FACTORS DETERMINING CUSTOMERS’ ATTITUDE AND PERCEPTION TOWARDS ISLAMIC BANKING PRACTICES IN MALAKAND DIVISION

Adnan Khan, Nazim Ali, Arshad Ali, Zahid Ali

Abstract


Islamic banking, being an integral component of Islamic financial system, gained an exceptional popularity over the last three decades. The higher rate of growth of Islamic banking has proved it as a best alternative to Riba based banking. Like the other industries; in Islamic banking industry, customers are the most integral part of the organization strategies. Various authors endured to examine the perception and attitude of customers from one aspect or another. It is evident form the literature that the determining factors of attitude and perceptions are varying from country to country. Keeping in view the phenomenon under question, the basic objective of this study is to examine the factors determining customers’ attitude and perception towards Islamic banking practices in Malakand division. Previous studies focused on the urban areas and big cities of Pakistan, Malakand division is selected as study region as majority of the population lives in rural areas of the country. Three districts of Dir (lower), Malakand and Swat are selected as sample for data collection. Data is collected through survey questionnaires from 300 customers of Islamic banking branches operating in the study region. Questionnaire is adapted from previous studies. Correlation, and Regression are used for analysis the data.

Results of the study show that all five variables have significant positive relationship with customers’ attitude. However, awareness and Shariah compliance show a negative relationship with perceptions of customers. Furthermore, Religiosity is the most dominant determinant of the customers’ attitude and perception, followed by bank image & reputation and social Influence. Customers give lesser importance to Shariah compliance and awareness as determinant of their attitude and perception towards Islamic banking practices.

The results of the study are expected to benefit the banking industry in general and bankers in specific. The bankers would be able to attract more and more customers by focusing on the key determinants. The results assist the policy makers in designing, revision and implementation of the policies to satisfy the needs of the customers of the region.  The study is also beneficial to the society at large, as more and easy investment and financing facilities would be available to them. Furthermore, due to awareness and information to the bankers and customers; more and more job or business opportunities would be available to the local community and thus unemployment would be eliminated.


Keywords


Key words: Riba, Musharika, Mudariba, Islamic Banking, Religiosity, Shariah.

Full Text:

PDF

References


Abdullah, N. I., & Dusuki, A. W. (2006). CUSTOMERS’PERCEPTIONS OF ISLAMIC HIRE-PURCHASE FACILITY IN MALAYSIA: AN EMPIRICAL ANALYSIS. IIUM Journal of Economics and Management, 14(2), 177-204.

Ahmad, A., & Bashir, R. (2014). An Investigation of Customer's Awareness Level and Customer's Service Utilization Decision in Islamic Banking. Pakistan Economic and Social Review, 59-74.

Akhtar, N., Mehmood, M. T., Pervez, M. Z., Aslam, F., & Akhtar, H. M. A. (2016). Factors Influencing the Perception of Customers in Islamic Banking: A Case Study in Pakistan. International Review of Management and Business Research, 5(3), 844.

Alam, S. S., Janor, H., Zanariah, C., & Ahsan, M. N. (2012). Is religiosity an important factor in influencing the intention to undertake Islamic home financing in Klang Valley. World Applied Sciences Journal, 19(7), 1030-1041.

Amin , M., Isa, Z., & Fontaine, R. (2013). Islamic banks: Contrasting the drivers of customer satisfaction on image, trust, and loyalty of Muslim and non-Muslim customers in Malaysia. International Journal of Bank Marketing, 31(2), 79-97.

Ashraf, S., Robson, J., & Sekhon, Y. (2015). Consumer trust and confidence in the compliance of Islamic banks. Journal of Financial Services Marketing, 20(2), 133-144.

Asif, M., Shah, F. A., Afeef, M., & Ahmed, Z. (2016). Factors Determining the Attitude of Customers towards Islamic Banking: A Study of Peshawar, Pakistan. Abasyn University Journal of Social Sciences, 9(1).

Awan, A. G., & Azhar, M. (2014). Consumer Behavior towards Islamic Banking in Pakistan. European Journal of Accounting Auditing and Finance Research, 2(9), 42-65.

Boone, H. N., & Boone, D. A. (2012). Analyzing likert data. Journal of extension, 50(2), 1-5.

Buchari, I., Rafiki, A., & Al Qassab, M. A. H. (2015). Awareness and attitudes of employees towards islamic banking products in Bahrain. Procedia Economics and Finance, 30, 68-78.

Erol, C., & El-Bdour, R. (1989). Attitudes, behaviour, and patronage factors of bank customers towards Islamic banks. International Journal of Bank Marketing, 7(6), 31-37.

Haron, S., Ahmad, N., & Planisek, S. L. (1994). Bank patronage factors of Muslim and non-Muslim customers. International Journal of Bank Marketing, 12(1), 32-40.

IBB , S. (2018). Islamic Banking Bulletin.

