Empirical Investigation of Islamic Banking Adoption in Brunei
Keywords:
Islamic Banking, Adoption, Brunei, Diffusion of Innovation
Abstract
The main objective of this study is to explore the understanding level of various Islamic banking concepts and determine the factors that impact the adoption of Islamic banking services in Brunei. The impact of thelevel of understanding, relative advantage, compatibility, complexity, observability, uncertainty, and service quality was examined through Rogers (2003) Diffusion of Innovation. The study adopted quantitative approach; data were collected through a self-administrated questionnaire from 245 bank customers located in Brunei’s Muara district.The findings predicted that understanding level of various Islamic banking concepts was below average among Islamic bank customers. The multiple regression analysis predicted that understanding, relative advantage,compatibility, complexity, observability, uncertainty and service quality has apositive impact on theadoption of Islamic banking services.
References
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Al-Ghaith, W.A., Sanzogni, L. &Sandhu, K. (2010).Factors influencing the adoption and usage of online services in Saudi Arabia.The Electronic Journal of Information Systems in Developing Countries, 40(2), 34-50.
Ali, M. &Puah, C.H. (2017).Acceptance of Islamic banking as innovation: a case of Pakistan. Humanomics, 33(4), 499-516.
Al-Jabri, I.M. &Sohail, M.S. (2012).Mobile banking adoption: application of diffusion of innovation theory. Journal of Electronic Commerce Research, 13(4), 379-391.
Amin, H., Rahman, A., & Abdul-Razak, D. (2013).An integrative approach for understanding Islamic home financing adoption in Malaysia.International Journal of Bank Marketing,31(7), 544-573.
Anuar, M.M., Adam, F., &Mohamad, Z. (2012).Muslim Consumers’ Perceptionon Internet Banking Services.International Journal of Business and Social Science, 3(3), 63-71.
Arts, J.W., Frambach, R.T., &Bijmolt, T.H. (2011).Generalizations on consumer innovation adoption: A meta-analysis on drivers of intention and behavior. International Journal of Research in Marketing,28(2), 134-144.
Awan, H.M.&ShahzadBukhari, K. (2011).Customer’s criteria for selecting an Islamic bank: evidence from Pakistan. Journal of Islamic Marketing,2(1), 14-27.
Aziz, Z.A. (2006). Islamic Banking and Finance Progress and Prospects.Collected Speeches 2000-2006, Bank Negara Malaysia, Kuala Lumpur.
Baiduri Bank Annual Report. (2015). Published by AutoritiMonetari Brunei Darussalam, Retrieved from www.baiduri.com.bn/documents/baiduri_annual_report_2015_english_31082016.pd (accessed on January 10, 2018).
Bashir, M.S. (2013). Analysis of Customer Satisfaction with the Islamic Banking Sector: Case of Brunei Darussalam. Asian Journal of Business and Management Sciences, 2(10), 38-50, ISSN: 2047-2528.
Black, N.J., Lockett, A., Winkhofer, H.,&Ennew, C. (2001).The adoption of internet financial services: a qualitative study. International Journal of Retail and Distribution Management,29(8), 390-408.
Butt, I., Saleem, N., Ahmed, H., Altaf, M., Jaffer, K.,&Mahmood, J. (2011).Barriers to adoption of Islamic banking in Pakistan.Journal of Islamic Marketing,2(3), 259-273.
Department of Economic Planning and Development annual report.(2016). Department of Statistics.Prime Minister’s Office, Brunei Darussalam.
Dusuki, A.W.,& Abdullah, N.I. (2007).Why do Malaysian customers patronize Islamic banks?.International Journal of Bank Marketing,25(3), 143-160, available at: http://dx.doi.org/10.1108/02652320710739850
Echchabi, A.,&Aziz, H.A. (2012).Empirical Investigation of Customers’ Perception and Adoption Towards Islamic Banking Services in Morocco. Middle-East Journal of Scientific Research, 12(6), 849-858.
Erol, C.,& El-Bdour, R. (1989).Attitudes, behaviour, and patronage factors of bank customers towards Islamic banks.International Journal of Bank Marketing,7(6),31-39.
