PARADOKS Jurnal Ilmu Ekonomi Vol.
9 No.
1, 2026
e-ISSN : 2622-6383 The Influence of Islamic Financial Literacy and Service Quality on CustomersAo Decisions to Use Islamic Banking Products with Religiosity as a Mediating Variable Annastasya Aprilia Ariyanto 1 Muhammad Sholahuddin 2* ms242@ums.
id 2* Management.
Universitas Muhammdiyah Surakarta.
Indonesia 1,2* Abstract This investigation explores the dynamics between Islamic financial literacy and the quality of banking services in shaping customers' decisions about Islamic banking products, with religiosity as a pivotal mediator.
Using a quantitative lens, the research employs a causal-associative design and leverages path analysis via Partial Least Squares Structural Equation Modeling (PLS-SEM) in SmartPLS The study scrutinized a purposively chosen cohort of 200 active clients of Islamic banks.
Results demonstrate that superior service quality exerts a robust, direct, and favorable influence on customersAo choices.
In contrast.
Islamic financial literacy, despite its positive orientation, does not have a statistically significant effect.
Intriguingly, both literacy in Islamic finance and service excellence substantially cultivate religiosity, which, in turn, exerts a pronounced positive impact on banking decisions.
Religiosity also emerges as a crucial mediating mechanism linking financial literacy and service quality to customersAo adoption behavior.
The novelty of this work lies in its integrative framework that accounts for both rational determinants .
nowledge and servic.
and spiritual drivers .
in Muslim consumer behavior toward Islamic banking offerings.
practice, these findings advocate a strategic synthesis of educational initiatives, exemplary service delivery, and spiritual alignment to reinforce customer commitment, satisfaction, and lasting loyalty.
Keyword: Islamic Financial Literacy.
Service Quality.
Religiosity.
Customer Decision.
Islamic Banking This work is licensed under a Creative Commons Attribution 4.
0 International License.
Introduction In recent years.
IndonesiaAos Islamic banking sector has expanded noticeably, yet it still accounts for only a modest share of the total banking market compared with conventional banks (P.
Aulia et al.
, 2.
Growth has been fueled in part by increasing public recognition of Islamic finance's value, alongside the adoption of financial technology, which has bolstered Islamic banks' competitiveness.
This advantage becomes even stronger when clients demonstrate robust financial literacy, when banks provide toptier services, and when religious commitment is pronounced (Anindyastri et al.
, 2.
Despite these positive dynamics, the sectorAos full potential remains constrained by systemic hurdles, particularly the widespread lack of understanding of Islamic finance among the general populace (Olii & Nanggong, 2.
IndonesiaAos Islamic banking sector remains a glaring weak spot in the countryAos economic blueprint, hindering the creation of a truly inclusive and sustainable financial As of December 2024, reports from the Financial Services Authority (OJK) indicate that Islamic banks account for only 7.
72% of the nationAos total banking assets, leaving conventional banks to monopolize the remaining 92%.
Even more striking, the 2024 National Survey on Financial Literacy and Inclusion (SNLIK) reveals that the average IndonesianAos grasp of Islamic finance barely scratches 39.
11%, a far cry from the broader national financial literacy rate of 65.
The situation is bleak regarding inclusion, with Islamic financial participation languishing at just 12.
These figures paint a stark picture:
despite a population overwhelmingly aligned with Islam, structural obstacles and ingrained Paradoks: Jurnal Ilmu Ekonomi 9.
| 1053 consumer behaviors continue to throttle the sectorAos growth.
In this landscape, elevating service quality is a decisive lever for attracting more public engagement with Islamic banking offerings (Hasibuan et al.
, 2.
Moreover, the level of religiosity among customers plays a crucial role in amplifying the influence of product perceptions on the decision to engage with Islamic financial services (Setiawan et al.
, 2.
Simultaneously, enhancing Islamic financial literacy directly supports the objectives of the National Research Master Plan by fostering both the development of human capital and the expansion of Sharia-compliant digital financial inclusion (Mukharomah et al.
, 2.
