Religiosity and Islamic Banking in Uganda
Kaawaase, Twaha Kigongo
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Purpose: The objective of this paper was to examine the extent to which religiosity matters in explaining existing bank customers’ propensity to patronise Islamic banking in the context of a predominantly non-Islamic country freshly adopting Islamic Finance and Banking. Methodology: Underpinned by the Theory of Reasoned Action we use pre-existing scales for attitudes of customers and subjective norms and integrate religiosity in the model to predict propensity to patronise Islamic banking. We collected data from 382 existing commercial bank customers and carried out a factor analysis to examine the scales validity and reliability. We answer the main question of whether religiosity matters using two approaches: we test for mediation effects of religiosity and also use a hierarchical regression analysis to determine the additive effect of religiosity in explaining propensity to Patronise Islamic Banking (PIB) in a predominantly non-Islamic country. Findings: Results of the Sobel, Aroian and Goodman tests show that religiosity mediates the predictive potential Behavioural Intentions (BI) of existing bank customers’ propensity to patronise Islamic banking. Hierarchical regression analysis also showed that after controlling for the variance accounted for by control variables, namely religion, age and education; religiosity had a significant additive effect in the model and positively relates with PIB. In the final model religiosity together with subjective norm and attitude predict 71% of the variance in Patronising Islamic Banking. Our study therefore shows religiosity is important and does matter in patronising Islamic banking. Originality/Value: This empirical study answers the pertinent question of whether religiosity matters in the propensity to use and patronise Islamic banking. It contributes to a better understanding of the factors that ought to be taken into account when a country is adopting Islamic banking principles. In particular the findings will be useful to commercial banks in Uganda when designing and marketing Islamic banking products to their existing and potential customers.