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Journal of Islamic Accounting and Business Research

ISSN : 1759-0817

Article publication date: 28 July 2021

Issue publication date: 6 August 2021

This paper aims to study the main trends of scientific research in Islamic finance’s social aspects to clarify place, role and functions, especially in the context of increasing social problems. To achieve this goal, this paper focuses on the social component of Islamic finance, analyzes publications on social Islamic finance in the Web of Science database, covering the period from 1979 to 2020, specify the geographical localization of research networks, determines the most cited authors and their scientific position.

Design/methodology/approach

The authors have applied several literature review techniques, a bibliometric citation and co-citation analysis, a co-authorship analysis and a review of the most cited papers. The analyzes’ results allow us to offer five future questions in Islamic social finance, zakat and waqf , which have not been investigated before and could influence Islamic social finance and Islamic finance research.

The authors also derive and summarize five leading future research questions.

Research limitations/implications

This is a limitation of using only the Web of Science Core Collection database as the premier resource and the most trusted citation index for the world’s scientific and scholarly research. Further study might expand the types of analyzed units, include more keywords and include other databases, such as Scopus.

Originality/value

This paper can be considered as an inspirational one to future researchers and policymakers in Islamic social finance.

• Literature review
• Islamic social finance
• Bibliometric citation analysis

Kuanova, L.A. , Sagiyeva, R. and Shirazi, N.S. (2021), "Islamic social finance: a literature review and future research directions", Journal of Islamic Accounting and Business Research , Vol. 12 No. 5, pp. 707-728. https://doi.org/10.1108/JIABR-11-2020-0356

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• Published: 25 June 2024

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

• Haykal Rafif Wijaya 1 ,
• Sri Rahayu Hijrah Hati 1 ,
• Irwan Adi Ekaputra 1 &
• Salina Kassim 2  

Humanities and Social Sciences Communications volume  11 , Article number:  830 ( 2024 ) Cite this article

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• Business and management

This study examines the effects of religiosity and Islamic financial literacy on Muslims’ financial behavior and well-being. Additionally, it investigates the impact of sociodemographic variables on the centrality of religiosity, financial literacy, financial management behavior, and the well-being of Muslim consumers. This research integrates perspectives from Rational Choice Theory, the Rational Choice Theory of Religion, and Behavioral Finance to illuminate the mechanisms behind these relationships. Data were collected through a non-probability sampling method from 1141 Muslim individuals aged between 18 and 65 living in Indonesia. The results indicate that the centrality of religion in the lives of Muslim consumers and Islamic financial literacy significantly affects their financial management behavior and financial well-being. However, the empirical evidence suggests a more substantial effect of Islamic financial literacy than religiosity on both dependent variables.

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Introduction.

Understanding the dynamics of financial behavior and well-being among Muslims requires a nuanced analysis of religiosity and Islamic financial literacy. Recent statistics indicate a growing trend towards Islamic finance, with the global Islamic finance market valued at $3.96 trillion in 2022/2023 and projected to reach $5.94 trillion by 2024/2025, growing at a compound annual growth rate of 9% from 2020 (Dinar Standard, 2023 ). This surge underscores the significant role of religious principles in shaping financial decisions within Muslim communities, as shown by many scholars (e.g. Azmat et al., 2021 ). Moreover, studies reveal that religiosity can profoundly influence financial behavior, affecting everything from savings to investment choices (Alfi and Yusuf, 2022 ; Newaz et al., 2016 ; Sharma et al., 2017 ; Zainudin, Mahdzan, Che Hashim, et al., 2019 ). In addition, religiosity is also found to influence Muslims’ well-being significantly (Tiliouine, 2009 ; Tiliouine et al., 2009 ). Apart from religiosity, Islamic financial literacy is found to significantly influence Muslim financial behavior and well-being (Abdullah et al., 2019 ; Biplob and Abdullah, 2019 ).

The importance of Islamic principles to economics is emphasized by the maqasid al-shariah (the higher objectives of Islamic law). These goals aim to promote the well-being of all people, encompassing the preservation of faith, self, intellect, progeny, and wealth (Auda, 2008 ). The Sharia, the legal and ethical code of Islam, guides how scientific knowledge is applied within Muslim societies and cultures (Bakar, 2003 ; Chapra, 2000 ). This framework challenges findings from studies like Guiso et al. ( 2003 ), which documented a negative association between Islam and attitudes supportive of economic progress. This contradicts the Islamic economic principles embedded in the Qur’an that promote efficiency and growth (Bonner, 2005 ; Kuran, 1995 ). Such contradictions highlight the complexity of understanding the relationship between Islam and economic behaviors.

Despite the growing body of literature on Islamic finance and the acknowledged influence of religiosity on financial behavior, a critical research gap persists in understanding the nuanced interplay between religiosity, Islamic financial literacy, and their combined effects on financial behavior and well-being. This study aims to address this gap by examining the impacts of religiosity and Islamic financial literacy on Muslims’ financial behavior and well-being, also considering the role of sociodemographic variables.

The theoretical lens of Rational Choice Theory, the Rational Choice Theory of Religion, and Behavioral Finance offers invaluable insights into bridging this phenomenon to a broader understanding of Muslim financial behavior. Rational Choice Theory, with its emphasis on utility maximization and consistent preferences (Becker, 1976 ; Zafirovski, 2018 ), serves as a foundation for understanding how Muslims’ decisions in savings, investments, and expenditures may reflect efforts to optimize both personal and spiritual well-being within Islamic law’s confines. The Rational Choice Theory of Religion further illuminates how religiosity influences financial decisions, suggesting that individuals engage in religious practices based on rational evaluations aimed at maximizing personal spiritual and social rewards (Jerolmack and Porpora, 2004 ). Behavioral Finance complements these theories by addressing deviations from rational decision-making due to psychological or sociocultural biases (Kahneman and Tversky, 1982 ), offering a lens through which to view how Islamic values impact financial decisions.

Integrating these theories facilitates a comprehensive exploration of the intersection between Islamic financial literacy and religiosity in shaping financial behaviors, addressing the gap left by traditional financial theories that often overlook cultural and religious nuances. This research not only aims to shed light on the mechanisms driving financial decisions within Muslim communities but also seeks to contribute to the broader discourse on financial behavior. By offering insights that can inform financial education, policy-making, and the development of religiously tailored financial products, this study endeavors to provide a more holistic understanding of financial decision-making processes among Muslims.

Literature review

The rational choice theory, the rational choice theory of religion and behavioral finance theory.

Rational Choice Theory suggests that individuals make decisions by systematically evaluating the available options to maximize their utility, based on preferences that are stable, coherent, and transitive (Handfield, 2014 ). This theory assumes that individuals have full information, can process this information effectively, and are motivated purely by self-interest to achieve the most favorable outcomes (Becker, 1976 ). It embodies the classical economic view of humans as rational actors, consistently making choices that maximize their utility. In the context of Islamic financial literacy, Rational Choice Theory suggests that Muslims equipped with knowledge about Islamic finance principles would make rational decisions to engage with financial products and services that not only comply with Shariah law but also offer competitive returns or benefits, thereby maximizing their economic utility. The decision to acquire Islamic financial literacy and apply it in financial management behavior is viewed as a rational pursuit to align financial actions with religious values while seeking the best possible economic outcomes. Rational Choice Theory has been applied in relation to financial literacy and its influence on financial decision-making, including biases (Loerwald and Stemmann, 2016 ). Within the realm of Islamic financial literacy, it implies that Muslims with knowledge of Islamic finance or sufficient Islamic financial literacy are likely to make informed decisions favoring financial products and services that adhere to Shariah law while offering competitive returns, thus maximizing their economic utility.

The Rational Choice Theory of Religion posits that individuals approach religious practices and beliefs through a cost–benefit analysis, aiming to maximize personal spiritual and social rewards (Jerolmack and Porpora, 2004 ). Stark and Finke ( 2000 ) argue that this theory helps explain why people are drawn to certain religious practices over others, suggesting that individuals make rational choices based on the perceived benefits of their religious engagement. Iannaccone ( 2016 ) further explores how this theory can account for various religious phenomena, including conversion and the level of commitment to religious observances, by examining the costs and benefits associated with these actions. This framework challenges older perspectives of religion as merely a societal or cultural phenomenon, instead proposing that religious behaviors can be understood through the same rational processes that govern economic decisions, highlighting the strategic and often economically driven choices individuals make within their religious lives.

Behavioral Finance Theory challenges the classical assumption of Rational Choice Theory, asserting that financial decision-making is influenced by psychological factors and cognitive biases (Kahneman and Tversky, 1982 ). Quackenbush ( 2004 ) notes that Rational Choice Theory often overlooks how decision-makers’ rationality is constrained by institutional, cultural, and psychological factors, suggesting that the premise of rational behavior may be overly optimistic. Mansour and Jlassi ( 2014 ) found that religious beliefs can sometimes clash with the principles of financial theory when it comes to decisions related to finance and investment. Behavioral Finance acknowledges that financial decisions are often influenced by psychological biases and emotions rather than purely rational calculations (Kahneman and Tversky, 1982 ). Relating this to Islamic financial literacy and financial well-being, it can be argued that psychological factors such as identity, trust, and the desire for social cohesion play significant roles in Muslims’ financial decisions. For instance, even if conventional financial products offer higher returns, psychological biases towards conformity with Islamic principles and the emotional comfort of engaging in religiously permissible transactions might lead individuals to opt for Islamic financial products.

In sum, Rational Choice Theory and the Rational Choice Theory of Religion provide frameworks for understanding the deliberate, utility-maximizing choices behind the acquisition and application of Islamic financial literacy and engagement in Shariah-compliant financial behaviors. Behavioral Finance adds depth by highlighting the psychological and emotional dimensions that influence these decisions. Together, these theories offer a comprehensive view of how Islamic financial literacy, influenced by rational calculations and psychological factors, shapes financial management behavior and contributes to the financial well-being of Muslims, balancing economic objectives with religious adherence. Behavioral finance introduces the concept that psychological influences and cognitive biases can affect financial decision-making, acknowledging that emotional and psychological factors derived from religious beliefs significantly influence financial decisions beyond rational calculations. This approach is particularly relevant when examining the impact of religiosity and Islamic financial literacy on financial behavior and well-being, helping to explain how sociodemographic variables might affect financial behavior and well-being by influencing individuals’ perceptions, risk tolerance, and decision-making processes.

Centrality of religiosity

Beliefs and experiences of divine existence are universal components of human life (Luckmann, 1990 ). This belief is manifested in the concept what so-called religion. A belief system that relates humanity to spirituality gives meaning and purpose to human life. It reinforces social unity and stability; serves as an agent of social control; promotes psychological and physical well-being; motivates people to work for positive social change and other social behavior (Barkan, 2021 ; Renneboog and Spaenjers, 2012 ).

Theoretically, religion’s central position in one person’s life has been measured using the concept of the Centrality of Religiosity (Huber and Huber, 2012 ). The idea integrates the perspective of sociology and psychology in viewing the Centrality of Religiosity through five dimensions: intellectual, ideology, public practice, private practice, and religious experience (Esperandio et al., 2019 ; Huber and Huber, 2012 ; Łowicki et al., 2022 ). First, the intellectual dimension refers to the religious reflexivity and social expectation that religious people understand and can articulate their beliefs about religion, transcendence, and religiosity, as exhibited in how frequently one considers religious issues in life (Huber and Huber, 2012 ; Zarzycka et al., 2020 ). The second is the ideology dimension. It is defined as the social presumption that religious people hold ideas about the presence and nature of a transcendent reality (Fear of God) and the connection between that reality and humanity (Huber and Huber, 2012 ; Zarzycka et al., 2020 ). The third is a public practice which refers to the social expectation that members of religious communities be active in their communities, as seen by the public’s engagement in religious ceremonies and social gatherings (Huber & Huber, 2012 ). Fourth is a private practice that reflects the devotion of the religious people in spending their time to the transcendence in private rites and activities (Huber & Huber, 2012 ). Last is a religious experience. The dimension resembles the assumption that religious people have some close relationship (contentment) with a higher reality (Huber & Huber, 2012 ; Zarzycka et al., 2020 ).

Islam, in particular, places religion in a central position in Muslim life (Haneef, 1997 ). In line with the first intellectual dimension, Muslims are encouraged to remember Allah often and glorify him morning and evening (Surah Al-Ahzab—41-42, 2022 ). Regarding the ideology dimensions, Islam obliges its adherence to the belief of transcendence or what is called Iman (al-Faruqi, 1992 ). Islam declares that everyone should care for God’s transcendence. It claims that God created all people with the ability to know Him in His transcendence. This is a natural blessing that all people forbid discrimination as believing in transcendence reality is something innate to humanity (al-Faruqi, 1992 ).

According to Kuran ( 1995 ), Islam has clearly outlined the norms and guidelines on how Muslims should manage their economic behavior by avoiding waste, excess, and ostentation. This fact shows that Islam as a religion holds the way it behaves economically. Islam forbids Muslims from engaging in extravagance and being spendthrift (Musadik and Azmi, 2019 ). For Muslims, Islam has a central position in their life and guides how they behave in any dimension of life, including their financial management behavior. Given this, it is hypothesized that:

H 1 : The Centrality of religion has a positive impact on financial management behavior .

The effect of religion in influencing individuals’ well-being has been a topic of discussion in the academic literature for a long time (St. George and McNamara, 1984 ). Previous studies have shown that religiosity has a positive impact on individual well-being (Green and Elliott, 2010 ), as evidenced by lower anxiety scores and a stronger sense of life direction (Phillips et al., 2022 ). A study conducted by Green and Elliott ( 2010 ) found that individuals who identify as being religious tend to express higher levels of health and happiness, more participation in religious activities, and better financial situation regardless of their specific religious denomination. A significant relationship between religiosity and well-being was also supported in the pandemic context (Hu and Cheng, 2022 ). In the context of finance, Renneboog and Spaenjers ( 2012 ) found that people’s perceptions of the importance of saving, risk, financial responsibility, and other critical economic concepts are influenced by their religious beliefs. Krause and Hayward ( 2015 ) found that individuals who faced financial hardship but had greater trust in god were reported to have higher self-rated health, lower depressed affect scores, and higher life satisfaction.

