scholarly journals An Islamic banking perspective on consumers’ perception in Pakistan

2017 ◽  
Vol 9 (4) ◽  
pp. 337-358 ◽  
Author(s):  
Umair Riaz ◽  
Musafar Khan ◽  
Naimat Khan
Keyword(s):  
Positive Influence ◽  
Marketing Strategies ◽  
Primary Data ◽  
Future Research ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Religious Motivation ◽  
Content Type ◽  
Banking And Finance ◽  
Innovative Products

Purpose The aim of this study is to examine the perceptions of consumers on Islamic banking and finance in Pakistan. Islamic finance is an emerging phenomenon, and its survival depends on the availability, affordability and awareness. This paper attempts to fill the gap in the literature by exploring the perceptions of consumers and bankers in an attempt to gain insights so that the availability of products and awareness can be increased. Design/methodology/approach The study uses a regression model by using perception as a dependent variable and awareness, knowledge and religious motivation as independent variables. Primary data is collected using 150 questionnaires distributed amongst finance students in several universities and employees of Islamic banks in the 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 a 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 increase their presence by mosque visits and conferences. Cooperation between the industry and scholars could help in providing more innovative products to the consumers. Research limitations/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 the 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 of the research associated with Islamic banks fails to pay attention to these stakeholder groups in one study.

Sharia’h practice at Islamic banks in Pakistan

2018 ◽  
Vol 9 (3) ◽  
pp. 274-289
Author(s):  
Muhammad Tariq Majeed ◽  
Abida Zainab
Keyword(s):  
Risk Sharing ◽  
Banking Sector ◽  
Islamic Law ◽  
Banking Industry ◽  
Supervisory Board ◽  
Primary Data ◽  
Equation Modeling ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type

PurposeIslamic banks provide an alternative financial system based on Sharia’h (Islamic law). However, critics argue that operation at Islamic banks is violating Sharia’h particularly in terms of provision of interest free services, risk sharing and legal contract. The purpose of this paper is to empirically evaluate the Sharia’h practice at Islamic banks in Pakistan by considering some basic principles of Sharia’h. Design/methodology/approachPrimary data are collected from 63 branches of Islamic banks in Pakistan. Questionnaire is used as an instrument. The study uses structural equation modeling that includes confirmatory factor analysis and regression analysis. Data are codified and analyzed using SPSS and Amos. FindingsThis study finds that Islamic banks are providing interest free services, ensuring that transactions and contracts offered by Islamic banks are legal and offering conflict-free environment to customers. In contrast, estimated results expose that Islamic banks are not sharing risk and Sharia’h supervisory board is not performing its role perfectly. Similarly, it is found that organization and distribution of zakat and qard-ul-hassan are weak at Islamic banks. Research limitations/implicationsData are collected from Islamabad federal capital of Pakistan that hold just 5 per cent share of Islamic banking industry. This small share may not provide true picture of Islamic banking sector. Practical implicationsTo ensure risk sharing, Islamic banking industry must consider the development of new modes of financing and innovation of more products based on Sharia’h. State Bank of Pakistan should ensure separate regulatory framework that enable Islamic banks to provide qard-ul-hassan, organize and allocate zakat. Originality/valueThis paper discusses the perception of bankers, who are actually the executors, about Shariah’s practices at Islamic banks in Pakistan. There are not many discussions on this topic that could be found, and hence this could be considered as a significant contribution by this paper to the existing literature of Islamic finance.

A study of factors affecting word of mouth (WOM) towards Islamic banking (IB) in Jordan

2019 ◽  
Vol 14 (4) ◽  
pp. 639-667 ◽  
Author(s):  
Bushra K. Mahadin ◽  
Mamoun N. Akroush
Keyword(s):  
Service Quality ◽  
Consumer Behaviour ◽  
Word Of Mouth ◽  
Perceived Value ◽  
Future Research ◽  
Islamic Banking ◽  
Decision Making Process ◽  
Islamic Banks ◽  
Content Type ◽  
Factors Affecting

