Attitudes towards Islamic Banks: The Impact of Religiosity and the Moderating Role of Trust

Abstract

The purpose of this study is to analyze the impact of Muslim religiosity on attitudes towards Islamic Banks, considering the moderating role of public trust that exists towards these Islamic financial institutions. It identifies how trust towards Islamic banks in terms of their conformity with Shari’ah principles and their safe handling of deposits would affect common attitudes towards them. Data for the study was collected through questionnaires from 113 individuals participated in the survey. The data was analyzed through correlation and regression analysis. Results showed that religiosity (belief, practice, knowledge, experience and consequence) has positive impact on attitudes towards Islamic banks. It proved that the more a person is religion conscious the more he/she is inclined towards Islamic banks. Moreover, it was confirmed that trust has positive relationship with attitudes towards Islamic banks. However, results could not identify any significant moderating role of trust on the relationship between religiosity and attitudes towards Islamic banks. Practical implications of the results and avenues for further investigation are discussed for future research.

Perceived inclusion of Islamic finance: The effects of attitudes, experience, literacy, religiosity, and social influences

“…Prior studies have confirmed that RL may have a direct or indirect effect on consumer purchase behaviour (Alam, Mohd, & Hisham, 2011), bank performance (Raksayudha & Suhartanto, 2019), and the intention to use Islamic finance (Zaid, 2019;Zauro, 2017). The current findings reveal an insignificant direct effect of religiosity (RL) on the perceived inclusion of Islamic finance (PIIF).…”

“…This study predicts the influence of attitudes towards Islamic finance (ATTIF), financial experience (FE), religiosity (RL), and social influence (SI) on perceived inclusion of Islamic finance (PIIF). These assumptions are based on the findings of prior studies (Karlan, Osman, & Shammout, 2021;Zaid, 2019;Zauro, 2017), social learning theories, and the financial capability approach (Bandura, 1977;Kempson et al, 2013). In addition, this study proposes the mediating role of ATTIF (Ajzen, 1991;Saurabh & Nandan, 2018;Sundarasen & Rahman, 2017) and the moderating effect of Islamic financial literacy (IFL).…”

“…Religiosity may not be crucial for some people when choosing financial services because Muslims prefer conventional financial services (Jouti, 2018). Surprisingly, religiosity as a reason for self-financial exclusion is still common among Muslims, even decades after the introduction of Islamic financial services (Albaity & Rahman, 2019;Zaid, 2019;Zauro, 2017). Some people may use religion as an excuse to use financial services because of illiteracy or a lack of awareness about Islamic finance operations (Abdu et al, 2018).…”

“…According to the conclusions of this study, religion's influence is context-and environment-dependent. Many people in Muslim-majority areas mentioned religious reasons for not using financial services compared to followers of other religions (Demirgüç-Kunt et al, 2022;Demirgüç-Kunt et al, 2018;Zaid, 2019). However, no prior studies have empirically confirmed this effect (Jouti, 2018;Karlan et al, 2021;Raksayudha & Suhartanto, 2019).…”

“…Understanding the peoples' perceptions and their underlying factors is crucial for promoting the adoption and inclusion of Islamic finance (Albaity & Rahman, 2019;Trianto, Yuliaty, & Sabiu, 2021;Zauro, 2017). Further, prior studies of financial inclusion in Islamic finance are from areas where Islamic finance is at an advanced stage, leaving behind the inclusion status of Islamic finance in other developing markets (Hassan, Hossain, & Unsal, 2018;Uddin, Ahmad, Dar, & Khan, 2023;Zaid, 2019). Prior studies have reported perceived low quality and irrelevant financial services among the critical challenges of financial inclusion.…”