Apprehensions and Reservations of Stakeholders Regarding Islamic Banking in Pakistan

Abstract

Islamic banking has gradually and steadily progressed in Pakistan over the last two decades but the stakeholders including customers, bankers and general public have their doubts and misgivings about various Islamic banking aspects. The paper assesses the apprehensions of stakeholders about Islamic banking in Pakistan. The study evaluates the reservations of four important stakeholder groups including Islamic banking customers, conventional banking customers, Islamic bankers and conventional bankers. The study is based on a survey conducted using a structured questionnaire for data collection from the research participants. In the past, much research has been done on the aspect of Islamic banking perceptions but there is a scarcity of studies analyzing the apprehensions of masses regarding Islamic banking. This paper attempts to address this gap by specifically analyzing the Islamic banking apprehensions and reservations of stakeholders. The research findings and the results of the study reflect that although there is generally a favorable stance of respondents towards Islamic banking but they have their doubts and suspicions regarding Islamic banking being truly Shariah-compliant in letter and spirit; the respondents also perceived that Islamic banking offerings are somewhat an imitation of conventional banking products. Therefore, there is a greater need to enhance the levels of understanding and awareness among the stakeholders regarding Islamic banking in order to dispel the suspicions and apprehensions regarding Islamic banking products and practices.