IJHMA
1,3
256
International Journal of Housing
Markets and Analysis
Vol. 1 No. 3, 2008
pp. 256-274
# Emerald Group Publishing Limited
1753-8270
DOI 10.1108/17538270810895105
Choice criteria for Islamic
home financing
Empirical investigation among Malaysian
bank customers
Hanudin Amin
Labuan School of International Business and Finance,
Universiti Malaysia Sabah (UMS), Labuan, Malaysia
Abstract
Purpose – 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.
Design/methodology/approach – 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.
Findings – 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.
Research limitations/implications – 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.
Practical implications – 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.
Keywords Financial management, Personal finance, Islam, Banks, Loans, Malaysia
Paper type Research paper
Introduction
This study considers Islamic banking products in Malaysia. The year 1983 saw
Malaysia’s entry into the Islamic banking industry, and over the past 20 years, it has
succeeded in developing a vibrant Islamic financial market. Islamic banks in Malaysia
offer a wide range of products, for instance from basic Shariah-compliant retail
products to insurance, mortgages, investment instruments and large-scale project
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