During the last few years, Islamic banking products have registered rapid growth with a double-digit compound annual growth rate of 17% during 2009 and 2013. The assets of Islamic banking industry assets were estimated to be worth around USD1.9 trillion in 2014. The growth of industry reflects the decisions made by the customers. What motivates customers to buy an Islamic banking product and under what conditions customers prefer Islamic banking products over the conventional banking products? We argue that multiple identities of individuals are operative while making purchasing decisions. We examine the role of religious identity and the market identity of individuals while making decisions regarding the purchase of Islamic Banking products instead of conventional banking products. In particular, we examine the conflicts between religious and market identities and associated intrinsic and extrinsic motivations, the context of decision-making, and the nature of decision-making on outcomes related to the selection of banking products.
Extant research has examined the role of risk and return from a financial point of view, documenting the role of extrinsic motivation and consumption utility derived from the monetary gains realized through decisions involving assessment of risks and returns, from a market-identity perspective. The research on religious identity has examined the effects on preferences for prosocial behavior, risk taking, and work ethic. The current research examines the role of Islamic religious identity in pro-market behavior and how the context and identity conflicts influence choices. We argue that in addition to the extrinsic consumption utility derived from the consumption of a financial product from a market identity perspective, consumers also derive intrinsic utility from the consumption of a financial product conforming to the expectations of a religious identity. Consumers may be willing to pay a ‘premium’ to obtain intrinsic religious utility. The two identities and the utilities derived therefrom may come in conflict and a tradeoff may be reached.