Purpose – The purpose of this paper is to assess
perception of the stakeholders about Islamic banking and find out approaches to
make it closer to the Shari’ah.
Methodology – The paper adopts direct survey
approach to find out perception of stakeholders about Islamic banking. The
survey results have been evaluated using Ordinary Least Square method.
paper reveals that respondents have negative perception about the present
form of Islamic banking due to multiple similarities in conventional and
Islamic banking products and operations. The respondents supported the idea of
different model of Islamic banking.
Research limitations – The study
relies solely on the opinion of limited number of respondents, living in few
major cities of Pakistan. It does not
provide any empirical evidence for the proposed model of Islamic banking.
Practical Implications – Riba is significantly condemned and prohibited in Islam. Therefore, avoiding riba in all business transactions is very important for our faith. Islamic world started practicing banking under the branding of Islam which has approval of a sizable group of Islamic scholars but still there is no consensus among the Islamic scholars on this issue. This paper helps in addressing perception issues and suggests a future direction of Islamic banking for the customers, practitioners and the regulators.
Originality – Manyresearchers have questioned the Shariah compliance and perception issues of Islamic Banking but most of them have suggested only awareness programs. This researchproposes a new model for Islamic banking which has not been witnessed in any other research.