Islamic Banking Market Research Articles

The Impact of Customer Perception and Religiosity on Satisfaction with Car Ijārah Financing in Pakistan: The Mediating Effect of Clarity and Accuracy

Purpose — This research aims to assess the impact of customer perception and religiosity on satisfaction with the car ijārah financing product which is offered in the Islamic banking market in Pakistan. The study also highlights the importance of clarity and accuracy that boost customer confidence in the car ijārah purchasing process. Design/Methodology/Approach — The study applied the Partial Least Squares-Structural Equation Modelling (PLS-SEM) technique to explore the complex relationship among the latent variables and their constructs. The primary data were collected from existing Islamic banking car ijārah customers who have already availed of the product from Islamic banks in Pakistan. A total of 268 respondents were finalised after scrutiny. Findings — The findings endorsed the proposed hypothesis of the study and demonstrated a strong and positive correlation between customer perception, religiosity, and customer satisfaction. Similarly, clarity and accuracy also act as a mediating variable (partially mediate the variables), and have a substantial effect on customer satisfaction. Originality/Value — This study extends the existing literature by incorporating religiosity into the customer satisfaction model for car ijārah financing. It provides a unique theoretical perspective, highlighting how religious beliefs impact customer behaviour and perceptions regarding Islamic financial products such as car ijārah. The study therefore fills a gap in the literature by addressing how religious values affect customer perception of Islamic financial products, offering insights that could help Islamic banks tailor their services to better align with religious beliefs. Research Limitations — The study is limited by its focus on existing customers from the Islamic banking sector in Pakistan that availed of car ijārah financing. Additionally, future research could explore other regions to enhance the generalizability of the results. Theoretical Implications — The study underscores customer perception and religiosity as crucial factors that influence customer satisfaction. Similarly, by improving clarity and accuracy about car ijārah products, Islamic banks can enhance customer satisfaction and increase market share. Practical Implications — The study provides valuable insights to Islamic banking practitioners to enhance and reinforce the car ijārah product structure in Pakistan by taking into account the need to address religious customers’ preferences. Islamic banks also need to focus on the clarity and accuracy aspects of Islamic financial products in their marketing and awareness campaigns to attract more religious customers.

Navigating the Adoption of Islamic Banking in the Base of Pyramid Market of Pakistan

The purpose of this research paper is to examine the adoption of Islamic banking (AIB) in the Bottom of the Pyramid (BoP) Market of Pakistan. The study used theory of planned behavior to hypothesize the relationship of the attitude (ATT), subjective norms (SN), perceived behavioral control (PBC), and Islamicity of the Product (IoP) on adoption of Islamic Banking (IB). Exploratory research design was used with a total of 400 questionnaires were distributed using a multi-staged stratified sampling (random sampling within each stratum) approach of which 320 usable questionnaires were returned representing 80 percent response rate. Partial Least Square Structural Equation Modeling (PLS-SEM) approach was used to analyze the hypothesized relationship of the conceptual framework. Results indicated that attitude (ATT), subjective norms (SN), and Islamicity of product (IoP) explained notable effect on the adoption of Islamic banking comparatively the perceived behavioral control (PBC). The overall effect of ATT, SN, PBC, and IoP explained 39.3 percent on AIB within the context of BoP. The adoption of Islamic banking counts the aforementioned variables with their countable effects. The inclusive outreach and features explaining the Islamicity of the financial products can enhance the span Islamic banking market share. Islamic banking over the past decade has witnessed tremendous growth in Asian countries due to innovative financial offerings based on the Sharia Principles of Islam. This study contributed on how the Islamic financial products can be penetrated in the low-income markets like Pakistan with its specific focus in Southern region of the Punjab province. The theoretical framework of the study has demonstrated how the customer closely associated behaviors navigate the adoption of the Islamic banking.

