Validating Islamic Financial Literacy Instruments among MUM Generation: Rasch Analysis Approach

Abstract

Islamic financial literacy is an emerging term which is increasingly used in research and policy. Though a study in this area is growing, there is a lack of an accepted method to measure Islamic financial literacy. This study aims to develop a valid and reliable instrument to access Islamic financial literacy among MUM (Muslim Urban Millennial) generations using Rasch analysis. A comprehensive literature review and a qualitative study were initially performed to identify the construct of Islamic financial literacy. A total of 109 respondents from MUM generation completed the 18-item instrument with multiple-choice questions. However, only 85 final sample out of 109 data measured after eliminating the person with the extreme score. The dimensionality of the items was evaluated using WINSTEPS 3.73. Results show that the measurements model is highly reliable with a reliability alpha of 0.87 and 0.96 for person and item, respectively. There is also six misfit item that needs to be reviewed or removed. Differential Item Functioning (DIF) analysis shows that three items have a bias between gender. Overall, the developed Islamic financial literacy scale is a validand reliable instrument to measure Islamic financial literacy in MUM generation. This measure lays a solid empirical and theoretical foundation for future research in Islamic financial literacy among the MUM generation.

The impact of religiosity and financial literacy on financial management behavior and well-being among Indonesian Muslims

“…Islamic financial literacy was measured using basic Islamic financial literacy developed by (Antara et al, 2016). Basic Islamic financial literacy measures individuals' knowledge related to the prohibition of Gharar (uncertainty, hazards, or risk), Riba (usury), and Maysir (gambling) in Islam (Antara and Musa, 2021). The study adopted the research instrument by Strömbäck et al (2017) to measure financial management behavior, consisting of twelve items.…”

“…Fifth, the study only measures basic Islamic financial literacy. Prospective researchers are encouraged to conduct a similar study by using more advanced Islamic financial literacy as developed by (Antara et al, 2016;Antara and Musa, 2021).…”

Islamic Financial Literacy Education: Study of Al-Ghazali's Thought

“…Besides that, the research [12] explains the level of Islamic financial literacy of generation Z in West Sumatra which is significantly influenced by communication patterns within the family. And the research [13] which uses Muslim millennials as research objects on the level of Islamic financial literacy using the RASCH analysis method. These studies show the importance of Islamic financial literacy as a character that every generation must have in responding to technological developments.…”

Digital Financial Literacy Among Young Adults in Malaysia

“…Malaysia has more than 60% Muslim population and there was a 20 per cent Islamic banking market share of the total banking sector (Antara & Musa, 2020). Hence, DFL for conventional-based financial products was unable to fully capture young Muslim financial awareness, knowledge, skill, attitude, and behaviour in the digital financial market.…”