The relevance of this issue is further highlighted by the growing demand for financial services that are not only economically efficient but also comply with ethical and religious principles (Ramadhani et al.
, 2.
Therefore, this study is important as a foundation for formulating more targeted and inclusive policies and as a strategic basis for developing Islamic banking by enhancing financial literacy, improving service quality, and strengthening customersAo religious values.
The extent of Islamic financial literacy plays a crucial role in determining the adoption of Islamic banking products, emphasizing the consumerAos capacity to assess offerings and select options that comply with Sharia law.
When evaluating service quality, the SERVQUAL framework has repeatedly demonstrated its relevance for gauging customer satisfaction (Parasuraman et al.
, 2.
In addition, religiosity has been identified as a mediator of purchase behavior, shaping decisions based on religious convictions (Ahmad Fauzi & Abdur Rafik, 2.
Mastery of Islamic financial concepts, combined with perceptions of service quality, is therefore central to influencing customersAo choices regarding Islamic While earlier investigations have explored these factors individually, comprehensive research that integrates all three variables into a single analytical model remains limited.
Evidence from prior studies suggests that both financial literacy in the Islamic context and service quality exert substantial effects on consumersAo intentions to utilize Islamic banking services (Rachmatulloh & Solekah, 2.
Nevertheless, many analyses overlook the mediating influence of religiosity, which may amplify the interplay between these determinants (Sholahuddin, 2.
Past investigations have largely treated Islamic financial literacy, service quality, and religiosity as separate, yielding scattered insights without systematically comparing their Some studies suggest that each factor directly influences consumersAo decisions to adopt Islamic banking products, yet other findings contradict this, showing weak or nonsignificant effectsAiespecially regarding financial literacy.
Such contradictions expose the urgent need for a unified analytical lens that fuses rational evaluations and spiritual motivations to make sense of Muslim consumer behavior in Islamic banking.
Therefore, devising an integrated model that intertwines literacy, service standards, and religiosity is essential to uncover a holistic picture of decision-making processes among Muslim customers and to bridge the evident research gaps in the field.
Despite numerous studies identifying what drives customers to use Islamic banking products, the interplay between Islamic financial literacy and service quality, particularly under the influence of religiosity, remains underexplored (Chusniah & Samsuri, 2.
Previous research often isolates these factors, offering only a partial picture of how customer decisions form in the Islamic banking landscape.
A deep understanding of these determinants is vital for developing strategies that can effectively boost Islamic banking Religiosity, in this framework, operates as a crucial intermediary, channeling the effects of financial literacy and service quality toward decision-making behavior.
Empirical evidence shows that although religiosity may not directly affect customer choices, it can amplify the impact of other variables in Islamic banking consumer models (Chusniah & Samsuri, 2.
This line of inquiry is essential, given the industryAos efforts to align service delivery with its clientele's religious values.
Therefore, conducting a quantitative study to examine the combined influence of Islamic financial literacy, service quality, and religiosity on customer decisions to utilize Islamic banking services is both timely and necessary Paradoks: Jurnal Ilmu Ekonomi 9.
| 1054 (Haerany & Aneza, 2.
Previous research emphasizes that knowledge of Islamic finance is a decisive factor in shaping consumersAo choices regarding Islamic banking products.
This form of literacy refers to a personAos ability to comprehend, evaluate, and select financial products in accordance with Sharia law (Haerany & Aneza, 2.
When individuals have an advanced understanding, they are more likely to engage with Islamic banks because they can clearly distinguish between interest-based products and permissible alternatives, which boosts confidence in choosing Sharia-compliant services (Safitri & Mangifera, 2.
Grasping fundamental ideas such as contracts .
, profit-sharing schemes, and the prohibition of interest strongly influences the preference for Islamic over conventional Literacy acts as a catalyst, fostering positive attitudes and a firm commitment to decisions guided by religious values (Alimi, 2.
Among students, greater familiarity with Sharia-compliant products and operational principles correlates with a higher propensity to make financial choices that adhere to Islamic principles (Olii & Nanggong, 2.
Thus, it is hypothesized that Islamic financial literacy positively influences customersAo decisions in using Islamic banking products (H.
