Selection criteria for Islamic home financing: a case study of Pakistan

Abstract

Purpose -The aim of this research is to examine the selection criteria of customers for Islamic home financing in the context of Pakistan and to examine these factors with respect to gender, age, income, and occupation. Design/methodology/approach -This study uses a quantitative approach to investigate the choice criteria for Islamic home financing. All 18 independent variables are taken from previous research; for their analysis, descriptive statistics, independent sample t-tests and ANOVA was used. Data were gathered from the customers of Islamic banking who use the services of Islamic home financing. The sample consists of 200 respondents. For the collection of data, a survey questionnaire with closed-ended questions and a five-point Likert scale was employed. The questionnaire was designed into two sections, one consisting of demographic information and the second relating to the selection criteria of Islamic home financing. Findings -The results indicate that the shariah principle, fast and efficient services, price, bank reputation, and terms and conditions of product flexibility are the five most important factors considered by customers in choosing Islamic mortgages.Research limitations/implications -The limitations relate to the sample area for the study, which is confined to Lahore, and due to the limited sample size, the findings cannot be generalized. Second, only four banks are considered. Practical implications -This study is beneficial for practitioners in Pakistan by offering insight into choice criteria for Islamic home financing. The results should also be useful for Islamic bank managers who are also policy makers, as they can study and plan for attractive schemes and policies for customers through which they can fulfill their needs and expectations. For the researcher, this study will also add to the existing body of knowledge by providing novel evidence on the selection criteria used for Islamic home financing. Originality/value -This topic has never been examined in the context of Pakistan, so this study initiates the choice criteria for Islamic home financing among Pakistani banks' customers. The paper provides potentially useful information for both customers (in selecting Islamic banks) and bank managers to identify the factors needed to attract customers.

Attitudes of Customers towards Islamic Banks in Kuwait

“…It might attribute to the fact that IBs in Kuwait are well-known among customers in Kuwait. The finding is consistent with the results reached by Hamid and Masood (2011) who found mass media is less influence on attract customers. However, it is not agreement with earlier studies like Ismail et al (2014) in Malaysia.…”

“…It refers to the fact that customers are influenced by responsive attitude of the bank staff. The finding is consistent with the results reached by Hamid and Masood (2011) and Awan and Azhar (2014) and Zulfiqar et al (2014) who provided evidence that quality of service is the influential factor for the customer in IBs. However, the finding is inconsistent with the results reached by previous empirical studies that reported by Abduh and Omar (2012) who provided evidence that quality of service provided by bank staff play minor influence on customers in selecting IBs in Malaysia.…”

“…The second part is designed to ask the participants to assess factors that are important to them when selecting Islamic bank. Most of these factors have been drawn from previous related research Marimuthu et al, 2010;Doraisamy et al, 2011;Awan & Bukhari, 2011;Hamid & Masood, 2011;Rehman & Masood, 2012;Khan, 2012;Selamat & Abdul-Kadir, 2012;Ismail et al, 2014). The third section was designed to ask the participants about their opinion towards some items to improve the services of IBs.…”

“…They provided evidence that customers rank religious motive is minor leading factor in choosing an Islamic bank. Hamid and Masood (2011) revealed that the shariah principle, fast and efficient services, bank reputation, and product flexibility are the most important factors considered by customers in choosing Islamic mortgages. Rehman and Masood (2012) stated that the most important factors are religious factors and convenient location that customers consider while selecting an Islamic bank.…”

Willingness to Be a Partner in Musharakah Mutanaqisah Home Financing: Empirical Investigation of Psychological Factors

“…This is consistent with the objective of Islamic bank which is to promote well-being of both the bank and the customer. There are two works which replicated this study notably Abdul- Hamid et al (2011) and Hamid and Masood (2011), however but they are varied in terms of research objectives and geographies. A study by Abdul- Hamid et al (2011) focuses on factors that influence the adoption of Islamic home financing.…”