Islamic house finanacing in Pakistan
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Date
2014
Authors
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Journal ISSN
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Publisher
University of Management and Technology
Abstract
This study analyzes the demand for house financing offered by Islamic banks by
exploring the nature of demand as well as highlighting its major determinant. The paper
also strives to find out the level of knowledge of people regarding Islamic financing,
factors encourage them to buy their own house, their perception of Islamic house
financing and finally those features which influence customers’ decisions relating to the
selection of finance provider.
The population of the study is residents of Lahore who intend to buy their own house
within next three years. A survey has been conducted using convenient sampling
technique taking a sample size of 300 respondents. The response rate of survey is 81%.
The study found that nature of demand for house financing offered by Islamic banks is
conventional. Later, logistic regression has been applied to find out the affect of
knowledge, quality of service and sincerity with religion on such demand. The results
indicate that religious factor and knowledge affect the demand for Islamic house
financing negatively whereas quality of service affect such demand positively. However,
only the affect of quality of service on demand is statistically significant. On the other
hand, study found that people have general knowledge of Islamic financing but they do
not have specific knowledge of Islamic house financing. Further, male respondents have
higher knowledge than the knowledge of female respondents. Moreover, people with
higher qualification have higher knowledge. Income rise is the most important factor
which encourages people to buy their own house. It is also found that people perceive
Islamic house financing similar to conventional house financing. Finally, the survey also
highlight that the cost of service is the most important criterion used by the potential
clients to select their finance provider.
Description
Keywords
MS Thesis, Finance, Islamic House Financing, Conventional Demand, Quality of Service, Religious Factor