Determinants of Low Adoption of Islamic Banking in Pakistan

Mir Hassan Junejo; Nusrat Shah

doi:10.35484/ahss.2023(4-III)35

Authors

Mir Hassan Junejo Research Fellow, Institute of Business Administration, University of Sindh Jamshoro, Jamshoro, Sindh, Pakistan
Nusrat Shah Research Fellow, Institute of Business Administration Shaheed Benazir Bhutto University, Nawabshah, Sindh, Pakistan

DOI:

https://doi.org/10.35484/ahss.2023(4-III)35

Keywords:

Islamic Banking, Sharjah-Compliant Financial Institutions, Musharika, Mudariba, Murabaha, Ijara, Consumers Intention, Perceived Risk

Abstract

This paper identifies the main factors that influence the intention to adopt Islamic banking in Pakistan. The primary data presented in the paper is collected through an online survey and personal interviews using questionnaire involving a sample of 201 respondents located in Islamabad, Karachi, Lahore and Sukkur and other cities of Pakistan. The results revealed that bank reputation, compatibility, awareness and service quality positively influence the customers’ intention to adopt Islamic banking whereas perceived risk negatively influences the adoption of Islamic banking services in Pakistan. By identifying the main drivers and inhibitors of Islamic banking adoption this research aims to help the managers to target their strategies and actions more efficiently and effectively. No such study has been already conducted in Pakistan regarding customer’s intention to adopt Islamic banking. Therefore, this study will add to the literature of Islamic banking specifically for Pakistan.