Int. J. Social Entrepreneurship and Innovation, Vol. 3, No.

2, 2014 85

Influence of religion and culture on investment

behaviour of Muslim investors in Pakistan

Syed Khuram Shahzad*

UQ Business School,
The University of Queensland,
4105, Australia
E-mail: [email protected]
*Corresponding author

Hayat Muhammad Awan

Air University, Multan Campus, Pakistan
E-mail: [email protected]

Anum Saqib Qureshi

Institute of Management Sciences,
Bahauddin Zakariya University,
Multan, Pakistan
E-mail: [email protected]

Abstract: This paper explores the impact of religious beliefs and other aspects
of culture on decision-making of investors by using analytical hierarchy
process (AHP). The study reveals that there is no significant relationship
between the religion, values and material part of culture with the investor’s
decision-making. This study has practical significance for brokers, managers of
banks, mutual fund, bond dealers and government saving schemes holders who
are developing different plans for the investors and making policies to attract
them for their investments. This study gives them the implication that
by focusing on the needs and goals of investor and their behavioural
decision-making is more important that have an effect on the decision-making
while the religion and other aspects of culture like values and material artefact
that are insignificant with the overall decision-making.

Keywords: religion; values; material symbols; culture; ethical investment

decision-making; Muslim investors; Pakistan; analytical hierarchy process;
AHP.

Reference to this paper should be made as follows: Shahzad, S.K.,

Awan, H.M. and Qureshi, A.S. (2014) ‘Influence of religion and culture on
investment behaviour of Muslim investors in Pakistan’, Int. J. Social
Entrepreneurship and Innovation, Vol. 3, No. 2, pp.85–105.

Biographical notes: Syed Khuram Shahzad is a PhD scholar, UQ Business

School, The University of Queensland, Australia.

Copyright © 2014 Inderscience Enterprises Ltd.

86 S.K. Shahzad et al.

Hayat Muhammad Awan is a Professor/Director at the Air University,

Islamabad, Pakistan (Multan Campus).

Anam Saqib Qureshi is an MS scholar at the Institute of Management Sciences,

BZ University, Multan, Pakistan.

This paper is a revised and expanded version of a paper entitled ‘Influence of

religion and culture on investment behaviour of Muslim investors in Pakistan’
presented at the 4th Global Islamic Marketing Conference, Istanbul, Turkey,
29–30 May 2013.

1 Introduction

Individual’s values and cultural norms make up an essential attribute of human life in
which a human being lives in and develop their personal orientation towards life. Culture,
refers to knowledge, explicitly acquired by people to interpret different experiences they
face in their life and adapts to a socially acceptable behaviour. Moreover, culture is
usually termed as a shared pattern of beliefs, meanings and values of a group or of any
organisation or society to establish guiding principles or standards, these values then
form attitude that eventually forms basis for individual or social behaviour. Cultural
dimensions include religion, values and attitudes, language, customs and manners,
material goods or artefacts, education and aesthetics. Culture, by virtue of its elements
and dimensions, influence the cognitive functioning of individuals, in such a way as to
ultimately affect the judgment or decision made (Choi, 2001).
Religion is the most important dimension of culture and religious beliefs are
considered as an endogenous variable that are interconnected with many unseen factors
having an impact on economic choices made by an individual. Religion in most simple
words, can be explained as, ‘a set of beliefs that are held and practised by an individual’,
whereas the extent to which these values and beliefs are not only held but practised is
known as religiosity. At the heart of ethical investment is the investor’s concern for and
interest in social values. Value is “an enduring belief that a specific mode of conduct or
end state of existence is personally or socially preferable to an opposite or converse mode
of conduct or end state of existence” [Rokeach, (1973), p.5]. Further, they contend that
social values may be thought of as “enduring beliefs that individuals hold regarding
appropriate modes of societal conduct, and desirable states of society” [Blarney and
Braithwaite, (1997), p.32]. Social values, therefore, depend upon individual preference
and belief (Owen, 1990; Cummins, 2000) and so the values exercised by ethical investors
are likely to vary between investors. Ethical investment from Islamic perspective would
be investment that is made in accordance to the Shariah guidelines.
The study, builds on the discussion about the impact of culture, religion, religiosity
and other set of cultural values. Second section articulates conceptual grounds of related
concepts through an in depth literature survey. Third section describes the research
framework, followed by a discussion of the research design, data collection and analysis
method in the third section. Final section discusses the findings, followed by the
conclusion and recommendation for future research in the final section.
 Influence of religion and culture on investment behaviour 87

