Analyzing the linkage between Islamic financial literacy and Islamic banking services adoption: evidence from Turkey

Abstract

Purpose The purpose of this study is twofold. First, this research explores the level of Islamic financial literacy of customers in the context of Islamic banking. Second, this study examines the determinants of customer adoption of Islamic banking in Turkey. Design/methodology/approach This study gathered sample data from 409 participants determined using the purposive sampling method. In the study, first, the reflective measurement model is used to examine the reliability, validity and multicollinearity problems of the variables. Then, AMOS structural equation model (SEM) is used to reveal the relationship between Islamic financial literacy and Islamic banking services. Additionally, this study performed both descriptive and inferential analysis to understand customer literacy about Islamic banking and their adoption behavior of Islamic banking. Findings The results obtained from descriptive assessment indicate that Turkish customers of Islamic banking possess sufficient literacy about Islamic banking. Moreover, the results from SEM indicate that the adoption of Islamic banking by customers is significantly predicted by the role of Sharia Board management, Islamic banking and purpose of financial institution, religious factor and legitimacy of Islamic financial system. Research limitations/implications This study focuses only on the level of knowledge and perceptions of customers who have accounts in Islamic banks or financial institutions in Turkey. It does not focus on the level of knowledge and perception of Muslims who do not have accounts in Islamic banks and financial institutions. Originality/value Previous studies on Islamic banking are mostly studies that investigate customers’ perceptions of the Islamic banking system and why individuals prefer Islamic banks. In particular, studies examining the relationship between individuals’ Islamic financial literacy level and Islamic banking preferences are limited. This study is considered to be an original study as it investigates the relationship between the Islamic financial literacy level of individuals and their adoption of Islamic banking services in Turkey.

Shariah Mobile Banking Adoption Trends: Analysis Mob Mentality, Reputation, Perceived Risk, and Islamic Financial Literacy

“…According to Roemanasari et al, (2022), financial literacy can be seen from knowledge related to financial management in general, the prohibition of usury transactions, contracts in Islamic finance, and Islamic financial products. Research by Pala et al (2023) states that Islamic financial literacy has a significant and positive impact on decisions. The technology used in Islamic finance will increase along with Islamic financial literacy.…”

“…Elhajjar & Ouaida (2019) indicated that perceived risk has a positive and significant effect on decisions, but Purnamasari et al 's research (2021) showed that perceived risk has a negative and insignificant impact on decisions. Pala et al, (2023) stated that Islamic financial literacy has a positive and significant impact on decisions, but Mas'ud & Amang (2023) indicated that Islamic financial literacy has a negative and insignificant impact on decisions.…”