Understanding Consumer Acceptance of Islamic Home Financing: An Application of the Theory of Planned Behavior

Abstract

This research tries to find out how well-informed Pakistani consumers are about Islamic home financing and to identify the reasons that lead them to choose Islamic home financing products. The study analyzes consumer acceptance through the lens of the Theory of Planned Behavior (TPB) and looks into factors that are tied to the perceived Islamicity of the Financing Products. This research uses a qualitative method. Live interviews of participants from three sectors - academia, households, and small businesses - were used as the main method of primary data collection. The analysis centered on the factors that led to the acceptance of Islamic home financing. The findings entail that the acceptance of Islamic home financing are considerably determined by the participants’ attitude, the subjective norms, the perceived behavioral control and the Islamicity or perceived Islamic value of the financing products. Determinants like age, gender, occupation, and income as demographic factors also considerably determine acceptance of Islamic home financing products. This study has notable limitations. Firstly, this study is constrained to a particular area, namely Lahore, Pakistan, as well as to only four of the major Islamic banks in Pakistan. The study also ignores any traditional banks that offer Islamic services through Islamic windows and/or branches. Nevertheless, the study is a leap forward in the Islamic home financing industry as it explains the challenges that potential adopters may face, and brings to light the demand for Islamic home financing in Pakistan.