Factor Affecting the Adoption of Interest Free Banking Services in the Case of Hijra Bank S.C
No Thumbnail Available
Date
2024-07-03
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
AAU
Abstract
The aim of this research was to examine factors affecting the adoption of interest-free banking services at Hijira Bank S.C. The study used both qualitative and quantitative research approaches, analyzing primary data collected from customers of Hijira Bank S.C. The cross- sectional data was collected for the year 2022/2023 with a total sample size of 380 respondents. Using SPSS statistical software, the data was quantitatively examined using linear model estimation. The findings indicate that major factors for the adoption of interest- free banking, such as Shariah compliance, advertising, and accessibility, showed statistically significant positive relationships. In contrast, the study found that awareness and perceived usefulness had statistically insignificant positive effects on IFB adoption. The demographic data analysis suggests the majority of interest-free bank (IFB) clients were young and educated, allowing the bank to effectively market its services. The correlation analysis revealed significant positive relationships between the independent variables and IFB adoption, indicating improvements in these factors could enhance IFB uptake and client retention. The findings indicate Hijra Bank S.C. has the potential to implement a full-fledged IFB system by leveraging its capabilities, with the regression analysis explaining 51.8% of the variation in IFB adoption and identifying Shariah conformity, advertising, and accessibility as the most influential factors. To enhance IFB adoption, the bank should ensure its services strictly adhere to Shariah principles, invest in accessible digital platforms and branch networks, develop targeted advertising campaigns, educate customers on the benefits of IFB, implement loyalty programs for its largely young customer base, and prioritize exceptional customer service across all demographics. By strategically addressing these areas, the bank can effectively attract new IFB clients while also retaining its existing customer base over the long term