CUSTOMERS’eprints.utar.edu.my/2705/1/fyp_BF_2017_SCK_-_1406582.pdf · participation, cooperation and enthusiasm in our questionnaire surveys. We appreciate all the respondents who

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

ii

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.



iii

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:



iv

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



v

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.



vi

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.



vii

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



viii

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



ix

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



x

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



xi

4.3.2.2.3 ANOVA Table……………...……. 78

4.3.3 Hypothesis Testing………………………………….79

4.3.3.1 Overall F-test (Hypothesis E)……………….79

4.3.3.2 T-test Hypothesis A………………………... 80

4.3.3.3 T-test Hypothesis B…………………………80

4.3.3.4 T-test Hypothesis C…………………………81

4.3.3.5 T-test Hypothesis D………………………... 81

4.4 Conclusion………………………….……………………… 82

CHAPTER 5 DISCUSSION AND CONCLUSION…………………… 83

5.0 Introduction……………………………….……………….. 83

5.1 Summary of Statistical Analysis………………………….. 83

5.1.1 Descriptive Analysis………………………………. 83

5.1.1.1 Respondents’ Demographic Profile………. 83

5.1.1.2 Central Tendencies Measurement of

Construct………………………..……..…… 84

5.1.1.3 Scale Measurement………………………… 86

5.1.2 Inferential Analysis………………………………… 86

5.1.2.1 Pearson Correlation Analysis………………. 86

5.1.2.2 Multiple Linear Regressions……………….. 88

5.2 Discussion on Major Findings……………………………... 89

5.2.1 The effect of all independents variables on

preferences of non-Muslim customers toward

Islamic deposit product…………..……………….. 90

5.2.2 The effect of Sharia compliance on preferences

of non-Muslim customers toward Islamic deposit

products…………………………………..……….. 90

5.2.3 The effect of knowledge of non-Muslim customers

on preferences of non-Muslim customers toward

Islamic deposit products………………………...…. 91

5.2.4 The effect of trust and confidence on preferences of

non-Muslim customers toward Islamic deposit

products…………………………………………..... 92



xii

5.2.5 The effect of flexibility of withdrawal on preferences

of non-Muslim customers toward Islamic deposit

products…………………………………………..… 93

5.3 Implications of the Study………………………….……….. 95

5.3.1 Managerial Implication……………………….……. 95

5.4 Limitation of Study……………...…………..…………… 96

5.5 Recommendation for Future Researches………………….. 97

5.6 Conclusion………………………………………………… 98

References…………………………………………………………………. 99

Appendix…………………………………………………………………… 113



xiii

LIST OF TABLES

Page

Table 3.1 : Pilot test reliability test results : Dependent Variable

(Preferences of non-Muslim Customers toward Islamic

Deposit Products)………………………………………….. 31

Table 3.2 : Pilot test reliability test results : Independent Variable ….. 31

Table 3.3 : Questionnaire Section B………………………………….. 33

Table 3.4 : Questionnaire Section C………………………………….. 37

Table 3.5 : Cronbach’s Alpha Coefficient Value…………………….. 40

Table 3.6 : Interpreting the Size of a Correlation Coefficient……….. 41

Table 4.1 : Respondent Demographic of Age………………………… 45

Table 4.2 : Respondent Demographic of Race………………………. 46

Table 4.3 : Respondent Demographic for Marital Status…………….. 47

Table 4.4 : Respondent Demographic of Highest Education Level….. 48

Table 4.5 : Respondent Demographic of Employment Status………... 49

Table 4.6 : Respondent Demographic of Monthly Income…………… 50

Tabl4 4.7 : Central Tendencies Measurement of Construct : Sharia

Compliance……………………………………………….... 53

Table 4.8 : Central Tendencies Measurement of Construct :

Knowledge of non-Muslim Customers……………………. 55


Trust and Confidence……………………………………… 57


Flexibility of Withdrawal…………………….……………. 60


Preferences of non-Muslim Customers …………………… 62

Table 4.12 : Reliability Test of Dependent Variable (Preferences of non-

Muslim Customers toward Islamic deposit products).. …… 65

Table 4.13 : Reliability Test of Independent Variables……………….. 65

Table 4.14 : Rules of Thumb about Correlation Coefficient Size…….. 61

Table 4.15 : Pearson Correlation Analysis………………….…………. 62



xiv

Table 4.16 : Correlation between Sharia compliance and preferences

of non-Muslim Customers toward Islamic deposit

products……………………………………………………. 68

Table 4.17 : Correlation between knowledge of non-Muslim customers

and preferences of non-Muslim Customers toward Islamic

deposit products…………………………………………… 69

Table 4.18 : Correlation between trust and confidence and preferences

of non-Muslim Customers toward Islamic deposit products 70

Table 4.19 : Correlation between flexibility of withdrawal and

preferences of non-Muslim Customers toward Islamic

deposit products……………………………..…………….. 72

Table 4.20 : Skewness and Kurtosis of Residuals…………………….. 73

Table 4.21 : Collinearity Table………………………..……………….. 74

Table 4.22 : Durbin Watson Result…………………….………………. 74

Table 4.23 : Coefficient Table…………………………………………. 76

Table 4.24 : Model Summary………………………………………….. 77

Table 4.25 : ANOVA table for multiple linear regression…………….. 78

Table 5.1 : Summary of the results of hypothesis testing……………. 89



xv

LIST OF FIGURES

Page

Figure 1.1 :Islamic Banking Statistics ……………………………… 3

Figure 1.2 :Islamic Banking Statistic – Deposits…………………….. 3

Figure 2.1 : Research Model in Aziza & Awais’ Study……………….. 21

Figure 2.2 : Conceptual Framework That Determine the Factors of

on-Muslim Customers’ Preferences toward Islamic

Deposit Products…………………………………………. 22

Figure 3.1 : Median and Mean monthly salaries of employees by

states, Malaysia 2015-2016………………………………… 29

Figure 4.1 : Respondent Demographic of Age………………………… 45

Figure 4.2 : Respondent Demographic of Race……………………….. 46

Figure 4.3 : Respondent Demographic for Marital Status……………. 47

Figure 4.4 : Respondent Demographic of Highest Education Level...… 48

Figure 4.5 : Respondent Demographic of Employment Status……….. 50

Figure 4.6 : Respondent Demographic of Monthly Income…………… 51



xvi

LIST OF APPENDIX

Page

Appendix A : Survey Questionnaire…………………………………….. 113

Appendix B : Pilot test reliability output……………………………….. 121

Appendix C : Frequency output………………………………………… 125

Appendix D : Reliability test output……………………………………. 139

Appendix E : Correlation output……………………………………….. 144

Appendix F : Normality test output…………………………………….. 145

Appendix G : Collinearity output……………………………………….. 147

Appendix H : Multiple linear regression model output…………………. 150

Appendix J : Chi square distribution table……………………………... 153



xvii

PREFACE

In this modern era, Islamic banking is an important banking system that helps to

facilitate current financial system. Bank Islam Malaysia started it operation in 1983.

Sharia finance is a blend of Islamic Economies and modern lending principles, its

products can be sold to Muslims and non-Muslims alike. The increased of

competition and the overall structure among Islamic banks have drawn the purpose

of conducting this research in order to have a deeper understanding on the affect

non-Muslim customers’ preference against Islamic deposit products in Malaysia.

This research is conducted to enable the Islamic bankers to gain better

understanding on the Sharia Compliance, Knowledge of non-Muslim customers,

Trust and Confidence, Flexibility of Withdrawal toward the non- Muslim

customer.This study contributes to Islamic banking by enable the Islamic bankers

to formulate different strategies and policies to attract more non-Muslims banking

users. In addition this research is conducted in order to provide meaningful result

and broaden the the Islamic deposit products in Malaysia.

The beginning of the process for conducting this research is complicated. However,

we have separated all the parts to each person to complete our research. We shared

the knowledge, ideas and solutions together in order to solve the problems faced

while conducting our research. We believe that teamwork is very important to

complete our research on time. After conducting this research, we realize that we

have deeper understanding on our topic and it could enhance our knowledge and

apply in future career.



xviii

ABSTRACT

Being one of the strongest proponents of Islamic Banking, Malaysia has been

promoting the idea of implementing Islamic Banking System (IBS) with the

purpose to expand the ring of unity among Muslims and to ensure a fair distribution

and utilization of fund in compliances with Islamic Principles in order to parallel

the conventional system. The existence of financial institutions for both Islamic and

conventional, Malaysians have been presented with numerous choices to choose the

products and services that meet their needs and wants. This study provides

important contribution to the Islamic bankers in understanding customer attitudes,

preferences and characteristics. In addition, this study also aims to investigate if any

demographic influence the awareness, understanding and perceptions of Islamic

Banking products and services among non-Muslims in Malaysia.

A total sample size of 250 respondents is drawn from Malaysia. The results show

that more than half of the respondents are aware of the Islamic banking products

and services in Malaysia. Multiple Linear Regression analysis is then conducted,

and all independent variables have significant positive effect on preferences of non-

Muslim customers, where independent variable Sharia compliance, knowledge of

non-Muslim customers, trust and confidence, flexibility of withdrawal toward the

non- Muslim customer. Besides, confidence in Islamic banking has the highest

Cronbach’s alpha and the strongest impact on acceptance level. For the analysis,

one way ANOVA and Pearson Correlation Coefficient was adopted to analyses the

results. This study also provides theoretical and managerial implications for the

Islamic bankers to attract non-Muslims customers and recommendations for future

research in Islamic Banking.



1

CHAPTER 1: RESEARCH OVERVIEW

1.0 Introduction

This research discussed about the factors that affect non-Muslim customers’

preference against Islamic deposit products in Malaysia. This chapter separated into

eight sections to discuss about history of Islamic deposit products in Malaysia,

definition of Islamic deposit product, problem statements, objectives of research

and questions, hypothesis of the research, significance of the research, chapter

layout and conclusion. First of all, the background of the research briefly explained

about the Islamic deposit products in Malaysia. Following from that, the problem

statements and research questions discussed and stated the purpose of this research.

Thus, research objectives and hypothesis will be a guideline to conduct this research.

Lastly, this research will be concluded with a summary of this research, limitations

of this research, and recommendations for future research.

1.1 History of Islamic Deposit Products

It is revealed that the primary sources of fund for Islamic banks are deposit products.