According to Abdellatef ( 2021 ), rationality, as central dogma in mainstream economics, has faced harsh criticism throughout the history of economic thought and the rise of modern economics due to the “homo-economicus” primary axiom’s inability to reflect reality. In contrast, Islamic economics views an Islamist rationalist as the utility and morality maximizer who balances his well-being to maximize utility in life here and hereafter (Abdellatef, 2021 ). Therefore, it is hypothesized that:

H 2 : Centrality of religion has a positive impact on financial well-being .

Islamic financial literacy

Financial literacy can be defined as the knowledge of fundamental economic and financial concepts and the ability to utilize that knowledge, along with other financial skills, to manage financial resources effectively for a lifetime of financial well-being (Stolper and Walter, 2017 ). Financial literacy is critical for individuals to make sound financial decisions (Dinc et al., 2021 ; Hamid and Loke, 2021 ). Numerous studies have found evidence that higher financial literacy leads to greater economic resilience (Lusardi et al., 2021 ), a higher probability of having emergency savings (Babiarz and Robb, 2014 ), better credit score (Huston, 2012 ), more responsible credit card usage (Kurowski, 2021 ; Robb, 2011 ) and prevents individuals from holding risky credit portfolios such as home-collected credit, mail order catalog debt, and payday loans (Disney and Gathergood, 2013 ; Kurowski, 2021 ).

Generally, Islamic financial literacy is discussed in the context of Islamic economics. It refers to a person’s ability to manage financial resources according to Islamic principles, using financial knowledge, skill, and attitude (Rahim et al., 2016 ). Islamic financial literacy has been driven by both the internal and external factors of the Muslim community. Internally, Muslims are required to obey Islamic teachings; externally, the presence of complex financial products leads the Muslim community to respond by making financial decisions based on Islamic financial literacy (Setiawati et al., 2018 ).

Islamic financial literacy also provides an understanding of the distinctions between Islamic and conventional financial products (Albaity and Rahman, 2019 ). It is crucial in appreciating the positive impact of Islamic financial literacy on financial management behavior. Islamic financial products are designed based on Shariah principles, which prohibit interest (riba), uncertainty (gharar), and investment in haram (forbidden) activities (Hassan and Lewis, 2009 ). This fundamental difference influences the structure of products, such as Islamic loans, which are based on profit-sharing (Mudarabah) or lease (Ijarah) principles, rather than interest payments, and Islamic investments that ensure compliance with ethical standards (Hassan and Lewis, 2009 ; Mansour et al., 2015 ). Consequently, Muslims equipped with Islamic financial literacy are more capable of making informed decisions that align with their religious beliefs and ethical considerations (Biplob and Abdullah, 2019 ; Muhamad et al., 2016 ). This knowledge empowers them to choose financial products that not only meet their economic needs but also adhere to Islamic teachings, contributing to responsible financial management and avoidance of prohibited transactions (I. Osman et al., 2023 ).

The increasing attention to the significant role of financial literacy is attributed to the rising level of indebtedness among young people. According to Zainudin et al. ( 2019 ), preferences for lavish lifestyles have led them to spend beyond their limits to the point that they are willing to incur debt. This is contrary to Islam’s teachings, which promote moderation in spending and limit the use of debt only for genuine needs. A hadith narrated by Imam Ahmad, where the Prophet Muhammad (Peace Be Upon Him) was reported to have said:

“Be wary of debts. Indeed, it is sadness at night and a disgrace during the day,” stresses that being in debt not only leads to an increase in financial burden but can also cause emotional burden. This explains why the concept of moderation in spending is highly encouraged in the Quran, as stated in chapter Al-Furqan verse 67, which means: “Those who, when they spend, are not extravagant and not niggardly, but hold a just (balance) between those (extremes).”

Based on the above discussion, the following hypothesis is developed:

H 3 : Islamic financial literacy has a positive impact on financial management behavior .

Many studies have shown the significant effect of financial literacy on individuals’ well-being (Z. Osman et al., 2018 ; Younas et al., 2019 ). It is important to note that the success of a financial education program should not only be assessed by financial outcomes such as obtaining a bank account, buying a home, or maintaining saving habits. It should also be evaluated in terms of the enhancement of life satisfaction, happiness, and a sense of financial security (Kozup and Hogarth, 2008 ). In the Islamic research context, Islamic financial literacy is also proven to significantly influence Muslim customers’ well-being (Abdullah et al., 2019 ). Therefore:

H 4 : Islamic financial literacy has a positive impact on financial well-being .

Based on the above hypotheses, the following research model is developed (see Fig. 1 ).

Research framework.

Research method

The study was administered using an online survey between May and June 2021. The data was collected from 1141 individuals who lived in Indonesia aged between 18- and 65 years old. The Centrality of religion was measured using The Centrality of Religiosity Scale (CRS) developed by (Huber and Huber, 2012 ). The measurement of the central position of religiosity has been primarily used in 100 studies in the sociology of religion, psychology of faith, and religious studies in 25 countries with a total of more than 100,000 participants (Huber and Huber, 2012 ). CRS consists of 5 dimensions: Intellect, ideology, public practice, private practice, and religious experience. Several items of questions were deleted as the financial products mentioned in the original articles were prohibited in Islam, e.g., Credit cards and contained riba (usury) issue. It is worth noting that the Centrality of religiosity instrument has been used in the Islamic economics research context, such as halal labeling (Maison et al., 2019 ). 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. Three items of financial management behavior were deleted as it measured the behavior related to the conventional credit card, which involves usury and is against the Islamic Sharia principles. Financial well-being represented by financial economics and financial security was also measured by the instrument used by Strömbäck et al. ( 2017 ). The instruments used the Likert scale, which consists of six items ranging from significantly disagree to very agree (See Table 1 ). The data were analyzed using structural equation modeling with AMOS. Additional analysis to compare means of the variable based on the sociodemographic status of the respondents by using SPSS.

The demographic of the study’s respondents can be seen in Table 2 . The majority of the respondents were female, with 688 responses (58.55%), while the total number of male respondents was 473 (41.45%). Table 2 further describes the cohort of respondents. Cohort denotes a set of individuals who share the same birth period (Zhang, 2017 ). Cohort effects relate to changes that occur among clusters of people who undergo a common experience. The table shows that 813 respondents (70.99%) fall into the Generation Z age (18–24 years). Millennial respondents (25–40 years) made up as many as 150 respondents (13.15%), and Generation X respondents (41–56 years) made up as many as 164 respondents (14.37%). Additionally, 17 respondents (1.49%) identified as Baby Boomers (57–75 years old). The majority of around 444 respondents (38.91%) lived in West Java, followed by responses from Jakarta Greater Area with 301 respondents (26.38%). Based on their educational background, the majority of 639 respondents (56.00%) had completed their tertiary education Table 2 .

The validity and reliability analyses were conducted to ensure the measurements’ validity and reliability (Table 3 ). Based on the above statistical analysis, the measures used in the study are valid and reliable. Even though some of the AVE is lower than 0.5, the CR is all above more than the acceptable threshold of 0.6 (Lam, 2012 ) or ranging between 0.757 and 0.858.

To assess the model fit, CMIN/df, CFI, TLI/NNFI, and RMSEA were used (Table 4 ). For CMIN/df, several cutoffs between 2 and 5 have been proposed (Marsh and Hocevar, 1985 ). The CMIN/df score for the current study is 4.559 showing a good fit index. If the CFI value is 0.9, the CFI can be regarded as a good model (a good fit). Meanwhile, an acceptable fit can be assumed if the CFI score is between 0.8 and 0.9 (Baumgartner and Homburg, 1996 ). The CFI of the current study is 0.865, which indicates a marginal fit of the model. If the TLI value is 0.9, the TLI can be regarded as a good model (a good fit). The TLI/NNFI value might be considered a marginal fit if it is between 0.8 and 0.9 (Hair, 2010 ). The TLI/NNFI indices of the study are 0.844, which indicates a marginal fit of the model. Based on the general agreement among experts in the field, a strict upper limit for the RMSEA cut value is 0.07 (Steiger, 2007 ). Thus, the RMSEA indices of the current study are accepted as the score is 0.056.

Path analysis was conducted to evaluate the significance of the proposed regression lines. Byrne ( 2001 ) suggests that the value of t -values/critical ratios (CR) should be greater than that of 1.96 to support the hypothesis. Table 4 also provides information about each path’s path coefficient, critical ratio, standard error, and significance value.

The result indicates that the Centrality of religiosity has a positive and significant impact on financial management behavior ( β  = 0.074, p  < 0.036) and financial well-being ( β  = 0.146, p  < 0.003). Islamic financial literacy also has a significant effect on financial management behavior ( β  = 0.211, p  < 0.000) and financial well-being ( β  = 0.286, p  < 0.000). Thus, hypotheses H 1 –H 4 are all supported.

The statistical analysis results explained above can be summarized in Fig. 2 .

Structural model.

Additional analyses were conducted to determine whether the socioeconomic status of the respondents had an impact on the investigated variables. A t -test analysis was conducted for the gender data, while one-way ANOVA was conducted for the age, education, and income data. The results of the t -test analysis can be seen in Table 5 . For financial well-being, the t -test was split based on the financial anxiety and financial security dimensions.

Based on t -test analysis, there are no significant differences between male and female customers in terms of centrality of religiosity ( p -value = 0.568 > 0.01) and financial management behavior ( p -value = 0.198 > 0.01). However, significant differences were found between males and females in terms of Islamic financial literacy ( p -value = 0.001), financial anxiety ( p -value = 0.001), and financial security ( p -value = 0.001). The t -test statistical analysis shows that male customers tend to have higher financial literacy (mean = 3.540) compared to female customers (mean = 3.050). Additionally, male customers have much higher well-being, as can be seen from their lower financial anxiety (mean = 2.916) compared to female customers (mean = 3.087), and a higher sense of financial security (mean = 3.396) in contrast to female customers (mean = 3.168).

As mentioned earlier, an ANOVA was conducted to compare the means of respondents in terms of centrality of religion, Islamic financial literacy, financial management behavior, and financial well-being (financial security and financial anxiety). For the cohort data, the Generation X data were integrated with the Baby Boomers, as the number of Baby Boomer respondents was very small ( n  = 17). The results of the ANOVA test can be seen in Table 6 .

The ANOVA test resulted in some very interesting findings. Significant differences among cohorts were found across all variables under investigation, based on the F -test statistics of centrality of religion ( F  = 21.225; p -value = 0.001 < 0.05), Islamic financial literacy ( F  = 3.213; p -value = 0.041 < 0.05), financial management behavior ( F  = 5.811; p -value = 0.003), as well as well-being, represented by financial anxiety ( F  = 33.659; p -value = 0.001 < 0.05), and financial security ( F  = 24.280; p -value = 0.001 < 0.05).

Further posthoc tests were conducted to examine the specific differences among cohorts. In terms of centrality of religion, the study shows no significant centrality of religion among Generation Z and millennials (sig = 0.166 > 0.05). Significant differences in the centrality of religion were found when both Generation Z and millennials were compared with the “Generation X and baby boomers” group. The mean difference between Generation Z and the Gen X plus baby boomers group (−0.254) was significant ( p -value = 0.01 < 0.05). The results show that Generation X has much lower centrality of religion compared to the later cohorts. The mean difference between millennials and the “Generation X plus baby boomers” group (mean difference/MD = −0.339) was also significant ( p -value = 0.001 < 0.05). The differences show that the older generation (Gen X plus baby boomers) is more religious as they have a much higher centrality of religion compared to the younger generation (Generation Z and millennials).

Similar to the comparison of cohorts in centrality of religion results, no significant differences were found between Generation Z and millennials in terms of Islamic financial literacy ( p -value = 0.989). Significant differences in Islamic financial literacy were found between the youngest (Generation Z) and the oldest generation (Gen X plus baby boomers group), with a p -value of 0.032. The results show that Generation Z has much higher Islamic financial literacy compared to the oldest group.

In the comparison of means of financial management behavior among cohorts, significant differences were found between Generation Z and Millennials (MD = −0.127, p -value = 0.024 < 0.05) and between Generation Z and “Generation X plus Baby Boomers” (MD = −0.116, p -value = 0.026 < 0.05). The results show that the older generations tend to have better financial management behaviors compared to the younger generations.

Similar to financial management behavior, the financial anxiety levels of Generation Z are significantly different compared to its older counterparts: Millennials (MD = 0.211, p -value = 0.013 < 0.05) and “Generation X plus Baby Boomers” (MD = 0.515, p -value = 0.001 < 0.05). The results indicate that the younger generation tends to have much higher financial anxiety levels.

In terms of financial security, “Generation X plus Baby Boomers” have a significant difference compared to Generation Z (MD = −0.520, p -value = 0.001 < 0.05) and Millennials (MD = −0.407, p -value = 0.001 < 0.05), indicating that the older generation has better financial security compared to their younger counterparts.

Based on the education comparisons, there is no significant difference between primary, secondary, and tertiary education in terms of centrality of religion ( F  = 2.276, p -value = 0.103 > 0.05) and Islamic financial literacy ( F  = 0.337, p -value = 0.714 > 0.05). However, differences in means were found between different levels of education in terms of financial management behavior ( F  = 17.391, p -value = 0.001 < 0.05), financial anxiety ( F  = 7.337, p -value = 0.001 < 0.05), and financial security ( F  = 21.344, p -value = 0.001 < 0.05). Nevertheless, the post-hoc test results only show a significant difference in financial management behavior between the secondary and tertiary education groups (MD = −0.182, p -value = 0.001 < 0.05). The results show that attainment of tertiary education improves customers’ financial management behavior. In terms of financial anxiety, tertiary education also reduces individuals’ financial anxiety compared to those who only have secondary education (MD = −0.181, p -value = 0.001 < 0.005). Regarding financial security, the attainment of tertiary education is proven to improve individuals’ financial security (MD = 0.181, p -value = 0.001 < 0.005).

