This study aims to examine how authenticity and trust in Islamic banking windows are constructed and contested across stakeholder groups in Pakistan’s dual banking system.
A qualitative design was employed using 24 semi-structured, in-person interviews with managers and clients from fully fledged Islamic banks and conventional banks offering Islamic windows. Data were thematically analyzed in ATLAS.ti, drawing on institutional, legitimacy, signaling and stakeholder theory, to identify cross-stakeholder patterns, divergences and mechanism-level explanations of legitimacy.
Stakeholders treat “Islamic” less as a branding label and more as an institutional-coherence judgment. Islamic-bank managers and clients anchor authenticity in riba avoidance and system-wide Shariah compliance and remain skeptical of windows where segregation is not verifiable and “back-end contamination” is suspected. Conventional-bank managers justify windows through regulatory transition, demand responsiveness and segregation assurances, while some critique Islamic marketing as sentiment-driven and insufficiently transparent. Conventional-bank clients reconcile the riba prohibition with infrastructural constraints via harm-minimisation (transaction-only use, avoiding interest-bearing products and charitable disposal of credited interest).
Legitimacy concerns are frequently triggered by perceived opacity rather than by product features alone. Regulators and banks can strengthen credibility by standardizing stakeholder-intelligible disclosure of segregation arrangements (ring-fencing logic, operational boundaries, reporting lines), product-approval gates and high-level Shariah-audit assurance statements, thereby reducing information asymmetry and improving verifiability of Shariah protections in window models.
The study contributes a multi-stakeholder, dual-institution explanation of Islamic-window legitimacy and specifies how trust is built, withheld or repaired through narratives of purity/contamination, governance visibility, segregation plausibility, necessity and moral boundary-setting in a transition-salient context. The study further proposes a stakeholder trust-formation model linking institutional coherence, governance visibility and segregation credibility, offering a structured framework for future research and practice.
