Search results

This study aims to investigate the interactions among macroeconomic variable shocks, banking fragility and home financing provided by conventional and Islamic banks in Malaysia. Identifying the causes of financial instability and the effects of macroeconomic shocks can help to foil the onset of future financial turbulence.

The autoregressive distributed lag bound-testing cointegration approach, impulse response functions (IRFs) and forecast error variance decomposition are used in this study to unravel the long-run and short-run dynamics among the selected macroeconomic variables and amount of home financing offered by both conventional and Islamic banks. In addition, the study uses Granger causality tests to investigate the short-run causalities among the selected variables to further understand the impact of one macroeconomic shock to Islamic and conventional home financing.

This study provides evidence that macroeconomic shocks have different long-run and short-run effects on amount of home financing offered by conventional and Islamic banks. Both in the long run and short run, home financing provided by Islamic banks is more linked to real sector economy and thus is more stable as compared to home financing provided by conventional banks. The Granger causality test reveals that only gross domestic product (GDP), Kuala Lumpur Syariah Index (KLSI)/Kuala Lumpur Composite Index (KLCI) and house price index (HPI) are found to have a statistically significant causal relationship with home financing offered by both conventional and Islamic banks. Unlike the case of Islamic banks, conventional home financing is found to have a unidirectional causality with interest rates.

This study has focused on analyzing the macroeconomic shocks on home financing. However, this study does not assess the impact of financial deregulation and enhanced information technology on amount of financing offered by both conventional and Islamic banks. In addition, it is not within the ambit of this present study to examine the effects of agency costs and information asymmetry.

The analysis of cointegration and IRFs exhibits that in the long run and short run, home financing provided by Islamic banks are more linked to real sector economy like GDP and House Prices (HPI) and therefore more resilient to economic vulnerabilities as compared to home financing provided by conventional banks. However, in the long run, both conventional and Islamic banks are more susceptible to fluctuations in interest rates. The results of the study suggest that monetary policy ramifications to improve banking fragility should focus on stabilizing interest rates or finding an alternative that is free from interest.

Because interest plays a significant role in pricing of home loans, the potential of an alternative such as rental rate is therefore timely and worth the effort to investigate further. Therefore, Islamic banks can explore the possibility of pricing home financing based on rental rate as proposed in this study.

This paper examines the unresolved issues in Islamic home financing where Islamic banks still benchmark their products especially home financing, to interest rates in dual banking system such as in the case of Malaysia. To the best of the authors’ knowledge, studies conducted in this area are meager and therefore is imperative to be examined.

The purpose of this study is to investigate the effects of service quality, product choice and Islamic debt policy on consumer attitude within the context of Islamic mortgage sector in Malaysia. The present study also examines the effect of attitudinal-behaviour on consumer preference towards preference of Islamic mortgage selection.

The study is based on questionnaire survey. Data are collected using sample from customers of Islamic banks in Malaysia. The study collects 351 respondents. Data are analysed using partial least squares (PLS).

The results indicate that service quality, product choice and Islamic debt policy significantly influence consumer attitude, in turn, affecting the Islamic home financing preference. Consumer attitude also mediates the effects of service quality, product choice and Islamic debt policy on the Islamic home financing preference.

Several limitations warrant future research. First, this study considers only a specific user group in one public university. Second, this study does not consider attitude as a moderator. Third, this study suffers from the limited number of factors used. These limitations, however, provide directions for future research.

Our results will add value to the consumer preference topic for Islamic home financing literature. The present study provides bank managers with valuable insights into better planning of Islamic home financing services in Malaysia.

This study is a pioneering effort at exploring consumer attitude and preference from the context of Islamic mortgage sector in Malaysia. The use of PLS analysis provides another important contribution to the literature in this area.

The purpose of this paper is to investigate the choice criteria for Islamic home financing in Malaysian Islamic banks. Most importantly, this study considers establishing a specific rank of choice criteria for Islamic home financing. Moreover, these choice criteria will also be ranked according to the selected demographic elements such as gender, marital status and age range.

