The adoption of Islamic banking services in Malaysia

Purpose The purpose of this paper is to examine the level of understanding of Islamic banking concepts and the factors that influence Islamic banking adoption in Malaysia, based on Rogers’ (1983; 2003) Diffusion of Innovation. Specifically, the impact of perceived attributes and other variables (und...

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Bibliographic Details
Published in:	Journal of Islamic marketing Vol. 8; no. 3; pp. 496 - 512
Main Authors:	Mahdzan, Nurul Shahnaz, Zainudin, Rozaimah, Au, Sook Fong
Format:	Journal Article
Language:	English
Published:	Bingley Emerald Publishing Limited 01-01-2017 Emerald Group Publishing Limited
Subjects:	Banking industry Innovations Islamic financing Islamic law Muslims Studies Malaysia Islamic marketing Islamic banking Islamic financial services marketing Diffusion of innovation Advertisements and promotions to Muslims The Muslim consumer Financial services Perceived attributes
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Summary:	Purpose The purpose of this paper is to examine the level of understanding of Islamic banking concepts and the factors that influence Islamic banking adoption in Malaysia, based on Rogers’ (1983; 2003) Diffusion of Innovation. Specifically, the impact of perceived attributes and other variables (understanding, consumer innovativeness and bank personnel’s professionalism) on Islamic banking adoption is examined. Design/methodology/approach A quantitative approach using a sample of 200 working MBA students in a leading public university in Malaysia was used. The instrument used was a self-administered questionnaire survey. Findings The level of understanding of various Islamic banking concepts is below average. A logistic regression reveals that the understanding of Islamic banking concepts and perceived advantage significantly influences the adoption of Islamic banking services. Research limitations/implications The small sample size of 200 individuals may render the findings ungeneralizable. Future studies may use a larger sample from across Malaysia and incorporate other independent variables, such as religiosity and Islamic financial literacy. Practical implications The Malaysian government can provide tax incentives and conduct educational roadshows on Islamic banking. Educating prospective consumers on the advantages of Islamic banking as opposed to conventional banking would provide more objective benefits that would boost the adoption of Islamic banking. Originality/value The results of this paper will be useful for Islamic financial institutions to increase their marketing and promotional efforts to keep pace with stiff competition within the industry.
ISSN:	1759-0833 1759-0841
DOI:	10.1108/JIMA-08-2015-0064