RESEARCH zero. This experiment paved the path for

 RESEARCH PROPOSAL  (FACTORS INFLUENCING CONSUMER FORTHE SELECTION OF ISLAMIC BANK IN PAKISTAN)    SUBMITTED TO:  Dr.Khurshid Kiani    SUBMITTED BY:  Jahanzaib Ashiq Satti (071517-11071)  MBA (1.5)  (2017-2018)            Quaid-e-Azam School Of ManagementSciences, Quaid-e-Azam University, Islamabad. FACTORS INFLUENCING CONSUMER FORTHE SELECTION OF ISLAMIC BANK IN PAKISTAN  INTRODUCTION:  Islamic banking was originated in back seventh century, when HazratKhadija, first wife of Our Prophet(S.

A.W),was a merchant and our Prophet(S.A.W)played a role of an agent for her business by using mostly the “same principles as used by modern Islamic banks.

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Inthe middle ages, Muslim word relied on Islamic banking principles for trade andbusiness activity .This idea spread through out spain, the Mediterranean andthe Baltic states, arguably providing some of the basis for western bankingprinciple. In the era of 1960`s to 1970`s , Islamic banking again capture theattention of modern word. In 1963,Egyptians formed Islamic bank in MitGhmar ,to reduce risk they only approve 40% of the loan and as a result their defaultratio was zero. This experiment paved the path for future and know a days Egyptis considered as pioneers in Islamic Banking along with Malaysia and Indonesia. In Pakistan, Islamic banking sector attracts the attention of customers,as a result this sector is showing good results from the last few years.

Keeping in view, the interest of customers towards Islamic banking, every bankwants to capture the customers of Islamic banking , for this they opened newIslamic branches in different cities. In 2002, there was only one Islamic Bankbut due to increase in knowledge and awareness related to Islamic productsamong customers , this number is now reached to 13 Islamic banks in Pakistan. As there is tough competition related to Islamic banking in Pakistan andevery bank is trying to attract maximum customers by providing differentservices and Islamic products. In this study, we want to see the factors thatinfluence customers towards selection of Islamic bank in twin cities (Rawalpindi and Islamabad) of Pakistan. Literature Review  Errol and EI-Bdour (1989) and Erol. Kayak and EI-bdour(1990) conductedstudy in Jordan and it revealed that product and services helps in attractingthe customers towards Islamic banking rather than religiousperspective.

Omer(1992) studu showed that customer prefer Islamic banking due toreligious attachment as they did not want to involve themselves in the elementof interest. Leeds (1992) study revealed that service quality and goodprofessional staff attitude plays a vital role in satisfying customer. It showsthat when bank provide good services to customers, it helps in creating goodcustomer relationship. Haron et al. (1994) argues that 40% of the respondents choose Islamicbanking due to Islamic factor and same research was conducted in Jordan and 206respondents participate in it and finding was that 70% respondents selectIslamic banks because of religion. Hegazy (1995) conducted research in Egyptand found that customer use Islamic banking services due to Islamic laws butstill they compare the services of both type of banks and then choose a bank.Lévesque and McDougall (1996) study focuses on service quality for selection.

Garrard and Cunningham (1997) conducted research in Singapore and found thatthey are inspired by abidance of Sharraih. Metawa and Almossawi (1998) found shariah principles as a primary factorfor selection of banks . Conclusion can be drawn from study conducted by Naseret al. (1999) in Jordan that customer prefer both religious and economicfactors while selecting a bank. Studies of both the researchers Zeithmal et al(2000) and Hanson stated service quality as an important factor forestablishing long term relationship that why customer prefer this factor. Studyconducted by Almossawi (2001) in Bahrain from students of differentuniversities that shows the results that they prefer accessible location, ATM,staff behavior and reputation of bank while selecting bank. Study conducted by Ahmed and Haroon(2002) in Malaysia, they foundreligious factor as a most powerful determinant.

Sureshchander (2003)found that in Indian banking industry technological factors are more preferableover human factors like quality service etc. Bley and Kuehn(2004) in UAE arguedthat individual are motivated by religious values , not by financial knowledgefor the selection of Islamic bank.

Flavian et al. (2005) concluded that bankimage is strong factor to hold market position and creating trust amongcustomers. Dusuki and Abdullah (2006) presented that in Malaysia, customersservice is considered as an important tool while selecting bank and theybelieve that staff should be well educated and deal them with respect.

