"Islamic Finance Researches" (IFR)

Investigating the Factors Affecting Islamic Financial Literacy Using DANP Technique

Document Type : Science - Research (Islamic Financial Theory)

Authors

1 Ph.D. in Financial Management, Tehran University, Tehran, Iran

2 Assistant Professor, Business Management Department, University of Bojnord , Bojnord, Iran

3 Assistant Professor, Management Department, Meybod University, Meybod, Iran

Abstract

Financial literacy is considered as one of the human capitals that plays an important role in influencing financial behavior. In order to develop Islamic financial products, Islamic financial literacy must be strengthened to support people's financial decisions. The purpose of this study is to identify and analyze the most important factors affecting Islamic financial literacy in Iran using DANP (The Dematel based Analytic Network Process) technique. Therefore, first, by studying the archives and carefully reviewing various sources, the most important factors affecting Islamic financial literacy were identified. Then These factors were presented to experts in the form of a pairwise comparison questionnaire for ranking. They included university professors and experts in Islamic financial markets. Finally, five of the most important of these factors were analyzed. The results of the research show that social factors are the most important. Also, Islamic financial attitude, culture, religious affiliations, friends and peers and Islamic financial knowledge are the most important sub-factors affecting Islamic financial literacy in Iran.

Keywords

 
Abdullah, M, A; Ab Wahab, S, N, A; & Sabar Salehudin, A, F., (2017). Factors Determining Islamic Financial Literacy Among Undergraduates, Journal of Emerging Economies & Islamic Research, 5(2), 67 – 76
Abdullah, M. A., & Anderson, A. (2015). Islamic Financial Literacy among Bankers in Kuala Lumpur. Journal of Emerging Economies and Islamic Research, 3(2), 79-94.
Abdullah, H.R; & Abdul Razak, A.L.H (2015). Exploratory Research ınto Islamıc Financial Literacy in Brunei Darussalam, Faculty of Business and Management Sciences Universiti Islam Sultan Sharif Ali Brunei Darussalam, 61-87
Ahmad, G., Widyastuti, U., Susanti, S., & Mukhibad, H. (2020). Determinants of the Islamic Financial Literacy. Accounting, 6(6), 961-966.
Ahmad, M. A. (2010). Why Islamic Financial Literacy is Important. Personal Money. March.
Albaity, M., & Rahman, M. (2019). The Intention to use Islamic Banking: an Exploratory Study to Measure Islamic Financial Literacy. International Journal of Emerging Markets.
Alfarisi, M. F. (2020). The Impact of Islamic Economics and Finance Courses on Islamic Financial Literacy of University Students. In The 3rd International Conference on Sustainability and Innovation.
Ali, M. M., Devi, A., Furqani, H., & Hamzah, H. (2020). Islamic Financial Inclusion Determinants in Indonesia: an ANP Approach. International Journal of Islamic and Middle Eastern Finance and Management.
Almenberg, J., & Dreber, A. (2015). Gender, Stock Market Participation and Financial Literacy. Economics Letters, 137, 140-142.
Al‐Tamimi, H. A. H. (2009). Financial Literacy and Investment Decisions of UAE investors. The Journal of Risk Finance.
Amin, K., & Aman, Q. (2016). Determinants of Attitude Towards the Acceptance of Islamic Banking: a Case of District Peshawar, Pakistan. Journal of Managerial Sciences, 10(1), 140-155.
Amouzegar, L, S; Shahrestani, S; & Mahmoudi, M; (2019). Investigating the Effect of Financial Literacy on Financial Behavior of Accounting Students; Second National Conference on Basic Research in Management and Accounting; Tehran. (In Persian)
Ansong, A., & Gyensare, M. A. (2012). Determinants of University Working Students' Financial Literacy at the University of Cape Coast, Ghana. International Journal of Business and Management, 7(9), 126.
Avard, S; Manton, E; English, D; & Walker, J. (2005), “The Financial Knowledge of College Freshmen”. Journal of College Student, 39. 2, 321-339.
Awang, A., Aizam, N. A. H., & Abdullah, L. (2019). An Integrated Decision-Making Method Based on Neutrosophic Numbers for Investigating Factors of Coastal Erosion. Symmetry, 11(3), 328.
Beal, D., & Delpachitra, S. (2003). Financial Literacy among Australian University Students. Economic Papers: A Journal of Applied Economics and Policy, 22(1), 65-78.
Bekereci, N.E; Ayrcay, Y; & Kök, D., (2018). Islamic Financial Literacy: A Field Study at Kahramanmaraş Sütçü İmam University, Pamukkale University, Journal of Social Sciences Institute, 33:45-60.
Chapra, M. U. (2007). The Case against Interest: Is it Compelling?. Thunderbird International Business Review, 49(2), 161-186.
