Attitudes and Realizing Potentials of Islamic Banking in Enhancing the Socio-economic Conditions of the Muslim Communities in the Philippines

The Philippines was one of the pioneers in the establishment of Islamic banking in 1974 through the creation of Philippine Amanah Bank. However, the Bank has been struggling from various challenges including low public awareness and lack of regulatory framework. This study aims to explore the attitudes of the Muslim society in the Philippines towards Islamic banking and to determine the factors that influence their attitudes in choosing Islamic banking. The study also examines how Islamic banking in the country can realize its potentials in enhancing the socio-economic conditions of Muslim communities. Through convenient sampling technique, self-administered questionnaires were distributed to 250 respondents from Muslim populations who are bank account holders in either Islamic or conventional banks. Descriptive and inferential statistical analyses were employed. The results revealed that Muslim society has positive attitudes towards Islamic banking in the country. Their attitudes towards the selection of Islamic banking products and services are considerably influenced by the factors such as opportunities that Islamic banking can provide to society, awareness towards Islamic banking, religious motivation, bank reputation, and product and marketing strategies of an Islamic bank. Moreover, Islamic banking has potentials to enhance the socio-economic conditions of Muslim society in the country through financial inclusion and microfinance. Hence, the findings of this study suggest that Islamic bank in the country can devise innovative strategies to target the factors that influence the attitudes of the Muslim society towards the selection of Islamic banking.