The Effect of Public Awareness on the Islamic Financial Industry’s Development

Ernawati Ernawati, Rosnawintang Rosnawintang, Ambo Wonua Nusantara

Abstract


The development of Islamic finance is not related to the size of the Muslim population as a potential demand. Awareness is a crucial factor in the demand for Islamic banking services. This research investigates the effects of knowledge, regulation, and public awareness on Islamic finance development. This study considers awareness as the mediator variable of knowledge and regulation in supporting Islamic finance development. The study used secondary data published by ICD and Refinitiv, with data from 2013-2019 from 62 countries. Data were analyzed using panel data path regression. The research findings show that knowledge, regulation, and awareness significantly affect the development of the financial industry. The importance of awareness in promoting the Islamic financial industry is indicated by the positive and significant value of awareness as a mediator of knowledge and regulation. This study recommends the synergy between the government and Islamic financial education institutions in strengthening public awareness in encouraging the development of the Islamic finance industry through disseminating research results and government policies.

How to Cite:

Ernawati., Rosnawintang., & Nusantara, A. W. (2022). The Effect of Public Awareness on the Islamic Financial Industry’s Development. Signifikan: Jurnal Ilmu Ekonomi, 11(2), 399-414. https://doi.org/10.15408/sjie.v11i2.25816.

JEL Classification: D83, G18, G41


Full Text:

PDF

References


Alam, N. (2013). Impact of banking regulation on risk and efficiency in Islamic banking. Journal of Financial Reporting and Accounting, 11(1), 29–50. https://doi.org/10.1108/jfra-03-2013-0010.

Alam, N., Binti Zainuddin, S. S., & Rizvi, S. A. R. (2019). Ramifications of varying banking regulations on the performance of Islamic Banks. Borsa Istanbul Review, 19(1), 49–64. https://doi.org/10.1016/j.bir.2018.05.005.

Ansari, M. A. A., Khan, A. J., Hanif, N., & Ahmed, T. (2021). Factors Affecting the Acceptability of Islamic Micro-Finance in Emerging Economy. Journal of Business and Social Review in Emerging Economies, 7(4), 1011–1022. https://doi.org/10.26710/jbsee.v7i4.2071.

Anwar, M. M., Anwar, A., & Khan, G. Y. (2020). Inclusive Growth Measurement Under Different Political Regimes of Pakistan. Global Social Sciences Review, 5(4), 42-49. https://doi.org/10.31703/gssr.2020(v-iv).05.

Anwer, Z., Khan, S., & Abu Bakar, M. (2020). Sharīʿah-compliant central banking practices: lessons from Muslim countries experience. ISRA International Journal of Islamic Finance, 12(1), 7–26. https://doi.org/10.1108/IJIF-01-2019-0007.

Asri, M., Ernawati, E., & Nusantara, A. W. (2021). The effect of knowledge and regulation toward the Islamic financial industry development. Amwaluna, 4(2), 184–197.

Aziz, S., & Afaq, Z. (2018). Adoption of Islamic banking in Pakistan an empirical investigation. Cogent Business and Management, 5(1), 1-32. https://doi.org/10.1080/23311975.2018.1548050.

Bananuka, J., Kaawaase, T. K., Kasera, M., & Nalukenge, I. (2019). Determinants of the intention to adopt Islamic banking in a non-Islamic developing country: The case of Uganda. ISRA International Journal of Islamic Finance, 11(2), 166–186. https://doi.org/10.1108/IJIF-04-2018-0040.

Basheer, M. ., Hussain, T., Hussan, S. ., & Javed, M. (2017). Impact of customer awareness, competition, and interest rate on growth of Islamic banking in Pakistan. International Journal of Scientific & Technology Research, 6(4), 33–40.

Bodibe, S., Chiliya, N., & Chikandiwa, C. T. (2016). The factors affecting customers’ decisions to adopt Islamic banking. Banks and Bank Systems, 11(4), 144–151. https://doi.org/10.21511/bbs.11(4-1).2016.05.

