Sharia financing behavior: The role of regret aversion, sharia financial literacy, and gender

Ana Mufidah (), Elok Sri Utami (), Novi Puspitasari () and Intan Nurul Awwaliyah ()

Humanities and Social Sciences Letters, 2025, vol. 13, issue 3, 904-915

Abstract: This research explores and assesses the impact of regret aversion, gender, and Sharia financial literacy on Sharia financing behavior and explores the impact of education and social environment on Sharia financial literacy. The participants are 400 with prior experience in utilizing Sharia financing, selected using the snowball sampling technique. Data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The findings reveal that Sharia financial literacy, gender, and regret aversion significantly influence Sharia financing behavior. Education does not have a direct impact while the social environment positively affects Sharia financial literacy. Sharia financial literacy, regret aversion, and gender are essential determinants of appropriate Sharia financing behavior. Psychological biases stemming from past experiences also influence Sharia financing decisions. A strong understanding of Sharia finance is crucial for financial institutions and policymakers. Adequate financial literacy empowers individuals to make well-informed choices and avoid misjudgments when selecting financing options that best suit their needs. The financial service providers must consider Sharia financial literacy, gender, and regret aversion. These factors significantly influence individuals' choices in Sharia financing. By considering these elements, it is likely to increase public interest in using Sharia financing and help improve their welfare.

Keywords: Gender; Regret aversion; Sharia financial literacy; Sharia financing behavior. (search for similar items in EconPapers)
Date: 2025
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