An Islamic banking perspective on consumers’ perception in Pakistan

Abstract

Purpose – The aim of this research is to examine the perceptions of consumers on Islamic banking and finance in Pakistan. Islamic finance is an emerging phenomenon and its survival depends upon the availability, affordability and awareness. This thesis attempts to fill the gap in the literature by exploring the perceptions of consumers and bankers in an attempt to gain insights so that availability of products and awareness can be increased. Design/methodology/approach – The study uses a regression model by employing perception as a dependent variable and awareness, knowledge and religious motivation as independent variables. The primary data is collected using 150 questionnaires distributed amongst finance students in several universities and employees of Islamic banks in Khyber Pakhtunkhwa (KPK) province of Pakistan. Findings – The findings reveal that overall consumers’ perception is positive about Islamic banking and finance in Pakistan. Statistical analysis shows that awareness, knowledge and religiosity level have positive influence on the perception of consumers about Islamic financing products and services in Pakistan. To improve the awareness and understanding, Islamic banks could make better marketing strategies and could increases their presence by mosque visits and conferences. A cooperation between the industry and scholars could help in more innovative products for the consumers. Implications – There has been a limited amount of work carried out on the perceptions of consumers about Islamic banking in Pakistan. The present study represents start of a larger context for examining Islamic banking practices in Pakistan. The findings of the study can be used as a reference in future research projects in the areas of perceptions and awareness. Originality/value – Little research has been conducted to study this problem from the perspectives of consumers and Islamic banking employees. Most research associated with Islamic banks fails to pay attention to these stakeholder groups in one study.