Perceptions of Islamic Banking Products Among University Students in Pakistan

Abstract

This study examines the relationship between knowledge, perceived usefulness, Shariah compliance, social influence, and understanding of Arabic terminologies and the perception of Islamic banking products. University students in Pakistan were selected as the target population because they represent both current and potential users of Islamic banking services, making their perceptions particularly significant for the industry’s future growth. Data were collected through an online survey questionnaire completed by 269 students from Islamabad, Karachi, and Lahore. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) through SmartPLS software, while descriptive statistics were computed using the Statistical Package for the Social Sciences (SPSS). The findings indicate that knowledge, perceived usefulness, Shariah compliance, and social influence have significant positive relationships with students’ perceptions of Islamic banking products. However, understanding of Arabic terminologies does not demonstrate a significant relationship with perception. The study faced certain limitations, including reliance on online data collection due to the COVID-19 pandemic and time constraints that restricted the sample size. Based on the findings, Islamic banks are encouraged to enhance awareness through social media marketing initiatives and interactive digital strategies, such as educational gaming platforms targeting youth. Furthermore, Islamic banking operations should be structured in a way that clearly differentiates their products from those of conventional banks to strengthen consumer understanding and perception.