PurposeThe purpose of this paper is to identify factors affecting word-of-mouth (WOM) towards Islamic Banking (IB) in Jordan through understanding the roles of service quality and perceived value.Design/methodology/approachA self-administered survey was hand-delivered to the targeted sample of Islamic banks customers in Jordan. The authors delivered 400 questionnaires to customers from which 352 were deemed valid for the analysis. Exploratory and confirmatory factor analyses were performed to assess the research constructs validity and composite reliability. Structural path analysis was also used to test the research model and hypothesised relationships between the variables.FindingsService quality has a positive and significant effect on perceived value and WOM towards IB. Convenience has a positive and significant effect on perceived value. Finally, perceived value has a positive and significant effect on WOM towards IB. Service quality exerted the strongest effect on perceived value and WOM. Also, 38 per cent of variation in perceived value was caused by religious motives, service quality and convenience path, whereas 34 per cent of variation in WOM towards IB was caused by perceived value, service quality and convenience path.Research limitations/implicationsFuture research needs to investigate other factors that may affect customers’ WOM concerning IB such as perceived bank image, trust and subjective norms. Future research should investigate other dimensions of perceived value such as social, psychological, emotional, sacrifice value and product values and how they affect WOM. From an international marketing standpoint, comparative studies between Jordanian and non-Jordanian Islamic customers are potential areas of future research for international marketing strategies and cross-cultural consumer behaviour analysis.Practical implicationsThe paper identifies the determinants of WOM towards IB. Managers should focus on executing service quality strategies customised towards IB. Convenience is a major driver of perceived value and, then, WOM towards IB. Managers need to focus on key marketing messages that enhance religious motives in customers’ minds and hearts; however, attracting new customers and retaining the current ones depend on the perceived benefits in the areas of service quality, convenience and several value aspects.Originality/valueThis study is the first of its kind to test a model of WOM determinants in IB in Jordan. The study is thought to have made a reasonable contribution to consumer behaviour literature and, specifically, for decision-making process through developing and testing a model of WOM determinants towards IB. The study offers CEOs and marketing managers of Islamic banks new insights into the determinants of WOM and how they contribute to consumers’ decision-making process and attitudes to achieve the intended behavioural outcomes towards IB, which were not available at their hands before. These empirical findings are crucial inputs for marketing strategy formulation and implementation.

Social networking information and pre-employment background check: mediating effects of perceived benefit and organizational branding

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Md Sajjad Hosain ◽  
Ping Liu ◽  
Mohitul Ameen Ahmed Mustafi
Keyword(s):  
Social Networking ◽  
Structural Equation ◽  
Positive Influence ◽  
Primary Data ◽  
Equation Modeling ◽  
Future Research ◽  
Content Type ◽  
Background Check ◽  
Perceived Benefit

PurposeThe purpose of this empirical paper is to identify the role of social networking information (SNI) on job candidates' pre-employment background checking (PBC) process. SNI was further divided into three elements: perceived availability of information (PAI), perceived accuracy of information (PACI) and perceived reliability of information (PRI). In addition, the authors employed two mediating variables: perceived benefit (PB) and organizational branding (OB) to study the influence of each element of SNI on PBC.Design/methodology/approachThe authors used primary data collected from a valid sample of 465 using a structured questionnaire survey selected through purposive sampling. For descriptive analysis, SPSS 24 and for testing the hypothesized relationships, structural equation modeling technique (with AMOS 24) were utilized.FindingsThe results indicated that only PAI had strong positive influence on PBC. The other two independent variables: PACI and PRI had insignificant positive influence on PBC. In case of mediators, OB was found to partially mediate the relationship between PAI and PBC while it did not mediate two other direct relationships. Further, PB did not mediate any relationship at all.Research limitations/implicationsThe paper is expected to be useful for the academicians involved in investigating the role of SNI on PBC as a lucrative research topic.Practical implicationsThe hiring professionals can utilize the findings of this primary research as the guidelines for formulating effective social media background checking policies.Originality/valueUsing SNI for different HRM practices is comparatively new but a growing practice. However, the empirical investigation covering this area is almost absent in academia. This paper as one of the very initial attempts to reveal the role of SNI on PBC can fill that severe gap to some extent and guide future research attempts. Furthermore, the HR professionals are expected to be benefitted from the empirical results in formulating and implementing an effective media policy that will help them in utilizing the SNI in an efficient and rightful manner.