Based on the study by Yusoff and Wilson (2005), Islamic banks and counters or

branches was opened in conventional banks in Malaysia and offer Islamic products

in order to obtain profit sharing rather that interest earning. The authors also further

expound that the demand deposits offer by Islamic bank is based on the guaranteed

custody concept (al-wadiah) which have relation to one person pass his or her asset

to another person for safekeeping on purpose while investment deposit is based on

the profit sharing concept (al-mudarabah) which related to one person provide

capital to another person for purpose of investment. The agreement between Islamic

bank and depositors does not mention a specific rate of return in investment or

deposit The parties of the contract just set the ratio to distribute the profits and losses.

According to Amin (2013), majority of banks offer all kinds of deposit products

based on bank policies, operation and marketing strategies. In short, deposit

products help surplus units transfer the funds to deficit units. Entrepreneur is one of

the deficit units who utilize the accumulated funds mobilize from surplus unit to do



2

different projects. Those funds are allocated in varies projects and sectors that

involved with many type of risk related to the employment of fund. Thus, the

depositors may earn dividend when the deposit or investment make profit. Likewise,

the depositors will lose a part of capital they invested when losing in investment

and deposit. By and large, Islamic bank play the vital role to accept funds and utilize

funds financing purpose, investment purpose or in profit making activities

compliant with Sharia laws.

1.1.1 What is Islamic Deposit Products?

Malaysia established the first Islamic bank in 1983 with the formation of Bank Islam

Malaysia Berhad (BIMB). As some other banks in Malaysia, the Central Bank of

Malaysia (also known as Bank Negara Malaysia) governs the operation of Islamic

banks; the Islamic Banking Act1983 covers the jurisdiction (Central Bank of

Malaysia, n.d.). The operation of the Islamic banking system is same with the

conventional system. This means that the government allows the Islamic banks to

compete with conventional banks without favouring either.

Islamic deposit products which are Islamic banks’ strength basis form in accordance

with Sharia law. They use these deposits’ money to help customers invest and earn

profit. Thus, in banks side, deposits are liabilities. Islamic deposits may be based

on Mudarabah and Wakalah structures. For the example, Islamic deposit products

such as Islamic current deposit is known as current account-i, Islamic savings

account known as savings account-i, Islamic investment account known as Islamic

fixed deposit, and so on.



3

Figure 1.1 : Islamic Banking Statistics

Source : http://www.oicstatcom.org/imgs/news/presentations/1015-

MALAYSIA.pd

Figure 1.2 : Islamic Banking Statistics - Deposits

Source : http://www.oicstatcom.org/imgs/news/presentations/1015-MALAYSIA.pdf

Above is show about the statistic of Islamic banking between the years 2006-2012.

The statistic shows the pre-tax profit result of banking system, commercial bank,

investment and Islamic bank. In 2010, MIFC, BNM, SC, Labuan FSA, Bursa

Malaysia and DOSM work together in estimate value added Islamic capital market



4

activities. Besides, nature of capital market structure in Malaysia is where the same

enterprises offering both products.

1.1.1.1 Current Account

Current account is the cheque account, which means customers use the cheque to

make payments, and usually without paying any ‘interest’. This is because the

Islamic bank will not use fund for investment purpose, they just used to profit

sharing. Current account-i is under a control based on the concept of wadiah or the

combination between wadiah (guaranteed custody) and mudarabah (profit-sharing)

(Kontota et al, 2016). According to Amin, the end of the product name which has

letter ‘i’ such as “current account-i” that mean the products processing with Sharia

Compliance, and that its services which are no any riba-taking activities. For the

example: Wadi’a-wad-dhamana or guaranteed deposits, qard hasan current account.

1.1.1.2 Savings Account

According to Haron & Wan-Azmi (2008), customers would ordinarily choose

savings account due to satisfying precautionary motives. Amin represent that the

concept of savings account-i, is based on the concept of rabbul mal and mudarib,

where the customer is still viewed as the rabbul mal because the customers

contribute funds to the bank. On the other hand, the bank is the mudarib because

the bank employs such funds for various types of halal investments in order to earn

profits from the business transactions undertaken (Amin).

Rosly and Mohd-Zaini (2008) explained that Islamic banks will give the ‘gift’ to

the savings account holder which is the returns. The returns known as hiba, which

is context of reward profit based on the banks performances (Abdul-Rahman, 2005).

If the bank generates more profit from its banking business, greater amount of hiba

is given and credited to the customer’s savings account. If the bank getting loss, no

hiba provided, and the customer will not get any loses from their deposit within the

bank. For example: Wadi’a Model, Mudharaba Model, Al Qard Al Hasan Model



5

1.1.1.3 Investment Account

Islamic fixed deposits are based on a “profit-sharing ratio” and heavily depend on

the performance of the bank (Utusan Online, 2005b). It is different with the savings

account-i, the investment account-i is more focused on long term saving and has

higher price (Amin). According to Amin, the major goal of the investment account

is to gain maximum profit during the time in which it is invested. During that time

however, the customer may also lose his money if the investment by the bank is at

a loss but this situation rarely happens (Amin). However, it is depends on the bank’s

policy. For the example: General Investment Account-i (GIA), Special Investment

Account-i(SIA)

1.1.1.4 Certificate of deposits

A certificate of deposit (CD) is a time deposit, a financial product typically sold in

the United States and elsewhere by banks, thrift institutions, and credit unions. CDs

are like savings accounts in that they are insured "money in the bank" and thus

virtually risk free. In the USA, CDs are guaranteed by the Federal Deposit Insurance

Corporation (FDIC) for banks and by the National Credit Union Administration

(NCUA) for credit unions. They contrast from savings accounts in that the CD has

a specific, fixed term (usually one, three, or six months, or one to five years) and,

usually, a fixed interest rate. The banks have to arrange that the customer holds the

CD until maturity, at which time they can withdraw the money and accrued interest.

1.2 Problem Statement

The wider increase of the products coverage area and the proficiency to overcome

the global economic downturn had gain the popularity among non-Muslims. The

outstanding performance of Islamic banking creates a remarkable image in banking

sector and a new dimension was generated due to the changes in the Malaysian

financial landscape. Some scenario cause customers preference changed and

demand for high quality banking services.



6

Since the competition between the banks becomes fierce, the financial institutions

decide to development more conventional and Islamic customers to attract Muslims

and non-Muslims for choosing the banking products and services. Rather,

customers currently are difficult to make decisions to pick the ones that address

their issues and needs. This situation applies to the Islamic banking system as

conventional bank can offer Islamic products and services under the dual-window

concept. There is different literature review found that the customers was influenced

by the services, products, trustworthy and the availableness of outlets to before

make decision to choose the Islamic products offer by Islamic banking. Hence,

based on Islamic scholars Tengku Wasimah, R, H, Rosemaliza, A, R & Abu Bakar,

H (2015) mentioned that the customers receive Islamic banking services was not

only influence by Islamic branding. From the information from examination found

that non-Muslims take Islamic administrations because of Islamic marking as well

as some different components. For example, knowledge of customers, Sharia

compliance, trust and confidence, flexibility of withdrawal scheme etc.

The demand of Islamic banking services was increased due to the Sharia principle

which complies on the commercial products and services in Malaysia. These issues

make numerous Muslim changed from ordinary to Islamic managing an account

items. Due to the well management of the operational base, regulatory framework

system and profitability, Malaysia’ society choose to support Islamic banking

industry. However, the quantity demand from customers was strong and causes the

problem of supply to industry. These days, clients are required to have more

information in saving money, interest for valuable items and administrations

(Aslamet al., 2011). There is always a doubt that the employee from Islamic banks

is well training and knowledgeable in Islamic products which can fulfil the needs

of customers. In the research by Zainol et al. (2008) argue that minority of the

bankers had insufficient knowledge to be accomplished with the banks.

Therefore, there are four main independent variables have been adopted in this

research to determine which variables is the most important factor for the customers



7

to choose Islamic banking services. The four independent variables which

mentioned above will be explained with the support of literature review in next

chapter.

1.3 Research Objectives

1.3.1 General Objective

To study the factors that affect the preferences of non-Muslim customers toward

Islamic deposit products in Malaysia.

1.3.2 Specific Objectives

a) To examine the relationship between Sharia compliance and the preferences

of non-Muslim customers toward Islamic deposit products in Malaysia.

b) To determine the relationship between knowledge of non-Muslim customers

and the preferences of non-Muslim customers toward Islamic deposit

products in Malaysia.

c) To examine the relationship between trust and confidence and the

preferences of non-Muslim customers toward Islamic deposit products in

Malaysia.

d) To determine the relationship between flexibility of withdrawal and the


Malaysia.

1.4 Research Questions

a) Are there any relationship between the Sharia compliance and non-Muslim

customers’ preferences against Islamic deposit products in Malaysia?

b) How well the non-Muslim customers understand about the Islamic deposit

products in Malaysia?

c) What are the level of trust and confidence for non-Muslim customers toward

Islamic deposit products in Malaysia?



8

d) What are the relationship between the flexibility of withdrawal and non-Muslim

customers’ preferences against Islamic deposit products in Malaysia?

1.5 Hypothesis of the Research

1.5.1 Sharia Compliance

H0A : There is no significant relationship between the Sharia compliance and the

preferences of non-Muslim customers toward Islamic deposit products in Malaysia.

H1A : There is significant relationship between the Sharia compliance and the


1.5.2 Knowledge of non-Muslim Customers

H0B : There is no significant relationship between the knowledge of non-Muslim

customers and the preferences of non-Muslim customers toward Islamic deposit


H1B : There is significant relationship between the knowledge of non-Muslim



1.5.3 Trust and Confidence

H0C : There is no significant relationship between the trust and confidence and the


H1C : There is significant relationship between the trust and confidence and the


1.5.4 Flexibility of Withdrawal

H0D : There is no significant relationship between the flexibility of withdrawal and

the preferences of non-Muslim customers toward Islamic deposit products in

Malaysia.