Service quality plays a crucial role in shaping customer choices, particularly in Islamic According to the SERVQUAL framework developed by Parasuraman et al.
service quality can be understood through five dimensions: tangibles, reliability, responsiveness, assurance, and empathy.
Empirical research demonstrates that these elements significantly impact both customer satisfaction and decision-making across various service industries, including Islamic finance.
Evidence from studies on Islamic banking clients highlights that responsivenessAihow promptly employees address needsAi and assuranceAireflecting staff competence and trustworthinessAiare strong drivers of customer loyalty and product adoption, as clients often rely on their perceived service experience when making financial choices (Dan & Gen, n.
Likewise, swift, courteous, and informative services create comfort for customers engaging with Islamic financial High-quality service also shapes favorable attitudes according to the Theory of Planned Behavior, thereby reinforcing intentions and actual decisions to utilize Islamic banking offerings (Huwaida et al.
, 2.
Furthermore, empathy and reliability build trust and positive perceptions, serving as a foundation for Sharia-compliant financial decisions, since approachable, precise, and Sharia-aligned service fosters both emotional attachment and rational confidence in Islamic banks (Nurrachmi & Setiawan, 2.
sum, superior service quality positively influences customersAo decisions to adopt and use Islamic banking products (H.
Religiosity is a key psychological driver shaping how individuals act and make decisions, including their engagement with Islamic financial products.
From an Islamic viewpoint, it represents the depth to which religious beliefs, values, and practices are woven into everyday life.
This construct can be broken down into five core aspects:
personal faith, ritual practices, spiritual experiences, religious knowledge, and the behavioral manifestations of religious principles.
In Islamic banking, these aspects serve as critical lenses through which consumers evaluate and prefer financial institutions that comply with Shariah principles (Hartini & Amri, 2.
Religiosity is a key factor shaping consumer preferences for Islamic financial institutions, as highly religious customers tend to select products that are not only economically beneficial but also consistent with their spiritual values, driven by a moral commitment to avoid transactions involving riba .
and uncertainty (Usvita & Empat, 2.
Therefore, religiosity positively affects customer decisions to use Islamic banking products (H.
Understanding Islamic finance is not merely about recognizing Sharia-compliant financial instruments.
it fundamentally reflects oneAos spiritual vigilance in managing wealth in accordance with Islamic law.
Individuals with knowledge of Islamic finance tend to weave religious values into every economic choice, as familiarity with concepts such as riba, gharar, and maisir reinforces ethical awareness and often deepens religious Paradoks: Jurnal Ilmu Ekonomi 9.
| 1055 commitment (Agustin & Hakim, 2.
Mastery of Islamic financial principles drives scrutiny when selecting financial products, ensuring alignment with divine guidelines and, in turn, fostering a heightened sense of religiosity.
In this way.
Islamic financial literacy serves as a cognitive and spiritual guide, shaping mindful, ethically informed financial behavior (Arifin.
Based on this reasoning, it is posited that Islamic financial literacy positively influences customer religiosity (H.
In the context of Islamic banking, service quality is not only measured by technical aspects such as speed, accuracy, or comfort, but also by the alignment of services with Islamic values.
Bank employees who serve customers with politeness, honesty, and trustworthiness reflect the application of Islamic business ethics, which can strengthen customersAo religiosity.
Consistent service experiences in accordance with Islamic principles can foster spiritual feelings and deepen customersAo commitment to religious values (Musyaffa & Iqbal, 2.
Specifically, the dimensions of empathy and assurance in Shariacompliant services influence customersAo perceptions of religiosity, as services that emphasize moral values and honesty can create an emotional and spiritual bond between the bank and its clients.
Sharia-based service practices build trust and enhance customersAo religious awareness in financial transactions (Pramudani, 2.
Therefore, service quality positively affects customer religiosity (H.
The intensity of a MuslimAos religious commitment plays a decisive role in shaping their consumer choices, particularly when it comes to products and financial services that comply with Sharia law.
