Islamic Perspectives on Understanding and Mitigating Youth Debt and Bankruptcy in Malaysia: A Systematic Analysis
Authors
-
Mohamad Zaim Isamail
Academy of Contemporary Islamic Studies (ACIS), Universiti Teknologi MARA (UiTM) Cawangan Perak, Kampus Seri Iskandar, Perak, MALAYSIA
-
Nurul Afifah Abdul Mulup
Academy of Contemporary Islamic Studies (ACIS), Universiti Teknologi MARA (UiTM) Cawangan Johor, Kampus Segamat, Johor, MALAYSIA
DOI:
https://doi.org/10.33102/jfatwa.vol31no2.854Keywords:
Youth Bankruptcy, Financial Literacy, Islamic Financial Principles, Debt Management, Wasatiyyah (Moderation)Abstract
The rising phenomenon of youth bankruptcy in Malaysia is a growing concern, reflecting a significant disconnect between contemporary financial practices and Islamic ethical standards. This study aims to evaluate youth financial behavior through the lens of Shariah principles, specifically the prohibition of Riba (usury), Wasatiyyah (moderation), and Amanah (stewardship). Utilizing the PRISMA 2020 guidelines, a systematic literature review was conducted. From an initial identification of 275 records, a rigorous screening process based on stringent inclusion criteria was employed to select 10 primary empirical studies, ensuring the quality and relevance of the findings. The study identifies the primary drivers of indebtedness, which are then critically analyzed as a foundation for developing a faith-based financial resilience framework. This research shifts the discourse from purely technical economic variables to a values-driven perspective, offering practical solutions to address the psychological and spiritual harms of debt. The implications suggest that government and educational institutions should integrate Islamic ethical values into financial management modules to foster sustainable economic stability.
Downloads
References
Abd Rahim, F., & Puteh Tajudeen, F. (2020). The impact of Qard Hasan financing on financial behavior among youth borrowers in Malaysia. Journal of Islamic Finance, 9(2), 65-75.
Abd Rahman, S. S. (2026). Strategic management practices in Muslim SMEs: The role of Amanah. Advanced International Journal of Business, Entrepreneurship and SMEs, 8(27), 338–351.
Abdul Rahman, S. F. (2020). Financial education programmes organised by mosques as a platform to increase financial literacy in Malaysia. TAFHIM: IKIM Journal of Islam and the Contemporary World, 13(1), 57–83.
Abdullah, M. F., Hoque, M. N., Rahman, M. H., & Said, J. (2022). Can Islamic financial literacy minimize bankruptcy among the Muslims? An exploratory study in Malaysia. SAGE Open, 12(2), 1–13.
Abdul Rahim, R., Munir, R. I. S., Zainal, N. Z., & Kassim, E. S. (2022). An investigation of factors contributing to bankruptcy of young generation: A conceptual paper. Global Business and Management Research: An International Journal, 14(1), 13–22.
Abdul Rahman, R., Ismail, A. G., & Mohd Yusof, R. (2018). Enhancing financial literacy through Qard Hasan programs: Evidence from Malaysian higher education institutions. International Journal of Islamic and Middle Eastern Finance and Management, 11(3), 406–423.
Agarwal, S., Driscoll, J. C., Gabaix, X., & Laibson, D. (2009). The age of reason: Financial decisions over the life cycle. Brookings Papers on Economic Activity, 2009(2), 51–117.
Ahmad Suhami, N. S., & Fairuz Syed Mohamad, S. (2023). Determinants influencing the spike in Malaysian youth bankruptcy. International Journal of Zakat and Social Finance, 4(2), 101–122.
Ahmed, H. (2014). Islamic banking and Shari’ah compliance: A product development perspective. Journal of Islamic Finance, 3(2), 15–29.
Aji, H. M., Md Husin, M., Othman, A. K., Hidayat, A., & Wan Rashid, W. E. (2024). Religious-based ethics and buy-now-pay-later re-usage intention among Muslim consumers in Indonesia and Malaysia: A commitment-trust theory perspective. Cogent Business & Management, 11(1), 1–16.
al-Bukhari, M. I. (2002). Sahih al-Bukhari (1st ed.). Dar Ibn Kathir.
al-Daraqutni, A. U. (2001). Sunan al-Daraqutni. Dar al-Ma'rifah.
al-Nasa'i, A. S. (2007). Sunan al-Nasa'i (N. al-Khattab, Trans.). Darussalam for Publishing and Distribution.
al-Tirmidhi. (2009). Jami' al-Tirmidhi (A. T. Z. A. Zai, Ed.). Darussalam for Publishing and Distribution.
Ansar, R., Chekima, B., Lada, S., Lim, M. F., & Bouteraa, M. (2023). Determinants of personal financial management practices among Malaysian youth. Asian Economic and Financial Review, 13(12), 996–1007.