H1D : There is significant relationship between the flexibility of withdrawal and the




9

1.6 Significance of the Research

This research emphasizes on the knowledge of non-Muslim customers for Islamic

deposit products, Sharia compliance, trust and confidence and the flexibility of

withdrawal scheme that affect the non-Muslim customers’ preferences against

Islamic deposit products in Malaysia. Since Malaysia is an Islamic hub in the world,

this research emphasizes on the preferences of non-Muslim customers toward


The Islamic services and products are considered well-received by non-Muslim

customers but the researchers were unsure about the customers’ preferences and the

potential of Islamic products in the future. Non-Muslim customers will consider to

establish a banking relationship with Islamic bank by taking the Islamic deposit

products if the bank have sufficient information of banking operations. Non-

Muslims customer will consider to involve in Islamic banking if the banks gave

higher confidence level to the non-Muslim customers.

Hence, through this research, the Islamic banks in Malaysia can have a better

understanding on the non-Muslim customers’ knowledge and preferences towards

the Islamic deposit products. Therefore, the banks can structure different strategies

and types of products to expand the Islamic deposit products business by increasing

the market among non-Muslim customers. In short, the Islamic deposit products

will become more popular among non-Muslim in Malaysia.



10

1.7 Chapter Layout

This report will be followed by the literature review of previous researches in

Chapter 2. The next chapter, Chapter 3 is the discussion on the methodology used

of this research. The interpretations and results will be presented in Chapter 4. The

last chapter, Chapter 5 of this research will be concluded by a summary, implication

of the findings, limitations of the research and recommendations for future research.

1.8 Conclusion

This chapter consist of basic knowledge of Islamic deposit products, problem

statement, research objectives and research questions of this research. The

hypothesis and significance of this research can also be clearly understood in this

chapter. The chapter outline that need to study is the factors that affect the

preferences of non-Muslim customers toward Islamic deposit products in Malaysia

also stated in this chapter.



11

CHAPTER 2 : LITERATURE REVIEW

2.0 Introduction

In Chapter 2 will discuss about the relationship between dependent variable which

is the preferences of non-Muslim customers toward Islamic deposit products in

Malaysia and independent variables which are Sharia compliance, knowledge of

non-Muslim customers, trust and confidence, and flexibility of withdrawal. This

chapter will cover literature review, review of relevant theoretical models, proposed

theoretical or conceptual framework, hypotheses development and a conclusion of

the chapter. In this chapter relevant established theories will be listed to show that

the relationship between the selected independent variables and the dependent

variable.

2.1 Literature Review

2.1.1 Dependent Variable

2.1.1.1 Preferences of non-Muslim customer

Customer preference defines a customer desires for one collection of product and

services over another or how ordering alternative of a collection of product and

services. This definition assumes customers order the products and services are

based on the amount of satisfaction, utility and afforded. Customer preference

theory does not take the income of customer, purchasing power for a product or

service and price of goods and services (Raines, 2011).

According to Jalir and Rahman (2014), the finding of the research shows the

respondents are influenced by perception of services, convenience of services and

ethical organization. But, they are not influenced by Islamic branding to choose

Islamic banking services. The finding shows the dependent variable ‘consumers’

preference toward the Islamic banking services’ and independent variable ‘services’

perception’ are strong positive relationship. However, there are some limitations in



12

his study which are the sample size was not more than 200, data collected from

different place in a city and too less non-Muslim respondent.

Apart from that, Haque, Osman and Ismail (2009) conducted a research on

Malaysia’s customer preferences to examine the factor influence selection of

Islamic banking. The results indicates that customer preferences influenced by the

bank service quality on performance which similar with the research conducted by

Dusuki and Abdullah (2007) stated that the customer satisfaction is depend on the

service quality of Islamic bank. Findings show that higher standard of quality

services will increase the customer preference and satisfaction. There are significant

relationships between customer perception and service quality, finally availability

of services and social and religious perspective since their coefficients are positive

values. But, there is negative value which indicated insignificant relationship

between confidence and customer perception and less effect on customer perception

for Islamic bank product selection.

Furthermore, Hamzah, Ishak and Nor (2015) conduct a study about the relationship

between customer satisfaction and the quality of services of Islamic banks in

Malaysia. This study shows that there is significant relationship between the

customer satisfaction and services quality and with the positive value of coefficient

(Hamzah, Ishak and Nor, 2015; Dusuki and Abdullah, 2007; Haque, Jamil and

Ismail, 2009). Hence, Islamic banks should take several steps to improve their

quality of services to keep marketed and maintain a top premium position. Further

researchers are recommended to do a comparison between the customer's’

preference and quality of services offer by conventional and Islamic bank that

provide Islamic banking.

Besides, Shahid, Mehmood, Ahmad, Ahmad and Shafique (2015) carry out a

research about the Malaysian consumer preferences for islamic attributes to

examine selection area of Malaysian customer towards Islamic banking. It was

affected by quality of service, accessibility to their clients, relationship with

customer, professional advice and employee skill and information. By using



13

quantitative method, it shows the favourite of Islamic banking is not influenced by

religious but affect by quality of service.

According to Doraisamy, Shanmugam, and Raman (2011), the result indicates that

the customers’ preferences against the Islamic banking products and services will

influence by three main factors. Those factors are awareness, profitability and

service quality. Based on the analysis, it shows that all three variables have

interaction with each other and effect on customers’ preferences toward the Islamic

deposit product and services among Sungai Petani. Among these three independent

variables, two variables which are profitability and quality have a great influence

against the customer's’ preference on Islamic product and services.

According to Metawa and Almossawi (1998), academic background is a factor will

influence customers’ preference toward the Islamic deposit product. Majority of the

Islamic bank customers are well educated and fall between 25-50years. It means the

higher the education level will increase the customer's preference and satisfaction.

The data was collected from customer in the state of Bahrain.

2.1.2 Independent Variables

2.1.2.1 Sharia Compliance

The amount of Non-Muslims customers toward Islamic products were increases

compared from the past as the Sharia principle attract the loyalty from the customers.

The Islamic products which comply with Sharia principle make the products easily

differentiate from the products offered by others conventional banks. From the

research by Md. Abdul Jalil and Muhammad Khalilur Rahman, the result from

questionnaire identify that is a positive relationship between the Non-Muslims

customers toward Islamic banking on Islamic banking services. The Islamic

products had attract the attention from Indian and Chinese customers with the

products such as insurance (TAKAFUL) and home loans (Bank Negara Malaysia).

The Sharia finance which developed in deposit product is a modern principle to the

new customers. A strict lending principle promote by Sharia finance increase the

demand in ethical investing among the Non-Muslims customers (Abdul Aziz,



14

Rokiah & Ahmad Azrin, 2012). Most of the Islamic banking contain Islamic

teachings bring benefit to Non-Muslims customers. From the research by Mohamad

Anwar Thalib, Sharia principle raise the mutual understanding behaviour to respect

the different needs between the Muslims and Non-Muslims customers. The value-

added services will different according to different Non-Muslims customers after

apply the behaviour.

Sharia principle protects non-Muslim customers’ perceptions by fulfilled quality

Islamic banking services to overcome the poverty in country. Islamic bank convince

customer save money in the bank with the benefit low risk and high return from

bank. Non-Muslims shift to the Islamic bank as Islamic product is protect from the

loss in recession (Keria, Jamil & Firdaus, 2016). From the research of Mohd Shahril

Ahmad Razimi and Abd Rahim Romle (2017) mention that the Sharia is used to

enhance the risk management to raise the confident from the customers. Tan Sri

Dr.Zeti Akhtar Aziz come out with a statement where amount of 70 percent Non-

Muslims customers choose Islamic banking product. A professional and

experienced Sharia scholars are needed to interpret the sources of Sharia,

differentiate the assets which is halal or haram and examine the guidelines whether

it is suitable for all customers (Ulrich & Shebab, 2008). This is because the

professional of Islamic banks’ employees possess the Sharia knowledge can raise

the confidence among the customers (Tengku Wasimah, Rosemaliza & Abu Bakar,

2015).

New Sharia financial products is offer to meet Non-Muslims demand in Bangladesh

by Islamic bank due to the satisfied of customer (Parvez, 2014). It maintain the

reputation of in management can raise the religion belief between the customers

(Sudin, Norafifah & Sandra, 1994). The process to receive the permission before

invest the fund from depositors had improve the good image of the bank. The fund

will invest at the bank risk and the profit or loss will be shared with the bank

(Mamun, Kabir Hassan & Abu Umar).

However, the condition to attract Non-Muslims is the cheaper transaction cost and

services provide by Islamic bank. The opinion from Sutan Emir Hidayat & Nouf K



15

Al-Bawardi (2012) proved Islamic banking products is not popular due to the less

amount of customers who maintain the relationship with Islamic banking. Non-

Muslims customers prefer the bank which offer high interest rate on the deposit

(Aziza & Awais, 2016). Muslims customers prefer the bank which comply with

Sharia laws which the fund will return to society for the growth of country economic

(Aziza & Awais, 2016).

Although Malaysia is a multi-religious society, but most of the customers believe

that the Sharia compliance was only benefit to Muslim customers. This statement

was rejected by Farah Amalina Md Nawi, Ahmad Shukri Yazid and Mustafa Omar

Mohammed (2013) after conducted a research which determine the acceptance

between Muslim and Non-Muslims customers related to Islamic Home Financing

(BBA). The result from the research showed that Non-Muslim satisfied BBA can

be fulfilled the desirable needs but discover a high level of dissatisfaction from

Muslims.

In conclusion, many researchers show that major results of the research agree there

is positive relationship between the Non-Muslims customers with the variable of

Sharia compliance.

2.1.2.2 Knowledge of Non-Muslims customers

The amount of Non- Muslims are keep interesting and populating trade with Islamic

banking products and services because of its product can cover wider scope and

ability to cross the worldwide economic recession. However, to what extent this

statement is true in Malaysian context. Subsequently, this research aims to examine

non-Muslim customers’ perception against of Islamic banking products and

services in Malaysia.

Nowadays, customers with higher educational level have more knowledge about

the area that they are interested in, for instance, as financial world (Zainol, Shaari,

& Muhamad Ali, 2008). In addition, the researchers also find that employees who

are working on the frontline are actually play important roles in representing the



16

association to the outside world. However, another study by Ahmad and Haron

(2002) on perceptions of Malaysian corporate customers of Islamic banking

products and services indicated that Islamic banks were not the main choice because

of the lack of knowledge. This review demonstrates that Islamic banks have not

sufficiently directed projects to instruct individuals or elevate their items to people

in general.

