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Article
Publication date: 1 October 2018

Fayaz Ahmad Lone and Ulfat Rashid Bhat

The purpose of this paper is to find out the importance of the tag “Islamic” in the title of banks. This will help to determine the future strategy of Islamic banks, while…

Abstract

Purpose

The purpose of this paper is to find out the importance of the tag “Islamic” in the title of banks. This will help to determine the future strategy of Islamic banks, while expanding to the countries where Islamic banking is seen as a religious banking and not an as an alternative approach to the conventional banking.

Design/methodology/approach

Adopting convenience sampling, a total of 596 customers of both Islamic and conventional banks were surveyed from four regions of Saudi Arabia (Makkah, Madinah, Riyadh and Dammam) using a self-structured questionnaire on a five-point Likert scale.

Findings

The results concede that Islamic banks without the tag “Islamic” and conventional banks have same customer satisfaction. There are some factors other than the tag “Islamic” which are driving customers towards Islamic banking. Those factors include physical aspects of the bank, level of satisfaction with the services, dealing and attendance by the staff and safety and security of the bank. Besides, the application of fundamental principles of Islamic banking works as a key motivation for customer satisfaction with Islamic banking.

Practical implications

Applying the tag “Islamic” is not as important as implementing the principles of Islamic banking. Islamic banks can survive and compete well even without using the “Islamic” tag if they implement the prime principles of Islamic banking and work on improving the factors highlighted by this study. This study can prove to be helpful in the expansion of Islamic banking in the countries where religious banking is not generally preferred by customers.

Originality/value

This is the first study to find out the customer satisfaction in a dual banking system (comprising of conventional banks and Islamic banks that do not use the tag “Islamic”), thereby filling the existing gap in the Islamic banking literature.

Article
Publication date: 2 December 2019

Hafiz Ali Hassan

The concept of Takaful has a long history. It is linked with the era of Prophet Muhammad 1,400 years ago. The globalization and development of socio-economic systems have made…

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Abstract

Purpose

The concept of Takaful has a long history. It is linked with the era of Prophet Muhammad 1,400 years ago. The globalization and development of socio-economic systems have made business activities more complex in response to emerging human needs and requirements. Similarly, Takaful insurance has fully commercialized and become an important indicator of the international financial market. The purpose of this study is to understand the Takaful mechanism and progression of its procedures to date since its inception.

Design/methodology/approach

This study seeks to examine the origin, evolution and historical developments of Takaful mechanism, operations, models and governing framework with extant literature review from previous studies and current practices.

Findings

The modern Takaful insurance first began in Sudan back in 1979. The Takaful operations must abide by the Sharia laws and work under the supervision of the Sharia Supervisory Board. Since its evolution, Sharia scholars have introduced various Takaful models that are going to be explained in this study. Moreover, several Islamic organizations, including the “Islamic Financial Services Board” and the “Accounting and Auditing Organization for Islamic Financial Institutions,” have provided guidelines and supervision to develop and strengthen the Takaful industry further. The study acknowledges Takaful as a growing insurance industry with huge potential and promising future in both Pakistan and the international market.

Practical implications

During the analysis, various deficiencies and loopholes were identified, which are responsible for the unmatched growth of conventional insurance. They can be eliminated with the joint efforts of industrial players, Sharia scholars and Takaful insurance companies. Hence, Islamic scholars and academic researchers are encouraged to develop and modify the current practices of Takaful mechanism according to current market demands and consumer approach. The research efforts will help Takaful operators to develop more innovative Takaful products adhering Sharia compliance. Consequently, it will help to access more consumer market and further enhances the Takaful growth.

Originality/value

This study is an effort to provide a basic understanding of the mechanism of Takaful models. The study helps to comprehend how Takaful models have evolved and been modified over the course of time. Moreover, it provides a base for further development and improvement in current practices of Takaful models, which will result in increased progress for the Takaful industry.