Ethical consideration of Islamic banks in Pakistan: an empirical analysis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Fatima Khaleel ◽  
Pervez Zamurrad Janjua ◽  
Mumtaz Ahmed
Keyword(s):  
Banking Sector ◽  
Annual Reports ◽  
Survey Method ◽  
Future Research ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Ethical Values ◽  
Content Type ◽  
Islamic Bank ◽  
Finance Ethics

Purpose The purpose of this paper is threefold. First, it assesses communicated (information disclosed in annual reports and websites) ethical values of Islamic banks (IBs) by using an index based on Islamic precept. Second, this research paper analyzes the perception of employees working in IBs of Pakistan regarding previously mentioned dimensions constructed in the form of index. Third, it explores the difference (if any) between communicated and perceived ethical values of IBs in Pakistan. Design/methodology/approach This study incorporated two research methods, namely, content analysis (qualitative method) and descriptive analysis (quantitative method) to assess communicated and perceived ethical values. A checklist was designed that includes total six dimensions with 106 items or constructs. For perceived ethics, survey method is used to explore how far in practice IBs are operating in line with Islamic finance ethics in Pakistan by distributing questionnaires among employees. Findings This research study revealed overall satisfactory communicated and perceived ethical values in IBs of Pakistan. It is generally concluded that Meezan Bank is doing well in all dimensions as compare to other three banks in Pakistan. Some banks such as Dubai Islamic Bank and Albaraka Islamic bank lack proper format of annual reports. It recommended proper training and development of employees particularly about Islamic banking products and procedure. Moreover, it is recommended to take initiative of attracting female segment of the society and environment protection related campaigns. Research limitations/implications Because of data and time constraints, an extended beneficiary analysis could not be materialized in this study. Therefore, for future research, it is recommended to expand the stakeholders’ analysis beyond employees of IBs. Practical implications This study may be helpful for policymakers and other stakeholders to improve the image and for further growth of IBs in Pakistan. Social implications This study is the part of corporate social responsibility, so it will add value to social norms of banking sector and provide different dimensions and constructs based on Islamic ethical and moral system. It highlights banker’s responsibilities toward society. Originality/value This paper supports the phenomena of Islamic banking and finance in emerging markets and shows its potential growth for the economy.

scholarly journals The internal challenges facing Islamic finance industry

2016 ◽  
Vol 9 (2) ◽  
pp. 222-235 ◽  
Author(s):  
Abdulazeem Abozaid
Keyword(s):  
Product Development ◽  
Design Methodology ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Banking And Finance ◽  
Finance Industry ◽  
Development Methodology ◽  
Shariah Governance

Purpose The paper aims to highlight the challenges facing Islamic finance industry and outline the prospectus of what constitutes a sound Islamic banking product in terms of both its Shariah control and product development methodology. Design/methodology/approach The paper analytically addresses the internal challenges facing Islamic finance industry by highlighting, first, the deficiencies in the existing Shariah supervisory work and, then, the deficiencies in the product development methodology followed in Islamic banks. Findings Islamic banking and finance is facing some internal challenges which require immediate action. Although facing the external challenges may be beyond the capacity of the industry players, Islamic banks have no excuse to overlook or turn a blind eye to their internal challenges which can be overcome by enacting Shariah governance for both products and Shariah control and reforming the methodology of product development. Originality/value This paper highlights an issue that has not received the needed attention, and it proposes the necessary solutions to the problems it identifies.

Factors influencing the community behavioral intention for adoption of Islamic banking

2019 ◽  
Vol 12 (4) ◽  
pp. 586-600 ◽  
Author(s):  
Sayeda Zeenat Maryam ◽  
Mian Saqib Mehmood ◽  
Chaudhry Abdul Khaliq
Keyword(s):  
Behavioral Intention ◽  
Reasoned Action ◽  
Cost Benefit ◽  
Positive Influence ◽  
Government Support ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Bottom Line ◽  
Content Type ◽  
Practical Implications

