Drivers of Islamic financial literacy: the roles of financial behavior, digital literacy, and financial socialization

Abstract

This study models the determinants of Islamic financial literacy (IFL) among university students in Malaysia, focusing on the roles of financial behavior, digital literacy, and financial socialization. Using a quantitative design, data were collected from 394 respondents using an online survey. The analysis employed ordinal logistic regression (OLR), and due to a violation of the proportional odds assumption, the generalized ordinal logistic model (GOLM) was applied to improve the model accuracy. The results indicate that financial behavior, digital literacy, and financial socialization are all statistically significant predictors of IFL at the 1% level. Among the demographic variables, age, year of study, field of study, and work experience were significantly associated with high IFL levels, whereas gender was statistically insignificant. Notably, financial socialization emerged as the strongest predictor, underscoring the influence of social and religious environments on financial knowledge acquisition. These findings suggest an urgent need for holistic educational interventions that integrate Shariah-compliant financial education with digital tools and social learning. This study’s insights offer valuable implications for universities and Islamic financial institutions seeking to improve IFL among youth.