The Basis for Selecting Islamic Banking: A Research Study on Selected Customers of Islamic Banks in Pakistan

Abstract

Bank is an institution which provides financial services to its customers and Islamic Banking is a comparatively new concept which works on the basis of shariah law and provides interest free banking. Many research studies have been conducted in the world to identify the factors that are important for the customers to select an Islamic Bank. Each researcher has identified few factors which differ from one another. This study focuses on all those twenty factors (variables) which have been identified by the various researches of the world, having effect on the selection criteria of an Islamic Bank but have not been so for considered as a whole by any one of the previous researchers. For this purpose, 300 questionnaires were distributed among the existing customers of the Islamic Banks, 223 were found complete. The reliability of the instrument was checked through Cronbach’s Alpha which is 0.950 and is above the acceptable range of 0.7. The analysis of the data proved that all the twenty factors are important for the selection of an Islamic Bank. The results of the previous researches were verified and generalized. Moreover it is also found that credibility of the Islamic Bank in the eyes of its customers also depends on the same factors which are important for the selection of the Islamic Banks by its customers.