Purpose Islamic banking (IB) is growing rapidly not only in Islamic countries but also in all over the world. The purpose of this paper is to stumble on the features that have an impact on Islamic banking adoption (IBA) in case of Pakistan. Design/methodology/approach The identification of the factors that affect IBA has made by extending the theory of reasoned action (TRA). However, the conceptual model for this study includes knowledge (K), business support (BS), government support (GS), reputation (Rep), religious obligation (RO), cost-benefit (CB) and social influence (SI) as the independent variables. To test the conceptual framework data were collected through a survey by distributing the 400 questionnaires among users- and non-users of Islamic banks. Multiple regression analysis was applied to test the hypothesis of this study. Findings The findings of the study suggest that Rep, CB, RO and SI has a highly significant and positive influence on IBA. On the other hand, K, GS and BS have insignificant influence on IBA. The bottom line of this study suggests that more the ROs will be adopted by Islamic banks, more will be the tendency to adopt it by a bank customer in case of Pakistan. Research limitations/implications The generalizability of the findings of this research is limited to IB. Practical implications Findings of the study present worthy insight especially for the practitioners to develop significant strategies to bridge the gap between industry and academia in case of IB. Originality/value This study is an extension of TRA.

scholarly journals Islamic banking sustainability: theory and evidence using a novel quadruple bottom line framework

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
M. Luthfi Hamidi ◽  
Andrew C. Worthington
Keyword(s):  
Rural Areas ◽  
Islamic Law ◽  
Principal Component ◽  
Primary Data ◽  
Small Scale ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Bottom Line ◽  
Content Type ◽  
Sustainability Theory

PurposeThe study aims to extend the conventional triple bottom line (TBL) framework (prosperity, people and planet) to the quadruple bottom line (QBL) by newly adding a “prophet” dimension for Islamic banks seeking compliance with Islamic law in their pursuit of sustainability.Design/methodology/approachEmploy Chapra's corollaries of maqasid al-shari'ah (the goals of Islamic law) to develop constructs for a survey of 504 Islamic bank stakeholders from five Indonesian provinces to gather primary data to quantitatively verify the dimensions and items in the proposed QBL framework. Categorical principal component analysis (CATPCA) then identifies the sustainability of ten Islamic banks from ten countries as a trial application of the resulting QBL index.FindingsUsing the dimensions and items identified using CATPCA, the authors develop a QBL index to assess the sustainability of the ten Islamic banks. The findings suggest that half of the banks are sufficiently sustainable, with three being proactive (doing more than is required) and two being accommodative (doing all that is required). The remaining five banks are unsustainable, with two banks being defensive (doing the least that is required) and three being reactive (doing less than is required). Most of the banks perform relatively poorly according to the “planet” (38%) and “people” (41%) dimensions and perform better on the “prosperity” (53%) and “prophet” (63%) dimensions. Nonetheless, there is ample room for improvement across all dimensions of sustainability.Research limitations/implicationsThe generalizability of the findings is limited by the small-scale single-country survey used in the CATPCA part of the analysis. Only ten Islamic banks were included in the QBL scoring and ranking exercisesPractical implicationsIslamic banks can improve their sustainability by increasing green financing and reaching out to rural areas and disadvantaged populations. In countries with Islamic banking systems, regulators can support this through training, guidance and incentives.Originality/valuePioneering exploration of TBL from maqasid al-shari'ah perspective. First, we develop a QBL index to assess the sustainability of Islamic banks in line with actual stakeholder expectations.

The analysis of the effect of Islamic financing and labor relationship development toward nonperforming financing in Islamic banks

2018 ◽  
Vol 9 (4) ◽  
pp. 648-660
Author(s):  
Muhammad Bahrul Ilmi
Keyword(s):  
Field Research ◽  
Numerical Data ◽  
Relationship Development ◽  
Annual Reports ◽  
Primary Data ◽  
Future Research ◽  
Islamic Banks ◽  
Content Type ◽  
Future Studies ◽  
Labor Relationship