This view is upheld by Baba and Amin (2009) showed that the understanding of

principles or ideas of Islamic products among bankers are at the minimum level.

Therefore, it is important that the Islamic banking players have a deep

understanding of Islamic banking industry so that it will have a competitive

advantage over the conventional system. In such manner, the experts are proposed

to give more framework and arrangements to furnish Islamic saving money

representatives with adequate information to empower them to play out their

obligations as per the Sharia standards. Bley and Kuehn (2004) reviewed business

students in the United Arab Emirates (Sharjah) on their knowledge of financial

aspects of Islamic and conventional banks. The major finding was that Muslim

students preferred Islamic banking services because of religious motivations. An

auxiliary discovering, non-Arabic Muslims understudies had a more elevated

amount of learning of ordinary managing an account. Hamid and Nordin(2001)

surveyed Malaysian commercial bank customers, finding a high awareness of

Islamic banking but poor self-reported knowledge of specific Islamic

products, including poor comprehension of the contrast amongst Islamic and

traditional keeping money

Based on Haque, Jamil and Ahmad Zaki (2009) conclude that the demographic

factors such as religion and knowledge are playing an important role to select a

bank. Scientist also found that clients don't have such a great amount of information

about the Islamic keeping money items. Example: Muderaba, Mushaaraka,

Murabaha and so forth. However they purchase these items for the reason of religion.

In the research found that consumer understanding of the workings of Islamic

banking was not strong (Khan et al., 2008; Okumus, 2005; Khattak and Rehman,

2003). Most respondents knew that premium was not paid and knew about a portion



17

of the regular terms related with Islamic keeping money (e.g.Ijarah, and Morabha),

in any case, more point by point information was inadequate. According to Dusuki

et al. (2006) customers highly knowledgeable and competent personnel coupled and

courteous values to be the most important criteria in patronizing Islamic banks.

Marimuthu, Jing, Gie, Mun, Ping (2010) additionally found that banks ought to

observe individuals' inadequate information in Islamic saving money framework

into thought particularly while advancing Islamic budgetary administrations. Hence,

banks should improve their marketing activities accordingly. In a survey conducted

in the UK, Omer (1992) reported that the higher the rule commitment and the lower

the level of general education, the stronger the preference on Islamic over

conventional finance. However, Haron,Ahmad and Planisek (1994) mention that

the selection criteria of Muslim bank customers in Malaysia was largely based on

non-religious aspects. They noticed that in spite of the fact that there was an

abnormal state of consciousness of Islamic items, there was a poor comprehension

of the contrasts amongst Islamic and traditional saving money. The little

information about Islamic banking products is the result of poor understanding of

Islamic banking concept and creates a strong impact on customer’s perception. The

better education is necessary for the awareness of Islamic banking products

(Doraisamy, 2011).

Finding is the level of perception is less in competitive area (Leo, 2009). This

research objective is to define the knowledge of customer perception of customer

with respect to Islamic banking product and the way of increase the knowledge and

the observation of customer about the product of Islamic bank. The populace size

of this review is 280 individuals. ANOVA and relationship examination are utilized

to break down the information. The finding of this review demonstrate that over

half individuals from respondent know an about IB yet less information about item

and administration of IB in addition this review assist to draw in more client (Keong,

2012). In an urban city of Malaysia, Kuala Lumpur, a study by Abdullah et al. (2012)

conclude that non-Muslims at young age and with higher academic qualification

possessed better knowledge and understanding of Islamic banking concepts.



18

2.1.2.3 Trust and confidence

Among the Islamic banking circumstance, trust and confidence are important in

consumer preferences. Former researchers indicated that is not only confidence with

bank, but also confidences in that bank who promise with accrete to Sharia principle

(Hoq, M., Sulatana, N., and Amin, M., 2010; Amin, M. and Isa, Z., 2008). Which

means that is more important that if products are secured, and that will build the

confidence to customers to lead them to choose that products. According to Ashraf,

S., Robson, J. & Sekhon, Y, (2015), trust exactly defined as performance of

commitment and expectation of customers that their long term benefits will be

protected by the bank. Long term will face more uncertainty than short term, if a

bank has greater reputation than others banks, will give more confidence to

customers to choose to deal with them. Good performance which mean can give

more benefits to customers and reduce risks which will faced by customers.

However, in the circumstance of Islamic Banking in Pakistan, the trust of customers

toward bank is also defined as a good perception which the expectation of the

product or service reached the customer’s expectation level (Rizwan, M., Yaseen,

G., Nawaz, A.,and Hussain, L., 2014). Customers prefer to get confidence and trust

for the bank which can increase and secured customers’ wealth.

According to Michell, P. , Reast, J. & Lynch, J., (1998) satisfaction of consumer

will affect trust and confidence of consumer to that bank. If consumer satisfied the

services of that bank provided will increase them more trust and confidence to

purchase products in that bank. Level of reputations of that bank also will affect

their image in consumer mind and tend to affect the trust and confidence of

consumer. Consumer must rely on trust when the products are difficult to assess and

in strange of range (Ennew, C, Kharouf, H, and Sekhon, H, 2011). Conclude from

Ennew, C, Kharouf, H, and Sekhon, H (2011), generate trust is a pre-requirement

for compliance and strengthen the development of allegiance, leading to repurchase

and cross buying, hence trust will affected the decision of consumers to trade with

a bank. Customers may repurchase those products or others products even they may

introduce their friends or family to purchase that products or trade with that bank

which they trusted.



19

Larger part of researchers has argued build on trust is important key influence about

the relationship between bank and consumers because it can’t without trust and

confidence of consumer when bank created or managed. (Sekhon, H., Ennew,C., &

Devlin, J., 2014) If a bank won’t have any trust by customer, that bank will facing

a lot of troubles, like it might not continuous the business process. It was because

that must had a basic in trust between dealer and consumers, otherwise that was

easily faced a high default risk and lower down the success ratio of trade. Based on

Castaldo (2007), trust is based on accumulated knowledge about the other party,

and believed that that party will meet it promised. If that party done it’s promised

will build a higher reputation to let other people more trust it can meet all its

promised and more prefer to trade with it.

In banking process, it manufactured trusting relationship when consumer is lag

knowledge about the variety and intricacy of products and the processing of

products. For the example in Islamic banking products are unfamiliar for consumers

in Non- Muslim in Malaysia, thus the presence of trust is important if consumers

have confidence with that bank. (Roy, S. K., Devlin, J. F., & Sekhon, H., 2015).

This research provides even more vision into whether trust and confidence in an

Islamic bank will affects consumer preferences.

2.1.2.4 Flexibility of withdrawal

The flexibility of withdrawal of an Islamic bank can be clearly understood through

the liquidity management carried out by the bank. Mobin and Admad (2014) stated

that, bank liquidity is the main element for a bank to manage their assets. Only bank

with a sound liquidity management could reach the level of withdrawal demand by

its customers. While the flexibility of withdrawal of an Islamic bank could bring

effects on non-Muslim customers’ preference towards Islamic deposit products.

The failure of a bank to balance between the supply and demand of liquidity leads

to liquidity problems and this is the main reason for depositors to leave the bank

(Ismal, 2010). Each Islamic bank have their own flexibility of withdrawal scheme

based on the basis of preferences and convenience such as online service and

location of ATM (Aziza & Awais, 2016). However, Amin (2016) argued that the



20

acceptance of consumers towards Islamic deposit products are influenced by

religious beliefs, social pressure, cost benefit analysis by the bank and

advertisements but did not show that the flexibility of withdrawal scheme have a

relationship with the customer behaviour towards Islamic deposit products.

In addition, although the availability of credit will affect the flexibility of

withdrawal of the bank but Haron, Ahmad and Planisek (1994) found that non-

Muslim customers only rank it as the ninth important factors that will affect their

preference compared to other factors. This showed that non-Muslim customers

emphasize more on others factors such as the quality of services from bank

compared to the availability of credit of the bank. The availability of ATMs’ had a

positive significant relationship with customer preference to choose the bank

(Srouji, Halim, Lubis & Hamdallah, 2015). The easier the customer could access to

the ATM of the bank, the more willingness of customer will choose for its products.

According to Mokhlis, Mat and Salleh (2008), they found that the availability of

ATM ranked second in their research which supports the view that undergraduates

have positive significant relationship stated earlier.



21

2.2 Review of Relevant Theoretical Methods

Figure 2.1: Research Model in Aziza & Awais’ Study

Source : Aziza, N., & Awais, F. (2016). Customer’s Patronage in Selection Criteria

of Islamic Banks in Pakistan. The International Journal of Business & Management.

According to Aziza and Awais (2016), the criteria for customers to choose Islamic

Bank will be Sharia compliance, awareness, cost and benefit analysis, friendliness

of bank personnel and quality and attractiveness of offerings. Many customers

prefer the services follow the rules and regulation which comply with Sharia

principle. Secondly, customers aware the qualities of the function is important than

traditional marketing activities. Most of the customers are profit oriented as they

want the high return with low risk. They will choose the products to invest which

give benefit more than the cost invests. Friendliness of bank personnel acts as an

important factor because it provide consultation and accurate information to



22

customers. Islamic bank need to provide quality products to help customers

differentiate from competitive bank.

2.3 Proposed Conceptual Framework

Figure 2.2: Conceptual Framework That Determine the Factors of Non-Muslims

Customers’ Preferences Toward Islamic Deposit Products.

Adapted from : Aziza, N., & Awais, F. (2016). Customer’s Patronage in Selection

Criteria of Islamic Banks in Pakistan. The International Journal of Business &

Management.

The conceptual framework above could explain the proposed model on how the

independent variables included are of Sharia compliance, knowledge of customer,

trust and confidence and flexibility of withdrawal influence the non-Muslim

customers’ preference.



23

2.4 Hypotheses Development

2.4.1 Sharia Compliance





Sharia is an Islamic principle required investor prohibit interest (Riba) to enhance

the economic growth. It was implied on the banking operations such as deposits

transactions, products and financing. Non-Muslims prefer the investment with less

risky due to the effect of global credit crisis. Hence, the information which follow

the Sharia compliance will help customers minimize losses in the recession (Aziza

& Awais. 2016). According to Abdul Aziz, Rokiah and Ahmad Azrin (2012), many

governance used Sharia principle to enhance the strength of the management to

maintain the relationship with Non-Muslims. The effect of the Sharia principle had

attract the Non-Muslims customers which give positive relationship with Islamic

products.