Fisher, R., & Chu, S.Z. (2009).Initial online trust formation: The role of company location and web assurance. Managerial Auditing Journal,24(6), 542-563.
Gait, A.,& Worthington, A. (2008).An empirical survey of individual consumer, business firm and financial institution attitudes towards Islamic methods of finance.International Journal of Social Economics,35(11), 783-808.
Gerrard, P., & Cunningham, J.B. (2003).The diffusion of internet banking among Singapore consumers.International Journal of Bank Marketing,21(1), 16-28.
Gronroos, C. (1982). An Applied Service Marketing Theory.European Journal of Marketing, 16(7), 30–41.
Hidayat, R., &Akhmad, S. (2015). The Influence of Service Quality, Religious Commitment and Trust on the Customers’ Satisfaction and Loyalty and Decision to do the Transaction in Mandiri Sharia Bank of Jawatimur. Al-Ulum,15(1), 57-90.
Hassan, K.,& Lewis, M. (2007).Handbook of Islamic banking.Edward Elgar Publishing Limited, Uk, ISBN: 9781845420833, pp: 443.
Haque, A., Jamal, U.,& Ahmad, Z. (2007).Islamic banking: Customer perception and its prospect on bank product selection towards Malaysian customer perspective. Proceedings of the 5th International Islamic Finance conference, September 3-4, 2007, Kuala Lumpur.
Harrington, S. J., &Ruppel, C.P. (1999).Practical and value compatibility: their roles in the adoption, diffusion, and success of telecommuting. Paper presented at the Proceedings of the 20th international conference on Information Systems.
Haron, S., Ahmad, N., &Planisek, S.L. (1994).Bank patronage factors of Muslim and Non-Muslim customers. International Journal of Bank Marketing,12(1), 32-40.
Hidayat, S.E., & Al-Bawardi, N.K. (2012).Non-Muslims’ Perceptions Toward Islamic Banking Services in Saudi Arabia. Journal of US-China Public Administration,9(6), 654-670.
Hoffmann, A.O., Franken, H.,&Broekhuizen, T.L. (2012). Customer intention to adopt a fee-based advisory model: An empirical study in retail banking. International Journal of Bank Marketing,30(2), 102-127.
Islamic Financial Services Industry Stability Report (2017). Published by Islamic Financial Services Board, Malaysia, Kuala Lumpur.
Jamshidi, D., &Hussin, N. (2012).A conceptual framework for adoption of Islamic Credit Card in Malaysia.Kuwait Chapter of Arabian Journal of Business and Management Review,2(3), 102-110.
Kaabachi, S.,& Obeid, H. (2016).Determinants of Islamic banking adoption in Tunisia: empirical analysis. International Journal of Bank Marketing,34(7), 1069-1091.
Khan, M.M., &Bhatti, M.I. (2008).Islamic banking and finance: on its way to globalization.Managerial Finance,34(10), 708-725.
Khattak, N.A.,& Rehman, K.U. (2010).Customer satisfaction and awareness of Islamic banking system in Pakistan.African Journal of Business Management, 4(5), 662 671.
Kotler, P.,&Amstong, G. (2001).Principles of Marketing.9th Ed, Prentice Hall, Upper Saddle River, NJ.
Lassar, W.M., Manolis, C.,&Lassar, S.S. (2005).The relationship between consumer innovativeness, personal characteristics, and online banking adoption.International Journal of Bank Marketing,23(2), 176-199.
Leech, N.L., Barrett, K.C.,& Morgan, G.A. (2005).SPSS for intermediate statistics use and interpretation.Job Characteristics and Organizational Commitments of Taiwanese Expatriates Working in Mainland China Li-Fen Tsai 180 Mahwah, Lawrence Erlbaum, USA.
Loo, M. (2010).Attitudes and perceptions towards Islamic banking among Muslims and non-Muslims in Malaysia: implications for marketing to baby boomers and x-generation”, International Journal of Arts and Sciences,3(13), 453-485.
Mahdzan, N.S., Zainudin, R.,& Au, S.F. (2017).The adoption of Islamic banking services in Malaysia. Journal of Islamic Marketing, 8(3), 496-512, DOI: 10.1108/JIMA-08-2015-0064.
