The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/1753-8394.htm

IMEFM
12,4 Factors influencing the community
behavioral intention for adoption
of Islamic banking
586 Evidence from Pakistan
Received 15 July 2017 Sayeda Zeenat Maryam
Revised 25 October 2017
17 July 2018
Hailey College of Commerce, University of the Punjab, Lahore, Pakistan
13 July 2019
20 July 2019 Mian Saqib Mehmood
Accepted 19 August 2019 Department of Commerce, University of Gujrat, Gujrat, Pakistan and
Department of Business Administration, Superior University,
Lahore, Pakistan, and
Chaudhry Abdul Khaliq
Hailey College of Commerce, University of the Punjab, Lahore, Pakistan

Abstract
Purpose – Islamic banking (IB) is growing rapidly not only in Islamic countries but also in all over the
world. The purpose of this paper is to stumble on the features that have an impact on Islamic banking
adoption (IBA) in case of Pakistan.
Design/methodology/approach – The identification of the factors that affect IBA has made by
extending the theory of reasoned action (TRA). However, the conceptual model for this study includes
knowledge (K), business support (BS), government support (GS), reputation (Rep), religious obligation (RO),
cost-benefit (CB) and social influence (SI) as the independent variables. To test the conceptual framework data
were collected through a survey by distributing the 400 questionnaires among users- and non-users of Islamic
banks. Multiple regression analysis was applied to test the hypothesis of this study.
Findings – The findings of the study suggest that Rep, CB, RO and SI has a highly significant and positive
influence on IBA. On the other hand, K, GS and BS have insignificant influence on IBA. The bottom line of
this study suggests that more the ROs will be adopted by Islamic banks, more will be the tendency to adopt it
by a bank customer in case of Pakistan.
Research limitations/implications – The generalizability of the findings of this research is limited to IB.
Practical implications – Findings of the study present worthy insight especially for the practitioners to
develop significant strategies to bridge the gap between industry and academia in case of IB.
Originality/value – This study is an extension of TRA.
Keywords Pakistan, Islamic banking, Theory of reasoned action (TRA),
Islamic banking adoption (IBA)
Paper type Research paper

1. Introduction
International Journal of Islamic Islamic banking (IB) is an ethical banking practice and its performance is playing an
and Middle Eastern Finance and
Management
important role in the economic progress. Banking activities have a significant role for
Vol. 12 No. 4, 2019
pp. 586-600
healthy economies and these activities have their flake to transform developing countries
© Emerald Publishing Limited into the developed (Latif, 2016). However, the system that established and governed
1753-8394
DOI 10.1108/IMEFM-07-2017-0179 according to the Islamic Laws and Shriah based implementation to perform the activities is
known as IB (Haque, 2009). Now IB is not limited to its own but the conventional banks also Community
have started the Islamic functioning and providing Islamic services and products to behavioral
Muslims and Non-Muslims. IB is spreading its daintiness all over the world including
Muslims and Non-Muslims countries. In more specific wording, its emerging operations and
intention
practices are operative in more than 50 countries across the globe (Khan, 2007). An
accentuation on ethics in banks has been given since the financial crises of 2008 and after it,
many of the banks claiming to have ethical values (San-Jose and Cuesta, 2019).
Undeniably, a fast-growing trend is observed in Islamic banks because of the holy 587
concept of Tawhid that is the keystone for the harmony of knowledge (K). This
comprehensive K represents the concept of having faith in the oneness of God. Hence, a
learning system is promoted in which world economy issues are being analyzed by the unity
of K and financial institutions are also included in it. Especially, the concept of Tawhid and
its relation with Zakat can be explained as the main focus of Islamic banks and due to this,
there is an appropriate circulation of wealth or the well-being of the society. From the
functions of IB, one is trade financing that is increasing the donors of Zakat and which
ultimately led the strong footings for the well-being of society via Islamic financial
instruments (Johnes et al., 2014). Moreover, in IB the utilization of wealth is made in such
form that is totally interest-free in the form of Qard-e-Hasana and Modaraba through which
the poor people can also contribute to being a stakeholder. Qard-e-Hasana positively
influences the monitory policy; it offers to borrow at the lowest cost, increases the output,
and resultantly prices remain maintained (Selim, 2019).
Pakistan is a state that was separated on the name of Allah Almighty, and the main
objective for this separation was to appear a state on the world map where Muslims spend
their lives according to Islam and all the aspects of their lives covered by Islamic rules and
regulations without any hurdle. Economic and financial systems are one of the standards
that affect the system earning and spending. For that reason, as the independence of
Pakistan, the demand for Islamic banks was on the peak from the side of religious scholars
and leaders. In the result of it in 2001, State Bank of Pakistan (SBP) issued the license of IB to
Al-Meezan Bank and in 2002 this bank operationalized its IB products.
The growth of Islamic banking industry (IBI) observed as 7.4 per cent overall and the
worth of assets is Rs 1,745bn, the deposits and market share overall ratio is 13.2 per cent and
11.4 per cent, respectively. The profitability indicators showing return on equity as 11.3 per
cent and return on asset 0.7 per cent during April to June 2016 (Khan et al., 2017). There is a
huge appreciation trend in the adoption of IB – IBI – with respect to investment, assets and
deposits are recorded, as an investment of IBI progression has Rs 72bn to Rs 354bn, Assets
raised from Rs18 to 1,016 similarly total deposits raised from Rs 83bn to Rs 872bn during
2007-2014 (Majeed, 2016). Islamic bank developed both in size and in numbers since 1971 and
from the previous two decades, it is considered that IB is feasible banking system.
Undeniably, Islamic banks are struggling for the enhancement of social welfare and financial
development by applying the teaching and principles of Islam (Buchari, 2015).
In Pakistan, a strong commitment and over meddling was observed from the side of the
navigated committee and from the government in case of the development and progress of
IB (SBP, 2016). The persuasive policies and practices of IB by the SBP create attraction in
the adoption of Islamic financing and IB. Recently, most of the conventional banks took an
initiative to offer the Islamic financial contracts, products and IB services through separate
branches by the order of SBP (Majeed, 2016). However, there are different factors, which
attract the consumers to switch their behavioral intentions from conventional to IB and to
accept or reject a decision; the attitude of the person has strong influence (Reni and Ahmad,
2016).
IMEFM By considering the gap available in the literature and by considering the above-described
12,4 scenario there is need to elaborate the theory of reasoned action (TRA) and to dig-out the role of
“government support (GS), business support (BS), religious obligation (RO), cost-benefit (CB),
social influence (SI) and reputation (Rep) toward the adoption of IB in case of Pakistan”:
From previous decades Islamic Banking is showing the growing trend due to its well-organized
policies and procedures. However, there is a need to investigate the factors that influence the
588 people’s behavior towards the adoption of Islamic Banking and to conclude its growth with a
logical reasoning. This study tends to analyze the said issue by modifying the Theory of
Reasoned Action (TRA) through the induction of some more factors like Knowledge, Business
Support, Government Support, Cost, Religious obligation Reputation with Social Influence in it.
Basic agenda of this study is to identify the key features that are persuading the individual
behavioral intentions toward IB and to explore the proportion of impact and relation of the
identified features in case of Islamic banking adoption (IBA).
By this study literature will be enhanced with respect to salient beliefs by the addition in
TRA and theory of planned behavior (TPB) as well, TRA has a construct of three factors
“attitude, subjective norms and intention”(Fishbein and Ajzen, 1975). TPB is adding one
more factor that is “perceived behavioral control” with attitude and subjective norms (Ajzen
and Fishbein, 1980). This research is keeping the construct of TRA by considering the
subjective norms as “SI and intention as IBA.” Other factors K, BS, GS, RO, cost and Rep
with respect to IBA will be analyzed for the first time that specifies their role in it.
The feature points and key findings of this research will provide a groundbreaking
thoughts and authenticity about the elements of IBA process and which in turn may
increase the market share of IB at bottom line. This study will be meaningful for the
executives to strategize the IB for expansion purpose and efficient implementation of this
banking system.

