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Does Islamic financial literacy and motives influence the holdings of Islamic financial products? A study on bank customers in Klang Valley, Malaysia

Nurul Shahnaz Mahdzan (Finance Department, University of Malaya, Kuala Lumpur, Malaysia)
Rozaimah Zainudin (Finance Department, University of Malaya, Kuala Lumpur, Malaysia)
Wan Marhaini Wan Ahmad (Finance Department, University of Malaya, Kuala Lumpur, Malaysia)
Mohamed Hisham Hanifa (Finance Department, University of Malaya, Kuala Lumpur, Malaysia)

Journal of Islamic Marketing

ISSN: 1759-0833

Article publication date: 14 June 2024

41

Abstract

Purpose

In a dual financial system where both conventional and Islamic financial institutions co-exist, the motives behind customers’ choices of financial products remain a crucial factor to comprehend. Thus, this paper aims to examine the influence of Islamic financial literacy (IFL) and motives (religious, ethical and economic) on the holdings of Islamic financial products (IFPs).

Design/methodology/approach

The sample consists of 234 bank customers in Klang Valley, Malaysia, with data obtained through a convenience sampling method. The instrument used was a digital survey that was electronically sent to respondents.

Findings

Findings reveal that IFL and religious motives positively influence IFPs, whereas economic motives negatively influence IFPs. Ethical motives have no significant impact on IFPs.

Research limitations/implications

The findings imply that IFPs attract customers due to their adherence to Islamic teachings, indicating strong religious motives. However, the negative leanings of the economic motive suggest that customers may perceive IFPs as less favourable due to higher costs and risks relative to conventional products. Islamic financial institutions must widen their efforts in educating the public regarding IFPs on the benefits of adherence to Shariah principles and at the same time improve their products’ cost-benefits.

Originality/value

This study contributes to the literature by comprehensively examining IFPs in terms of both assets and financing products. In addition, IFL is measured in an all-inclusive way, covering different dimensions of knowledge related to Islamic savings, investments, protection and financing.

Keywords

Acknowledgements

The authors would like to express gratitude to the Faculty of Business and Economics, Universiti Malaya, for the financial assistance provided under the Faculty Research Grant for the research project entitled “Development and Validation of a Comprehensive Objective Measurement for Islamic Financial Literacy” (project code: GP F009I-2019).

Disclosure statement: The authors report that there are no competing interests to declare.

Compliance with ethical standards:

Ethical approval: All procedures performed in studies involving human participants were in accordance with the ethical standards of the institutional and/or national research committee (Universiti Malaya Research Ethics Committee, reference number: UM.TNC2/UMREC_1000) and with the 1964 Helsinki declaration and its later amendments or comparable ethical standards.

Conflict of interest: The authors declare that there are no conflict of interest.

Informed consent: Informed consent was obtained from all individual participants included in the study.

Citation

Mahdzan, N.S., Zainudin, R., Wan Ahmad, W.M. and Hanifa, M.H. (2024), "Does Islamic financial literacy and motives influence the holdings of Islamic financial products? A study on bank customers in Klang Valley, Malaysia", Journal of Islamic Marketing, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JIMA-05-2022-0158

Publisher

:

Emerald Publishing Limited

Copyright © 2024, Emerald Publishing Limited

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