Customers’ Perception on Islamic Retail Banking: A Comparative Analysis between the Urban and Rural Regions of Malaysia

Islamic banking was launched in Malaysia nearly three decades now, back in 1983. However, the market shareof Islamic retail banking (IRB) still seemed to be relatively low. Therefore, the main aim of the present study isto analyze the difference in the awareness, perception, and preferences on IRB between the urban and ruralbanking customers of Malaysia. Hence, a comparative analysis was conducted based on 537 respondentsrepresenting both urban and rural regions of Malaysia. Results revealed that there is a significant difference interms of awareness and on perceived complexity, uncertainty, and observablity. There also seem to be somevariations for returns, loan repayment period, service charges, and overdraft facilities. Thus, the findings wouldbe useful for the banking sector in understanding the customer perception and preferences concerning IRB, andto promote it strategically, and for the relevant authorities, in promoting specific regulations and policies thatenhance the market share of IRB.