Islamic Financial Literacy and Its Impact on Community Economic Behavior

Abstract

Islamic financial literacy plays an increasingly important role in shaping responsible economic behavior. It enables individuals to understand and manage financial resources while adhering to Islamic principles, including the prohibition of riba (interest/usury), gharar (excessive uncertainty), and maysir (gambling), as well as promoting fairness, transparency, and social responsibility. This study aims to examine the concept of Islamic financial literacy and its impact on people's economic behavior based on previous research. The study employs a literature review method using a qualitative and descriptive-analytical approach. Sources include scientific journal articles, academic books, research reports, and relevant literature on Islamic financial literacy, financial behavior, Islamic financial inclusion, Islamic banking, investment, financial management, and Islamic economic principles. The literature was analyzed through identification, classification, comparison, interpretation, and synthesis. The findings indicate that Islamic financial literacy contributes to financial planning, saving, investment, financing decisions, consumption patterns, and the selection of Sharia-compliant financial products. Higher Islamic financial literacy tends to encourage more rational, prudent, and responsible economic decisions. However, literacy alone does not guarantee behavioral change, as income, education, social environment, access to financial services, culture, and individual preferences also influence behavior. Therefore, strengthening Islamic financial literacy requires improved access to Islamic financial services, effective educational programs, and supportive institutional and policy environments.