The antecedents of Muslim customers’ intention to invest in an Islamic bank’s term deposits: evidence from a Muslim majority country

• Published in: Journal of Islamic marketing Vol. 12; no. 7; pp. 1363 - 1384
• Main Authors: Hati, Sri Rahayu Hijrah, Wibowo, Sigit Sulistiyo, Safira, Anya
• Format: Journal Article
• Language: English
• Published: Bingley Emerald Publishing Limited 02-09-2021; Emerald Group Publishing Limited
• Subjects: Banking industry; Banks; Consumption; Customers; Hypotheses; Interest rates; Islam; Islamic financing; Market shares; Muslims; Purchase intention; Retail banking; Revenue sharing; Indonesia; Product knowledge; Perceived risk; Islamic bank; Perceived quality; Perceived value
• ISSN: 1759-0833; 1759-0841
• DOI: 10.1108/JIMA-01-2020-0007

Purpose
The purpose of this study is to examine the impacts of product knowledge, perceived quality, perceived risk and perceived value on customers’ intention to invest in Islamic Banks. This study specifically examines an Islamic bank’s term deposits.
Design/methodology/approach
Structural equation modeling was used to analyze the data collected from 217 customers of an Islamic bank in Indonesia using an online survey.
Findings
This study highlights the central and dual roles of perceived risk as both the independent and the intervening variable that mediates the relationship between product knowledge and Muslim customer intention to invest in an Islamic bank’s term deposits.
Research limitations/implications
This study only investigates term deposits as one type of investment in Islamic banks. This study contributes to the literature by examining the role of product knowledge, perceived quality, perceived risk and perceived value on Muslim customer intention to invest in Islamic term deposits.
Practical implications
The results of this study highlight the requirement for Islamic banks to educate customers to improve the depositors’ product knowledge because Muslim customers’ risk and value perception and intention are strongly influenced by product knowledge.
Originality/value
The investigation of perceived risk is particularly relevant for Islamic financial products because of the inherent nature of risk sharing in Islamic finance. This study investigates the role of product knowledge in influencing the Muslim customers’ perception of risk, quality, value and their intention to invest in Islamic bank term deposits. Ideally, the profit loss sharing concept (PLS) should be applied; however, in this context, revenue sharing is applied because of Indonesia’s central bank regulation.