Linear Decomposition
The column of T is the latent vector, and U = TB, which is the regression of the latent vector t so:
Y = TBQT + F
Figure 5.
FIGURE 5 Example of a SEM PLS diagram
While the value or indicator that can be used as a measurement tool can be concluded, among others:
Composite reliability (ρc)
Internal consistency measurement with a value of ≥ 0.6. So if <0.6 then it is not reliable.
Reliability indicators
External absolute standard loading with a value> 0.7. So if <0.7 then it is not reliable.
AVE (Average Variance Extracted)
The mean of extract variants with a value> 0.5 was used as a determinant of convergent validity. So if <0.5 then it is not convergent valid.
Fornell-Larcker criteria
Used to ensure discriminant validity, the AVE for each latent variable must be higher than R2 for all other latent variables. Thus, each latent variable shares more variance with its respective indicator blocks than with other latent variables representing a different block of indicators.
Cross-loadings
Used to check the validity of the discriminant other than the above criteria. If an indicator has a higher correlation with other latent variables than with the latent variable itself then model fit must be reconsidered.
Figure 6.PLS Reflective Model
FIGURE 6 PLS Reflective Model
The picture above shows that: The latent variable Y is measured by block X which consists of 3 indicators. X1, X2, and X3 reflect. The reflective model reflects that each indicator is a measure of the error imposed on the latent variable. The direction of movement and effect is from latent variables to indicators, thus indicators are a reflection of variations of latent variables (Henseler, Ringle & Sinkovicks, 2009). Therefore, differences in latent variables are exacted to cause changes in all indicators.
Figure 7.PLS Formative Model
FIGURE 7 PLS Formative Model
The picture above shows that: The latent variable Y is measured by block X which consists of 3 indicators. X1, X2, and X3 formative. The formative relationship model is a causal relationship originating from the indicator towards the latent variable. That can happen if a latent variable is described as a combination of its indicators. Therefore changes that transpire in indicators will be reflected in changes in latent variables.
RESULTS AND DISCUSSION
Results
TABLE 2 Gross Enrollment Ratio, Indeks Literacy and Inclusion
Figure 8.Gross Enrollment Ratio, Indeks Literacy and Inclusion
The table above is secondary data from the Central Statistics Agency and the Financial Services Authority which shows the Gross Enrollment Ratio (GER) index and the index of Islamic financial literacy and inclusion in Indonesia.
Discussion
This type of research is analytical research in which the researcher explains the causality relationship within variables with hypothesis testing to answer the research questions and objectives. To collect the required data, the authors conducted secondary data research from the Central Statistics Agency (BPS) and the Financial Services Authority (OJK) level. The unit of analysis of this study were students at universities in Indonesia based on secondary data from the Central Statistics Agency.
There are three variables in this study, namely financial literacy, financial inclusion, and gross enrollment ratio (GER). Financial literacy consists of any knowledge and experiences linked to finance held by people to be able to handle or use a specific amount of money to upgrade their model of living. Financial inclusion surveys and refers to a person's position where he can obtain various commercial institutions, products, and services as needed and administer benefits for prospective progress development. The Gross Enrollment Rate (GER) is a position of the number of students who enter the university both public and private in a particular time.
The analytical tool used is PLS (Partial Least Square), where the processing uses SmartPLS 3.0 software. PLS has two model specifications, namely the inner model and the outer model. The internal model describes the relationship between latent variables based on substantive theory. The hidden model evaluated using Rsquare for the dependent construct, the Stone –Geisser Q-square test for predictive relevance and t-test as well as the significance of the structural path parameter coefficients. The inner model is used to test the research hypotheses where the t-statistic value> 1,960 shows that the influence between variables is significant.
TABLE 3 Kriteria Inner model
Figure 9.
For the measurement model or outer model is evaluated by using convergent validity which measures the reflective model of indicators assessed based on the correlation between item scores or component scores with construct scores. Then discriminant efficacy of the measurement model with reflective signs is evaluated based on cross-loading measurements with constructs or using other methods by comparing the square root of Average Variance Extracted (AVE) values. Furthermore, composite reliability can measure through two types of measures, namely internal consistency and Cronbach's Alpha.
