FACTORS AFFECTING CUSTOMER ADOPTION OF ISLAMIC BANKING SERVICES: A CASE FROM PAKISTAN

Abstract

Our goal is to study the elements that impact a person's decision to adopt Islamic banking in Pakistan. The study focuses on differences between Islamic and conventional banking, importance of religion in selecting Islamic banking, and customer perceptions towards the Islamic banking. Moreover, this study employs the quantitative approach by surveying 880 participants. In analysis, predicting variables are bank awareness, perceived compatibility, perceived risk, and most important religiosity, and social impact. In the case of Islamic banking, the dependent variable is Intention to adopt Islamic banking. This study found that consumer understanding and perceived compatibility had a positive impact on their desire to use Islamic banking services. A consumer's  intention to adopt Islamic banking is strongly influenced by their religiosity and social presence. However, reputation of bank does not affect customer intent. In conclusion, customer willingness to adopt Islamic banking services in Pakistan is negatively impacted by perceived risk and thus study offered certain valuable recommendations.