2.4.2 Knowledge of non-Muslim Customers







This exploration was conducted to identify the product knowledge among Islamic

banks’ employees in the northern part of Malaysia. The findings yielded basic

standards and preparing had given a strong influence towards the knowledge.

However, religiosity and discernment which supposed to have effect on product



24

knowledge (Ahmad and Haron, 2002; Zainol et al., 2008; Aslam et al., 2011) are

failed to prove. The findings will have some impact on the theory and practical

aspects of Islamic banking sector.

According to Holliday (1996), the importance of understanding customers’

perception in bank selection has become a persevering examination motivation in

managing an account. In order to infiltrate and operate side by side with

conventional banks, Islamic banks must be able to know the people’s perceptions

that their system is much better than the conventional system. Consequently,

inferable from the much focused condition, Islamic banks need to focus client

recognitions in bank determination to help them advertise their items capable

(Haron, Ahmad & Planisek, 1994; Dusuki & Abdullah, 2006). According to Rustam,

Bibi, Zaman, Rustam and Zhid-ul-haq (2011) to conclude, a new conceptual model

for Islamic banks selection criteria should include understanding of Islamic banking

concept.

The review is to indicate that more focus and improvement of education and training

on advanced aspects of Islamic banking and finance are urgently required. This

finding is important for policy-makers such as national banks. As Malaysia plans to

wind up plainly the worldwide center point of the Islamic money related industry,

information of Islamic keeping money and fund among the bank chiefs is basic to

understanding that objective. In particular it is essential if the industry is to evolve

and prosper. Knowledge of the foundation of Islamic banking practices. In addition,

only if the bank managers are knowledgeable can they inform and educate their

customers, which in turn will attract new customers and enhance the market share

of Islamic banks. This is especially important in a dual financial system like

Malaysia where Islamic financing is practiced in parallel with conventional banking.



25

2.4.3 Trust and Confidence





In Islamic Banking, trust and confidence are applied with Sharia compliant.

Consumers will more believe based on the banks will meet its promise which is

called trust. Confidence which means customers will more prefer a bank which has

a stability capital, higher reputations, and higher return. For the example customer

more trust bank A than bank B, because that customer believes that bank A will

give that customer more benefits than bank B, and the bank A’s has more sufficient

capital which means more stable than bank B. According to Fungacova, Hasan &

Weill (2016), trust in the banks is a basic element in the economy. Because

consumers always think that must put money in trust rather than put trust in money,

trust can helps to stability the financing and inclusive financing and it thereupon

helps to promote economic growth. Banks need consumers’ trust and confidence

to attract consumers to deposit in banks or borrowing from banks, have a good

relationship with banks.

2.4.4 Flexibility of Withdrawal



Malaysia.



The flexibility of withdrawal refers to how flexible can the customers withdraw or

transfer their deposit into cash or another time of investment. While the flexibility

of withdrawal might be different according to the bank’s basis of preferences and



26

convenience such as online services provided and location of ATM (Aziza & Awais,

2016). For example, the ATM of bank located inside a mall allowed their customer

to withdraw money after the bank working time and this may be the reason of

customer choose this bank instead of other banks.

2.4.5 Four independent variables

H0E : There is no significant relationship between independent variables (Sharia

compliance, knowledge of non-Muslim customers, trust and confidence, flexibility

of withdrawal) and the preferences of non-Muslim customers toward Islamic

deposit products in Malaysia.

H1E : There is significant relationship between the independent variables (Sharia




2.5 Conclusion

In this chapter, the relationship of Sharia compliance, knowledge of non-Muslim

customers, trust and confidence, flexibility of withdrawal and the preferences of

non-Muslim customers toward Islamic deposit products in Malaysia have been

demonstrated an supported by the findings, previous studies, theories and journals.

Besides, the five hypotheses made to test whether there have relationship between

selected independent variables and the dependent variable or no. However, the

methodology of research will be discussed in the following chapter.



27

CHAPTER 3 : METHODOLOGY

3.0 Introduction

This chapter includes the data collection method, sampling design, research

instruments, constructs measurements, and data analysis. Primary data and

secondary data are the types of quantitative approach using in different research. In

this study, primary data are collected from 250 questionnaire papers; the

questionnaire is created to distribute to targeted respondents through hand-to-hand

method. In the end of this chapter, descriptive analysis, reliability test, and

inferential analysis will be designed and presented on how the research is going to

carry out.

3.1 Research Design

Research design includes methods and processes in development of this study, thus

it is serves as a structure for this research project. The questionnaire survey to

respondents will be used to collect the data. However, only data and information

that are relating to this study will be collected and analysed. In this research,

descriptive and quantitative methods will be used to examine the data collected.

3.1.1 Descriptive Research

Descriptive research is a design to relate the participants in the study to an accurate

direction. It included three methods to proceed the project such as observational,

case study and survey. Observational is a method that record the participants which

involve in the study research by using observation. Case study is a method that study

and understanding a group of individual to get information and data throughout the

process. Survey is a method that used to discuss certain specific topic through an

interview session (Kowalczyk, 2015).



28

3.1.2 Quantitative Research

Quantitative research generates a data from a larger sample population. This data

will be transformed into useful information to quantify the defined variables. All

facts and uncover pattern can be measured by quantitative research through various

types of methods. For example: papers survey, online survey, face to face interview

and so on (Susan & Wyse, 2011).

3.2 Data Collection Method

Data collection must carry out in every researches in order to make the study

complete as without data the research could not measure and examine the variable

hence the research could not be conducted. The data collected should be accurate

to ensure the precision of the result. In this research, primary data is being used.

3.2.1 Primary Data

Primary data are the first hand data which collected through surveys, interviews or

questionnaire papers. In this study, the data were collected by using questionnaire

papers. The hard copy of questionnaire papers will be distributed to respondents.

Furthermore, questionnaire papers being used in this research because it can be

reached out to a huge number of respondents in a shorter period of time compared

to interviews. This method of data collection involved lower cost and save time

compared to other data collection methods.

3.3 Sampling Design

In this study, a simple random technique is selected to conduct the study. Simple

random technique is a technique where the respondents are being selected randomly

from a large number of populations.



29

3.3.1 Target Populations

In this study, male non-Muslim Malaysian as well as female non-Muslim Malaysian

is the targeted population. This population is being chosen in order to achieve the

objective of this study which is to study the factors that affect preferences of non-

Muslim customers toward Islamic deposit products in Malaysia.

3.3.2 Sampling Frame and Sampling Location

Based on Zikmund et al. (2009), sampling frame is defined as a sample can be

drawn from a list of elements or knows as working population. For this study,

sampling frame is all the customers in the cities in Malaysia and sampling locations

are Kuala Lumpur, Johor Bahru, Ipoh and Georgetown. The locations are chosen is

because these cities are urban area and show that the employees have a higher

median and mean salary in urban area compared to rural area (Salaries & wages

survey report, 2017).

Figure 3.1 : Median and Mean monthly salaries of employees by states, Malaysia

2015-2016

Source: Salaries & wages survey report, Malaysia, 2016. (2017, May 5).

Retrieved from

https://www.dosm.gov.my/v1/index.php?r=column/pdfPrev&id=U3JoKzFiekE5W

FFKK0VMRWQ0a2FDQT09



30

3.3.3 Sampling Elements

Sampling element is a case within a population. In this study, the targeted

respondents would be the non-Muslim resident in Malaysia in order to examine the

factors that affect the non-Muslim customers’ preference toward Islamic deposit

products in Malaysia. Base on this, the data and information will be collected from

different level of education, income and race of respondents so that the result will

be more accurate and trustable.

3.3.4 Sampling Techniques

Based on Saunders et al. (2009), sampling technique can be divided into two

categories, which are probability and non-probability. In this study, the probability

sampling technique will be used due to it is not easy to collect data and information

from the entire resident of Malaysia and also it can save cost and time.

3.3.5 Sampling Size

In this study, 250 set of questionnaire papers will be distributed through hand-to-

hand in order to collect the data and information from targeted respondents. In this

research, the online form not being used for the reason to avoid the problem of

respondents not clear about the survey questions and simply choose an answer that

will affect the outcome. While the hardcopy of questionnaire was being used is to

avoid the unbalance age range as during distribution the respondents can be filtered

out before providing information. The survey for this research was conducted from

May to June 2017.

3.4 Research Instrument

3.4.1 Questionnaire Design

The main purpose of distributing questionnaire papers is to collect the primary data

and information efficiently and allow the researchers to proceed with data tabulation

as well as research discussion. The design for questionnaire papers for this study

are closed-ended format questions that suggested answer are clearly listed in the

paper. The closed-ended format questions enable the researchers to limit the number



31

of possible response from respondents and which will lead them to quick decision

making process as well as ease the data coding time.

Basically, the questionnaire paper for this study is separated into two main

parts which is Appendix B and Appendix C. Appendix B include the cover page of

questionnaire papers and brief explanation of researchers’ objectives. While

Appendix C consist of three sections which are section A, B, and C. Section A

contain information of respondent’s demographic profile, Section B contain the

information of factors that influence respondent’s preference, while Section C

consist of questions about the awareness and preference of respondents on Islamic

deposit products.

3.4.2 Pilot Test

There are around 30 sets of questionnaire have been distributed to conduct pilot test

for purpose of checking the reliability, validity and accuracy of statement stated in

questionnaire paper.

3.4.2.1 Result of Pilot Test

Table 3.1 : Pilot test reliability test results : Dependent Variable

(Preferences of non-Muslim Customers toward Islamic Deposit Products)

Variables Cronbach’s Alpha Number of Items

Preferences of non-Muslim

Customer towards Islamic

deposit products

0.935 4

Table 3.2 : Pilot test reliability test results : Independent Variables


Sharia Compliance 0.8010 4

Knowledge of non-Muslim

Customers 0.8750 4

Trust and Confidence 0.7420 5

Flexibility of Withdrawal 0.9580 4



32

3.5 Construct Measurement

3.5.1 Section A of Questionnaire

Section A in the questionnaire consists of particular information such as age, race,

marital status, highest education level, employment status and monthly income of

the respondents. This section was conducted by using nominal scale as it is the

easiest measurement level among others. Nominal scale gives the meaning as

distinct classification which directly classified the data into respective categories.

