The intention to adopt Islamic financing in emerging economies: evidence from Uganda

Abstract

PurposeThe purpose of this paper is to establish whether there is a relationship between religiosity, religious preferences, firm age and intention to adopt Islamic financing in an emerging economy like Uganda which is a secular state and adopting Islamic financing for the first time.Design/methodology/approachThis study uses a cross-sectional and mixed-methods design. The authors administered closed-ended questionnaires and these were supplemented by semi-structured interviews.FindingsResults indicate that religiosity is significantly associated with intention to adopt Islamic financing. Further, religious experience as a dimension of religiosity is significantly associated with intention to adopt Islamic financing unlike ideology. Religious preferences and firm age are also significantly associated with intention to adopt Islamic financing. A one-way analysis of variance (ANOVA) reveals that there are significant differences in between religions whereby Muslims are more ready for Islamic financing than the Christians are.Research limitations/implicationsThis study’s main limitation is that it uses evidence from Uganda’s micro businesses which account for 70 per cent of Uganda’s total businesses. It is unclear on whether this study results can be generalized to the remaining 30 per cent of the businesses and if results of this study can be generalized to other national settings.Originality/valueIslamic financing being an emerging phenomenon on the African continent especially in the Sub-Saharan Africa where most countries are secular states, there are few empirical studies exploring religiosity, religious preferences, firm age and intention to adopt Islamic financing in an emerging economy perspective. To the best of the authors’ knowledge, this is the first paper that provides some insights into religiosity, religious preference, firm age and intention to adopt Islamic financing from a Ugandan perspective using a mixed methods research design.