Islamic Banking in Africa: A Booming Market with Growing Pains

Islamic banking, also known as ethical banking, is a banking system for those who avoid conventional banking due to religious beliefs. It drives the creation of new financial instruments that meet the needs of a wider range of customers, and it is currently accepted as an essential banking model in the global financial landscape. This paper assesses the opportunities and challenges of Islamic banking in Africa using a systematic literature review by examining 19 articles. The paper argues that Africa is the original home of modern Islamic banking practices, and it can become an essential hub for this banking model in the future. The results demonstrate that the Islamic banking market has potential for those seeking expansion and the establishment of Shari’ah banks, as well as promising avenues for the growth of Islamic banking and finance and aligning with the continent's socio-economic dynamics by providing inclusive financial solutions. The findings also demonstrate the existing opportunities, including the large Muslim population, arguing that popularity can drive Islamic banks on the continent, while limited awareness, misconceptions, and legal restrictions are the main challenges for Islamic banks in Africa, hindering public understanding of how Islamic banks work. The paper recommended that Islamic banks should conduct market research, create innovative products, and apply tailored marketing strategies. The study also suggests that governments should recognize Islamic banks as distinct financial institutions in order to better support them.

Nurturing trust in Islamic banking within the metaverse for market success

Purpose This study aims to investigate the impact of trust in the metaverse on the Islamic banking sector, particularly in facilitating market success. Additionally, it seeks to explore the relationship between metaverse-driven brand image, product features, service quality and overall performance in the market. Design/methodology/approach Data were collected from 187 participants in Jordan, with the SmartPLS software used to test the hypotheses. Findings The findings reveal a significant impact of metaverse-enhanced brand image, product features and service quality on Islamic banking market performance. Furthermore, customer trust in the metaverse plays a significant role in shaping the relationship between product features, service quality and Islamic banking market performance. Originality/value The study’s practical implications still suggest the need for a more holistic metaverse-driven approach. Investing in service quality initiatives alone may not adequately build and sustain customer trust in the metaverse. Instead, transparent communication on ethical practices in the metaverse is required to reinforce trust and magnify the positive influence of superior service quality in the metaverse.

Developing Shariah-Compliant Products for Islamic Banking Market in Nigeria: Can Bay’u Al-Inah (Buy-Back Sale) be Experimented?

The uniqueness of Islamic banking system is in the shariah-compliant products designed to serve the market. Among the products, is the controversial bay’u al-‘inah whose acceptability remains a subject of debate among shariah experts. As Islamic banking market is still evolving in Nigeria, it becomes imperative to analyze the potentials of bay’u al-inah’s adoption. This study therefore examined bay’u al-inah product with the objective of establishing whether the product could be adopted to improve market share of Islamic banks. Data were collected with a structured questionnaire which was used to obtain data from customers of Jaiz bank and Lotus bank in Kwara State. Six Hundred (600) copies of questionnaire were administered to respondents. Ordered Logistic Regression was conducted for the data analysis. The study found that bay’u al-inah personal financing (Coeff =0.51, p<0.05), home financing (Coeff =0.82, p<0.05), and working capital financing (Coeff =0.16, p<0.05),) have positive and significant relationship with market share which was measured with number of customers’ accounts. It was concluded based on the findings that, bay’u al-inah has great potentials for attracting more customers to Islamic banks and boosting the market share of Islamic banks in Kwara State, Nigeria. the study recommends that, subject to the assessment and approval of shariah committee of experts, bay’u al-inah be adopted by Islamic banks in Kwara State and Nigeria as whole.

THE INFLUENCE OF RELIGIUSITY, KNOWLEDGE, AND PROFIT SHARING ON STUDENTS' PREFERENCE ON ISLAMIC BANK

The low of Islamic bank market share in Indonesia need to uncover which factors to influence consumers’ behaviours and how communication and interaction among Islamic bank and Muslim. This study aims to determine the influence of religion, knowledge and profit sharing on students' interest in saving in Islamic banks. The population in this study were students at Palopo City University. The number of questionnaires processed in this study were 100 respondents. Structural equation modelling (SEM) was used to examine research hypotheses by AMOS and SPSS software. The results of this study indicate that religiosity has a positive effect on student interest, knowledge has a positive effect on student interest, while profit sharing also has a positive effect on student interest in saving at Islamic banks. It implies Islamic bank managers and regulators need promote the main goals of Islamic bank and systems, which also offers regulations and invite students as agent of change to provide insight among Muslim bank consumers.