No significant differences were found in terms of the centrality of religion among consumers with different incomes ( F  = 0.114; p -value = 0.892 > 0.05). However, significant differences were found among consumers with different income levels in terms of Islamic financial literacy ( F  = 18.902; p -value = 0.001 < 0.05), financial management behavior ( F  = 35.100; p -value = 0.001 < 0.05), financial anxiety ( F  = 33.127; p -value = 0.001 < 0.05), and financial security ( F  = 21.344; p -value = 0.001 < 0.05).

Based on Islamic financial literacy, the statistics show a significant improvement in financial literacy when income increases consistently across all income levels. The financial management behavior is also higher when income increases, and this pattern is consistent across different income levels. The significant differences in financial anxiety were found among the lowest income group compared to the moderate (MD = 0.347; p -value = 0.001 < 0.05) and highest income group (MD = 0.411; p -value = 0.001 < 0.05), reflecting that the lowest income group has much higher financial anxiety. Similar patterns were found in terms of financial security, where the lowest income group has the lowest financial security compared to the moderate-income group (MD = −0.368; p -value = 0.001 < 0.05) and the highest income group (MD = −0.063; p -value = 0.001 < 0.05)

The findings of the study are noteworthy, as they empirically demonstrate that Islamic financial literacy is the most significant factor influencing individual financial management behavior and financial well-being. These findings lend support to the research by Kozup and Hogarth ( 2008 ), which posits that financial literacy is vital not only for enhancing individual wealth but also for promoting greater financial security. Moreover, the centrality of religiosity also significantly impacts financial management behavior and well-being, albeit to a lesser extent than Islamic financial literacy. This observation is in harmony with the studies by Rinallo and Oliver ( 2019 ) and Agarwala et al. ( 2019 ), which highlighted the profound impact of religion on consumer behavior and decision-making. Similarly, the findings resonate with those of Green and Elliott ( 2010 ), who found that religious individuals generally enjoy higher well-being and better financial status.

Remarkably, the study reveals that private practice, akin to the devotion exhibited by religious individuals through private rites and activities (Huber and Huber, 2012 ), stands out as the most critical dimension of religiosity in an individual’s life. This is followed by ideology and experiential dimensions. The study illustrates that for Muslims, personal activities such as prayer, fear of God, and maintaining a close relationship with God are of paramount importance in their lives. Moreover, the study suggests that centering one’s life around religion contributes to enhanced well-being by diminishing financial anxiety and fortifying financial security. These insights align with Phillips et al. ( 2022 ), which found a negative correlation between religiosity and anxiety, further underscoring the protective role of faith against financial anxiety.

Further examination indicates notable variations among different cohorts in relation to religiosity, Islamic financial literacy, financial management behavior, and well-being. Based on the cohort analysis, the older generation or Gen X plus baby boomers have a much higher level of centrality of religion, better financial management behavior, lower financial anxiety, and higher financial security compared to the younger generation, even though the results show the younger generation to have much higher Islamic financial literacy. The study supports the findings of Voas and Doebler ( 2011 ) and Gay and Lynxwiler ( 2013 ), who found that the older cohorts have much higher religiosity compared to the younger generation. In regards to financial literacy and financial management behavior, Henager and Cude ( 2016 ) that improved financial knowledge among older cohorts substantially improved their financial management behavior.

The current study only partially supported the findings of Henager and Cude ( 2016 ), as the results show that even though the younger generation has much better financial literacy, the older cohorts have much better financial management behavior. As explained earlier, the current study examined well-being from two dimensions: financial anxiety and financial security. Based on the nonfinancial study, the level of anxiety tends to increase among the younger cohorts compared to the older cohorts (Twenge, 2000 ). The study consistently supports the findings as the financial anxiety of the younger cohorts tends to be higher compared to the older cohorts. A previous study found that the more recent cohorts tend to feel much higher financial insecurity (Brown et al., 2019 ). The current study support the findings as the “Generation X plus baby boomers” has significantly higher financial security compare to the Generation Z and Millenials.

With respect to education, the research reveals the favorable influence of educational on financial management behavior and well-being, Specifically, the results show that attainment of tertiary education improves customers’ financial management behavior. The results, in general, support a previous study that shows how education positively influences individuals' financial management behavior (Haynes-Bordas et al., 2008 ). In terms of financial anxiety, tertiary education also reduces individuals’ financial anxiety compared to those who only have secondary education. Regarding financial security, the attainment of tertiary education is proven to improve individuals’ financial security. The study supports a previous study that shows how education reduces financial anxiety (Sachin et al., 2021 ). In the context of technology-based educational interventions, studies have found that improving individuals’ financial knowledge, skills, and behaviors leads to better financial well-being (Way and Wong, 2010 ). This aligns with research showing that higher levels of education are associated with greater financial security.

Regarding income, the less affluent category exhibits significantly lower Islamic financial literacy, inadequate financial management skills, higher levels of financial anxiety, and lower levels of financial security. The results of the study support the research of Potrich et al. ( 2015 ), who found a low level of financial literacy among low-income groups. The study also supports the findings from Perry and Morris ( 2005 ) that show the higher income group has a tendency to perform responsible financial management behavior.

In terms of theory, Rational Choice Theory posits that individuals make decisions that maximize their utility (Becker, 1976 ). The significant impact of Islamic financial literacy on financial management behavior and well-being aligns with this theory, suggesting that Muslims who are more knowledgeable about Islamic financial principles make informed decisions that align with their financial and religious goals, thereby maximizing their utility. This decision-making process reflects a rational evaluation of financial products and behaviors based on their compatibility with Islamic law and potential for financial return or security. The differences observed in financial management behavior and well-being across different levels of education and income further support this theory, indicating that increased resources and knowledge contribute to more effective and utility-maximizing financial decisions.

The Rational Choice Theory of Religion extends the utility-maximization framework to religious behavior, arguing that individuals engage in religious practices based on a rational analysis of costs and benefits, seeking to maximize spiritual and social rewards (Stark and Finke, 2000 ). The positive correlation between the centrality of religiosity and financial well-being could be interpreted within this framework as individuals deriving both spiritual satisfaction and social benefits from aligning their financial behaviors with Islamic principles. This alignment may offer a sense of community belonging and approval, enhancing one’s social capital and contributing to overall well-being. Moreover, the significant impact of religiosity across different generations suggests that for older generations, the spiritual and social rewards gained from religious adherence and its manifestation in financial behavior may be more pronounced, reflecting a rational choice to maintain or enhance their spiritual and social well-being through religiously informed financial practices.

Behavioral Finance, with its emphasis on psychological influences and cognitive biases in financial decision-making (Kahneman and Tversky, 1982 ), offers insights into the nuanced ways individuals’ financial behaviors and well-being are shaped by their beliefs and identities. The absence of significant gender differences in the centrality of religiosity and financial management behavior, coupled with significant differences in Islamic financial literacy and financial well-being indicators, suggests that psychological factors and societal norms related to gender roles may influence how financial knowledge is acquired and applied. Furthermore, the generational differences in financial anxiety and security could be attributed to varying risk perceptions and financial priorities influenced by psychological factors, such as optimism or pessimism about the future, which Behavioral Finance theory helps clarify.

The findings of this study underscore the significant and positive influence that the centrality of religiosity and Islamic financial literacy have on financial management behavior and the financial well-being of Muslims. The evidence suggests that a stronger religious commitment and an enhanced comprehension of Islamic financial principles are linked to more prudent financial behaviors and improved financial well-being. Furthermore, the study highlights the role of socioeconomic factors such as gender, age, education, and income in determining these outcomes. Gender differences are observed in Islamic financial literacy and various aspects of financial well-being, while analyses based on age cohorts reveal differences in religiosity, financial literacy, financial management behavior, and financial well-being across generations. The impact of education level is particularly noteworthy, significantly influencing financial management behavior, anxiety, and security, which stresses the critical role of financial education. Similarly, income levels are found to be associated with Islamic financial literacy, financial behavior, and well-being, pointing to the economic underpinnings of financial decisions. Additionally, while Rational Choice Theory and the Rational Choice Theory of Religion emphasize the importance of informed, utility-maximizing decisions within a religious framework, Behavioral Finance explores the psychological intricacies that influence these decisions. Collectively, these theories provide a nuanced understanding of the complex factors that affect financial behavior in the realm of Islamic finance.

Contributions

The study makes several theoretical contributions to the literature. First, This study contributes to the broader discourse on financial behavior in Muslim communities by integrating Rational Choice Theory, the Rational Choice Theory of Religion, and Behavioral Finance. It emphasizes the importance of religiosity and Islamic financial literacy in shaping financial decisions and outcomes, providing empirical evidence that religious commitment and financial literacy are critical determinants of financial behavior and well-being. Second, it addresses the concept of financial management from the unique perspective of Muslim consumers, whose paradigm differs from that of non-Muslim consumers, thus challenging the universal applicability of financial management principles rooted in Western capitalism.

From the managerial standpoint, the results suggest, religious teachers, Islamic economics scholars and Islamic financial institutions to educate Muslim consumers more about Islamic financial literacy, as the evidence shows a strong relationship between Islamic financial literacy and the consumers’ well-being. Islamic financial education is essential as education generally can improve individual adaptability and problem-solving to deal with increasingly complex issues (Pavlovich, 2010 ).

Limitation and future research direction

While this study provides valuable insights, it has limitations that should be acknowledged. First, the cross-sectional design limits the ability to infer causality between the variables studied. Second, the sample may not fully represent the diversity within Muslim communities, potentially limiting the generalizability of the findings. Third, the study’s reliance on self-reported measures for financial behavior and well-being could also introduce response biases. Fourth, the analysis of socioeconomic factors, while comprehensive, may not capture all relevant variables that could influence financial decisions and outcomes in these communities. 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 ).

Future research should address these limitations by employing longitudinal designs to better understand the causal relationships between religiosity, Islamic financial literacy, financial behavior, and well-being. Expanding the sample to include a wider range of Muslim communities would enhance the generalizability of the findings. Further studies could also explore additional variables, such as specific religious practices or deeper aspects of financial literacy, to gain a more detailed understanding of their impact on financial behavior. Investigating the mechanisms through which religiosity and financial literacy influence financial decisions and outcomes could provide deeper insights into the complex interplay of psychological, cultural, and economic factors in financial behavior. Additionally, exploring interventions aimed at enhancing Islamic financial literacy and understanding their effects on financial behavior and well-being could offer practical implications for policymakers and financial educators.

Data availability

The data are available at: https://figshare.com/articles/dataset/Data_Financial_Literacy_xlsx/25837177 .

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This research is funded by the Hibah Riset Kolaborasi Internasional World Class University (WCU) 2021 program of Direktorat Riset dan Pengembangan (Risbang) Universitas Indonesia.

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Wijaya, H.R., Hati, S.R.H., Ekaputra, I.A. et al. The impact of religiosity and financial literacy on financial management behavior and well-being among Indonesian Muslims. Humanit Soc Sci Commun 11 , 830 (2024). https://doi.org/10.1057/s41599-024-03309-6

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Islamic social finance: a literature review and future research directions

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Islamic Finance and Financial Stability: A Review of the Literature?

Journal of King Abdulaziz University-Islamic Economics

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Governance of Islamic social finance: learnings from existing literature

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84 References

Islamic accounting research between 1982 and 2020: a hybrid review, islamic banking in bangladesh: a literature review and future research agenda, research trends in the field of islamic social finance, developing an islamic corporate governance framework to examine sustainability performance in islamic banks and financial institutions, islamic social finance: a literature review and future research directions, islamic finance as social finance: a bibliometric analysis from 2000 to 2021, islamic social finance and commercial finance: a marriage made in heaven, a bibliometric review of the waqf literature, perception of stakeholders on corporate social responsibility of islamic banks in jordan, a framework to analyse the efficiency and governance of zakat institutions, related papers.

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• v.8(9); 2022 Sep

Fintech in islamic finance literature: A review ☆

Muneer m. alshater.

a Faculty of Business, Philadelphia University, Amman, Jordan

b Institute of Business Administration, Karachi, Pakistan

Indri Supriani

c Department of Economics, Faculty of Economics and Business, Universitas Brawijaya, Indonesia

Mustafa Raza Rabbani

d Department of Economic and Finance, College of Business Administration, University of Bahrain, Zallaq, Bahrain

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Data included in article/supp. material/referenced in article.

This study reviews Islamic FinTech research development from 2017 to 2022. The study adopts a hybrid approach combining bibliometric and content analysis to reveal the current research trend of Islamic FinTech research. Using the Scopus database, we retrieve 85 documents and analyze them using RStudio and VOSviewer. The content analysis categorizes the research output in Islamic FinTech into four distinct streams. The study finds potential for cointegrating FinTech into Islamic finance to benefit the unbanked and small-medium-size businesses, the adoption of FinTech in Islamic finance will also help the government improve financial inclusion, conquer financial crises, such as COVID-19, and achieve SDGs for a sustainable nation. However, the lack of legal regulation and the lower financial literacy becomes the primary obstacle to the development of FinTech in Islamic finance.

Islamic FinTech; Crowdfunding; Payments; Blockchain; Cryptocurrency; P2P lending.

1. Introduction

FinTech ( Financial Technology ) is an emerging field within finance. It refers to the use of technology to enable incremental or drastic improvements in financial services ( Alshater and Othman, 2020 ; Thakor, 2020 ). The Financial Stability Board (2019) defines FinTech as “Technologically enabled financial innovation that could result in new business models, applications, processes, or products with an associated material effect on financial markets and institutions and the provision of financial services”. Islamic FinTech is no different else than being compliant with shariah and a special focus on Islamic compliant institutions or Islamic countries ( Alshater and Othman, 2020 ). The term “Islamic” stands to differentiate between conventional and shariah-compliant FinTech operators. This differentiation is rational due to the many differences in FinTech business models between the two systems. For example, profit interest-based P2P lending, one of the most thriving business models in FinTech, is fundamentally rejected in the Islamic finance system due to ( riba ) being a primary prohibition in the system.

