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This study aims to understand common customer’s perception about interest factor in Islamic banking in Pakistan. Initiation of Islamic banking has produced numerous issues for banking sector in Pakistan. Based on theoretical background, research questions and objectives were developed which were investigated through a survey type study. This endeavor revolves around a two-fold enquiry. First it probes the perception of customers about current practices and products offered by Islamic banks. Secondly it considers the awareness level of customers, based on real knowledge. Data was collected from selected respondents having their bank accounts in either conventional or Islamic banks. In addition to cross tabulation, Analysis of Variance and Regression were used to analyze the data. The result of the study indicates that customer have almost the same perception about interest factor in Islamic banks as in other conventional banks. Moreover, besides other factors the findings show that awareness has a significant role in this perception.

A PERCEPTION ANALYSIS OF CUSTOMER’S SENSITIVITY TO INTEREST FACTOR IN CONTEMPORARY ISLAMIC BANKING IN PAKISTAN