Auni Zulfaka2026-01-052026-01-052025https://studentrepo.iium.edu.my/handle/123456789/33741The policymakers and financial industry in Malaysia have actively promoted financial literacy initiatives following the launch of the Financial Sector Blueprint 2022-2026, aimed at elevating the financial well-being of all households as one of their strategic thrusts. Despite these efforts, however, the financial well-being of Malaysian households remains concerningly low. High poverty rates, rising bankruptcy cases, and insufficient retirement savings, especially within these households, highlight the urgency of addressing these issues. The aims of this study are to investigate the role of Islamic financial literacy, with the following objectives: (i) to identify the impact of Islamic financial literacy and the financial well-being of Malaysian households, (ii) to determine the potential mediating effect of financial decision-making between Islamic financial literacy and financial well-being of Malaysian households, (iii) to examine the determining factors that influence the financial well-being of Malaysian households, (iv) to analyse the application of the Theory of Planned Behavior affect the financial well-being among Malaysian households, and (v) to investigate the influence of Social Cognitive Theory on the financial well-being of Malaysian households. By applying the Theory of Planned Behavior and Social Cognitive Theory, this study frames financial well-being as a function of an individual's religious attitudes, community-based social norms, and the self-belief that they can manage their wealth in a manner consistent with Islamic principles. The study employs quantitative methods, with data collected from 402 respondents in the Klang Valley region using a cross-sectional design and questionnaire instruments. The collected data were analyzed using Structural Equation Modeling (SEM) techniques, specifically PLS-SEM 4.0 software and SPSS 26. The results of the survey revealed a significant positive effect between Islamic financial literacy and both financial decision-making and financial well-being among households. Additionally, the study found that financial decision-making partially mediates the relationship between Islamic financial literacy and the financial well-being of Malaysian households. These findings suggest that financial decision-making plays a pivotal role in improving households' financial well-being, emphasizing its potential as a key factor in enhancing overall financial outcomes. The determinants of financial well-being tested in this study namely, financial inclusion, religiosity, perceived behavioral control, and financial self-efficacy within the context of Islamic finance were found to have a statistically significant positive impact on the financial well-being of Malaysian households. These results highlight the multidimensional nature of financial well- being and its strong alignment with Islamic financial principles. This study makes both theoretical and empirical contributions to understanding the role of Islamic financial literacy in enhancing the financial well-being of Malaysians. It emphasizes the need to tailor financial literacy and awareness programs to foster more effective participation in Islamic financial products and services. To address Malaysia's pressing challenges of poverty, bankruptcy, and low retirement savings, which significantly affect financial well-being, the study identifies several solutions through the application of Islamic social finance (ISF), increased government participation, policymakers, practitioners, community engagement and enhanced collaboration with state entities. Additionally, the study outlines potential areas for future research, presenting opportunities to expand knowledge and deepen understanding within this critical field.enJOINTLY OWNED WITH A THIRD PARTY(S) AND/OR IIUMIslamic financial literacy;financial well-being;financial decision-makingFinancial literacy -- MalaysiaFinance, Personal -- MalaysiaEconomic development -- MalaysiaDoctoral Theses