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Consumer acceptance of Islamic home financing

Author

Listed:
  • Hanudin Amin
  • Abdul Rahim Abdul Rahman
  • Dzuljastri Abdul Razak

Abstract

Purpose - – 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. Design/methodology/approach - – 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. Findings - – 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. Research limitations/implications - – 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. Practical implications - – 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. Originality/value - – 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.

Suggested Citation

  • Hanudin Amin & Abdul Rahim Abdul Rahman & Dzuljastri Abdul Razak, 2014. "Consumer acceptance of Islamic home financing," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 7(3), pages 307-332, July.
    • Handle: RePEc:eme:ijhmap:v:7:y:2014:i:3:p:307-332
    DOI: 10.1108/IJHMA-12-2012-0063
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    Citations

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    Cited by:

    1. Oseni, Umar A. & Adewale, Abideen & Mohd Zain, Nor Razinah Binti, 2016. "Customers' perceptions on the dispute resolution clauses in Islamic finance contracts in Malaysia," Review of Financial Economics, Elsevier, vol. 31(C), pages 89-98.
    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. Amina Hachimi & M. My Abdelouhab Salahddine, 2019. "The Acceptability of Participatory Banking Products by SMES: A Conceptual Framework," International Journal of Economics and Financial Issues, Econjournals, vol. 9(4), pages 259-266.
    5. Mirza Ashfaq Ahmed & Riffat Zulfiqar & Muhammad Anwar ul Haq & Noreena Kausar & Shaista Khalid, 2020. "Customer Purchase Intentions toward Islamic Banking Products in Pakistan: A Study of Religiosity-Based Marketing," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(10), pages 1187-1202, October.
    6. Umar A. Oseni & Abideen Adewale & Nor Razinah Binti Mohd Zain, 2016. "Customers' perceptions on the dispute resolution clauses in Islamic finance contracts in Malaysia," Review of Financial Economics, John Wiley & Sons, vol. 31(1), pages 89-98, November.
    7. Mohammed Mohammed Ishaq & Sulaiman Noralfishah, 2018. "Determinants of Reverse Mortgage Usage in Malaysia," Real Estate Management and Valuation, Sciendo, vol. 26(3), pages 5-23, September.
    8. Ghlamallah, Ezzedine & Alexakis, Christos & Dowling, Michael & Piepenbrink, Anke, 2021. "The topics of Islamic economics and finance research," International Review of Economics & Finance, Elsevier, vol. 75(C), pages 145-160.
    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. Balushi, Yasmeen Al & Locke, Stuart & Boulanouar, Zakaria, 2018. "Islamic financial decision-making among SMEs in the Sultanate of Oman: An adaption of the theory of planned behaviour," Journal of Behavioral and Experimental Finance, Elsevier, vol. 20(C), pages 30-38.

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