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Selection Factors of Customer towards Islamic and Conventional Home Financing: A Case Study in Johor, Malaysia

Author

Listed:
  • Abd Jalil, Mohamad Isa
  • Yusoff, Remali
  • Mahmud, Roslinah

Abstract

Malaysia is one of the world financial centres for Islamic finance outside the Middle East. The purpose of the study was to find out the choice criteria for home financing among Malayan Banking Berhad customers which is the biggest bank in Malaysia. 350 of Malayan Banking Berhad home financing products customer among public servants, private sector workers, and self-employment were chosen as respondent. By using the Principal Component Analysis with Varimax Rotation, fourteen independent variables (selection factors) used had been reduced to only three main factors for both Islamic and conventional financing. The Research had found that the “advantage and goodness of products”, the “income and advice from the third party”, and the “lifestyle” were the factors that motivate customer in choosing Islamic home financing. In contrast, the customers prefer conventional home financing because of “products advantage and lifestyle”, “advice from the third party”, and “market performance” as the factors that motivate them to choose conventional home financing.

Suggested Citation

  • Abd Jalil, Mohamad Isa & Yusoff, Remali & Mahmud, Roslinah, 2010. "Selection Factors of Customer towards Islamic and Conventional Home Financing: A Case Study in Johor, Malaysia," MPRA Paper 68433, University Library of Munich, Germany, revised 09 Nov 2011.
    • Handle: RePEc:pra:mprapa:68433
    as

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    References listed on IDEAS

    as
    1. Rodney Wilson, 1997. "Economics, Ethics and Religion," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-37472-0, March.
    2. Wilson, Rodney, 1994. "Development Of Financial Instruments In An Islamic Framework," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 2, pages 103-115.
    3. Rodney Wilson, 1989. "The islamic development bank's role as an aid agency for moslem countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 1(4), pages 444-466, October.
    4. Rodney Wilson, 1997. "Economics and Ethics," Palgrave Macmillan Books, in: Economics, Ethics and Religion, chapter 1, pages 1-21, Palgrave Macmillan.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Determinants; Home financing; Islamic financing;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior

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