Those who demonstrate stronger religiosity instinctively evaluate financial information through religious principles, amplifying the effect of Islamic financial literacy on their inclination toward halal goods and Sharia-compliant financial instruments (Allport & Ross, 1.
Research indicates that while financial literacy directly affects consumption decisions, this influence becomes stronger when mediated by religiosity, highlighting its role as an internal factor that filters and guides the interpretation of financial knowledge into actual decision-making (Chusniah & Samsuri, 2.
The level of faith and religious practice significantly determines the extent to which Islamic financial information is applied in behavior, including the selection of Sharia banking products, suggesting that literacy alone is insufficient without spiritual values as a moral guide in decision-making (Khotimah & Saputeri, 2.
Therefore, it is hypothesized that religiosity mediates the effect of Islamic financial literacy on customer decisions to use Sharia banking products (H.
Muslim consumersAo decisions are filtered through religiosity, which dictates how they assess service experiences in Islamic banks.
High levels of religious commitment amplify the effect of service quality on whether customers engage with a provider, because customers demand both efficient, professional service and strict compliance with Islamic moral values such as honesty, fairness, and courteous treatment (Farida & Mahfud, 2.
When evaluating economic decisions, religious consumers assess service quality not only on technical aspects .
angibles, responsivenes.
but also on its alignment with the financial institution's spiritual values.
Consequently, when customers receive services they perceive as compliant with Sharia principles, their decisions to choose Sharia products become stronger and more directed (Mayer et al.
, 1.
Trust built through service quality alone does not necessarily drive purchase decisions without support from the customerAos internal religious orientation, indicating that religiosity acts as a crucial filter connecting service perception and Sharia product usage (Romdhoni & Sari, 2.
Thus, religiosity mediates the effect of service quality on customer decisions to use Islamic banking products (H.
This research primarily seeks to determine the degree to which customersAo choices to adopt Islamic banking products are shaped by their understanding of Islamic finance and the quality of banking services, while also examining the mediating role of religiosity.
Without a thorough exploration of this issue, the Islamic banking sector's expansion risks stagnation, hindering its ability to capture a larger market share.
From a theoretical standpoint, failing to address this gap constrains the integration of financial literacy and religiosity frameworks within models of Islamic consumer behavior (M.
Aulia & Hafasnuddin, 2.
On a Paradoks: Jurnal Ilmu Ekonomi 9.
| 1056 practical level.
Islamic banks may face significant challenges in delivering effective services and running educational initiatives for customers.
Methods The present study explores the effects of Islamic financial literacy and service quality on customers' decisions to engage with Islamic banking products, while considering religiosity as a mediating factor.
A quantitative research strategy was employed, using an associative causal design to examine how the independent variablesAiIslamic financial literacy and service qualityAiaffect the dependent variable, customer decision-making, and the mediating role of religiosity.
This approach makes it possible to collect objective, measurable data that can be processed statistically to assess both the direction and magnitude of the variable relationships.
The target population includes all customers who have interacted with Islamic banking products, and purposive sampling was used to select participants who met predefined criteria: they must be active users aged 18 to 55 with experience using at least one Islamic banking product.
To guarantee reliability and stability in the structural model analysis, a minimum sample size of 200 respondents was established in accordance with PLS-SEM guidelines.
The data were gathered through online questionnaires distributed via Google Forms and social media channels, with responses recorded on a five-point Likert scale ranging from 1 .
trongly disagre.
to 5 .
trongly agre.
Table 1.
Indicators and Measurement Scales Variable Indicator Source Measurement Scale Islamic Financial Literacy Awareness of Islamic financial products Ali .
Ability to evaluate Islamic financial products Dewi .
Ability to select the appropriate Islamic Tangibles: Physical appearance of the bank, office design, facilities, and promotional Reliability: Ability of the bank to provide consistent and timely service Responsiveness: Ability of the bank to respond quickly to customer requests Assurance: Knowledge and politeness of staff in providing information about Islamic products Empathy: StaffAos concern for customer needs in the context of Islamic services An individualAos belief in religious teachings in financial matters Religious practices influencing economic Influence of religious values on economic Recognition of the need for Islamic financial Process of searching for information about Islamic products and bank services Process of comparing Islamic banking products based on features, risks, and benefits Decision to choose Islamic banking products according to needs and religious beliefs Hassan & Rahman .