Mbawuni, J.,&Nimako, S.G. (2017).Determinants of Islamic banking adoption in Ghana.International Journal of Islamic and Middle Eastern Finance and Management, 10(2), 264-288.
Meuter, M.L., Binter, M.J., Ostrom, A.L.,& Brown, S.W. (2005).Choosing among alternative service delivery modes: An investigation of customer trial of self-service technologies.Journal of Marketing,10(2), 61-83.
Naser, K., Jamal, A.,& Al-Khatib, K. (1999).Islamic banking: a study of customer satisfaction and preferences in Jordan. International Journal of Bank Marketing,17(3), 135-151.
Nor, K.M. (2005).An empirical study of internet banking acceptance in Malaysia: An extended decomposed theory of planned behavior. Unpublished PhD thesis, Southern Illinois: University Carbondale.
Norjidi, D. (2017). Strong Islamic philosophy key to be finance hub.Borneo Bulletin, 03 August, 4-5.
Nunnally, J.C. (1978). Psychometric Theory.New York, NY: McGraw-Hill.
Ostlund, L.E. (1974). Perceived innovation attributes as predictors of innovativeness. Journal of Consumer Research, 1(2), 23-29.
Othman, A.Q.,& Owen, L. (2003).The Multi Dimensionality of CARTER Model to Measure Customer Service Quality (SQ) in Islamic Banking Industry: A Study in Kuwait Finance House. International Journal of Islamic Financial Services, 3(4), 328-341.
Pannell, D.J. (2003). Uncertainty and adoption of sustainable farming systems Risk management and the environment: Agriculture in perspective. Springer, 67-81.
Perry, F.V.,& Rehman, S.S. (2011).Globalization of Islamic finance: myth or reality?.International Journal of Humanities and Social Science,1(19), 107-119.
Ramdhony, D. (2013). Islamic banking awareness attitudes and bank selection criteria.International Journal of Humanities and Applied Sciences,2(2), 29-35.
Rogers, E.M. (2003). Diffusion of Innovations.5th Ed., The Free Press, New York, NY.
Rugimbana, R.,&Iversen, P. (1994).Perceived attributes of ATMs and their marketing implications.International Journal of Bank Marketing,12(2), 30-35.
Sathye, M., (1999).Adoption of Internet banking by Australian consumers: an empirical investigation. International Journal of Bank Marketing,17(7), 324-334.
Tan, M., &Teo, T.S. (2000).Factors influencing the adoption of Internet banking.Journal of the AIS, 1(1), 5-23.
Thambiah, S., Eze, U.C., Tan, K.S., Nathan, R.J.,& Lai, K.P. (2010). Conceptual framework for the adoption of Islamic retail banking services in Malaysia. Journal of Electronic Banking Systems,2(10), 1-10.
Thambiah, S., Ismail, H.,&Malarvizhi, C.A. (2011a).Islamic retail banking adoption: a conceptual framework. Australian Journal of Basic and Applied Sciences,5(12),http://www.bnm.gov.my.
Thambiah, S., Ismail, H.,&Malarvizhi, C. (2011b).Islamic Retail Banking Adoption: A Conceptual Framework. Australian Journal of Basic & Applied Sciences,5(12), 649-657.
Thambiah, S., Ramanathan, S.,&Mazumder, M.N.H. (2012).The determinants of Islamic retail banking adoption in Malaysia.International Business &Economics Research Journal,11(4), 437-442.
Thambiah, S., Ismail, H., Ahmed, E.M.,&Khin, A.A. (2013).Islamic retail banking adoption in Malaysia: the moderating effect of religion and region. The International Journal of Applied Economics and Finance,7(1), 129-142.
Tornatzky, L.G., & Klein, K.G. (1982).Innovation Characteristics and Innovation Implementation.A Meta- Analysis of Findings.IEEE Transactions on Engineering Management,29(1), 28-45.
Warsame, M.H.,&Ireri, E.M. (2018).Moderation effect on Islamic banking preferences in UAE.International Journal of Bank Marketing, 36(1), 41-67.