2 Background

2.1 Culture, religion and religiosity

Culture can be defined as “collective programming of the mind; it manifests itself not
only in values, but in more superficial ways: in symbols, heroes, and rituals” [Hofstede
et al., (2010), p.6]. Culture has an influential power on many of the aspects of human
behaviour. It is the multifaceted whole that consists of belief, art, knowledge, moral,
customs and any other capabilities and habit that are acquired by any member of society.
From economic, political, legal, religious, educational, technological, linguistic and
industrial environment in which individuals have find their absolute identity. Culture we
can say is a mix of patterned behaviours, political and economical artefacts that are
combined and make this word a complete integration in the society. Cculture consists in
patterned ways of thinking, feeling and reacting; acquired and transmitted mainly by
symbols, constituting the distinctive achievements of human groups, including their
embodiments in artefacts; the essential core of culture consists of traditional (i.e.,
historically derived and selected) ideas and especially their attached values (Kluckhohn,
1951).
Religion is the most fundamental part of the society and at times, it can be very
complex to understand but at the same time it is made to be simple to adopt because of its
commonly held believes and shared practices. Depending upon the religious identity of
any given culture, religion and many others unobserved variables have an impact on the
economic situation of a country. In a Muslim country, individual’s routine life’ decisions
are influenced by their religious orientation to a large extent and this is also true about
individual’s considerations about investment decisions. This behaviour is reflected in
their decisions about saving and investment products that are available in the financial
market and are more in demand (Benjamin et al., 2010). It can be safely assumed that in a
Muslim country, religion has major role in the formulation of societal norms (Socially
acceptable ways of doing) according to the established rules and regulation based on
shriah (Ho, 2009).
Schneider et al. (2011) define religiosity as ‘a belief in the existence of God and a
commitment to attending to and complying with rules that members of that religion
believe have been defined by God (McDaniel and Burnett, 1990). The internalisation of
the role expectations created by religion, as mediated by religious self-image, then
influences human behaviour (Mokhlis, 2009; Weaver and Agle, 2002). Religiosity,
defines the degree of strength or importance of religion in individual’s life in general and
can be observed by looking at individual’s overall behaviour including one’s
participation in religious services, praying and concerns about assigning value to one’s
religious beliefs (Gunnoe and Moore, 2002). Religious behaviour of individual composed
of three components: cognition, affection and behavioural component and they all are
highly correlated to religion (Newcomb et al., 1965; Rokeach, 1973; Rosenberg et al.,
1960; Sherif et al., 1981)
88 S.K. Shahzad et al.

According to Berger (1961), religion is a fundamental determinant of social

behaviour. Religion is considered as a unified system of beliefs and practices but
religiosity viewed as how many beliefs are held and practised. People who consider
religion as most important part of their life give importance to their social values, report
high life satisfaction and spend their life according to their values and system which they
adopt and live in.
Religious commitment and affiliation is found to have an association with
demographics mainly age, gender, income and decision-making outcomes (Muhamad and
Mizerski, 2010). The habitual expression and interpretation of life that deals with
ultimate concern and values depends upon the degree of importance assigned by the
individuals in a given society. An institutionalised religion formalises these expressions
into a system which can be taught to next generations so that they can inherit these
learned values as social asset. Religiosity can be described in two forms, the intrinsic
form, where individuals assign greater importance to religion to organise their own lives
and the extrinsic form such that people use religion as means to increase their acceptance
in particular social environments (Allport, 1950).
Glock (1966) suggested five dimensions of religion, namely: belief, ritual,
intellectual, experiential and consequential. Evidence supporting Glock’s five dimensions
was reported by Faulkner and De Jong (1966). Subsequent work by Stark and Glock
(1966) derived nine dimensions of religiosity. King (1967) proposes ten dimensions,
namely: creedal assent and personal commitment, participation in congregational
activities, personal religious experience, personal ties in the congregation, commitment to
intellectual search despite doubt, openness to religious growth, dogmatism, extrinsic
orientation, financial behaviour and financial attitude and talking and reading about
religion (Salleh, 2012).
Holdcroft (2006), in a theoretical essay ‘What is religiosity?’ suggested that,
religiosity is a complex concept and difficult to define for at least two reasons. The first
reason is that the religiosity is found to be synonymous with such terms as religiousness,
faith, belief, piousness, devotion and holiness (Lewis, 1978). A second reason for this
complexity that various academic disciplines approach religiosity from different vantage
points and there is no synergy of agreement found across the disciplines (Cardwell, 1980;
Demerath and Hammond, 1969). A theologian would address religiosity from the
viewpoint of faith (Groome and Corso, 1999), while religious educators could focus on
belief (Groome, 1998). Similarly, psychologists might choose to address the dimensions
of devotion, holiness and piousness, whereas sociologists would consider the concept of
religiosity to include affiliation with religious organisations, frequency or attendance in
religious events, belief acceptance, doctrinal knowledge and living the faith (Cardwell,
1980).
This use of different terms across academic disciplines to identify what could be
thought of as like dimensions of religiosity makes it difficult to discuss without an
explicit definition from the viewpoint of religious education and the application of that
knowledge to the lived experience [Holdcroft, (2006), p.1]. Adding more to the
complexity involved in defining religiosity, Salleh, (2012) raised the question that ‘the
dimensions and components developed by most of the authors are based predominantly
 Influence of religion and culture on investment behaviour 89