2. Literature review
This study is adopting the construct of TRA and there is an addition of some salient beliefs
also. The brief introduction of both is going to explain here. With respect to social
psychological prospect, TRA has given importance; as it is fulfilling the object by
identifying the determinants of behavior (Fishbein, 1980; Ajzen, 1991). In behavior
prediction, a combination is designed including SI, attitude and Intention variables in this
study. The second prospect of behavior in this study is salient beliefs. Salient beliefs are the
characteristics or features that a person must perform according to the predestined norms
and the behavior. By salient beliefs, one’s attitude can also be determined. These beliefs are
linked with the object, characteristics and experiences of one’s lives and different qualities.
In this study, salient beliefs consisting of the BS, CB, RO, Rep and K. Literature for the
concerned factors are described as follows.

2.1 Theory of reasoned action

It is observed in the literature that TRA is studied to determine the behavior of an
individual’s adoption intention and it is also fulfilling the need of social psychology.
However, for the theory of behavioral predictions (TBP) the designed combination in TRA
consists of the attitude, subjective norms and intention.
Attitude is the function of beliefs that someone has toward the objects and it is the
perception on which the action is based. Anybody who is performing any act or any
consequence is based on the beliefs and perception of one’s (Fishbein and Ajzen, 1975).
Subjective norms are the most important determinant of behavioral intention in both TRA
and TBP (Ajzen and Fishbein, 1980; Fishbein and Ajzen, 1975). It is the function of Community
expectations that perceived by individuals or cluster toward the person performance. behavioral
However, it motivates the person to comply according to the expectations and it is also
known as SI. While the third construct of TRA is the behavioral intention that is affected by
intention
attitude and subjective norms (Fishbein and Ajzen, 1975).
To examine the diminishing partnership home financing it is reported that the attitude
and SI are important determinants for the home financing through Musharikah and
Mutanaqisah with the applicability of TRA. 589
So, for the identification of the determinants of behavior and to find out the intentions,
TRA is applied in many studies to elaborate the “Muslim community behavior in the
context of Islamic banks through the moderation role of K and pricing” (Wahyuni, 2012). It
is also applied to identify the awareness of employees toward IB (Buchari, 2015) and also
used to find out the determinants of attitude and adoption of Islamic financing among non-
users (Jaffar, 2016). Similarly, TRA is applied to check out the importance of size
(Villablanca and Shah, 2018).
In this specific research two constructs of TRA are adopted:
(1) Subjective norms as SI as it will identify the individual intention because of its
surroundings.
(2) Behavioral intention as adoption intention of IB because it will reflect the
individual capacity that encourages the person to act accordingly. However, these
two are considered more important and noteworthy for IB.