Parasuraman et 1 = Strongly Disagree, 5 = Strongly Agree 1 = Strongly Disagree, 5 = Strongly Agree 1 = Strongly Disagree, 5 = Strongly Agree 1 = Very Dissatisfied, 5 = Very Satisfied Service Quality Religiosity Customer Decision Parasuraman et Fatimah .
Sari .
1 = Very Dissatisfied, 5 = Very Satisfied 1 = Very Dissatisfied, 5 = Very Satisfied 1 = Very Dissatisfied, 5 = Very Satisfied 1 = Very Dissatisfied, 5 = Very Satisfied 1 = Very Low, 5 = Very High Abdillah .
1 = Very Low, 5 = Very High Suhendi .
1 = Very Low, 5 = Very High Rosyidi .
1 = Strongly Disagree, 5 = Strongly Agree 1 = Strongly Disagree, 5 = Strongly Agree 1 = Strongly Disagree, 5 = Strongly Agree 1 = Strongly Disagree, 5 = Strongly Agree Fauzi .
Sari .
Hassan & Rahman .
Ali .
Fatimah .
Data were processed using PLS-SEM in SmartPLS, following a structured three-step Initially, the measurement .
model underwent rigorous examination to confirm both reliability and validity of the constructs.
Subsequently, the structural .
Paradoks: Jurnal Ilmu Ekonomi 9.
| 1057 model was analyzed to uncover the interconnections among variables.
The final phase involved testing the hypotheses to determine whether the proposed relationships were Evaluation of the instrumentAos soundness relied on convergent and discriminant validity metrics, in addition to CronbachAos Alpha and Composite Reliability.
The research unfolded systematically: the development of a questionnaire rooted in theoretical frameworks and prior literature.
pilot testing to refine the instrument.
the collection of empirical data.
the application of SEM-PLS techniques.
and careful interpretation of results to answer the research questions.
Throughout, ethical rigor was strictly upheld: participants provided informed consent, participation was voluntary, confidentiality of personal data was guaranteed, and all data were employed solely for scholarly purposes, ensuring compliance with academic research ethics and maintaining the integrity of the study.
Results and Discussion Results PLS Program Scheme For this research, hypothesis evaluation is conducted using the Partial Least Squares (PLS) approach with SmartPLS 4.
Below is the conceptual framework of the model as designed for analysis within the PLS environment:
Figure 1.
Outer Loading In research, the so-called outer model, commonly called the measurement model, serves as the mirror between hidden constructs and the signals .
that represent To vet this system, one must probe its validity, test the reliability of its measures, and check for collinearity .
, all to ensure that each indicator accurately and consistently reflects the latent concept it purports to represent (Hair et al.
, 2.
Outer Model Analysis Validity Test Hair et al.
suggest that an indicator is considered valid when its outer loading, also called the loading factor, exceeds 0.
70, indicating a strong and reliable capacity for that indicator to reflect the underlying construct.
Based on this criterion, all indicators in Paradoks: Jurnal Ilmu Ekonomi 9.
| 1058 Table 2 are valid, except KL5, which is slightly below the threshold but remains acceptable given its theoretical relevance.
Table 2.
Outer Loading Results KL1
KL2
KL3
KL4
KL5
KN1
KN2
KN3
KN4
LKS1
LKS2
LKS3
Source: Smart-PLS 4 results of primary data, 2025 Table 3.
Validity Test (Discriminant Validit.
LKS Source: Smart-PLS 4 results of primary data, 2025 By employing the HTMT approach, discriminant validity is examined, with a benchmark of values under 0.
9 (Hair et al.
, 2.
The analysis confirms that each construct in the study maintains a clear boundary from the others, ensuring that the variables measured do not overlap.
Reliability Test Table 4.
Reliability Test of Construct Reliability and Validity LKS Cronbach's Composite reliability .
Composite reliability .