Chen, S. H., & Lin, W. T. (2018). Analyzing Determinants for Promoting Emerging Technology through Intermediaries by Using a DANP-based MCDA Framework. Technological Forecasting and Social Change, 131, 94-110.
Chen, H., & Volpe, R. P. (1998). An Analysis of Personal Financial Literacy among College Students. Financial Services Review, 7(2), 107-128.
Chong, B. S., & Liu, M. H. (2009). Islamic Banking: Interest-free or Interest-Based?. Journal of Pacific-Basin Finance, 17(1), 125-144.
Comlekci, I, (2017). Definition of Islamic Financial Education Design: Adjustment for Customers of Bankruptcy Banks. Electronic Social Science Portal, 16 (63): 1423-1439.
Daradkah, D., Aldaher, A. A., & Shinaq, H. R. (2020). Islamic Financial Literacy: Evidence from Jordan. Transition Studies Review, 27(2), 109-123.
Dinc, Y., Çetin, M., Bulut, M., & Jahangir, R. (2021). Islamic Financial Literacy Scale: an Amendment in the Sphere of Contemporary Financial Literacy. ISRA International Journal of Islamic Finance.
Echchabi, A., & Azouzi, D. (2015). Predicting Customers’ Adoption of Islamic Banking Services in Tunisia: A Decomposed Theory of Planned Behaviour Approach. Tazkia Islamic Finance and Business Review, 9(1).
Eliza, A., & Susanti, V. (2020). Islamic Financial Literacy among Sharia Bankers in Bandar Lampung. Share: Jurnal Ekonomi dan Keuangan Islam, 9(1), 92-109.
Eser, A., & Yigiter, S.Y. (2020). Determining the Financial Literacy Level of Individuals who Have Accounts in a Participation Bank: Erzincan Province Example. Journal of Business, Economics and Management Studies. 2: 234-253.
Ganjoui, A, A; & Nayebzadeh., (2014); Investigating the Relationship between Religious Beliefs and Islamic Financial Literacy in Postgraduate Students; Financial Knowledge of Securities Analysis, 7 (3); 45-55 (In Persian)
Ganesan, Y., Pitchay, A. B. A., & Nasser, M. A. M. (2020). Does Intention Influence the Financial Literacy of Depositors of Islamic Banking? A Case of Malaysia. International Journal of Social Economics.
Ghalmegh, k; Yaqubnejad, A; & Fallah Shams, Mirfeiz; (2016); The Effect of Financial Literacy on the Behavioral Biases of Tehran Stock Exchange Investors; Financial Management Outlook; 16 (6), 75-94. (In Persian)
Hassan, M. K., & Aliyu, S. (2018). A Contemporary Survey of Islamic Banking Literature. Journal of Financial Stability, 34, 12-43.
Hogarth, J. M., & Hilgert, M. A. (2002). Financial Knowledge, Experience and Learning Preferences: Preliminary Results from a new Survey on Financial Literacy. Consumer Interest Annual, 48(1), 1-7.
Hsu, C. H., Wang, F. K., & Tzeng, G. H. (2012). The Best Vendor Selection for Conducting the Recycled Material Based on a Hybrid MCDM Model Combining DANP with VIKOR. Resources, Conservation and Recycling, 66, 95-111.
Jalilvand, A., Rostami Noroozabad, M. (2018). Dynamics of Investors’ Financial Literacy, Risk Perceptions and Emotions: Evidence from the Tehran Stock Exchange. Journal of Investment Knowledge, 7(27), 141-170. (In Persian)
Jumpstart Coalition (2009). National Standard in K-12 Personal Financial Education.
Kayed, R. N. (2008). Appraisal of the Status on Research on Labor Economics in the Islamic Framework.
Kazempour Dizaji, F; Mohammadi, M, H; Moinuddin, M; (2020); Providing a Model of Financial Literacy Training in Iran Using Grounded theory method; Quarterly Journal of Financial Engineering and Securities Management; Forty-third issue; 151-179. (In Persian)
Kevser, M., & Dogan, M. (2021). Islamic Financial Literacy and Its Determinants: A Field Study on Turkey. Journal Transition Studies Review, 28(1), 91-120.
Khalili Shourini, S. (2006), Research Methods in the Humanities; Book Memoir; Fourth Edition; 1-158. (In Persian)
Krische, S. D. (2019). Investment Experience, Financial Literacy, and Investment‐Related Judgments. Contemporary Accounting Research, 36(3), 1634-1668.
Kilic, Y; Ata, H.A; & Seyrek, H.H, (2015), Financial Education: a Course for University Students, Accounting for Finance. 66: 129-150.
Md, A. S., & Ahmad, W. M. W. (2020). Financial Literacy among Malaysian Muslim Undergraduates. Journal of Islamic Accounting and Business Research.
Louw, J., Fouché, J., & Oberholzer, M. (2013). Financial Literacy Needs of South African third-year University Students. International Business & Economics Research Journal (IBER), 12(4), 439-450.
Lukonga, M. I. (2015). Islamic Finance, Consumer Protection, and Financial Stability. International Monetary Fund.
Lusardi, A., & Mitchell, O. S. (2011). Financial Literacy around the World: an Overview. Journal of Pension Economics & Finance, 10(4), 497-508.
