Factors affecting to select Islamic Credit Cards in Pakistan: The TRA Model

Ali, Muhammad and Raza, Syed Ali (2015): Factors affecting to select Islamic Credit Cards in Pakistan: The TRA Model.

Abstract

This study investigates the factors affecting intentions to select Islamic credit cards in Pakistan by employing the Theory of Reasoned Action (TRA) model. In general, bank customers generally aware of credit card facility, but the leading factors to select Islamic credit cards are particularly unexplored. Due to this fact, the study examined the effect of Subjective norm, Attitude and Perceived financial cost on the customers’ intention of Pakistani banks to select Islamic credit cards. The study uses a survey of 466 respondents. Exploratory factor analysis (EFA) and multiple regression were used to attain the study objectives. Findings from regression analysis suggest that subjective norms (SN) and attitudes (ATT) show positive and significant impact on intentions to select an Islamic credit card, while perceived financial cost (PFC) has a negative impact on intentions to select Islamic credit cards. On the other hand, subjective norms were found to be the most influential factor to predict the selection of an Islamic credit card. It is recommended that, Islamic bank should educate their customers about Islamic credit cards to compete with conventional credit cards and develop marketing strategies through social media and other marketing channels to change consumer’s attitude in favor of Islamic credit cards. The TRA model applicability extends into Islamic credit cards context while perceived financial cost is integrated on the intention to select Islamic credit cards. The present study also offers an insight view of one’s decision to select Islamic credit cards.

• Item Type: MPRA Paper
• Language: English
• Keywords: Islamic finance, Islamic credit cards, Islamic banks, Sharia
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages

References

Abdul-Muhmin, A.G. and Umar, Y.A. (2007), “Credit card ownership and usage behavior in Saudi Arabia: the impact of demographics and attitudes toward debt”, Journal of FinancialServices Marketing, Vol. 12 No. 3, pp. 219-234.

Amin, H., Abdul-Rahman, A.R. and Ramayah, T. (2009), “What makes undergraduate students enroll into an elective course? The case of Islamic accounting”, International Journal of Islamic and Middle Eastern Finance and Management, Vol. 2 No. 4, pp. 289-304.

Amin, H. (2012), “Factors influencing Malaysian bank customers to choose Islamic credit cards Empirical evidence from the TRA model”, Journal of Islamic Marketing, Vol. 4 No. 3, pp. 245-263

Amin, H., Ghazali, M.F. and Supinah, R. (2010), “Determinants of Qardhul Hassan financing Acceptance among Malaysian bank customers: an empirical analysis”, International Journal of Business and Society, Vol. 11 No. 1, pp. 1-16.

Choo, S.Y., Lim, H.E. and Sanusi, N.A. (2007), “The consumer choice of Islamic-based credit card:an analysis of bivariate probit model”, in Sanusi, N.A., Harun, M. and Samsudin, S. (Eds), Readings in Islamic Economics and Finance, Universiti Utara Malaysia Press, Sintok.

Comrey, A.L. and Lee, H.B. (1992), A First Course in Factor Analysis, 2nd ed., Lawrence Erlbaum Associates, Hillsdale, NJ.

Erdem, C. (2008), “Factors affecting the probability of credit card default and the intention of card use in Turkey”, International Research Journal of Finance and Economics, Vol. 18, pp. 159-71.

Kaynak, E. and Harcar, T. (2001), “Consumer’s attitudes and intentions towards credit card usage in an advanced developing country”, Journal of Financial Services Marketing, Vol. 6 No. 1, pp. 24-39.

Fishbein, M. and Ajzen, I. (1975), Belief, Attitude, Intention and Behavior: An Introduction to Theory and Research, Addison-Wesley, Reading, MA.

Gan, L.L. and Maysami, R.C. (2006), “Credit card selection criteria: Singapore perspective”, Economic Growth Centre Working Paper Series, Working Paper No. 2006/10.

Gan, L.L., Maysami, R.C. and Koh, H.C. (2008), “Singapore credit cardholders: ownership, usage patterns and perceptions”, Journal of Services Marketing, Vol. 22 No. 4, pp. 267- 279.

Gopi, M. and Ramayah, T. (2007), “Applicability of theory of planned behavior in predicting intention to trade online: some evidence from a developing country”, International Journalof Emerging Markets, Vol. 2 No. 4, pp. 348-360.

Hair, J.F., Black, W.C., Babin, B.J., Anderson, R.E. and Latham, R.L. (2006), Multivariate Data Analysis, 6th ed., Prentice-Hall, Upper Saddle River, NJ.