This study uses a quantitative study similar to what was employed by previous researchers. The study presents primary data collected by self‐administered questionnaires involving a sample of 150 Malaysian bank customers in Labuan, Malaysia. Of these, 141 questionnaires were returned with a response rate equivalent to 94 per cent. The Islamic home financing choice criteria as perceived by the Malaysian bank customers are analysed using frequencies, independent samples t‐test and ANOVA.

The results suggest that “Shariah principle”, “lower monthly payment”, “transparency practice”, “interest‐free practice” and “100 per cent financing” are the first five decision criteria considered as being very important. The least preferred criteria, among others, are “recommendation”, “longer financing period”, “product range” and “branch location”. Results also suggested that a small number of significant differences are apparent in the importance of choice criteria with respect to gender, marital status and age range.

The study contains three limitations. The first limitation was based on the sample area for the study which is confined to Labuan, Malaysia. Second, this study restricted the use of factor analysis since the data did not allow for aggregation. Third, this study was also unable to perform ANOVA for religion differences as the sample consisted largely of Muslims.

The results are primarily beneficial to academics and practitioners in Malaysia by offering an insight into choice criteria for Islamic home financing. This study provides new results about different kinds of customer types and their preferences with regards to Islamic home financing selection. As such, Islamic bank managers can learn and plan to offer attractive schemes for the Islamic home financing market that meet Malaysian bank customers' needs. For the researcher, this study contributes to existing body of knowledge by providing an investigation of choice criteria in the Islamic home financing. Indeed, this study is considered an “eye‐opener” for Islamic home financing choice criteria which has limited previous studies. Originality/value –This study introduces the choice criteria for Islamic financing among Malaysian bank customers. The study offers an insight into Islamic home financing choice criteria in Malaysia which has limited previously been investigated.

The purpose of this study is to examine the contributing factors that affect consumer behaviour of Islamic home financing in Malaysia. The effects of perceived religiosity on property, perceived Islamic debt principle and perceived maqasid on homeownership on consumer behaviour are examined. Furthermore, the effects of perceived religiosity and consumer behaviour on religious satisfaction are also investigated.

Using the theory of Islamic consumer behaviour (TiCB) as a baseline theory identified from the literature, this study proposes a conceptual model of consumer behaviour of Islamic home financing in Malaysia. Data from the 205 usable questionnaires are analysed using partial least squares (PLS).

The PLS results suggest that perceived religiosity on property, perceived Islamic debt principle and perceived maqasid on homeownership are instrumental in determining consumer behaviour, thus revealing these factors as “Islamic factors” that represent the TiCB. Furthermore, the effect of consumer behaviour on religious satisfaction is also significant, implying that good behaviour makes people happier – seeking pleasure for doing well that is blessed and approved by Allah (S.W.T).

Two limitations are available for future studies. First, this study included only Malaysians in East Malaysia, suggesting that further testing of the proposed model should be conducted across different geographies to determine the generalisability of this study’s findings. Second, this study’s contributions are narrowed down to the factors examined. These limitations, however, provide directions for further future research.

The results provide directions to bank managers to effectively manage Islamic home financing services for the benefit of their customers. Islamic home financing products tend to be used by consumers if the patronage factors investigated are considered more profoundly.

This study examines the behaviour of consumers of Islamic home financing using the proposed framework derived from TiCB.

This study aims to examine the impacts of Shariah-compliant products, value-added benefits, mortgage repayment policy and well-versed bankers on the consumer acceptance of Islamic home financing. These variables, thereafter, are called the “critical success factors” (the CSFs) for Islamic home financing.

Guided by the Islamic theory of consumer behaviour (ITCB), this study intends to propose the specific CSFs that ensure consumer acceptance of Islamic home financing a success. The term success refers to consumers’ willingness to take up the facility. A questionnaire survey was conducted to elicit responses pertinent to the level of agreement/disagreement of the CSFs. A total of 460 respondents usable responses were obtained and analysed accordingly.

The results obtained indicate that Shariah-compliant products, value-added benefits, mortgage repayment policy and well-versed bankers are instrumental to influence the consumer acceptance of Islamic home financing.

