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The purpose of this paper is to investigate a distinct set of characteristics that influence Muslim customers’ intentions to purchase Ar-Rahnu Islamic financing contract in Malaysia.

The study studied the impact of perceived value, perceived quality, perceived financial advantages, religious commitment and product knowledge on the purchase intention Ar-Rahnu Islamic financing contract using a quantitative research approach. A Google Form-based online survey was created and distributed through Twitter, Facebook and Instagram, among others. The survey data were analysed using structural equation modelling with a partial-least-square estimation property (PLS-SEM).

The study results suggested that Muslim customers in Malaysia had a greater propensity to buy Ar-Rahnu Islamic financing contract. Analysis of the data revealed that perceived value, perceived quality, perceived financial benefits and religious commitment had direct effects on the desire to buy Ar-Rahnu Islamic financing contract in Malaysia. In addition, the results reveal that religious commitment, perceived quality and perceived financial benefit are the top three important factors in explaining Ar-Rahnu Islamic financing contract buying intentions in this country.

Muslim customers may use Ar-Rahnu Islamic financing contract as a short-term credit alternative to enhance their financial standing. Ar-Rahnu Islamic financing contract generates a substantial quantity of credit demand and supply, which not only allows Muslim customers to adhere to Islamic standards but also contributes to the expansion of the economy. The result would aid and advise Ar-Rahnu finance resources and legislators in measuring the efficacy of the program in Malaysia, especially among Muslim customers.

Ar-Rahnu Islamic financing contract as a financing alternative has been explored extensively, but this study takes a whole new approach to the subject by looking at dimensions of perceived value, perceived quality and perceived financial benefit along with individual product knowledge and religious commitment. Consequently, this study will contribute to the understanding of how Muslim customers will respond to the Ar-Rahnu Islamic financing contract and will assist financial institutions in increasing the possibility that Muslim consumers would acquire Ar-Rahnu Islamic financing contract.

The case is suitable for use in the topics related to the functions and roles of Islamic pawn-broking and the Islamic risk management framework.

The case is designed for undergraduate and postgraduate students taking courses in Islamic Banking, Islamic Finance and Risk Management for Islamic Banking Institutions.

This case is meant to explain the mechanics of pawn-broking (Ar-Rahnu) in Islam as well as to understand the risk management of Ar-Rahnu in the bank. Ar-Rahnu is discussed, in general, from the perspective of muamalat and then is related to the financing service offered through Ar-Rahnu scheme at Al-Qamari Bank Berhad (a disguised bank). Ar-Rahnu means making an asset as a security or collateral for a debt. The collateral will be used to settle the debt when the debtor is in default. It may also be known as borrowing with either collateral or pawn-broking. In Al-Qamari Bank Berhad, gold and jewellery are the subject of collateral for Ar-Rahnu. In return, customers will get the cash based on the margin of loan with regards to the current market value of gold/jewellery as determined by the bank. The operation of Ar-Rahnu is discussed in Exhibit 1, while the risk management of Ar-Rahnu is discussed in Exhibit 2.

The learning outcomes include: to identify a problem and issue related to Ar-Rahnu; to evaluate the modus operandi of Ar-Rahnu; to analyze the risk management practices of Ar-Rahnu; and to develop decision criteria on whether Ar-Rahnu in Al-Qamari bank is Shariah-compliant or not.

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The purpose of this paper is to examine the factor persuading the acceptance of Islamic pawn broking (Ar-Rahnu) among Islamic bank customers.

The authors collected the data using a self-administered questionnaire design and analysed using SPSS Statistics and smart partial least square. The study is restricted to only respondents who are based in the area of Klang Valley (Selangor and Kuala Lumpur), as these two areas have a larger number of Islamic banks and a decent number of Islamic banks’ clients. A total of 381 respondents’ responses are used for this study, and the constructs involved for analysis purpose are affect, social factor, facilitating conditions, perceived financial benefits and perceived risk constructs.

The finding suggests a significant positive association for social factor and perceived risk, while negative association learnt for affect on acceptance of Ar-Rahnu financing. On the same note, the facilitating condition and perceived financial benefit are found insignificantly related.

The findings generated from this study are expected to enrich the literature on the body of knowledge, as it has served to broaden the understanding of the Ar-Rahnu acceptance level in Malaysia. As mentioned, there is limited literature available using this type of financing. Existing studies focus too much on conventional financing products such as personal financing, credit card, short-term loan and many others. Less attention is given to Ar-Rahnu financing. Thus, this study expected to add value to the literature available in the context of Islamic pawn broking business. Moreover, the findings of this study will be very helpful for the Islamic financial institutions to find the best way to retain Ar-Rahnu clients and encourage more client to choose Ar-Rahnu as a mode of financing.

