Conventional versus Islamic Finance: Student Kowledge and Perception in the United Arab Emirates

Abstract

This research investigates the relationship between university student knowledge of relevant financial concepts and terms in conventional and Islamic banking, the impact of religion and language, and other individual variables on preferences for financial services. Data from a university graduate and undergraduate business students (n = 667) from the United Arab Emirates was used to investigate the role of financial knowledge, religion, and language on self-reported attitudes and preferences for financial services. Results suggest that knowledge of conventional banking terms and concepts was higher among these students than was Islamic banking terminology. Arabic language was the primary predictor of higher Islamic banking knowledge, as well as a significant, though weaker, predictor of lower conventional banking knowledge. The more education completed tended to improve financial knowledge of both conventional and Islamic finance. Finance students tended to have higher overall knowledge of both financial systems. Further, religious sincerity, not better knowledge, was the strongest predictor of preference for Islamic banking services. Implications of the research are discussed.