Responding to Islamic finance anomalies in Indonesia: Sharia financial literacy using virtual reality context

Purpose The purpose of the current study is to investigate the process by which the level of immersion in virtual reality-based behavioral simulation (VR-BS) impacts on the non-cognitive and cognitive outcomes. The cognitive outcome is measured using the increase in the level of sharia financial literacy, while the non-cognitive outcome is measured using the behavioral intention to use VR-BS. Design/methodology/approach The method consists of two parts: First, the development of VR-BS, in the context of sharia financial literacy, using the waterfall model. Second, testing the effectiveness of VR-BS using the theory of interactive media effects (TIME) framework. The participants were 142 students from three secondary schools (two Islamic religious schools and one public school) in Yogyakarta and Central Java, Indonesia. Partial least squares structural equation modeling (PLS-SEM) was used for testing the hypotheses. Findings VR-BS creates a perceived coolness and vividness, which in turn has an impact on increasing the participants’ engagement. Also, the use of VR has an impact on natural mapping, which increases a user’s engagement through its perceived ease of use. As predicted, the user’s engagement affects VR’s behavior, mediated by the user’s attitude toward VR media. VR’s interactivity, however, does not impact on the cognitive aspect. Research limitations The participants were not randomly selected, as the data were collected during the COVID-19 pandemic. As a result, the majority of the participants had never tried VR before this study. The participants, however, were digital natives. Practical implications It is implied from the findings that Islamic financial business actors and the relevant government agencies (e.g., the Indonesian Financial Services Authority [OJK], the Ministry of Education, Culture, Research and Technology, and the Ministry of Religious Affairs) should collaborate to best prepare the future generation of ummah by using VR-BS in their joint promotion and education programs. The results of the current study reveal that the use of VR-BS may attract people to engage in Islamic financial activities. By engaging in such activities, or at least engaging in real-life simulations/classes/workshops, people may gradually acquire more knowledge about Islamic finance.