An Empirical Analysis of the Determinants of Financial Literacy among Undergraduate Students

Abstract

This study examines the key determinants of financial literacy among students in Islamic private higher education institutions in Northern Malaysia, with particular emphasis on three fundamental dimensions: financial knowledge, financial management behaviour, and financial experience. The study is motivated by growing concerns over the increasing financial vulnerability of Malaysian youth, including issues related to poor budgeting, excessive debt, and limited long-term financial planning. Despite the importance of financial literacy in promoting individual financial well-being and economic stability, empirical evidence within the context of Islamic higher education institutions in Malaysia remains limited. Therefore, this paper seeks to address this gap by examining how these determinants jointly influence students’ financial literacy and by contributing to the broader financial education literature. A quantitative research design was employed using a structured questionnaire administered to 110 students, and simple linear regression was used to analyse the relationships. The findings indicate that financial experience (R² = 0.404, p < 0.001) is the strongest predictor of financial literacy, followed by financial management behaviour (R² = 0.400, p < 0.001) and financial knowledge (R² = 0.151, p < 0.001). Practical implications include the need for experiential learning interventions, financial workshops, and budgeting simulations. The results underscore the need for stronger collaboration between universities and key national institutions such as the Financial Education Network (FEN), the Credit Counselling and Debt Management Agency (AKPK), the National Higher Education Fund Corporation (PTPTN), and Bank Negara Malaysia (BNM) to enhance and institutionalise comprehensive financial education frameworks for Malaysian youth.