Diversifying Islamic Banking in Muslim Majority Rural Areas: A Case Study of Sinjai Regency, Indonesia

Abstract

Despite Sinjai Regency being predominantly Muslim, the penetration and utilization of Islamic banking remain limited. This study investigates the prospects for diversifying Islamic banking products in rural Muslim-majority areas using a mixed-methods approach that integrates qualitative interviews and quantitative surveys. Guided by the Theory of Reasoned Action (TRA) and the Theory of Planned Behavior (TPB), the research examines behavioral determinants influencing the intention to adopt Islamic banking and assesses contextual opportunities for its development. The findings reveal that ethical considerations, including halal status and personal attitudes toward Sharia principles, do not significantly affect consumer decisions. Instead, subjective norms derived from family, religious leaders, and community influence strongly encourage adoption, while perceived behavioral control related to service accessibility and convenience also demonstrates a significant effect. The analysis identifies three strategic opportunities to support the diversification of Islamic banking in Sinjai Regency: a large Muslim demographic base, improving regional economic performance, and increasing public literacy regarding Islamic financial concepts. These results indicate that social influence and service accessibility play a more decisive role than ethical awareness in shaping consumer behavior. Therefore, developing Islamic banking in rural areas should prioritize community-based promotion, literacy programs, and service innovation rather than solely relying on religious appeals. The study contributes practical insights for policymakers, Islamic financial institutions, and regional leaders in designing policies and marketing strategies aligned with sociocultural characteristics of rural Muslim communities.