Yusof, M.Y.R. (1999). Islamic Banking: Adoption of a Service Innovation.Unpublished MSc thesis, NTU, Singapore.
Al-Ghaith, W.A., Sanzogni, L. &Sandhu, K. (2010).Factors influencing the adoption and usage of online services in Saudi Arabia.The Electronic Journal of Information Systems in Developing Countries, 40(2), 34-50.
Ali, M. &Puah, C.H. (2017).Acceptance of Islamic banking as innovation: a case of Pakistan. Humanomics, 33(4), 499-516.
Al-Jabri, I.M. &Sohail, M.S. (2012).Mobile banking adoption: application of diffusion of innovation theory. Journal of Electronic Commerce Research, 13(4), 379-391.
Amin, H., Rahman, A., & Abdul-Razak, D. (2013).An integrative approach for understanding Islamic home financing adoption in Malaysia.International Journal of Bank Marketing,31(7), 544-573.
Anuar, M.M., Adam, F., &Mohamad, Z. (2012).Muslim Consumers’ Perceptionon Internet Banking Services.International Journal of Business and Social Science, 3(3), 63-71.
Arts, J.W., Frambach, R.T., &Bijmolt, T.H. (2011).Generalizations on consumer innovation adoption: A meta-analysis on drivers of intention and behavior. International Journal of Research in Marketing,28(2), 134-144.
Awan, H.M.&ShahzadBukhari, K. (2011).Customer’s criteria for selecting an Islamic bank: evidence from Pakistan. Journal of Islamic Marketing,2(1), 14-27.
Aziz, Z.A. (2006). Islamic Banking and Finance Progress and Prospects.Collected Speeches 2000-2006, Bank Negara Malaysia, Kuala Lumpur.
Baiduri Bank Annual Report. (2015). Published by AutoritiMonetari Brunei Darussalam, Retrieved from www.baiduri.com.bn/documents/baiduri_annual_report_2015_english_31082016.pd (accessed on January 10, 2018).
Bashir, M.S. (2013). Analysis of Customer Satisfaction with the Islamic Banking Sector: Case of Brunei Darussalam. Asian Journal of Business and Management Sciences, 2(10), 38-50, ISSN: 2047-2528.
Black, N.J., Lockett, A., Winkhofer, H.,&Ennew, C. (2001).The adoption of internet financial services: a qualitative study. International Journal of Retail and Distribution Management,29(8), 390-408.
Butt, I., Saleem, N., Ahmed, H., Altaf, M., Jaffer, K.,&Mahmood, J. (2011).Barriers to adoption of Islamic banking in Pakistan.Journal of Islamic Marketing,2(3), 259-273.
Department of Economic Planning and Development annual report.(2016). Department of Statistics.Prime Minister’s Office, Brunei Darussalam.
Dusuki, A.W.,& Abdullah, N.I. (2007).Why do Malaysian customers patronize Islamic banks?.International Journal of Bank Marketing,25(3), 143-160, available at: http://dx.doi.org/10.1108/02652320710739850
Echchabi, A.,&Aziz, H.A. (2012).Empirical Investigation of Customers’ Perception and Adoption Towards Islamic Banking Services in Morocco. Middle-East Journal of Scientific Research, 12(6), 849-858.
Erol, C.,& El-Bdour, R. (1989).Attitudes, behaviour, and patronage factors of bank customers towards Islamic banks.International Journal of Bank Marketing,7(6),31-39.
Fisher, R., & Chu, S.Z. (2009).Initial online trust formation: The role of company location and web assurance. Managerial Auditing Journal,24(6), 542-563.
Gait, A.,& Worthington, A. (2008).An empirical survey of individual consumer, business firm and financial institution attitudes towards Islamic methods of finance.International Journal of Social Economics,35(11), 783-808.
Gerrard, P., & Cunningham, J.B. (2003).The diffusion of internet banking among Singapore consumers.International Journal of Bank Marketing,21(1), 16-28.
Gronroos, C. (1982). An Applied Service Marketing Theory.European Journal of Marketing, 16(7), 30–41.