on their studies on Christian believers and manifestations of Christian religious

experience. It is therefore questionable whether these methodological approaches can
explain non-Christian religious experience in general and manifestations of Islamic
orientation in particular (p.2). Thus, there is need to view the concept of religiosity from
the Islamic perspective that can be understood by tawhidic paradigm (doctrine of divine
unity/oneness of God) and should therefore, be measured or assessed primarily through
the Islamic creed (aqidah), which lays down what a Muslim should know, believe and
inwardly comprehend about Allah and religion as guided by the Qur’an and demonstrated
by Sunnah (way) of the Prophet Muhammad (PBUH), which represent the two primary
sources of Islamic religious law, belief and practice within Islam (Krauss et al., 2007).

2.2 Investment decision-making: goals of an investor

Our literature survey found that major investment objectives of an individual investor
include savings for some future, to maintain consistency in income sources, securing
capital and to make effective use of portfolios that can get them better gains (Epstein and
Pava, 1993; Muhamad and Devi, 2006). However, in Islam and according to the Shariah
principals, individual economic objectives through his/her personal initiatives should be
in compliance with the basic conventions of Islam which emphasise that the activity
carried out by an individual should not be at the expense of any other (Ariff and Mannan,
1991). Islam also acknowledges uneven wealth distribution (due to differences in human
talent and capacity) as a fact of life ordained by Allah, the Almighty. But at the same
time, Islam stipulates an alternate system for an equitable redistribution of income and
wealth (Zakat, Sadqa, Qarz e Hasna) which is enforced through moral obligations and
fiscal measures. Thus in a Muslim society, an individual would emphasise on
non-economic factors and will be concerned for humanity and the alleviation of poverty.
The basic idea of economic prosperity in Islam essentially demands adherence to social
justice and the provision of basic needs. Although, individual freedom is of primary
significance in Islam, yet it is not independent of its social implications. The larger
interest of society takes precedence over the interest of the individual. Similarly
‘relieving hardship’ and ‘promoting benefit’ are both among the prime objectives of the
Shari’ah (Islamic law), the former takes precedence over the latter. It is to also emphasise
that a significant loss cannot be inflicted to relieve a smaller loss or a bigger benefit
cannot be sacrificed for a smaller one. Conversely, a smaller harm can be inflicted to
avoid a bigger harm or a smaller benefit can be sacrificed for a larger benefit. Individual
freedom, within the ethical limits of Islam, is therefore sacred only as long as it is not
infringing on the larger social interest or as long as the individual does not violate the
rights of others.
The literature cited to explore the measure of religiosity to-date, found to common
ground to study the influence of religiosity as an independent variable and to explain the
individual’s investment behaviour along the various dimensions of religiosity. Given the
scenario, this study attempts to use a multidimensional framework which integrates
culture, religiosity and individual’s perceived value of economic outcomes to reflect upon
the investment behaviour of Muslim investors in Pakistan.
90 S.K. Shahzad et al.

3 Methodology

This study explores the different constructs of religiosity; defines the religion and its
various dimensions to analyse relationship between religious dimensions investment
decision-making by investors within the context Pakistan. Individual investment
decision-making include the goals of an investor, types of financial instrument and
sources of information used for making investment decision. Along with these variables
behavioural aspects of investors are also taken that is dogmatism and openness of an
investor’s personality. Here is the research questions that we want to find out:
1 Whether or not religious dimension of religion have any impact on the individual
investment decision-making of within the context of Pakistan?
2 What if there is any relationship exists between dogmatism and openness of
investor’s personality and investment decision-making?
3 To what extent different cultural and demographic variables explain the differences
among investment decision-making behaviour of individual investors?
By using cross sectional study design, structured questionnaire used to for data collection
through field survey. Target population consists of individual investors who are having
accounts with the conventional (UBL, HBL) and Islamic banks (Meezan Islamic bank,
Al-Baraka Islamic investment), or invested in stock market exchange (KSE: Karachi
Stock Exchange), products of Mutual Islamic funds (NIT: National Investment Trust),
bonds market and real estate property and last one from the government schemes holders
(National saving schemes or Markaz Quami Bachat schemes).