There is no intrinsic ordering in between the categories for nominal scale based

questions, therefore, it do not represent any value or relationships with other

variables. In addition, ordinal scale was also included in this section. The main

difference between ordinal scale and nominal scale is the intrinsic ordering for the

choices of categories. In short, both nominal and ordinal scale able the researcher

to collect data in an efficient way and also carry out the data analysis efficiently but

nominal scale is more suitable in this research.

3.5.2 Section B of Questionnaire

Section B contained statements relating to selected independent variables which are

factors that affect preferences of non-Muslim customers toward Islamic deposit

products in Malaysia. The selected independent variables included Sharia

compliance, knowledge of non-Muslim customers, trust and confidence, and

flexibility of withdrawal. Interval scale is the appropriate scale to adopt in this

section. It is a numeric scales which used to examine the sequences and dissimilarity

between the values and it were carried out in the figure of five points such as Likert

scale. This scales included five different options: 1 represent “Strongly Disagree”,

2 represent “Disagree”, 3 represent “Neutral”, 4 represent “Agree”, and 5 represent

“Strongly Agree”. Therefore, the respondents could determine their level of

agreement toward the statement stated in the questionnaire by using this scale.

3.5.3 Section C of Questionnaire

Section C has the purpose to examine the preferences of non-Muslim customers

toward Islamic deposit products in Malaysia. Therefore, some questions that can

show the preferences of the respondents toward Islamic deposit products were

stated in this section.



33

Table 3.3 : Questionnaire Section B

Independent

Variable Item Measure Sources and Years

A. Sharia

Compliance

Q1. I prefer Sharia

deposit products more

than Non- Sharia

deposit products from

the bank.

Q2. I can obtain

profit sharing after I

deposit my saving in

the Islamic bank.

Q3. Islamic product

is avoid from the

activities such as

alcohol, gambling,

pornography, tobacco

and pork processing.

Q4. When facing any

risk of economic, the

Islamic products

provide by Islamic

bank will be

minimized by the risk

sharing with the bank.

Maswadeh, S, N. (2014).

A Compliance of Islamic

Banks with the Principle

of Islamic Finance

(Shariah): An empirical

survey of the Jordanian

Business Firms.

International Journal of

Accounting and

Financial Reporting. Vol

4. No 1.



34

B. Knowledge of

Customer

Q1. I can easily

obtain useful

information about

Islamic deposit

products from the

bank.

Q2. Conventional

bank and Islamic

bank provides the

same information for

customers.

Q3. I believe bank’s

staffs have enough

knowledge to answer

questions regarding

Islamic deposit

products provided by

the bank.

Q4. The different age

of people could not

receive the

information

accurately.

- Ahmad, Norafifah, and

Haron, Sudin. (2002).

“Perceptions of Malaysian

Corporate Customers

Towards Islamic Banking

Products and Services”,


Islamic Financial

Services, 3 (4).

-Bley, J and Kuehn K

(2004). Conventional

versus Islamic finance:

student knowledge and

perception in the United

Arab Emirates.


Islamic Financial Services

5 (4).

- Baba, R., & Amin, H.

(2009). Offshore Bankers'

Perception on Islamic

Banking Niche for

Labuan: An Analysis.


Commerce and

Management Vol.19 No.4,

293-308.



35

C. Trust and

Confidence

Q1. I trust Islamic

banking because it

strictly upholds the

confidentiality of

consumers’ privacy.

Q2. I believe Islamic

banks provide the

sameness of true and

exact information of

the products and

services to all

consumers.

Q3. I trust the

Islamic banks’

account and

operational

transparency system.

Q4. I am confident

with the Islamic bank

because it accreted

with Sharia principle.

Q5. If the bank has

higher image and

reputation will make

me more trust and

confidence to

deposits.

Liang, F. C. et al., (2013)

Acceptance Level

Towards Islamic

Banking Among

Individual Consumers in

Malaysia. (Unpublished

University Thesis).

Universiti Tunku Abdul

Rahman, Malaysia



36

D. Flexibility of

Withdrawal

Q1. I prefer to

deposit in the Islamic

bank which have

higher availability of

credit.

Q2. I will choose the

Islamic bank which

provides ATM at

convenient location.

(Eg: Mall, University,

Hospital)

Q3. I prefer to


bank with online

services provided.

Q4. I prefer to


bank which can fulfil

my personal needs.

(Eg: Emergency

withdrawal)

Srouji, Halim, Lubis and

Hamdallah (2015).

Determinants of Bank

Selection Criteria’s in

Relation to Jordanian

Islamic and Conventional

Banks : International

Journal of Economics,

Commerce and

Management, Vol III, Issue

10, 294 – 306.



37

Table 3.4 : Questionnaire Section C

Dependent

Variable Item Measure Sources and Years

Preferences of

non-Muslim

Customers

Q1. Purchasing Islamic

deposit products is a “must”

to prevent financial

difficulties.

Q2. The concepts of interest

free and profit and loss

sharing make me prefer to

Islamic deposit products

rather than conventional

deposit products.

Q3. I prefer Islamic deposit

products compared to

conventional deposit products

because of the structure and

processing transparency.

Q4. Engaging in Islamic

deposit products would be my

consideration for the time to

come.

Liang, F. C. et al., (2013)

Acceptance Level Towards

Islamic Banking Among

Individual Consumers in

Malaysia. (Unpublished

University Thesis). Universiti

Tunku Abdul Rahman,

Malaysia



38

3.6 Data Processing

The data is process through the processing stage which is data processing and

converts the information from questionnaire paper into useful output. A total of 6

steps will be carried out during data processing, first step is data checking followed

by data editing, data coding, data transcribing, data cleaning, and lastly data analysis

strategy selection. However, the purpose of this stage is to generate a series of data

which is free from error and fault.

The first step of data checking after the questionnaire was created completely and

it is found out to be free of errors. In this step, any problem that existed will be

amended and the correction of the questionnaire can be made immediately.

Therefore, the questionnaire is free of errors before distributing to targeted

respondents. After data checking, the step of data editing will be carried on. This

step carries out for the purpose to overview the questionnaire in order to increase

the accuracy precision. Questions that consist of uniformity answer and questions

that are unanswered will exist in the questionnaire, therefore, this step is important

to identify the consistency of the questionnaire.

Data coding is the third step to transform the data and information collected into

another format which is the computer could encoded. In the questionnaire, there are

few dissimilar types of code being allocate to represent the different types of

questions. However, the next step is data transcribing. During step of data

transcribing, the data will be transformed into computers by typing and key in the

collected data and information.

Moreover, the next step will be data cleaning process. In this step, SPSS software

version 23 will be used to make consistency checking so that the inconsistency data

can be avoided. The step of data cleaning is quite similar with the step of data

editing but data cleaning process is more detail as in it used to identify the data

which is out of range, inconsistent with the title or it consist of extreme values.

Lastly, the final step is data analysis strategy selection. The data analysis strategy

will be selected based on the problem definition, developing of hypothesis, and



39

research constructed. However, the characteristics of the data and information

produced are also under the consideration when selecting the strategy of data

analysis.

3.7 Data Analysis

Statistical Package for Social Science (SPSS) Version 23 has been used to analyse

and interpreted the collected data and information. This software will help us in

managing the data in any size and calculated it in statistical form.

3.7.1 Descriptive Analysis

For this part descriptive analysis is a mainly for describe the collected information

from questionnaires quantitatively. Statistic profile of respondents and central

tendencies measurement of conduct will be separated respectively in descriptive

analysis. Besides that, there are few common ways to use in conclude data including

by calculating the averages, frequency distributions and also the percentage. In this

study, the statistics will be presented through frequencies and percentages of mean

value of summaries the group data using a combination of tabulated description (i.e.

tables) and graphical description (i.e. graphs and charts).

3.7.2 Scale Measurement

3.7.2.1 Reliability test

According to Golafshani (2003), reliability is one of the most important elements

of test quality which is based on results that are consists over time and also an

accurate representation of total population under the research study. If the result can

be remake under a similar methodology, then the examination instrument is viewed

as solid. In other words, reliability refers to whether the variability in the observed

scores actually represents variability in the underlying true score (DeCoster, 2004).

SPSS Version 23 provides a measurement of internal-consistency reliability

whereby it is calculated by averaging of coefficients that result from all possible

combination of split halves which is called Cronbach’s Alpha. The higher the



40

correlation among the variables are more the better. According to Zikmund and

Babin (2010), coefficient values vary from 0 mean no consistency reliability

between items to 1 means complete consistency reliability.

According to George and Mallery (2003) provide following rules: 1 to 0.9 is

excellent, 0.8 to less than 0.9 is good, 0 .7 to less than 0.8 is acceptable, 0.6 to 0.7

is questionable, 0.5 to less than 0.6 is poor, and less than 0.5 is unacceptable.

Table 3.5 : Cronbach’s Alpha Coefficient Value

Alpha Coefficient Range Strength of Association

Less than 0.50 Unacceptable

0.5 to less than 0.60 Poor

0.60 to less than 0.70 Questionable

0.70 to less than 0.80 Acceptable

0.80 to less than 0.90 Good

0.90 and above Excellent

Source: by George, D., &Mallery, P. (2003). SPSS for Windows step by step: A

simple guide and reference. 11.0 update (4th ed.). Boston: Allyn& Bacon.

3.7.3 Inferential Analysis

3.7.3.1 Pearson Correlation Coefficient Analysis

Pearson correlation coefficient alludes to the measure on showing the relationship

of variables and the strength of the association between two variables. The scatter

plot will be used to gauge the relationship between the variables. The correlation

coefficient value is from -1 to +1. When the value with -1 indicates that the variable

has a perfect negative linear relationship with a negative slope. The value with zero

indicates that the variable has no linear relationship. The value with +1 indicates

the variable has a perfect positive linear relationship with a positive slop. If the



41

Pearson correlation is less than 0.5 which mean there is a weak correlation while

the coefficient value is more than 0.8 indicate that there is a strong relationship.

In this research, the Pearson correlation analysis used to evaluate the correlation

between the selected independent variables which are Shari compliance, knowledge

of non-Muslim customers, trust and confidence, and flexibility with the dependent

variable, preferences of non-Muslim customers toward Islamic deposit products.

