Abstract
The Islamic banking system is attaining enormous development. Several modern international conventional banks were also enchanting significant concern and starting Islamic banking branches in their organizations, which work in compliance with the specific Islamic Shariah principles in a number of states of Pakistan. The Islamic banking structure is bizarrely facing gigantic contest by the Islamic banking sector all over the world as well as from the well-known International commercial banks that hold out services and products of IB. It is an attempt for exploration and investigation of the extensive and essential factors, which persuade consumers to choose the Islamic banking or conventional banking and the function of demographic features, which track consumers to the assortment of IB or CB in Pakistan. Sample of 341 respondents has been used in this study mainly focused on non-probability convenience test tool. Pre-institute 5 point likert survey instrument ranging from 5 to 1 was applied to gather data. The conclusion reveals that there are countless factors other than religious perception like employee and customer interactions, convenience, reputation, financial benefits & services, and technology, which are fundamental for the consumers for the assortment of Islamic or conventional banking. The demographic characteristics of the respondents also have a significant impact. The authors expect that the crux of this study will explore new ways for the Islamic banking system to emphasis on specific emerging factors to enhance the efficiency and performance of the Islamic banking system in Pakistan. There will be enormous advantage for executives of IBs & CBs in developing marketing approach.
Highlights
In the later part of 20th century, the resurgence of Islamic ideology started its course in Muslim countries and societies
As the conventional banks are created beneath the ideology of capitalism and transect business by indicting interest, which is offensive in Islam
The investigation analyzes the observation of 341 consumers of conventional banking (CB) and Islamic Banking (IB) in connection with their assortment criteria and preferences
Summary
In the later part of 20th century, the resurgence of Islamic ideology started its course in Muslim countries and societies. As the conventional banks are created beneath the ideology of capitalism and transect business by indicting interest, which is offensive (banned) in Islam. Persian Gulf Area is the centre of Islamic finance with a share of 82% followed by South Asia and Fareast region 13% and balance from all over the world including Europe, North America and Africa (IFSL 2011). In December 2008, Islamic financial system was operational in more than 50 countries and approximately 300 institutions were operating and they manage funds of US$ 951 billion. Persian Gulf is the centre of Islamic finance and banking with a share of 82% followed by South Asia and Fareast region 13% and balance from all over the world including Europe, North America and Africa (IFSL, 2011). Overall an average growth of 76% per annum in the last six and half years (12/03-06/10) was achieved by Islamic banking in Pakistan
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