TABLE 4 Criteria Outer model
Figure 10.Criteria Outer model
Hypothesis testing using loading factors by looking at the value of the critical ratio (CR) (t arithmetic) with t table with the provisions, that if CR> t table with p ≤ 0.05 means significant and if CR <t table with p ≥ 0.05 means not significant. This test can be done with t-statistics when t value> t table (± 1.98 in the error rate of 5% or ± 1,658 in the error rate of 10%). If the test results of the model are significant, it means that there is an influence between latent variables.
Testing in PLS statistically on each hypothesized relationship will be through simulation using the bootstrap method of the sample. The bootstrap method aims to minimize the problem of research data that is not normal. Hypothesis testing is done by comparing t-tables and t-statistics. T-table can be obtained from 100 respondents with a significance value <0.05 and t-table value> 1.960. The results of testing through bootstrapping are as follows:
TABLE 5 Research Hypothesis Testing Results
Figure 11.Research Hypothesis Testing Results
The first hypothesis, which examines the relationship between GER and financial literacy, shows the original sample value of 0.198 and t-statistics 1.363. The measurement results show that the t-statistic <t table (significance level of 5% = 1.96), the first hypothesis in this study rejected. From the results of these data, it can be interpreted that the sample data of the independent latent variable (GER) did not succeed in proving the relationship with the latent variable dependent (financial literacy), or in other words, the Gross Enrollment Ratio did not significantly influence Financial Literacy with the direction of a positive relationship.
The second hypothesis, which examined the relationship between GER and financial inclusion, showed an original sample value of 0.098 and a t-statistic of 0.583. The measurement results show that the t-statistic <t table (significance level of 5% = 1.96), the first hypothesis in this study rejected. From the results of these data, it can be interpreted that the sample data of the independent latent variable (GER) did not succeed in proving the relationship with the latent dependent variable (financial inclusion), or in other words, the Gross Enrollment Ratio did not significantly influence Financial inclusion with a positive direction.
CONCLUSION AND RECOMMENDATION
Conclusion
From the discussion above, it can conclude that the level of Gross Enrollment Ratio of the University is not significant to the literacy and inclusion of Islamic finance in Indonesia. But several other variables can affect the level of literacy and Islamic financial inclusion apart from the Gross Enrollment Ratio of the University. This research still has many limitations, so there is still plenty of room to develop further analysis in-depth. This research focuses on the Gross Enrollment Ratio on literacy and Islamic financial inclusion in Indonesia. Besides, several other factors make the Gross Enrollment Ratio of shariah literacy and financial inclusion in Indonesia still low. One of which is the fact that students in Indonesia are not yet interested in knowing more about sharia finance in addition to factors from the competition with conventional system finance.
Recommendation
From the research that has been made by researchers, it can give some recommendations that can make research on Islamic financial literacy and inclusion better in the future. Literacy and inclusion have normally been surveyed by authorized institutions such as the Financial Services Authority, researchers usually conduct research on this index and link it to several indicators such as poverty and education. The recommendation that the researchers put forward is that the higher education institutions and also the government must collaborate with Islamic financial institutions, both banks and non-banks to make seminars or socializations both in primary school and colleges, therefore the literacy and inclusion index for college graduates will increase, especially in the field of Islamic finance. Besides, it is expected that there will be more different research on literacy and inclusion index, especially in the field of Islamic finance in Indonesia, so that they can compete with a conventional financial index.
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Main Article Content
Abstract
The inclusion and literacy of Islamic finance is an index that can use as a guide in assessing whether people living in a country know about Islamic finance. Multiple variables can conclude whether a nation knows Islamic banking. The Financial Services Authority does a review that can use as additional analysis on the knowledge of the Indonesian personalities about Islamic Banking. Overall, the Third National Financial Literacy Survey (SNLIK) accompanied by the Financial Services Authority (OJK) this year revealed that the financial literacy index equaled 38.03%, including the financial inclusion index of 76.19%. Based on geographical levels, during urban financial literacy index equaled 41.41% and economic inclusion of urban ranges amounted to 83.60%. OJK will use the results of the 2019 financial literacy survey to improve the national financial literacy developing policy that is further practical and targeted. In comparison, the literacy index and financial inclusion of rural communities were 34.53% and 68.49%. This pattern developed compared to the results of the 2016 OJK survey, precisely the financial literacy index 29.7% and the financial inclusion index 67.8%. The questionnaire effects further designated that based on gender literacy index and economic inclusion of men were 39.94% and 77.24%, comparatively higher than women at 36.13% and 75.15%.
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