Table 3.6 : Interpreting the Size of a Correlation Coefficient

Size of Correlation Interpretation

0.90 to 1.00 (-0.90 to -1.00) Very high positive (negative)

correlation

0.70 to 0.90 (-0.70 to -0.90) High positive (negative) correlation

0.50 to 0.70 (-0.50 to -0.70) Moderate positive (negative)

correlation

0.30 to 0.50 (-0.30 to 0.50) Low positive (negative) correlation

0.00 to 0.30 (0.00 to -0.30) Very low positive (negative)

correlation

3.7.3.2 Multiple Linear Regression Analysis

Multiple linear regressions are the most general form of linear regression analysis.

This analysis used to examine the relationship between one dependent variable and

two or more independent variables. It is a factual procedure with the function of

evaluating the association among selected independent variables and dependent

variable by computing coefficients in the straight line multiple regression equation

(Zikmund et al., 2010).

Therefore, multiple linear regressions analysis will subsitute the selected

independent variables which are Sharia compliance, knowledge of non-Muslim

customers, trust and confidence, and flexibility of withdrawal into the equation to

test the significant of affecting the preferences of non-Muslim customers toward


http://www.statisticssolutions.com/academic-solutions/membership-resources/member-profile/data-analysis-plan-templates/data-analysis-plan-multiple-linear-regression/



42

Moreover, R-square is known as the coefficient of determinant for the multiple

regressions and used to examine of how close the data can be fitted into regression

line. R-squared also defined as the percentage of the variable variation which is

explained by a linear model. The higher the percentage, the more the model can

explain the response variable’s variability around the mean value.

The basis of Multiple Regression Equation:

Y = β1 + β1 X1 + β2 X2 + …… + βnXn

A multiple linear regression models will be formed. The equation of multiple

regressions that is involved in this study is as follow:

CP = β0 + β1SC + β2TC + β3KOC + β4FW

Where,

CP = Preferences of non-Muslim customers toward Islamic deposit

products

SC = Sharia Compliance

KOC = Knowledge of non-Muslim Customers

TC = Trust and Confidence

FW = Flexibility of Withdrawal



43

3.8 Conclusion

In conclusion, the research methodology is used to collect and investigate the data

which need to be processed in next chapter. The research methodology of this

chapter was discussed about design and instrument of research, method to collect

data, design of sampling, and construct measurement as well as data processing and

analysis. A total of 250 questionnaire surveys were collected from 250 respondents

that randomly chosen from general non-Muslims in Malaysia which come from

different races so as to carry out the research to investigate the factors that effect on


Malaysia. To run, analyse and access the collected data, Statistical Analytical

Software (SAS) was conducted in this research to test and determine the multiple

linear regression analysis correlation among the variables. In chapter 4, the data and

result will be analysed further.

.



44

CHAPTER 4 : DATA ANALYSIS

4.0 Introduction

In this chapter, the data collected from the survey will be analysed for interpretation

and research purposes. The data was collected from the distribution of questionnaire

and was collected from 250 Malaysians. Statistical Package for Social Science

(SPSS) Version 23 was used in this research to interpret and examine the collected

data to make sure the hypotheses are valid in this research. In addition, the data

running process and the obtained results which including Cronbach’s Coefficient

Alpha, Pearson Correlation test, Multiple Regression analysis and etc. will be

presented by using tables and charts which are easy for understanding.

Furthermore, there are four main sections in this chapter which are descriptive

analysis, scale measurement, inferential analysis, and a small conclusion. Firstly, in

the section of descriptive analysis will analyse the respondents’ demographic

profile and followed by the central tendencies measurement of construct. Second,

reliability analysis will be included in the part of scale measurement to identify the

reliability of the variables in this research. Moreover, the connection of independent

variable and dependent variables will be showed in the section of inferential

analysis. Lastly, the results obtained in this chapter will be summarized in the

conclusion’s section.



45

4.1 Descriptive Analysis

4.1.1 Respondents’ Demographic Profile

The following tables and charts demonstrated demographic profile of survey

respondents including age, race, marital status, highest education level,

employment status, and monthly income.

4.1.1.1 Age

Table 4.1 : Respondent Demographic of Age

Age Frequency Percentage (%)

17 - 25 years

26 – 35 years

36 – 50 years

50 years and above

134

76

25

15

53.60

30.40

10.00

6.00

Total 250 100.00

Source : Developed for the research

Figure 4.1 : Respondent Demographic of Age


In the age of respondents, majority of the respondent are at the age of between 17

to 25 years which has 53.60% of respondents. The amounts of respondents are age

50 and above are lowest in the research which is 15 respondents (6%). The

53.60%30.40%

10.00%6.0…

Age

17 - 25 years

25 - 35 years

36 - 50 years

50 years and above



46

respondents are age 26 to 35 is the second highest percentages which is 76

respondents (30.4%), follow by the respondents are age 26years to 50 with 25

respondents (10%).

4.1.1.2 Race

Table 4.2: Respondent Demographic of Race


Figure 4.2 : Respondent Demographic of Race


In the race of respondents, the highest percentages of respondents are from Chinese

which is 211 respondents (84.4%). The amount of respondents other race are lowest

84.40%

12.80%

2.80%

Race

Chinese

Indian

Other

Race Frequency Percentage (%)

Chinese

Indian

Others

211

32

7

84.40

12.80

2.80

Total 250 100.00



47

in the research which is 7 respondents (2.8%). The second highest percentages of

respondents are from Indian which is 32 respondents (12.8%).

4.1.1.3 Marital Status

Table 4.3: Respondent Demographic for Marital Status


Figure 4.3 : Respondent Demographic of Marital Status


Figure 4.4 and table 4.4 illustrate the respondent’s marital statuses. Marital statuses

which have been included in this survey are single and married. The result above

shows that the highest percentage of respondents is 76% which is from Single and

76.00%

24.00%

Marital Status

Single

Married

Marital Status Frequency Percentage (%)

Single

Married

190

60

76.00

24.00

Total 250 100.00



48

there is more than half comprises 190 respondents. The result from marital Status

shows that respondents which are in married status only cover 60 respondents

(24%).

4.1.1.4 Highest Education Level

Table 4.4 : Respondent Demographic of Highest Education Level


Figure 4.4 : Respondent Demographic of Highest Education Level


7.20%

13.20%

12.40%

61.60%

1.60% 0.40% Highest Education Level

UPSR/PMR/SRP/SPM

STPM/A-Level/Foundation

Diploma/Advanced

DiplomaBachelor Degree

Master Degree

PHD

Highest Education Level Frequency Percentage (%)

UPSR/PMR/SRP/SPM


Diploma/Advanced Diploma

Bachelor Degree

Master Degree

PHD

Others

18

33

31

154

4

1

9

7.20

13.20

12.40

61.60

1.60

0.40

3.60

Total 250 100.00



49

Table 4.4 and Figure 4.4 demonstrated that the highest percentages of 61.60% or

154 respondents are from bachelor degree level. In contrast, there is only 1

respondent who are holding PHD certificate showed the lowest percentage of 0.40%

only. Besides, the amount of respondents from master degree in the research are 4

out of 250 respondents or 1.60% of respondents. Moreover, there are 33 respondents

or 13.20% of respondents are at the level of STPM/A-Level/Foundation which is

the second highest percentage and followed by Diploma/Advanced Diploma with

31 respondents (12.4%), UPSR/PMR/SRP/SPM with 18 respondents (7.2%) and

other education level with 9 respondents (3.6%).

4.1.1.5 Employment Status

Table 4.5: Respondent Demographic of Employment Status


Employment Status Frequency Percentage (%)

Students

Employed for wages

Self-employed

Homemaker

Retired

Unable to work

120

93

25

10

1

1

48.00

37.20

10.00

4.00

0.40

0.40

Total 250 100.00



50

Figure 4.5 : Respondent Demographic of Employment Status


In the employment status of respondents, the highest percentages of respondents are

from students which is 120 (0.48%). The amount of respondents from retired and

unable to work are lowest in the research which is 1 respondent (0.4%). The second

higher of respondents is employed for wages which is (0.372%), follow by self-

employed which is (0.1%) and homemaker which is (0.04%).

4.1.1.6 Monthly Income

Table 4.6: Respondent Demographic of Monthly Income


48.00%

37.20%

10.00%4.00%

0.40%0.40%

Employment Status

Studemts

Employed for wages

Self-employed

Homemaker

Retired

Unable to work

Monthly Income Frequency Percentage

(%)

Less than RM2500

RM2500 – RM 3500

RM3500 – RM 4500

More than RM4500

204

28

15

3

81.60

11.20

6.00

1.20

Total 250 100.00



51

Figure 4.6 Respondent Demographic of Monthly Income


Table 4.6 and Figure 4.6 demonstrated the frequency of monthly income of the

respondents. In fact, most of the respondents are having an income below RM2500

per month which are 204 persons or 81.60% among 250 respondents. In contrast,

there are only 3 persons or 1.20% of the respondents are having an income more

than RM4500 per month. Furthermore, there are 28 persons or 11.20% of the

respondents are in the income range of RM2500 to RM3500 per month. Lastly, for

the monthly income range of RM3500 to RM4500, there are 15 out of 250 or 6.00%

of the respondents fall in this range.

81.60%

11.20%

6%1.20%

Monthly Income

Less than RM2500

RM2500 - RM3500

RM3500 - RM4500

More than RM4500



52

4.1.2 Central Tendencies Measurement of Construct

In this part of Chapter 4, the mean scores of the four independent variables will be

calculated. In the central tendencies measurement, the mean values of 21 items will

be calculated and stated by using SPSS version 23. Furthermore, the construct was

taped on a 5-points Likert Scale with 1 represents “Strongly Disagree” (SD), 2

represents “Disagree” (D), 3 represents “Neutral” (N), 4 represents “Agree” (A),

and 5 represents “Strongly Agree” (SA).

The central tendencies measurement of construct for the selected independent

variables which are Sharia compliance, knowledge of non-Muslim customers, trust

and confidence, and flexibility of withdrawal will be evaluated with table

respectively from Table 4.7 to Table 4.10. While the central of tendencies

measurement of construct for the dependent variable will be evaluated with Table

4.11.



