Business, Management, Finance and Economics

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Browsing Business, Management, Finance and Economics by Subject "Banks and banking—Religious aspects—Islam"

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    Harmonising Mudarabah practices in conventional regulatory regime in Tanzania
    (Universiti Teknologi Malaysia, 2019) Omar, Habiba Hassan
    Mudarabah is a common Islamic bank product practiced by Islamic banks in Tanzania even though its practices seem to be vague due to the lack of harmonisation between banks. This situation is a result of lack of regulatory, infrastructure and institutional frameworks that could lead to a harmonized stance of this product. This product has been studied in order to explore the current practices under conventional regulatory regime. The main objective of this study is to investigate the conventional regulations influencing Mudarabah in order to develop a harmonised Mudarabah practice model. This objective was achieved by interviewing Islamic bank stakeholders including bank managers, sharia board members and customers of the selected Islamic banks. The study applied qualitative methodology based on multiple case studies in data collection and analysis. Twenty-five participants were interviewed including eleven bank managers, three sharia board members and eleven bank customers from three cases triangulated with document review. Thematic data analysis was employed to come up with the broad themes that form a basis for discussion. Several barriers and challenges have been found from the results of the analysis which hinder the efficiency of Mudarabah practices. Irregularities of regulations and policies is the major challenge found to obstruct Mudarabah practices as Mudarabah is not governed by sharia regulatory framework. Similarly, existing contradictions between a country‘s financial regulations and policies are seen as a challenge to Mudarabah practices. Apart from regulatory challenges, infrastructure of the country is not effective enough to allow efficient practices of Mudarabah as Islamic capital market products are not available to allow a wide range of investment for Mudarabah mobilised funds. However, Islamic banks are forced to insure Mudarabah deposits under conventional insurance to the deficiency of Takaful in the country. Despite the limitations provided in this research, the research contributed theoretically and practically to the understanding of Mudarabah practices in conventional regulations in Tanzania. Practically, the research develops Mudarabah harmonisation model to be adopted by Islamic banks, regulators or policy makers where efficient practices can be attained in a conventional regulation. The model emphasizes appropriate regulations to govern Islamic banks that will ensure sharia compliance of the banks. Theoretically, the study provides an understanding of the practices of Mudarabah that can meet conventional regulations as well as comply with Islamic norms and ethics. Implication of the study for banks‘ management is to encourage Islamic banks to form a union in order to form central sharia board and Takaful services for depositors. Similarly, the study will foster transparency of bank activities to stakeholders and enhance customer knowledge on Mudarabah operation and profit distribution. Henceforth, regulators have to harmonize country‘s regulations and policies with Islamic sharia for the betterment of Islamic banking performance. Future studies have to examine the level of sharia compliance in Islamic banks in Tanzania. Apart from Mudarabah, future studies have to explore the performance of other Islamic banking products under conventional regulations of Tanzania. In addition, future studies could examine the eligibility of a central bank as a sole regulator in regulating Islamic banking.
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    Integration of knowledge and cue utilization on consumer purchase decision process towards Islamic Banking in Pakistan
    (Universiti Teknologi Malaysia, 2020) Mahmood, Chaudhry Kashif
    Financial growth has been increasing during past years and conventional banks are considerably the predominant market players of the banking sector. The current development and growth of Islamic banking in the financial market is not sufficient to raise the confidence of customers and attract them towards Islamic Banking compared to conventional banking. To address the problem, this study aimed to empirically test the effect of non-functional cues i.e. country of origin, brand name, advertising, and price on the consumer purchase decision process of the Islamic banking sector of Pakistan. A research model was developed, based on cue utilization theory and the theory of consumer behavior. The methodology for the study was quantitative, involving a sample of N=415 respondents broadly representative of Pakistan’s Islamic banking sector. Multistage cluster sampling technique was utilized and the two most dominant cities i.e. Lahore and Karachi were selected to collect the data from the respondents. A self-administered questionnaire was used as a research instrument to collect the data. Descriptive statistics and relationships between latent variables were calculated by Partial Least Square Structural Equation Modeling (SEM-PLS). The results indicated that non-functional cues have a significant positive effect on the consumer purchase decision process of the Islamic banking sector of Pakistan. The findings of the study also revealed that consumer knowledge has a significant strong relationship with the consumer purchase decision process. Moreover, this study confirmed that the relationship between non-functional cues and the consumer purchase decision process is moderated by consumer knowledge. The theoretical contribution of this study was the integration of two existing theories; cue utilization theory and consumer decision-making model for financial services, based on consumer behavior theory. Based on these theories, this study provides an integrated model of non-functional cues and the consumer purchase decision process for financial services. The final model of the study provides an opportunity for the managers to recognize the underlying quality factors that customers consider most while dealing with Islamic banks. Moreover, it facilitates the extension of the existing body of knowledge related to the consumer buying behavior in the Third World Countries by using a variety of national settings. Since the aim of this study was to investigate the influence of non-functional cues on Islamic banking consumer’s purchase decision, functional cues were not being considered for this research. Thus, it is recommended that future research measure the effect of functional cues on the consumer purchase decision process with the moderation effect of consumer knowledge.