As Islamic Finance is now a $3 trillion industry with growing demand, this puts a context of what Islamic FinTech might witness soon, given the industry is already on the rise ( Islamic Finance Development Report, 2019 ). Thus, studying the emerging industry dynamics becomes more critical as FinTech aims are in line with the primary shariah objectives for financial transactions. According to Thakor (2020) , FinTech aims to unveil cheaper ways to overcome financial contracting frictions and lower the cost of financial services to improve consumer welfare; in a similar vein, D. K. C. Lee and Teo (2015) defined FinTech's five principles: low-profit margin, light asset, expandability, innovation, and easy compliance, which all are in line with shariah principles.

Fintech history starts as early as 1866, Consumer International (2017) divided the FinTech developmental period into three phases. The first phase between 1866 to 1967 was marked by trans-Atlantic cable and telegraph as a means of financial communications. Between 1967 and 2008, the second phase saw the emergence of online banking and ATMs where financial institutions started incorporating information technology into financial products and services. The third phase, from 2008 onwards, is marked by the use of high-tech by newer entrants with different characteristics, creating a new competitive landscape for financial institutions. Palmié et al. (2020) state that the emergence represented an industry-wide system-level change that led to the inception of new actors and the convergence of competencies. This intensive rise of FinTech at the industry level, especially in major economies such as the US, UK, China, and Germany, motivated researchers to investigate FinTech related topics from different dimensions. From the conventional perspective, the literature is growing at a fast pace, so do various types of reviews ( Al-Sartawi et al., 2022 ; Li and Xu, 2021 ; Sangwan et al., 2020 ; Suryono et al., 2020 ; Utami et al., 2021 ), in contrast from Islamic perspective the pace is much slower, which motivated us to conduct this study, as few reviews tried to catch up the progress including non-directly related topics e.g ( Rabbani et al., 2020 ). Our study is more comprehensive in nature and scope as it focuses on reviewing all relevant and published articles tackling compliant innovative technological applications concentrating on Islamic financial institutions.

This study makes several contributions to the existing literature. (1) It is the first study to illustrate the basic characteristics of publications in the Islamic FinTech domain, including the annual progress, the most influential articles, and keywords co-occurrence, beside the development of the research streams over the years. (2) Further, the study does a comprehensive overview of the research publications in Islamic FinTech and each category under it. (3) The study adopts a hybrid method combining bibliometric methods and content analysis to review 85 studies from 2017–2022 (4) Finally, it provides an overview of the current special environment of Islamic FinTech and the challenges faced by besides providing suggested future research directions.

The remainder of this paper is organized as follows. Section 2 introduces the data collection and research methodology. Section 3 presents the bibliometric results. Section 4 presents the content analysis. We conclude the paper in section 5 .

2. Review methodology

2.1. methodology and study framework.

The study uses various methods such as bibliometric analysis, content analysis and SLR to provide a Quanti-qualitative perspective of Islamic FinTech research development. Bibliometric is a quantitative analysis that enables the researchers to discover the emerging trend of collaboration networks and identify the intellectual structure of a certain field of study ( Liu et al., 2020 ; Donthu et al., 2021 ). This method is useful for mapping the Islamic FinTech research based on statistical analysis. Moreover, this study uses content analysis and SLR as it allows the researcher to categorize the literature, analyze the gaps in existing studies, and offer recommendations for the research topic ( Paul and Criado, 2020 ). The SLR used is based explicitly on the Preferred Reporting Items for Systematic reviews and Meta-Analyses (PRISMA), a well-suited method to synthesize the research finding from the most impactful selected studies in this research field. We follow the PRISMA guideline proposed by Moher et al. (2009) who divided PRISMA into four main steps: identification, screening, eligibility assessment, and identification of the findings. This method assure transparency on how the data is collected and the final number of papers included for review. We employ RStudio software to achieve the following research objectives (RO1.1 and RO1.2), whereas (RO1.3 and RO2) are addressed using VOSviewer software. Following are the outlined objectives:

To evaluate the current publication trend of Islamic FinTech.

as answers to RO1 are rather quantitative in nature, hence, further sub objectives are categorized as follow:

• RO1.1. To present the performance of publication and citation annually.
• RO1.2. To identify the most influential studies based on the number of citations.
• RO1.3. To investigate the collaboration network globally.

To identify the main research themes from existing studies on Islamic FinTech.

To analyze the primary result and limitations of the selected studies.

To detect research gaps and provide recommendations for future research.

2.2. Data source and collection

This study curated the data from the Scopus database, a well-known and comprehensive database covering various social disciplines including business and finance fields ( Guckenbiehl et al., 2021 ). Alshater et al. (2020) state that the Scopus database contains a greater number of Islamic finance research than other databases such as Web of Science, while it also indexes more well-validated studies than those solely appearing on Google Scholar, EBSCO, or ProQuest. Moreover, several previous review studies on Islamic economics, banking, and finance, primarily relied on Scopus e. g Paltrinieri et al. (2020) , M. K. Hassan, Aliyu, et al. (2020) , and Foglie and Panetta (2020) . Figure 1 shows data collection steps for bibliometrics and SLR with PRISMA. The bibliometrics analysis is used in this study to answer the RO1 and RO2 , whereas SLR-PRISMA is adopted to address the RO3 and RO4 .

Prisma flow diagram showing article selection process.

The first step of collecting the data is the identification of keywords for the data curation process. The vast development of Islamic FinTech literature which spans through multiple disciplines, including technology and religion, resulted in challenges in identifying the right keywords. As Lee and Shin (2018) described, there are six business models of FinTech, including lending, capital market, insurance services, wealth management, payment, and crowdfunding. In detail, Laidroo et al. (2021) identified seven activities of FinTech, including, (1) Payment activity refers to the online and mobile payment model; (2) Deposit and lending activity which covers the crowdfunding model, peer-to-peer lending, microlending, and consumer financing model; (3) Investment management activity which covers Robo-advice, social trading, and automated advice model; (4) Distributed ledger technology activity which covers digital currency and blockchain model; (5) Banking infrastructure activity covering user interface and open banking model; (6) Analytics activity; and (7) Insurance.

Given the consideration of previous explanation, the selected keywords in this study were identified by conducting a pre-simulation to assure that the keywords cover most of the existing studies related to Islamic FinTech. Moreover, the selection of keywords also referred to previous scientometric research by various researchers who tried to cluster the knowledge in this area, for example, Liu et al. (2020) , suggested including the words P2P, crowdfunding, blockchain, cryptocurrency, robo-advisors, and mobile payment, as they are related to FinTech business model.

Guided by the previous literature, therefore, the study applied several important search keywords including, “Fintech” OR “Financial Technologies” OR “Financial Technology” “finance technology” OR “Islamic Fintech” OR “Blockchain” OR “Digital Finance” OR “P2P” OR “P2P Lending’ OR “Credit Scoring” OR “Robo Advisor” OR “Insurenctech” OR “Smart Contract∗” OR “Bitcoin” OR “Crowdfunding” OR “Crypto∗ OR “Financial Inclusion” in the Article Title, Abstract, Keyword. These keywords were further combined with another set of keywords, namely. “Islam∗” OR “ Shariah ” OR “Shari'ah” to represent Islamic FinTech. In result, at the first stage of data curation, we obtain 265 documents. Moreover, as this study strive to investigate the existing studies on FinTech within the Islamic view, we conducted another data search using “Financial Inclusion” in the Article Title, Abstract, Keyword, followed by two search field by using “Islam∗” OR “ Shariah ” OR “Shari'ah”, AND followed by “ fintech” OR “ finance technology ” OR “ financial technologies ” OR “ digital finance ” in the Article Title, Abstract, Keyword, to collect related articles. Thus, at the second stage of data curation, we obtained 11 documents. The data of this study retrieved the data from the Scopus database in February 2022 and resulted in 276 documents.

The second step is data screening. The selected articles from the previous step are filtered based on specific criteria described in Figure 1 . Hence, 159 out of 276 documents were excluded as it does not satisfy our screening criteria; this step leaves 117 potentially relevant studies. Previous SLR studies on Islamic banking and finance, such as Narayan and Phan (2019) , Khan et al. (2020) , and Foglie and Panetta (2020) suggested only including the articles published by highly ranked peer-reviewed journals, measured by an A and A∗ rank indexed by ABDC journal list or two star and above on the ABS list however, due to the limited number of articles in Islamic FinTech published in these outlets, this study relied only on the Scopus database for selecting documents.

The third step is reviewing the articles to satisfy the eligibility of inclusion in the review, by reviewing the full text of the paper. The criterion in this step refers to the article's content where we followed Lundberg et al. (2006) in hiding the article's identity suggestion, including journals and authors' names, to avoid subjectivity in manual refinement, also using the following inclusion criterion: (1) Studies related to Islamic FinTech; (2) Studies discussing the role and impact of Islamic FinTech in business, Islamic economics, philanthropy, banking, stock market, and halal industry; and (3) Studies investigate one of the business models of Islamic FinTech. While the exclusion criterion is: (1) Studies discuss other topics as the study's objectives, while Islamic FinTech has a small part of the study; and (2) Studies that did not offer substantial insights into Islamic FinTech. The full-text analysis has excluded 32 articles from 117, leaving 85 articles for the final evaluation.

The final step is categorizing and summarizing literature findings. In this step, we extracted the substantial findings of previous studies and presented them in tables and discuss them. Moreover, we analyze the research gaps, limitations, and identify the direction for future research, for early career researches in fintech and Islamic fintech.

The Statistical analysis of Islamic FinTech publications is measured using bibliometrics analysis to answer RO1 and RO2. Publication trend is frequently used to present the current development of a discipline and scientific output ( Liu et al., 2020 ). The general performance analysis is presented to address RO1, whereas RO2 is answered by utilizing co-occurrence author keyword and co-word analysis on the article's title and abstract.

3.1. General performance

3.1.1. analysis of the overall growth trend.

This section explains the data utilized in this study. According to our dataset, the first publication related to Islamic FinTech was in 2017. Since then, 85 articles have been published by 52 journals. Moreover, 205 authors have worked on FinTech related articles, out of whom 10 have worked independently, while the rest have collaborated in conducting the research. The collaboration index is relatively high at 2.83 points. Hence, the high percentage of multi-authored documents and collaboration index is associated with the interdisciplinary nature of Islamic FinTech with other disciplines such as business and economics, finance, law, shariah , and information technology.

Figure 2 reflects the yearly trend of Islamic FinTech publications and citations between 2017 to 2022. In terms of citation performance, the trend remained stagnant during 2017–2019, the 85 articles on Islamic FinTech have been cited 332 times. In sum, this study expects that the total publication and citation of Islamic FinTech would significantly increase in the next five years given the increasingly moving average trend and the massive escalation of Islamic FinTech in terms of asset and performance.

The number of growth and trend of published articles and citation 2017–2022.

3.1.2. Analysis of the influential articles

Table 1 present the most cited articles based on the criteria of a minimum of ten citations from the Scopus database. This current study measured the impact of the articles based on global citation. Global citations assess the performance of an article based on the total citations from a variety of disciplines and articles ( Agbo et al., 2021 ). According to Table 1 , the article authored by Mensi et al. (2020) has the highest citations among the articles published by Scopus indexed journals. This study examines the relationship between bitcoin, the Islamic stock market, and Sukuk .

Table 1

Top influential articles on islamic FinTech

Note: GC = Global citation.

3.1.3. Analysis of the collaboration network

Paltrinieri et al. (2020) stated that identifying the co-authorship analysis will help researchers build their research collaboration and result in higher quality papers. It offers a broad and cross-countries perspective. The distance between nodes represents the linkage between the countries, and the smaller distance indicates the higher linkage and the strong relationship between them ( Van Eck and Waltman, 2014 ). Figure 3 describes the research collaboration amongst countries on Islamic FinTech with a minimum of one publication. It also illustrates that the country's collaboration network was divided into five clusters. Malaysia was cited as the centre of collaboration with the United States, Indonesia, Bangladesh, Japan, and Finland's research partnership in the green cluster. This result implies that these countries have published a similar topic of discussion on Islamic FinTech. Furthermore, the short distance nodes between Malaysia United Arab Emirates (UAE) (in the cluster red) indicated that these countries tend to conduct joint research partnerships. Malaysia and the United Kingdom are also present the closer nodes. Thus, the collaboration network between these two countries is of relative strength.

Collaboration network map of countries.

Moreover, the red cluster consists of eight countries with similar topic interests, namely, France, India, Oman, Palestine, Luxemburg, Russian Federation, and UAE. Furthermore, Australia, China, Pakistan, South Korea, the United Kingdom, and Vietnam were found in cluster blue. These countries have a strong connection with Malaysia, Saudi Arabia, and Italy as their research partners. Besides, in the yellow cluster, Canada, Greece, Italy, Malta, and Morocco tend to have a common research topic. Finally, Saudi Arabia, Kuwait, Tunisia, and Bahrain were found in the purple cluster. In conclusion, research related to FinTech and the Islamic finance industry has spread globally and attracted researchers from various countries, including non-Muslim majority countries.

3.2. Research main theme

The most discussed topics in Islamic FinTech research are presented using keyword co-occurrence analysis. The mapping analysis visualises the most common topic based on the co-occurrences of keywords ( Baker et al., 2020 ). Figure 4 . describes the keyword occurrence: author keywords by setting the minimum occurrence of word is two times. Based on the figure, this study confirms that there are four clusters. The most frequently used keywords in the red cluster are FinTech, Islamic finance, Islamic bank, financial inclusion, riba , and customer retention. At the same time, the most widely used keywords are bitcoin, cryptocurrencies, blockchain , gold, Malaysia, smart contract, and COVID-19 in the yellow cluster. In the blue cluster: cryptocurrency, shariah compliance, trust, precious metal, security, system and technology, and SEM become the highly used keywords. Lastly, in the green cluster: Crowdfunding, Islamic crowdfunding, Indonesia, TAM, and SME are the most appear keywords.

