Attitudes, Perceptions and Motivations of Libyan Retail Consumers toward Islamic Methods of Finance†

This paper reports the results of a survey of 385 Libyan retail consumers in December 2007– February 2008 used to gather attitudes, perceptions and motivations towards Islamic methods of finance. The results indicate that while most respondents have at least some knowledge about some aspects of Islamic finance, specifically Musharakah (full-equity business partnerships) and Quard Hassan (interest-free benevolent loans), they are generally unaware of many other related products. Nonetheless, most respondents (85.9%) are potential users of Islamic methods of finance at the retail level, though potential use varying markedly according to age, level of education, employment, income and nationality. Factor analysis reduces the large number of variables that determine retail consumers ’ attitudes, perceptions and motivations towards Islamic methods of finance to just four determinants: namely, community service, profitability, religion and unique services. Discriminant analysis shows that religion and community service are the most important factors determining the potential use of Islamic methods of finance by retail consumers in Libya