FUAD ALI BULLE
CONSUMER AWARENESS AND ADOPTION OF ISLAMIC BANKING
PRODUCTS IN MOGADISHU SOMALIA
The Study Aims to find out consumer awareness and adoption of Islamic banking products in
Mogadishu-Somalia as statistical shows the number of users of Islamic banking are
increasing last years with different user of Muslims and non-Muslims with that increasing on
the other hand if we compare number of users of both conventional and Islamic banking
conventional banking users are larger this leads to many contributing factor so in Somalia
The study is driven to achieve three main objectives which are:
1. to investigate the extent of consumer awareness in Islamic banking products provide
by Islamic banks in Mogadishu,
2. Second is to examine the level of adoption in Islamic banking products in Mogadishu
3. To find out the relationship between consumer awareness and Adoption of Islamic
banking products in Mogadishu.
According to above objectives the research questions will be:
1. What is extent that consumers aware of Islamic banking products in Mogadishu-
2. What is level of adoption of Islamic banking products in Mogadishu-Somalia?
3. What is the relationship between consumer awareness and adoption of Islamic
banking Products in Mogadishu-Somalia?
The Main Objective if this study is to find out consumer awareness and adoption of Islamic
banking products in Mogadishu Somalia by identifying the degree that consumers live
Mogadishu aware that Islamic banks in Mogadishu provide Islamic banking products if they
are aware of much they know and describe about that Islamic products and also study aims to
examine that degree of adoption of Islamic banking products in Mogadishu the capital city of
Somalia how much consumers adopted the Islamic banking products provide Islamic banks
operate in Mogadishu the motivate of this study is that since 1991 Somalia were lack of
strong government which have strong institutions that operate significantly so from that
period Islamic banks who individually established began to operate in Mogadishu and there
is no string central bank that monitors, the study also aims to examine how much customer’s
trust on Islamic banks in Mogadishu-Somalia.
2.0 LITERATURE REVIEW
RELATED STUDIES ABOUT CUSTOMER AWARENESS AND ISLAMIC
(Khan ; Asghar, 2012) investigated customer awareness and adoption of Islamic banking in
Pakistan, the researchers used descriptive study by adopting 32 Questionnaire stuffs
focusing on 5main variables which are financial service, service knowledge, sharia
based, customer service, targeting demographic factors like age, gender and education,
the study concluded that most of Pakistan people are positive attitude and enough
awareness towards the Islamic banking this result can be satisfactory according to
Pakistan the country is developing in Islamic banking and becoming a hub to Islamic
banks which encouraged the investors in Pakistan to put their money in Islamic banks
shifting from conventional banks which will have positive impact on Pakistan Financial
sector coming future.
This Study Is important to my research because, the researchers focused on same variables
like my research is intended to do and secondly they applied the same methodology I
would like to use but I think they found out that that Pakistan people are aware of
Islamic banking which is the reason that Pakistan people have Islamic culture and long
term of government in the result of peaceful transition of power which different from my
study area Somalia which suffered from civil war and lack of strong government
institutions since 1991 when the military rule was ousted by rebel groups.
(Alsoud, 2013), in Kuwait studied customer awareness and satisfaction of Islamic retail
products, the study used descriptive study and distributed 150 Kuwait customers a
questionnaire asking whether they are ware of some Islamic products provide by Islamic
banks operate in Kuwait, and how satisfied they are towards Islamic retail products they
receive from Islamic banks in Kuwait, the researchers found that Kuwait customers are
demanding not only compliance of sharia from but other traditional things customer
request from banks the study also found that Kuwait aware of some Islamic products
like Islamic credit cards but not aware of all Islamic products, on the other hand the level
of satisfactory which the study aimed to explore have found it quite higher in with in the
Kuwait customers in general.
In my opinion this study looks another dimension which is examining the level of satisfaction
of Kuwait customers towards Islamic retail products which good part but this dimension
comes after customer uses and adopts Islamic banking products provide by Islamic
banks in Kuwait where the study is conducted.
(Sarbo, 2016) studied the influence of consumer’s awareness on Islamic banking in Nairobi,
Kenya. The study examined how the customer’s awareness influences the Islamic
banking in Nairobi County, the study used descriptive design and questionnaire by
number of 196 customers live in Nairobi the capital city of Kenya, the researchers found
that 64% of respondents aware of Islamic banking but only aware of basic Islamic
banking like credit account and debit accounts but not the famous ones like
Murabaha,Musharakah and Mudharabah.