Figure 1 Research model of religious orientation of investors towards ethical decision-making

Ideological Experiential Cognitive Affiliation Behavioural

Extrinsic RELIGIOSITY Intrinsic

High Religious Low Religious

Sources of information Goal Dogmatism/Openness

ETHICAL INVESTMENT DECISION-MAKING

 Influence of religion and culture on investment behaviour 91

3.1 Research model

The research model is drawn below in the study showing religiosity and its dimensions
that are extracted from the relevant literature and theories that are studied to develop this
conceptual framework. The dimensions are further divided into sub factors.
Diagrammatic presentation below demonstrates how the religiosity (religious orientation)
of a person and the intensity of his personal beliefs may have an impact on investment
decision-making behaviour.

3.2 Research context and instrument

A structured questionnaire used for data collection items used for the development of
questionnaire selected from an in-depth literature survey and preliminary discussions
with managers, brokers and individual account holders. Likert scale was used for the
measurement of items. Data for this study collected from four major cities including
Multan, Lahore, Karachi and Islamabad. Out of total 490 questionnaires, responses of
266 are found to be valid. Thus response rate was almost 54%. Given the sensitive nature
of opinions, the respondents were also assured that none of their response is used
individually and their personal information will be kept confidential and results based on
data will be used only in the summarised form. The data from the returned questionnaires
was entered into SPSS 17 for analysis in batches as the survey responses accumulated.
The questionnaire is divided into three sections: Section A deals with the personal
information of an investor, Section B includes all the possible dimensions that are taken
from the literature that is studied. And the last Section C is about the questions that are
asked to know the decision-making of investors towards any investment they opt for. In
the construct religiosity there are seven more dimensions are included further to get to
know the strength of beliefs of a respondent towards his religion and in practically
applying these beliefs while doing any decision in life. The seven dimension of religiosity
are: ideological beliefs that are further divided into four variables, cognitive dimension
and experiential dimension both are comprised of seven factors and then religious
affiliation and extrinsic orientation both consists of five concepts that are measured
further and in last intrinsic orientation towards religion and behavioural orientation both
are divided into 16 elements, eight in each used further in the study. There were total
78 questions in the research instrument. These all dimensions of religiosity are measured
on the seven point LIKERT-scale ranges from 1 = strongly disagree to 7 = strongly agree.

4 Results and findings

Types of investors are divided into categories: light investors and heavy investors. Light
investors having investment around PKR 100,000 thousand and heavy investor defined as
when investment greater than PKR 100,000. Results are shown in the Table 1:
92 S.K. Shahzad et al.

Table 1 Category of investors’ w.r.t. type of investment

Variables Categories Frequency %

Amount of investment Below 50,000 93 35.0
Greater than 50,000–1 lac 72 27.1
Greater than 1lac–1million 60 22.6
Greater than one million 31 11.7
Above ten million 10 3.8
Investment type Shariah approved only 81 30.5
Conventional only 116 43.6
Stocks and real estate (risky instr.) 58 21.8
Shariah approved and conventional 11 4.1
Note: *Amount given is in PKR
Results presented in the Table 1 showing that 43.6% of the investors made their
investment in non-Shariah compliant instruments offered by conventional banks,
whilst, 30.5% of the investors made investment in Shariah approved investments
options mainly offered by Islamic banks or Islamic banking windows of conventional
banks.
A chi-square analysis of selected demographic variables which include gender,
profession, age and monthly income as given in Table 2.
In Table 2 results revealed that 81.2% of the respondents are male while 18.8% are
female and if we talk about age of investors than 6.8% are below 25 years, between
25 and 35 are 33.1% while from 35 to 45 are 36.5 and person above 45 years of age are
23.7%. In terms of profession, 52.6%, of the respondents are salaried individuals while
31.2% of them are self-employed and running their own business; 6.4% living on their
inherited. Monthly income of 38.0% of the respondents ranges from PKR 25,000 to PKR
50,000; 24.8% respondents earn greater than 50,000 to 100,000 and there are 21.4%
respondents earning less than PKR 25000 per month.
The result of the chi-square analysis shows that there are no significant different
in terms of the amount of investment between the male and female respondents and
between the different profession (χ > 0.000). However, chi-square values found
to be significant for gender, monthly income and age. Results indicate that male
respondents are more investment oriented than females (X2 = 35.58 and p-value = 0.000)
while in case of monthly income (X2 = 164.53 and p-value = 0.000.) suggest that
with the increased level of monthly income of a person, his amount of investment
also increases. Similarly, with regard to age, the amount of investment decreases
for relatively young age group, this might be because of the fact that younger
respondents (between 25–35) have more monthly expenditures than older age group
respondents.
 Table 2

