Role of Islamic Banking in Agriculture Development in Bahawalpur, Pakistan

Abstract

Purpose - The basic purpose of this research paper conducted is to report the findings of this experimental study conducted in Bahawalpur region, about the role of Islamic banking in agriculture sector from the users and non-users (users of conventional banking) of Islamic banking.

Design/methodology/approach - This descriptive and qualitative research is conducted and focuses on two main groups of banking customer’s users and non users of Islamic banking and also informal interview with managers of some banks. A survey questionnaire was developed that subsequently get response from 120 respondents. Hypothesis analysis is the main tool of analysis in which mean, standard deviation; variance and chi-square tests are applied using SPSS 16.0.

Findings - After the through study of body of knowledge we find that there is significant relationship between Islamic banking and agriculture sector. Islamic banking is providing easy terms of financing like Ijarah, Diminishing musharaka, Murabaha, salam and bai salam and similarly providing different types of working capital like Murabaha, Musawamah, Salam, Muzara’a. These terms of financing increase the asset ownership, yield and income of farmers. Islamic banking is not providing any financing for irrigation system and farmers are facing problem of credit standing and problem of collateral.

Practical Limitations/Implication – Most of the concerned articles are taken from the Pakistan, Malaysia, etc. there was limited time for conducting research and receiving response from respondents. The sample size is of small size subsequently of 120 respondents and applicable to Bahawalpur region.  As this result is implemented to Bahawalpur region only so therefore pilot study to whole Pakistan is suggested.

Originality/Value -The aim of this paper is to provide and make attention toward of role of Islamic banking the Bahawalpur region of southern Punjab, Pakistan as the previous studies were country wide. This paper will help to conduct same type of researches in other regions of Pakistan.

Keywords - Role of Islamic banking, Agriculture sectors.