Examining the role of family and social factors on Islamic financial literacy: evidence from Indonesia

Abstract

Purpose This study aims to investigate the determinant factors of Islamic financial literacy (IFL) of the Z generation in Indonesia. As the role of family and social influence play an important role in shaping a person’s character, behavior and understanding, especially for the young generation in Indonesia, so this study proposed communication pattern in the family, financial socialization in family and social influence along with religiosity and sociodemographic factors as determinant factors of the IFL in Indonesia. Design/methodology/approach This study applied survey method with online questionnaire. There are 978 respondents from various provinces in Indonesia who were participated in this study. Then, data were analyzed by using Structural Equation Model. Findings Based on data analysis, this study found that communication pattern in the family, social influence, religiosity and sociodemographic factors have a significant influence on the IFL. Meanwhile, financial socialization in the family has no significant influence on IFL. Practical implications The results can be useful for Indonesian government especially in making decision and policy to encourage the increase in IFL in Indonesia. Originality/value This study has a theoretical contribution in providing comprehensive framework regarding the relationship between IFL and its underlying factors such as individual factors, family and social factors. In addition, this study also focused on the IFL of generation Z − an aspect that has been overlooked in previous studies.