Application of the Theory of Planned Behaviour Model for Examining Customers’ Intentions towards Islamic Hire Purchase Financing

Abstract

The paper deals with the issues relevant to behavioural economics studies, demonstrating psychological and behavioural aspects of Muslim banking customers across the world. The aim of the research is to investigate the factors that are significant to customers using the Islamic hire purchase (auto financing) in Pakistan. The novelty of this study is to develop a modified model based on the Theory of Planned Behaviour (TPB) and apply it to bridge this gap as well as to identify the determinants. The TPB model was applied to examine the intention of customers buying automobiles through Islamic hire purchase financing. This study involves 730 respondents who are customers of Islamic hire purchase (IHP) from major Islamic banks of Pakistan. The results of the study demonstrated that the basic items of the TPB instrument, for instance, subjective norms, attitude, and perceived behavioural control, significantly influenced customers' intention to use Islamic hire purchase financing. At the same time, researchers assimilated three factors such as religious belief, pricing of Islamic banking products, and knowledge of Islamic banking products as moderating variables. The results verified their moderation and exhibited a significant link between items of the Theory of Planned Behaviour model and intention to use the Islamic hire purchase.