A Survey of “Knowledge, Attitudes & Practices” of Islamic Banking Clients: An Evidence from FATA and PATA, Pakistan
Abstract
Islamic banking & Finance and conventional banking are described as having the "same purpose but the essence and operations of Islamic banking are in accordance with Shariah law and have same "basic objectives" as other business and financial entities, i.e. "maximization of shareholder wealth". The speedy development of an Islamic banking system may improve financial insertion by providing an alternative to faith sensitive Muslims who are willingly excluded themselves from the system of conventional finance due to the nature of interest based. In Pakistan, the Islamic banking system eroding the growth of conventional banking so it’s worthy to explore the effect of religious belief the occurrence of a financial exclusion. The target population is from FATA and PATA maintain accounts at Islamic banks and conventional banks and a sample size of one hundred and fifty customers were picked up. The methodology focuses on the KAP Model (knowledge, attitude, practices), which indicates if attitude influences the association among “knowledge and practice” of an “Islamic banking”. Looking into KAP Analysis survey, through study result we find out that knowledge about Islamic banking and practices of Islamic banking are closely related. People having information about Islamic Banking and Products are more inclined towards Islamic Banking and people who don’t have much information are less interested in Islamic banking and Islamic products. KAP survey suggested that customers of conventional and Islamic banks are driven by the same motivating factors that have impact on their attitude. However, there have some likable factors that could be valued by “Islamic bank account holders only such as “variety of products & services, reliability, confidence in bank’s management, reputation and most important compliance with the Shariah rules in finance & investment.”. Low-cost services are some factors result in non-Muslims prefer Islamic Banking over the conventional banking.
References
Anwar, Y. (2012). Islamic Banking Bulletin. [Press release]. State Bank of Pakistan, Islamic Banking Department. Retrieved from http://www. sbp.org.pk/ibd/bulletin/2012/IBB-sep-2012.pdf.
Arshad, M., Aslam, S., Razi, A., & Ali, S.A. (2011). A Comparative Analysis of Bankers’ Perception on Islamic Banking in Pakistan. International Journal of Economics and Research, 2(4), 1-12.
Bakar, M. A. (2010). BROAD DISTINCTION BETWEEN ISLAMIC & CONVENTIONAL BANKING. Seminar on Islamic Finance, Bank Islam and Malaysian Press Institute.
Cihak, M., & Hesse, H. (2008). Islamic banks and financial stability: an empirical analysis. IMF Working Papers, 1-29.
Fada, K. A., & Wabekwa B. (2012). People’s Perception Towards Islamic Banking: A Field work study in Gombe Local Government Area, Nigeria. International Journal of Business, Humanities and Technology, 2(7), 55-61.
Gait, A. & Worthington, A. (2009), Libyan Business Firm Attitudes towards Islamic Methods of Finance. Discussion Papers in Finance: 2009-10, Griffith University, Department of Accounting, Finance and Economics.
Hamid, M. A., Yaakub, N. I., Mujani, W. K., Sharizam, M., & Jusoff, K. (2011). Factors Adopting Islamic Home Financing: A Case Study Among Customers of Islamic Banks in Malaysia. Middle-East Journal of Scientific Research 7 (Special Issue of Diversity of Knowledge on Middle East): 47-58.
Haque, A., Osman, J., & Ismail, A.Z. (2009). Factor influences selection of Islamic banking: a study on Malaysian customer preferences. American Journal of Applied Sciences, 6(5), 922-933.
Hassan, M. (2007). People’s Perceptions towards the Islamic Banking: A Fieldwork Study on Bank Account Holders’ Behavior in Pakistan, School of Economics. Nagoya City University Japan, 467-8501.
Hidayat, S. E., & Al-Bawardi, N. K. (2012). Non-Muslims’ Perceptions Toward Islamic Banking Services in Saudi Arabia. Journal of US-China Public Administration, 9(6), 654-670.
Imran, M., Samad, S. A., & Masood, R. (2011). Awareness Level of Islamic Banking in Pakistan’s' Two Largest Cities. Journal of Managerial Sciences, 1.
Khan, F. (2010). How ‘Islamic’ is islamic banking? J. Econ. Behav. Organ., 76, 805-820.
Khattak, N. A., & Rehman, K. U. (2010). Customer satisfaction and awareness of Islamic banking system in Pakistan. African Journal of Business Management, 4(5), 662-671.
Ling, K. L., Ling, K. M., Pey, L. S., Hui, W. Z., & Rahman, U. (2012). Awareness of Islamic Banking Products and Services among Non-Muslims in Malaysia. University of Tunku Abdul Rahman, Faculty of Business and Finance, Department of Finance.
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.
Mahdi et al. (2018). Relationship between capital, risk and liquidity: a comparative study between Islamic and conventional banks in MENA region. Research in International Business and Finance, 45(2018), 588–596.
Mahdi, I. B. S., & Abbes, B. M. (2017). Relationship between capital, risk and liquidity: a comparative study between Islamic and conventional banks in MENA region. Res. Int. Bus. Finance. http://dx.doi.org/10.1016/j.ribaf.2017.07.113, In Press
Marimuthu, M., Wai Jing, C., Phei Gie, L., Pey Mun, L., & Yew Ping, T. (2010). Islamic Banking: Selection Criteria and Implications. Global Journal of Human-Social Science Research, 10(4).
Mohanty, S. K., Lin, H. J., Aljuhani, E. A., & Bardesi, H. J. (2016). Banking efficiency in gulf cooperation council (GCC) countries: a comparative study. Rev. Finance. Econ., 31, 99–107, http://dx.doi.org/10.1016/j.rfe.2016.06.004
Moin, M. S. (2008). Performance of Islamic banking and conventional banking in Pakistan: a comparative study (Doctoral dissertation, University of Skövde).
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.
Sheikh, M. A., Taseen, U., Haider, S. A., & Naeem, M. (2010). Islamic Vs Conventional Banks in Pakistan (A case study of Bahawalpur). Journal of Educational Research, 2(3), 23-35.
Sun, et al. (2014). The assets and liabilities gap management of conventional and Islamic banks in the organization of Islamic cooperation (OIC) countries. Appl. Finance. Econ., 24, 333-346. https://doi.org/ 10.1080/09603107.2013.877568
Zainol, Z., Shaari, R., & Ali, H. M. (2008). A Comparative Analysis on Bankers’ Perceptions on Islamic Banking. International Journal of Business and Management, 3(4), 157.
ZiaUddin, A. (2016). Islamic Banking: State of the Art. Retrieved from http://www.isdb.org/irj/go/km/docs/documents/IDBDevelopments/Internet/English/IRTI/C M/downloads/IES_Articles/Vol%202-1.Ziauddin.ISLAMIC%20BANKING.pdf
This work is licensed under a Creative Commons Attribution 4.0 International License.
Copyright for this article is retained by the author(s), with first publication rights granted to the journal.
This is an open-access article distributed under the terms and conditions of the Creative Commons Attribution license (http://creativecommons.org/licenses/by/4.0/).
