What drives consumer choice of Islamic banking services in the United Arab Emirates?

Abstract

Purpose Islamic banking (IB) has witnessed remarkable growth in the past decade. The purpose of this study is to explore some factors that are influencing the choice of Islamic banking and finance (IBF) products and services in the United Arab Emirates (UAE), a predominantly Muslim country. Design/methodology/approach Students enrolled at a university located in a major emirate in the UAE were asked to respond to a survey on factors underlying their decision to open an account at an Islamic bank. Responses were analyzed using descriptive statistics, analysis of variance and regression analysis. Findings Results indicate that the decision to open an account with an Islamic bank is influenced by consumer expectations regarding the conformity of the bank’s operations with Islamic principles, as well as consumers’ Arab language skills. Variables such as consumers’ nationality, gender, education and familiarity with IB do not have a significant influence on the decision to open an account at an Islamic bank. Research limitations/implications The study focuses on university students from a certain Emirate only, which somewhat limits the generalizability of the research results. Nevertheless, the findings of this study may potentially provide some practical insights for further improving and promoting IB, with special reference to the UAE youth market segment. Originality/value The research is original in nature, particularly as there have not been many instances where the choice of potential consumers (university students) regarding IB and finance services has been explored within the IB sector in a predominantly Muslim nation such as the UAE, an emerging Gulf economy. Consequently, the research findings have important implications for Islamic banks operating in a predominantly Islamic environment.

The Effect of Knowledge, Promotion, and Religiosity on Intention to Use Islamic Banking Services

“…The results of this study are in accordance with the results of previous studies. Shome, Jabeen, & Rajaguru (2018) failed to prove the significant effect of education and gender on consumers' decision to choose the services of Islamic banks at the United Arab Emirates. Kaakeh et al (2018) also showed that the potential of Islamic banking customers in Spain are Muslim (Spanish, Moroccan or Pakistani), male, and did not reach university degrees in their education.…”

Determinants of the decision to adopt Islamic finance: evidence from Oman

“…The United Arab Emirates:Shome et al (2018), targeting university students, find that students' Arabic language skills and their expectations in terms of the conformity of a bank's operations with Islamic principles are the main factors that affect their decision to open an account with an Islamic bank. On the other hand, factors such as students' nationality, gender, education and familiarity with Islamic banking are not seen to have any effect on the decision to open an account with an Islamic bank.…”

The Impact of Service Quality, Technology Acceptance and Religiosity on The Selection of Islamic Bank and FinTech – Investigating The Stagnation of Indonesian Islamic Banking

“…In term of the sharia compliance in financial transaction, Usman et al [37] found that not all Muslim obey the tenets, and only those who perceived bank interest as usury strictly choose Islamic banks while conducting their transactions. However, most studies confirm that religiosity become one of the considerations of customers when they choose Islamic bank [2], [7], [8], [39]. Hence, we proposed following hypotheses:…”