Impact of demand side factors on adoption of Islamic finance by SMEs: a way forward for sustainable financial markets

Rabia Rasheed and Sulaman Hafeez Siddiqui

International Journal of Business and Globalisation, 2022, vol. 31, issue 1, 113-130

Abstract: This research paper explains the behavioural factors affecting SMEs owner-managers' intentions to adopt Islamic financial products from a consumer behaviour perspective. The research model of this study is based on theory of planned behaviour postulates that SME owner-manager intentions are determined by financial knowledge, perceived risk, attitude, religious beliefs, subjective norms, self-efficacy and perceived behavioural control. The study uses quantitative (survey and factor analysis) methods. The results revealed that SMEs intention to adopt Islamic financial product is low which shows negative attitude of owner-managers towards Islamic finance in Pakistan. Moreover, study highlights that financial knowledge has strong impact on owner-managers' attitude towards intention to adopt Islamic finance. The results imply that achieving sustainable/inclusive finance for SMEs sector requires financial institutions and policy makers in the area of Islamic finance to focus on SME owner-managers' financial awareness and literacy in order to motivate them to adopt Islamic financial products.

Keywords: Islamic finance; access to finance by SMEs; sustainable finance; Pakistan. (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijbglo:v:31:y:2022:i:1:p:113-130

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