Despite Islamic prohibitions against usury (riba) and materialism, payday loan borrowing remains prevalent among Muslim consumers, raising critical questions about ethical conflict and financial behavior. This study aims to examine the influence of perceived financial knowledge, multidimensional ethics and materialism on cognitive dissonance and continuance intention toward online payday loan services among Muslim consumers.
Data were collected via purposive nonprobability sampling. A total of 191 Muslim consumers experiencing indebtedness through online payday loans participated in the study. Data collection was conducted via an online survey targeting Muslim users who had experience with payday loans. Data were analyzed with partial least squares structural equation modeling.
The results indicate that multidimensional ethics and materialism significantly affect cognitive dissonance among Muslim payday loan borrowers, with ethics exerting a stronger influence. Borrowers who perceive payday loan practices as unjust, culturally unacceptable or personally unsatisfying experience heightened ethical discomfort. Although materialism also contributes to dissonance, its effect is weaker, as the pursuit of immediate gratification lessens ethical concerns. In predicting continuance intention, materialism emerges as the only significant direct driver, reflecting a stronger focus on immediate needs among borrowers. Meanwhile, multidimensional ethics influences continuance intention indirectly, as the ethical discomfort it generates discourages further borrowing. Overall, cognitive dissonance plays a key mediating role, reducing the likelihood of continued payday loan use among borrowers experiencing ethical conflict, while materialism sustains borrowing behavior despite the presence of discomfort.
From an Islamic marketing perspective, this study suggests the need to promote Shariah-compliant financial alternatives, such as interest-free microfinance and cooperative lending, to reduce reliance on payday loans. Marketing practices should emphasize transparency and fairness to address ethical discomfort. Behavioral interventions leveraging cognitive dissonance may further encourage Muslim consumers toward more responsible and ethically aligned financial behaviors.
This study contributes to the Islamic marketing literature by examining Muslim consumers’ payday loan behavior through the lens of general multidimensional ethics and cognitive dissonance theory. Although the ethical framework is not Islamic-specific, the context of payday lending – involving prohibited riba practices in a Muslim-majority country – makes the findings highly relevant for understanding Muslim consumer behavior.