Jaffar, M. A., & Musa, R. (2016). Determinants of attitude and intention towards Islamic financing adoption among non-users. Procedia Economics and Finance, 37, 227-233.

Kamaruddin, A. R. (2007). Religiosity and shopping orientation: a comparative study of Malaysia and Thailand consumers. Journal of Global Business Management, 3(2), 1-13.

Khattak, N. A. (2010). Customer satisfaction and awareness of Islamic banking system in Pakistan. African Journal of Business Management, 4(5), 662.

Lee, K.-h., & Ullah, S. (2007). Integration of Islamic and conventional finance. International Review of Business Research Papers, 3(5), 241-265.

Lee, K.-h., & Ullah, S. (2011). Customers' attitude toward Islamic banking in Pakistan. International Journal of Islamic and Middle Eastern Finance and Management, 4(2), 131-145.

Loo, M. (2010). Attitudes and perceptions towards Islamic banking among Muslims and non-Muslims in Malaysia: implications for marketing to baby boomers and x-generation. International Journal of Arts and Sciences, 3(13), 453-485.

Mansour, I. H. F. H., & Diab, D. M. E. (2013). The Impact of Religiosity commitments on Attitude towards Celebrities Endorsed TV Advertising and Buying Behavior. Paper presented at the The Annual Conference of Postgraduates Studies and Scientific Research–Humanities and Educational studies.

Mehtab, H., Zaheer, Z., & Ali, S. (2015). Knowledge, Attitudes and Practices (KAP) Survey: A Case Study on Islamic Banking at Peshawar, Pakistan. FWU Journal of Social Sciences, 9(2), 1.

Mukhtar, A., & Butt, M., Muhammad. (2012). Intention to choose Halal products: the role of religiosity. Journal of Islamic Marketing, 3(2), 108-120.

Naser, K., Al Salem, A., & Nuseibeh, R. (2013). Customers awareness and satisfaction of Islamic banking products and services: Evidence from the Kuwait finance house. International Journal of Marketing Studies, 5(6), 185.

Naser, K., Jamal, A., & Al-Khatib, K. (1999). Islamic banking: a study of customer satisfaction and preferences in Jordan. International Journal of Bank Marketing, 17(3), 135-151.

Newaz, F. T., Fam, K.-S., & Sharma, R. R. (2016). Muslim religiosity and purchase intention of different categories of Islamic financial products. Journal of Financial Services Marketing, 21(2), 141-152.

Obeid, H., & Kaabachi, S. (2016). Empirical investigation into customer adoption of Islamic banking services in Tunisia. Journal of Applied Business Research, 32(4), 1243.

Rammal, H. G., & Zurbruegg, R. (2007). Awareness of Islamic banking products among Muslims: The case of Australia. Journal of Financial Services Marketing, 12(1), 65-74.

Raven, B. H. (1964). Social influence and power: CALIFORNIA UNIV LOS ANGELES.

Reuters, I.-T. (2018). Islamic Finance Development Report 2018: Building Momentum. ICD-Thomson Reuters.

Rowley, J. (2014). Designing and using research questionnaires. Management Research Review, 37(3), 308-330.

Saqib, L., Farooq, M. A., & Zafar, A. M. (2016). Customer perception regarding Sharī ‘ah compliance of Islamic banking sector of Pakistan. Journal of Islamic Accounting and Business Research, 7(4), 282-303.

SBP. (2017). Islamic Banking Bulletin, March, 2017, 24.

Shahzad, K. (2012). Factors Responsible for Making Consumer Attitude towards Islamic Banking: A Study of Islamic Banks Accountholders of Peshawar Region Pakistan. Oman Chapter of Arabian Journal of Business and Management Review, 34(970), 1-11.

Sood, J., & Nasu, Y. (1995). Religiosity and nationality: An exploratory study of their effect on consumer behavior in Japan and the United States. Journal of Business Research, 34(1), 1-9.

Souiden, N., & Jabeur, Y. (2015). The impact of Islamic beliefs on consumers’ attitudes and purchase intentions of life insurance. International Journal of Bank Marketing, 33(4), 423-441.

Souiden, N., & Rani, M. (2015). Consumer attitudes and purchase intentions toward Islamic banks: The influence of religiosity (Vol. 33).

Tara, N., Irshad, M., Khan, M. R., Yamin, M., & Rizwan, M. (2014). Factors influencing adoption of Islamic banking: a study from Pakistan. Journal of Public Administration and Governance, 4(3), 352-367.

Yeates, C. (2008). Islamic finance rides the storm. The Sydney morning herald, 11.

Zaher, T. S., & Hassan, K. (2001). A comparative literature survey of Islamic finance and banking. Financial Markets, Institutions & Instruments, 10(4), 155-199.


Refbacks

  • There are currently no refbacks.


Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Creative Commons License
Sarhad Journal of Management Sciences by Sarhad University of Science & Information Technology is licensed under a Creative Commons Attribution 4.0 International License.
Based on a work at suit.edu.pk