Intention to adopt Islamic finance through the mediation of attitudes towards Islamic finance

Abstract

Purpose This paper aims to explore the intention to adopt Islamic finance (ItIF) through the mediation of attitudes towards Islamic finance among microbusiness owners of Pakistan. Design/methodology/approach The study is co-relational and based on cross-sectional data. The authors gathered the data from microbusiness owners through a survey questionnaire. The authors used 236 valid cases to assume the outcomes. Findings The results through structural equation modeling reveal a significant positive effect of the perception of Shariah compliance (PoSC), knowledge of the Islamic financial system (KoIF), religious preferences (RP) and loyalty on ItIF. Furthermore, attitude towards Islamic finance (AtIF) is a potent factor in developing the relationship between PoSC, KoIF, RP, loyalty and ItIF. Practical implications The study’s findings would be helpful for planners and policymakers in developing policies that favourably enhance the attitudes and intentions among individuals towards Islamic financing. The results would inspire readers to go to Islamic finance and an interest-free financial system enriched with Shariah law or Islamic obligations. The study would provide implications for the financial institutions in Pakistan and the rest of the Muslim world. Originality/value The study offers an apparent thoughtfulness of the empirical evidence from microbusiness owners of Pakistan. The study would provide a plausible mediating contribution of AtIF.

A systematic review of customer Sharia compliance behaviour in Islamic banks: determinants and behavioural intention

“…Wijaya et al (2023) discovered that religious belief or religiosity is a determining factor when choosing an Islamic bank. Muslim clients believe that subscribing to Islamic banks is in accordance with their beliefs (Shah et al , 2023). For this reason, Islamic banks must be usury-free, as Islam prohibits usury to have an Islamic banking reputation (Tegambwage and Kasoga, 2023).…”

“…According to Aslam et al (2022), religion, collectivism and sustainable intentions influence customer compliance. Compliance with Sharia principles correlates positively with the intention to use Sharia financial services (Samad et al , 2022; Shah et al , 2023).…”

“…Several studies have analysed the elements affecting Islamic banking’s profitability, focusing on client behaviour in selecting Islamic banking services (Junaidi et al , 2022). Several research studies have examined customer views and attitudes toward Islamic banking products and identified the factors influencing consumer compliance with Islamic standards (Shah et al , 2023). Another study has explored the characteristics that influence customer selection of Islamic banking services, focusing on the Sharia compliance behaviour of bank customers (Ibrahim and Mohd Sapian, 2022).…”

Factors Influencing the Behavioural Intention to Adopt Islamic Banking in Pakistan with the Mediating Role of Attitude

“…A system that supports Islamic law and the Shariah, as well as one that puts that law into practice, is known as Islamic banking. Islamic banks are different from traditional banks in that they constantly endeavour to eliminate interest from all types of transactions; rather, the foundation of Islamic banks is profit-sharing and gift-giving (Shah et al, 2023). The primary objective of Islamic banking is to assist its clients in carrying out financial transactions following Islamic teachings, Shariah, and clients' preference for Islamic banking (Aslam et al, 2022).…”

“…Husseini et al (2019) commented that Islamic banking is defined as banking concepts backed by Shariah, and Shariah laws are backed up by the acceptance of different scholars on one point. Islamic financing refers to providing Muslims with financial services following Shariah, the Islamic legal code, and forbidding ambiguity or interest to satisfy their particular requirements (Shah et al, 2023). Islamic banks do not support any illegal businesses because doing so would be unethical; additionally, Islamic banks spread the risks and advantages of each business transaction more equitably and sensibly (Kibria & Siddiqui, 2022).…”