Details

Journal of Islamic Marketing, vol. 11 no. 6
Type: Research Article
ISSN: 1759-0833

Keywords

Article
Publication date: 29 July 2020

Mahmoud Yasin, Lucia Porcu and Francisco Liébana-Cabanillas

The purpose of this paper is to investigate how religious values of Islamic banking users influence their active social media engagement behavior (SMEB), when exposed to online…

Abstract

Purpose

The purpose of this paper is to investigate how religious values of Islamic banking users influence their active social media engagement behavior (SMEB), when exposed to online brand related-content.

Design/methodology/approach

The method used for data collection was an online self-administered questionnaire. A total of 448 valid responses were obtained from Islamic banks customers, who are members of at least one online brand community (OBC) on Facebook. Responses were analyzed and processed by means of structural equation modeling.

Findings

The results of the online survey reveal that religious values have a positive influence on the active SMEB in terms of contributing (like and/or share) and creating (posting positive comments) of brand related-contents via Facebook OBC. Religious values play a key role in encouraging Islamic banks’ customers to share and forward posts, advertisements and/or contents. Furthermore, religious values encourage customers to forward contents that comply with their religious values and beliefs and are also compatible with the Islamic rules of Shari’ah.

Originality/value

The findings of this study suggest that religious values are likely to impact customer behavior when consuming, liking, sharing and commenting on the online contents generated by Islamic banks. Given the fact that Islamic religious values are universal and persistent, there is a potential for long-term benefits for those Islamic banks that identify profitable religious consumer segments within the domestic and global markets as well as to promote and enhance active SMEB in terms of number of positive comments, likes and shares of brand-related contents.

Details

Journal of Islamic Marketing, vol. 12 no. 9
Type: Research Article
ISSN: 1759-0833

Keywords

Article
Publication date: 23 November 2021

Achraf Haddad

The purpose of this study is to compare the impact of religion on the financial performance of conventional and Islamic banks in the framework of stakeholders’ theory.

Abstract

Purpose

The purpose of this study is to compare the impact of religion on the financial performance of conventional and Islamic banks in the framework of stakeholders’ theory.

Design/methodology/approach

Few studies have focused on studying the impact of religion on banking performance. Although religion represents an external governance mechanism for financial institutions, by using the generalized method of moments (GMM), this topic constitutes a research opportunity. The already modeled variables are collected from 76 countries located on 5 continents. The data were collected from DATASTREAM, banks’ annual reports, WIKIPEDIA and World Bank. It concerns 210 banks of each type during the period (2010–2020).

Findings

The author retained that religion negatively affects the financial performance of both conventional and Islamic banks. More specifically, results showed that religion affected the liquidity and solvency of two bank types. It also affected conventional banks’ profitability and efficiency.

Research limitations/implications

I summarized the theoretical contribution in the integration of a new original governance category to enhance its presence with impacts directly affecting the banks’ financial performance. Empirically, the study can be seen as a compass for all stakeholders to consider environmental, behavioral and doctrinal factors in studying the financial performance evolution and to become more competitive in the banking market.

Originality/value

Although conventional banks located in developed countries are different from those existing in emerging countries and Islamic banks located in developed countries are different from those existing in emerging countries, I carried out a diversified study in the global context. Referring to the comparative literature review between conventional and Islamic banks, the study was the first conditional research that compared the impacts of religion on the financial performance of conventional and Islamic banks.

Article
Publication date: 31 May 2022

Mohammed Ali Al-Awlaqi and Ammar Mohamed Aamer

Although Islamic banks offer superior financial services than other interest-based conventional banks, they could not expand their share and dominate the markets in several…

Abstract

Purpose

Although Islamic banks offer superior financial services than other interest-based conventional banks, they could not expand their share and dominate the markets in several Islamic countries. This problem could be attributed to some causes not addressed. The current study proposes Islamic financial literacy as an important factor that could help aggress this problem. Due to a wide variety of Islamic financial services and the lack of understanding of these services, the banks' small business customers are indifferent between Islamic and interested-based conventional services to finance their business.

Design/methodology/approach

This study uses the exploratory technique of multiple correspondence analysis to detect any potential role of Islamic financial literacy in customers' preference for Islamic banks over conventional ones. The potential effect was tested with other essential factors, such as the customers' age, gender, and educational level. This analysis was conducted on a data set from 2061 banks' small businesses customers using the mall-intercept survey method.

