Abstract
A nation’s economic success is largely dependent on the performance of their banks as they play a major role in regulating its financial sector to stability and cohesion by acting as an intermediary to various parties such as individuals, organizations and governments to conduct their borrowing and depositing activities. The quality of services provided by the banks will influence how these parties benefit and consumers would choose the bank that they perceive will result in the most benefit. In Malaysia, a larger percentage of the population are employing conventional banks compared to Islamic banks due to factors such as unfamiliarity of products and services and inadequate marketing. This study examine the factors influencing adoption of Islamic Banking in Selangor. A quantitative research approach is employed in this research following the positivist assumption with a realist ontology and objectivist epistemology. Data was collected using a probabilistic sampling method, particularly a stratified random sampling technique. The adapted survey questionnaire employed in this study and distributed 150 questionnaire and successfully received 130 questionnaire. Overall, the researcher has discussed about the findings of the analysis that was conucted using the SPSS software. Descriptive approach, correlation and multiple regression analysiss had been shown during the analysis. The descriptive approach displayed direct results while the correlation displayed the relationship between the dependent variable (adoption of Islamic Banking) and the independent variables (compatibility, consumer knowledge, risk perception/management and consumer satisfaction). In this research, found two factors that influencing adoption of Islamic Banking in Malaysia which are consumers knowledge and consumer satisfaction. For the future researchers, this research will benefit them as well. If they are doing their researches which are related to this topic, they can gather everything they want easily. Besides that, it will benefit the researcher who is going to do this research study in Malaysia. This is because the information in Malaysia is limited.
Highlights
The Islamic banking system is well established in Malaysia, currently having 16 Islamic banks and 3 international Islamic banks but still less compared to conventional banking with 27 commercial banks, according to the Central Bank of Malaysia
The analysis made on the research findings completed in chapter four has helped to conclude that the independent variables, which consist of compatibility, customer satisfaction, and risk management and consumer knowledge can influence the consumer’s adoption of Islamic banking
The Statistical Package for Social Scientists (SPSS) Version 22.0 plays a significant role in this study for the aim of conducting the necessary tests needed for this research such as descriptive analysis, normality test, z-score test, linearity test, correlation and multiple linear regression analysis to determine whether the relationship between the dependent variable and the independent variables are significant or not
Summary
The Islamic banking system is well established in Malaysia, currently having 16 Islamic banks and 3 international Islamic banks but still less compared to conventional banking with 27 commercial banks, according to the Central Bank of Malaysia. Islamic banking has become one of the fastest growing industry in Malaysia and conventional banks have to compete with Islamic banking to maintain their market share. The introduction of Islamic banking into the banking system has changed the financial landscape by providing a banking system which influences consumers in the religious and social sense. This creates more factors for consumers’ selection of Islamic banking. Conventional banking and Islamic banking have to compete more with each other on the best products and services they can provide to their customers
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