This study is conducted east Africa where my study location is more over Kenya and Somalia
are neighbors so study showed that Kenyan consumers are not that aware of Islamic banking
but according to culture and religion which is the country is different from each other, Kenya
most of population is Christian but in Somalia 100% of the population are Muslim which can
lead to different result if the study is conducted in Mogadishu.
(Mahdzan, Zainudin, ; Au, 2017) researched the adoption of Islamic banking services in
Malaysia to test the level of understand of Islamic banking and factors effecting the adoption
if Islamic banking, the study used descriptive design by distributing Questionnaire to 200
MBA working student who have been selected in famous public university in Malaysia, the
studied concluded that the level of understanding is below average and the Islamic banking
concepts and perceived knowledge have significant effect on the adoption of Islamic banking
The preliminary findings show that the respondents’ self-reported level of understanding on
Riba and Shariah concepts is above average; however, their understanding on concepts such
as ijarah,Mudharabah, musharakah, and Murabaha appears to be low.
This study focused factors that affect the adoption of Islamic banking in Malaysia and the
level of understanding which are good dimension that needs the attention but I would
recommend as further studies.
(Saini, Bick, & Abdulla, 2011) investigated consumer awareness and usage of Islamic
banking products in South Africa, the researchers examined the level of consumer awareness
and the use of Islamic banking products, the study used non probability sampling method and
distributed 250 Questionnaire to Consumers in South Africa to test level of awareness in
South Africa, the study found that Muslims are aware of Islamic banks, but their rate of use is
low, as Muslim customers regard efficiency, lower bank charges, the availability of automatic
teller machines and an extensive branch network as important factors when it comes to
choosing a bank, rather than religious motivations for compliance with Islamic conventions.
It was concluded that, if Islamic banks wanted to attract and retain customers and remain
relevant in the South African context, they would have to develop relevant strategies
designed to meet customers’ needs. Religion as the sole motivation for choosing
Islamic banking is inadequate.
2.2 THEORETICAL FRAMEWORK OF THE STDUY
In this study the theory of diffusion of innovation adoption is suitable that developed by
Roger, E. M (2003), which states “According to Roger there are two levels to adoption.
Initially, innovation must be purchased, acquired and adopted by individuals or
organizations” based on this adoption of Islamic banking requires and goes through many
stages first comes the awareness and telling people that this Islamic bank provides Islamic
products like Murabaha, Musharakah, Mudharabah, Ijarah and Salam which are all kind of
Islamic products after people are getting aware of the banks are providing Islamic products
the second stage of adoption is explaining to the customers what are this products and how
they are benefiting after that comes a customer to buy acquires and adopts it by coming back
to the bank without the fear of less information towards the products Islamic banks provide
that how Adoption on Islamic bank achieve
2.3 CONCEPTUAL FRAME WORK OF THE STUDY
INDEPENDENT VARIABLE DEPENDENT VARIABLE
Primary data (2018)
The above conceptual framework explains in figure the variables of the study independent
variable which customer awareness and dependent variable which is adoption of Islamic
banking products and personal characters that intervening Variable.
1.1 Early adopters
1.2 Late adopters
1.2Social interaction and communication
CUSTOMER AWARENESS ADAPTION OF ISLAMIC
In this section it is described the kind of methodology this study will use starting with
research design, sampling method and data collection instrument and data analysis
3.1 RESEARCH DESIGN
To get the purpose of this study was to examine customer awareness and adoption of Islamic
banking products and achieve objectives of the study there for the study employed descriptive
research design method by both qualitative and quantitative by analysis the mean and
standard deviations of respondents answers and looking correlation to know the relationship
between customer awareness and usage of Islamic banking products the reason to why the
chose descriptive is that it best fits in this study and it also have another good benefits like it
takes less time and cost to do.
