Sulaiman Lujja, Mustafa Omar Mohammed and Rusni Hassan
Islamic banking (IB) has been globally embraced by over 76 countries, with over $2tn in assets. Despite this remarkable progress, there are countries that are yet to fully embrace…
Abstract
Purpose
Islamic banking (IB) has been globally embraced by over 76 countries, with over $2tn in assets. Despite this remarkable progress, there are countries that are yet to fully embrace IB (Uganda inclusive). All the ongoing initiatives in Uganda (at policy level) to establish IB require supporting study of public awareness and attitudes toward IB. This will stimulate a down-top approach to the feasibility of IB and policymaking, thus providing a fertile ground for wider consideration of the majority stakeholders’ views in formulating standards and policy guidelines regulating IB. This study aims to explore the perception of Ugandans towards IB.
Design/methodology/approach
The study is exploratory in nature and uses a quantitative method. Out of the 400 questionnaires distributed, only 354 were usable for further analysis. SPSS 21 was used to analyze data using descriptive statistics and factor analysis.
Findings
Major findings indicate that unlike non-Muslims, Muslims are more knowledgeable about the IB culture, although both groups have low awareness about IB terminologies. There were inconsistences in Muslim and non-Muslim attitudes toward IB, for instance; while non-Muslims are motivated by “profitability”, Muslims’ inclination to IB is mainly due to “religious and profitability combined”. Both groups demonstrated some uniformity in their selection criteria of banks such as “third party influence”, although they are inconsistent in other factors.
Originality/value
The novelty of this study rests in its down-top approach to feasibility of IB by gauging the perception of majority stakeholders before IB is established. The study is conducted in a heterogeneous society unlike many of similar studies that have focused on Muslim majority countries. As most studies (with similar background) are at least 18 years old, this study remains outstanding in gauging the dynamics of stakeholders in Muslim minority countries which have yet established IB.
Details
Keywords
Sulaiman Lujja, Mustafa Omar Mohammad and Rusni Hassan
Islamic banking (IB) has resulted in abundant cross-border financial flows and diversified economic inter-linkages with over US$2tn in assets that have extended beyond Muslim…
Abstract
Purpose
Islamic banking (IB) has resulted in abundant cross-border financial flows and diversified economic inter-linkages with over US$2tn in assets that have extended beyond Muslim countries to more established global financial centres and other emerging economies. Despite this remarkable diffusion, numerous developing and least-developed countries are yet to embrace IB. This study aims to examine the factors that determine public intention to adopt IB in Uganda.
Design/methodology/approach
This study undertook a quantitative approach where the theory of reasoned action (TRA) was used as a theoretical framework and structural equation modelling technique was applied to determine the relationship between attitude, subjective norm and public intention to adopt IB. Thus, a sample of 300 bank customers was surveyed using a questionnaire.
Findings
Initially, the measurement model did not fit the data well. So, the model was modified by removing an indicator with a lower loading. Finally, the structural model under maximum likelihood estimate analysis confirmed a good model fit for the data. Key findings were as follows: attitude positively influenced intention to adopt IB, whereas subjective norm influence to intention is mediated by attitude. Furthermore, public intention to adopt IB in Uganda can be predicted by attitude (R2 = 0.89) which also mediates the prediction of subjective norm to intention (R2 = 0.58).
Originality/value
To the best of the authors’ knowledge, no study has used the TRA on the feasibility and adoption of IB. Thus, the present study is relevant in extending the theoretical body of knowledge by validating the TRA in a new field.
Details
Keywords
Sulaiman Lujja, Mustafa Omar Mohammad, Rusni Bt. Hassan and Umar A. Oseni
In 2014, Islamic finance assets are estimated to have exceeded US$2 trillion with over 100 products and an annual growth of over 20.7 per cent, across more than 76 countries, most…
Abstract
Purpose
In 2014, Islamic finance assets are estimated to have exceeded US$2 trillion with over 100 products and an annual growth of over 20.7 per cent, across more than 76 countries, most of which are members of the Organization of Islamic Cooperation (OIC). Despite this remarkable market expansion, numerous OIC members such as Uganda are yet to fully adopt this unique financial system because of regulatory constraints. Thus, the purpose of this paper is to examine the extent to which Uganda can benchmark the Malaysian experience and best practices to overcome the regulatory challenges in introducing Islamic Banking.
