Examining Islamic capital market adoption from a socio-psychological perspective and Islamic financial literacy

Abstract

Purpose This study aims to explore the Islamic capital market adoption model, based on the construct of Islamic financial literacy (IFL), the theory of planned behavior (TPB) and past behavior (PBR) in the context of a Muslim-majority country (Indonesia). Design/methodology/approach To test the conceptual model, this study used data from 251 respondents with a diverse spectrum, and the partial least squares structural equation modeling technique was used to test the forecasting of the model. Findings Overall, IFL and TPB dimensions (i.e. attitudes and perceived behavioral control) have a significant positive effect, either directly or indirectly, for investment intentions in the Islamic capital market. Also, the findings recommend the construct of PBR as an important predictor of investment intentions in Islamic capital markets. Practical implications The study can be beneficially used for Islamic financial institutions to participate with the Indonesian government in affirming IFL to broader society, not only Islamic education institutions. It is related to the significance of IFL, where it can be utilized as an indicator that education on the concept and values of Islamic finance can positively establish attitudes in society and stakeholders. Originality/value This study is an effort to strengthen IFL as a key construct using a good measurement scale, in the context of the Islamic capital market investment. In addition, this study also provides the necessary impetus to analyze the relationship between the dimensions of TPB and PBR, either directly or indirectly.

The dilemma of millennial Muslims towards financial management: an Islamic financial literacy perspective

“…Regardless, FAs are unlikely to guarantee protection from compulsive purchases, as an individual needs to understand Islamic financial services, in particular, and how it influences their attitude towards using them in their financial matters (Chowdhury et al, 2017). Yusfiarto et al (2022) asserted that Islamic financial awareness, attitude and knowledge positively impact the Islamic financial investment. Moreover, Al-Awlaqi and…”

“…Recently, Widyastuti et al (2021) found that higher level of IFL positively drives financial decision-making behaviour. Therefore, these norms magnify the social pressure exerted on decision-makers to perform specific behaviours, which, in turn, convert the behaviours into intentions (Yusfiarto et al, 2022). Their notable social impact on student financial management is rooted in the support mechanism established (Xiao et al, 2014), causing young consumers to observe to all parental guidelines, as to be more vigilant and responsible regarding their financial management strategies (Xiao et al, 2014).…”

“…Muslims need to know Islamic financial management principles when dealing with their banking needs (Yusfiarto et al, 2022), particularly for high-valued Islamic customers, as they should prefer Islamic banking goods and services (Gunardi et al, 2021). Some Muslims have diverse Islamic values because they practice Shariah; they have different attitudes and religious commitment to Islamic law.…”

“…Due to its clear-cut distinction, IFK is seen as a religious requirement for every Muslim. Millennial Muslims learn about IFK through a series of learning opportunities to make better financial decision-making, and to comply within the Islamic principles (Yusfiarto et al, 2022). According to Islamic perspectives, these elements are certainly to be addressed in the context of financial literacy.…”

A systematic review of customer Sharia compliance behaviour in Islamic banks: determinants and behavioural intention

“…4.3.3 Perceived behavioural control, Islamic branding, behavioural intention and customer Sharia compliance behaviour. According to Purwanto et al (2022) and Yusfiarto et al (2023), PBC is a customer's assessment of the ease or difficulty of using Islamic banking products. A previous study shows a positive and significant association between PBC factors and behavioural intents and compliance behaviour (Sadallah et al, 2023).…”