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Do Interest-Free Financial Organizations Offer Fair Prices to Their Customers?

Author

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  • Abdullah Mesut Ucar

    (Helal Finans Arastirmalari Dernegi (HEFİAD), Istanbul, Turkey)

Abstract

This study seeks to observe whether or not the financial instruments offered by the interest-free financial institutions cause a dilemma in generating fair prices for the consumers. Additionally, it also attempts to provide a comparative framework towards cost-free and accessible financial offers in terms of loaning by both conventional and participation banks. As part of the study, a 34-item questionnaire has been drafted to identify the consumer behaviors within the framework of a theory of fair consumer behavior. To test the validity and reliability of the scale, exploratory factor analysis and cronbach alfa tests were utilized. Based on the findings in the test, 28 items were included in the analysis. Subsequently, multiple regression analysis was performed between four factors identified in conjunction with the exploratory factor analysis. The results confirm the hypotheses offered for the theory of fair consumer behavior. In other words, the study concludes that the interest-free financial institutions, serving as alternatives to the interest-based financial system, attract the fair financial system perceptions of the consumers not just because they offer interest-free products and services, but also because of additional factors.

Suggested Citation

  • Abdullah Mesut Ucar, 2022. "Do Interest-Free Financial Organizations Offer Fair Prices to Their Customers?," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 9(2), pages 495-521, July.
    • Handle: RePEc:ist:iujepr:v:9:y:2022:i:2:p:495-521
    DOI: 10.26650/JEPR1047547
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    References listed on IDEAS

    as
    1. Mohammed Hossain & Shirley Leo, 2009. "Customer perception on service quality in retail banking in Middle East: the case of Qatar," International Journal of Islamic and Middle Eastern Finance and Management, Emerald Group Publishing Limited, vol. 2(4), pages 338-350, November.
    2. Khadijah M. Sayuti & Hanudin Amin, 2019. "Integrating the effects of price fairness and Islamic altruism with the TPB model," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 13(5), pages 791-807, October.
    3. Hanudin Amin, 2008. "Choice criteria for Islamic home financing," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 1(3), pages 256-274, August.
    4. repec:eme:ijhma0:ijhma-07-2019-0077 is not listed on IDEAS
    5. Kun‐ho Lee & Shakir Ullah, 2011. "Customers' attitude toward Islamic banking in Pakistan," International Journal of Islamic and Middle Eastern Finance and Management, Emerald Group Publishing Limited, vol. 4(2), pages 131-145, June.
    6. 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.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Consumer behavior; Islamic banking; behavioral finance; exploratory factor analysis; Islamic finance JEL Classification : G11 ; G40 ; G41;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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