Department of Economics

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Browsing Department of Economics by Author "Adam, S. U."

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    Exploring the Applicability of Choice Experiment in Islamic Banking and Finance Product Engineering
    (Faculty of Management Sciences, University of Maiduguri, 2021) Adam, S. U.
    Product engineering in Islamic banking and finance (IBF) is a continuous task as experts keep introducing newer products that suite the changing preferences of bank customers. In doing so, besides sharia compliance, understanding the marketability of IBF products is key to product engineers in the sub-sector. Product engineers are thus concerned about modeling the preferences and potential prices of such products like the cost-plus-profit margin (Murabahah). Choice experiment (CE) constitutes one of the potent techniques rooted in economics and econometrics that could be used to model preferences and estimate willingness to pay (WTP) for IBF products. Product engineers can use CE to estimate market values for product or services as well as their characteristics in advance of their availability in the market. Despite the heightened potential for the use of CE as a non-market valuation method in IBF product structuring, there seem to be dearth of knowledge on its application. The objective of this paper is to demonstrate how CE technique could be used in determining customers’ preferences and WTP for the characteristics which when understood will trigger subscription choice for IBF products. This is demonstrated particularly, for risk-sharing IBF products, which has relatively received the least patronage in the industry.