Analysing the Demand for Islamic Financial Products: The Role of Religiosity and Financial Literacy

Theory of demand is one of the core areas in Micro Economics. Various price and non-price factors exist to determine consumer demand for a particular good or service,  but the modern economists, mainly behavioural economists gradually suggest that psychological factors may also affect the individual decisions regarding the demand for a good and service. Therefore, the present study seeks to analyze personal religiosity together with financial literacy as a determinant of consumer demand for Islamic financial products.  Fieldwork was carried out for the study in three Public sector Universities of District Peshawar, Khyber Pakhtunkhwa. The data was collected from a sample of 679 Muslim male and female through a structured questionnaire. The econometric technique used to test the data includes Ordered Logistic regression. The key findings of the study suggest that religiosity and financial literacy has a significant impact on consumer demand through directly influencing their buying attitude and purchase intention towards Islamic financial goods and services, concluding them as an important determinant of demand for Islamic financial products within an Islamic society.