 Al-Hawari and Ward (2006) found that aborigines consider financialperformance and service quality as an important tool for customer satisfaction.Dusuki and Abdullah (2007) argued employee ability as an important factor, asemployee’s behavior help in attracting customer and change their decision forselecting bank. Ahmad et al. (2008) concluded in Malaysia that people Who are more inclined towards Islam select Islamic bank for theirtransactions for deposit. Osman et al. (2009) found that despite of the factthat customers are well informed that international banks are providing betterservices but still they prefer Islamic banking due to religious factor.Marimutho (2010) observed that there are other factors like staff quality etc. thateffect customer decision but religious values are still at the top.

 Idris et al.(2011) analyzed that Islamic bank not only take favor fromreligious aspect of customer but also provide quality products and services.Alam et al. (2011) prevailed in Malaysia religion has a powerful impact indirecting the behavior of human being in social and personal aspect. Rehman A. and M.S.

Shabbir (2010) explored that religious factor impacton customer decision and action , as it help in shaping attitudes , beliefs andknowledge of people. Ahmed et al. (2010) analyzed that service quality isimportant factor , that help customer in making decision for selecting Islamicbank.

Ali et al. (2011) identified factors that not only satisfy but alsoattract customer which are: Service quality, Financial benefits , Customerquality ,bank image and bank competitiveness and shows considerablerelationship between customer satisfaction and these factors. According to Taimoor (2012) higher loyalty of customer arrives from highlevel of satisfaction and creates positive perception, when customer is fullysure that bank is purely working on Islamic rules it leads towards loyalty.Imtiaz et al. (2013) argued that corporations are more inclined towardsconventional banking because of no risk factor and fix interest rate, whileindividual consider Islamic banking ethical and prefer it due to religiousfactor”. Ghafoor et al (2014) conductedresearch in Multan and it shows positive relationship among all variables(religious, service quality and bank image) and Research Model Frame work  Figure 1: Model for criteria for selection of an IslamicBank.

  Convenience (Al-Ajmi, Al-Saleh, &Hussain, 2009) Quality of Service (Al-Ajmi, Al-Saleh, &Hussain, 2009) Availability of ATM(Ahmad,Rustam, & Dent,2011;Cunningham &Gerrard,2001) Religious Motives (Awan& Bukhari, 2011) Privacy & Confidentiality (Awan & Bukhari, 2011) Bank Reputation & Image (Gerrard & Cunningham,1997) Variety of financing options (Awan & Bukhari, 2011) High profit & Low service charges (Awan & Bukhari, 2011) Recommendations from friends/family (Awan & Bukhari, 2011) Friendly & Responsiveattitude of banking staff (Awan & Bukhari, 2011)                                       IslamicBank Selection Themeasures adapted were drawn from earlier relevant studies as stated in figure 1and these measures are the criteria for the selection of an Islamic bank. Hypothesis  Based on the above model the followinghypotheses will be made:   H1 Convenience effects consumers’ selection of an Islamic bank     H2 Quality of service effects consumers’ selection of an Islamic bank     H3 Religious motives effects consumers’ selection of an Islamic bank     H4 Availability of ATM effects consumers’ selection of an Islamic bank     H5 Privacy & Confidentiality effects consumers’ selection of an Islamic bank     H6 Bank reputation & Image effects consumers’ selection of an Islamic bank     H7 Variety in financing options effects consumers’ selection of an Islamic bank     H8 High profit & Low service charges effects consumers’ selection of an Islamic bank     H9 Recommendations from friends/family effects consumers’ selection of an Islamic bank     H10 Friendly & Responsive attitude of banking staff effects consumers’ selection of an Islamic bank      Methodology  Sample of Research  A survey will be conducted and data will begathered with the help of questionnaire taken from previous study, from 150consumers on random bases. Data will be gathered from customers of 8 Banks inIslamabad and Rawalpindi which includes Burj Bank, Dubai Islamic Bank, ,Askari-Islamic, Bank AlHabib-Islamic, Alfalah-Islamic, Bank Islami, Meezan Bankand UBL-Ameen.

 Technique and tools  As it is quantitative study so responses of questionnaires will beconverted in to numeric digits with a liked scale of 1-5 with the help of SPSSand One sample t-test will be used to investigate the all propositions and theobjective of the paper. Expected Results  I believe that religious factor along with quality of service andDealing with customer will be the most influential factors among othervariables. REFERENCES  Agha Tahir Ijaz and Asghar Ali (2013).

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