A Conceptual Framework for Adopting Islamic Banking and Finance in Libya

International Journal of Research and Innovation in Applied Science (IJRIAS) |Volume VIII, Issue IV, April 2023|ISSN 2454-6194

 A Conceptual Framework for Adopting Islamic Banking and Finance in Libya

Ibrahim Khalifa Mohamed Elghwail, Besar Bin Ngah, Fahd Mohammed Obad, Al-Harath Abdulaziz Mohammed Ateik
Al MDINAH International University Malaysia (MEDIU)

DOI: https://doi.org/10.51584/IJRIAS.2023.8401
Received: 26 February 2023; Accepted: 21 March 2023; Published: 19 April 2023

Abstract: The main objective of the current study is conceptualizing a framework about the factors that affect the Islamic Banking and Finance adoption (IBF) in Libya, namely; Knowledge and Awareness, Attitude, Subjective Norms, Perceived behavioural control, and Religiosity. The researcher will utilize quantitative research methods. Primary data was collected from Beneficiaries of financial services in Libya who are anticipated to use IBF are the focus of the present research project’s population targeting efforts. A total of 30 respondents were selected for this study. The researcher has found that all of the developed items in the survey questionnaire have scored a sufficient level of Reliability and Validity. Therefore, these results stressed that this framework can be used in an empirical study to extract further results on the relationship between the variables.

Keywords: Islamic Banking and Finance adoption, Knowledge and Awareness, Attitude, Subjective Norms, Perceived behavioural control, Religiosity.

I. Introduction

The Middle East and the Gulf region, Southeast Asia, South Asia, and many Western countries are seeing an increase in the number of Islamic banks opening their doors. Muslims who feel uncomfortable using traditional banking services, which require the payment of interest and are thus not guaranteed to be in compliance with Islamic law, are the target customers for Islamic banks (Sharia). It was projected that the total value of assets held by Islamic banks throughout the globe would reach 3.2 trillion dollars by the year 2020, and it was believed that this figure was at 1.5 trillion dollars in 2018 (Albaity & Rahman, 2021). As a result, the establishment of Islamic financial institutions has substantially stoked Muslims’ appetites for making deposits and engaging in other banking-related activities. In light of these changes, traditional banks have made concerted efforts to break into the Islamic banking market in the hope of maximising their profit potential (Ezeh & Nkamnebe, 2021).

In recent years, a great number of empirical research have investigated the behaviour of consumers in relation to Islamic banking. These studies have sought, among other things, to explain the usage of Islamic banks and to ascertain whether or not religion is a determining factor in this matter. Numerous academics have investigated the relationship that exists between religious beliefs and shopping patterns. On the other hand, research into this relationship explicitly in the context of Islam has a very little history when compared to study done in the context of Christianity or Judaism. This research zeroes in on Islamic bank clients in particular because an investigation of their patterns of financial behaviour may assist in the explanation of the part that religion or religious identity plays in the decision-making process of consumers. It is important to study the effect of religion on customer decision-making in the context of Islamic banks given the value of comparable research relating to the impact of an individual’s values or culture on consumer behaviour.

Previous research on the factors that determine consumers’ loyalty in Islamic banking examined factors such as continuing use (repurchase), ongoing intents for use (repurchase), recommendation intentions, and switching (exit) behaviour (Albaity & Rahman, 2021; Iqbal & Molyneux, 2019; Muhammad & Chin-Hong, 2017; Thambiah et al., 2011; Wardana et al., 2021). According to the findings of many of these research, customer loyalty may be defined as nothing more than a customer’s desire to make repeated uses of a product or service purchased from a certain company. In the literature on consumer behaviour, loyalty has been and continues to be defined as the frequency with which a customer makes repeat purchases of the same brand or the relative amount of those purchases. Previous experiences or purchases might influence intentions (Ayyub et al., 2019; Aziz & Afaq, 2018; Han, 2019; Kaabachi & Obeid, 2019; Mihajat, 2019). These studies focused primarily on the question of whether or not religious affiliation or religiosity had a role in the decision-making process, an issue that was also a primary concern in previous research on the factors that led customers to choose Islamic financial institutions. There is evidence from a number of studies that religiosity has a role in determining client loyalty in Islamic banking and toward Islamic financial goods (Shaikh et al., 2022).

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