The adoption of Islamic banking services in Malaysia

Nurul Shahnaz Mahdzan · Rozaimah Zainudin · Sook Fong Au

106 citations0/0 files storedJournal of Islamic marketing

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Islamic Finance and Banking Studies Technology Adoption and User Behaviour Halal products and consumer behavior

Abstract

Purpose The purpose of this paper is to examine the level of understanding of Islamic banking concepts and the factors that influence Islamic banking adoption in Malaysia, based on Rogers’ (1983; 2003) Diffusion of Innovation. Specifically, the impact of perceived attributes and other variables (understanding, consumer innovativeness and bank personnel’s professionalism) on Islamic banking adoption is examined. Design/methodology/approach A quantitative approach using a sample of 200 working MBA students in a leading public university in Malaysia was used. The instrument used was a self-administered questionnaire survey. Findings The level of understanding of various Islamic banking concepts is below average. A logistic regression reveals that the understanding of Islamic banking concepts and perceived advantage significantly influences the adoption of Islamic banking services. Research limitations/implications The small sample size of 200 individuals may render the findings ungeneralizable. Future studies may use a larger sample from across Malaysia and incorporate other independent variables, such as religiosity and Islamic financial literacy. Practical implications The Malaysian government can provide tax incentives and conduct educational roadshows on Islamic banking. Educating prospective consumers on the advantages of Islamic banking as opposed to conventional banking would provide more objective benefits that would boost the adoption of Islamic banking. Originality/value The results of this paper will be useful for Islamic financial institutions to increase their marketing and promotional efforts to keep pace with stiff competition within the industry.

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References

2019Diffusion of Innovations 1 1979Review of Psychometric theory (2nd ed.).1991Development of an Instrument to Measure the Perceptions of Adopting an Information Technology Innovation 1995Decomposition and crossover effects in the theory of planned behavior: A study of consumer adoption intentions 1999A Cross-National Investigation into the Individual and National Cultural Antecedents of Consumer Innovativeness 1998Antecedents and consequences of trust and satisfaction in buyer‐seller relationships 2009Determinants of behavioral intention to mobile banking 2003An Empirical Study of Innate Consumer Innovativeness, Personal Characteristics, and New-Product Adoption Behavior

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