A Profile Analysis of the Customers of Islamic Banking in Peshawar, Pukhtunkhwa

Abstract

The call of giving all subscribers a greater opportunity in the Islamic banking systems is well documented in the<br />literature of the first decade of this millennium. Many banks and financial institutions across the world have<br />attempted to implement programs aiming at increasing the customer’s involvement in terms of investment and<br />financing with varying degrees of success. The study describes the attributes and profiles of the Islamic banking<br />subscribers.<br />A list of attributes and characteristics of the clientele having access to credit was developed from the current<br />literature to augment the process of identifying and selecting Islamic banks for the study. The potential Islamic<br />banks were nominated by the panel of proficient academicians. Four branches of Islamic banks having the<br />maximum subscribers and highest number of attributes observed during the visits were selected for site visits.<br />Interviews were conducted with borrowers to gain an insight into the diverse avenues of banking habits of<br />subscribers. Findings of the study are examined in relation to religious inclination of the subscribers and allied<br />socio-demographic factors. The empirical results suggest that the regulators of the Islamic banking should<br />concentrate on the demography of a location when it comes to establishment of a new branch. Branches should<br />be opened at those places where the prospective clientele are well-educated and inclined towards the Islamic<br />principles in order to tap the potential market. The aspirations and preferences of the educated class shall be<br />taken into consideration and products and services should be designed in such a way to cater to the needs of the<br />subscribers. Implications for the generalizations of practice should be carefully considered and further research is<br />suggested

Patronage Factors In Islamic Banks In Pakistan

“…For instance, prior studies have revealed that intentions to seek high rate of return influence customers to pursue services of Islamic banks (Farooq, Ahmad and Jamil, 2010). On the other hand, results of this study also align with the findings of Al-Ajmi et al (2009) who suggest that religious motivations of customers are the major factors that influence them to adopt Islamic banking services.…”

“…For instance, in the case of profits, both entrepreneur and investor would share profits with each other in an agreed proportion. On the contrary, in case of losses, all the capital losses would be borne by the individual who provides capital whereas the entrepreneur would only borne the losses of time and labor put into a project (Farooq, Ahmad and Jamil, 2010). Consequently, fair distribution of wealth is achieved through this system that s the essence of Islamic financial principles.…”

“…Not only does the Islamic banking system prohibits taking interest and conforms principles of Shari'a regarding several financial products, but also this system aims to contribute for the fulfillment of socioeconomic objectives of the society (Haron and Yamirudèng 2003;and Balz 2007 Ahmad and Jamil, 2010). Firstly, the Islamic banking system represents a system that reflects risk sharing, equity sharing and stake sharing with customers.…”

“…Since the development of Islamic banking in the early 1960s, this banking system has continued to play a significant role in the global financial system. The Islamic banks have received attention across the world regardless of the distinction in Muslim and non Muslim countries (Balz 2007;Haron and Azmi, 2008;Farooq, Ahmad and Jamil, 2010). The Islamic banking system has evolved over the period and now it serves as a competent industry with the traditional banking system in the world.…”

Assessing Customer Awareness and Selection Criteria of Islamic and Conventional Banks in Turkey

“…However, they stressed that the positive relationship between service quality and customer satisfaction is stronger for IBs than for CBs. In the same year Farooq, Ahmad & Jamil (2010) also conducted a research with the aimed of describing the attributes and profiles of Islamic banking subscribers by statistically testing a sample of 942 subscribers and users of Islamic banks in Pakistan and they empirically suggested that the regulators of Islamic banking should concentrate on the socio-demographic factors when it comes to establishment of a new branch. They therefore emphasised that the aspiration and preferences of the educated class shall be taken into consideration and products and services should be designed in such a way to cater for the needs of the subscribers.…”