Keyword analysis.

Based on the keyword's occurrence, the red cluster is related to the adoption of FinTech in Islamic financial institutions while the yellow cluster mainly examines the correlation between FinTech's products and the Islamic stock market. The studies on the blue cluster cover the studies related to the shariah compliance and customer's trust in FinTech. Lastly, the green cluster analysis of the technology acceptance of FinTech in SMEs.

This study also offers analysis of the trending topics over the years. Van Eck and Waltman (2014) underlined that co-word analysis on the article's title and abstract could be constructed and visualized to reveal the research main theme clusters based on research topic similarities. The darker nodes and links designate the past topics. By analysing the keywords, as shown in Figure 5 studies related to the concept of financing and payment in the Islamic FinTech platform are the oldest topics. While the most recent topics on Islamic FinTech covers studies related to financial inclusion, social implication, role, intention, benefit, and COVID-19. Moreover, intention, ease, sample, factor, and determinant also dominated the latest topic. Hence, it can be concluded that research exploring the contribution of FinTech and the intention to adopt FinTech in the Islamic finance industry has become a recently discussed topic.

Topics concern over the past years.

4. Content analysis of Islamic FinTech publications

This section is divided into two sections. The first section addresses the RO3 which categorize the literature into four distinct streams namely: (1) Financial technology (consists of two sub-streams: Customer perception on Islamic FinTech and Islamic FinTech's current development and its impact on Islamic finance institutions); (2) Islamic FinTech and distributed ledger technology (consist of two sub-streams: Cryptocurrency and Blockchain), (3) Financial inclusion; and (4) Islamic FinTech and deposit-lending (consist of two sub-streams: P2P Lending and Crowdfunding). The second section explains the research gap and future research recommendations to answer the RO4.

4.1. Content analysis

4.1.1. stream 1: financial technology.

This stream consists of 20 articles that can be divided into two sub-streams: Customer perception on Islamic FinTech, its current development, and its impact on Islamic finance institutions.

The first sub-stream is related to customer perception. Most of the studies measure customer perception of Islamic FinTech through customer intention on using Islamic FinTech ( Darmansyah et al., 2020 ; Oladapo et al., 2021 ); customer's acceptance (I. M. Shaikh et al., 2020 ); customer's satisfaction ( Baber, 2019 ); customer's retention ( Baber, 2020b , 2020c ); and customer's trust (M. Ali et al., 2021a , Ali et al., 2021b ). FinTech in Islamic finance institutions provides four types of services: payments, crowdfunding, advisory, financing, and compliance ( Baber, 2020b ). Several key factors are affecting customers' intention to use Islamic FinTech based on previous studies:

First, shariah compliance. There is still debate amongst the scholars and practitioners about whether religiosity drives the customers to use Islamic banking, a study by Baber (2020b) and Marzuki and Nurdin (2020) proved that Islamic banking customers have a strong concern toward shariah -compliance of FinTech products. Moreover, Baber (2019) correctly argues that shariah -compliance of FinTech services becomes a crucial factor in customer satisfaction. Thus, to maintain the customer's loyalty and satisfaction, the quality and performance of Islamic banking, specifically mobile banking, should improve immensely. Hence, the results of these studies call attention to enhancing the roles of the shariah supervisory board in ensuring the services meet Islamic principles.

Second, is the ease of use. An interesting study by Darmansyah et al. (2020) concludes that the technology acceptance model becomes the most significant factor influencing customers’ intention in using FinTech, particularly in P2P services. In detail, I. M. Shaikh et al. (2020) ascertained that perceived ease of use and usefulness play an important role in shaping customer intention. In the same vein, Baber (2019) also argued that apps design has massively increased customer satisfaction in using Islamic FinTech. Besides, M. Ali et al. (2021) pointed out that the secure Islamic FinTech apps and operations increase customer trust in accessing Islamic FinTech. Hence, the key implication drawn from these studies is the importance of user experience in using Islamic FinTech. Thus, FinTech providers should pay more attention to improving FinTech apps and websites quality by considering the customer needs and prevailing innovations.

Third, is customer knowledge. Oladapo et al. (2021) put forth that customers' knowledge of Islamic FinTech is significantly related to the increasing customer's intention to utilise FinTech. Moreover, the result is also supported by Baber (2020c) , who assured that providing adequate information regarding Islamic principles will enhance the customer's satisfaction. These studies clarify that banking practitioners and operators should regularly attend training, seminars, and conferences to update their capacity to offer customers comprehensive knowledge related to FinTech.

The second sub-stream addressed Islamic FinTech development and its impact on Islamic finance institutions. Rabbani et al. (2020) conducted a systematic literature review to synthesize Islamic fintech; they found that three dominant topics have been widely discussed: Islamic FinTech opportunity and challenges, cryptocurrency/blockchain shariah compliance, and the law/regulation aspect of fintech innovations. this study underlined that FinTech offers more cost-effective financial services than traditional finance and banking. Based on a country level Muryanto et al. (2021) stated that Indonesia, as the largest Muslim population country, has massive potential to elevate the economic growth by utilizing Islamic FinTech. Moreover, this study also describes several challenges in Islamic FinTech's development, including weak regulation, inefficient permit procedures, and a higher rate of illegal FinTech practices. Another study Almulla and Aljughaiman (2021) documented that the massive growth of FinTech firms negatively affects conventional and Islamic banks' performance, measured by the declining ROA and ROE rates. These studies' findings illustrate the possibility of financial institutions shifting from banking to FinTech firms, highlighting disruptive technology's negative impact on traditional financial institutions.

On the other hand, numerous studies have investigated FinTech practices adoption's impact on Islamic finance institutions' performance, specifically Islamic banks and microfinance institutions. Mustafa Raza Rabbani and Khan (2020) underlined that FinTech could significantly decrease the operational cost of Islamic banking, which will allow it to offer more competitive products. Moreover, Selim (2020) ascertained that implementing FinTech in foreign currency transactions by Islamic banks would increase their market share. In return, Islamic banking can provide non-interest rate transactions in real-time and without riba . Moreover, Altwijry et al. (2021) conducted an interesting discussion regarding the shariah-based FinTech money creation. This study emphasized the validity and credibility of Islamic banking to adopt FinTech in their services, answering a debate about whether Islamic banking is necessarily creating money to support their business. This study underlines that Islamic bank should fully enhance their ability to adapt Sharīah-compliant FinTech.

Moreover, in the case of Islamic microfinance, S. A. Shaikh (2021) explained that FinTech would enable Islamic microfinance to obtain a broader range of fund providers, increase transparency, decline the transaction cost, support the customer's monitoring process, and increase the accuracy in screening criteria. However, research by X. Wang et al. (2021) reported that the Islamic bank's investment in FinTech has not yet been effective; this indicates that there are still areas that require improvement. The result of this study is also supported by Nastiti and Kasri (2019) , who declared that the policy-maker should make a strenuous effort to establish a supportive investment environment for an Islamic bank to adopt FinTech. In short, the adoption of FinTech will elevate the development and efficiency of Islamic financial institutions, which will lead to the improvement of Islamic finance institutions' role in economic growth. Hence, a solid collaboration amongst the stakeholder is crucial.

Despite the massive growth of Islamic FinTech, one of the biggest obstacles in its way is the lack of specific legal law from policymakers. Nurhasanah and Rahmatullah (2020) from Indonesia revealed that the Islamic FinTech providers are still behind in terms of regulation, law, and operational rules compared with their conventional counterparts. The uncertainty of the legal law of Islamic FinTech has also resulted in the weak security of customers' data and the increasing number of illegal FinTech. Moreover, the ineffective role of shariah supervisors as regulating authorities has also become the primary reason that hinders the growth of FinTech's start-up (Ilyas et al., 2020; Tajudin et al., 2020 ). In the Malaysian case, the government has set a specific target to digitalize the financial industry, which breaks down to the liberation of specific areas, including insurance, trading assistance, Robo-advisory, and P2P lending. By analyzing the development of FinTech start-ups in Malaysia and Finland, this study tells us that special committees and legal laws are required to drive Islamic FinTech development. Table 2 further summarizes the prior literature in this stream.

Table 2

Financial technology.

4.1.2. Stream 2: Islamic FinTech and distributed ledger technology

This stream consists of 33 studies and is divided into two sub-streams: Cryptocurrency (25 articles) and Blockchain (8 articles). The list of articles in this stream is presented in Table 3 .

Table 3

Islamic FinTech and distributed ledger technology.

The first sub-stream is about the cryptocurrency literature ; it mainly discusses the role of cryptocurrency from a shariah centric perspective and the risk-return tradeoff of cryptocurrencies ( Ajouz et al., 2020a , Ajouz et al., 2020b ; Hammad, 2018 ; Lietaer, 2017 ; Oziev and Yandie, 2018 ; Saleh et al., 2020 ; Siswantoro et al., 2020 ; Virgana et al., 2019 ; M. Abubakar et al., 2019 ; N. Khan et al., 2020 ; Lahmiri and Bekiros, 2019 ; Lahmiri et al., 2020 ; Mensi et al., 2020 ; Rehman et al., 2020 ). Islamic finance does not consider money as a subject matter of trade but as a medium of exchange. However, the introduction of digital currencies has renewed the debate on the status of money and its dynamics, especially within the context of digital currency, i.e., cryptocurrency. In this regard, Oziev and Yandie (2018) critically analyzed bitcoin's nature and features and identified no contradiction of bitcoin with Islamic laws. Much has been written about the status of money and its role in the overall economy after the seminal work of Nakamoto in 2008 ( Figuera and Tortorella Esposito, 2019 ; Mohamad and Sifat, 2017 ; Oberauer, 2018 ).

Nevertheless, cryptocurrencies are heavily criticized for their functional point of view for the following main reasons ( Abozaid, 2020 ; Y. S. Abubakar et al., 2018 ). First, all the products within the nomenclature of cryptocurrency are derived from financial engineering without being backed by real economic assets; thus, it does not fit within Islamic finance. Islamic finance proposes financial intermediation based on real tangible assets, which naturally strengthen the economy and make it more resilient during economic turmoil. Secondly, Islamic finance does not allow transactions based on interest and speculation (M. K. Hassan et al., 2019 ). Also, recent studies show that cryptocurrencies are inefficient ( Bariviera, 2017 ; Nadarajah and Chu, 2017 ; Tiwari et al., 2018 ), highly volatile and speculative ( Cheah and Fry, 2015 ; Elsayed et al., 2020 ; Katsiampa, 2017 ), very sensitive to macroeconomic factors ( Demir et al., 2018 ; P. Wang et al., 2020 ), and lacks flexibility and acceptability ( Hanif, 2020 ), it cannot be used as a medium of exchange on the ground because of its speculative nature ( Baur et al., 2018 ). Thirdly, cryptocurrencies are also used in illegal activities such as money laundering and purchasing drugs and weapons ( Hammad, 2018 ). Cryptocurrencies are type of digital currencies that are generally not asset-backed or issued by any central bank, so it doesn't have the same features of fiat money. Lastly and very importantly, due to the aforementioned factors, cryptocurrencies are not directly backed by any country or regulatory body, unlike fiat money which has implications for monetary policy. If central bank money no longer defines the unit of account for most economic activities and if crypto assets instead provide those units of account, the central bank's monetary policy becomes irrelevant. Moreover, most developing countries are heavily dependent on foreign currency reserves to meet their fiscal deficit and debt obligation. This provides an analogy to cryptocurrency and may disconnect the monetary policy in local currency from the local economy. This dilemma will remain in developing countries if a global digital currency is not introduced.

Siswantoro et al. (2020) investigated a class of 23 different cryptocurrencies and asserted that cryptocurrencies are highly volatile and cannot become alternative fiat money in Muslim countries. Specifically, Kirchner (2021) ascertained that the shariah compliances of cryptocurrency still become a debate amongst the shariah scholars. From an Islamic law perspective, the classification of cryptocurrency still needs further analysis. Hammad (2018) reported similar findings. However, if the cryptocurrency is backed by any precious metal such as gold, it will increase its acceptance rate and adaptability in Muslim populated countries. Ajouz et al. (2020a) analyzed the recently emerged Precious Metal Backed Cryptocurrency (PMBC) and found that more than 63.55% of respondents will accept PMBC as a mode of transaction for their future payments. In other studies, Ajouz et al. (2020b) proposed a model for implementing the PMBC mechanism, and Ajouz et al. (2020c) assessed the shariah compliances of PBMC. These studies highlighted that PMBC provided shariah compliances standards to perform the function of money while operating as a peer-to-peer payment system.

In a similar vein, Saleh et al. (2020) and Virgana et al. (2019) maintained the view that payment methods based on cryptocurrencies are legitimate, as they reduce the transactions cost and are backed by shariah as fiat money. Similar to the analogy of cryptocurrency, Lietaer (2017) proposed a model of global digital currency i.e., ‘Trade Reference Currency’, and will be backed by tangible assets such as gold, silver, oil, etc., and the bearer will bear storage cost. Over the last decade, the family of cryptocurrencies has witnessed tremendous growth, with more than USD 2 trillion in total market value.

With the advent of cryptocurrency and developments around blockchain, technology experts, industry professionals along shariah scholars have been working to introduce FinTech in shariah - compliant financing products and services. In this regard, M. Abubakar et al. (2019) argued that cryptocurrencies have three competitive advantages over other forms of money, namely, (1) It is based on a unique decentralized financial system; (2) It's controlled issuance; (3) to surmount inflation. Consequently, X8 AG 1 and OneGram 2 launched the shariah - compliant cryptocurrencies backed by gold and stable fiat currencies such as USD, euro, etc.

