An investigation of user perceptions of Islamic banking practices in the United Kingdom
Purpose – Islamic banking as a financial institution has always been proclaimed to be different from conventional banking systems. This is mainly due to the prohibition of interest and emphasis on achieving social economic responsibility in society. However, in practice, Islamic banking practices in the UK seem to be far away from its paradigm version. The main purpose of this study is to evaluate user perceptions of Islamic banking practices in the UK. Design/methodology/approach – To explore the understandings and perceptions of customers about Islamic banking practices in the UK an online questionnaire survey is used as the research approach in this study. The survey was conducted through a closed-ended structured questionnaire. Findings – The overall findings of this study suggest that Islamic banking in the UK is not fully aligned with the paradigm version of Islamic finance. The respondents generally agree with the view that the principle of profit and loss sharing element represents the true spirit of Islamic banking practices, however, due to the complex nature of Islamic banking products, they are unsure about the full benefits of this system. There is a high expectation among the respondents about the commitment and strong welfare role of Islamic banks in society. It is therefore suggested that through research, effective marketing and generating more awareness in users about Islamic finance, it is possible to achieve more from the Islamic banking paradigm. Originality/value – This study is not only relevant to Muslims, but also to the banking regulators in the UK, as many conventional banks are now offering Islamic products and services alongside their routine interest-based transactions. Hence there is a need for the regulators to understand the real nature of such practices by both the Islamic and conventional banks and establish a uniform regulation so that users are not ill-treated by banks in the UK.
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Volume (Year): 5 (2012)
Issue (Month): 4 (December)
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