Pengaruh Return On Asset, Capital Adequacy Ratio, Dana Pihak Ketiga Dan Non-Performing Financing Terhadap Market Share Perbankan Syariah

The purpose of this study was to analyze the effect of return on assets, CAR, third-party funds, and non-performing financing on Islamic banking market share. The population of this study is Islamic banking registered with the Financial Services Authority (OJK) for the period 2017–2022. The sampling method used was purposive sampling, with a total sample of 10 Islamic commercial banks. The data analysis technique used in this research is multivariate regression analysis using Eviews 10 statistical tools. The results of this study indicate that ROA and DPK affect the market share of Islamic banking. CAR and NPF do not affect on the market share of Islamic banking

Waqif Preference of Waqf-Based Qardhul Hassan Financing in Malaysia: An Analytic Hierarchy Process Perspective

Although Islamic banking products like tawarruq and bay al-inah personal financing products available in the Malaysian Islamic banking market, their ability to meet the need of those disadvantaged in the case of health crisis like COVID-19 or financial crisis are somehow marginal. There is a need for Islamic social finance products to meet this challenge and one of them is the offered qardhul hassan financing funded through crowdfunding on the basis of waqf. This is called waqf-based qardhul hassan financing. For this purpose, this study introduces QAFSCALE, referred to qardhul hassan financing scale to gauge waqif preference on the facility should it is made available in the market. A total of 324 waqif or donors were participated in this study to identify their preference in donating their money in the facility should it is introduced. This study used Attia’s (2010) maqasid al-Shariah theory to generate the QAFSCALE, beginning from the conceptualisations, dimensions and importantly the batter items that represent the QAFSCALE. Analytic Hierarchy Process (AHP) is used. The results obtained indicate that humanity factor is ranked first in importance, followed by family factor, consumer factor and ummah factor. This study limitation is the sample size. A broader sample would have made the result better. Adding to that, the newly designed scale is first of its kind in the context of waqf-based qardhul hassan financing and more studies needed to prove its applicability and generalization, at least. The results obtained might be of interest to managers of Islamic banks and the like to understand their potential waqif preference in the context of waqf-based qardhul hassan financing. Four factors drawn from QAFSCALE were evaluated to identify important factors leading to the waqif contribution on waqf.

Analisis Pengaruh Kantor, ATM dan Imbal Hasil terhadap Dana Pihak Ketiga Bank Syariah di Indonesia

Signal Theory conveys that financial reports are very important tools for stakeholders. In the banking industry, especially Islamic Banks (BUS) are the main benchmark in increasing the Islamic banking market. This success appeared in the form of a signal in the form of a continuous increase in the position of Third Party Funds (DPK) over time. This study aims to analyze the effect of the number of offices, the number of ATM machines and the rate of return on DPK BUS in Indonesia. The methodology used is multiple linear regression analysis. The result of the analysis is that BRANCH (number of offices) has a negative but not significant effect on FUND (DPK), while ATM (ATM machines) has a significant positive effect on FUND and RETURN (yield rate) has a significant negative effect on FUND. The simultaneous test results, namely BRANCH, ATM and RETURN simultaneously affect FUND

Merger Bank Syariah BUMN: Strategi Peningkatan Pangsa Pasar Keuangan Syariah

The market share of Islamic finance in Indonesia is currently still low, in stark contrast to the condition of the Muslim majority in Indonesia with the largest number in the world. As an effort to increase the market share of Islamic finance in Indonesia, the government through the Ministry of BUMN made a breakthrough by merging three state-owned Islamic banks namely BNI Syariah, BRI Syariah and Bank Syariah Mandiri into Bank Syariah Indonesia in order to expand the Islamic banking market which is the locomotive driving economic development. sharia in Indonesia. This study aims to analyze the role of the merger of state-owned Islamic banks in increasing the share of the Islamic financial market in Indonesia through a qualitative approach with a type of library research that focuses on collecting secondary data in the form of books, research results, news, magazines, journals, and other references. Based on the results of the study, the merger strategy in state-owned Islamic banks seeks to increase the share of the Islamic financial market through various advantages possessed by Bank Syariah Indonesia, among others: first, the system and work professionalism supported by the system, technological sophistication and qualified service features so as to provide various conveniences in financial transactions. Second, the amount of capital assets accompanied by various product innovations resulting in high sharia-based funding, stable liabilities and impressive profitability. Third, the superiority of local and regional understanding that is able to reach various economic sectors in society.