Design/methodology/approach
This exploratory study adopts qualitative research methods through documentary review to elicit relevant information from the existing laws in Uganda that would accommodate the Islamic Banking system. Interpretive analysis and analytical methods are used to analyze data.
Findings
The Malaysian experience and best practices of Islamic Banking regulation need to be benchmarked by regulators. Relevant laws which require some amendments include section 37(a) and 38(1) of the Financial Institutions Act 2004 and section 29(3)(a) of the Bank of Uganda Act 2000. Similarly, tax legislation needs amendments to ensure a level playing field for Islamic finance and conventional finance products.
Originality/value
This is one of the earliest studies on models of Islamic Banking regulation suitable for adoption in Uganda. This study contributes to literature on how other jurisdictions (especially those with less regulatory prudence) could regulate Islamic Banking in a dual banking system jurisdiction.
Details
Keywords
Juma Bananuka, Musa Kasera, Grace Muganga Najjemba, Doreen Musimenta, Bob Ssekiziyivu and Saadat Nakyejwe Lubowa Kimuli
The purpose of this paper is to report on the results of a study carried out to examine the mediating effect of attitude in the relationship between subjective norm, religiosity…
Abstract
Purpose
The purpose of this paper is to report on the results of a study carried out to examine the mediating effect of attitude in the relationship between subjective norm, religiosity and intention to adopt Islamic banking in a developing secular state like Uganda.
Design/methodology/approach
This study’ research design was cross sectional. Closed ended questionnaires were distributed to 258 managers of micro businesses in Uganda. Data were analyzed with the help of SPSS v22 and MedGraph program (Excel version).
Findings
Attitude is a significant mediator in the relationship between subjective norm and intention to adopt Islamic banking. Also, attitude significantly mediates the relationship between religiosity and intention to adopt Islamic banking.
Research limitations/implications
The study used only a single research methodological approach; therefore, future research could be undertaken using a mixed-methods approach.
Practical implications
Emphasis should be put on improving the mindsets of Ugandans toward Islamic banking.
Originality/value
While there has been a number of studies on Islamic banking, this study provides an initial empirical evidence on the mediation effect of attitude in the relationship between subjective norm, religiosity and intention to adopt Islamic banking in a single study in an African developing secular state like Uganda.
Details
Keywords
Juma Bananuka, David Katamba, Irene Nalukenge, Frank Kabuye and Kasimu Sendawula
This paper aims to examine the concept and practice of Islamic banking in the context of a non-Islamic country such as Uganda.
Abstract
Purpose
This paper aims to examine the concept and practice of Islamic banking in the context of a non-Islamic country such as Uganda.
Design/methodology/approach
Semi-structured interviews were used to elicit the strategies banks may use to ensure that the Islamic banking system is successful and to ascertain those factors that may hinder its success. Chief executive officers of business associations, heads of committees on Islamic banking and religious leaders were interviewed.
Findings
The strategies used by financial institutions in ensuring the adoption of Islamic banking are now known such as “creating awareness of Islamic banking’s mode of operation among existing and potential clients.” The findings also show that factors such as “lack of trust among clients” may hinder the success of Islamic banking.
Research limitations/implications
The research findings are useful for informing the deliberations of regulators, the business community and financial institutions. The results are applicable only to those countries in the preparation stages of adopting Islamic banking services for the first time, but they could be generalized to any new product launch in any country.
Originality/value
This paper may help Ugandan financial institutions to design strategies that will accelerate the adoption and, ultimately, the diffusion of Islamic banking in Uganda.
Details
Keywords
Safwan Kamal, Muslem Muslem, Mulyadi Mulyadi and Izra Berakon
This study aims to determine whether the relationship between the Muslim community and moneylenders is important even though the practice of moneylenders is clearly forbidden in…
Abstract
Purpose
This study aims to determine whether the relationship between the Muslim community and moneylenders is important even though the practice of moneylenders is clearly forbidden in Islam. This study examines a model consisting of two major theories, namely, the theory of planned behavior (TPB) and marketing theory, and the existence of the religiosity variable as a moderator.
