DO SOCIO-DEMOGRAPHIC CHARACTERISTICS AND ISLAMIC FINANCIAL LITERACY MATTER FOR SELECTING ISLAMIC FINANCIAL PRODUCTS AMONG COLLEGE STUDENTS IN INDONESIA?
Indonesia is a promising market for the Islamic finance industry since most of the population is Muslim. However, the growth of Islamic finance in Indonesia is still low. Therefore, Islamic financial literacy needs to be improved in order to grow the Islamic finance industry significantly. The purpose of this study is to determine the factors that enhance Islamic financial literacy among college students in Indonesia. The development of validated constructs for Islamic financial literacy is important because conventional financial literacy might contain some elements that are not compatible with Islamic financial principles. This study also measures the level of Islamic financial literacy and its relationship with socio-demographic characteristics using multilinearregression. Furthermore, the relationship between Islamic financial literacy and the possession of Islamic financial products is observed by logistic regression. The determinant factors are perception, attitude and behaviour, and knowledge. The study found that type of educational institution, Islamic finance course experience, being educated to Master’s degree level, having one’s own income, and having an incomeabove five million have a significant relationship with the Islamic financial literacy of college students. The factors that have a significant relationship with the possession of Islamic financial products are Islamic financial literacy, choice of major, Islamic finance course experience, and monthly income above five million . This research attempts to provide an Islamic financial literacy measurement through exploratory factor analysis.The development of a validated instrument for an Islamic financial literacy index and its determinant factors is our scientific and practical contribution to the literature on Islamic financial literacy in Indonesia.
Abdullah, A. M., Wahab, S. A., Sabar, S., & Abu, F. (2017). Factors Determining Islamic Financial Literacy among Undergraduates. Journal of Emerging Economies and Islamic Research, 5(2), 67-76.
Abdullah, M. A., & Chong, R. (2014). Financial Literacy: An Exploratory Review of the Literature and Future Research. Journal of Emerging Economies and Islamic Research, 2(3), 1-9.
Abdullah, M., & Anderson, A. (2015). Islamic Financial Literacy among Bankers in Kuala Lumpur. Journal of Emerging Economies and Islamic Research, 3(2), 1-16.
Akbar, S., Ali Shah, S., & Kalmadi, S. (2012). An Investigation of User Perceptions of Islamic Banking Practices in the United Kingdom. International Journal of Islamic and Middle Eastern Finance Management, 5(4), 353-370.
Amiirah, N. M. (2015, December 8). Islamic Financial Literacy among QFIS students. Retrieved from Academia: https://www.academia.edu/25359559/Islamic_Financial_Literacy
Antara, P., Musa, R., & Hassan, F. (2015). Bridging Islamic Financial Literacy and Halal Literacy: The Way Forward in Halal Ecosystem. Fifth International Conference Marketing and Retailing (5th INCOMaR) (pp. 196-202). Procedia Economics and Finance.
Atkinson, A., & Messy, F.-A. (2012). Measuring Financial Literacy: Results of the OECD / International Network on Financial Education (INFE) Pilot Study. OECD Working Papers on Finance, Insurance and Private Pensions 15, OECD Publishing.
Badan Pusat Statistik (2015). Statistik Indonesia 2015 (Badan Pusat Statistik, 2015).
Bashir, M. S. (2013). Analysis of Customer Satisfaction with the Islamic Banking Sector: Case of Brunei Darussalam. Asian Journal of Business and Management Sciences, 38-50.
Bley, J., & Kuehn, K. (2003). Conventional versus Islamic Finance: Student Knowledge and Perception in the United Arab Emirates. International Journal of Islamic Financial Services, 5(4).
Chen, H., & Volpe, R. (1998). An Analysis of Personal Financial Literacy among College Students. Financial Services Review, 7(2), 107-128.
DEFINIT, SEADI, & OJK. (2013). Developing Indonesian Financial Literacy Index. Jakarta: Otoritas Jasa Keuangan.
Department of Statistics Malaysia (2017, October 25). Compilation and Estimation of Islamic Finance Statistics: Malaysia’s experience. Retrieved from United Nations Statistics Division: https://unstats.un.org/unsd/nationalaccount/RAmeetings/TFOct2017/lod.asp Directorate of Islamic Banking Indonesia (2008). Grand Strategy of Islamic Banking Market Development. Bank Indonesia.
Er, B., & Mutlu, M. (2017). Financial Inclusion and Islamic Finance: A Survey of Islamic Financial Literacy index. International Journal of Islamic Economics and Finance Studies, 3(2), 33-54.
Field, A. (2009). Discovering Statistics using SPSS. London: SAGE.
Hasan, M., & Dridi, J. (2010). The Effects of the Global Crisis on Islamic and Conventional Banks: A Comparative Study.
Kaiser, H. F., & Rice, J. (1974). Little Jiffy, Mark IV. Educational and Psychological Measurement, 34, 111–117.
Klapper, L., Lusardi, A., & Oudheusden, P. (2015). Global Financial Literacy Survey. S&P’s Rating Services. Retrieved from https://gflec.org/wp-content/uploads/2015/11/Finlit_paper_16_F2_singles.pdf
Israel, G. (1992). Determining Sample Size. University of Florida Cooperative Extension Service, Institute of Food and Agriculture Sciences, EDIS, Florida.
Nidar, S. R., & Sandi, B. (2012). Personal Financial Literacy among University Students. World Journal of Social Sciences, 2(4), 162–171.
OECD/INFE (2018). Toolkit for Measuring Financial Literacy and Financial Inclusion. Paris: OECD.
Otoritas Jasa Keuangan (2013). Indonesian National Strategy for Financial Literacy. Jakarta: OJK.
Journal of Islamic Monetary Economics and Finance is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.