Average variance extracted (AVE) Source: Smart-PLS 4 results of primary data, 2025 Hair et al.
suggest that an indicator can be considered dependable when CronbachAos Alpha rises above 0.
60, and composite reliability exceeds 0.
In this study, all indicators exceed these benchmarks, confirming that the survey items consistently yield stable and reliable data that accurately reflect the constructs they are designed to Inner Model Test Goodness of Fit Test SmartPLS employs the Variance Inflation Factor (VIF) to uncover potential multicollinearity among latent variables or formative indicators.
When VIF values exceed 5, this often signals multicollinearity (Hair et al.
, 2.
In the present dataset, all indicators register VIF scores below this limit, implying that multicollinearity is absent and no Paradoks: Jurnal Ilmu Ekonomi 9.
| 1059 adjustments are warranted.
Table 5.
Inner Model Multicollinearity Test
LKS
Source: Smart-PLS 4 results of primary data, 2025 Table 6.
R-SQUARE Test R-square R-square adjusted Source: Smart-PLS 4 results of primary data, 2025 The RA metric reflects how much of the variation in endogenous latent variables is accounted for by exogenous latent variables.
Hair et al.
classify RA values as strong .
, moderate .
, or weak .
In this study, the RA value for KN stands at 0.
placing it in the moderate range.
This implies that the model explains 43.
5% of the fluctuations in KN, with the remainder shaped by influences not captured in this research.
In contrast, the RA for R is only 0.
232, falling into the weak category.
This indicates that merely 2% of the variation in respondentsAo religiosity is explained by the model, suggesting that external factors beyond the study likely play a larger role in shaping this construct.
Table 7.
Goodness of Fit Test
Saturated model
Estimated model
SRMR
d_ULS Chi-square NFI Source: Smart-PLS 4 results of primary data, 2025 The model fit test (Goodness of Fi.
assesses the alignment between the data and the research model.
Based on the table, the SRMR value is below 0.
08, indicating that the model fits well and does not require any modifications (Hair et al.
, 2.
Table 8.
F-SQUARE Test
LKS
Source: Smart-PLS 4 results of primary data, 2025 The FA index quantifies the change in RA when a predictor variable is added to or removed from a target construct.
As outlined by Hair et al.
, an FA of 0.
02 indicates a negligible impact, 0.
15 a moderate influence, and 0.
35 a substantial effect.
From the presented results.
Service Quality (SQ) and Islamic Financial Literacy (IFL) exhibit only a minimal effect on Y, whereas Religiosity (R) shows a moderate contribution to Y.
At the same time, both SQ and IFL have a minor impact on Z in the structural model.
Path coefficients range from Oe1 to 1, with values near 1 indicating a strong positive relationship and values near Oe1 indicating a strong negative relationship (Hair et al.
, 2.
Hypotheses were evaluated using P-values, with significance established at P < 0.
Findings reveal that Service Quality (SQ) exerts a statistically significant positive impact on Customer Decision (CD) ( = 0.
P = 0.
and also on Religiosity (R) ( = 0.
P =
Paradoks: Jurnal Ilmu Ekonomi 9.
| 1060 Conversely.
Islamic Financial Literacy (IFL) demonstrates a positive but statistically non-significant effect on CD ( = 0.
P = 0.
, while it significantly enhances R ( = 317.
P = 0.
Furthermore.
Religiosity has a robust, significant positive influence on CD ( = 0.
P = 0.
Mediation analysis confirms that Religiosity serves as a significant conduit, transmitting the effect of SQ on CD ( = 0.
P = 0.
and of IFL on CD ( = 138.
P = 0.
, thus verifying its mediating role.
Hypothesis Testing Table 9.
Direct Effect
Original sample (O) Sample mean
(M)
Standard deviation (STDEV) T statistics (|O/STDEV|) KL i KN KL i R LKS i KN LKS i R R i KN Table 10.
indirect Effect
KL i R i KN
LKS i R i KN
Original sample (O) Sample mean
(M)
Standard
(STDEV)
T statistics (|O/STDEV|) Source: Smart-PLS 4 results of primary data, 2025 Discussion Employing Partial Least Squares Structural Equation Modeling (PLS-SEM), this study unraveled how certain factors interplay to shape customer behavior.