Like other works, this study has confined its context to capture only a limited geographical area, and the study’s contributions are restrained to the variables analysed to a specific context of Islamic home financing in Malaysia.

The results obtained can become as a yardstick to measure the consumer acceptance of Islamic home financing.

New proposed CSFs can help to address the new demand of Islamic home financing accordingly, where a new area of improvement is brought into play. This study also extends the applicability of the ITCB to include Islamic home financing products.

This study aims to examine the factors influencing the consumer acceptance on Islamic home financing products amongst clients of Islamic banks. For the purpose, the study extends the theory of planned behaviour (TPB) in explaining the Islamic home financing adoption along. Further, the study also intends to analyze the effects of “Islamicity of product” and seven demographic factors on the consumer acceptance of Islamic home financing products.

Using the TPB model as a baseline theory, data are collected from bank customers in East Malaysia involving two cities, namely, Kota Kinabalu and Labuan, using self-administered questionnaires. A total of 300 questionnaires are distributed; however, only 278 are found usable. We use ordered probit model to analyze the effects of attitude, subjective norm, perceived behavioural control, Islamicity of product and demographic factors.

Using the ordered probit model, this study finds that attitude, subjective norm, perceived control and Islamicity of product are instrumental in determining the consumer acceptance of Islamic home financing products. Concerned with demographic items, the study finds that marital status, ethnic, occupation and religion are influential. It is also discovered, however, that gender, academic qualification and monthly income have little effects on the consumer acceptance.

Three limitations are available for future studies. First, the current work does not include the experienced users who patronize Islamic home financing products. Second, the contribution of the present study is confined to the analyzed explanatory variables. Third, this study also has geographical constraint in which it is conducted in East Malaysia whilst samples from West-Malaysia are overlooked. These limitations, however, provide directions for further future research.

Essentially, this study is a pioneering effort in applying the TPB model to the new context of Islamic home financing products in Malaysia. The study integrates the effects of Islamicity of product and demographic factors on the consumer acceptance on Islamic home financing products. The TPB model is proven valid and is reliable in predicting the consumer acceptance on Islamic home financing products.

This study introduces Islamicity of product and demographic factors in explaining the consumer acceptance on Islamic home financing products. Most fundamentally, this study proposes a modified theoretical framework that is of paramount importance to predict the demand of Islamic home financing products in the future.

The purpose of this paper is to explore the development of Islamic home financing and some of its practical issues. In addition, the study also intends to draw attention to some recommendations to the issues highlighted from the viewpoint of industrial experts.

The methodology for this study follows the qualitative research approach which aims to capture the thoughts and extensive knowledge of a few related experts in the field. Eight respondents who are mainly scholars and bankers in Islamic banking were selected for the interview purpose. A semi-structured interview was adopted to investigate a series of themes concerning the Islamic home financing in Malaysia.

In terms of development, the findings showed that a majority of the participants agreed that the Islamic banking and finance (IBF) is developing in line with its counterpart – the conventional banks. This is due to its innovation in products as well as offering a variety of financial products including home financing. Some of the practical issues highlighted by the respondents include pricing, adherence to conventional framework and interest rate movement. Islamic home financing is argued to be much more expensive and faces difficulty in working within a conventional framework. The issue of interest rate movement is also becoming a major hurdle in Islamic banking due to the absence of a proper benchmark for IBF. At present, IBF still follows the benchmark set by its conventional counterpart. Furthermore, the respondents also believed that the product of home financing, together with other financial products, are not in line with the teaching of Shariah principles and guideline. In addressing those issues, the respondents provided some suggestions to counter those problems, which include promoting Islamic home financing, particularly in terms of Musharakah Mutanaqisah (MM), ensuring the transparency of products, strengthening due diligence, legal aspect and others.

This study is limited in terms of the relatively small number of respondents used to generate its findings. Time constraint is another limiting factor of the research. Additionally, potential respondents in a higher position were unable to take part in the study. Due to these factors, the generalisation of the study’s findings will be visibly restricted.