Chapra, I. ., Ahmed, A., Rehan, R., & Hussain, F. (2018). Consumer's preference and awareness: a comparative analysis between conventional and Islamic ijarah auto financing in Pakistan. Al-Iqtishad: Journal of Islamic Economics, 10(2), 389–402.

Dinar Standard. (2020). State of the Global Islamic Economy Report Thriving in Uncertainty. In DinarStandard. https://cdn.salaamgateway.com/special-coverage/sgie19-20/full-report.pdf.

Elias, E. M., Othman, S. N., Yaacob, N. A., & Saifudin, A. M. (2016). A study of halal awareness and knowledge among entrepreneur undergraduates. International Journal of Supply Chain Management, 5(3), 147–152.

Ernawati, E., & Asri, M. (2020). Knowledge and Awareness of Islamic Financial in Europe And America Countries. Iqtishadia, 13(1), 23–36. https://doi.org/10.21043/iqtishadia.v13i1.7207.

Fakhfekh, M., Hachicha, N., Jawadi, F., Selmi, N., & Idi Cheffou, A. (2016). Measuring volatility persistence for conventional and Islamic banks: An FI-EGARCH approach. Emerging Markets Review, 27, 84–99. https://doi.org/10.1016/j.ememar.2016.03.004.

Firmansyah, E. A., Alamanda, A. R., & Santoso, T. (2020). Knowledge Level and Determinants Factors in Selecting the Islamic Rural Banks. International Journal of Islamic Business and Economics, 4(1), 1–10. https://doi.org/10.28918/ijibec.v4i1.1883.

Hamza, H. (2013). Sharia governance in Islamic banks: effectiveness and supervision model. International Journal of Islamic and Middle Eastern Finance and Management, 6(3), 226–237. https://doi.org/10.1108/IMEFM-02-2013-0021.

Hariyana, N. B., & Arsyianti, L. D. (2019). Non-Muslim Customer Preferences towards Islamic Banks in Semarang. Al-Muzara’ah, 7(1), 61–74. https://doi.org/10.29244/jam.7.1.61-74.

Hasan, H. (2016). a Study on Awareness and Perception Towards Halal Foods Among Muslim Students in Kota Kinabalu, Sabah. Proceedings of the Australia-Middle East Conference on Business and Social Sciences 2016, Dubai.

Hidayat, S. E. (2015). The Role of Education In Awareness Enhancement of Takaful: A Literature Review. International Journal of Pedagogical Innovations, 3(2), 107–112. https://doi.org/10.12785/ijpi/030203.

Hidayat, S. E., & Al-bawardi, N. K. (2012). Non-Muslims’ Perceptions Toward Islamic Banking Services in Saudi Arabia. Journal of US-China Public Administration, 9(6), 654–670.

IFSB. (2020). Islamic Financial Services Industry Stability Report 2020. https://www.ifsb.org/download.php?id=5724〈=English&pg=/sec03.php.

Ismail, F. ., Nasiruddin, K., & Samad, N. S. . (2017). Halal And Non-Moslem: What Matters? International Journal of Accounting & Business Management, 5(2), 1–12.

Latif, S. D. H. (2019). Awareness and Perceptions of Muslim Society towards Islamic Banking in the Philippines. International Journal of Islamic Economics and Finance (IJIEF), 1(2), 209–228. https://doi.org/10.18196/ijief.1211.

Mahdzan, N. S., Zainudin, R., & Au, S. F. (2017). The adoption of Islamic banking services in Malaysia. Journal of Islamic Marketing, 8(3), 496–512. https://doi.org/10.1108/JIMA-08-2015-0064.

Maria John Joseph, K. A., & Mahalakshmi, D. (2021). A Study on Awareness and Attitude Towards Islamic Banking in Tirupattur District. ComFin Research, 9(4), 1–6. https://doi.org/10.34293/commerce.v9i4.4148.

