While insurance penetration in Malaysia has reached 40%, family takaful participation lags at only 20%, raising questions about why many Muslims hesitate to adopt Shariah-compliant financial products.
This question was posed in an article carried by Bernama New Agency which was written by three academics in tertiary institutions in Malaysia. They are Dr Mohd Faizuddin Muhammad Zuki, senior lecturer at the Islamic Business School, Universiti Utara Malaysia; Mr Muhammad Arif Fadilah Ishak, lecturer at the Faculty of Quranic Science, UCYP University; and Mr Muhammad Hafiz Hassan, lecturer at the Faculty of Muamalat & Islamic Finance, Universiti Islam Antarabangsa Tuanku Syed Sirajuddin.
A recent study on Islamic financial behaviour, focusing on university students across different higher learning institutions in Malaysia, uncovered that it’s not just about knowing the rules of Islamic finance; family influence and confidence play a much bigger role.
Islamic financial literacy, the understanding of key Islamic finance concepts such as riba (interest), halal investments, and Shariah-compliant banking, wasn’t the strongest predictor of good financial behaviour.
One of the standout findings was the power of parental financial socialisation. Students who reported that their parents regularly talked about money, showed them how to save, and demonstrated ethical financial habits were much more likely to manage their finances in ways that align with Islamic principles.
“This really reinforces the idea that financial habits are shaped at home,” the study noted. “When parents openly discuss budgeting, saving, and responsible spending, they’re not just passing on knowledge, they’re instilling values and habits that stick.”
Another major finding of the study was a person’s belief in their ability to manage their own finances effectively. Students who felt confident about budgeting, saving, and making smart financial decisions were far more likely to actually do those things.
In addition, the study found that in the Islamic finance context, where ethics, compliance, and risk-sharing are emphasised over speculative risk-taking, risk attitude played a much smaller role than expected. Islamic financial principles discourage high-risk speculation (gharar) and prohibit interest-based transactions (riba).
The academics say that financial education campaigns need to go beyond simply teaching the rules of Islamic finance. “We have to focus on building students’ confidence and involving their families in the process,” one of the researchers suggested.” M