factors that affect non-muslim customers' preference against islamic deposit products in malaysia

171 Pages·2017·2.21 MB·English

by  Chew Hoong

FACTORS THAT AFFECT NON-MUSLIM
CUSTOMERS’ PREFERENCE AGAINST ISLAMIC
DEPOSIT PRODUCTS IN MALAYSIA

BY
CHOONG JIA BIN
LIM CHEW HOONG
ONG KAH YONG
SEAH CHIA LOK
TAN YI XIN

A research project submitted in partial fulfilment of the
requirement for the degree of

BACHELOR OF BUSINESS ADMINISTRATION
(HONS) BANKING AND FINANCE

UNIVERSITI TUNKU ABDUL RAHMAN

FACULTY OF BUSINESS AND FINANCE
DEPARTMENT OF FINANCE

JANUARY 2017
FACTORS THAT AFFECT NON-MUSLIM CUSTOMERS’ PREFERENCE AGAINST
ISLAMIC DEPOSIT PRODUCTS IN MALAYSIA

Copyright @ 2017
ALL RIGHT RESERVED. No part of this paper maybe produced, stored in a
retrieval system, or transmitted in any form or by any means, graphics, electronic,
mechanical, photocopying, recording, or otherwise, without the prior consent of the
authors.

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FACTORS THAT AFFECT NON-MUSLIM CUSTOMERS’ PREFERENCE AGAINST
ISLAMIC DEPOSIT PRODUCTS IN MALAYSIA

DECLARATION

We hereby declare that:

(1) This undergraduate research project is the end result of our own work and
that due acknowledgement has been given in the references to ALL sources
of information be they printed, electronic, or personal.

(2) No portion of this research project has been submitted in support of any
application for any other degree or qualification of this or any other
university, or other institutes of learning.

(3) Equal contribution has been made by each group member in completing the
research project.

(4) The word count of this research report is 21,122 words.

Name of Student: Student ID: Signature:
1. CHOONG JIA BIN 1303992
2. LIM CHEW HOONG 1406603
3. ONG KAH YONG 1305845
4. SEAH CHIA LOK 1406582
5. TAN YI XIN 1303372

Date:

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FACTORS THAT AFFECT NON-MUSLIM CUSTOMERS’ PREFERENCE AGAINST
ISLAMIC DEPOSIT PRODUCTS IN MALAYSIA

ACKNOWLEDGEMENT
It is appreciated that our research project has been successfully conducted with the
assistance of various authorities. Hence, we would like to grasp this opportunity to
express our sincere appreciation and acknowledge those who had been contributed
towards our research project.

First and foremost, we would like to express thanks to Universiti Tunku Abdul
Rahman (UTAR) for giving us such a good opportunity to conduct this research
project which is useful for our future. Throughout this research project, it enables
us to obtain specific knowledge and skill which is very valuable to us. Also, it
allows us to build up strong friendship and cooperation through the teamwork in
this project.

Besides that, we want to express our deepest grateful to our supervisor, Puan Siti
Nur Amira binti Othman who has advised and guided us patiently in completing
this project. We appreciate her contribution and it is our pleasure to be under her
supervision as she shares many of her opinions and gives us valuable guidance in
order to assist us to achieve our objectives of this research. Moreover, we able to
complete our research project on time satisfactorily with her patient guidance and
full support.

Apart from that, we would also like to take this opportunity to thank and appreciate
our second examiner, Cik Zainon Binti Md. Yunus. During our VIVA presentation,
she has pointed out some weaknesses of our project and also suggested solutions
for us to further enhance our research project. We appreciate her advice as it helps
to improve our research project to be more perfect.

In addition, we would like to acknowledge to all the respondents for their
participation, cooperation and enthusiasm in our questionnaire surveys. We
appreciate all the respondents who are willing to spend their precious time to fill up
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FACTORS THAT AFFECT NON-MUSLIM CUSTOMERS’ PREFERENCE AGAINST
ISLAMIC DEPOSIT PRODUCTS IN MALAYSIA

the questionnaire. Last but not least, we are grateful to all our team members for
their cooperation, tolerance and contribution towards this research project.

Once again, we would like to express a sincere gratitude to all of you. Thank you.