The role of religion and social capital on employees’ performance: An empirical study post Indonesia’s Islamic bank merger

The rapid development technology and information competition resulted companies to switch their strategies and operations including merger to obtain competitive advantage. Despite, the most population is Muslim, compared to conventional bank, Islamic bank market share in Indonesia is still stagnant in 5%. This research investigates how employees’ religiosity influences the mediator variables, such as structural, cognitive, and relational social capital, which subsequently influences Indonesian Islamic banking performance post-merger. The sample consists of 675 Islamic bank employees. Structural equation modelling (SEM) was used to test the research hypotheses through three studies. The empirical results indicate that religiosity positively affects employees’ social capital, precisely when employees have frequent communication and interaction, which also has a strong correlation to employees’ share language, value, trust, and reciprocity. Furthermore, mediator variables, such as structural, cognitive, and relational social capital, have a partial role in religiosity and employees’ performance. This study was limited to Indonesian Islamic bank employees. Therefore, future studies are needed to analyze cross-regional, culture, organization, and religion. Bank managers and regulators need to enhance employees’ religiosity and social capital toward valuable communication and interaction. They also need to enlighten employees from the perspective of business and organization. This study contributes to human resource management and organization literature and the decision-making process associated with developing and testing a model of religious determinants of employees’ performance towards social capital.

Transformation of Islamic Banking Branchless Based on Local Culture

The Islamic banking industry is a business institution in the financial sector that shows the existence of the Islamic economy in the current Indonesian economic order. This study aims to show a model for the development of branchless banking, especially Islamic banks. This study analyzes and also designs a branchless banking business model based on a literature study and also based on a qualitative analysis with a literature study approach. Based on this study, it was found that the development model of a branchless banking Islamic bank in Indonesia is more appropriate and more appropriate if it synergizes the latest technology and the local wisdom aspects which is developing in the community because it is more in line with the character and culture and geographical conditions of Indonesia. The diversity of local wisdom embraced by the Indonesian people can be a distinct advantage in the development of branchless banking Islamic banking. The results of this study also show that Islamic banking must collaborate with local economic institutions and units so that the integrated, protected and easy-to-operate design model of sharia banking can reach out widely in the community, especially in areas that are not covered by banking services so that the target for increasing Islamic banking market share can be achieved.

An analysis of market power and efficiency of Islamic banking in Indonesia and Malaysia

Purpose – This paper aims to investigate whether the Islamic banking industry in Indonesia and Malaysia is collusive or efficient. Indonesian Islamic banking is expected to meet the Qualified ASEAN Bank (QAB) to compete with other Islamic banks, including Malaysia.Methodology – The data used in this study was panel data on Islamic banking in Indonesia and Malaysia from January 2010 to December 2019. Data analysis employed static panel data regression.Findings – The findings of the study disclosed no collusive behavior from Islamic banking in Indonesia and Malaysia to increase profitability. Meanwhile, market share has been shown to boost profitability in terms of equity, despite the fact that there is an endogeneity problem. Technical efficiency and scale efficiency in Islamic banking in Indonesia have been shown to significantly increase market share, but not profitability and market power. This study concludes that if Islamic banking market in Indonesia and Malaysia are opened and state boundaries are lifted, Indonesian Islamic banking still will not be able to compete since it has not been able to acquire economies of scale.Implications – Islamic banking in Indonedia needs to establish Islamic-Finance-Friendly Regulations. It is expected to pave the way for the value-added character of Islamic banking, it is the most important strategy to boost market share of Indonesian Islamic banking.Originality – This study seeks to fill the validation gap of endogeneity test in Islamic banking. There is the limitation on studies of Islamic banks since the validation of endogeneity test deal only with conventional banking studies.

РОЛЬ ЭЛЕКТРОННОГО МАРКЕТИНГА В ПОВЫШЕНИИ ПРИБЫЛЬНОСТИ КОММЕРЧЕСКИХ И ИСЛАМСКИХ БАНКОВ СИРИИ (СРАВНИТЕЛЬНОЕ ИССЛЕДОВАНИЕ)