Findings

The study shows a low level of Islamic financial literacy among Yemeni banks' small business owners' customers. Furthermore, despite integrating some critical factors that could influence the actual bank selection process among Yemini banks' customers, the authors found a decisive potential role of Islamic financial literacy as one of the key determinants of bank selection preferences.

Originality/value

This is the first paper to explore the potential role of Islamic financial literacy on the actual selection between Islamic Banks and their counterparts: the conventional banks in Yemen. The research results could build a more comprehensive theoretical model on Islamic banks' customer behavior.

Details

International Journal of Emerging Markets, vol. 18 no. 12
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 1 October 2019

Davood Feiz and Hadi Moradi

The purpose of this paper is to investigate the effect of brand experience on brand equity dimensions in the perspective of customers (including brand identification, physical…

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Abstract

Purpose

The purpose of this paper is to investigate the effect of brand experience on brand equity dimensions in the perspective of customers (including brand identification, physical quality, staff behavior quality, brand awareness, ideal self-congruence and life style-congruence) on brand satisfaction and loyalty in Iranian banking industry.

Design/methodology/approach

The author designed the conceptual model of the research based on the existing relationships between the research variables and the proposed hypotheses. By a questionnaire, the opinion of 288 customers and clients of selected branches of Melli and Tejarat banks were collected in two Provinces, including East and West Azerbaijan Provinces. The research hypotheses were tested using structural equation modeling.

Findings

The results of the paper showed that the brand experience directly affected all dimensions of brand equity. Also, the results indicated that except for lifestyle congruence, other dimensions of equity directly affected the customers' brand satisfaction.

Originality/value

This paper is significant, because it addresses the experience relationships and brand equity with the perspective of the customers of banks in an Islamic country, which affects the development of branding literature.

Details

Journal of Islamic Marketing, vol. 11 no. 6
Type: Research Article
ISSN: 1759-0833

Keywords

Article
Publication date: 4 September 2007

Toseef Azid and Mehmet Asutay

To reason whether the ethical–moral cum economic coalition among the different sets of economy is more efficient with objectives of Islamic Shariah.

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Abstract

Purpose

To reason whether the ethical–moral cum economic coalition among the different sets of economy is more efficient with objectives of Islamic Shariah.

Design/methodology/approach

This is a theoretical paper based on the modified model of layers of economic coalition which was initially developed by W. Leontief and P.N. Mathur and tries to evaluate the impact of ethical–moral cum economic coalition among different sets of an economy within the framework of Islamic political economy system.

Findings

This study suggests that endogenoising the ethical–moral cum economic coalitions will comparatively enhance the efficiency level of the economy, and will also increase the social welfare level.

Practical implications

A dynamic cum marginal input–output table can be constructed on the basis of this framework.

Originality/value

This research is beneficial to the researchers, policy makers and social scientists for the enhancement of the level of social welfare through this coalition.

Details

Humanomics, vol. 23 no. 3
Type: Research Article
ISSN: 0828-8666

Keywords

Article
Publication date: 14 May 2018

Shafiu Ibrahim Abdullahi

The purpose of the study is to explore contributions made in Islamic economics methodology, particularly in the use of mathematical models used to build Islamic economic theories.

Abstract

Purpose

The purpose of the study is to explore contributions made in Islamic economics methodology, particularly in the use of mathematical models used to build Islamic economic theories.

Design/methodology/approach

The methodology adopted is a survey by means of literature review.

Findings

Overuse of mathematical models in economics has it apparent weakness in simplifying complex realities and use of impracticable assumptions. But, that notwithstanding, they have a role to play in the development of Islamic economics. Empirical analysis in Islamic economics has weaknesses, including the very fact that moral phenomenon in Islamic economics is difficult to quantify, but its contribution, just like mathematics, is needed to develop the field. Islamic economics adopt mathematical models that do not cause obstacles in achieving the aim of Islamic economics, which is Falah. Where it is harmful, it is discarded. Islamic economics has yet to have a universally accepted research methodology; instead, numerous methodologies are used today. The poor use of mathematics in Islamic economics by new researchers, among other factors, may be due to young researchers’ poor background in mathematics.

