Islamic Financial Literacy: Evidence from Jordan

Abstract

This study aims to test the extent of financial literacy in Islamic banking services in Jordan, and to test the effect of demographic variables: (gender, age, monthly income, region of residence, level of education, field of study, and occupation) on Islamic financial literacy via Ordered Logistic Regression, as well as, testing the differences in Islamic financial literacy among the averages of categories of demographic variables using non-parametric tests.In order to achieve these goals, the study designed and distributed a questionnaire to a sample of 385 individuals from Jordan. The study found that 19.5% of Jordanians have a low level of Islamic financial literacy, 45.2% and 35.3% of Jordanians have an average and high level of Islamic financial literacy, respectively.The study found a positive effect of the level of education, region of residence and the field of the study on the level of Islamic financial literacy. In which individuals with a higher educational qualification, “Humanities and Social Science” specialization, and individuals in northern and central Jordan possess a higher level of Islamic financial literacy. On the other hand, the study found a statistically significant difference between the averages of the categories: educational level, field of study, and region of residence.Therefore, the study recommended the Central Bank of Jordan and the legislators to increase the general level of financial literacy and Islamic financial literacy in particular. Through, targeting segments that showed a low level of Islamic financial literacy. These results also have important implications for policy makers and academics.