Customer Adoption of Islamic Banking in Tanzania’s Dual Banking System: The Role of Subjective Norms Under Demographic Control

Abstract

The co-existence of Islamic and conventional banking in Tanzania offers customers diverse financial services under a shared regulatory framework, yet the adoption of Islamic banking remains low. This study examines the influence of subjective norms on adoption, controlling for demographic characteristics. Grounded in the Theory of Planned Behaviour, a mixed-methods convergent design was employed, using a convergent design, where quantitative and qualitative data were collected simultaneously using a survey questionnaire containing both closed-ended and semi-structured questions. The datasets were analysed separately and integrated at the interpretation stage to complement the quantitative findings. Quantitative analysis in R included descriptive statistics, reliability checks, correlations, and hierarchical regression, while qualitative data were analysed thematically in ATLAS.ti. A total of 375 completed questionnaires were obtained from bank customers in Dar es Salaam. Findings show that subjective norms significantly explain 18.8% of variance beyond demographics. Religiosity emerged as the strongest motivator, followed by cultural support, while family and peer effects were moderate, and social position and networks were weak. Overall, subjective norms exert a moderate but significant influence, with adoption shaped by a balance between social expectations and individual autonomy. These insights underscore the importance of leveraging religiosity and Shariah compliance for Muslim customers while highlighting practical financial benefits to attract broader segments.