Originality/value

The paper is unique in looking at the topic of Islamic economic methodology from the angle of application of mathematical models.

Details

International Journal of Ethics and Systems, vol. 34 no. 2
Type: Research Article
ISSN: 0828-8666

Keywords

Article
Publication date: 6 January 2021

Ishfaq Ahmed, Ahmad Usman, Waqas Farooq and Muhammad Usman

With the advent of technology and internet banking, the role and value of bank’s websites have increased. Additionally, the Islamic banking boom has also increased the role of…

Abstract

Purpose

With the advent of technology and internet banking, the role and value of bank’s websites have increased. Additionally, the Islamic banking boom has also increased the role of Shariah-based banking in the market. But neither web-based information nor Shariah board members have been investigated for their possible effects on the branding of Islamic banks. Against this backdrop, this study aims to explore web-based information and Shariah board as a source of branding of Islamic financial institutions (IFIs).

Design/methodology/approach

An interpretivism-based thematic inquiry is carried out through semi-structured interviews of 22 customers of Islamic banks.

Findings

The findings of the study highlighted the fact that customers’ perceived web-based information is in line with the Shariah objectives but showed low level of trust on that information. They assumed that the practices are not consistent with this information. Moreover, the Shariah board members were considered as brand ambassadors, and customers valued board members more than the Shariah board and Islamic bank itself. Findings further highlight the more knowledge customers have about the Shariah board members (experience, qualification, achievements, etc.) the greater is the impact on the branding of the IFIs.

Originality/value

This study offers a novel perspective by considering the value of web-based information and Shariah board on branding of Islamic banks. As there is no such study available in literature, up to the best of researchers' knowledge, the qualitative inquiry may suffice the study objectives and research questions.

Article
Publication date: 19 June 2017

Joseph Mbawuni and Simon Gyasi Nimako

This study aims to examine factors affecting the adoption of Islamic banking (IB), which is an innovative and emerging form of banking, in a non-Islamic Sub-Saharan African (SSA…

1622

Abstract

Purpose

This study aims to examine factors affecting the adoption of Islamic banking (IB), which is an innovative and emerging form of banking, in a non-Islamic Sub-Saharan African (SSA) country.

Design/methodology/approach

It used primary data collected from a cross-section of 975 respondents using self-administered structured questionnaire. Empirical data were analysed using SPSS version 16 and partial least squares structural equation modelling (PLS-SEM) for Muslim and non-Muslim groups.

Findings

Consumer attitude, readiness to comply with Sharia law, knowledge, perceived innovativeness and perceived benefits were critical determinants of bank customers’ intention to adopt IB in both Muslim and non-Muslim sub-groups. The least influential factors were perceived religion effect (PRE) and perceived threat of violence (PTV). PTV was not a significant factor to non-Muslims, but it was a significantly negative factor to Muslims’ intentions to adopt IB. PRE has a positive influence on Muslims’ intention to adopt IB, but it has a negative effective on non-Muslims’ adoption intentions.

Research limitations/implications

This study is limited to only bank customers in Ghana. Moreover, service quality factors were not included in the research model because IB is yet to be given full-fledged operational license in Ghana. Future research should extend the study to other emerging countries to improve the generalizability of the findings.

Practical implications

Policymakers are encouraged to develop stakeholder-oriented strategies to promote effective consumer education in IB. Also, IB institution should endeavour to develop innovative financial products that are Sharia-compliant and economically beneficial to individual and business needs of bank customers. Moreover, policymakers and management of IB institutions should ensure effect governance structures to guide IB operations.

Originality/value

This study provides initial structural equation modelling of determinants of IB adoption in emerging countries and provides empirical evidence on the spread of IB in non-Islamic SSA, which is an under-researched area. It is the first study to empirically report on the influence of PTV, readiness to compliance Sharia law and perceived innovativeness of IB on intentions to adopt IB in non-Islamic SSA context.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 10 no. 2
Type: Research Article
ISSN: 1753-8394

Keywords

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