Predictors of Islamic banking adoption among Muslim customers in Nigeria

This paper aimed at identifying factors that influence the acceptance of Islamic banking by Muslim bank customers in an emerging market, using Innovation Diffusion Theory. Innovation Diffusion Theory was adopted because it is perceived that Islamic banking is a novelty in Nigerian banking industry. Data for this paper were collected from 500 respondents in northwestern Nigeria. Out of 500 copies of questionnaire, a total of 398 copies were valid and utilised. The relationships between constructs were assessed using Structural Equation Model. The reliability and validity of the instrument were also verified using Cronbach's Alpha, Composite Reliability and Average Variance Extracted. Furthermore, various descriptive statistics and factor analysis were equally conducted. The findings revealed that knowledge and relative advantage have a significant influence on adoption of Islamic banking by Muslim bank customers. However, compatibility does not significantly influence the acceptance of Islamic banking. Moreover, the relationship between knowledge of Islamic banking, relative advantage of Islamic banking and compatibility was also tested. The study found that relative advantage significantly influence compatibility, while knowledge has no significant influences on compatibility.