The analysis revealed that both Islamic financial literacy (LKS) and service quality (KL) exert measurable effects on decision-making processes (KN), with religiosity (R) acting as a pivotal mediator in this What follows is a detailed exploration of how these relationships manifest and influence one another:
H1: Sharia financial literacy has a positive influence on customer decisions in using Sharia banking products.
The analysis shows that Islamic financial literacy positively influences customersAo adoption of Islamic banking products, but the effect is not statistically significant, supporting the hypothesis.
In academic terms, this implies that even if individuals acquire knowledge of Islamic finance concepts, such understanding alone does not strongly compel them to act, revealing a disconnect between awareness and actual usage behavior, which is often swayed by emotional and spiritual considerations.
This outcome resonates with the findings of Olii and Nanggong .
and Haerany and Aneza .
, who argue that literacy in Islamic finance must be paired with religiosity to manifest in Sharia-compliant consumption.
From the perspective of AjzenAos .
Theory of Planned Behavior, performing a behavior is not solely a matter of cognitive comprehension.
it is also shaped by perceived social pressures and oneAos perceived control over one's actions.
Conceptually, these results underline that financial literacy functions more as a foundational rational factor than as a decisive driver of Islamic financial practices.
From a practical standpoint.
Islamic financial institutions should integrate educational initiatives with spiritual value reinforcement to ensure that knowledge translates into concrete.
Sharia-aligned behavior.
Paradoks: Jurnal Ilmu Ekonomi 9.
| 1061 H2: Service quality positively influences customers' decisions to use Islamic banking Analysis results provided strong support for the second hypothesis, demonstrating that service quality significantly shapes customer choices.
Essentially, when Islamic banks excel in areas such as reliability, timeliness, and empathetic engagement, clients are more likely to choose their financial products.
These findings resonate with the principles of the SERVQUAL model (Parasuraman et al.
, 1.
and align with Huwaida et al.
, who highlighted that quick, courteous, and professional interactions strengthen both trust and loyalty among customers.
Theoretically, this strengthens consumer decision theory by positioning service quality as a key determinant of intention and usage behavior for financial products.
Practically.
Islamic banks should ensure that all service processes uphold honesty, integrity, and accountability to foster sustainable customer loyalty.
H3: Religiosity has a positive influence on customer decisions in using Islamic banking Analysis of the third hypothesis reveals that religiosity exerts a statistically significant and positive influence on customer decision-making.
This indicates that individuals with stronger religious commitment are more inclined to select banking products that align with Sharia principles.
These findings align with Hartini and Amri .
and Usvita and Empat .
, who emphasize religiosity as a crucial determinant in the adoption of Islamic financial products.
Interpreted through the lens of the Theory of Planned Behavior, religiosity reinforces subjective norms that motivate behavior consistent with Islamic Conceptually, these results contribute to consumer behavior theory by highlighting spiritual beliefs as critical factors shaping financial choices within the Islamic banking context.
In practice.
Islamic banks can leverage religiosity in marketing communications and brand image strategies that emphasize the values of blessing, justice, and compliance with Sharia principles.
H4: Sharia financial literacy has a positive effect on customer religiosity.
The analysis revealed that the fourth hypothesis received strong empirical support.
This demonstrates a clear and statistically significant influence of Islamic financial literacy on individualsAo religiosity.
In other words, deepening oneAos grasp of Islamic finance appears to enhance spiritual consciousness and commitment to religious practices.
This outcome aligns with the conclusions of Arifin .
and Agustin & Hakim .
, who observed that understanding Islamic financial principles not only boosts economic competence but also reinforces consistent religious conduct.
Theoretically, this extends the meaning of financial literacy from a purely cognitive dimension to an instrument for shaping Islamic financial In practice.
Islamic financial institutions should integrate financial education with spiritual values, for example, through faith-based training or social campaigns that emphasize ethics and blessings in financial transactions.
H5: Service quality has a positive effect on customer religiosity.