Hidayat, R., &Akhmad, S. (2015). The Influence of Service Quality, Religious Commitment and Trust on the Customers’ Satisfaction and Loyalty and Decision to do the Transaction in Mandiri Sharia Bank of Jawatimur. Al-Ulum,15(1), 57-90.
Hassan, K.,& Lewis, M. (2007).Handbook of Islamic banking.Edward Elgar Publishing Limited, Uk, ISBN: 9781845420833, pp: 443.
Haque, A., Jamal, U.,& Ahmad, Z. (2007).Islamic banking: Customer perception and its prospect on bank product selection towards Malaysian customer perspective. Proceedings of the 5th International Islamic Finance conference, September 3-4, 2007, Kuala Lumpur.
Harrington, S. J., &Ruppel, C.P. (1999).Practical and value compatibility: their roles in the adoption, diffusion, and success of telecommuting. Paper presented at the Proceedings of the 20th international conference on Information Systems.
Haron, S., Ahmad, N., &Planisek, S.L. (1994).Bank patronage factors of Muslim and Non-Muslim customers. International Journal of Bank Marketing,12(1), 32-40.
Hidayat, S.E., & Al-Bawardi, N.K. (2012).Non-Muslims’ Perceptions Toward Islamic Banking Services in Saudi Arabia. Journal of US-China Public Administration,9(6), 654-670.
Hoffmann, A.O., Franken, H.,&Broekhuizen, T.L. (2012). Customer intention to adopt a fee-based advisory model: An empirical study in retail banking. International Journal of Bank Marketing,30(2), 102-127.
Islamic Financial Services Industry Stability Report (2017). Published by Islamic Financial Services Board, Malaysia, Kuala Lumpur.
Jamshidi, D., &Hussin, N. (2012).A conceptual framework for adoption of Islamic Credit Card in Malaysia.Kuwait Chapter of Arabian Journal of Business and Management Review,2(3), 102-110.
Kaabachi, S.,& Obeid, H. (2016).Determinants of Islamic banking adoption in Tunisia: empirical analysis. International Journal of Bank Marketing,34(7), 1069-1091.
Khan, M.M., &Bhatti, M.I. (2008).Islamic banking and finance: on its way to globalization.Managerial Finance,34(10), 708-725.
Khattak, N.A.,& Rehman, K.U. (2010).Customer satisfaction and awareness of Islamic banking system in Pakistan.African Journal of Business Management, 4(5), 662 671.
Kotler, P.,&Amstong, G. (2001).Principles of Marketing.9th Ed, Prentice Hall, Upper Saddle River, NJ.
Lassar, W.M., Manolis, C.,&Lassar, S.S. (2005).The relationship between consumer innovativeness, personal characteristics, and online banking adoption.International Journal of Bank Marketing,23(2), 176-199.
Leech, N.L., Barrett, K.C.,& Morgan, G.A. (2005).SPSS for intermediate statistics use and interpretation.Job Characteristics and Organizational Commitments of Taiwanese Expatriates Working in Mainland China Li-Fen Tsai 180 Mahwah, Lawrence Erlbaum, USA.
Loo, M. (2010).Attitudes and perceptions towards Islamic banking among Muslims and non-Muslims in Malaysia: implications for marketing to baby boomers and x-generation”, International Journal of Arts and Sciences,3(13), 453-485.
Mahdzan, N.S., Zainudin, R.,& Au, S.F. (2017).The adoption of Islamic banking services in Malaysia. Journal of Islamic Marketing, 8(3), 496-512, DOI: 10.1108/JIMA-08-2015-0064.
Mbawuni, J.,&Nimako, S.G. (2017).Determinants of Islamic banking adoption in Ghana.International Journal of Islamic and Middle Eastern Finance and Management, 10(2), 264-288.
Meuter, M.L., Binter, M.J., Ostrom, A.L.,& Brown, S.W. (2005).Choosing among alternative service delivery modes: An investigation of customer trial of self-service technologies.Journal of Marketing,10(2), 61-83.
Naser, K., Jamal, A.,& Al-Khatib, K. (1999).Islamic banking: a study of customer satisfaction and preferences in Jordan. International Journal of Bank Marketing,17(3), 135-151.
