Predictors of Islamic bank adoption: Nigerian perspective

Purpose - The 2008 financial crisis that hit conventional banks provides a market opportunity for special types of banks. Furthermore, given the current financial reform for financial inclusion and economic concern of the Nigerian Government, there is a need for research on the adoption of Islamic banks. Accordingly, the purpose of this study is to determine the predictors of Islamic bank adoption in Nigeria. Design/methodology/approach - Data is collected from 385 Islamic bank customers in northern Nigeria and is analyzed using the partial least square structural equation modeling technique. Findings - The result reveals that trust, social influence, knowledge and government support have a significant positive relationship with the adoption of Islamic banks, while relative advantage and compatibility do not. The model (trust, social influence, knowledge, government support, relative advantage and compatibility) explained 50% of the variance in the adoption of Islamic bank. Practical implications - These findings are very important to scholars, the policymakers and Islamic bank operators in designing their marketing strategies. It shows that trust, social influence, government support and knowledge are predictors of Islamic bank adoption. Originality/value - This study extended the diffusion of innovation (DOI) theory by combining relative advantage, compatibility with trust, social influence, knowledge and government support to the model. The developed model is validated for the study of Islamic bank adoption in an emerging market, Nigeria. Arguably, it is the only study that test effect sizes (f2) and predictive relevance (Q2) of extended DOI on Islamic banks.