Analysis revealed that the fifth hypothesis holds, confirming that improvements in service quality significantly boost customer religiosity.
Services that reflect honesty, courtesy, and adherence to Islamic principles can enhance customersAo religious This finding aligns with Musyaffa and Iqbal .
and Pramudani .
, who stated that the empathy and assurance dimensions in Islamic banking services strengthen both the emotional and spiritual connection between banks and customers.
Theoretically, this extends the concept of service quality beyond technical aspects to a transcendental dimension, viewing service as a means of conveying Islamic values.
In practice, this means Islamic banks should cultivate a service culture grounded in religious ethics so customers can experience spiritual value in every service interaction.
Paradoks: Jurnal Ilmu Ekonomi 9.
| 1062 H6: Religiosity mediates the influence of Islamic financial literacy on customer decisions.
Support was found for the sixth hypothesis, indicating that religiosity significantly mediates the relationship between Islamic financial literacy and customer decisionmaking.
This suggests that the influence of Islamic financial literacy on customer choices is indirect, manifesting only when religiosity is heightened, which in turn amplifies the moral dimension guiding financial behaviors.
These findings align with Chusniah and Samsuri .
and Khotimah and Saputeri .
, who assert that religiosity functions as a moral filter, translating financial knowledge into behavior consistent with Sharia principles.
Theoretically, this confirms that religiosity is a key psychological variable linking cognitive and behavioral aspects in Islamic financial decision-making contexts.
In practice, it highlights the need for Islamic financial institutions to integrate financial education with religious values to ensure that financial literacy promotes ethical.
Sharia-compliant financial decisions.
H7: Religiosity mediates the influence of service quality on customer decisions.
The seventh hypothesis was also supported, indicating that religiosity serves as a significant mediator between service quality and customer decisions.
This suggests that service experiences aligned with Islamic values not only enhance satisfaction but also strengthen spiritual dimensions, ultimately influencing the decision to use Sharia products.
These findings are consistent with Farida and Mahfud .
and Romdhoni and Sari .
, who explain that ethically-based Islamic services reinforce customer trust and emotional attachment to Islamic financial institutions.
Theoretically, this demonstrates that consumer behavior in the Sharia context is driven not only by economic rationality but also by spiritual value orientation.
In practice, it underscores the importance for Islamic banks to provide services that are both efficient and morally and religiously meaningful to enhance loyalty and promote the adoption of Sharia-compliant products.
Conclusion and Suggestions The study investigates the impact of Islamic financial literacy and banking service quality on customersAo decisions to adopt Islamic banking products, with religiosity serving as a mediating factor.
The findings indicate that service quality has a strong and significant effect on customer decision-making, whereas Islamic financial literacy has a positive but not statistically significant influence.
Both financial literacy and service quality, however, significantly enhance customersAo religiosity, which in turn positively drives the adoption of Islamic banking products.
These results highlight the crucial role of religiosity as a mediator linking rational evaluation with spiritual motivations in financial behavior.
The findings carry important theoretical and practical implications.
Theoretically, the study emphasizes the need to integrate spiritual and rational dimensions when analyzing financial decision-making within Islamic contexts.
In practice.
Islamic banks can benefit from combining financial literacy programs with religious education and faith-based promotional strategies.
Simultaneously, enhancing service quality according to Islamic ethical principles such as honesty, empathy, and trustworthiness can strengthen customer confidence and encourage greater adoption of banking products.
The study has several limitations.
First, purposive sampling with only 200 respondents limits the generalizability of the findings to the broader population of Islamic banking clients in Indonesia.
Second, focusing on only three core variables excludes other potential influences, such as marketing campaigns, perceived financial benefits, or institutional Third, religiosity was measured through self-reported perceptions, which may introduce subjectivity.
Future research should consider increasing the sample size and geographic coverage, incorporating additional variables such as trust, perceived risk, and customer loyalty, and employing mixed-methods approaches to gain deeper insights into the psychological and spiritual factors that influence financial choices.
Paradoks: Jurnal Ilmu Ekonomi 9.
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Reference