2.2 Knowledge
K is referred to as awareness in case of the package about the acknowledgment of the IB
traceable items, functioning and know-how about the offered services. This specific K is
because of the use of those products or services or familiarity with them through other
sources (Buchari, 2015). Consumer behavior is dependent on consumer K because when
some extrinsic aspects exercised on satisfaction and loyalty, consumer degree of K influence
the perceived quality effect (Espejel, 2008). Similarly, K has a positive relationship with the
intention to use and it affects the consumer’s intention to adopt the IB products in the
prudential way or vice versa (Wahyuni and Arifin, 2013). There is an explanation of
outcomes of trust behavior through K as in an experimental game where initial K influences
the trustee and most of the researches also revealed that the experiential K affects the trust
outcomes in a critical and logical way (Delgado-Márquez et al., 2015).
Furthermore, in the absence of SI, a strong impact of K is noted toward the intention to
use Islamic banks while its proof is absent in case of K was exercised as a moderator
between the attitude and SI (Wahyuni, 2012). With respect to expected insurance products,
the insurance take-up rates strongly affected by the improved K (Cai and Song, 2017).
However, the strong influence of K toward the intention to use Islamic financing, adoption of
products of Islamic financial institutions is increasing among non-Muslims also, as there is
awareness of Islamic financing Jaffar (2016). K can play efficient intact for the acceptance of
IB and a greater move toward its adoption. However, in the case of Indonesia, the study
revealed that there is a positive and highly significant connection between K and the
adoption of IB. K on the intention of Indonesian people means as the K significantly impacts
the people’s mind-set to get inclination related to the under consideration issue – IB (Reni
and Ahmad, 2016).
However, it is also observed that the preference for IB products and perception about
Islamic banks is not influenced by the K about IB terms and concepts but because of the
IMEFM religious factor. However, there is a lack of K about IB products, its terms and concept so the
12,4 decision for the bank’s adoption is not because of K and awareness but due to religion
(Kuehn, 2004). When K variable is tested as a moderator between the cognitive needs
fulfillment and emotions then the partial results were founded in this regards (Lee, 2016). On
the other hand, if there are practices of K management the organizational performance is
affected significantly (Valmohammadi and Ahmadi, 2015):
590 H1. There is an influence of K on IBA by an individual.

2.3 Government’s support

In research, GS means the assistance from the side of SBP. However, the factors/
determinants that are characterized for the GS is in which scenario SBP is assisting the IBI?
How its rules are providing convenience to it? What is the support of it in policies and
provision of funds for IBI? The supply of the loan is influenced more by financial
management and government involvement. However, government involvement can play a
vital role in the IBI even more than economic factors as rate of return not affecting the
supply of loan as much (Makiyan, 2003). The functioning of IB at the UK was not starting as
there was reluctance in license issuance form the side of government and legal bodies
(Karbhari, 2004). Muslims and their organizational support have a great role for the bright
future of Islamic banks when it is showing the growing trend (Haron and Yamirudeng, 2003;
Buallay, 2019).
Similarly, there is a significant and positive impact of GS at Malaysia. In 9th Malaysian
plan, strong GS is reflected for IB by license issuance to the Islamic banks and also in case of
the development of Islamic regulatory framework (Teo, 2003). A strong and positive impact
is recorded by GS toward Islamic personal financing and IB. However, when there is GS,
people feel more secure in using Islamic financing products and IB (Reni and Ahmad, 2016).
Lack of funding is the main hurdle on the way of new business. To sort out these issues
different countries planned some programs; one of them is the seed capital program (SCP). A
study held by collecting data from 89 countries by keeping in view the issue of the
probability of finance obtaining, performance and sales business development. Results of
the study suggest that there is a positive impact of SCP on business development with
prospect to sales and performance but not with the probability of finance obtaining
(Cancino, 2015). However, GS with respect to use Islamic personal financing is not found as
there is an insignificant relationship between them. However, if GS is available in case of IB
then there are splendid chances of higher adoption in case of IB (Amin, 2011):

H2. There is an influence of GS influence on IBA.

2.4 Business support

BS is referred to as the technical assistance, ease in credit grant, cluster of significant
business environment, creativity and innovation to provide the value chain of an institute
(Cravo and Piza, 2016). BS encourages the attitude of both users of Islamic finance –
potential or non-potential – positively for Islamic methods of finance. However, BS also
proxies with some other elements like profitability and religion flanked by two groups
(Gait, 2009). If there is BS, the firm or businesses will have the enhanced capacity of business
expansion and opportunities of innovation and creativity as well. BS has a significant
impact toward the attitude of Islamic financing and the relationship with an attitude of
Islamic financing is also positive Jaffar (2016). In developing countries BS helps to generate
jobs in the market and the esteemed working conditions help to raise the firm’s performance Community
at the end. The level of individual performance may vary from situation to situation and the behavioral
personality attributes are significantly important in this regard (Mehmood et al., 2017;
Siddique et al., 2017):
intention

H3. There is an influence of BS on IBA.

591
2.5 Reputation
An image of reliability, social responsibility, confidence in the firm’s credibility and also the
trust toward the organization is the representation of Rep. With respect to financial
institutions Rep is also social responsibilities and societal aspects that should consider the
Islamic financial institutions (Jaffar, 2016). It is observed consumers move toward that
organizations and firms that have a good Rep in the society (Sengupta, 2015). Rep impact on
individual exactions in a significant way because when a firm is located in such location that
is easily accessible and beneficial for society then the people has more attraction and
tendency to move toward that specific place and vice versa (Roggeveen, 2007).
Profitability is associated with the Rep positively and at the considerable level, the Rep
brings the significant inflow in case of profitability. Similarly, the quality of credit is linked
with the Rep, it is founded that the syndications that are associated with more reputable
arranger are having a considerable bearing in the market in relation to the rest of the
performers (Bushman, 2012). However, the borrowers prefer more to the banks that have a
good Rep and the conditions of those banks also favorable for lending (Ross, 2010):

H4. There is an influence of Rep on IBA.

2.6 Cost-benefit
The low charges for services and the relative advantage for offers with respect to cost are
referred to as the CB. Individual attracted more toward Islamic financing if there is a CB
offered by the institution. The cost has a significant and positive relation with the individual
attitude (Jaffar, 2016; Asif, 2016). A significant but negative relation of pricing is observed to
use the IB because people are price conscious (Reni and Ahmad, 2016). On the other hand,
toward the IB there is an insignificant impact of CBs on attitude. However, the quality and
competitive product launch are suggested at the bottom line (Amin and Aman, 2016):

H5. There is an influence of CB on IBA.

