Organizational learning and adaptation in participatory Islamic finance
Qualitative Research in Financial Markets
ISSN: 1755-4179
Article publication date: 17 July 2023
Issue publication date: 8 February 2024
Abstract
Purpose
Islamic banking has undergone significant adaption since its inception. This study aims to investigate why and how Islamic banks adapt their services, using participatory financing as evidence.
Design/methodology/approach
A qualitative study is designed, using working capital financing and commodity operations financing in Pakistan as analytical units. The data for each analytical unit is analyzed using a qualitative content analysis, while the findings are synthesized using a cross-case synthesis method.
Findings
Findings suggest that participatory financing has undergone extensive adaptation in the Islamic banking industry of Pakistan, in the wake of resolving constraints to participatory financing and increasing its viability. Consequently, participatory finance has emerged as an attractive and viable option in Pakistan. These findings suggest that unlike in the past, where Islamic banks used to buffer themselves from the environment and ignore the market demands, they have learned to respond effectively to the market demands and the challenges posed by the environment.
Research limitations/implications
Findings suggest that the adaptation strategy is more effective than the migration strategy, because it enables the financial service systems to reduce the underlying risks by avoiding emergent threats and eradicating the inherent weaknesses.
Originality/value
The extant literature provides a generalized view on the adaptation process that Islamic banks undergo to comply with their environment. However, it is limited in terms of conceptualizing the adaptations and innovations in their products and the underlying structural variations. The present study fills this gap.
Keywords
Acknowledgements
Data availability statement. The data that support the findings of this study are available on request from the corresponding author. The data are not publicly available due to privacy or ethical restrictions.
Citation
Nouman, M., Ullah, K., Jan, S. and Khan, F.U. (2024), "Organizational learning and adaptation in participatory Islamic finance", Qualitative Research in Financial Markets, Vol. 16 No. 2, pp. 331-354. https://doi.org/10.1108/QRFM-08-2022-0134
Publisher
:Emerald Publishing Limited
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