The banking system plays an important role in the development of the Syrian economy. However, the country is experiencing a deep political and economic crisis as a result of the armed conflict. This negatively affects the work of all types of banks. Syrian commercial banks face financial stability risks due to uncertainty. Islamic banks are also facing difficulties as they are regulated by Sharia law. At the same time, the demand for banking products and services remains. The expansion of digital business and the introduction of new technologies create additional opportunities for the promotion of financial products and services, including traditional commercial banking. At the same time, the Islamic banking market in Syria, based on Shariah principles, can increase customer access through the use of modern e-marketing tools such as digital advertising, social media promotion and mobile banking. This opens up new opportunities to expand the client base of Islamic banks in the country. The purpose of the study is to evaluate the use of electronic marketing tools by commercial and Islamic banks in Syria using a previously developed methodology, and to determine the impact of such use on their financial performance. It is planned to develop methodological recommendations for the use of digital marketing technologies by Syrian banks, taking into account the specifics of the political situation. This will help improve their efficiency in difficult conditions.

Pengaruh Inklusi Keuangan dan Bank Syariah terhadap Kemiskinan di Indonesia


 Indonesia's Muslim population is 229 million, which only accounts for 6.18% of the Islamic banking market share in national finance. This is evidenced by the fact that 92 million adults in Indonesia do not have access to financial or banking services. Compared to other ASEAN countries such as Malaysia, Thailand and Singapore, the low life expectancy of the Indonesian people shows that Islamic finance is not yet so inclusive. This study is here to determine the effect of Financial Inclusion on Poverty in Indonesia and to determine the effect of Islamic Banks on Poverty in Indonesia. This study uses an associative quantitative research type, using the variable Financial Inclusion (Islamic Bank Third Party Funds) and the variable Islamic Bank (Islamic Banking Financing) to find out whether there is an effect of these variables on the dependent variable, namely Poverty (Amount of Poverty). The data collected is secondary data and time series data. In this study using panel data regression method which is processed using Eviews 9. The findings in this study are: First, Financial Inclusion is not significant to Poverty Second, Islamic Banks are significant to Poverty. 1.) It is recommended to be able to provide new product variants in order to reach the potential of the community who have not been reached by Islamic financial inclusion and Islamic financing 2.) It is recommended that this research can be used as a material consideration when making strategies for Financial Inclusion, Islamic Banking, and Poverty so that can have more impact on the wider community 3.) It is recommended to be able to use other indicators of the variables that the author uses so that they are more varied so that we can all reach the inclusiveness of Islamic finance in Indonesia.
 Keywods: Financial Inclusion, Islamic Banks, Poverty, Panel Data Regression, and Eviews 9.
 

BSI Mobile Adoption Process with Religiosity As a Moderation Variable

During a pandemic like today, new habits have emerged in society, one of which is conducting financial transactions. The presence of Bank Syariah Indonesia is expected to have the financial and technological capabilities to meet customer needs following sharia principles and reach the currently unspoiled sharia market by creating an Islamic ecosystem and becoming one of the centers of sharia economy and finance in the world. The BSI Mobile application is the right solution with ease for benefits such as paying infaq, alms, and hajj savings deposits, to opening an account online. In this study, the superiority of the BSI Mobile feature as a spiritual, financial, and social friend following the main target of Islamic banks in Indonesia is Muslims, then the potential of the Islamic banking market in Indonesia is very large. This study uses a sample of 308 prospective customer respondents. Analysis using SEM and based on PLS (Partial Least Square) shows that innovation and bank reputation have a significant effect on attitudes and intentions to adopt BSI Mobile, except for bank reputation on attitudes which are moderated by religiosity. This study can provide input to Bank Syariah Indonesia to improve mobile banking services amidst the development of digital banking technology and after the Covid-19 pandemic.

The Merger of State-Owned Enterprises of Bank Syariah Indonesia in Positive Legal Review and Maqashid Syariah

As a form of the government's participation in paying attention to and developing the market share of the Islamic economy in Indonesia, the three state-owned Islamic banks (BNI Syariah, BRI Syariah, and Mandiri Syariah) were merged into one. With the hope of being able to expand the Islamic banking market both nationally and internationally. This study aims to examine the merger of the three state-owned Islamic banks in terms of positive Law in it and to review it from the perspective of Maqashid sharia. This study uses a qualitative descriptive method by using secondary data obtained through a literature review with references from books, journals, and other literature related to this research. The results of this study indicate that the merger of state-owned banks, Bank Syariah Indonesia, is on the right track, legally positive, and in terms of Maqashid sharia. This is a step and effort by the government in maintaining and developing sharia market share in line with the maqashid sharia principle; keep and or attract good and keep away bad. In addition, some of them are launching a literacy program in understanding the concept of Islamic economics for the community so that the noble values ​​of Islam are maintained and run in banking economic activities. However, it still requires other developments in the aspect of justice that must be initiated by BSI, of course, by continuing to carry the message of sharia in it.

