Awareness, Perception and Reluctance towards Islamic Banking in Pakistan

Abstract

Purpose: The aim of this study is to find out the level of awareness and perception of Pakistani people towards Islamic banking and their reluctance towards its adoption. Pakistan is an Islamic state with great potential for Islamic banking industry which is not yet fully unleashed, so it is important to find out the reasons why Islamic banking is not fully adopted in Pakistan yet. Design/methodology: For the data collection purpose sampling was adopted, a sample of 270 respondents were surveyed in Rawalpindi/Islamabad using a self structured questionnaire. The data was analyzed using appropriate statistical tools. Findings: It is evident from results that majority of the respondents’ lack awareness about Islamic banking. Further, it is found out that believe Islamic banking is similar to conventional banking with addition to escalated risk of loss. The results suggest that Islamic financial institutions need a communication strategy which is more effective and convey a clear message. Islamic banks should aware their customers about the operations of Islamic banks. Practical implications: This study can be helpful for Islamic banks in formulating marketing and communication strategies, and they can attract the huge market of potential customers by effective advertisements and awareness campaigns. Originality: The current research addresses the important area of why people are reluctant toward Islamic banking, and therefore, fill the gap in existing literature of Islamic banking.