Determinants of low adoption of Islamic banking in Pakistan

Irfan Butt, Nisar Ahmed, Amjad Naveed, Zeeshan Ahmed

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

Purpose: The purpose of this paper is to examine the reasons behind low penetration of Islamic banking in Pakistan. Specifically, the study investigates the differentiation of Islamic banks (IBs) from conventional banks, the role of religion in choosing Islamic banking and the perception of IBs amongst the consumers. Design/methodology/approach: The study uses a mixed-method approach, qualitative research along with a survey of users of conventional and Islamic banking. Factor analysis identified underlying dimensions and cluster analysis ascertained the differences between users and non-users of Islamic banking. Inferential statistics were used to test purported hypotheses. Findings: The study finds that the users and non-users both perceive that Islamic banking is not completely interest-free. Furthermore, consumers presume that IBs are more of eyewash and are not truly practicing Islamic banking. Moreover, religion is not a major factor that attracts new users but there are also other important factors in marketing Islamic banking, such as service quality, convenience, branch network, etc. Originality/value: This is one of the sparse studies in the field of Islamic banking consumer behaviour, which uses focus groups of users and non-users, and in-depth interviews of experts, to identify the issues and factors considered relevant and important by the users rather than relying only on literature review. Furthermore, it also provides a profile of users versus non-users of Islamic banking which is very useful for segmentation and targeting of customers.

Original languageEnglish
Pages (from-to)655-672
Number of pages18
JournalJournal of Islamic Marketing
Volume9
Issue number3
DOIs
Publication statusPublished - Sep 10 2018

Fingerprint

Pakistan
Islamic banking
Islamic financial institutions
Factors
Factor analysis
Segmentation
Consumer behaviour
Penetration
Focus groups
Literature review
Mixed methods
Service quality
Hypothesis test
Marketing
Cluster analysis
Targeting
Statistics
In-depth interviews
Qualitative research
Design methodology

Keywords

  • Adoption of Islamic banking
  • Consumer perception
  • Islamic banks
  • Mixed-method

ASJC Scopus subject areas

  • Marketing

Cite this

Determinants of low adoption of Islamic banking in Pakistan. / Butt, Irfan; Ahmed, Nisar; Naveed, Amjad; Ahmed, Zeeshan.

In: Journal of Islamic Marketing, Vol. 9, No. 3, 10.09.2018, p. 655-672.

Research output: Contribution to journalArticle

Butt, Irfan ; Ahmed, Nisar ; Naveed, Amjad ; Ahmed, Zeeshan. / Determinants of low adoption of Islamic banking in Pakistan. In: Journal of Islamic Marketing. 2018 ; Vol. 9, No. 3. pp. 655-672.
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