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FACTORS THAT AFFECT NON-MUSLIM CUSTOMERS’ PREFERENCE AGAINST
ISLAMIC DEPOSIT PRODUCTS IN MALAYSIA

DEDICATION

We would like to express our sincere gratitude to our honour supervisor, Puan Siti
Nur Amira binti Othman, for her valuable guidance, advice and motivation in
assisting the completion of this research project.

Furthermore, we would like to dedicate this research project to our family members
for the appreciation of their encouragement and financial support. Moreover, this
research project is dedicated to all of our group members who have contributed
most of the time, effort, energy, knowledge and cooperation in conducting this
research. Our collaboration, understanding, respect and enthusiasm towards this
research highly lead to the completion of this research project.

Apart from that, this research project is dedicated to the public who has assisted in
the success of the survey conduction. We would like to express special thank to
them for their participation and the valuable information provided to complete this
research.

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FACTORS THAT AFFECT NON-MUSLIM CUSTOMERS’ PREFERENCE AGAINST
ISLAMIC DEPOSIT PRODUCTS IN MALAYSIA

TABLE OF CONTENTS
Page
Copyright Page ……………………………………………………………. ii
Declaration ………………………………………………………………… iii
Acknowledgement ………………………………………………………… iv
Dedication ………………………………………………………………. vi
Table of Contents ………………………………………………………….. vii
List of Tables ……………………………………………………………. xiii
List of Figures …………………………………………………………… xv
List of Appendix…………………………………………………………… xvi
Preface……………………………………………………………………. xvii
Abstract…………………………………………………………….. ……...xviii

CHAPTER 1 RESEARCH OVERVIEW…………………………….. 1
1.0 Introduction………………………………………………. 1

1.1 History of Islamic Deposit Products……………………… 1
1.1.1 What is Islamic Deposit Products?............................ 2
1.1.1.1 Current Account………………………….. 4
1.1.1.2 Savings Account………………………….. 4
1.1.1.3 Investment Account………………………. 5
1.1.1.4 Certificate of Deposits…………………….. 5
1.2 Problem Statement……………..………………………….. 5
1.3 Research Objectives………………………………………. 7
1.3.1 General Objectives………………………………… 7
1.3.2 Specific Objectives……………………………… 7
1.4 Research Questions……………………………………… 7
1.5 Hypothesis of the Research………………………………… 8
1.5.1 Sharia Compliance…………………………………. 8
1.5.2 Knowledge of non-Muslim Customers…………….. 8
1.5.3 Trust and Confidence………………………………. 8
1.5.4 Flexibility of Withdrawal…………………………... 8
1.6 Significance of the Research………………………………. 9
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FACTORS THAT AFFECT NON-MUSLIM CUSTOMERS’ PREFERENCE AGAINST
ISLAMIC DEPOSIT PRODUCTS IN MALAYSIA

1.7 Chapter Layout………………………………………….. 10
1.8 Conclusion…………………………………………………. 10

CHAPTER 2 LITERATURE REVIEW……………………………... 11
2.0 Introduction……………………………………………… 11
2.1 Literature Review………………………………………… 11
2.1.1 Depndent Variable……………………………… 11
2.1.1.1 Preferences of non-Muslim Customers…… 11
2.1.2 Independent Variable…………………….……….. 13
2.1.2.1 Sharia Compliance……………………….. 13
2.1.2.2 Knowledge of non-Muslim Customer ……. 15
2.1.2.3 Trust and Confidence ………………….….. 18
2.1.2.4 Flexibility of Withdrawal………………….. 19
2.2 Review of Relevant Theoretical Methods………………. 21
2.3 Proposed Theoretical / Conceptual Framework……..……. 22
2.4 Hypothesis Development…………………………………. 23
2.4.1 Sharia Compliance…………………………………. 23
2.4.2 Knowledge of non-Muslim Customers…………….. 23
2.4.3 Trust and Confidence………………………………. 25
2.4.4 Flexibility of Withdrawal………………………….. 25
2.4.5 Four Independent Variables……………………….. 26
2.5 Conclusion……………………………………………….… 26