3.2 POPULATION OF THE STUDY
The target population employed in this study are the customers and branch managers of
3banks in Mogadishu which are DAHABSHIIL BANK, SALAAMA BANK, PREMIER
BANK which are the most used banks in Mogadishu those provide Islamic banking products
since the basic banks practice Islamic banking in Mogadishu is considered appropriate to
achieve the purpose and objectives of the study, the exact number of population living in
Mogadishu using these three banks are around 2million people since this large of people
cannot be reached sample of them is compulsory to use but in branch manager in Mogadishu
there are 17districts and these three banks have branches on almost ten districts the total
branch managers will be 30 branch and managers.
3.3 SAMPLE SIZE
Since the total of study population cannot be reached for sake little time and cost sample size
is appropriate to use to choose some number from the whole population, in this study a
sample size of 170 customers use three selected banks in Mogadishu has been selected added
30 branch managers from which makes a total of 200 questionnaires will be distributed to
three selected Banks in Mogadishu.
3.4 SAMPLING METHOD
The sampling technique that is adopted in this research is non-probability sampling
technique. This is because data cannot be collected from the entire population as the
population of three selected banks in Mogadishu is too large. In nonprobability sampling the
selection of elements for the sample is not necessarily made with the aim of being statistically
representative of the population. Rather, the researcher based on subjective methods such as
personal experience, convenience, expert judgment and so on to select the elements in the
3.5 DATA COLLECTION METHOD
In research procedure or data collection method in this Questionnaire adapted from (HUI &
A, 2012) conducted their research in Malaysia titled customer attitude and adoption IBPs, So
that some modifications were made for that questionnaire to ensure its applicability of this
context. The instrument comprised of three sections, profile of respondents (PR), level
customer awareness, level of adoption of Islamic banking products. The questionnaire
included close-ended questions Respondents were asked if costumer awareness have relation
to adoption of Islamic banking products. This method was selected because it was easy to
administer questionnaires, it saved time and it was helped to collect information that is
applicable to the study.
3.6 DATA ANALYSIS
Collected data consist of quantitative data gathered by the questionnaire. The researchers will
use Statistical Package for the Social Sciences (SPSS) program for statistical analysis as
descriptive study. The data will be presented in tables and counted. This study employed
descriptive (Mean and Standard Deviation) and correlation statistics to analyze data, the
totals will be converted into numbers to enable the researchers to analyze and describe the
data systematically to reach logical conclusions on the effect of the study variables.
3.7 VALIDITY AND RELIABILITY OF THE INSTRUMENT
The validity of the instruments used in this research work where highly controlled by the
researchers. There is clear information as how to complete the questionnaire by the
respondents and the researcher personally administered and collected them to ensure high rate
A reliability test was conducted to evaluate the logic and internal consistency of the items by
using below table shows that all variables have Cronbach Alpha values of more than
0.7.which makes all variables accepted, internally consistent and the scale deemed reliable
for further analysis. However, suggests that alpha of .50 and above is an indication of internal
consistency. Based on the literature, all the Cronbach’s alpha scores for the variables were
greater the .60.
Alsoud, G. F. A. (2013). Customer Awareness and Satisfaction of Islamic Retail Products in
Kuwait. Research Journal of Finance and Accounting, 4(17), 36–53.
HUI, K. L. L. K. M. L. L. S. P. W. Z., ; A. (2012). Awareness of Islamic Banking Products
and Services among Non-Muslims in Malaysia, (April).
Khan, H. N., ; Asghar, N. (2012). Customer awareness and adoption of Islamic Banking in
Pakistan. Interdisciplinary Journal of Contemporary Research Business, 3(9), 359–366.
Retrieved from http://www.journal-archieves14.webs.com/359-366.pdf
Mahdzan, N. S., Zainudin, R., ; Au, S. F. (2017). The adoption of Islamic banking services
in Malaysia. Journal of Islamic Marketing, 10(2), 264–288.
Saini, Y., Bick, G., ; Abdulla, L. (2011). Consumer awareness and usage of islamic banking
products in South Africa. South African Journal of Economic and Management
Sciences, 14(3), 298. https://doi.org/10.4102/sajems.v14i3.193
Sarbo, B. (2016). Influence of Consumer’S Awareness on Islamic Banking in Nairobi
County, Kenya. European Journal of Business and Social Sciences, 4(11), 124–129.
Retrieved from http://www.ejbss.com/recent.aspx-/
Roger E.M (2003) diffusion of innovation, fifth edition, New work, Free Press.