REANALYSIS OF SPIN-OFF ISLAMIC BANKS IN INDONESIA: EFFICIENT OR NOT?

The market share of Islamic banks in Indonesia is around 6,3%. Although starting 2008, BI had been a spin-off to enrich the Islamic bank market share, the efficiency did not surmount the big problem from an Islamic bank. This study aims to reanalysis efficiency policy in Indonesia's spin-off in 2011-2019. The research sample is Islamic banking in Indonesia, including BUS (Islamic commercial banks) and UUS (Sharia Business Unit) that was doing spin-off yet. This research used an analysis method of DEA (Data Envelopment Analysis) by using CRS (constant return to scale) and VRS (Variable return to scale models). The variables consisted of input and output, such as liquid assets, total financing, profit-sharing income, operating cost, personnel cost, and fixed assets. The result and findings show that BUS after the spin-off is inefficient. Moreover, several Islamic commercial banks decreased inefficiency in many periods. The spin-off does not affect efficiency, especially in the market share of Islamic banks. UUS was more efficient than BUS. One of the factors because of operational cost. However, the BUS is more inefficient than UUS in producing Islamic financial products and services. Besides that, labor costs cannot cut and always grow every time. Finally, making a load of the company to be weight thus consumer prize more expensive

Ijarah Collaborative Service Model in Sharia Banking

Ijarah is a contract for the transfer of usufructuary rights over goods or services, through payment of rental wages, without being followed by a transfer of ownership of the goods themselves. The context of ijarah in Islamic banking is a lease contract in which a bank or financial institution leases equipment to one of its customers based on a definite predetermined cost. The research method is qualitative with a comparative study approach. Data collection techniques include observation, documentation, and deep interviews. The object of this research was carried out in the Yogyakarta area. The findings of the ijarah case presented in this study indicate that the services created jointly by customers, service organizations (Islamic banks), and assisting parties divide their roles into sub-roles assigned to individuals. This research provides a basic understanding of the development of a sharia service model, which can complement the current IFM to holistically capture both economic transactions and service elements, which are currently prevailing in the Islamic banking market.

Herding behaviour in the Islamic bank market: evidence from the Gulf region

PurposeThis study examines herding in Islamic bank equity markets under various market conditions (up/down, high/low trading and high/low volatility) and during events such as Organization of the Petroleum Exporting Countries (OPEC) meeting days, Ramadan, the Gulf Cooperation Council (GCC) crisis of 2017 and the COVID-19 pandemic. The authors also look at the impact of rising and falling oil prices on herding behaviour.Design/methodology/approachThis study uses the model of Changet al.(2000) to estimate herding behaviour in the Islamic bank markets.FindingsFirst, the authors estimate herding at the GCC region level, and the results reveal an absence of herding under all market conditions and during all the events considered, except for the GCC crisis of 2017. Second, the authors investigate herding in four Gulf countries (Saudi Arabia, United Arab Emirates [UAE], Qatar and Kuwait) separately and find that herding is evident in all these countries during various market conditions. During Ramadan, herding appears in the Saudi Arabia and Kuwait Islamic bank equity markets. Herding is not prevalent during OPEC meeting days in any of the markets, whereas herding is evident in Saudi Arabia, UAE and Kuwait Islamic bank equity markets during the GCC crisis of 2017 and the COVID-19 pandemic. Lastly, the rising and falling oil prices do not influence herding at either GCC region or country level.Practical implicationsFrom the practitioner's perspective, this study provides useful insights for investors in Islamic banks and policymakers, in terms of asset pricing, portfolio diversification, trading strategies and market stability.Originality/valueMany studies explore herding in the equity markets of Muslim majority countries, but not specifically in the Islamic bank market. This study fills this literature gap by comprehensively examining herding in Islamic bank equity markets under various market conditions (up/down, high/low trading and high/low volatility) and during events, such as OPEC meeting days, Ramadan, the GCC crisis of 2017 and the COVID-19 pandemic.