Financial Behavior and Debt Decision-Making: The Role of Sharia Compliance of Muslim Entrepreneurs in Pekanbaru

Debt decision-making is an alternative funding source solution for MSME entrepreneurs to meet business capital. This research aims to examine financial behavior that influences debt decision-making by moderating Sharia compliance. This research uses primary data through structured questionnaires from 200 Muslim MSMEs. The distribution of questionnaires used convenience sampling techniques. Partial Least Square Structural Equation Modeling (PLS-SEM) was used to analyze data via SmartPLS software. The research results show that, overall financial behavior does not influence debt decision-making. However, each dimension of financial behavior, namely overconfidence, herding, and risk aversion, influences debt decision-making. Apart from that, Sharia compliance and its dimensions in the form of religious knowledge and religious motivation enhance the financial behavior and debt decision-making. Therefore, the research results indicate that Sharia compliance moderates the influence of financial behavior on debt decision-making.