The Influence of Understanding of Sharia Contracts, Fear of Riba, and Financial Literacy on the Preference for Sharia Financing among Culinary MSMEs in Pangkalpinang City

Authors

  • Zavela Oktarana Department of Accounting, Faculty of Economics and Business, Universitas Bangka Belitung
  • Savira Aprilia Department of Accounting, Faculty of Economics and Business, Universitas Bangka Belitung
  • Satria Widodo Department of Accounting, Faculty of Economics and Business, Universitas Bangka Belitung
  • Rahil Imainul Aprilian Department of Accounting, Faculty of Economics and Business, Universitas Bangka Belitung

DOI:

https://doi.org/10.18326/iaj.v6i1.55-70

Keywords:

Sharia Contract Understanding, Fear of Riba, Financial Literacy, Sharia Financing Preference, MSMEs, Islamic Behavioral Finance

Abstract

Abstract

Objectives & Objects:
This study aims to empirically analyze the influence of Understanding of Sharia Contracts, Fear of Riba, and Financial Literacy on the Preference for Sharia Financing among Micro, Small, and Medium Enterprises (MSMEs) in the culinary sector in Pangkalpinang City. The study seeks to explain behavioral tendencies among Muslim entrepreneurs in choosing Islamic financing products and to identify which factors predominantly shape their financial decision-making patterns.

Methods:
The research employed a quantitative approach using Structural Equation Modeling–Partial Least Squares (SEM-PLS) with SmartPLS version 4. Primary data were collected through a questionnaire distributed to culinary MSMEs in Pangkalpinang. Sampling used the purposive method, focusing on business owners who have been operational for at least two years and are aware of both conventional and Islamic financial products. The model was tested through validity, reliability, and hypothesis testing procedures.

Results & Conclusions:
The findings reveal that Understanding of Sharia Contracts and Fear of Riba have no significant influence on the Preference for Sharia Financing, while Financial Literacy exerts a strong and significant positive effect. These results suggest that rational cognitive factors such as financial competence and knowledge play a more dominant role in influencing financing preferences than religious or emotional considerations. The study further emphasizes that practical literacy in managing finance and understanding profit-sharing mechanisms enhances the intention to adopt Sharia-compliant financial products.

Limitations:
The study focuses solely on culinary MSMEs in Pangkalpinang City and does not account for potential moderating variables such as Islamic educational background or previous experience with Sharia banking. Broader generalization requires multi-regional and sectoral comparison.

Implications:
The findings underline the necessity for Islamic financial institutions to improve public financial literacy through practical education, simulation of Sharia contracts, and contextual communication. Future research could integrate moderating factors such as exposure to Islamic schooling or perceived behavioral control to deepen understanding of the intention–behavior gap in Islamic finance adoption.

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Published

2026-08-11

How to Cite

Oktarana, Z., Aprilia, S., Widodo, S., & Aprilian, R. I. (2026). The Influence of Understanding of Sharia Contracts, Fear of Riba, and Financial Literacy on the Preference for Sharia Financing among Culinary MSMEs in Pangkalpinang City. Islamic Accounting Journal, 6(1), 55–70. https://doi.org/10.18326/iaj.v6i1.55-70

Issue

Vol. 6 No. 1 (2026): ISLAMIC ACCOUNTING JOURNAL

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