Millennial Generation’s Islamic Banking Behavioral Intention: The Moderating Role of Profit-Loss Sharing, Perceived Financial Risk, Knowledge of Riba, and Marketing Relationship

Abstract

Despite tons of studies on Islamic banking (IB) behavior, there is a lack of understanding of the Millennial generation’s attitude to and subjective norms surrounding Islamic banking, as well as of their behavioral intention toward Islamic banking. Therefore, the present study investigates the influence of the Millennial generation’s attitude and subjective norms on their behavioral intention toward Islamic banking products and services. This study also focuses on the moderating roles of profit-loss sharing, perceived financial risk, knowledge of riba, and relationship marketing on the nexus of antecedent and behavioral intent of Islamic banking. This study has developed a conceptual framework, employed a questionnaire to collect data for understudying relationships, and constructed a predictive model. Within the proposed conceptual framework, structural equation modeling is employed to investigate the extent and direction of the link. We discovered that Millennial generation consumers’ attitudes and subjective norms influence and predict their behavioral intention towards Islamic banking. With the exception of perceived financial risk, all moderators have direct effects on behavior intention toward Islamic banking and could be antecedents of behavior intention toward Islamic banking. Profit-and-loss sharing and knowledge of riba moderate the nexus of attitude and behavioral intention and the nexus of subject norms and behavioral intention. Our findings thus extend the literature on Islamic banking and consumer behavior context.

Consumer behavior in Islamic banking: a systematic literature review and agenda for future research

“…Furthermore, we delve into the examination of the most extensively tested theories in CB research (in accordance with the suggestions provided by Canabal and White, 2008;Roy Bhattacharjee et al, 2022). The application of inter-related theories of TRA and TPB, SERVQUAL and CARTER model and TAM and unified theory of acceptance and use of technology (UTAUT) in the IB (Ajzen, 1991) is the other prominent theory that is often used in conjunction with TRA to detail consumer adoption of IB and IB products (Abou-Youssef et al, 2015;Johan et al, 2020;Asyari et al, 2022;Panggi et al, 2022). TPB is an extension of TRA, including an additional factor of perceived behavioral control.…”

“…TRA posits that an individual’s behavior is influenced by their attitudes toward the behavior and their perception of social pressures and expectations surrounding it. The first line of inquiry indicates how the attitude of different customers, specifically millennial generations (Farhat et al , 2019; Asyari et al , 2022; Panggi et al , 2022) and religious leaders(Janah et al , 2020), influence behavioral intention toward IB and IB products use (credit card – Ali et al , 2017; Johan et al , 2020; takaful – Farhat et al , 2019; Tawarruq – Panggi et al , 2022) The second line of research detail the factors affecting customer attitude toward IB adoption (Amin, 2013; Kaakeh et al , 2019) in specific countries (for example, UAE: Kaakeh et al , 2019; Malaysia: Amin, 2013; Mauritius: Omran et al , 2022). Based on this theory, apart from attitude and subjective norms, the factors such as religiosity (Abou-Youssef et al , 2015; Panggi et al , 2022), religious status (Omran et al , 2022), religious obligation (Janah et al , 2020), IB knowledge (Ezeh and Nkamnebe, 2020) and financial investment (Amin, 2013; Ali et al , 2017; Asyari et al , 2022) were observed to influence the behavioral intention.…”

“…The TPB (Ajzen, 1991) is the other prominent theory that is often used in conjunction with TRA to detail consumer adoption of IB and IB products (Abou-Youssef et al , 2015; Johan et al , 2020; Asyari et al , 2022; Panggi et al , 2022). TPB is an extension of TRA, including an additional factor of perceived behavioral control.…”

“…In this case, perceived control refers to a customer's perception of their ability to engage in or control their behavior related to IB practices. It includes factors such as the availability of Sharia-compliant banking products (Ezeh and Nkamnebe, 2020), accessibility of IB services (Panggi et al , 2022), knowledge of Islamic financial principles (Johan et al , 2020; Asyari et al , 2022) and the consumer's confidence in their ability to adhere to IB guidelines (Mustapha et al , 2022). The theory is pivotal in assessing the influence of external factors and personal beliefs on consumers' decision-making and adoption of IB practices.…”

“…Among the reviewed studies, about 9% of the investigation includes moderating variables, which can impact the strength or direction of the relationship between independent and dependent variables (Baron and Kenny, 1986). The moderating variables examined include behavioral factors such as experience (Samsudeen et al, 2022;Parayil Iqbal et al, 2023) and habit (Mohd Thas Thaker et al, 2022), financial factors such as profit-loss sharing and perceived financial risk (Asyari et al, 2022), firm-related factors such as the type of bank (Rizkiah et al, 2021) and corporate image (Abd Aziz, 2018), religious factors such as religiosity (Alzadjal et al, 2022;Tegambwage and Kasoga, 2023) and Shariah compliance perception (Saqib et al, 2016) and sociodemographic factors such as age and gender (Samsudeen et al, 2022;Parayil Iqbal et al, 2023). By using moderated mediation analysis, existing studies investigate the concept of bank affiliation, which encompasses the association between customers and a particular bank.…”