CHAPTER 3 METHODOLOGY…………………………………….…. 27
3.0 Introduction………………………………………………… 27
3.1 Research Design…………………………………………… 27
3.1.1 Descriptive Research………………………………. 27
3.1.2 Quantitative Research……………………………… 28
3.2 Data Collection Method………………………………….… 28
3.2.1 Primary Data……………………………………….. 28
3.3 Sampling Data……………………………………………… 28
3.3.1 Target Populations…………………………………. 29
3.3.2 Sampling Frame and Sampling Location…………... 29
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ISLAMIC DEPOSIT PRODUCTS IN MALAYSIA

3.3.3 Sampling Elements………………………………… 30
3.3.4 Sampling Techniques……………………………… 30
3.3.5 Sampling Size……………………………………… 30
3.4 Research Instrument……………………………………….. 30
3.4.1 Questionnaire Design………………………………. 30
3.4.2 Pilot Test………………………………………….... 31
3.4.2.1 Result of Pilot Test………………………… 31
3.5 Construct Measurement…………………………….……… 32
3.5.1 Section A of Questionnaire……………………….... 32
3.5.2 Section B of Questionnaire………………………… 32
3.5.3 Section C of Questionnaire………………………… 32
3.6 Data Processing…………………………………………….. 38
3.7 Data Analysis………………………………………………. 39
3.7.1 Descriptive Analysis……………………………….. 39
3.7.2 Scale Measurement………………………………… 39
3.7.2.1 Reliability Test……………….……………. 39
3.7.3 Inferential Analysis………………………………… 40
3.7.3.1 Pearson Correlation Coefficient Analysis…. 40
3.7.3.2 Multiple Linear Regression Analysis……… 41
3.8 Conclusion…………………………………………………. 43

CHAPTER 4 DATA ANALYSIS………………………………………... 44
4.0 Introduction………………………………………………… 44
4.1 Descriptive Analysis……………………………………….. 45
4.1.1 Respondents’ Demographic Profile………………... 45
4.1.1.1 Age…………………………………………. 45
4.1.1.2 Race…………………………………………46
4.1.1.3 Marital Status………………………………. 47
4.1.1.4 Highest Education Level…………………… 48
4.1.1.5 Employment Status………………………… 49
4.1.1.6 Monthly Income…………………………… 50
4.1.2 Central Tendencies Measurement of Construct……. 52
4.1.2.1 Sharia Compliance (SC)…………………... 53
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ISLAMIC DEPOSIT PRODUCTS IN MALAYSIA

4.1.2.2 Knowledge of non-Muslim Customers
(KOC)…………………………………….... 55
4.1.2.3 Trust and Confidence (TC)………………… 57
4.1.2.4 Flexibility of Withdrawal (FW)……………. 60
4.1.2.5 Preferences of non-Muslim Customer (CP)…62
4.2 Scale Measurement………………………………………… 64
4.2.1 Internal Reliability Test……………………………. 64
4.3 Inferential Analysis………………………………………… 66
4.3.1 Pearson Correlation Analysis………………………. 67
4.3.1.1 Correlation between Sharia Compliance and
Preferences of non-Muslim Customer toward
Islamic Deposit Products............................. 68
4.3.1.2 Correlation between Knowledge of
non-Muslim Customers and Preferences of
non-Muslim Customer toward Islamic
Deposit Products…………………………… 69
4.3.1.3 Correlation between Trust and Confidence
and Preferences of non-Muslim Customer
toward Islamic Deposit Products…………... 70
4.3.1.4 Correlation between Flexibility of
Withdrawal and Preferences of non-Muslim
Customer toward Islamic Deposit
Products………………………………….. 72
4.3.2 Multiple Regression Analysis……………………… 73
4.3.2.1 Diagnostic Checking……………………….. 73
4.3.2.1.1 Normality Test………………….. 73
4.3.2.1.2 Multicollinearity Checking………. 74
4.3.2.1.3 Durbin Watson Test
(Autocorrelation)………........….... 74
4.3.2.2 Multiple Linear Regression Model………… 75
4.3.2.2.1 Coefficient of Determination(R2)…77
4.3.2.2.2 Adjusted Coefficient of
Determination (Adjusted R2)…...… 78
x