Amount of investment
Greater than Greater than Greater than one Total
Variables Below 50,000 Above ten million
50,000–1 lac 1lac–one million million
Freq % Freq % Freq % Freq % Freq % Freq %
Gender
Male 61 65.6 60 83.3 58 96.7 31 100.0 6 60.0 216 81.2
Female 32 34.4 12 16.6 2 3.3 0.00 0.00 4 40.0 50 18.8
(X2 = 35.585, df = 4, p = 0.000)
Age
Below 25 6 6.5 4 5.6 6 10.0 2 6.5 0 0.00 18 6.8
Greater than 25–35 36 38.7 25 34.7 18 30.0 7 22.6 2 20.0 88 33.1
Greater than 35–45 35 37.6 28 38.9 19 31.7 12 38.7 3 30.0 97 36.5
Chi-square analysis of demographic variables

Above 45 16 17.2 15 20.8 17 28.3 10 32.3 5 50.0 63 23.7

2
(X = 11.466, df = 12, p = 0.489)
Education
Under Matric/Matric 29 31.2 19 26.4 11 18.3 10 32.3 0 0.00 69 25.9
Influence of religion and culture on investment behaviour

Intermediate/Bachelor 27 29.0 26 36.1 18 30.0 7 22.6 4 40.0 82 30.8

Masters/ PhD/Diploma holder 37 39.8 27 37.5 31 51.7 14 45.2 6 60.0 115 43.2
(X2 = 9.587, df = 8, p = 0.259)
93
 94

Table 2

Amount of investment
Greater than Greater than Greater than one Total
Variables Below 50,000 Above ten million
50,000–1 lac 1lac–one million million
S.K. Shahzad et al.

Freq % Freq % Freq % Freq % Freq % Freq %

Profession
Student 2 2.2 3 4.2 0 0.00 0 0.00 0 0.00 5 1.9
Salaried person 51 54.8 35 48.6 32 53.3 14 45.2 8 80.0 140 52.6
Self-employed 27 29.0 23 31.9 22 36.7 10 32.3 1 10.0 83 31.2
Retired 6 6.5 6 8.3 4 6.7 5 16.1 0 0.00 21 7.9
Unemployed/inherited money 7 7.5 5 6.9 2 3.3 2 6.5 1 10.0 17 6.4
(X2 = 13.315, df = 16, p = 0.650)
Monthly income
Less than 25,000 47 50.5 6 8.3 4 6.7 0 0.00 0 0.00 57 21.4
Greater than 25,000 to 50,000 39 41.9 41 56.9 18 30.0 2 6.5 1 10.0 101 38
Chi-square analysis of demographic variables (continued)

Greater than 50,000–100,000 5 5.4 20 27.8 27 45.0 10 32.3 4 40.0 66 24.8

Above 100,000 2 2.2 5 6.9 11 18.3 19 61.3 5 50.0 42 15.8
(X2 = 164.53, df = 12, p = 0.000)
 Influence of religion and culture on investment behaviour 95

Table 3 Chi-square analysis of intensity of religion with investment type

Intensity of religion Intensity of religion

Investment type (X2 = 1.707, (less religious (high religious)
df = 3, p = 0.635)
Freq % Freq %
Bonds, conventional acc, 23 38.8 33 46.4
government schemes
Islamic accounts, mutual funds 21 35 19 26.7
Stocks, real estate 13 21.6 17 23.9
Both conventional and Islamic 3 5.00 2 2.8
Total 60 100 71 100

Cross tabulation of religious orientation of investors and type of investment found that
religious orientation has insignificant relationship with the type of investment (see
chi-square value = 1.707 and p = 0.635).
Results of independent t-test suggested that there is insignificant relationship between
cultural dimensions and investor’s investment decision-making outcomes i.e., sources of
information that is used (long and short term securities), for their behaviour towards risk
attitude.
Table 4 Effect of intensity of religion on investment decision-making variables