Antara, P. M., Musa, R., & Hassan, F. (2016). Bridging Islamic financial literacy and halal literacy: The way forward in halal ecosystem. Procedia Economics and Finance, 37, 196–202.
al-Qazwini, M. Y. (Ibn Majah). (2007). Sunan Ibn Majah (N. al-Khattab, Trans.). Darussalam for Publishing and Distribution.
al-Shaybani, A. M. (Ihmad bin Hanbal). (2012). Musnad Ahmad bin Hanbal. Dar al-Hadith.
Ating, R., Palmares-Cruz, J., M. R. M., & Lalisan, A. K. (2024). Bankruptcy among Malaysian millennials: Due to lavish lifestyles or low financial literacy as evidenced by PISA examination results? Journal of Wealth Management & Financial Planning, 11, 60–66.
Atkinson, A., & Messy, F. A. (2012). Measuring financial literacy: Results of the OECD / International Network on Financial Education (INFE) pilot study. OECD Working Papers on Finance, Insurance and Private Pensions, 15, 1–73.
Az-Zuhaili, W. (1985). Al-fiqh al-Islāmī wa adillatuhu (2nd ed., Vol. 2). Dār al-Fikr.
Azmi, A. N., Abu Samah, I. H., Abd Rashid, I. M., Shamsuddin, A. S., & Amlus, M. H. (2019). Personal financial management and youth bankruptcy awareness: Moderating effect of excessive lifestyle. International Journal of Scientific & Technology Research, 8(12), 3681–3683.
Butt, I., Saleem, N., Ahmed, H., Altaf, M., Jaffer, K., & Mahmood, J. (2011). Barriers to adoption of Islamic banking in Pakistan. Journal of Islamic Marketing, 2(3), 259–273.
Chapra, M. U. (2008). The Islamic vision of development in the light of Maqasid al-Shariah (Occasional Paper Series No. 15). Islamic Research and Training Institute.
Dholakia, U. M., Tam, L., Yoon, S., & Wong, N. (2016). The ant and the grasshopper: Understanding personal saving orientation of consumers. Journal of Consumer Research, 43(1), 134–155.
Dusuki, A. W., & Bouheraoua, S. (2011). The framework of Maqasid al-Shariah and its implication for Islamic finance. Islam and Civilisational Renewal, 2(2), 316–336.
Faizal, D. R., & Mohd Ashhari, Z. (2015). Factors affecting youth bankruptcy in Malaysia. UPM-SAGE Publication Young Writer’s Awards 2015 Paper, 19–34.
Guest, G., Bunce, A., & Johnson, L. (2006). How many interviews are enough? An experiment with data saturation and variability. Field Methods, 18(1), 59–82.
Halim, N. G., Nur Aini, M., Muhid, & Muthoharoh, I. L. (2024). A study of hadiths about riya' in the book of Hidayatus Salikin perspective of Abdul Samad al-Falimbani. International Journal of Islamic Studies, 36(1), 1–11.
Hassan, M. K., & Lewis, M. K. (Eds.). (2007). Handbook of Islamic banking. Edward Elgar Publishing.
Hassan, S., Kholib Jati, M. K., Md Yatim, N. H., & Abd Majid, M. A. (2021). Factors influencing personal bankruptcy among youth in Malaysia. Advanced International Journal of Banking, Accounting and Finance, 3(7), 85–91.
Isa, M. Y., Ahmad, N. H., Maamor, S., Ahamad, Z., & Abu Bakar, N. A. (2024). The role of Islamic financial literacy from the perspective of Maqasid al-Shariah: A case study of community of Naka in Kedah. International Journal of Islamic Business, 9(2), 26–42.
Jamlus Rafdi, N., Mohamad Puad, N. A., Shah Shahar, W. S., & Mat Nor, F. (2015). Faktor-faktor muflis dalam kalangan belia di Malaysia. Proceeding of the 2nd International Conference on Management and Muamalah, 484–488.
Kamri, N. A., & Daud, M. Z. (2011). Islamic wealth management: A review on the dimension of values. Jurnal Syariah, 19(3), 187–212.
Laldin, M. A., & Furqani, H. (2013). Developing Islamic finance in the framework of Maqasid al-Shariah: Understanding the ends (maqasid) and the means (wasa'il). International Journal of Islamic and Middle Eastern Finance and Management, 6(4), 278–289.
Latif, S., Ali, A., & Aleem, A. (2024). The concept of Islamic financial management in the light of Quranic teachings: A way forward to organizations. Pakistan Social Sciences Review, 8(3), 789–799.
Lincoln, Y. S., & Guba, E. G. (1985). Naturalistic inquiry. Sage Publications.
Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. Journal of Economic Literature, 52(1), 5–44.
Lusardi, A., Schneider, D., & Tufano, P. (2011). Financially fragile households: Evidence and implications (Discussion Paper No. 03/2011-013). Netspar.
Malterud, K., Siersma, V. D., & Guassora, A. D. (2016). Sample size in qualitative interview studies: Guided by information power. Qualitative Health Research, 26(13), 1753–1760.
