Reasons For Low Preferences For Islamic Banking Among Pakistani Consumers

Abstract

The purpose of this paper is to attempt to investigate the possible determinants of low banking preference in Pakistan towards Islamic Finance. In this paper, the perception of consumers about Islamic banks in terms of their legitimacy and practices, and the attitude of consumers towards Islamic banks will be examined, while at the same time examining the role of religious factors on the banking decisions of consumers. The method used in this paper is qualitative research. In this paper, in-depth interviews and focus groups with Islamic banking consumers and non-consumers, and experts in the field will be conducted. Using this method, a comprehensive understanding of the perceptions, faith, and experiences of consumers about Islamic banking will be obtained. The findings of this study are that Islamic banking is perceived by consumers and non-consumers alike as not entirely interest-free. In addition, Islamic banking is perceived as not entirely based on true Islamic principles; it is perceived as symbolic in nature. Furthermore, the adoption of Islamic banking is not entirely based on religious factors; the adoption of Islamic banking is largely influenced by practical factors. This study adds to the meager literature of qualitative research on the perception of Pakistani consumers towards Islamic banking. This study would provide an in-depth understanding of the problems faced by the Islamic banking sector in the country by using information from consumers, non-consumers, and experts. This study would also provide vital information for the positioning of the Islamic banking sector, which would be highly beneficial for the banks in addressing the concerns of the consumers.