Nor, K.M. (2005).An empirical study of internet banking acceptance in Malaysia: An extended decomposed theory of planned behavior. Unpublished PhD thesis, Southern Illinois: University Carbondale.
Norjidi, D. (2017). Strong Islamic philosophy key to be finance hub.Borneo Bulletin, 03 August, 4-5.
Nunnally, J.C. (1978). Psychometric Theory.New York, NY: McGraw-Hill.
Ostlund, L.E. (1974). Perceived innovation attributes as predictors of innovativeness. Journal of Consumer Research, 1(2), 23-29.
Othman, A.Q.,& Owen, L. (2003).The Multi Dimensionality of CARTER Model to Measure Customer Service Quality (SQ) in Islamic Banking Industry: A Study in Kuwait Finance House. International Journal of Islamic Financial Services, 3(4), 328-341.
Pannell, D.J. (2003). Uncertainty and adoption of sustainable farming systems Risk management and the environment: Agriculture in perspective. Springer, 67-81.
Perry, F.V.,& Rehman, S.S. (2011).Globalization of Islamic finance: myth or reality?.International Journal of Humanities and Social Science,1(19), 107-119.
Ramdhony, D. (2013). Islamic banking awareness attitudes and bank selection criteria.International Journal of Humanities and Applied Sciences,2(2), 29-35.
Rogers, E.M. (2003). Diffusion of Innovations.5th Ed., The Free Press, New York, NY.
Rugimbana, R.,&Iversen, P. (1994).Perceived attributes of ATMs and their marketing implications.International Journal of Bank Marketing,12(2), 30-35.
Sathye, M., (1999).Adoption of Internet banking by Australian consumers: an empirical investigation. International Journal of Bank Marketing,17(7), 324-334.
Tan, M., &Teo, T.S. (2000).Factors influencing the adoption of Internet banking.Journal of the AIS, 1(1), 5-23.
Thambiah, S., Eze, U.C., Tan, K.S., Nathan, R.J.,& Lai, K.P. (2010). Conceptual framework for the adoption of Islamic retail banking services in Malaysia. Journal of Electronic Banking Systems,2(10), 1-10.
Thambiah, S., Ismail, H.,&Malarvizhi, C.A. (2011a).Islamic retail banking adoption: a conceptual framework. Australian Journal of Basic and Applied Sciences,5(12),http://www.bnm.gov.my.
Thambiah, S., Ismail, H.,&Malarvizhi, C. (2011b).Islamic Retail Banking Adoption: A Conceptual Framework. Australian Journal of Basic & Applied Sciences,5(12), 649-657.
Thambiah, S., Ramanathan, S.,&Mazumder, M.N.H. (2012).The determinants of Islamic retail banking adoption in Malaysia.International Business &Economics Research Journal,11(4), 437-442.
Thambiah, S., Ismail, H., Ahmed, E.M.,&Khin, A.A. (2013).Islamic retail banking adoption in Malaysia: the moderating effect of religion and region. The International Journal of Applied Economics and Finance,7(1), 129-142.
Tornatzky, L.G., & Klein, K.G. (1982).Innovation Characteristics and Innovation Implementation.A Meta- Analysis of Findings.IEEE Transactions on Engineering Management,29(1), 28-45.
Warsame, M.H.,&Ireri, E.M. (2018).Moderation effect on Islamic banking preferences in UAE.International Journal of Bank Marketing, 36(1), 41-67.
Yusof, M.Y.R. (1999). Islamic Banking: Adoption of a Service Innovation.Unpublished MSc thesis, NTU, Singapore.
Published
2018-11-12
How to Cite
Ali, Q., Yaacob, H. B., & Haji Mahal, D. H. N. B. D. (2018). Empirical Investigation of Islamic Banking Adoption in Brunei. International Journal of Islamic Banking and Finance Research, 2(2), 24-38. https://doi.org/10.46281/ijibfr.v2i2.202
Section
Research Paper/Theoretical Paper/Review Paper/Short Communication Paper
Copyright (c) 2018 Qaisar Ali, Hakimah Binti Yaacob, Dayang Hjh Norliza Binti Dato Haji Mahalle
This work is licensed under a Creative Commons Attribution 4.0 International License.
