How Islamic is Islamic banking in Pakistan?
International Journal of Islamic and Middle Eastern Finance and Management
ISSN: 1753-8394
Article publication date: 12 October 2017
Issue publication date: 17 October 2017
Abstract
Purpose
Increasing popularity of Islamic banks in the wake of recent global financial crisis of 2008 has generated debate among researcher about practicality of Islamic banks. Critics argue that Islamic banks are not working according true spirits of Sharia’h. This paper aims to empirically address the question that how Islamic is Islamic banking in the case of Pakistan.
Design/methodology/approach
The target population in this paper is staff at the Islamic banks who are employees and managers. Data are also collected from customers to analyze their views. Sample comprises 63 branches of five full-fledge Islamic banks and five Islamic branches of conventional banks in Islamabad. For analysis purpose, the study uses exploratory factor analysis.
Findings
Findings indicate that Islamic banks are following Sharia’h excluding the provision of profit loss sharing contracts and provision of qard-ul-hassan. Moreover, it is found that customers are less agreed and more neutral about Sharia’h-based operations at Islamic banks.
Originality/value
Findings will help regulators to introduce wide range of Islamic financial contracts that involve profit loss sharing and consider the expansion of emerging industry. Moreover, findings suggest to consider promotional techniques to create awareness of Islamic banking among the customers.
Keywords
Citation
Majeed, M.T. and Zainab, A. (2017), "How Islamic is Islamic banking in Pakistan?", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 10 No. 4, pp. 470-483. https://doi.org/10.1108/IMEFM-03-2017-0083
Publisher
:Emerald Publishing Limited
Copyright © 2017, Emerald Publishing Limited