Knowledge Dimension Of Islamic Financial Literacy Has Room For Improvement - Survey

KUALA LUMPUR, Dec 4 (Bernama) -- The Malaysian public still lacks an in-depth understanding of the technical aspects and principles related to Islamic finance, according to the 2025 Islamic Financial Literacy Index survey.

The study, jointly conducted by the Credit Counseling and Debt Management Agency (AKPK), Institute of Islamic Understanding Malaysia (IKIM) and Universiti Kebangsaan Malaysia (UKM), found that the overall Islamic financial literacy score, at 77.0, showed that respondents generally have a good foundation in understanding and instilling the Islamic financial concept.

However, there is room for improvement, as the knowledge dimension showed a score of 63.2. However, the other two dimensions gauged by the study -- behaviour and attitude -- recorded commendable scores of 82.2 and 85.7, respectively.

IKIM deputy chairman Datuk Dr Mohd Yusof Othman said efforts must be intensified to raise the level of knowledge so that it matches the strength shown in attitude and behaviour.

“This gap shows that our society is inclined to practise Islamic values but lacks a deep understanding of the technical aspects and principles underlying financial decisions. This is a major challenge in our educational agenda,” he said today at the launch of the Islamic Financial Literacy report published by AKPK in cooperation with IKIM and UKM, which contains the findings.

He stressed the importance of enhancing understanding in long-term financial planning including wealth accumulation (score of 45.0) and wealth distribution (55.0).

“(The weak scores) highlight the importance of focusing on knowledge about wills and inheritance to ensure the continuity of families’ financial well-being,” he said.

The majority of survey respondents showed a strong preference for Shariah-based financing, in line with Islamic principles that forbid usury (riba).

The Shariah-compliant alternatives for car financing and personal financing are preferred (44 per cent and 40 per cent, respectively) over conventional financing (27 per cent and 24 per cent, respectively).

Meanwhile, preference for Shariah-compliant housing financing was also higher (29 per cent) compared to conventional financing (21 per cent).

Meanwhile, IKIM director-general Datuk Dr Mohamed Azam Mohamed Adil said financial literacy is an essential skill to empower individuals in making informed decisions regarding financial management.

“This includes understanding basic financial concepts such as budgeting, saving, investing, and debt management to achieve financial well-being,” he said.

He added that Muslims need to master financial management concepts based on Shariah principles, starting from how wealth is acquired, accumulated, grown and protected to how to distribute it correctly.

-- BERNAMA