This study owns greater potential to assist Islamic financial institutions to discover the best techniques to retain and encourage the grander number of clients for Ar-Rahnu as a mode of financing.

This study aims to offer a new area of discourse by investigating the factors determining the usage of the Islamic non-bank financing product ar-rahnu (Islamic pawnbroking) among women micro-entrepreneurs in Malaysia within the framework of the informal credit market theory.

The study is based on primary data obtained by using self-administered questionnaires distributed in three states in Malaysia: Kedah, Kelantan and Terengganu. The questionnaires were distributed to a total of 750 participants, with each state contributing 250 respondents. Total number of respondents valid for data analysis was however 600.

Based on descriptive and inferential statistics by using the IBM statistical package for the social sciences and structural equation modelling analysis of moment structures, the results show that the main factor influencing women micro-entrepreneurs to use ar-rahnu is the service charge.

This study only covers three states in Malaysia and is limited to examining the use of ar-rahnu by women micro-entrepreneurs in those states.

As micro-entrepreneur s often face constraints to obtaining financial access in the formal credit market, ar-rahnu provides an alternative mode of obtaining business financing to female micro-entrepreneurs, so they can sustain their operations and even expand their businesses. The significance of such factors like service fee, as revealed in this study, indicates that managers should focus on this element when offering Islamic financial products, especially to women micro-entrepreneurs.

The informal credit market theory is frequently used in conventional studies. This paper adds Sharīʿah compliance in the context of this theory as a new area to be considered when discussing Islamic financial products.

This study aims to enlighten the effects of Islamic religiosity, Islamic altruism and Islamic debt collection policy (IDCP) on millennials’ acceptability of tawarruq-based ar-rahnu in Malaysia.

This study applies the factors drawn from the Islamic theory of consumer behaviour (ITCB) and uses data obtained from a survey of 267 respondents to examine the impact of these factors on millennials’ acceptability of tawarruq-based ar-rahnu.

The findings indicate that Islamic religiosity, Islamic altruism and IDCP are all important factors influencing millennials’ acceptability of tawarruq-based ar-rahnu.

The study is narrowed down in scope in terms of the broader context of tawarruq-based ar-rahnu and the variables retrieved from the ITCB, which may explain its limited impact.

Considering the effects of the variables investigated in this study might assist enhance product acceptance among consumers.

This study is focussed on tawarruq-based ar-rahnu in the context of the ITCB, taking a different approach than past research on the subject.

Hisbah is one of the distinguished institutions that had emerged since the early days of the Islamic empire. Based on its cardinal duty to enjoin good and prohibit evil, over time, its functions gradually expanded, and its responsibilities increasingly grew. In light of the contemporary trend in establishing institutional framework for consumer protection, entrusting an agency with multifarious tasks may not be the best and effective way in handling consumer protection issues. Thus, this chapter attempts to explore the new paradigm of hisbah as a consumer protection institution in Malaysia with a special reference to the Islamic consumer credit industry. While utilising the doctrinal legal research methodology, relevant sources of law have been examined and analysed. This research finds that the classical hisbah institution provides a good reference point in establishing regulatory agency and dispute management body. Nevertheless, some modifications are required to remain relevant especially in terms of specialisation of role and function. Likewise, it is viewed that adjustment of the hisbah institution is also necessary regarding the characteristic of the muhtasib (ombudsman).

The purpose of this paper is to identify how zakat institutions in Brunei can facilitate financial inclusion into their practices and assist to fulfil the saving motives of zakat recipients, notably upon creating financial products/solutions for the poor and destitute.

Using mixed methods approach, structured interviews were conducted with 431 individuals (215 welfare recipients and 216 non-welfare recipients) and semi-structured interviews were conducted with 39 welfare recipients.

This paper highlights the need for bank accounts and credit facilities that meet the needs of welfare recipients, to fulfil their daily needs, as well as saving for children/grandchildren’s education, and for welfare recipients who save.

Limitation includes non-random sampling.

The implications of these findings point out how zakat and other social institutions in Islam can adapt to contemporary challenges in personal finance, notably in facilitating financial inclusion and understanding saving motives of recipients.

This paper provides a perspective and contention for zakat institutions to adapt to contemporary aspects of personal finance, through facilitating financial inclusion and the saving motives of zakat recipients.