Financial self efficacy as a mediator of artificial intelligence use in detecting money laundering and financial fraud in Jordanian Islamic banks

This study examines the mediating role of financial self-efficacy in the relationship between artificial intelligence (AI) adoption and the perceived effectiveness of detecting money laundering and financial fraud in Jordanian Islamic banks. The study addresses a behavioral and institutional gap in the literature by explaining how AI-supported monitoring capabilities may be translated into effective regulatory action through employees’ confidence in interpreting and using AI-generated outputs. A quantitative cross-sectional survey design was adopted. Data were collected from 115 employees working in compliance, Shariah compliance, Shariah supervision, internal audit, auditing, and risk management functions in Jordanian Islamic banks. The questionnaire consisted of 35 items measuring AI adoption, financial self-efficacy, perceived AML/fraud detection effectiveness, and demographic characteristics. The data were analyzed using reliability and validity tests, correlation analysis, standardized multiple regression, and regression-based mediation analysis. The results indicate that AI adoption has a statistically significant positive direct effect on perceived AML/fraud detection effectiveness after accounting for financial self-efficacy (β = 0.296, p = 0.001). AI adoption also has a significant positive effect on financial self-efficacy ( β = 0.640, p < 0.001), while financial self-efficacy has a significant positive effect on perceived AML/fraud detection effectiveness ( β = 0.491, p < 0.001). The mediation analysis shows a significant indirect effect of AI adoption on perceived detection effectiveness through financial self-efficacy (indirect effect = 0.314, Sobel z = 4.806, p < 0.001). The VAF value of 51.46% indicates complementary partial mediation. The findings suggest that AI adoption contributes to perceived AML/fraud detection effectiveness not only through technological capabilities but also through employees’ financial self-efficacy. The study recommends integrating AI-supported monitoring systems with structured training, human-in-the-loop governance, and Shariah-sensitive regulatory procedures in Islamic banks.