2.7 Religious obligation

By religion obligation, the study means that the psychological affection with something
because of one’s religious guideline and to follow an attachment with different things
because of it Kirkpatrick (2005). There is a significant and positive impact found by religion
on Libyan business among the potential and non-potential users of Islamic finance. BS along
with profitability is also important (Gait, 2009). Similarly, positive and significant relation of
religion is found for the acceptance of IB and Islamic financing, respectively (Amin and
Aman, 2016; Jaffar, 2016). While there are also some results beside of it like religious
compliance showed the insignificant impact for the attitude of IB (Asif, 2016):

H6. There is an influence of RO on IBA.

IMEFM 2.8 Social influence
12,4 SI is such characteristics that society perceives or the values linked with the individual and
someone became too much careful about these things to choose and to apply it in his/her life.
One’s accepts or rejects the subject just because society is expecting or demanding that
specific decision (Ajzen, 1991). By explaining the influencing factors of intention among the
bank users of home finance with respect to Musharika and Mutanaqisah, it is identified that
592 SI with others variable is significantly and positively influencing the intention to use home
financing facility by bank. SIs are also statistically related to attitude (Amin, 2011).
Similarly, by using the sampling size of 441 it was empirically analyzed, in adoption of
mobile banking the intention is significantly influenced through the SI (Yu, 2012).
Then, in a study that purpose finding the factors and willingness for IBM in Tunisian the
author found that with capability, awareness, and SI is affecting the attitude with respect to
parents, sibling’s colleagues and through close groups. At the end, it was concluded
Tunisian want to shift toward IB (Echchabi and Azouzi, 2015).
For IB acceptance and to build an attitude for it, SI has 53 per cent role and it
insignificant and positive. Individuals select the IB because the society is expecting it from
them (Amin and Aman, 2016). The relationship of SI with customer loyalty is not significant
but through a mediator, customer satisfaction is supported. That mean SI firstly affects
customer satisfaction and then in result of its loyalty will increase (Saleem, 2016). People
have more attraction toward the product or institution like IB because of their surrounding
references, relatives and friends (Reni and Ahmad, 2016). However, results also found some
unexpected results in case of using the IB and Information technology Asif (2016):

H7. There is an influence of SI on IBM.

3. Methodology
The purpose of the study is descriptive and through which deductive and quantitative
approach is applied by adopting the questionnaire from previous studies. Data are collected
from the customers of Islamic banks, IB students, and business students and from the
people who are secondary account holder of Islamic banks through a questionnaire. A
sample of 400 respondents is drawn through non-probability sampling technique from
which 350 is collected back, while for analysis purpose 300 responses are used according to
the Allen Bryman rule of thumb (Allen, 2013) (Figure 1).
Questionnaire consisted of three parts. First was briefing about the researcher, research
purpose and developing the interest of respondent. Second part consisted of the eight
variables of the research that measured at five-point licker scale as 1 assigned for the
strongly disagree and 5 for strongly agree. The third and last part aimed to collect the
demographic information of the respondent and the dimensions were religion, gender,
qualification, awareness about IB and usage of Islamic banks products.
IBM is measured by the five items. The K variable is measured adopting the four items
(Jaffar, 2016). The measures of GS are consisting of five items. BS has two items of
measures, Rep construct based on the four items. Similarly, CBs also have four items and for
the RO, there are five items adopted from the previous literature. SI constructs consisting of
the five items (Kuehn, 2004; Ross, 2010; Amin and Aman, 2016; Jaffar, 2016).
An analysis is conducted through the Statistical Package for Social Sciences (SPSS) V.20.
Data analysis confirm the instrument is high reliable because internal consistency is
observed among all variables. Tolerable reliability is signified when it exceeds the digit of
0.70, mostly for the confirmation of reliability Cronbach’s alpha is viewed (Vehkalahti, 2000).
Cronbach’s alpha is used to measure the interrelatedness of items of the same construct
 Community
Knowledge
behavioral
intention
Govt. Support

Business Support 593

Islamic Banking
Adoption
Reputation

Cost Benefit

Religious
Obligation

Social Influence
Figure 1.
Research model

Tavakol and Dennick (2011). If the Cronbach’s alpha coefficient value is = 1.0, it described
there is great internal consistency in the scale, Cronbach’s alpha should at least 0.6 (Gliem
and Gliem, 2003). As the Cronbach’s coefficient value is greater than 0.70 for all items and
validity score Kaiser- Meyer Olkin value is near to 0.999 that confirm data is fit for further
analysis. Consequently, correlation analysis runs to check the association of variables. To
test the model multiple linear regressions used that is explaining the overall impact of the
model.

4. Results and discussion

This portion of research is containing on the result of research work with respect to
demographic information of respondents, variables position with explanation, correlation
results of the research variables, regression analysis and the hypothesis test elaboration.