Md Nawi, F. A., Ab Aziz, M. R., & Shahwan, S. (2022). Conceptualizing and operationalizing Islamic financial literacy: A multidimensional framework. Advanced International Journal of Banking, Accounting and Finance, 4(11), 12–29.
Mian, A., & Sufi, A. (2014). House of debt: How they (and you) caused the Great Recession, and how we can prevent it from happening again. University of Chicago Press.
Mohd Noor, A., & Mohd Azli, R. (2010). A review of Shariah-compliant instruments for Islamic credit cards as adopted by Malaysian financial institutions. International Journal of Monetary Economics and Finance, 2(3), 1–22.
Mohd Yusoff, Y., Ismail, N., & Hussain, N. A. (2024). A mini exploration on the factors of personal bankruptcy among Malaysian’s youth. Insight Journal, 11(2), 229–247.
Muawaliyah, W., & Saifuddin, A. (2023). Consumptive behavior in female university students: Qana'ah and hedonic lifestyle as predictors. Islamic Guidance and Counseling Journal, 6(1), 70–82.
Muchtar, N. A. H., Samsul, & Kamaruddin. (2024). Imam Al-Ghazali’s perspective on money: Function, ethics, and economic implications in Islamic finance. Journal of Islamic Economic in Southeast Asia, 1(1), 43–56.
Noblit, G. W., & Hare, R. D. (1988). Meta-Ethnography: Synthesizing Qualitative Studies. SAGE Publications
Obaidullah, M., & Khan, T. (2008). Islamic Finance for Micro and Medium Enterprises. Islamic Research and Training Institute (IRTI).
Page, M. J., McKenzie, J. E., Bossuyt, P. M., Boutron, I., Hoffmann, T. C., Mulrow, C. D., Shamseer, L., Tetzlaff, J. M., Akl, E. A., Brennan, S. E., Chou, R., Glanville, J., Grimshaw, J. M., Hróbjartsson, A., Lalu, M. M., Li, T., Loder, E. W., Mayo-Wilson, E., McDonald, S., . . . Moher, D. (2021). The PRISMA 2020 statement: An updated guideline for reporting systematic reviews. BMJ, 372, Article n71.
Rahim, S. H. A., Rashid, R. A., & Hamed, A. B. (2016). Islamic financial Literacy and its Determinants Among University Students: An Exploratory Factor Analysis. International Journal of Economics and Financial Issues, 6(7S), 32-35
Sandelowski, M., Docherty, S., & Emden, C. (1997). Qualitative Metasynthesis: Issues and techniques, Research in Nursing & Health, 20(4), 365-371.
Sophia, E., & Ryandono, M. N. H. (2018). Islamic family budgeting. In Proceedings of the 2nd International Conference Postgraduate School (ICPS 2018) (pp. 81–84).
Syan, C. L., Mohd Rom, N. A., & Md. Hassan, N. (2020). Bankruptcy risk among Gen Y in Klang Valley. International Journal of Advanced Research in Education and Society, 2(3), 32–40.
Tahir, P. R., Sudarmoyo@Suffari, N. F., Mat Saman, F., & Husin, T. (2022). Financial literacy and bankruptcy among youth in Malaysia: Insights from literature for conceptual framework development. International Journal of Accounting, Finance and Business, 7(45), 1–10.
Thaidi, H. 'A. A., Ab Rahman, M. F., & Salleh, A. Z. (2023). Addressing challenges, unleashing potentials: Towards achieving impactful Islamic social finance. Ulum Islamiyyah: The Malaysian Journal of Islamic Sciences, 35(2), 63–85.
Thaler, R. H. (2016). Behavioral economics: Past, present, and future. American Economic Review, 106(7), 1577–1600.
Tini, M., Wadi, I., & Hassan, N. A. (2025). The influence of lifestyle and Islamic financial literacy on the consumptive behavior of Indonesia Smart Scholarship for Higher Education scholarship recipients. Ekonomi Islam, 16(1), 140–166.
Veblen, T. (1899). The theory of the leisure class: An economic study of institutions. Macmillan.
Yusoff, M. E., & Mat Isa, M. Y. (2016). The effectiveness of Qard Hasan financing in promoting educational access: A case study of student loan schemes in Malaysia. International Journal of Economics and Management, 10(S2), 345–361.
Zailani, M. N., Mohd Satar, N., & Zakaria, R. H. (2022). A review of indicators for the preservation of wealth (Hifz al-Mal) based on Maqasid al-Shariah. Journal of Islamic Philanthropy & Social Finance, 4(1), 23–29.
Zaman, A. (2001). [Review of the book The future of economics: An Islamic perspective, by M. U. Chapra]. Islamic Studies, 40(1), 149–154.
Downloads
Published
Issue
Section
License
Copyright (c) 2026 Mohamad Zaim Isamail , Nurul Afifah Abdul Mulup
This work is licensed under a Creative Commons Attribution 4.0 International License.
The copyright of this article will be vested to author(s) and granted the journal right of first publication with the work simultaneously licensed under the Creative Commons Attribution 4.0 International (CC BY 4.0) license, unless otherwise stated.
How to Cite