Design/methodology/approach
This study uses a structural equation modeling (SEM); SEM was chosen because it has effectiveness in revealing estimates of direct and indirect effects and shows moderating values. Manual questionnaires were distributed to 385 Acehnese who use loan shark services.
Findings
The combination of TPB and marketing theory constructs has a significant influence on the intention to use loan shark services. Then, the existence of the word-of-mouth variable significantly mediates the relationship between service and subjective norms and the intention to use loan shark services. In fact, the position of the religiosity variable has a significant negative effect on the intention to use loan shark services, and in terms of the moderating effect, it has been demonstrated that religiosity weakens the relationships between the services provided by loan sharks and the intention to use loan shark services.
Research limitations/implications
This study has several limitations. First, sampling is still limited and can still be expanded. Second, it is difficult to get data and there are people who refuse to be sampled. Third, this study succeeded in capturing the phenomenon of the behavioral intentions of people who have a religious spirit but are still associated with moneylenders.
Practical implications
This research provides material implications for the Aceh Government, especially in managing public funds. Indeed, Aceh is a productive province that has produced policies and regulations that encourage the Sharia economy; it is just that the use of social funds and Islamic philanthropy in Aceh has not been maximized, which has led to the growth of a network of moneylenders. Because of this, Aceh, which has been successful in producing the law for Islamic financial institutions, should also be successful in destroying the moneylender network by synergizing to create alternatives and financial solutions for the community, especially the lower and middle classes.
Social implications
This research explains that the level of religiosity can dampen and reduce the intention to use loan shark services; therefore, it is important for the community to understand the dangerous impact of using loan shark services and expand the role of community leaders in socializing the idea of lending money to loan sharks.
Originality/value
Due to the lack of studies on the behavior of Muslims using the services of moneylenders, therefore, this study provides new knowledge of the literature on the economic behavior of Muslim communities who continue to use the services of moneylenders. This study develops TPB theory and marketing theory in one model and involves the religiosity variable as a moderator.
Details
Keywords
Juma Bananuka, Veronica Mukyala, Zainabu Tumwebaze, Johnson Ssekakubo, Musa Kasera and Mariam Ssemakula Najjuma
The purpose of this paper is to establish whether there is a relationship between religiosity, religious preferences, firm age and intention to adopt Islamic financing in an…
Abstract
Purpose
The purpose of this paper is to establish whether there is a relationship between religiosity, religious preferences, firm age and intention to adopt Islamic financing in an emerging economy like Uganda which is a secular state and adopting Islamic financing for the first time.
Design/methodology/approach
This study uses a cross-sectional and mixed-methods design. The authors administered closed-ended questionnaires and these were supplemented by semi-structured interviews.
Findings
Results indicate that religiosity is significantly associated with intention to adopt Islamic financing. Further, religious experience as a dimension of religiosity is significantly associated with intention to adopt Islamic financing unlike ideology. Religious preferences and firm age are also significantly associated with intention to adopt Islamic financing. A one-way analysis of variance (ANOVA) reveals that there are significant differences in between religions whereby Muslims are more ready for Islamic financing than the Christians are.
Research limitations/implications
This study’s main limitation is that it uses evidence from Uganda’s micro businesses which account for 70 per cent of Uganda’s total businesses. It is unclear on whether this study results can be generalized to the remaining 30 per cent of the businesses and if results of this study can be generalized to other national settings.
Originality/value
Islamic financing being an emerging phenomenon on the African continent especially in the Sub-Saharan Africa where most countries are secular states, there are few empirical studies exploring religiosity, religious preferences, firm age and intention to adopt Islamic financing in an emerging economy perspective. To the best of the authors’ knowledge, this is the first paper that provides some insights into religiosity, religious preference, firm age and intention to adopt Islamic financing from a Ugandan perspective using a mixed methods research design.
Details
Keywords
Shuiqing Yang, Kang Lin, Xi Wang, Yixiao Li, Yuangao Chen and June Wei
The metaverse enables users to create their own avatars in a shared virtual space, giving rise to a new avatar personality that differs from their real-self personality. The aim…
Abstract
Purpose
The metaverse enables users to create their own avatars in a shared virtual space, giving rise to a new avatar personality that differs from their real-self personality. The aim of this research is to explore how users' real-self and avatar personalities may affect their behavioral engagement and satisfaction in the metaverse context.