4.1 Demographic information

The third part of the questionnaire is consisting of the demographic information. The first
question answering the religion of the respondent and 97.3 per cent are Muslims for this
study. From which majority is the male that is 54 per cent and with respect to the age, the
majority of the respondent 74.7 per cent are young and falling in the range of 20-30 years old.
The affiliation of the respondent is in such a scenario that business students are more 42.3
per cent and after it, 30 per cent is those individuals that have affiliation with IB. All the
respondents are qualified as 46 per cent are those that have 16 years qualification and
currently enrolled for further. There are 53 per cent respondents who are linked with IB less
than one year being a customer of it. With respect to IB product K, there is 51.7 per cent who
has K about deposits and lending services, while 29.3 per cent know about the Car Ijarah,
House financing, and Asset management. (Table I)
IMEFM Variables Variables’ classification Frequency (%)
12,4
Religious conviction Non-Muslims 8 2.7
Muslims 292 97.3
Gender Female 138 46
Male 162 54
Age Below 20 years 27 9
594 20-30 years 224 74.7
31-40 years 35 11.7
41-50 years 10 3.3
Above 50 years 4 1.3
Type of respondent Business students 127 42.3
Islamic finance students 34 11.3
Regular customer 24 8.0
Occasional customer 30 10.0
Other 85 28.3
Last degree of Respondent Intermediate 35 11.7
Bachelors 61 20.3
Masters 137 45.7
MPhil/PHD 65 21.7
Post Doctorate 2 0.7
Linkage of the respondent Less than a year 160 53.3
with IB ( being the 1-2 years 74 24.7
student or customer) 3-5 years 53 17.7
6-10 years 10 3.3
More than 10 years 3 1.0
Which all type of services Deposits and lending 155 51.7
are knowable or used by Asset management 16 5.3
Table I. Respondent House financing 12 4.0
Demographic Car Ijarah/leasing 29 9.7
information All above 88 29.3

4.2 Descriptive statistics

Above table described in first column the construct of research K, GS, BS, Rep, CB, RO, SI
and the dependent variable as IBA. The “N” column is showing the number of respondents
that information is used for analysis purpose these are 300. While the “minimum” column is
showing the least point of behavior record from where the value is starting is 1 for “Strongly
Disagree.” Similarly, the maximum column is showing the maximum point for response
recording that is number 5 as “Strongly Agree.” Now the mean value of all variables is
greater than 3. Which means the trend of these variables is toward the agreed position by
the individuals and moving toward the strongly agree. The last column is of standard
deviation that is showing normal condition. (Table II)

4.3 Correlation
Table III show that K, GS, BS, Rep, CB, RO and SI is significantly positively associated
with the dependent variable IBA as its p-value is double static that showing the
significant level is below than 1 per cent. So as all these independent variables are
moving in the same direction with the same consistency the dependent variable IBA
will move. If these seven variables are showing the increasing trend than adoption will
also be increased and if these variables giving respond of decreasing the IBA will also
decrease (Alexander, 2001).
Construct N Minimum Maximum Mean SD
Community
behavioral
K 300 1.00 5.00 3.6900 0.81846 intention
GS 300 1.00 5.00 3.2873 0.70353
BS 300 1.00 5.00 3.9467 0.80580
Rep 300 1.00 5.00 3.7242 0.83628
CB 300 1.00 5.00 3.3892 0.81787
RO 300 1.00 5.00 3.6207 0.87628 595
IBA 300 1.00 5.00 3.8773 0.85349
SI 300 1.00 5.00 3.6213 0.80555
Table II.
Note: Dependent variable: IBA Descriptive statistics

Variables K GS BS Rep CB RO IBA SI

K 1
GS 0.352** 1
BS 0.449** 0.448** 1
Rep 0.343** 0.294** 0.562** 1
CB 0.233** 0.196** 0.377** 0.572** 1
RO 0.285** 0.288** 0.482** 0.674** 0.552** 1
IBA 0.330** 0.240** 0.399** 0.650** 0.550** 0.715** 1
SI 0.332** 0.272** 0.351** 0.559** 0.491** 0.533** 0.7** 1
Table III.
Notes: Dependent variable: IBA (*significant p < 0.05; **significant at p <0.001) Correlation matrix

4.4 Regression results

Table IV shows the value of multiple correlations R, which is = 0 0.820 and Adjusted R2 is 0.67.
Its mean all dependent variables collectively 67 per cent explaining the dependent variable – IBA
(Wooldridge, 2007). While there are also some other factors that have 33 per cent power to
explain this behavior. The F-value = 85.58 per cent which is showing that the model is well fitted
as its p-value is showing significant results. On the other hand, Durbin Watson test identifying
that there is no Autocorrelation (AC) is existed in the data. When error terms are correlated with
one another there is serial correlation or AC that can misrepresent the results. It can be identified
by running Durbin Watson d test. If d test value is greater than 1.5 or near to 2, there is no AC
(White, 1992). On the other hand, the value of VIF is < 5 for all variables that mean there is no
Multi co-linearity issue among variables. As when the Tolerance value is greater or equal to 0.2
and VIF is lesser than or equal to 5, at that time there is no multi-collinearity (White, 1992). That
means all variables are independent and explaining the separate concept with existing construct
of items. Now data is error-free for hypothesis testing (Wooldridge, 2007).

4.5 Hypotheses testing

The values of Table V is describing the results, as the constant value is 0.297 that means
if the independent variables have no impact or zero influences there will be 29.7 per cent

R R2 Adjusted R2 S. E F P-value D-W VIF

Table IV.
0.820 0.670 0.664 0.49 85.584 0.000 1.819 0.02 Regression results
IMEFM dependency of IBA on these variables. The first identified feature for IBA is K, the
12,4 coefficient value = 0.049 if there is one per cent change occur in K, at average there will be
4.9 per cent change on IBA in the same direction. However, in this study K showing
insignificant results with IBA, hence H1 is rejected and these results are aligned with the
study of Kuehn (2004). GS refers the assistance from the side of Central Bank for IB
development and promotion. GS coefficient value = 0.052 that means 5 per cent change
596 will be in IBA because of GS but negatively. The results of it also insignificant, showing
no influence hence, H2 is rejected also. BS value is showing insignificant but negative
relation with IBA, H3 is rejected.
The Rep coefficient = 0.139 while the p-value is <0.05 that means Rep has 13 per cent
explanatory power for IBA. H4 has supported and results are aligned with (Roggeveen, 2007;
Sengupta, 2015; Jaffar, 2016). CB will cause to change 7.4 per cent the IBA and results showing
CB significantly and positively influencing the IBA, H5 has accepted, results have been
supported by Asif (2016). RO has significantly and positively influenced the IBA with b value
0.375 that means 37.5 per cent explanatory power has found in RO in the same direction at 1 per
cent level of significance. H6 supported and results are aligned with Haque (2010), Reni and
Ahmad (2016). The last variable SI b value = 0.378 that means 37 per cent change will be due to
SI in IBA in a positive direction. SI is highly significant at 1 per cent level of significance. H7 is
accepted and these results are aligned with the (Reni and Ahmad, 2016; Amin and Aman, 2016).
By analysis, we can conclude that a significant and positive influence has observed in
this study by the RO, CB, SI, and Rep. These variables have 67 per cent explanatory power
for the IBA among individuals. While the K has been showing insignificant influence on
IBA but positive relation if occur, However, the BS and GS is not influencing the IBA and
the relationship is also negative.

