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Choice criteria for Islamic home financing

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  • Hanudin Amin

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 samplest‐test and ANOVA. Findings - The results suggest that “Shariahprinciple”, “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.

Suggested Citation

  • Hanudin Amin, 2008. "Choice criteria for Islamic home financing," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 1(3), pages 256-274, August.
  • Handle: RePEc:eme:ijhmap:v:1:y:2008:i:3:p:256-274
    DOI: 10.1108/17538270810895105
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    Citations

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    Cited by:

    1. Khurshid Ali & Zeeshan Khan & Abdullah Saleh, 2016. "Islamic Versus Conventional Banking: An Insight into the Malaysian Dual Banking System," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 3(1), pages 103-112.
    2. Muhammad Ali & Syed Ali Raza & Chin-Hong Puah & Mohd Zaini Abd Karim, 2017. "Islamic home financing in Pakistan: a SEM-based approach using modified TPB model," Housing Studies, Taylor & Francis Journals, vol. 32(8), pages 1156-1177, November.
    3. Muhammad Y. Khan & Shahab Ud Din & Majid J. Khan & Anam Javeed, 2021. "Dynamics of selecting Islamic home financing," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 5005-5016, October.
    4. Abdullah Mesut Ucar, 2022. "Do Interest-Free Financial Organizations Offer Fair Prices to Their Customers?," Journal of Economic Policy Researches, Istanbul University, Faculty of Economics, vol. 9(2), pages 495-521, July.
    5. Sayed Al-Hunnayan & Abdullah Al-Mutairi, 2016. "Attitudes of Customers towards Islamic Banks in Kuwait," International Journal of Business and Management, Canadian Center of Science and Education, vol. 11(11), pages 1-59, October.
    6. Amin, Hanudin & Abdul-Rahman, Abdul-Rahim & Abdul-Razak, Dzuljastri, 2009. "Is the Theory of Planned Behaviour Valid for Islamic home financing?," MPRA Paper 43179, University Library of Munich, Germany, revised 05 Sep 2011.
    7. Muhammad Ali & Syed Ali Raza & Chin-Hong Puah & Muhammad Shujaat Mubarik, 2023. "Customer acceptance toward Islamic personal financing in Pakistan," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 28(2), pages 270-284, June.
    8. Hajime Kamiyama & Kenichi Kashiwagi, 2019. "Factors affecting customers’ continued intentions to use Islamic banks," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 24(3), pages 59-68, December.
    9. Shaikh, Imran Mehboob & Noordin, Kamaruzaman & Alsharief, Ahmed, 2018. "Factors Influencing Customers’ Acceptance Towards Diminishing Partnership Home Financing: A Study of Pakistan," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 26, pages 63-86.
    10. Ayesha Hamid & Omar Masood, 2011. "Selection criteria for Islamic home financing: a case study of Pakistan," Qualitative Research in Financial Markets, Emerald Group Publishing Limited, vol. 3(2), pages 117-130, June.

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