Religious Mean Significant

Dependent variables Mean df
intensity difference (two-tail)
Goals index Less religious 6.1380 129 .012
High religious 5.6624 .47560 126.664 .011
Sources of information index Less religious 4.5907 129 .090
(long-term securities)
High religious 5.4901 –.89931 128.501 .065
Sources of information index Less religious 5.1420 129 .096
(short-term securities)
High religious 4.6119 .53006 119.898 .085
Openness. general index Less religious 5.7556 129 .651
High religious 5.8380 –.08247 126.632 .650
Dogmatism. general index Less religious 3.7464 –.34039 129 .265
High religious 4.0868 120.772 .269
Openness. religious index Less religious 6.0833 129 .397
High religious 6.2254 –.14202 122.926 .399
Dogmatism. religious index Less religious 4.9905 129 .020
High religious 5.5228 –.53229 128.599 .018
Investment. religious index Less religious 5.8211 129 .555
High religious 5.9155 –.09438 126.852 .554
Investment. general index Less religious 5.7477 129 .171
High religious 5.5207 .22697 128.806 .164
96 S.K. Shahzad et al.

Sources of information for the long term securities are found to be significant with
religious beliefs and values (sig = 0.00) where dogmatism has moderate significant
(sig = 0.020) with religious belief held by an individual investor. However, the
relationship between religious orientation index and investment decision-making remain
insignificance (sig = 0.55) which is greater than 0.05.

4.1 Generalised linear model of multivariate testing

Multivariate test to analyse the significance of cultural aspects indicates that sources of
information for long term securities significant (p = 0.000). Individual’s values are found
to be positively significant predictor of openness but through religion specific factors. As
indicated by low value of R2, almost all cultural dimensions remain insignificant and
could not establish their relationship with individual’s investment decision-making
behaviour.

Table 5 Effect of intensity of religion on investment decision-making variables

Independent Type 3 sum Adj. R2

Dependent variables df F-value Sig. R2
variables/model of squares square
Corrected model Goal.index 4.040 3 1.250 .292 0.014 0.003
SoI.long.index 30.037 3 4.583 .004 0.050 0.039
SoI.short.index 3.551 3 .413 .744 0.005 –0.007
Openness gen.index 5.725 3 1.869 .135 0.021 0.010
Dogmatism gen.index 21.980 3 2.676 .048 0.030 0.019
Dogmatism reg.index 63.116 3 12.091 .000 0.122 0.112
Openness reg.index 33.834 3 12.375 .000 0.124 0.114
Investment 2.539 3 1.081 .358 0.012 0.001
general.index
Investment reg. index 2.443 3 1.172 .321 0.013 0.002
Religiosity Goal.index 2.095 1 1.945 .164
index
SoI.long.index 29.186 1 13.359 .000
SoI.short.index .039 1 .013 .908
Openness gen.index 1.305 1 1.278 .259
Dogmatism gen.index 4.907 1 1.792 .182
Dogmatism reg.index 7.861 1 4.518 .034
Openness reg.index 1.946 1 2.136 .145
Investment .765 1 .977 .324
general.index
Investment reg.index 1.523 1 2.193 .140
 Influence of religion and culture on investment behaviour 97

In Table 6, goals of an investor rating is given according to their response. Majority of

the respondents ranked ‘save money for the future’ as primary objective of investment
decision. Overall analysis of data reveals that investment decision predominantly based
on maintaining a consistent income source for essential needs of living and saving the
leftover money as safeguard of future needs.
Table 6 Goals of investment

Stand. Coeff. of
Investment goals Mean Median Rank
dev variance
To have some savings for the future 6.24 7.00 1.38 1.91 1
To have a capital appreciation 5.76 7.00 1.85 3.43 2
To earn steady income 5.39 6.00 2.21 4.92 3
To earn speculative gains 4.89 6.00 2.45 6.04 4

As indicated by the results respondent’s ranking for ‘earning for speculative gains’ found
to be least important. That is mainly because of the fact that Islam discourages the
earning through speculation.

5 Conclusions

Major findings of this study reveal that religion has no impact on the investment
behaviour of Muslim investors of Pakistan. From analysis of hierarchical process we
come to know that contribution of religiosity in all aspects of culture is only 7.09% that’s
why insignificant relationship is seen with the investment decisions making of investors.
This also concludes that the intensity of religion does not predict investment
decision-making behaviour of investors. Results of multivariate analysis also found that
religion index have insignificant relation with the goals, sources of information either for
long term or short term securities but with dogmatism specific to religiosity index comes
out to have an influence of religion.
Upshot of this study is that culture specific religious orientation of individual’s
investor does not influence investment behaviour Muslims investor in Pakistan. However,
Future research can be done to see other aspects of culture like values and material
symbols impact on investor types as well as on the investment decision-making.

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Appendix

Survey on religion and other cultural impact on investors

Personal profile:
1 Religion ___________
2 Gender
Male Female
3 Age
< 25 >25–35 > 35–45 > 45
4 Education
under matric/matric Intermediate/bachelor
Masters/PhD/diploma holders
5 Profession
Student Salaried individual Self-employed
Retired Unemployed
6 City_______________
100 S.K. Shahzad et al.

