Customer Perception about Car Ijarah Financing in Pakistan:In-depth Interview Study

Abstract

The aim of the study was to explore the perception of customers about car Ijarah financing provided by Islamic banks of Pakistan through an in-depth interview study. A sample of 14 respondents was taken for conducting semi-structured convergent interviews. The purpose or judgmental along with snowball sampling technique was applied to rally to the objectives of the study. The study concludes that although Ijarah has attained a remarkable position in the Islamic banking parallel to conventional lease due to its reliance on Shariah rulings, still there exists a perception which compels the customers of Islamic banks to take Ijarah financing as merely a gimmick of exchange of terminology and gives the impression that Ijarah financing is similar to the conventional lease. Hence, it is still a requisite necessity for Islamic banks to coach their customers in understanding the salient features and high profitability of Ijarah financing. This study is helpful for the decision-makers, policyholders, and service providers of Islamic banks to get a better insight into the dominating factors that influence the Islamic banks for car Ijarah process. Furthermore, it can be valuable in order to fill the gap between customers and Islamic banks by understanding the beliefs and thoughts which the customers have in the context of products and service of Islamic banks. Efforts should be made to enhance customer awareness on Islamic banking products. Additionally, employee training sessions and targeted marketing campaigns can effectively communicate the benefits and principles of Islamic finance. This study contributes to the existing literature by examining customer preferences for Islamic banks, specifically in the context of Ijarah financing. It sheds light on the significance of a riba-free and Shariah-based system, religiosity, Fatwas, and trust in influencing customer choices.