ISLAMIC FINANCIAL LITERACY AND OTHER DETERMINANTS FACTOR THAT INFLUENCE THE INTENTION TO USE ISLAMIC BANKING

• Main Author: Nurkholida, Faiza
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/57362
• Institution: Institut Teknologi Bandung

Indonesia is a country with the largest Muslim populations and has an immense opportunity to optimize the halal industry as the largest Muslim majority nation in the world. Halal industry refers to industries that comply with Islamic law and standards. There are seven large and rapidly maturing halal industry sectors with the financial sector as the starting point. As one of the sub-sectors of Islamic finance, Islamic banking has a strategic role in encouraging the development of the halal industry in Indonesia. But people's awareness and preferences for Islamic finance are struggling to grow in Indonesia. There is still a gap to be pursued to reach many Indonesian people in Islamic banking. Thus, to support the government’s sharia plan and to increase the Islamic banking adoption in Indonesia, we should examine the current level of Islamic financial literacy in Indonesia and assess the significance factors that influence the intention to use Islamic banking. This study has a purpose to assess the level of Islamic financial literacy and its implication on the intention to use Islamic banking among generation Z in West Java, Indonesia. This study aims to assess the level of Islamic financial literacy and other indicators and its implication on the intention to use Islamic banking in Indonesia. Other than assessing the IFL level, the researcher also analyzed four indicators; religiosity, awareness, bank’s reputation and attitude. The researcher used a quantitative method by distributing online questionnaires to gather data from 552 respondents towards people in West Java using PLS-SEM to analyze the data. This research found that the level of Islamic financial literacy among Generation Z in West Java is 59%, with men more knowledgeable about Islamic financial literacy and Muslim respondents scored higher in the assessment. Islamic financial literacy, religiosity, and attitude towards Islamic banking were found to positively influence the intention to use Islamic banking while awareness and the bank's reputation showed an insignificant effect. This study also found that there is a mediating variable namely attitude towards Islamic banking. The author believes that it is important for the industry’s players and stakeholders to focus on factors that might influence the intention to use Islamic banking. Same goes for Indonesia's government, since one of the sectors in the halal industry is Islamic finance, the government should be concerned about the level of knowledge among Indonesia’s citizens about Islamic financing. Thus, educating the local communities about the Islamic financial literacy is a mandatory step