5. Conclusion
5.1 Discussion
The objective of the study is fulfilled by the identification of factors that have a great
influence on IBA. The results of this study revealed that the most important factor in the
adoption process is a RO and that is exactly the extended part of TRA. A positive and
highly significant influence has found among individuals’ adoption of IB. It instigates that
the Islamic Banks should focus on RO. If more the ROs will be adopted by Islamic banks the
more will be the tendency to adopt IB for a bank customer in case of Pakistan. However, the
perceived adherence is mandatory to the sharia criteria in non-users or user’s eyes. Wealth
equal distribution, Halal Investment and Riba free banking are demanded by the individuals
for the IB. Similarly, SI is significantly and positively affecting the Adoption of IB. Islamic

Hypotheses Variables Coefficients Critical value Decision

Constant 0.297 1.556

H1 K 0.049 1.214 Rejected
H2 GS 0.052 1.104 Rejected
H3 BS 0.050 0.097 Rejected
H4 Rep 0.139 2.811** Supported
H5 CB 0.074 1.715* Supported
H6 RO 0.375 7.789*** Supported
Table V. H7 SI 0.378 9.079*** Supported
Testing of
hypotheses Notes: Dependent variable: IBA (*significant at p < 0.10; **significant p < 0.05; ***significant at p < 0.001)
banks should adopt the criterion of human intentions toward the adoption of IB. It is human Community
physics ones attract more toward the subject that is appreciable and praised in society. behavioral
Society preference for IB increases its adoption among people. So Islamic Banks should intention
arrange such events and launch the programs that cause social affection and raising
opportunities that help to refer IB among peers, relatives and friends, etc.
IBA is affected by the Rep significantly and positively. The results of Rep suggests that
by the increase of Rep IBA will also increase as the matter of fact behind is that the Islamic 597
Backing is promoting Islamic values by practicing it at the bottom line. The management
should consider the Rep element for the promotion of sustainable projects and should
contribute to social welfare. CB has shown the positive and highly significant influence on
IBA. If an Islamic bank offers more benefits with competitive prices then these attractive
and beneficial offers will encourage more to the individuals to use IB. By the Cost
advantage, Islamic Banks can increase the market share along with market growth.

5.2 Implications of the study

This study is helpful for the policymakers to get a better insight into the dominating factors
that influence IBA process. For practitioners; this study will provide a comprehensive tool to
implement the findings of this research to get better results in case of turnover of IB
products. For the potential and regular customers; this study will provide a better
understanding about adoption process of IB. However, this study suggests that by building
a good Rep, considering more the Religious aspect, Islamic law and sharia rules in banks
transaction and offering more suitable and affordable products/services at low charges,
more customers can be attracted. Similarly, this research is providing the conceptual model
that has an influence on IBA by individuals. This study has unique characteristics in case of
Pakistan as it considers more factors i.e. BS, Rep, CB and GS that are not tested before. It is
playing a vital role in extension of TRA with respect to IB.