Purpose The purpose of this study is to examine the effect of Islamic financing (IF) and labor relationship development (LRD) toward nonperforming financing (NPF) in Islamic banks. This research aims to identify the connection between IF products and the practice of loan officers building a relationship with loan customers (also known as LRD) and its influence on NPF. Design/methodology/approach This study uses a quantitative field research that emphasizes upon analysis of numerical data which are processed with statistical methods. Furthermore, the source is secondary data from financial statements of Islamic banks such as annual reports or financial disclosures. These sources of data are used to examine NPF facilities from 2008 to 2012. Moreover, primary data collected via questionnaire are used to investigate IF and LRD. The banks where the study was conducted are: Bank Muamalat Indonesia and Bank Danamon Shari’ah in Surakarta, Indonesia. The population in this study is 15 employees who work as account officers in Bank Muamalat Indonesia and Bank Danamon Shari’ah. The techniques of data collection in this study are documentation, questionnaires and literary study. In this study, the data analysis technique was multiple regression analysis and examination using SPSS version 21. These methods were used for analyzing the effect of IF and LRD toward NPF. Findings IF has a significant effect on NPF. In contrast, the LRD has no effect on NPF in Islamic banks. In addition, both IF and LRD simultaneously had an effect on NPF in Islamic banks. Research limitations/implications This study does not cover all Islamic banks in Surakarta because of limited data; thus, in future research, the sample size could be increased by including all Islamic banks in Surakarta, Indonesia. Furthermore, this study does not take into consideration the fact that IF includes product financing. For future studies, the population and samples should be improved and take into consideration that product financing does exist in Islamic banks; moreover, future studies could provide other variables which are appropriate for current studies. Originality/value The results support the recommendation for Islamic banks in Surakarta to enhance the capability of employees to develop their knowledge in IF. Because the performance of a bank does not only depict financial performance but also nonfinancial performance such as services, knowledge and employees’ performance.

Selection of Islamic banking in a multicultural context: the role of gender and religion

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Suzanna ElMassah ◽  
Heba Abou-El-Sood
Keyword(s):  
Emerging Market ◽  
Marketing Strategies ◽  
Business Strategies ◽  
Equation Modeling ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Data Set ◽  
Content Type ◽  
Multicultural Context ◽  
Selection Of

Purpose As the popularity of Islamic banking and financial instruments continues to rise globally, a recurring empirical question is what specifically makes consumers choose Islamic banking. This paper aims to investigate the determinants of bank type selection, especially in culturally diverse settings where the Islamic banking sector is well-established. It further examines whether consumers’ gender/religion influences their choices. One intuitive prediction is that Muslim consumers opt for Islamic banking products as “ethical” because of conviction-related reasons. However, the reality is not necessarily straightforward. Design/methodology/approach This paper uses structural equation modeling to examine data collected from a survey questionnaire of 790 respondents in an emerging market setting. Further analysis is made based on gender and religion to remove related bias. Findings Results suggest that overall consumer awareness significantly affects the selection of Islamic banking products. The positive effect of awareness is more significant for Muslim consumers relative to non-Muslims. Interestingly, social stimuli and bank attributes have an insignificant effect on the banking choices of both Muslims and non-Muslims. Practical implications Results suggest that Islamic banks’ marketing managers should adopt differentiated strategies for men and women, focusing on the core benefits of the service or personal interactions with consumers, respectively, along with a focus on different aspects of personal service for each gender. Awareness should be enhanced by adopting informative and effective marketing strategies to attract and retain consumers in the competitive bank environment. Islamic banks (IB) should pay attention to the religious effect without considering it as the sole variable motivating potential customers. They should design segmented and customized marketing strategies based on gender-religion market segmentation to suit different groups’ needs. Originality/value The findings fill a gap in the literature and provide Islamic bankers with insights to help design and articulate their business strategies to appeal to consumers in a multicultural context. Examining an integral part of gender and religion mitigates biased estimates due to the omission of variables. The study contributes to the existing literature on customer preferences for IB with a relatively large, new data set.

State ownership and bank performance: conventional vs Islamic banks

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Turki Alshammari
Keyword(s):  
Banking Sector ◽  
Banking System ◽  
Positive Influence ◽  
State Ownership ◽  
Bank Performance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Banking Systems ◽  
The Impact

Purpose This paper aims to examine the effect of state ownership on bank performance for all banks in the Gulf Cooperation Council (GCC) countries during the period 2003 – 2018, for two distinct banking systems: the conventional and the Islamic banking systems. Design/methodology/approach To achieve the goal of the study, this paper uses a mean t-test to examine the mean difference of the related variables for both banking systems, and a regression test (using the GMM method) to explore the effect of state ownership on bank performance. Findings The most important result of the analysis is that state ownership has a significantly positive influence on bank performance for conventional banks but not for Islamic banks, in the GCC area. Originality/value This study adds to the scarce related literature comparative empirical results with respect to the impact of ownership on the performance of two different banking systems: the conventional system and the Islamic banking system in the GCC area. This study is likely to have implications for policymakers in terms of developing rules relevant to the governance of GCC’s two banking systems that can help to support the stability of the whole banking sector.

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