Section A: Religiosity (religious beliefs, values and attitudes)

Please rate the following statements from 1 = strongly disagree, 2 = disagree,
3 = somewhat disagree, 4 = neither agree nor disagree, 5 = somewhat agree, 6 = agree to
7 = strongly agree.
1 2 3 4 5 6 7
7A Ideological (basic beliefs)
7A.1 I believe there is only one ALMIGHTY who is
dealing with everything that came across
7A.2 I believe (that our beloved Prophet Muhammad
(P.B.U.H) is the last Prophet) in prophecy
7A.3 I believe in all basic teachings of my religion
7A.4 I believe in all the basic (five) pillars of my
religion
7B Cognitive (beliefs, thinking and values)
7B.1 My religious belief is what I think that there is
some reason of my existence
7B.2 My religion is important to me because it answers
many question about meaning of life
7B.3 I try hard to carry my religion in every decision
that I make
7B.4 I feel myself very close to ALMIGHTY whenever
I am involved in any religious teaching or
obligations
7B.5 I feel myself that only religion is the solution of all
my problems
7B.6 I feel myself that my religion taught me about all
right and wrong doings
7B.7 I feel myself that my religion gives me calm and
peace that I need for life to move on
7C Experiential (learning thorough any process)
7C.1 I have learned a lot from religious Holy book and
teachings of my religion to lead my life
7C.2 I have a feeling of being dominated by evil if I am
involved in any wrong doings
7C.3 I have a feeling of being afraid by ALMIGHTY if
I am involved in any wrong doings
7C.4 I have a feeling of being punished whenever I do
something wrong by ALMIGHTY
7C.5 I feel good whenever I see that people are
following religious teachings
7C.6 I feel internally very calm when I spread teachings
of my religion
7C.7 I feel guilty when I do not follow the right path of
my religion
 Influence of religion and culture on investment behaviour 101

Section A: Religiosity (religious beliefs, values and attitudes) (continued)

1 2 3 4 5 6 7
7D Religious affiliation (orientation towards religion)
7D.1 I am related to religion I am born with (Islam,
Buddhism, Christianity or other)
7D.2 I have complete faith in my religion
7D.3 I am satisfied in my religion
7D.4 I give my religion more preference over other
religions
7D.5 There is no other religion present in world that
give so strong faith to their followers except mine
7E Extrinsic (orientation towards religion)
7E.1 It is the part of one’s patriotic duty to pray where
he likes to pray even in alone or at religious place
(mosque)
7E.2 The mosque is more important place to formulate
good social relationships
7E.3 The purpose of prayer is to secure a happy and
peaceful life
7E.4 What religion offers me most is comfort when
sorrows and misfortune strike
7E.5 Religion helps me to keep my life steady and
balanced as me citizenship, friendships and family
do
7F Intrinsic (orientation towards religion)
7F.1 I enjoy reading about my religion
7F.2 It does not much matter what I believe so long as I
am good
7F.3 It is important to me to spend time in private
thought and prayer
7F.4 I have often a strong sense of ALMIGHTY’s
presence
7F.5 I try hard to live all my life according to my
religious beliefs
7F.6 Although I am religious, I do not let it affect my
daily life
7F.7 My whole approach to life is based on my religion
7F.8 Although I am a true believer of my religion, still
there are many things that I think are more
important in my life
7G Behavioural (practicing religious values and beliefs)
7G.1 I regularly offer prayer (five times a day)
7G.2 I regularly recite the Holy book of my religion
7G.3 I fast regularly in the month of Ramadan
102 S.K. Shahzad et al.

Section A: Religiosity (religious beliefs, values and attitudes) (continued)

1 2 3 4 5 6 7
7G Behavioural (practicing religious values and beliefs)
7G.4 I pay Zakat, Fitrah every year if I meet the
prescribed criteria
7G.5 I always pray Jummah prayer every week
7G.6 I always keep myself away by earning through
Haram (prohibited) means
7G.7 According to teachings of my religion I try to help
everyone who is needy in my opinion
7G.8 I always respect my elders and give them their
rights according to my religious teachings

Section B: Values (another aspect of culture)