Lada, S., Tanakinjal, G.H. and Amin, H. (2009), “Predicting intention to choose halal products using theory of reasoned action”, International Journal of Islamic and Middle Eastern Finance and Management, Vol. 2 No. 1, pp. 66-76.

Luarn, P. and Lin, H.H. (2005), “Toward an understanding of the behavioural intention to use mobile banking”, Computer in Human Behaviour, Vol. 21 No. 6, pp. 873-891.

Mansor, N. (2005), “Islamic credit card: are demographic factors a good indicator?”,Prosiding Seminar EkonomidanKewangan Islam 2005, Universiti Utara Malaysia, Sinto, Kedah, Malaysia.

Mansor, N. and Che-Mat, A. (2009), “Islamic credit card: are demographic factors a good indicator”, Asian Social Science, Vol. 5 No. 12, pp. 17-26.

Mathieson, K., Peacock, E. and Chin, W.W. (2001), “Extending the technology acceptance model: the influence of perceived user resources”, DATABASE for Advance in InformationSystem, Vol. 32 No. 3, pp. 86-112.

Md-Taib, F.M., Ramayah, T. and Abdul-Razak, D. (2008), “Factor influencing intention to use diminishing partnership home financing”, International Journal of Islamic and Middle Eastern Finance and Management, Vol. 1 No. 3, pp. 235-248.

Meidan, A. and Davos, D. (1994), “Credit and charge cards selection criteria in Greece”, International Journal of Bank Marketing, Vol. 12 No. 2, pp. 36-44.

Mishkin, F. and Eakins, S. (2008), Financial Markets and Institutions, 6th ed., Addison-Wesley, New York, NY.

Mohd-Dali, N.R.S., Abdul-Hamid, H., Shahimi, S. and Wahid, H. (2008), “Factors influencing the Islamic credit cards holders satisfaction”, The Business Review, Vol. 11 No. 2, pp. 298-304.

Nazimah, H. (2011), “An analysis of attitudes to Islamic and conventional credit cards in Malaysia: perspectives on selection criteria and impact analysis”, unpublished PhD thesis,Durham University, Durham.

Nunnally, J.C. (1978), Psychometric Theory, McGraw-Hill, New York, NY. Pikkarainen, T., Pikkarainen, K., Karjaluoto, H. and Pahnila, S. (2004), “Consumer acceptance of online banking: an extension of the technology acceptance model”, Internet Research,Vol. 14 No. 3, pp. 224-235.

Pikkarainen, T., Pikkarainen, K., Karjaluoto, H. and Pahnila, S. (2004), “Consumer acceptance of online banking: an extension of the technology acceptance model”, Internet Research,Vol. 14, pp. 224-35.

Ramayah, T., Md-Taib, F. and Ling, K.P. (2006), “Classifying users and non-users of internet banking in Northern Malaysia”, Journal of Internet Banking and Commerce, Vol. 11 No. 2, pp. 1-13.

Ramayah, T., Jantan, M., Noor, M.N.M. and Ling, K.P. (2003), “Receptiveness of internet banking by Malaysian consumers”, Asian Academy of Management Journal, Vol. 8 No. 2, pp. 1-29.

Ramayah, T., Rouibah, K., Gopi, M. and Rangel, G.J. (2009), “A decomposed theory of reasoned action to explain intention to use internet stock trading among Malaysian investors”,Computers in Human Behavior, Vol. 25 No. 6, pp. 1222-1230.

Raza, S. S., and Hanif, N. (2013), “Factors affecting internet banking adoption among internal and external customers: a case of Pakistan”, Int. J. of Electronic Finance, 2013 Vol.7, No.1, pp.82 – 96.

Ryu, S., Ho, S.H. and Han, I. (2003), “Knowledge sharing behavior of physicians in hospitals”, Expert Systems with Applications, Vol. 25 No. 1, pp. 113-122.

Tabachnick, B.G. and Fidell, L.S. (1996), Using Multivariate Statistics, 3rd ed., Harper Collins Publisher, New York, NY.

Yee, C.S., Eam, L.H. and Sanusi, N.A. (2007), “The consumer choice of Islamic-based credit card: an analysis of bivariate probit model”, in Sanusi, N.A., Harun, M. and Samsudin, S. (Eds), Readings in Islamic Economics and Finance, Universiti Utara Malaysia Press, Sintok.

Yu, C.S. (2012), “Factors affecting individuals to adopt mobile banking: empirical evidence from the UTAUT model”, Journal of Electronic Commerce Research, Vol. 13 No. 2, pp. 104 - 121.

Zainuddin, Z., Noresma, J. and Ramayah, T. (2004), “Perception of Islamic banking: does it differ among users and non-users”, JournalManagementdanBisnis, Vol. 6 No. 2, pp. 135 - 149.