Awareness of Islamic financial institutions among non-Muslims in the Ampara district of Sri Lanka

Abstract

Islamic Financing refers to the financing activity that complies with Islamic law and its practical application through the development of Islamic economics. It is one of the fastest-growing sectors in the world. The activities of Islamic Financial Institutions are found in all over the globe. In Sri Lanka, Islamic banking was introduced by Amana investment in 1997. Started primarily to cater for the Muslim community as a private operation, it had become to be one of the growing financial sectors in Sri Lanka. More than 19 financial institutions offer Islamic finance services in Sri Lanka, including one fully-fledged Islamic bank and seven Islamic banking window operations. Overall, the performance of Islamic banking services has been identified by researchers as steady but slow compared to the growth of conventional finance. There is a huge potential for the Islamic banking and finance industry to grow and reap its full potential with proper regulatory and institutional support. Islamic finance had been used by Muslims and non-Muslim customers in the country irrespective of religious influence. There had been valid concerns over this burgeoning industry in Sri Lanka that need to analyze in detail. Therefore, this research aims to determine the awareness level of non-Muslims of Ampara district in Sri Lanka about Islamic financial institutions and identify whether they realize the existing difference between Islamic financial institutions and conventional financial institutions in Sri Lanka. This study had been carried out using quantitative methods. For this study, primary data were collected through the questionnaire. Questions were distributed to all the respondents through Google Forms, and data was obtained. Among the selected sample size of 200 respondents, only 165 questionnaires were valid and used for the data analysis. The questionnaire consists of two parts: the first part requires the details of the respondents, and the second part deals with the awareness level regarding financial institutions. Collected primary data was analyzed through Microsoft Excel and presented through the tables and figures. Secondary sources were collected through academic journals, books, research articles, and thesis and website articles. According to the findings, even if non-Muslims are as aware of Islamic financial institutions as conventional financial institutions, their engagement level in them could be much higher.