Does intention influence the financial literacy of depositors of Islamic banking? A case of Malaysia

Abstract

Purpose

Since the establishment of Islamic banks in Malaysia since the 1980s, the banking system has undergone rampant development within the financial industry. It has resulted in a positive competitive challenge for the conventional banks and able to attract not just the Muslim customers, but also those non-Muslim customers. At the same time, understanding the customers' knowledge of Islamic banking products is an interesting issue to explore. This issue is raised because the Islamic bank products are often packaged using Arabic terms, even though it is marketed in non-Arabic countries like Malaysia. Therefore, this study aims to examine the factors that influence the intention of the Islamic banking customers as the result of relying on some information produced by Malaysian Islamic banks.

Design/methodology/approach

This study is conducted using the existing underpinning theory of planned behaviour (TPB). A total of 300 questionnaires were analysed using the structural equation modelling (SEM).

Findings

The results indicated that perceived behavioural control, attitude and subjective norms of the Islamic banking depositors are positively influenced by the intention of the depositors to learn about Islamic banking.

Research limitations/implications

One of the main issues faced in this study is the result cannot be generalised. It is not possible to know based on the collected data if the sample is representative, other than the fact that all of the respondents are Islamic bank depositors. Nevertheless, it can still be a catalyst for further research as a link to existing findings in the area. There might be a bias on the understanding of the respondents about Islamic banking. This is due to the fact that Malaysia is a multi-racial population. Malay people might have a better understanding and basic knowledge about Islamic banking than the Chinese, Indians and other races. This cultural bias could be overcome in future studies by identifying respondents who have experiences in dealing with Islamic banking.

Originality/value

This study provides interesting insights of the Malaysian banking industry in terms of the multi-racial customers' intention to learn about Islamic banking, which is scarcely discussed in the extant literature.

Peer review

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-01-2019-0011.

Citation

Ganesan, Y., Allah Pitchay, A.B. and Mohd Nasser, M.A. (2020), "Does intention influence the financial literacy of depositors of Islamic banking? A case of Malaysia", International Journal of Social Economics, Vol. 47 No. 5, pp. 675-690. https://doi.org/10.1108/IJSE-01-2019-0011