This paper is expected to generate several practical implications. Firstly, the study’s exploration of the issues surrounding home financing will likely provide a general overview of the recent development in Islamic banking and the challenges it faces. Consequently, this will indirectly help policymakers and bankers alike to design a better policy when dealing with Islamic home financing issues. In the review of various literatures in the field, a majority of research studies were observed to mainly focus on a quantitative approach. Hence, in terms of methodological innovation, the study’s use of qualitative inquiry based on an interview method may provide a deeper understanding of the matter. The resolutions proposed by the various experts are hoped to contribute to shaping a better framework and system in Islamic and conventional home financing in Malaysia.

Despite having many literatures revealing mixed results concerning Islamic home financing, especially the Bai Bithaman Ajil and MM, addressing the issues of Islamic home financing, particularly from an expert perspective, has been lacking. The majority of research studies claim those issues from a theoretical viewpoint rather than a practical one. With this gap and lack of initiative, the current study is motivated to undertake an in-depth analysis on the issues of Islamic home financing and how to address those arising issues from an industrial expert’s point of view via a qualitative approach.

The purpose of this study is to examine the impacts of price fairness and Islamic altruism on the Islamic mortgage adoption along with theory of planned behaviour’s (TPB’s) constructs (i.e. attitude, subjective norm and perceived behavioural control). Attitude is also analysed as a mediator in this study.

Using TPB as a baseline theory, this study analyses the Islamic mortgage adoption involving a total of 281 Muslim consumers in Malaysia using partial least squares.

The results indicate that attitude, subjective norm, perceived behavioural control and price fairness significantly influence Muslim bank customers’ intention to choose Islamic home financing products. Other interesting findings are also provided.

This study contains three limitations that include the geographical constraint, respondents’ selection and the limited number of factors used.

The results obtained can serve as a guideline for bank managers or marketers to generate better strategies, which are dynamic to improve the acceptance rate of Islamic mortgage.

This study extends the TPB flexibility to integrate with price fairness and Islamic altruism in the Islamic mortgage adoption context.

The purpose of this paper is to analyze the possibility of relying on the rental rate to price Islamic home financing product.

By comparing two models consisting of either rental rate or lending rate (LR) and selected macroeconomic variables that could influence property value, the study focuses on the Malaysian data covering the period from 1990 to 2006. The study adopts several econometric time‐series analysis, such as the autoregressive distributed lag estimates, bi‐variate Granger causality, and multivariate causality based on the vector error‐correction model.

The study finds consistent evidence that the rental price (RP) is a better alternative than the LR to price Islamic home financing product. In particular, the rental rate is found to be resilient to short‐term economic volatility, while in the long run, it is truly reflective of the economic fundamentals.

This feature of the RP renders it as a fair pricing mechanism for the Islamic home financing product. Results of this study contribute towards finding an alternative benchmark for the Islamic home financing product which is currently using the conventional interest rate as its benchmark.

To the best of the authors' knowledge, the current study is the first of its kind which provides empirical evidence for the possibility of relying on the rental rate to price Islamic home financing product.

Using the maqasid-based consumer preference index (MCPi), this study aims to investigate customer preference for Islamic home financing.

The current study, based on valid 1,034 usable questionnaires and the MCPi, evaluates consumer choice for the supplied Islamic home finance products by 16 Islamic banks in Malaysia.

According to the findings, all banks have a moderate value of MCPi. Bank Islam Malaysia Berhad is at the top of the list, followed by Maybank Islamic, Commerce International Merchant Bankers Islamic and Malaysia Building Society Berhad.

The MCPi is used in this study to test a new technique to measuring consumer preference. The contributions are confined to these particular variables – Educating Customer, Establishing Justice, Promoting Welfare and Fulfiling Islamic Debt Policy. The research also has limitations in terms of the facility’s general setting. Future research may shed light on these issues from new angles.

This research offers banks a new way to manage their products based on maqasid al-Sharīʿah.

In the context of Malaysia, this study introduces the MCPi, a new measure of consumer preference for home financing.