Design/methodology/approach
This research applies self-discrepancy theory to investigate how the big five traits of both real-self and avatar personalities influence users' engagement and satisfaction in the metaverse. The present research employed a mixed-methods approach, beginning with a qualitative study to identify prevalent personality cues among users on metaverse social media platforms. Subsequently, a quantitative study was conducted to further validate the findings of the qualitative study.
Findings
The results indicated that avatar personality scored higher than the real-self personality in the dimensions of openness, conscientiousness and extraversion, while scored lower in the dimensions of agreeableness and neuroticism. Both real-self and avatar personality traits positively influenced metaverse satisfaction via behavioral engagement in the metaverse. Notably, avatar personality traits had a stronger impact on behavioral engagement compared to real-self personality traits, which further influence metaverse satisfaction.
Practical implications
The present study offers practical insights for metaverse developers and managers to enhance user satisfaction by focusing on users’ big five traits of both real-self and avatar personality. It suggests implementing personalized tools, organizing personality-based social activities and other initiatives to encourage user’s behavioral engagement and ultimately enhance metaverse satisfaction.
Originality/value
Unlike existing research that concentrates on a single facet of personality traits, this research employs a mixed-methods approach to conceptualize users' real-self personality and avatar personality, further exploring their impacts on metaverse satisfaction.
Details
Keywords
Naqeeb Ullah Atal, Mohammad Iranmanesh, Fathyah Hashim and Behzad Foroughi
The purpose of this paper is to investigate the determinants of Muslims’ attitude and intention towards Murabaha financing by considering religiosity as a moderator.
Abstract
Purpose
The purpose of this paper is to investigate the determinants of Muslims’ attitude and intention towards Murabaha financing by considering religiosity as a moderator.
Design/methodology/approach
The data were collected through a survey of 373 Muslims in Afghanistan and were analysed using the partial least squares technique.
Findings
The results showed that social influence and religious obligation have a positive effect on attitude towards Murabaha financing. Furthermore, social influence and attitude have a positive effect on the intention to use Murabaha financing. Religiosity moderates negatively the impact of social influence on attitude towards Murabaha financing.
Practical implications
Managers and marketers of Islamic banks may benefit from the findings of this study, which provide insight into the factors that should be considered to promote Murabaha financing.
Originality/value
The findings contribute to the literature on Islamic financing products by demonstrating the drivers of attitude towards and intention to use Murabaha financing. The study also extends the literature by testing the moderating role of religiosity. Furthermore, the study extends the theory of reasoned action in the context of Islamic financing by introducing religious obligation as a potential driver of attitude and religiosity as a moderator.
Details
Keywords
Mohammed Ali Al-Awlaqi and Ammar Mohamed Aamer
Although Islamic banks offer superior financial services than other interest-based conventional banks, they could not expand their share and dominate the markets in several…
Abstract
Purpose
Although Islamic banks offer superior financial services than other interest-based conventional banks, they could not expand their share and dominate the markets in several Islamic countries. This problem could be attributed to some causes not addressed. The current study proposes Islamic financial literacy as an important factor that could help aggress this problem. Due to a wide variety of Islamic financial services and the lack of understanding of these services, the banks' small business customers are indifferent between Islamic and interested-based conventional services to finance their business.
Design/methodology/approach
This study uses the exploratory technique of multiple correspondence analysis to detect any potential role of Islamic financial literacy in customers' preference for Islamic banks over conventional ones. The potential effect was tested with other essential factors, such as the customers' age, gender, and educational level. This analysis was conducted on a data set from 2061 banks' small businesses customers using the mall-intercept survey method.
Findings
The study shows a low level of Islamic financial literacy among Yemeni banks' small business owners' customers. Furthermore, despite integrating some critical factors that could influence the actual bank selection process among Yemini banks' customers, the authors found a decisive potential role of Islamic financial literacy as one of the key determinants of bank selection preferences.
Originality/value
This is the first paper to explore the potential role of Islamic financial literacy on the actual selection between Islamic Banks and their counterparts: the conventional banks in Yemen. The research results could build a more comprehensive theoretical model on Islamic banks' customer behavior.