Impact of Islamic Financial Literacy on the Intention to use Islamic Banking – Evidence from Pakistan
Submission Type
Paper Presentation
Abstract/Description
The purpose of this study is to measure the existing level of Islamic Financial Literacy (IFL) among the residents of Pakistan and then evaluate its impact along with some other determinants (awareness, cost and benefit, attitude towards Islamic banking, and reputation) on the intention of potential customers to use Islamic banking. An online survey questionnaire was distributed using the judgmental sampling technique that collected 430 completed responses, out of which 266 responses were selected to conduct the research, excluding respondents who are already using Islamic banking. The data collected was then analyzed using the partial least square structural equation modeling technique (PLS-SEM). The result indicates that 46.2% of the respondents have high level of IFL, 36% of the respondents have average, and the remaining 17.8% of the respondents have low Islamic financial literacy. The result further concludes that IFL, reputation and cost and benefit were insignificant and have a negative influence on the intention of customers to use Islamic banking whereas the awareness and attitude towards Islamic banking were found to be positively influencing the intention of customers to use Islamic banking. However, when the same variables were regressed in the presence of a mediating variable i.e. attitude towards Islamic banking, then IFL, reputation & cost-benefit turned out to be significant along with awareness and all the variables had positive coefficient which means that all the variables positively influence the intention of potential customers to adopt Islamic banking if positive attitude towards Islamic banking already exists. The study recommends that the central bank should facilitate increasing Islamic financial literacy to boost patronization of Islamic banking system.
Keywords
Islamic Financial Literacy (IFL), Islamic Banking Adoption, Financial Inclusion in Pakistan, Banking Intention Behavior, Islamic Banking Awareness
Location
Movenpick Hotel
Session Chair
Prof. Dr. Imam Uddin, Director Islamic Finance & Accounts, Institute of Business Management (IOBM)
Session Moderator
Dr. Azima Khan, Assistant Professor, Institute of Business Administration, Karachi
Start Date
4-12-2024 3:15 PM
End Date
4-12-2024 4:15 PM
Recommended Citation
Qaisar, A. (2024). Impact of Islamic Financial Literacy on the Intention to use Islamic Banking – Evidence from Pakistan. IBA CEIF World Islamic Finance Forum (WIFF). Retrieved from https://ir.iba.edu.pk/wiff/2024/agenda/11
COinS
Impact of Islamic Financial Literacy on the Intention to use Islamic Banking – Evidence from Pakistan
Movenpick Hotel
The purpose of this study is to measure the existing level of Islamic Financial Literacy (IFL) among the residents of Pakistan and then evaluate its impact along with some other determinants (awareness, cost and benefit, attitude towards Islamic banking, and reputation) on the intention of potential customers to use Islamic banking. An online survey questionnaire was distributed using the judgmental sampling technique that collected 430 completed responses, out of which 266 responses were selected to conduct the research, excluding respondents who are already using Islamic banking. The data collected was then analyzed using the partial least square structural equation modeling technique (PLS-SEM). The result indicates that 46.2% of the respondents have high level of IFL, 36% of the respondents have average, and the remaining 17.8% of the respondents have low Islamic financial literacy. The result further concludes that IFL, reputation and cost and benefit were insignificant and have a negative influence on the intention of customers to use Islamic banking whereas the awareness and attitude towards Islamic banking were found to be positively influencing the intention of customers to use Islamic banking. However, when the same variables were regressed in the presence of a mediating variable i.e. attitude towards Islamic banking, then IFL, reputation & cost-benefit turned out to be significant along with awareness and all the variables had positive coefficient which means that all the variables positively influence the intention of potential customers to adopt Islamic banking if positive attitude towards Islamic banking already exists. The study recommends that the central bank should facilitate increasing Islamic financial literacy to boost patronization of Islamic banking system.