5.3 Limitations and future directions

The identified factors in this study are influencing 66.67 per cent according to regression
results. It means there are also some other factors besides these. There is a need to identify
them, as they have 33.33 per cent influence on adoption behavior. In future researcher can
consider the profit benefits, perception of goodness, rewards and return, long term profit
offers and risk, etc. with respect to IB.
A theoretical model of this research is tested on banking sector by the classification of IB.
In future, it can also be applied to conventional banks, other financial Institutions and on
educational sector in which behavioral intention is involved. Similarly, this model can also
be applied to compare the adoption of conventional and IB.
The data collected from the individuals who have knowledge about Banking like users,
Employees and Students of Business and Banks, for further research, it may be collected
from the people of other sectors. This study is applying the technique of multiple linear
regression and correlation, though it is attaining the aim of research; but in future, some
other analytical techniques may apply for data analysis.
In behavioral finance, the demographics play an important role in the investor’s financial
decisions (Metawa et al., 2019). Therefore, in the future, a study considering the
demographics can predict preferences of IBA among the individuals. A new prospect of IBA
is to find out the critical reason for non-usage of IB. In future, the researcher can dig out
these reasons by qualitative research on non-users of it.
IMEFM References
12,4 Ajzen, I. (1991), “The theory of planned behavior”, Organizational Behavior and Human Decision
Processes, Vol. 50 No. 2, pp. 179-211.
Ajzen, I. and Fishbein, M. (1980), Understanding Attitudes and Predicting Social Behavior, Prentice-Hall, NJ.
Alexander, C. (2001), Market Models: A Guide to Financial Data Analysis, John Wiley & Sons,
Chichester.
598 Allen, B. (2013), “Integrating quantitative and qualitative research: how is it done?”, Qualitative
Research, Vol. 6 No. 1, pp. 97-113.
Amin, H.R. (2011), “Determinants of customers’ intention to use Islamic personal financing: the case of
Malaysian Islamic banks”, Journal of Islamic Accounting and Business Research, Vol. 2 No. 1, pp. 22-42.
Amin, K. and Aman, Q. (2016), “Determinants of attitude towards the acceptance of Islamic banking: a
case of district Peshawar”, Pakistan. Journal of Managerial Sciences, Vol. 10 No. 1, pp. 140-155.
Asif, M.S. (2016), “Factors determining the attitude of customers towards Islamic banking: a study of
Peshawar Pakistan”, Abasyn Journal of Social Sciences, Vol. 9 No. 1, pp. 201-210.
Buallay, A. (2019), “Corporate governance, Sharia’ah governance and performance: a cross-country
comparison in MENA region”, International Journal of Islamic and Middle Eastern Finance and
Management, Vol. 12 No. 2, pp. 216-235.
Buchari, I.R. (2015), “Awareness and attitude of employees towards Islamic banking products in
Behrain”, Procedia Economics and Finance, Vol. 30, pp. 68-78.
Bushman, R.M.M. (2012), “The role of bank reputation in ‘certifying’ future performance and implications
of borrowers’ accounting firms”, Journal of Accounting Research, Vol. 50 No. 4, pp. 883-930.
Cai, J. and Song, C. (2017), “Do disaster experience and knowledge affect insurance take-up decisions?”,
Journal of Development Economics, Vol. 124, pp. 83-94.
Cancino, C.A. (2015), “The impact of government support programs for the development of businesses
in Chile”, Management Decision, Vol. 53 No. 8, pp. 1736-1754.
Cravo, T.A. and Piza, C. (2016), “The impact of business support services for small and medium
enterprises on firm performance in low- and middle-income countries: a meta-analysis”, World
Bank Policy Research Working Paper No. 7664.
Delgado-Márquez, B.L., Aragon-Correa, J.A., Hurtado-Torres, N.E. and Aguilera-Caracuel, J. (2015),
“Does knowledge explain trust behaviors and outcomes? The different influences of initial
knowledge and experiential knowledge on personal trust interactions”, The International
Journal of Human Resource Management, Vol. 26 No. 11, pp. 1498-1513.
Echchabi, A. and Azouzi, D. (2015), “Predicting customers’ adoption of Islamic banking services in
Tunisia: a decomposed theory of planned behaviour approach”, Tazkia Islamic Finance and
Business Review, Vol. 9 No. 1.
Espejel, J.F. (2008), “The influence of consumer degree of knowledge on consumer behavior: a case of
Spanish olive oil”, Journal of Food Products Marketing, Vol. 15 No. 1, pp. 15-37.
Fishbein, M. (1980), “A theory of reasoned action: some applications and implications”, Nebraska
Symposium on Motivation, Vol. 27, pp. 65-116.
Fishbein, M. and Ajzen, I. (1975), Belief, Attitude, Intention, and Behavior: An Introduction to Theory
and Research, Addison Wisley Publication Co, Reading, pp. 25-578.
Gait, A.H. (2009), “The impact of demographic variables on Libyan retail consumers’attitudes towards
Islamic methods of finance”, Islamic Economic Studies, Vol. 17 No. 1, pp. 1-18.
Gliem, J.A. and Gliem, R.R. (2003), “Calculating, interpreting, and reporting Cronbach’s alpha reliability
coefficient for Likert-type scales”, 2003 Midwest Research-to-Practice Conference in Adult,
Continuing, and Community Education.
Haque, A.K. (2009), “Factor influences selection of Islamic banking: a study on Malaysian cusstomer
preferences”, American Journal of Applied Sciences, Vol. 6 No. 5, pp. 922-928.
Haque, A.K. (2010), “Islamic banking in Malaysia: a study of attitudinal differences of Malaysian customers. Community
European journal of economics”, Finance and Administrative Sciences, Vol. 18, pp. 7-18.
behavioral
Haron, S. and Yamirudeng, K. (2003), “Islamic banking in Thailand: prospects and challenges”,
International Journal of Islamic Financial Services, Vol. 5 No. 2, pp. 1-11.
intention
Jaffar, M.A. (2016), “Determinants of attitude and intention towards Islamic financing adoption among
Non-Users”, Procedia Economics and Finance, Vol. 37, pp. 227-233.
Johnes, J., Izzeldin, M. and Pappas, V. (2014), “A comparison of performance of Islamic and
conventional banks 2004–2009”, Journal of Economic Behavior and Organization, Vol. 103,
599