Maryam, S. Z., Mehmood, M. S., & Khaliq, C. A. (2019). Factors Influencing the Community Behavioral Intention for Adoption of Islamic Banking: Evidence from Pakistan. International Journal of Islamic and Middle Eastern Finance and Management.
Md, A. S., & Ahmad, W. M. W. (2020). Financial Literacy among Malaysian Muslim Undergraduates. Journal of Islamic Accounting and Business Research.‏ 8(11). 1515-1529.
Muslichah, I., & Sanusi, S. (2019). The Effect of Religiosity and Financial Literacy on Intention to use Islamic Banking Products. Journal of Islamic Management, 85-92.
Nawi, F. A. M., Daud, W. M. N. W., Ghazali, P. L., Yazid, A. S., & Shamsuddin, Z. (2018). Islamic Financial Literacy: a Conceptualization and Proposed Measurement. International Journal of Academic Research in Business and Social Sciences, 8(12), 629-641.
OECD. (2005). Improving Financial Literacy. Analysis of Issues and Policies. Organization for Economic Co-operation and Development Publications
OECD INFE (2011). Measuring Financial Literacy: Core Questionnaire in Measuring Financial Literacy: Questionnaire and Guidance Notes for Conducting an Internationally Comparable Survey of Financial Literacy, OECD, Paris, 1-31
Rahim, S. H. A., Rashid, R. A., & Hamed, A. B. (2016). Islamic Financial Literacy and its Determinants among University Students: An Exploratory Factor Analysis. International Journal of Economics and Financial Issues, 6(7S), 32-35.‏
Ab Rahman, S., Tajudin, A., & Tajuddin, A. F. A. (2018). Determinant Factors of Islamic Financial Literacy in Malaysia. American Journal of Humanities and Social Sciences Research (AJHSSR), 2(10), 125-132.‏
Reni, A., & Ahmad, N. H. (2016). Application of theory Reasoned Action in Intention to Use Islamic Banking in Indonesia. Al-Iqtishad: Jurnal Ilmu Ekonomi Syariah, 8(1), 137-148.‏
Rozikin, A. Z., & Sholekhah, I. (2020). Islamic Financial Literacy, Promotion, and Brand Image Towards Saving Intention in Sharia Bank. Iqtishadia, 13(1), 95-106.‏
Saaty, T. L. (2005). Theory and Applications of the Analytic Network Process: Decision Making with Benefits, Opportunities, Costs, and Risks. RWS Publications.‏
Sabri, M. F. (2011). Pathways to Financial Success: Determinants of Financial Literacy and Financial Well-being among Young Adults. Iowa State University.‏
Saleem, M. A., Zahra, S., Ahmad, R., & Ismail, H. (2016). Predictors of Customer Loyalty in the Pakistani Banking Industry: a Moderated-Mediation Study. International Journal of Bank Marketing.‏
Setyowati, A., Harmadi, H., & Sunarjanto, S. (2018). Islamic Financial Literacy and Personal Financial Planning: a Socio-Demographic Study. Journal Keuangan dan Perbankan, 22(1), 63-72.‏
Shim, S., Xiao, J. J., Barber, B. L., & Lyons, A. C. (2009). Pathways to Life Success: A Conceptual Model of Financial Well-being for Young Adults. Journal of Applied Developmental Psychology, 30(6), 708-723.‏
Suci, A., & Hardi, H. (2019). Literacy Experiment of Islamic Financing to Non-Muslim Small and Micro Business. Journal of Islamic Marketing.‏
Taftian, A; Bastani Allahabadi, B; Tabatabai Mazraehno, S, J., (2021). The Impact of Financial Literacy on the use of Financial Services and Decisions; National Conference on New Approaches in Accounting and Finance; 1-23. (In Persian)
Thilakam, C. (2012). Financial Literacy among Rural Masses in India. In The 2012 International Conference on Business and Management, 67.‏
Toghyani, M; & Moradi Basiri, A; (2016). Critical Analysis of the Conventional Model of General Financial Literacy Education from the Perspective of Islamic Economics; Islamic Economics Studies; 8 (2); 227-260. (In Persian)
Van Rooij, M., Lusardi, A., & Alessie, R. (2011). Financial Literacy and Stock Market Participation. Journal of Financial Economics, 101(2), 449-472.‏
Woodyard, A., & Robb, C. (2012). Financial Knowledge and the Gender Gap. Journal of Financial Therapy, 3(1), 1-16.‏
Mehmood, B., Aftab, R., Siddique, M. S., & Ameen, Y. (2017). Role of Islamic Financial Literacy in the Adoption of Islamic Banking Services: An Empirical Evidence from Lahore, Pakistan.
Zaman, Z., Mehmood, B., Aftab R., Siddique, MS, & Ameen, Y. (2017). Role of Islamic Financial Literacy in the Adoption of Islamic Banking Services: An Empirical Evidence from Lahore, Pakistan. Journal of Islamic Business and Management, 7(2), 230-247.‏
Zulaihati, S., Susanti, S., & Widyastuti, U. (2020). Teachers’ Financial Literacy: Does it Impact on Financial Behaviour?. Management Science Letters, 10(3), 653-658.‏
Volume 11, Issue 1 - Serial Number 21
February 2021
Pages 75-110
  • Receive Date: 01 January 2022
  • Revise Date: 11 February 2022
  • Accept Date: 08 March 2022