THE ISLAMIC FINTECH INCLUSION PARADOX: HOW SHARIA COMPLIANCE LITERACY MODERATES THE EFFECT OF ACTUAL ISLAMIC FINTECH USAGE ON MEANINGFUL FINANCIAL INCLUSION AMONG GENERATION Z
DOI:
https://doi.org/10.33102/2jtz4g04Keywords:
Islamic fintech, meaningful financial inclusion, Sharia compliance literacy, Generation Z, financial capabilityAbstract
Islamic financial technology has expanded access to Sharia-compliant payments, financing, investment, crowdfunding, and social-finance services, particularly among digitally native Generation Z. Yet access and transaction frequency do not necessarily produce responsible use, financial resilience, or improved welfare. This study develops the Islamic fintech inclusion paradox to explain how intensive use may coexist with shallow financial capability when users do not adequately understand Sharia principles, contractual structures, fees, risks, and consumer obligations. It examines the effect of actual Islamic fintech usage on meaningful financial inclusion and the moderating role of Sharia compliance literacy. Meaningful financial inclusion is conceptualised as effective, responsible, sustained, and welfare-enhancing use of formal Sharia-compliant financial services rather than mere account ownership or transaction frequency. Using a cross-sectional survey dataset of 410 Generation Z users, the PLS-SEM analysis shows that actual Islamic fintech usage positively predicts meaningful financial inclusion (β = 0.468, p < 0.001), Sharia compliance literacy has a positive direct effect (β = 0.332, p < 0.001), and the interaction between usage and literacy is positive and significant (β = 0.149, p < 0.001). Simple-slope analysis indicates that the contribution of usage increases from 0.319 at low literacy to 0.617 at high literacy. The model explains 44.2% of the variance in meaningful financial inclusion and demonstrates positive predictive relevance (Q²_predict = 0.423). The findings support a capability-based interpretation of Islamic fintech inclusion and reinforce practical recommendations for literacy-by-design, transparent contract communication, Sharia assurance, suitability safeguards, and outcome- based inclusion indicators for providers, regulators, and educational institutions.
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Data-status note. The tables in this appendix report statistics recalculated from the 410-case
item-level dataset supplied for the study. They cover indicator loadings, reliability and
convergent validity, HTMT discriminant validity, bootstrapped structural paths, predictive
assessment, and simple slopes. The values are analytical reporting outputs based on the
