Islamic home financing in Pakistan: a SEM-based approach using modified TPB model

Abstract

The present study attempts to examine the Islamic home financing using the modified theory of planned behavior model (TPB). A sample data of 375 is conveniently drawn from walk-in customers of Islamic banks located in the biggest city Karachi. This study employed both exploratory factor analysis (EFA) and confirmatory factor analysis (CFA) to confirm the validity and reliability of the measurement model. The modified theoretical framework was examined by applying the structural equation modelling (SEM) using frequently reported goodness-of-fit indices. The findings indicate that the original constructs of TPB model, attitude (ATT), subjective norm (SN) and perceived behavioral control has a positive and significant impact on the customer intention to use Islamic home financing. Furthermore, ATT is found to be the most influential factor in determining the customer intention towards Islamic home financing. On the other hand, we introduced two new factors, pricing on home financing (PHF) and religious belief (RB), which proved their presence in the TPB model by showing a significant impact on the customer intention to use the facility of home financing. In addition, PHF has a negative impact while religious belief has a positive relationship with the customer intention to use Islamic home financing in Pakistan. This study also suggests that the standard TPB model is successfully modified by introducing PHF and RB factors. Therefore, Islamic bank managers should consider this study to promote the Islamic home financing facility in Pakistan.

Factors Affecting Customer Intentions to Seek Islamic Microfinancing: Evidence from Indonesia

“…PBC positively and significantly affects intention to seek Islamic microfinance. This finding accords with Ali et al [12] and Nature et al (2012). Customers in this study feel they have the ability to seek Islamic microfinance and control over doing so.…”

“…Approval of people who are important to the customer bolsters the intention to seek Islamic microfinance. This finding supports M. Ali et al [12] and Amin et al [6] In Table 4.4, the correlation for PBC has a correlation of 0.454 to intention (INT) (t-statistic > 1.645). H3 is confirmed.…”

“…Ramdhani [8] defines subjective norms as our perception of how people important to us will regard our behavior. Ali, Ali, and Hong [12] find that subjective norms influence the intention to seek Islamic personal financing in Pakistan. Other studies find that subjective norms enhance the intention to seek Sharia financing for Malaysia [11] We propose Hypothesis 2:…”

Bank Profitability and its Determinants in Pakistan: A Panel Data Analysis after Financial Crisis

“…Particularly, Islamic banks have maintained their position well due to availability of potential target market (in Pakistan) . It is also necessary for banks to create awareness about their products and services in order to become more profitable (Ali, Chin-Hong, & Arif, 2015;Ali, Raza, & Chin-Hong, 2015;Afshan & Sharif, 2016). The banks are considered essential for economic functions as they also perform a critical role as financial intermediaries in the service providing economies.…”

The Construction of a New Mathematical Model for Islamic Home Financing

“…Islamic banking started to enter the Malaysian market in 1963 with the operation of Tabung Haji. Previous conventional home financing is not aligned with the Islamic principle as riba (usury) and gharar (uncertainty) are integral part of the financing and because of that many people start to be aware of halal and haram transactions (Ali, Raza, Puah, & Karim, 2017). Considering that the financial institution progress was encouraging, gradual setting up of Islamic financial institutions was observed throughout the country.…”