Abstrak
ABSTRACT This study investigates whether the profit-sharing system affects the preferences of choosing the funding product at Islamic Banks and if so , whether the effect is mediated by financial literacy. Using a sample of 385 customers of Islamic banks in Tanah Datar district, under condition 2018, this study reveals that the profit-sharing system and financial literacy is positively associated with the preferences of choosing funding products. This study proves that this association is significantly mediated by financial literacy. This finding offer the empirical evidence of the importance of financial literacy on the relationship between the profit-sharing system and the preferences of choosing the funding product. It indicates that the system of profit sharing in Islamic banks will not make people turn to Islamic banks without education of the Islamic financial system itself. Furthermore, this research recommends strategy of increasing market share of Islamic Bank by increasing public’s finance literacy. Keyword: financial literacy; islamic bank; preferences; profit sharing