pp. S93-S107.
Karbhari, Y.N. (2004), “Problems and challenges facing by Islamic Banking system in the west: the case
of the UK”, Thunderbird International Business Review, Vol. 46 No. 5, pp. 541-543.
Khan, M.S. (2007), “Banking behavior of Islamic bank customer in Bangladesh”, Journal of Islamic
Economics, Banking and Finance, Vol. 3 No. 2, pp. 159-194.
Khan, I., Khan, M. and Tahir, M. (2017), “Performance comparison of Islamic and conventional banks:
empirical evidence from Pakistan”, International Journal of Islamic and Middle Eastern Finance
and Management, Vol. 10 No. 3, pp. 419-433.
Kirkpatrick, L.A. (2005), Attachment, Evolution and Psychology of Religion, Guilford Press, London.
Kuehn, J.B. (2004), “Conventional versus Islamic finance: student knowledge and perception in the
United Arab Emirates”, International Journal of Islamic Financial Services, Vol. 5 No. 4,
pp. 17-30.
Latif, Y.A. (2016), “Study of performance comparison between Islamic and conventional banking in
Pakistan”, European Journal of Educational and Development Psychology, Vol. 4 No. 1, pp. 17-33.
Lee, E.J. (2016), “How perceived cognitive needs fulfillment affect consumer attitudes toward the
customized product: the moderating role of consumer knowledge”, Computers in Human
Behavior, Vol. 64, pp. 152-162.
Majeed, M.T. (2016), “Efficiency analysis of Islamic banks in Pakistan”, Humanomics, Vol. 32 No. 1,
pp. 19-32.
Makiyan, S.N. (2003), “Role of rate of return on loans in the Islamic banking system of Iran”,
Managerial Finance, Vol. 29 No. 7, pp. 62-69.
Mehmood, M.S., Mehmood, A. and Siddique, M. (2017), “Personality traits nexus employee’s
performance: an application of big five personality dimensions model”, Abasyn Journal of Social
Sciences, Special Issue: AIC 2016, pp. 101-119.
Metawa, N., Hassan, M.K., Metawa, S. and Safa, M.F. (2019), “Impact of behavioral factors on investors’
financial decisions: case of the Egyptian stock market”, International Journal of Islamic and
Middle Eastern Finance and Management, Vol. 12 No. 1, pp. 30-55.
Reni, A. and Ahmad, N.H. (2016), “Application of theory reasoned action in intention to use Islamic
banking in Indonesia”, Al-Iqtishad: Journal of Islamic Economics, Vol. 8 No. 1, pp. 137-148.
Roggeveen, A.L. (2007), “How call center location impacts expectations of service for reputable verses
lesser-known firm”, Journal of Retailing, Vol. 83 No. 4, pp. 403-410.
Ross, D.G. (2010), “The ‘dominant bank effect:’ how high lenders reputation affects the
information contents and terms of bank loan”. The Review of Financial Studies, Vol. 23
No. 7, pp. 2730-2756.
Saleem, M.A. (2016), “Predictors of customer loyalty in the Pakistani banking industry: a moderated-
mediation study”, International Journal of Bank Marketing, Vol. 34 No. 3, pp. 411-430.
San-Jose, L. and Cuesta, J. (2019), “Are Islamic banks different? The application of the radical affinity index”,
International Journal of Islamic and Middle Eastern Finance and Management, Vol. 12 No. 1,
pp. 2-29.
SBP (2016), “Islamic banking Bulletin, state bank of Pakistan”, Professional Network.
IMEFM Selim, M. (2019), “The effectiveness of qard-al-Hasan (interest-free loan) as a tool of monetary policy”,
International Journal of Islamic and Middle Eastern Finance and Management, Vol. 12 No. 1,
12,4 pp. 130-151.
Sengupta, A.S. (2015), “How customers cope with service failure? A study of brand reputation and
customer satisfaction”, Journal of Business Research, Vol. 68 No. 3, pp. 665-674.
Siddique, M., Ch, N.I., Mehmood, S., Qureshi, M.I. and Umar, A. (2017), “Relationship between channel
conflict and stock-outs at retail/distribution points”, Abasyn Journal of Social Sciences, Special
600 Issue: AIC 2016, pp. 604-612.
Tavakol, M. and Dennick, R. (2011), “Making sense of Cronbach’s alpha”, International Journal of
Medical Education, Vol. 2, pp. 53-55.
Teo, T.S. (2003), “Adoption of WAP-enabled mobile phones among internet users”, Omega, Vol. 31
No. 6, pp. 483-498.
Valmohammadi, C. and Ahmadi, M. (2015), “The impact of knowledge management practices on
organizational performance: a balanced scorecard approach”, Journal of Enterprise Information
Management, Vol. 28 No. 1, pp. 131-159.
Vehkalahti, K. (2000), “Reliability of measurement scales. Tarkkonen’s general method supersedes
Cronbach’s alpha”, Stat. Res. Rep, 17, The Finnish Statistical Society, Helsinki, Finland.
Villablanca, P. and Shah, B. (2018), “Size matters: Moving toward a slender trans-radial artery
approach”, Cardiovascular Revascularization Medicine, Vol. 19 No. 4, pp. 401-420.
Wahyuni, S. (2012), “Moslem community behavior in the conduct of Islamic bank: moderation role of
knowledge and pricing”, Procedia - Social and Behavioral Sciences, Vol. 57, pp. 290-298.
Wahyuni, S.S. and Arifin, T. (2013), “Knowledge as an antecedent variable of intention to use Islamic
banking products”, ASEAN/Asian Academic Society International Conference Proceeding Series.
White, K.J. (1992), “The Durbin-Watson test for autocorrelation in nonlinear models”, The Review of
Economics and Statistics, Vol. 74 No. 2, pp. 370-373.
Wooldridge, J.M. (2007), Introductory Econometrics: A Modern Approach, 3rd ed., Thomson-South
Western.
Yu, C.S. (2012), “Factors affecting individuals to adopt mobile banking: empirical evidence from the
UTAUT model”, Journal of Electronic Commerce Research, Vol. 13 No. 2, p. 104.

Further reading
Anderson, D.R., Sweeney, D.J. and Williams, T.A. (1996), Statistics for Business and Economics, West
Publishing Company, St. Paul.
Mou, J., Shin, D.H. and Cohen, J. (2017), “Understanding trust and perceived usefulness in the consumer
acceptance of an e-service: a longitudinal investigation”, Behaviour and Information Technology,
Vol. 36 No. 2, pp. 125-139.
Souiden, N. and Rani, M. (2015), “Consumer attitudes and purchase intentions toward Islamic banks:
the influence of religiosity”, International Journal of Bank Marketing, Vol. 33 No. 2, pp. 143-161.

Corresponding author
Mian Saqib Mehmood can be contacted at: miansaqibmehmood@gmail.com

For instructions on how to order reprints of this article, please visit our website:
www.emeraldgrouppublishing.com/licensing/reprints.htm
Or contact us for further details: permissions@emeraldinsight.com