Awareness of Islamic banking products and services among the non-Muslims in Sri Lanka

Abstract

Sri Lanka is one of the non- Islamic countries to have legislated for Islamic banking. Islamic banking introduced within a shorter period than the conventional banks in Sri Lanka. It has been approximately fifteen years when the first Islamic financial institution makes its debut. Islamic banks have to compete with its rival, conventional banks which have a longer history than Islamic banks. For this competition, Islamic banks have to know the awareness, understanding and perceptions of Sri Lankans towards it. Islamic banks not only available for Muslims, but it also available for nonMuslims as well. InSri Lanka, 91% of the population are non-Muslims as Buddhist, Hindus, Christians and others living. The main purpose of this study is to examine the level of awareness, understanding and perceptions of non-Muslims in Sri Lanka of Islamic Banking products and services. In addition to that, this study also aims to identify if any demographic influence in the awareness, understanding and perceptions of Islamic banking products and services among non-Muslims in Ampara district. A total of200 respondents from different areas in Ampara district were selected and received the primary data from them by distributing the questionnaires for the purpose of this study. For the analysis, one way ANOVA and Pearson Correlation Coefficient was adopted to analyze the results. The results show that, more than 65% of the respondents are aware of the Islamic banking in Sri Lanka and some of the people are interested in Islamic banking products and services. But, they do not aware of most of the products and services offered by Islamic banks. Non-Muslims’ understanding level towards Islamic banking concepts are at average level, but they do not understand most of the Arabic terms. The perceptions of non-Muslims towards Islamic banks are vary among themselves. And the demographic factors such as age, religion and occupation of the respondents are influencing in awareness, understanding and perceptions of Islamic banking products and services in Ampara district. This study also provides theoretical and managerial implications for the Islamic bankers to attract non-Muslims customers and recommendations for future research in Islamic Banking.