The Impact of Wasatiyyah/Moderation on Student’s Financial Decisions

Wan Rohaida Wan Husain, Muhammad Tahir Jan
Department of Business Administration, Kulliyyah of Economics & Management Sciences, International Islamic University Malaysia

Roslily Ramlee, Sharifah Raihan Syed Mohd. Zain
Department of Finance, Kulliyyah of Economics & Management Sciences, International Islamic University Malaysia


Statistics and surveys of literature to date have revealed a disturbing truth regarding financial prudence among the Malaysian population, particularly the youth. The studies depict this group’s state of being easily overwhelmed by the latest trends, causing them to spend beyond their means due to impulse buying behavior. Individual financial decisions encompass one’s spending, savings, borrowing, and investment activities, which are generally influenced by their materialistic needs and level of financial literacy alike. In consideration of these two main contributing factors, this study aimed to examine the practice of moderation (wasatiyyah) among Malaysian university students in their financial decision-making. A total of 550 questionnaires were distributed to respondents enrolled in public universities located in central and north Malaysia regions. Subsequently, all data obtained were analyzed using exploratory factor analysis (EFA), confirmatory factor analysis (CFA), and structural equation modeling (SEM). The resulting findings concluded that there was no mediatory influence of wasatiyyah on students’ financial decisions. Nevertheless, its adoption was comparably influential as the financial literacy exhibited by students pertaining to their financial decisionmaking. Hence, the tested hypothesis in this study is duly supported: the element of wasatiyyah would render students more cautious in financial decision-making processes.

Keywords: Moderation (Wasatiyyah), Youth, Financial decision, Financial literacy, Materialism, Structural equation modeling