Identifying the Factors Determining of Muslims’ Intention to Adopt Islamic Banking in the Local Region: Religiosity as Moderating Variable

Abstract

Purpose of the study: This paper investigates factors that influence the Muslims' intention to adopt Islamic banking and to examine whether religiosity moderates the effect of those factors toward the Muslim's intention to adopt Islamic banking in South Sumatera.Methodology: Primary data collected from six towns/districts in South Sumatera are obtained through questionnaires with the total respondents of 300. Using multiple regression analysis, we test whether attitude, social influence, bank reputation, and compliance on Islamic principles can affect the Muslims' intention in using Islamic banking. Main Findings:We further crosscheck our findings through an interview with some of the respondents. We find that attitude, reputation, and compliance affect the intention to adopt Islamic banking significantly, whereas social influence is found to be insignificant. Our further finding explains that religiosity, which is represented by the dimension of Syariah and Ahlaq, cannot moderate the effect of an independent variable on the dependent variable. Implications of this study:This implies that in increasing Islamic bank market share, managers of Islamic banks and also government cannot solely depend on religious factors. Our findings give insights to practitioners and regulators on what factors can affect Muslims' intention to use Islamic banking. Novelty/Originality of this study:This study contributes as it extends the existing literature, any factors influencing the interest and intention of the Muslim community to adopt sharia banking as their banking activities. Some studies look at the direct effect of religiosity toward Islamic banking, however, it is different from previous studies because we put religiosity as a moderating variable.

Investigating the effect of total assets, financing, and third-party funds on Islamic Banking Revenue in Indonesia

“…Although at that time there was only one Islamic banking financial institution, it was acknowledged by many circles that the system adopted could answer the challenges of the crisis that occurred in 1997-1998. Since then, Islamic banking was born from the trust of Muslims and has become known by Muslims and non-Muslim communities (Isnurhadi et al, 2020). Until now many conventional banks have special units of Islamic banks (Ulfah, 2010 and Bangsawan, 2017).…”