Determinants of Consumers' Choice of Islamic Financing Products
The Islamic banking has been in Malaysia since the set up of the first Islamic bank on 1st March 1983. Ten years later, the Malaysian government launched the Interest Free Banking Scheme (SPTF), which later renamed Islamic Banking Scheme (SPI). Today, the consumers' acceptance toward the Isl...
Saved in:
| Main Author: | |
|---|---|
| Format: | Thesis |
| Language: | English English |
| Published: |
2003
|
| Subjects: | |
| Online Access: | http://psasir.upm.edu.my/id/eprint/8170/1/GSM_2003_1_.pdf http://psasir.upm.edu.my/id/eprint/8170/ |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | The Islamic banking has been in Malaysia since the set up of the first Islamic bank
on 1st March 1983. Ten years later, the Malaysian government launched the Interest
Free Banking Scheme (SPTF), which later renamed Islamic Banking Scheme (SPI).
Today, the consumers' acceptance toward the Islamic banking system especially the
financing section is still below the target set by the government. In analyzing why the
consumers' are not taking Islamic financing, the study had focus to factors that
determine consumers' choice.
Studies that had been conducted were on the factors that influence customers'
selection for a bank is directly related to the factors determining consumers' choice.
The researchers identified various factors such as the quality of bank products and
services, existence of branches, friendliness or customers' relation, availability of
credit, friend's recommendation, location, speed of processing, uncertainty of return
and risk involved, customers' awareness, publicity of products and availability of
products.Therefore the main objective of the study is to determine factors that determine
consumers' choice in selecting Islamic financing products introduced by the
commercial banks. In order to determine the choice, the study will analyse the
reasons that determine consumers' choice toward Islamic financing products. The
reasons were derived from the literatures and interviews conducted with the bankers.
A set of questionnaire was designed and distributed to the public. A total of 269
completed questionnaires were returned from 500 questionnaires distributed. In
analyzing the results of the research various methods had been used. Among them
were the Pearson Correlation, factor analysis and regression analysis. The Pearson
Correlation is used to determine the relationship among the variables that determine
customers' choice, to measure the strength of association between two variables and
determine the degree to which the variables are related. The factor analysis was used
to determine the reasons that influence their choice toward Islamic financing
products and reduce the 24 reasons (variables) into 6 factors. The 6 factors
comprised of Factor 1 "staff", Factor 2 "application process", Factor 3 "customer
awareness and knowledge", Factor 4 "customer preference", Factor 5 "risk and
return", and Factor 6 "products offering". The factor analysis results indicate that the
staff factor such as inefficient, unfriendly, unknowledgeable staff is the main
contributors that determine consumers' choice toward Islamic financing. The staff
factor contributes 30.044% as compared to other factors that are less than 12.0%.
Lastly the discriminant analysis is used to determine the relationship that best
distinguish (discriminate) between choosing Islamic financing and conventional
financing with the factors determining customers' choice. The discriminant analysis
results show that Factor 4 Customer's Preference has the highest positive standardized coefficient of 0.667 followed by Factor 2 Application Process 0.381 and
Factor 3 Customer's Awareness and Knowledge 0.331. This means that all the three
factors had greater contribution in discriminating the groups between Islamic
financing products and conventional financing products |
|---|