Psychosocial Strains and Default Behavior in Islamic Fintech: An Urban-Rural GST Perspective
Keywords:
Economic pressure, Default intention, Social difficulties, Islamic Microfinance Institution, Urban, Rural areasAbstract
This study explores the psychosocial drivers of loan default among Millennials and Gen Z users of Islamic fintech microfinance in Indonesia, using General Strain Theory (GST) to compare urban and rural contexts. Data from 307 respondents were analyzed using Structural Equation Modeling–Partial Least Squares (SEM-PLS). The findings reveal significant differences: in urban areas, default intention is shaped by social difficulties, inferiority feelings, life dissatisfaction, loneliness, and weakened moral norms, while in rural settings, loneliness is the sole significant factor. Economic pressure was not a dominant predictor, highlighting the greater role of psychosocial strain. These insights suggest that fintech companies should enhance credit risk models by integrating social and psychological indicators. Interventions such as financial literacy, moral education, and community-based support are crucial, especially for rural users facing social isolation. The study contributes a novel integration of GST within the context of Islamic fintech, offering both theoretical depth and practical guidance for inclusive and ethical fintech development.
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