The Relationship Between Financial Literacy and Financial Wellbeing Among Muslim Women in Indonesia and Malaysia

Abstract

Women's participation in economic activity could contribute to the high annual global output. Good financial planning, as well as good financial knowledge, attitude, and behaviour, can improve women’s wellbeing. The purpose of this study is to examine the relationship between financial literacy dimensions (knowledge, attitude, and behaviour) and financial wellbeing among women in Indonesia and Malaysia. A quantitative method of study is employed by distributing 411 questionnaires that consist of financial knowledge, financial attitude, financial behaviour, and financial wellbeing questions. Indonesian and Malaysian women were found to have a moderate level of financial knowledge. Financial knowledge was found to have a positive and significant relationship with financial attitude, but it has no significant relationship with financial behaviour. The financial attitude was found to have a positive and significant relationship with financial behaviour and mediates the relationship between financial knowledge and financial behaviour. Financial attitude and financial behaviour were found to have a positive and significant relationship with financial wellbeing. This study contributes to the literature by showing that financial knowledge alone does not directly lead to positive financial behaviour; instead, it shapes financial attitudes, which in turn influence behaviour. When women develop positive financial attitudes, they are more likely to practice responsible financial behaviours and make sound financial decisions. Thus, achieving financial wellbeing requires not only improving knowledge but also fostering the right financial attitudes that can translate knowledge into right financial behaviour.