Abstract
The present study examines the factors affecting customer intention to use auto financing (ijarah) in Pakistan. The research framework is constructed based on the theory of reasoned action, which explains behavioural intention and its determinants. The study incorporates the participation of 350 potential customers of auto ijarah in Pakistan. Data analysis was conducted with structural equation modelling (SEM), assessing the measurement, and structural model. The outcome indicates that attitude, perceived cost benefits, Sharia compliance, religious orientation, and subjective norm are the significant predictors of customer intentions. We also found a statistically insignificant association between awareness and customer intentions. The results hold significance for the Islamic banking and financial service providers. This study provides a comprehensive understanding of the factors that contribute to the adoption of auto ijarah among potential Islamic bank customers.
Highlights
Islamic banking and finance (IBF) are among the emergent industries which rely on Sharia-compliant principles of Islamic laws
From Pakistan’s perspective, the industry of Islamic banking has been growing at a rapid pace since its inception
In Pakistan, Islamic banking has been growing at a rapid pace since its inception
Summary
Islamic banking and finance (IBF) are among the emergent industries which rely on Sharia-compliant principles of Islamic laws. Financial institutions based on Islamic principles are operating in more than 75 countries. The prevention of riba or usury (interest), the financial system in Islam proscribes activities inclusive of uncertainty, gambling, and speculation. It promotes risk-reward sharing in financial services and products. The growth of the Islamic banking industry has been reflected in a diverse range of Sharia-based financial products and services and investment opportunities in the Middle East and Asia. Whereas Egypt, Indonesia, and Malaysia are considered pioneering countries in this regard (Awan & Azhar, 2014). The assets of Islamic finance sector which stood at $2 trillion in 2016 are projected to increase to $3.8 trillion by the year 2022, whereas Malaysia, United Arab Emirates, and Bahrain continue to dominate the sector (Ahmadova, 2019)
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