1 2 3 4 5 6 7
8A Conformity
8A.1 In my life, as a guiding principle, I value
politeness
8A.2 In my life, as a guiding principle, I value
self-discipline
8A.3 In my life, as a guiding principle, I value
obedience
8A.4 In my life, as a guiding principle, I value
honouring of parents
8B Tradition
8B.1 In my life, as a guiding principle, I value respect
for tradition(customs)
8B.2 In my life, as a guiding principle, I value being
moderate
8B.3 In my life, as a guiding principle, I value
humbleness
8B.4 In my life, as a guiding principle, I value accepting
my portion in life
8B.5 In my life, as a guiding principle, I value being
responsible
8C Self-direction
8C.1 In my life, as a guiding principle, I value making
my own decisions
8C.2
In my life, as a guiding principle, I value freedom
8C.3
In my life, as a guiding principle, I value
independence
8D Hedonism
8D.1 In my life, as a guiding principle, I value devoted
8D.2 In my life, as a guiding principle, I value
observing social norms
 Influence of religion and culture on investment behaviour 103

Section B: Values (another aspect of culture) (continued)

1 2 3 4 5 6 7
8E Power
8E.1 In my life, as a guiding principle, I value
preserving my public image
8E.2 In my life, as a guiding principle, I value social
recognition
8E.3 In my life, as a guiding principle, I value wealth
9 Attitudes (another aspect of culture)
9.1 I invest all my money that remain after spending
on my basic needs
9.2 I invest where I think there are less chances for
loss
9.3 I invest where I think there are more chances to gain
9.4 I invest only in that investment products that fulfil
my goals

Section C: Material goods (government, social, technology infrastructure)

1 2 3 4 5 6 7
10.1 I think that government provides enough schemes
for investment
10.2 I think that all the schemes of government for
investments are according to our religious beliefs
and values
10.3 I think the more savvy instrument for investments
are government schemes
10.4 I think that government prohibit to invest in
non-religious type of things
10.5 I think that there are enough financial institutions
that are meeting needs of investors
10.6 I think our government has not put any restrictions
on financial institution growth
10.7 I mostly get all information about investment
products using media (radio, internet, TV,
newspaper etc)
10.8 I am happy about the technology in my country as
I don’ t need to hire any consultant for my
investments
10.9 Technology always helped me to solve many of
my problems, while at home
10.10 I am satisfied with transport system of my country
10.11 I am satisfied with health and education system of
my country
10.12 I am satisfied with economic growth of my country
10.13 I am satisfied with growth of investments
institutions in my country
104 S.K. Shahzad et al.

Section D
11 Investment behaviour and decisions
11A. What is your monthly income?
a < 25,000 b >25,000–50,000
c >50,000–100,000 d >100,000
11B. How much amount you mostly invest (or currently how much you have
invested)?
a <50,000 b >50,000–1 lac c >1 lac–10 lac
d > 1 Million e Above10 Million
11C. Which type of investment you mostly use? (If more than one give relevant
percentages)
a Stocks___ b Bonds___
c Conventional banking accounts___ d Mutual funds___
e Government saving scheme___ f Islamic banking accounts___
g Real estate property___
Please rate the following statements from 1 = strongly disagree, 2 = disagree,
3 = somewhat disagree, 4 = neither agree or disagree, 5 = somewhat agree, 6 = agree to
7 = strongly agree.
1 2 3 4 5 6 7
11D Goals behind your investment
11D.1 To have some savings for the future
11D.2 To earn steady income
11D.3 To have a capital appreciation
11D.4 To earn speculative gains
11E Sources of information you use (for long term securities)
11E.1 Go to some financial broker
11E.2 Ask any of your friend advice
11E.3 See media news, events and market sentiment
11E.4 Analyse through technical analysis (past prices and
trends)
11E.5 Analyse through fundamental analysis(all in-depth
analysis of that institution)
11F Sources of information you use (for short term securities)
11F.1 Go to some financial broker
11F.2 Ask any of your friend advice
11F.3 See media news, events and market sentiment
11F.4 Analyse through technical analysis(past prices and
trends)
11F.5 Analyse through fundamental analysis (all in-depth
analysis of that institution)
 Influence of religion and culture on investment behaviour 105

Section D (continued)
1 2 3 4 5 6 7
11G Dogmatism
11G.1 I always invest where I think my religion allow me
11G.2 I always invest where I think my values allow me
11G.3 I always invest in risky investments
11G.4 I always invest in non-risky investments
11G.5 I always invest in new products without thinking of
either its according to my values or not
11H Openness
11H.1 I only accept gain where I think it is acceptable to
my values and beliefs
11H.2 I only accept loss where I think it is acceptable to
my values and beliefs
11H.3 I only invest where I think I surely get benefit
11H.4 I only invest in that modes of investment that are
now a days of more use
11H.5 If I face loss in investments still I do not give up
investing

Thank you for your cooperation!!!