Mathis, K., & Steffen, A. . (2015). From Rational Choice to Behavioural Economics, Theoretical Foundations, Empirical Findings, and Legal Implications. In K. Mathis (Ed.), European Perspectives on Behavioural Law and Economics (31–48). Economic Springer International Publishing Switzerland. https://www.unilu.ch/fileadmin/fakultaeten/rf/mathis/Dok/1_Mathis_Steffen_From_Rational_Choice_to_Behavioural_Economics.pdf

Muslichah, I., & Sanusi, S. (2019). The effect of religiosity and financial literacy on intention to use Islamic banking products. Asian Journal of Islamic Management, 1(2), 85–92. https://doi.org/10.20885/ajim.vol1.iss2.art2.

Naser, K., Salem, A. Al, & Nuseibeh, R. (2013). Customers Awareness and Satisfaction of Islamic Banking Products and Services: Evidence from the Kuwait Finance House. International Journal of Marketing Studies, 5(6), 185–199. https://doi.org/10.5539/ijms.v5n6p185.

Ozair, K., Luqman, M., & Hussain Hamdani, S. N. (2019). Conceptualizing the Impact of Religiosity on the Preferences for Islamic Banking in Mirpur (Azad Jammu and Kashmir): An Empirical Analysis. Lahore Journal of Business, 8(1), 73–90. https://doi.org/10.35536/ljb.2019.v8.i1.a4.

Rusydiana, A. S., & Hasib, F. F. (2019). Islamic Banking Selection Criteria: Case in Indonesia Using Analytic Network Process. Economica: Jurnal Ekonomi Islam, 10(1), 165–188. https://doi.org/10.21580/economica.2019.10.1.2846..

Santoso, F. S. (2020). Motivasi Keagamaan Konsumen Muslim Dalam Penggunaan Bank Syariah. Nuansa Akademik: Jurnal Pembangunan Masyarakat, 5(2), 103–116. https://doi.org/10.47200/jnajpm.v5i2.577

Sarbo, B. (2016). Influence of Consumer Awareness on Islamic Banking in Nairobi County, Kenya. European Journal of Business and Social Sciences, 4(11), 1-15.

Selvanathan, M., Nadarajan, D., Zamri, A. F. M., Suppramaniam, S., & Muhammad, A. M. (2018). An Exploratory Study on Customers’ Selection in Choosing Islamic Banking. International Business Research, 11(5), 42–49. https://doi.org/10.5539/ibr.v11n5p42.

Siregar, D., Daulay, A. H., & Siregar, S. (2021). Increasing Customer's Saving Interest through Religiusity, Product Perception, and Knowledge. Budapest International Research and Critics Institute (BIRCI-Journal): Humanities and Social Sciences, 4(1), 918–925. https://doi.org/10.33258/birci.v4i1.1693

Su'un, Possumah, B. T., Appiah, M. K., & Hilmiyah, N. (2018). Determinants of Islamic banking adoption across different religious groups in ghana: A panoptic perspective. Journal of International Studies, 11(4), 138–154. https://doi.org/10.14254/2071-8330.2018/11-4/10.

Widityani, S. F., Faturohman, T., Rahadi, R. A., & Yulianti, Y. (2020). Do Socio-Demographic Characteristics And Islamic Financial Literacy Matter For Selecting Islamic Financial Products Among College Students In Indonesia. Journal of Islamic Monetary Economics and Finance, 6(1), 51–76. https://doi.org/10.21098/jimf.v6i1.1057.

Yasid, Farhan, F., & Andriansyah, Y. (2016). Factors Affecting Muslim Students' Awareness of Halal Products in Yogyakarta, Indonesia. International Review of Management and Marketing, 6(4), 27–31.

Yuhanis, A. ., & Nyen, V. C. (2013). The Role of Halal Awareness, Halal Certification, and Marketing Components in Determining Halal Purchase Intention Among Non-Moslems in Malaysia. Journal of International Food & Agribusiness Marketing, 25(1), 1–23.




DOI: https://doi.org/10.15408/sjie.v11i2.25816 Abstract - 0 PDF - 0

Refbacks

  • There are currently no refbacks.




View My Stats