Adnan Khan, Nazim Ali, Arshad Ali, Zahid Ali


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.


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

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