Factors affecting intention to use Islamic personal financing in Pakistan: Evidence from the modified TRA model.

The present study is the first attempt in Pakistan to examine the determinants of Islamic personal financing by using a modified theory of reasoned action (TRA) model. This study uses the two major construct of TRA model, namely, subjective norm and attitude. Additionally, we modified this model by introducing three relevant factors: pricing of Islamic personal financing, a religious obligation and government support to predict the intention of Islamic bank customers about Islamic personal financing. Sample data were conveniently drawn from the Islamic bank customers with the help of self administered survey based questionnaire. The study sample comprised on 484 responses of full-fledge Islamic bank customers located in the biggest city of Pakistan. Out of 484 responses, we considered 471 responses and ignored 13 responses due to incomplete information provided by the customers. This data was statistically analyzed by employing Structural equation modeling (SEM). Overall, the results of the study suggest that pricing of Islamic personal financing and religious obligation have a negative and significant impact on the intention to use Islamic personal financing. Attitude and social influence were found to be positive, but insignificant predictors. In addition, government support is positive and significantly associated with the intention to use Islamic personal financing. This study has some practical implications for Islamic bank managers and the government of Pakistan. Furthermore, Islamic banks should capture the need of Islamic personal financing while government support may help in promoting this service for Islamic banks in Pakistan. This paper makes a unique contribution in the existing body of Islamic banking literature.The empirical findings of this study provide some future directions and is considered to be a pioneer study, which has laid a foundation in the context of Islamic personal financing in Pakistan.