Adoption of islamic credit card utilizing innovation diffusion theory and theory of reasoned action

Abstract

Islamic banking is the most developed part of the Islamic financial system. In order to ensure that it is competitive within the banking industry, Islamic banks have to have their own distinctive Islamic-based financial schemes and appealing alternatives to the services offered by conventional banks. Among the Shariah compliance products offered, the main focus of this study is the Islamic credit card (ICC). Currently, the market share of ICC is comparatively smaller than the conventional ones and the service is under-used. Since the factors determining the usage of ICC remained inconclusive, this study was conducted to fill the gaps. Besides, due to the enormous advantages it offers to banks as well as customers, a close examination of the main factors that makes ICC attractive to consumers is worth the study as well. This study expanded a model of antecedents that was found to affect customers’ intentions to adopt ICC. It also used using Innovation Diffusion Theory (IDT) in combination with Theory of Reasoned Action (TRA), along with other related predictors. Using a quantitative methodology, 649 Islamic bank customers in Kuala Lumpur participated in the study and completed the survey. A structural equation modeling (SEM), particularly Partial Least Squares (PLS) was incorporated to evaluate the relationships between constructs and to estimate both the measurements and structural parameters proposed. The results depicted that relative advantage, compatibility, trialability and observability have positive associations with the customers’ intentions to use ICC. The study is a pioneer in terms of extending the validity of IDT in the field of ICC research. Besides, it is also the first in integrating two well-established adoption and acceptance models, namely IDT and TRA in order to provide more in depth results in regards to the acceptance of ICC.