Is Fintech Financing Failing the Faithful? Online Lending, Debt Culture, and Islamic Economic Principles

Abstract

Background: The rapid growth of online lending platforms across Muslim-majority countries has raised critical questions about the ethical and economic implications of fintech financing, particularly for low-income communities. Purpose: This study investigates whether digital financial services—promoted as tools of financial inclusion—are in fact fostering a culture of economic dependency and debt in contradiction to the foundational principles of Islamic economics, which emphasize self-reliance (ikhtiar), justice ('adl), and the prohibition of riba. The research focuses on three comparative contexts: Indonesia, Malaysia, and Egypt—countries with significant Muslim populations and active fintech ecosystems. Study design/methodology/approach: By employing a literature review methodology supported by empirical data from credible news outlets and publicly available reports, this paper explores how online lending practices differ in regulatory structure, religious framing, and socioeconomic impact. Despite differences in national policies and religious fatwas, a common pattern emerges: the proliferation of short-term, high-interest loans among economically vulnerable populations. Findings: The study highlights the urgency of developing fintech models that align with Islamic moral economy, and calls for stronger institutional frameworks and public awareness to counteract the normalization of debt as a coping mechanism. Research limitations/implications – This paper contributes to a growing discourse on the ethical challenges of digital finance in the Muslim world. Originality/value: This paper offers a novel ethical analysis of online lending practices in three Muslim-majority countries by applying Islamic economic principles—justice, balance, and social responsibility—to the growing fintech landscape.