Several studies have assessed the empirical nature of cryptocurrencies along with Islamic equity and capital markets to understand the risk-return tradeoff and whether they provide diversification and hedging opportunities. For example, Uddin et al. (2020) consider the role of bitcoins as hedging instruments in portfolio management. Using a comprehensive daily dataset of Islamic, convention, and sustainable assets, they reported that bitcoin values are mean-reverting in the long run, however, bitcoin provides portfolio diversification benefits to all equity markets both in the short and long run. Lahmiri et al. (2020) also observe the long-term persistence in the fluctuation of bitcoin prices along with European and Islamic markets. Another research by W. M. A. Ahmed (2021) analysis the sensitivity of the Islamic stock market towards the dynamic volatility of bitcoin in developed and emerging markets and found a similar behavior of Islamic stock in two types of markets during normal, bear, and bull markets states. Similarly, Rehman et al. (2020) studies the risk dependence structure of bitcoin along with the Islamic equity market for the period of 2010–2018 and found that the value at risk of bitcoin is higher than those of Islamic equity markets, which naturally implies that investors from cryptocurrency market should add Islamic equity funds to reduce the overall risk of their portfolio. Besides, Mensi et al. (2020) analyzed bitcoins' co-movement and risk structure with the Islamic equity and bond market and provided mixed results. They find strong co-movement of bitcoin in the same direction at a lower frequency with Islamic equity and bond, suggesting lower (higher) diversification benefits for the long run (short-run) investors. Lastly, empirical evidence during the policy uncertainty period, Hasan et al. (2021) portrayed the positive and significant relationship between cryptocurrency policy uncertainty towards gold, Sukuk , and the DJ Islamic index return, which indicates the existence of diversification benefit between those assets during bearish, normal, and bullish market period. Besides, this study also mentioned that the existence of shariah screening criteria on Sukuk and the DJ Islamic index improves the resistance of Islamic investment instruments towards uncertainty and the economic meltdown period.

Few studies have also assessed the differences between Islamic and conventional cryptocurrencies. The shariah compliance of bitcoin and cryptocurrency still has become a debate amongst Islamic scholars and stakeholders (M. K. Hassan, Karim, et al., 2020 ). Aloui et al. (2021) found that Islamic cryptocurrencies positively correlate with yellow metal. However, this relationship is negative and weak for conventional cryptocurrencies. Likewise, Lahmiri & Bekiros (2019) reported that green and Islamic cryptocurrencies showed anti-persistence in their returns while the volume, prices, and volatility exhibit a higher pertinence dynamic than its counterpart. During economic meltdown due to COVID-19 ( Nugroho, 2021 ), Islamic gold-backed cryptocurrency (GC-gold) has shown better performance than conventional GC-gold, which is indicated by the resistance of Islamic GC-gold to COVID-19's impact. Moreover, Chkili et al. (2021) found that bitcoin provides a safer asset for investors during economic downturns than Islamic stock. Thus, it is suggested that investors add bitcoin to their investment portfolio to reduce the risk. These findings imply significant differences between Islamic and conventional ones; the logical reason is the existence of screening criteria standards in Islamic cryptocurrencies. Furthermore, the behavior of Islamic and conventional cryptocurrencies was also influenced by investor sentiment, where the investor in an Islamic portfolio should follow specific rules based on shariah compliance, including the prohibition of any speculation activities.

In contrast with the previous studies, a research by Bahloul et al. (2021) ascertained that during the COVID-19 crisis period, bitcoin and Islamic stock indexes had a similar volatility pattern, and the two types of investment instruments did not offer safe-haven investment. Hence, it can be concluded that bitcoin has a similar characteristic with other investment instruments, and the massive amount of information related to bitcoin will gradually decrease the Muslim perspective regarding the uncertainty ( gharar ) of bitcoin. Moreover, However, the legal regulation related to shariah compliances of bitcoin should be designed to evaluate and improve its legality from an Islamic perspective. Another interesting study conducted by Echchabi et al. (2021) examined the predicting factors that affect Muslims in Oman to invest in Bitcoin and found that perceived ease of use, compatibility, awareness, and facilitating conditions plays a vital role in shaping the investor's intention. Importantly, this study underlines that the respondents believe they have a sufficient understanding and awareness of the Bitcoin concept, its benefits, and the strategies utilized to administer a Bitcoin account. Research that empirically assesses the investor behavior using a quasi-qualitative approach is still scarce; this topic becomes significant to investigate to obtain comprehensive knowledge regarding Muslim intention to adopt bitcoin.

The second sub-stream is blockchain . Blockchain has become one of the most popular technologies behind cryptocurrencies. This stream discuss the implementation of blockchain technology on various Islamic financial services, including the Sukuk industry, musharakah scheme, takaful, and zakat ( Delle Foglie et al., 2021 ; Al-Sakran and Al-Shamaileh, 2021 ; Abdeen et al., 2019 ; Mohd Nor et al., 2021 ). Blockchain classifies and records the transaction, which is connected to every party. Thus, the adoption of blockchain in finance will enhance the transparency and traceability of every single financial transaction. Hence, it increases the accountability in financial services, which in turn, promotes trust between the parties ( Chong, 2021 ). Furthermore, Delle Foglie et al. (2021) and Busari and Aminu (2021) demonstrated that the adoption of smart contract and tokenization on Sukuk would support the development of Sukuk by reducing operational cost, assuring shariah compliance, strengthening standardization, removing the ambiguities from shariah interpretations, and speed-up the transaction process (N. Khan et al., 2022 ). Despite the numerous advantages of implementing blockchain technology in Islamic financial services, the lack of legal regulation related to blockchain, the absence of shariah standard of Islamic FinTech, and the complexity of Islamic finance principles become the primary factors that prevent the escalation of blockchain integration in Islamic financial institutions ( Alaeddin et al., 2021 ).

M. H. Ali et al. (2021) explained that blockchain has huge potential in elevating the Supply Chain (SC) benefits for the halal food industry by increasing SC transparency, food quality, traceability, and avoiding food fraud. In the same vein, Al-Sakran and Al-Shamaileh (2021) underlined that integrating blockchain into the musharakah financial scheme will automatically enable the parties to conduct e-negotiation. This study illustrated the e-negotiation model by allowing the entrepreneur and investors to come to an agreement. The entrepreneurs should input their information, including the purpose of investment, professional background, and previous business projects. Thus, the blockchain will automatically ensure the shariah compliance of business activities, assess business risk, and provide relevant information for the investor to decide their participation in the business.

In addition, Mohd Nor et al. (2021) stated that the usage of blockchain technology could be improved by socializing and educating the community regarding the significant advantages and convenience of utilizing blockchain on Islamic social finance such as zakat . This effort is predicted to lead to a massive improvement in zakat collection and distribution for society. Moreover, Abdeen et al. (2019) emphasized that a certificate from a legal authority that describes the specific roles of investors, entrepreneurs, and operators is urgently essential to manage and control the safety and shariah -compliance of transactions in the Blockchain expected to intensify the participation in Islamic finance. Based on the findings of these studies, it can be ascertained that blockchain technology will increase customer engagement in Islamic finance ( Abdeen et al., 2019 ). In consequence, it promotes the contribution of the Islamic finance instrument itself to economic growth. Studies also examined the correlation between blockchain and the capital market. Table 3 further summarizes the prior literature in this stream.

4.1.3. Stream 3: financial inclusion

This stream consists of 13 studies as described in Table 4 , it is about the role of Islamic FinTech in financial inclusion. A discussion on some of the most important papers are presented as follows:

Table 4

Financial inclusion.

Islamic social finance tools such as zakat, sadaqah, waqf , Islamic microfinance, and micro takaful models lead to financial inclusion ( Macchiavello, 2017 ; Zauro et al., 2020 ). Islamic social finance tools have a positive impact on financial inclusion. The extensive use of Islamic social finance tools lead to less inequality of income in Muslim countries ( Zulkhibri, 2016 ). The use of financial technology has increased the reach of Islamic financial institutions to the last man standing in the queue with social finance such as zakat, waqf, and Islamic microfinance (H. Ahmed and Salleh, 2016 ). This statement also supported by Aziz et al. (2021) who investigated the correlation between digital banking and financial inclusion and found that digital banking has a positive correlation to financial inclusion. Moreover, Ezzahid & Elouaourti (2021) explained that digital banking plays a prominent role in reducing the number of unbanked by providing financial access in a convenient way and competitive price.

Other studies further investigate the role of FinTech in enhancing the contribution of the Islamic social economy and financial institutions during COVID-19. Mustafa Raza Rabbani et al., 2021a , Rabbani et al., 2021b proposed a model of utilizing Islamic finance as an instrument in combating the COVID-19's impact and revealed that Islamic FinTech will accelerate the collection and distribution of funding for the community in the short, medium, and long term. The role of Islamic FinTech and its adoption by the Islamic financial institutions will offer remarkable solution for economic activities due to COVID-19. Rabbani, Ali, et al. (2021) divided the four-stage economic model in combating COVID-19, namely, business and economic damage, financial contagion, bottom formation, and post COVID-19 effects. In addition, for each stage of the epidemic, this study also recommends ten unique Islamic financial services. In detail, M. K. Hassan, Rabbani, et al. (2020) offers four potential Islamic finance instruments merged with FinTech in combating the economic downturn due to COVID-19, namely, Islamic cryptocurrency, a blockchain-based system for zakat and qardh-al-hasan , smart contracts, and smart Islamic banking. In a broader context, Hudaefi (2020) argued that implementing FinTech services in Islamic financial institutions has huge potential in elevating the social and economic welfare of the unbanked population by distributing funding for their small and underdeveloped business sectors; which will support the government in achieving the Sustainable Development Goals (SDGs), particularly SDG 1 no poverty, SDG 2 zero hunger, and SDG 10 reduce inequality. Interestingly, Baber (2020a) pointed to other advantages of having FinTech in Islamic finance, as the improvement of women's quality of life as it is focused on empowering women both financially and socially.

Previous studies highlighted the importance of implementing FinTech in Islamic financial institutions for financial inclusion. Interestingly, Aminah et al. (2020) stressed that despite the crucial impact and massive potential in escalating the contribution of Islamic finance towards financial inclusion, the adoption of FinTech itself had been significantly proven in leading the Islamic banking market share to the upward trend. Furthermore, Banna et al. (2021) and Syed et al. (2020) also revealed that the adoption of FinTech in Islamic banking has a crucial role in promoting banking stability, specifically during the economic downturn caused by COVID-19, specifically by minimizing the cost of services, maximizing profit, and promoting the efficiency of banks. Hassan (2015) suggests the possibility of including poor Muslims in mainstream financial services through innovative approaches. Islamic microfinance can be viable if it is delivered with FinTech, as it can lead to financial inclusion and is based on the principle of Islamic solidarity. He argues that FinTech-based microfinance can generate enormous employment and economic prosperity for the poor. Correspondingly, Hidayat (2019) also concludes that financial inclusion is an excellent idea for the poor and marginalized. However, it can only be achieved through the help of Islamic banks and non-banking financial corporations (NBFCs). Islamic banks need to collaborate with Islamic microfinance institutions to achieve financial inclusion. Shinkafi et al. (2020) and Zulkhibri (2016) report similar findings, arguing that Islamic banks and financial institutions have an essential role in the financial inclusion of the poor and marginalized. As Islamic banking is based on the principle of compassion, solidarity, and economic justice, it can help achieve financial inclusion by bringing more innovative financial services through FinTech ( Rabbani and Khan, 2020 ).

Islamic financial institutions have an essential role to play in the country's financial inclusion. The findings of the study conducted by Banna et al. (2020) suggest that barring a few countries in the Middle East and MENA region, most of the selected countries have some inconsistent trends in the Islamic banking sector. It further concludes that financial inclusion is linked with the efficiency of Islamic banks. The study is a post-crisis analysis. It concluded that Islamic banks are still bearing the consequences of the financial crisis; therefore, Islamic banks should focus more on financial inclusion, and banks with a sound and high level of the inclusive financial environment should have high efficiency. Moreover, Tajudin et al. (2020) also emphasized that adopting FinTech improves the performance of Islamic financial institutions in two ways. First, it escalates the living standard of the underserved community. Second, it becomes an effective way to strengthen the intimacy between the customer and service provider through broader customer knowledge regarding social finance. In addition, S. A. Shaikh (2021) , Aydin and Iqbal (2017) and Macchiavello (2017) also underlined that Islamic financial institutions such as Islamic microfinance, banks, and credit unions have an essential role to play in achieving financial inclusion through the use of technology.

Financial inclusion and the role of Islamic finance must be viewed differently in Muslim and non-Muslim countries ( Sain et al., 2018 ). The study is conducted in Australia, and it concludes that FinTech has nothing to do with financial inclusion and in Australia alone, despite the widespread use of financial technology, there are 3.1 million of the adult population who are financially excluded. They further draw a conclusion that the Muslim population is finically excluded due to their religious beliefs because Islam prohibits riba and Australia is not governed by the Islamic financial system. Baber (2020a) , Kannaiah et al. (2017) , and Abubecker et al. (2019) support these findings, one being that the Muslims in Non-Muslim countries are financially excluded and are not able to get valuable financial services due to their religious beliefs. Adewale and Haron (2017) support the argument that religion being an impediment to financial inclusion.

From another perspective, Kannaiah et al. (2017) and Kim et al. (2018) discuss the relationship between financial inclusion and the economic growth of a country. They gather panel data from 55 OIC countries and conclude by applying panel VAR, IRF's and granger causality tests. Pg Md Salleh (2015) , Brekke (2018) , and Zauro et al. (2016) analyzed financial inclusion and individual characteristics with regard to the specific countries. Jan et al. (2018) , Aydin and Iqbal (2017) , and A. E. E. S. Ali (2017) say that financial inclusion is bout justice in Islamic finance. It is the right of every individual to have access to valuable financial services. Banna et al. (2020) , and Arsyianti and Kassim (2018) analyze the role of Islamic banking in financial inclusion and how Islamic banking can be used as a tool for financial inclusion. Having access to the key financial services is the major indicator of the economic well-being, quality of life, and standard of living of the population all across the globe ( Banna et al., 2020 ; Sain et al., 2018 ). Not only that having access to these valuable financial services helps a person to make an online payment, access to credit and offers, investments, and getting banking and other financial services ( Aldoseri and Worthington, 2017 ). According to the Global Findex databases 2017, the situation in Organization of Islamic Cooperation (OIC) countries remains worse as adults participating in the financial system or having no access to the financial services remains low as compared to the high-income countries. Despite the huge penetration of Islamic banks and financial services in these countries, the level of financial inclusion remains significantly low ( Baber, 2020a ). There are 41% adults with the contribution in the financial system in OIC countries as compared to the 92% in the high-income countries. The report further stresses that around 75% of the world's unbanked population lives in developing countries. The unbanked population of the world is dominated by the Muslim countries with countries like Pakistan and Bangladesh with 5.2% and 3.7% of the worlds unbanked population respectively.

