Download What Factors Influence the Decision to Adopt Islamic Banking? An Empirical Study in the UAE

What Factors Influence The Decision To Adopt Islamic
Banking? An Empirical Study in the UAE
Anamitra Shome, Dr. Fauzia Jabeen and Dr. Rajesh Rajaguru
Research question: Islamic banking has witnessed remarkable growth
in the last few years. This study asks the following question: What factors
influence the decision of consumers to open an account at an Islamic
bank?
Period of study, methodology or model used: A sample of 390
students at Abu Dhabi University in 2011 were asked to complete a
survey on consumer attitudes towards Islamic banking. The study has
implications for the future of Islamic banking in the UAE, since the
respondents represent a young adult population that may well provide a
customer
base
for
Islamic
banks
in
the
country.
The data collected was analyzed using descriptive statistics, analysis of
variance as well as regression analysis. The dependent variable is the
probability of the respondent opening an account at an Islamic bank.
Independent variables that were posited to influence this behavior are the
respondent’s expectations relating to the following factors associated with
Islamic banking: superior customer service, financial stability, reputation,
social responsibility, ability to survive tough economic times, geographical
proximity, degree of conformance with Islamic principles, personal
familiarity with Islamic banking concepts, and Arab-language skills.
Findings: The results do not support the following independent variables
as having a significant influence on the decision to open an account at an
Islamic bank: superior customer service, reputation, ability to survive,
geographical proximity, and personal familiarity with Islamic banking
concepts. The following independent variables were found to have a
significant influence on the decision to open an account at an Islamic
bank: Expectations of financial security, social responsibility, and Arablanguage skills. The single most significant factor influencing the decision
to open an account at an Islamic bank, however, was found to be
consumer expectations regarding conformance towards Islamic
principles. This finding has important implications for Islamic banks
operating in a predominantly Islamic environment.
Track: Banking
Dr. Anamitra Shome, Dept. of Accounting, Brock University, 500 Glenridge Avenue, St. Catharines,
ON L2S 3A1, Canada, Email: [email protected]
Office: +1-905-688-5550 ext. 3544, Fax: +1-905-688-9779
Dr. Fauzia Jabeen, College of Business Administration, Abu Dhabi University, P.O. Box 59911, Abu
Dhabi, United Arab Emirates, Email: [email protected]
Office: +971-2-501-5562
Dr. Rajesh Rajaguru, Solbridge International School of Business, 151-13 Samsung 1-dong, Dong-gu,
Daejeon, 300-814, South Korea, Email: [email protected], Office: +82-42-630-8538