Exploring the Determinants of Financial Well-Being: An Empirical Study in Muslim-Majority Countries

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Purpose — This study explores the financial well-being (FWB) of Muslim countries. It particularly examines the effect of financial capability, religiosity, and education level on FWB. Design/Methodology/Approach — The data utilised was obtained from the World Values Survey. The data analysis used was the ordered logit/probit regression analysis with a sample of 20,701 respondents from 16 countries. To measure FWB, this study uses both objective and subjective FWB. Findings — The results show the average FWB in the medium category, reflecting a moderate level where individuals neither face substantial financial difficulties nor achieve full financial satisfaction. The feeling of happiness is an important factor for a person to achieve high FWB even though they have a relatively low income or are relatively satisfied with their financial situation. Religiosity and education level have a positive effect on FWB while financial capability in success (hard work) has a negative effect, but saving has a positive effect on FWB. Originality/Value — This paper is the first to highlight the determinants of FWB in Muslim-majority countries with insights from World Values Survey data. The study contributes to the literature on FWB, specifically in the context of Muslim-majority countries. Research Limitations/Implications — A limitation of this study relates to the data availability and its use of some independent variables based on World Values Survey data. From a theoretical perspective, the research contributes to a better understanding of the factors influencing FWB. Practical Implications — One of the policy implications of this research is for governments to strengthen financial education that is integrated with religious values to encourage wiser financial management while adhering to religious principles. Practically, this study encourages individuals to improve financial literacy while considering religious values; financial institutions can also provide relevant financial services that accommodate religious needs. Individuals are advised to not only pursue high income but also to prioritise satisfaction and happiness through a healthy work-life balance.