There is a strong opportunity for Islamic FinTech to fill this gap by providing access to financial services to this segment of people and bringing confidence in the financial system through technology. Financial inclusion can be achieved by combining technology with Islamic finance and Islamic FinTech is the way to go forward ( Kim et al., 2018 ). There are also studies on the role of Islamic versus conventional finance in financial inclusion ( Nawaz, 2017 ). Albaity et al. (2019) concluded that Islamic FinTech is based on the principles of ethics and morality and this characteristic makes it more fit for financial inclusion. S. Khan et al. (2019) stressed that Islamic finance has some financial services like zakat which automatically leads to financial inclusion. This view is also confirmed from the findings of Sain et al. (2018) , which concludes that Islamic financial services combined with technology can lead to financial inclusion. On the other hand, there are credible studies like Baber (2020a) which concluded that there is no inter-relationship between FinTech adoption and financial inclusion. Voluminous studies have been proved that the integration of FinTech will uplift the number of banked population and boost the Islamic finance performance. Notwithstanding, the low quality of education, particularly for women and elder people in utilizing FinTech; the presence of risks such as network disruption and account securities, and the lower number of smartphone users; and lack of firm regulation related to FinTech become the prominent factors in preventing the massive adoption of FinTech in Islamic economics, finance, and banking. Therefore, the findings of existing studies suggest the need for the stakeholder to establish an impactful effort in creating a conducive environment for integrating FinTech in Islamic social-economy and financial institutions. Organizing regular seminars, campaigns, workshops, and training sessions in increasing digital financial literacy, which in turn, prompt the effectiveness of mobile banking usage specifically for the unbanked community, small business owners, undereducated people, women, and elder people ( Banna et al., 2021 ; Ezzahid and Elouaourti, 2021 ). More importantly, a national and international standard for Islamic FinTech regulation is urgently needed to improve the integration of FinTech and Islamic financial institutions, as well as the qualification of shariah board members, particularly in technological aspects, to ensure that FinTech in the Islamic finance industry is regulated in accordance with shariah principles ( Razak et al., 2020 ).

4.1.4. Stream 4: Islamic FinTech and deposit-lending

There are 19 previous studies on this stream, which can be divided into two sub-streams, namely, peer-to-peer (P2P) lending (4 articles) and crowdfunding (15 articles). Prior studies on P2P lending stress the challenge and potential development of Islamic P2P lending. To a large extent, this sub-stream discusses the current Islamic P2P platform development situation.

The first sub-theme is p2p lending. P2P lending is a platform that enables borrowers to acquire a source of funds from the lender through the internet ( Rosavina et al., 2019 ). The conventional concept of p2p differs from the Islamic concept, as lending can not be interest based, thus it is a sort of peer to peer financing which took the name of lending while it is indeed a shariah complaint financing in concept. P2P lending is one of the financial services provided by FinTech, it is predicted to become the most convenient financial platform for the unbanked community. Specifically, Rosavina et al. (2019) investigate several influencing factors in using the Islamic P2P platform. This study ascertained that the rejection from banking institutions leads the customer to find other financing alternatives, such as P2P lending that offers a more extended payment period, shariah-based loans, and profit loss sharing schemes.

In general, the P2P lending platform is predicted to become a “new banking service” with several additional advantages presented by the speed, efficiency, and channels better than the traditional bank ( Sa'ad et al., 2019 ). This phenomenon leads to an unwanted situation, the weakness of the banking system's contribution to economic development. However, rather than viewing the P2P lending platform as a competitor, the integration and collaboration between Islamic P2P lending and Islamic banks would promote the positive development trend of the business cycle, especially for the small business sector. Several studies investigate the possibility of optimizing the P2P platform. Sa'ad et al. (2019) proposed a model and argued that the MSC model is innovative and provides equal benefits for the parties: business owners, investors, and P2P companies. This model relied on the musharakah contract, where the business owners and investors agree to run the business and share the profit and loss-sharing equally based on the capital contributed. At the same time, the P2P company gains a fixed fee as the agent that connects the two parties.

Related to the previous discussion regarding the musharakah contract, Aprita and Adhitya (2020) emphasized that the profit and loss sharing scheme is effective in specific business models, and the scheme's implementation should be done by ensuring transparency between the parties. This study underlines that the P2P platform should create an upstream-downstream ecosystem that provides financial services and solutions for non-payment financing cases. Moreover, this study also suggested that P2P lending platforms collaborate with notaries or legal parties to promote safety and speed up transactions. From another perspective, Muhammad et al. (2021) demonstrated several significant factors that affect the failure of the P2P lending platform. This study pointed out that the higher level of debt and financing ratio and the weak support from the government will lead to the failure of the P2P platform. Most importantly, this study showed that the stricter Islamic principles applied by the P2P platform would reduce the probability of failure faced by the P2P platform. Therefore, this study calls on P2P players to improve the quality borrower selection criteria and lending prudence and run the platform under shariah compliance.

Another interesting study by W. Ali et al. (2018) proposes a conceptual framework that predicts the intention to adopt FinTech in SMEs' Peer-to-Business (P2B) financing platform. This study highlights two prominent factors that arguably influence the adoption of the P2B platform. First, an internal factor is derived from cost, brand, security, perceived ease of use, and usefulness; second, external factors cover social influence and facilitating conditions. In addition, this study also highlights that the study on the intention to adopt P2P and P2B platforms by SMEs from an Islamic perspective is still underexamined. Therefore, this study suggests that extensive research is urgently needed to explain the predicting factors of SMEs adopting FinTech platforms.

The second sub-theme in this stream is crowdfunding. Crowdfunding is the broader concept derived from crowdsourcing, which aims to collect financing from many individuals for social, profitable, or cultural projects ( Mollick, 2014 ). The literature has defined crowdfunding as an open call, essentially through the Internet, for the provision of financial resources either in the form of donations or in exchange for some form of reward and voting rights to support projects based on social, profitable, or cultural motives ( Mollick, 2014 ; Schwienbacher and Larralde, 2010 ). Historically, the first crowdfunding-based projects were initiated in 1800 to fund the Statue of Liberty's pedestal. In 2000, a website named AristShare was designed to provide a platform for artists to raise funds. The World Bank (2013) categorized crowdfunding based on four main types. First, donation-based crowdfunding is purely based on donation and philanthropy; thus, there is no compensation for the party who provides the funds. Second, debt-based crowdfunding is based on debt-based contracts. The crowd lender provides the financing to small businesses or startups and receives a fixed interest and principal payment at a stipulated time. Third, reward-based crowdfunding is when the provider of funds receives an appreciation or reward in the form of a gift or acknowledgment for supporting the project. Lastly, equity-based crowdfunding is purely based on the profit and loss sharing mode of financing and is more aligned with venture capital.

Previous literature on crowdfunding within the context of Islamic finance has mainly proposed crowding as a solution to the halal industry, the book publishing industry, startup companies, agricultural activities, and reviving waqf ( Abdullah and Oseni, 2017 ; Ishak et al., 2021 ; Hendratmi et al., 2020 ; Saiti, Musito, et al., 2018 ; Zain et al., 2019 ). A few studies also focused on the development of crowdfunding and its awareness ( Saiti, Musito, et al., 2018 ; Shofiyyah et al., 2019 ).

To begin with, Abdullah and Oseni (2017) argue that equity crowdfunding inherently follows Islamic laws amid its structure of profit and loss sharing. However, scrutiny of its governance structure, business model, and products offered under the umbrella of equity crowdfunding is required. In detail, Ishak et al. (2021) assess the possibility of implementing mudharabah -based crowdfunding for the book publishing industry, specifically self-publishers and small publishers. This study proposes a framework of mudharabah crowdfunding consisting of three parties: First, the publishers, as the mudharib (who have the professional capability of producing and publishing books), should offer detailed and transparent information regarding the business plan and profit estimation. Second, the platform is the agent who bridges the publisher and funders; the platform's responsibilities include marketing the books and promoting the publisher to obtain more funding sources. Third, the funders, such as the rab al-Mal , should have a clear and comprehensive understanding of the loss and return from the contracts and business activities.

Equity crowdfunding can be a good source of external financing, especially for halal SMEs, which struggle to get financing from financial institutions. Likewise, Hendratmi et al. (2020) proposed an innovative crowdfunding model by developing a website that will not only provide a good source of generating funds but also help connect geographically diversified investors. In a similar vein, Saiti, Afghan, et al. (2018) suggested Salam-based crowdfunding for the agriculture industry to have access to funds. Moreover, a few studies also recommended crowdfunding based on the waqf model, especially in non-Muslim countries ( Zain et al., 2019 ). Furthermore, by conducting semi-structured interviews with the experts, Hapsari et al. (2022) also found that crowdfunding offers a sustainable fund source to develop waqf lands. In another case, Afroz et al. (2019) declare that implementing crowdfunding for financing solar energy in Malaysian households is possible. This study underlines that the most profound factors affecting the model's acceptance are income, household size, and knowledge about climate change. In a nutshell, the findings of these studies agree that Islamic crowdfunding contributes substantially to escalating business performance in various fields of business. Especially for small-medium-sized enterprises, the owners can obtain additional fund resources based on shariah contracts, such as mudarabah, musyarakah , and salam . Hence, it is suggested that the government take significant action to optimize crowdfunding platforms as a source of funds.

The development of the crowdfunding market depends on the market structure and economic development, advancement in the regulatory framework, and IT infrastructure. Moreover, Kazaure et al. (2021) described that social media and crowdfunding information also significantly shape SME owners' intention to obtain additional funding support from online crowdfunding, which boosts the massive growth of crowdfunding platforms among business people. Similarly, Salim et al. (2021) assess the determining factors of young entrepreneurs' intention to obtain business funds from the crowdfunding system in Malaysia. This study highlights that perceived ease of use and usefulness play a vital role in influencing young entrepreneurs' intention to accept crowdfunding. Hence, crowdfunding is expected to increase SMEs' performance and promote economic growth. Another research by Baber (2020b) found that integrating FinTech, particularly crowdfunding, into the Islamic banking system will escalate the business cycle of social entrepreneurship and micro-finance and build a firm platform for the global Islamic philanthropy system. Global crowdfunding is growing at 44%, with total assets of USD 290 billion to USD 418 billion from 2016 to 2017, respectively ( Ziegler et al., 2020 ).

Despite this unprecedented growth, the crowdfunding market is also subject to some limitations especially within the framework of Islamic jurisprudence. Foremost and the important one is the regulatory impediments that further restrict its growth. For example, a crowdfunding model is required for credit insurance to eliminate the credit risk. Since Islamic equity crowdfunding is based on the mudharabah model, it is a matter of concern whether the profit distribution mechanism follows the law of the country. Islamic crowdfunding is strictly allowed for businesses that are deemed permissible in Islam and not allowed to have a conventional lending approach i.e., involvement of interest ( Saiti, Musito, et al., 2018 ). Lastly, frauds and scams are the major threats in establishing a stable crowdfunding market regardless of its structure and model ( Ishak and Rahman, 2021 ). Besides, from the business owner's perspective, by involving in an online crowdfunding platform, the possibility of their business ideas will be copied higher. Thus, they are reluctant to share their detailed information online. Hence, they tend to become more hesitant to obtain funding from online crowdfunding ( Rahman et al., 2020 ). Consequently, there is a dire need for awareness among all the stakeholders and institutionalize it at the macro-level, including establishing shariah regulation for crowdfunding platforms ( Shofiyyah et al., 2019 ; Baber, 2021 ). Table 5 further summarizes the prior literature in this stream.

Islamic FinTech and deposit-lending.

4.2. Future research direction

This section discusses the general features of the literature based on bibliometrics and content analysis; to draw the research gap from the previous studies.

First, the total of number of papers reviewed using content analysis is 85 documents, divided into five streams. In detail, Islamic FinTech and deposit-lending consisting of cryptocurrency and blockchain sub-streams became the most discussed topics with 39% (33 out of 85 papers). The general analysis of the FinTech topic and the financial inclusion topic has attracted around 23%, followed by Islamic FinTech related to deposit and lending, consisting of two sub-streams, namely P2P lending and crowdfunding sub-streams (22%). Moreover, financial inclusion has become the least popular topic studied by researchers, as only 13 papers (15%) have been found in the Scopus database. Specifically, in terms of sub-theme topics, P2P lending has become the most underexamined topic, with only four publications in this field.

In the disruptive era, industry 4.0, automation, and artificial intelligence, including Robo advisors in finance, have shown unprecedented growth with the possibility of replacing human resources (X. Wang et al., 2021 ). However, Islamic investment has specific criteria that should follow shariah compliance, thus, calling attention to this topic. Second, the current development of Islamic FinTech studies was heavily conducted in Asian countries with Muslim majorities, including Malaysia, Indonesia, Pakistan, and Nigeria. Therefore, it is suggested that studies on these topics could be extended to other Muslim countries in the MENA beside some other non-Muslim majority countries.

Lastly, the research method. Previous studies on crowdfunding, P2P lending, blockchain, and financial inclusion were mainly qualitative. These investment instruments are at the initial stage of integrating with Islamic finance. Thus, it required more quantitative and conceptual analysis regarding the models and shariah compliance. On the other hand, the existing studies on the FinTech stream mainly discussed quantitative methods based on secondary or primary data. Moreover, in recent years, the prior studies on this stream have investigated the determinant factors of intention in using FinTech, as visualized in Figures  4 and ​ and5 5 .

