ASSESSMENT OF NON-INTEREST BANKING SERVICES ON SMALL AND MEDIUM ENTERPRISE’S FINANCIAL INCLUSION IN GOMBE METROPOLIS

Abstract

Despite the growing presence of non-interest banking institutions in Nigeria, the adoption of Islamic financial services among Small and Medium-sized Enterprises in Gombe Metropolis remains low. This study examines the effect of non-interest banking service dimensions product diversification, customer service, and technology adoption on Small and Medium-sized Enterprisesfinancial inclusion. Using a survey design, data were collected from 240 Small and Medium-sized Enterprises owners and managers and analyzed through Partial Least Squares Structural Equation Modeling using SmartPLS 4.1. The measurement model demonstrated satisfactory reliability and convergent validity, while the structural model showed strong explanatory power with an adjusted R² of 0.634, indicating that non-interest banking service factors explain 63.4% of the variance in Small and Medium-sized Enterprises financial inclusion. The findings reveal that product diversification has a positive but statistically insignificant effect on financial inclusion. In contrast, customer service exhibits the strongest positive and significant influence, followed by technology adoption, which also significantly enhances Small and Medium-sized Enterprises access to Islamic financial services. The results suggest that service quality and digital accessibility, rather than product variety alone, are the primary drivers of Small and Medium-sized Enterprises engagement with non-interest banking. The study contributes region-specific empirical evidence from North-East Nigeria and provides policy and managerial implications for strengthening Islamic financial inclusion through improved service delivery and technological innovation.