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An empirical survey of individual consumer, business firm and financial institution attitudes towards Islamic methods of finance

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  • Alsadek Gait
  • Andrew Worthington

Abstract

Purpose - The purpose of this paper is to review the attitudes, perceptions and knowledge of Islamic financial products and services. Design/methodology/approach - A synoptic survey of empirical analyses about Islamic financial products and services and comparison with the literature on conventional financial services and products. Findings - It was found that while religious conviction is a key factor in the use of Islamic finance, consumers also identify bank reputation, service quality and pricing as being of relevance. When selecting a financial institution's products and services, business firms usually employ criteria that are more conventional, such as the cost of finance, in their decision making. There is also interest among financial institutions in supplying Islamic financial products and services, but this is mitigated by complications with firm management and a lack of familiarity with business conditions. The concept of risk sharing with borrowers serves as a substantial barrier to most financial institutions engaging in Islamic methods of finance.Research limitations/implications– This survey is limited to work published in refereed journals, books and book chapters. Practical implications - Need for further theoretical and empirical research on how religious convictions affect consumers in their financial decision making. In addition, most work on Islamic finance is in a single national context, international comparisons are required. Originality/value - This paper is the only known empirical survey of attitudes, perceptions and knowledge of Islamic financial products and services. It provides guidance for future research in Islamic finance and serves as an aid for decision making by policymakers, consumer interest groups, business firms and financial institutions.

Suggested Citation

  • Alsadek Gait & Andrew Worthington, 2008. "An empirical survey of individual consumer, business firm and financial institution attitudes towards Islamic methods of finance," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 35(11), pages 783-808, September.
    • Handle: RePEc:eme:ijsepp:v:35:y:2008:i:11:p:783-808
    DOI: 10.1108/03068290810905423
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    Citations

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    Cited by:

    1. Revti-Raman Sharma & Farhana T Newaz & Kim-Shyan Fam, 2017. "Muslim religiosity, generational cohorts and buying behaviour of Islamic financial products," Australian Journal of Management, Australian School of Business, vol. 42(3), pages 482-501, August.
    2. Bassam Omar Ali Jaara & Mohammad A. AL-Dahiyat & Ismail AL-Takryty, 2021. "The Determinants of Islamic and Conventional Banks Profitability in the GCC Region," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(3), pages 78-91, May.
    3. Bouarar, Ahmed Chemseddine & Mouloudj, kamel, 2020. "Examining Awareness level of Islamic Finance among Customers of Banks in Algeria - Exploratory Study," MPRA Paper 106634, University Library of Munich, Germany.
    4. Irfan Ahmed & Shahid Mahmood & Umar Farooq, 2012. "Determinant Attributes of Customer Choice of Banks, Supplying Mortgage Products," Journal of Economics and Behavioral Studies, AMH International, vol. 4(5), pages 287-296.
    5. Shazia Zahid, AB. Basit, 2018. "Impact of Macroeconomic Factors on the Growth of Islamic Banking: A Case of Pakistan," Journal of Finance and Economics Research, Geist Science, Iqra University, Faculty of Business Administration, vol. 3(2), pages 37-50, October.
    6. Sherif Abdullahi & Amir Shaharuddin, 2016. "Potential for Islamic Banking in Macedonia: An Empirical Evidence," International Review of Management and Marketing, Econjournals, vol. 6(4), pages 1039-1047.
    7. Farhana Tahmida Newaz & Kim-Shyan Fam & Revti Raman Sharma, 2016. "Muslim religiosity and purchase intention of different categories of Islamic financial products," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 21(2), pages 141-152, June.
    8. Andrew C. Worthington & Alsadek H. Gait, 2009. "Libyan Business Firm Attitudes towards Islamic Methods in Finance," Discussion Papers in Finance finance:200910, Griffith University, Department of Accounting, Finance and Economics.
    9. Najat Abdullrahim & Julie Robson, 2017. "The importance of service quality in British Muslim’s choice of an Islamic or non-Islamic bank account," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 22(2), pages 54-63, June.
    10. Amina Hachimi & M. My Abdelouhab Salahddine, 2019. "The Acceptability of Participatory Banking Products by SMES: A Conceptual Framework," International Journal of Economics and Financial Issues, Econjournals, vol. 9(4), pages 259-266.
    11. Muhammad Ichsan Hadjri & Badia Perizade & Taufiq Marwa & Agustina Hanafi, 2019. "Islamic Human Resource Management, Organizational Commitment and Employee Performance: A Case Study on Sharia Bank in South Sumatera," International Review of Management and Marketing, Econjournals, vol. 9(1), pages 123-128.
    12. Gait, Lsadek Hesain A., 2009. "The Impact Of Demographic Variables On Libyan Retail Consumers’ Attitudes Towards Islamic Methods Of Finance," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 17, pages 1-18.
    13. Khalid Mohummed Alomari & Aya Naser Yousef Maqableh & Ali A. Salah & Khaled (M.K) Ismail Alshaketheep & Ahmad Abdullah abu Jray, 2020. "Impact of Halal Digital Marketing on Consumer Behavior: Jordan’s Perspective," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(Special 1), pages 202-215.
    14. Pepinsky, Thomas B., 2013. "Development, Social Change, and Islamic Finance in Contemporary Indonesia," World Development, Elsevier, vol. 41(C), pages 157-167.
    15. Osama Omar Jaara & Bassam Omar Jaara & Jamal Shamieh & Usama Adnan Fendi, 2017. "Liquidity Risk Exposure in Islamic and Conventional Banks," International Journal of Economics and Financial Issues, Econjournals, vol. 7(6), pages 16-26.
    16. Balushi, Yasmeen Al & Locke, Stuart & Boulanouar, Zakaria, 2018. "Islamic financial decision-making among SMEs in the Sultanate of Oman: An adaption of the theory of planned behaviour," Journal of Behavioral and Experimental Finance, Elsevier, vol. 20(C), pages 30-38.
    17. Abdul Hafeez Quresh & Kashif Ur Rehman, 2012. "A Comparison between Islamic Banking and Conventional Banking Sector in Pakistan," Information Management and Business Review, AMH International, vol. 4(4), pages 195-204.
    18. Jasim Al‐Ajmi & Hameeda Abo Hussain & Nadhem Al‐Saleh, 2009. "Clients of conventional and Islamic banks in Bahrain," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 36(11), pages 1086-1112, September.
    19. Sherif Abdullahi & Amir Shaharuddin, 2016. "Potential for Islamic Banking in Macedonia: An Empirical Evidence," International Review of Management and Marketing, Econjournals, vol. 6(4), pages 1039-1047.
    20. Dayah Abdi Kulmie & Mohamed Abdirahman Abdulle & Mukhtar Sheikh Hussein & Hussein Abdi Mohamud, 2023. "Effects of Islamic Modes of Financing on Profitability of Banking Institutions," International Journal of Business and Management, Canadian Center of Science and Education, vol. 18(5), pages 237-237, October.

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