The impact of Islamic economic awareness and financial literacy on household saving behaviour in Herat, Afghanistan : a Theory of Planned Behaviour approach

Abstract

This study aims to analyze the factors influencing household saving behaviour by integrating the Theory of Planned Behaviour (TPB), Islamic Economic Awareness (IEA), and Islamic Financial Literacy (IFL) in Herat City, Afghanistan. The study investigated the effects of psychological and cognitive factors on household saving intention and saving behaviour in a low-income and financially constrained environment. A quantitative research approach was employed using data collected from 242 respondents. Partial Least Squares Structural Equation Modeling (PLS-SEM) was used to analyze the direct and indirect relationships among Attitude (ATT), Subjective Norms (SN), Perceived Behavioural Control (PBC), Islamic Economic Awareness (IEA), Islamic Financial Literacy (IFL), Saving Intention (INT), and Household Saving Behaviour (SB). The findings indicate that Islamic Financial Literacy has a significant positive effect on Perceived Behavioural Control, which in turn has a significant effect on Saving Intention. Islamic Economic Awareness was also found to have significant positive effects on Attitude and Subjective Norms. Furthermore, Perceived Behavioural Control was identified as the strongest predictor of Saving Intention, whereas Attitude and Subjective Norms did not have significant direct effects on Saving Intention. Finally, Saving Intention was found to have a strong and significant positive effect on Household Saving Behaviour. Furthermore, the mediation analysis showed that Saving Intention significantly mediates the relationships between Islamic Financial Literacy, Islamic Economic Awareness, Attitude, Subjective Norms, Perceived Behavioural Control, and Household Saving Behaviour. These findings provide empirical support for the Theory of Planned Behaviour by confirming that behavioural intention plays a crucial role in linking psychological and cognitive factors with household saving behaviour. The study extends the TPB framework to the Afghan context, where evidence remains limited. The study suggests strengthening Islamic Financial Literacy and Islamic Economic Awareness through financial education programs and supportive public policies to foster sustainable household saving behaviour.