Table 6 provides a list of future research directions.

Table 6

Future research direction.

5. Conclusion

This study portrayed a comprehensive literature development on Islamic FinTech sourced from the Scopus databases, covering a period from 2017 to 2022. The study identified four streams that dominated the discussion of Islamic FinTech literature based on content analysis using the SLR-PRISMA approach. In detail, financial technology (customer perception towards Islamic FinTech, 8 articles, and Islamic FinTech development and its impact on Islamic Finance Institutions, 12 articles); Islamic FinTech and distributed ledger technology (Cryptocurrency 25 articles, and Blockchain, 8 articles), financial inclusion (13 articles); Islamic FinTech and deposit-lending (P2P Lending, 4 articles, and Crowdfunding, 15 articles).

By conducting a content analysis on each stream, we reveal that the cointegration of FinTech in Islamic finance has enormous potential in elevating socio-economic development, particularly for the underdeveloped community, unbanked people, and small-medium-sized businesses. In addition, the adoption of FinTech in Islamic finance will support the government in improving financial inclusion, conquering financial crises, such as COVID-19's crisis, and achieving SDGs for a sustainable nation. However, the lack of laws, legal regulations and the lower financial literacy become the primary obstacles preventing the development of FinTech in Islamic finance. Additionally, based on the previous research's results, this study underlined that the shariah compliance of cryptocurrency and blockchain is still inconclusive with tendency toward rejection of cryptocurrency as a meduim of exchange.

Aside from its theoretical and practical implications, this study has a limitation as it only utilized papers indexed by Scopus.

Declarations

Author contribution statement.

Muneer M. Alshater Conceived and designed the experiments; Analyzed and interpreted the data; Contributed reagents, materials, analysis tools or data; wrote the paper.

Indri Supriani: Conceived and designed the experiments; Analyzed and interpreted the data; Contributed reagents, materials, analysis tools or data; wrote the paper.

Irum Saba & Mustafa Raza Rabbani: Analyzed and interpreted the data; wrote the paper.

Funding statement

This research received no specific prior grant from any funding agency in the public, commercial, or not-for-profit sectors.

Data availability statement

Declaration of interests statement.

The authors declare no conflict of interest.

Additional information

No additional information is available for this paper.

Acknowledgements

We thank Heliyon for waiving the article publication fee for manuscripts published in this special issue entitled: “Islamic finance in the post-COVID world: Opportunities and challenges”. We also extend our thanks to the Guest editor and the kind reviewers for their constructive feedback which helped in significantly improving the quality of this review.

☆ This article is a part of the "Islamic finance in a post-COVID world" Special issue.

1 https://www.x8currency.com/x8x/ .

2 https://onegram.org/ .

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The Role of Fintech in Promoting Financial Inclusion to Achieve Sustainable Development: An Integrated Bibliometric Analysis and Systematic Literature Review

• Published: 03 July 2024

Cite this article

• Kriti Kishor   ORCID: orcid.org/0009-0006-2808-1633 1 ,
• Sanjeev K. Bansal   ORCID: orcid.org/0009-0009-8585-0429 1 &
• Roshan Kumar 2  

Fintech’s ability to enhance efficiency and reduce costs in financial services can promote greater financial inclusion (FI), which in turn serves as a foundation for sustainable and equitable development. Due to the dearth of thorough summaries in the body of existing literature, this systematic review and bibliometric analysis aim to present quantitative and qualitative information about the comprehensive relationship between fintech, FI, and sustainability development in an organised way. The review includes 189 publications from peer-reviewed journals of Scopus and Web of Science (WoS) databases up to 2023. The article was compiled based on the Scientific Procedures and Rationales for Systematic Literature Reviews (SPAR‐4‐SLR) protocol and the theory-context-characteristics-methodology (TCCM) framework. Bibliometric analysis has identified the leading journals, authors, nations, articles, and themes. A conceptual model has been designed to illustrate the entire scope, following which potential study areas have been proposed. This study aims to provide academic researchers, policymakers, and regulators with a detailed understanding of the relationship between fintech, financial inclusion, and sustainable development. The analysis demonstrates that FI is an essential requirement of our society and a vital pathway to achieve sustainable development. In the content analysis, we identify an integrative framework of four variables on this nexus. We found a very few conceptual, qualitative, and mixed method papers on this interaction, which provide potential avenues for further research. We recommend that scholars consider adopting a multi-theory perspective. We propose a comprehensive framework on this nexus. It will also pinpoint specific areas that require further investigation.

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Data Availability

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Kishor, K., Bansal, S.K. & Kumar, R. The Role of Fintech in Promoting Financial Inclusion to Achieve Sustainable Development: An Integrated Bibliometric Analysis and Systematic Literature Review. J Knowl Econ (2024). https://doi.org/10.1007/s13132-024-02168-5

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MESPT-CREDIT-PRQ03435-2024 - Consultancy for Assessment of opportunities of Islamic finance as a model for financial inclusion

• Micro Enterprises Support Programme Trust

PLEASE NOTE: THIS CONSULTANCY IS ELIGIBLE TO ONLY NATIONAL INDIVIDUAL CONSULTANTS.

BIDS FROM CONSULTING FIRMS WILL BE DISQUALIFIED

• INTRODUCTION

Micro Enterprise Support Programme Trust (MESPT) is a development organization focused on enhancing, Agricultural Enterprise Development and Market linkages, Agricultural productivity and Food Safety, Financial Access and Inclusion and Green Transformation. MESPT interventions targets small holder farmers, farmer groups, farmer organizations and Agricultural SMEs with the aim of increasing productivity, incomes, market expansion and enhancing competitiveness for decent job creation and financial access and inclusion.

MESPT has taken catalytic and facilitative role to engage both private and public stakeholders to build sustainable partnership to support the agricultural and green eco-system. This calls for integrated delivery model that entails working with:

• Small holder farmers (SHFs)- MESPT support is geared towards increased productivity, profitability, compliance with food safety and market standards and enhanced linkages to markets. MESPT has a focus on unlocking potential among women and youth in Agri-value chain enterprise development. This is achieved through grant support.
• Micro Small and Medium Enterprises (MSMEs)-(including farmer co-operatives) – MESPT support focuses on increased market capacity, production capacity, entrenchment of food safety processes, adoption of and transition to ecofriendly agro-processing and value addition, reduction of post-harvest losses, and increased operational efficiency. This is facilitated through Technical/Business Development Services, grant and debt financing. MESPT plays a critical role in facilitating market linkage and market infrastructural development.
• Financial service providers (FSPs) – MESPT supports focuses towards increased provision of financial services to agricultural sector and more specifically to smallholder farmers, farmer producer organizations, women and youth in agribusiness. MESPT supports FSPs through affordable debt financing for onlending, grant financing for technical and business development services.

“Build a more Prosperous Society”

To provide sustainable business development and financial services to small holder farmers and Agri SME’s.

MESPT financial access and inclusion strategy was rolled out in 2021 anchored on promoting increased accessibility and affordability of financial credit to smallholder farmers, Micro, Small and Medium Enterprises in Agri and Green business and farmer co-operatives. The strategy placed a deliberate focus on women and youth led Agri and Green entrepreneurs.

The strategy focused on catalyzing increased Agri-Green loan portfolios within MESPT partnering FSPs, enhanced capital investments within Agri and Green based Small and Medium Enterprises (Agri/Green focused SMEs). With perceived risk in Agri-lending, our engagement with FSPs was and continues to aim at enhancing their funding capacity to Agricultural and Green sectors, evidence based social impact measurement and reporting, improving climate smart investments at enterprise, domestic and farm levels, promoting financial inclusion for women, youth and vulnerable groups and enterprises. MESPT engagement with Agri and Green Based SMEs focused enhancing production capacities through working capital and investment/asset financing. It also aimed at creating opportunities for job creation, adoption of climate smart production technologies and involvement of youth and women.

MESPT has adopted two financing instruments for FSPs and SMEs- Term loans and Credit guarantee. However, due to limited capital, credit guarantee was discontinued. MESPT has also not been successful in rollout of financing to informal groups such as Village Savings and Loans Associations, Financial Service Associations among others, which are popular in enhancing financial inclusion among women.

MESPT has not had clear understanding of the operations of Islamic finance and its contribution to financial inclusion among venerable groups and enterprises. More so, MESPT would wish to identify specific aspects of Islamic banking that can be incorporated to existing financing model to promote financial inclusion, where possible. MESPT wishes to identify technical and operational capacity that is necessary to successfully embed Islamic finance as well as establish fund raising opportunities within Islamic finance model.

OBJECTIVES OF THE ASSIGNMENT

The objective of this consultancy is to undertake an assessment on the understanding the Islamic financing landscape and the opportunities of Islamic finance as a financial inclusion tool, opportunities for MESPT to incorporate Islamic finance models and establish available fundraising opportunities for Islamic financing.

• SPECIFIC OBJECTIVES

The objectives of the consultancy are to:

• To determine the level of understanding of MESPT management and technical teams on Islamic financing.
• To develop a detailed paper on what is Islamic finance, how does it operate, highlighting success cases for Islamic finance as a financial inclusion tool (globally and locally)
• To understand the current MESPT financing operation and delivery model and identify key opportunities for plugging in Islamic finance and fund-raising opportunities within Islamic finance space.
• Provide a clear demonstration on how Islamic financing model could be applied to enhance inclusion in Agri and green finance in the context of MESPT operations.
• To establish and recommend how Islamic models could be applied to facilitate MESPT delivery through inform financial service providers,
• To establish necessary control environment (Legally, culturally, socially and economically) that could impede or promote rollout of Islamic finance within MESPT. How to mitigate the impediments?
• To determine the overall benefit or otherwise to MESPT upon embedding Islamic finance as a financial inclusion tool.
• Develop documentation and tools necessary to facilitate roll out of the Islamic financing model within MESPT.
• To establish key sustainability risks for Islamic financing model and provide practical mitigation measures.
• SCOPE OF WORKS

Working closely with MESPT Credit and the Business Development Manager, the consultant will be required to engage MESPT management and technical teams for wider scope of feedback. The consultant shall be expected to undertake the following:

• Inception meeting to develop harmonized scope for the assignment.
• Desk review of MESPT documentation to understand MESPT existing credit model- new strategy for financial access and inclusion, new credit policy, profiles of financial products, letter of offers and loan agreements for different financial service providers, loan portfolio reports, social impact statistics held by MESPT among other.
• Interview MESPT Management, Technical teams and key external informants with practical knowledge and expertise in Islamic financing.
• Market assessment to
• Identify how Islamic finance has been utilized within the financial inclusion space. This will entail identification and interview of external key informants with expertise in Islamic finance, practitioners within the space of Islamic finance and review of available literature within development and financial sector on the subject matter.
• Document detailed perspectives of Islamic financing globally and locally including successful cases.
• Identify and document fund raising opportunities for Islamic finance.
• Interview 3 financial service providers (2 Saccos and 1 Microfinance Institution/Bank) to identify and document opportunities for incorporating Islamic finance as a delivery model.
• Interview funded SMEs (at most 2) to identify and document opportunities of embedding Islamic financing model within SMEs.
• METHODOLOGY

It is recommended that for maximum value generation for this assignment, the consultant will adopt a participatory approach that include close collaboration with MESPT and FSPs. The consultant will be expected to develop a detailed work schedule that will ensure maximum utility of time and other resources and use proactive engagement methods to generate necessary information from the target stakeholders.

• KEY DELIVERABLES

Milestone 1:- Inception Report

• Inception report highlighting harmonized understanding of the assignment in respect to objectives and expected output, agreed work plan with MESPT, schedule of engagements with MESPT team and FSPs, list of documents for desk review from MESPT, generate list of external stakeholders and informants relevant to this assignment, and timelines for the engagement. Also, any confirmation of any additional stakeholders to be interviewed for this assignment.

Milestone 2: Engagement of Stakeholders

Draft report upon desk review of MESPT documents, engagement of respective stakeholders and undertaking market research capturing findings, opportunities, challenges, risks, successful cases.

Milestone 3- Presentation of final report to Management and Board of Trustees

Presentation of final assignment report to Management and Board of Trustees.

• ASSIGNMENT TIMELINES

The assignment will commence immediately after signing the contract with MESPT and will be for a period of 20 working days delivered within a span of two months.

• CONSULTANT REQUIREMENTS
• In-depth knowledge and experience in Islamic finance locally and globally. This includes demonstration of practical experience in application of Islamic finance.
• Master’s degree in Finance, Economics, Agri-economics, Social science/studies, Environmental science, Mathematics, Computer Science, Statistics, Business Management, Accounting.
• Demonstrable experience in undertaking surveys/assessments within the financial sector including developing tools for credit appraisal and reporting.
• Demonstratable Knowledge of Islamic finance processes, appraisals, financial risk analysis and management.
• INSTITUTIONAL ARRANGEMENT

The Consultant(s) will work under the direct supervision of the Credit & Business Development Manager. During his/her assignment, the consultant will be provided with all necessary information and office space to undertake online interviews and engagements.

• DOCUMENTATION REQUIREMENTS
• Covering letter explaining how your experience addresses the requirements of the TOR.
• CV of consultant involved in the exercise.
• KRA Pin Certificate and Tax compliance Certificate
• 3 references of relevant past works, scope, role and contact for the last 3 years
• Provide detailed proposal with a detailed Work plan demonstrating the number of man-days to be employed and budget for this work.

How to apply

Download the requirements by clicking on the following link:

Any clarifications should be sent to [email protected]

Responses to clarifications will be posted on the above link for all bidders to see. Bidders are encouraged to click on the link from time to time to check on any clarifications/responses posted.

• MESPT reserves the right to accept or reject any proposal.
• Any canvassing will lead to automatic cancellation of the submitted proposal.

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