Purpose
The purpose of this study is to assess the social utility of the Islamic banking system, with a focus on the Tunisian market as a case example.
Design/methodology/approach
The authors study individuals’ potential demand for Islamic financial products in different Tunisian regions. To do that, the authors conducted a national survey based on the quota sampling method to select the number of interviewed by governorate and sex. The authors then obtained a sample that included 1,600 persons from different social categories with a minimum age of 18 years.
Findings
The survey results show that this potential demand is significant but Tunisian Islamic Banks should work more to enlarge their existing customer base. Indeed, they should consider the level of Islamic finance knowledge and the sociodemographic characteristics (such as governorate, level of education and annual income) to ensure social welfare. They should also supply Islamic microfinance products to ensure the inclusion of poorer agents. In addition, Islamic banks should provide competitive products and services at lower cost and higher quality that are compliant with the Sharia principles to encourage entrepreneurs or richer agents to invest in profitable and innovative projects, especially in economically disadvantaged regions. This would strengthen accountable decentralization and fight income inequality in Tunisia.
Originality/value
This work reflects the behavior and preferences of all Tunisians (adopters or non-adopters of IFPS) including the Tunisian inland areas inhabitants. To do this, we include the socio-demographic factors in our analysis.