Selection criteria for Islamic home financing: a case study of Pakistan

Abstract

Purpose

The aim of this research is to examine the selection criteria of customers for Islamic home financing in the context of Pakistan and to examine these factors with respect to gender, age, income, and occupation.

Design/methodology/approach

This study uses a quantitative approach to investigate the choice criteria for Islamic home financing. All 18 independent variables are taken from previous research; for their analysis, descriptive statistics, independent sample t‐tests and ANOVA was used. Data were gathered from the customers of Islamic banking who use the services of Islamic home financing. The sample consists of 200 respondents. For the collection of data, a survey questionnaire with closed‐ended questions and a five‐point Likert scale was employed. The questionnaire was designed into two sections, one consisting of demographic information and the second relating to the selection criteria of Islamic home financing.

Findings

The results indicate that the shariah principle, fast and efficient services, price, bank reputation, and terms and conditions of product flexibility are the five most important factors considered by customers in choosing Islamic mortgages.

Research limitations/implications

The limitations relate to the sample area for the study, which is confined to Lahore, and due to the limited sample size, the findings cannot be generalized. Second, only four banks are considered.

Practical implications

This study is beneficial for practitioners in Pakistan by offering insight into choice criteria for Islamic home financing. The results should also be useful for Islamic bank managers who are also policy makers, as they can study and plan for attractive schemes and policies for customers through which they can fulfill their needs and expectations. For the researcher, this study will also add to the existing body of knowledge by providing novel evidence on the selection criteria used for Islamic home financing.

Originality/value

This topic has never been examined in the context of Pakistan, so this study initiates the choice criteria for Islamic home financing among Pakistani banks' customers. The paper provides potentially useful information for both customers (in selecting Islamic banks) and bank managers to identify the factors needed to attract customers.

Citation

Hamid, A. and Masood, O. (2011), "Selection criteria for Islamic home financing: a case study of Pakistan", Qualitative Research in Financial Markets, Vol. 3 No. 2, pp. 117-130. https://doi.org/10.1108/17554171111155357