53

4.1.2.1 Sharia Compliance (SC)

Table 4.7 Central Tendencies Measurement of Construct : Sharia

Compliance


Statement SD

(%)

D

(%)

N

(%)

A

(%)

SA

(%)

Mean Rank

SC1 I prefer Sharia deposit

products more than Non-

Sharia deposit products

from the bank.

5.60 14.80 25.20 43.20 11.20 3.3960 4

SC2 I can obtain profit

sharing after I deposit my

saving in the Islamic

bank.

4.40 5.60 22.00 43.60 24.40 3.7800 1

SC3 Islamic product is avoid

from the activities such as

alcohol, gambling,

pornography, tobacco and

pork processing.

2.00 9.20 24.40 39.60 24.80 3.7600 2

SC4 When facing any risk of

economic, the Islamic

products provide by

Islamic bank will be



6.40 10.40 30.40 41.60 11.20 3.4080 3



54

As Table 4.7 showed, obtain interest after deposit saving in the Islamic bank is

ranked number one as the mean value is the highest among others which is 3.7800.

Islamic product is avoid from the activities such as alcohol, gambling, pornography,

tobacco and pork processing ranked number two at the mean 3.7600. When facing

any risk of economic, the Islamic products provide by Islamic bank will be

minimized by the risk sharing with the bank ranked number three with mean 3.4080

and prefer Sharia deposit products more than Non-Sharia deposit products from the

bank will be the last ranked number four at mean 3.3960.

In the first statement “I prefer Sharia deposit products more than Non-Sharia deposit

products from the bank”, most of the respondents vote for “agree” which is 43.20%.

There is 11.20% of respondents vote for “strongly agree”, followed by 25.20% for

“neutral”, 14.80% for “disagree” and only 5.60% for “strongly disagree”.

From the statement “I can obtain profit sharing after I deposit my saving in the

Islamic bank”, 43.60% of respondents vote for “agree”. 24.40% of respondents vote

for “strongly agree”, followed by 22% for “neutral”, 5.60% for “disagree” and only

4.40% for “strongly disagree”.

From the next statement “Islamic product is avoid from the activities such as alcohol,

gambling, pornography, tobacco and pork processing”, 39.60% of respondents vote

for “agree”. 24.80% of respondents vote for “strongly agree”, followed by 24.40%

for “neutral”, 9.20% for “disagree” and only 2% for “strongly disagree”.

In the last statement “When facing any risk of economic, the Islamic products

provide by Islamic bank will be minimized by the risk sharing with the bank”, 41.60%

of respondents vote for “agree”. 11.20% of respondents vote for “strongly agree”,

followed by 30.40% for “neutral”, 10.40% for “disagree” and only 6.40% for

“strongly disagree”.



55

4.1.2.2 Knowledge of non-Muslim Customers

Table 4.8 : Central Tendencies Measurement of Construct : Knowledge of non-

Muslim Customers


Statement SD

(%)

D

(%)

N

(%)

A

(%)

SA

(%)

Mean Rank

KOC1 I can easily obtain

useful information

about Islamic deposit

products from the

bank.

2.40 18.80 14.80 50.00 14.00 3.5440 3

KOC2 Conventional bank

and Islamic bank

provides the same

information for

customers.

3.60 11.20 17.20 47.20 20.80 3.7040 1

KOC3 I believe bank’s staffs

have enough

knowledge to answer

questions regarding

Islamic deposit


the bank.

3.60 10.40 25.60 43.60 16.80 3.5960 2

KOC4 The different age of

people could not

receive the

information accurately

2.80 10.40 40.40 38.40 8.00 3.3840 4



56

Table 4.8 show the measurement of trust and confidence may affect Non-Muslim

customers' preference against Islamic deposit products in Malaysia. KOC 2

(Conventional bank and Islamic bank provides the same information for customers)

is agreed by most of the respondents with the mean value of 3.7040. Second and

third highest are KOC 3 (I believe bank’s staffs have enough knowledge to answer

questions regarding Islamic deposit products provided by the bank.) and KOC1 (I

can easily obtain useful information about Islamic deposit products from the bank.)

where the mean values are 3.5960 and 3.5440 respectively. In addition, KOC 4 (The

different age of people could not receive the information accurately.) is the fourth

with mean values of 3.3840.

In the first statement “I can easily obtain useful information about Islamic deposit

products from the bank”, most of the respondents vote for “agrees” which is

50.00%. There is 18.80% of respondents vote for disagree”, followed by 14.80%

for “neutral”, 14.00% for “strong agree” and only 2.40% for “strongly disagree”.

From the second statement “Conventional bank and Islamic bank are provide the

same information toward the custom”, 47.20% of respondents vote for “agree”,

followed by 20.8% for strong agree”, 16% for “strongly agree” and there is 17.20%

for “neutral” and only 3.60% for “strongly disagree”.

From the third statement “I believe bank’s staffs have enough knowledge to answer

questions regarding Islamic deposit products provided by the bank.” 43.6% of

respondents vote for “agree”, followed by 25.60% for “neutral” and 16.80% for

“strongly agree”, and there is 10.40% for “disagree” and only 3.60% for “strongly

disagree”.

In the last statement “The different age of people could not receive the information

accurately”, 40.40% of respondents vote for “neutral”, followed by 38.40% for

“agree”, 10.40% of respondents vote for “disagree” and there is 8.00% for “strong

disagree” and only 2.80% for “strongly disagree”.



57

4.1.2.3 Trust and Confidence

Table 4.9 : Central Tendencies Measurement of Construct : Trust and Confidence


Statement SD

(%)

D

(%)

N

(%)

A

(%)

SA

(%)

Mean Rank

TC1. I trust Islamic banking

because it strictly

upholds the

confidentiality of


2.40 11.60 17.60 52.80 15.60 3.6760 3

TC2. I believe Islamic

banks provide the

sameness of true and

exact information of

the products and

services to all

consumers.

2.80 10.40 20.00 50.80 16.00 3.6680 4

TC3. I trust the Islamic

banks’ account and

operational


2.40 11.60 16.80 56.00 13.20 3.6600 5

TC4. I am confident with

the Islamic bank

because it accreted

with Sharia principle.

6.40 10.40 10.80 50.00 22.40 3.7160 2

TC5. If the bank has higher

image and reputation

will make me more

trust and confidence

to deposits.

2.40 18.80 9.20 32.80 36,80 3.8280 1



58

Table 4.9 showed the measurement of trust and confidence may affect Non-Muslim

customers' preference against Islamic deposit products in Malaysia. TC5 (If the

bank has higher image and reputation will make me more trust and confidence to

deposits.) is agreed by most of the respondents with the mean value of 3.8280.

Second and third highest are TC4 (I am confident with the Islamic bank because it

accreted with Sharia principle.) and TC1 (I trust Islamic banking because it strictly

upholds the confidentiality of consumers’ privacy.) where the mean values are

3.7160 and 3.6760 respectively. In addition, TC2 (I believe Islamic banks provide

the sameness of true and exact information of the products and services to all

consumers.) is the fourth and the last one TC3 (I trust the Islamic banks’ account

and operational transparency system.) is the fifth with mean values of 3.6680 and

3.6600.

In the first statement “I trust Islamic banking because it strictly upholds the

confidentiality of consumers’ privacy”, most of the respondents vote for “agree”

which is 52.80%. There is 17.60% of respondents vote for “neutral”, followed by

15.60% for “strongly agree”, 11.60% for “disagree” and only 2.40% for “strongly

disagree”.

From the second statement “I believe Islamic banks provide the sameness of true

and exact information of the products and services to all consumers”, 50.80% of

respondents vote for “agree”, followed by 20% for “neutral”, 16% for “strongly

agree” and there is 10.40% for “disagree” and only 2.80% for “strongly disagree”.

From the third statement “I trust the Islamic banks’ account and operational

transparency system”, 56% of respondents vote for “agree”, followed by 16.80%

for “neutral” and 13.20% for “strongly agree”, and there is 11.60% for “disagree”

and only 2.40% for “strongly disagree”.



59

From the next statement “I am confident with the Islamic bank because it accreted

with Sharia principle”, 50% of respondents vote for “agree”, followed by 22.40%

for “strongly agree” and 10.80% for “neutral”, and there is 10.40% for “disagree”

and only 6.40% for “strongly disagree”.

In the last statement “If the bank has higher image and reputation will make me

more trust and confidence to deposits”, 36.80% of respondents vote for “strongly

agree”. followed by 32.80% for “agree”, 18.80% of respondents vote for “disagree”

and there is 9.20% for “neutral” and only 2.40% for “strongly disagree”



60

4.1.2.4 Flexibility of Withdrawal

Table 4.10 : Central Tendencies Measurement of Construct : Flexibility of

Withdrawal

Statement SD

(%)

D

(%)

N

(%)

A

(%)

SA

(%)

Mean Rank

FW1. I prefer to deposit in

the Islamic bank

which have higher

availability of credit.

3.60 11.20 17.20 54.00 14.00 3.6360 2

FW2. I will choose the

Islamic bank which

provides ATM at

convenient location.


Hospital)

3.60 10.40 18.00 55.60 12.40 3.6280 3


the Islamic bank with

online services

provided.

2.40 11.60 24.00 54.80 7.20 3.5280 4


the Islamic bank with

online services

provided.

6.40 10.40 14.00 50.00 19.20 3.6520 1


Table 4.10 demonstrated the measurement of central tendencies of construct in

Flexibility of Withdrawal. In this case, the highest ranking of overall statement is

FW4 which represent “I prefer to deposit in the Islamic bank with online services

provided.” with 3.6520 of mean value. FW1 which represents “I prefer to deposit

in the Islamic bank which have higher availability of credit.” and FW2 which

represents “I will choose the Islamic bank which provides ATM at convenient



61

location. (Eg: Mall, University, Hospital)” ranked at the second and third highest

with mean value of 3.6360 and 3.6280 respectively. However, FW3 (I prefer to

deposit in the Islamic bank with online services provided.) ranked at the lowest with

mean value of 3.5280.

In the first statement “I prefer to deposit in the Islamic bank which have higher

availability of credit”, most of the respondents vote for “Agree” which is 54.00%.

There is 17.20% of respondents vote for “Neutral”, followed by 14.00% for

“Strongly Agree”, 11.20% for “Disagree” and only 3.60% for “Strongly Disagree”.

From the second statement “I will choose the Islamic bank which provides ATM at

convenient location. (Eg: Mall, University, Hospital)”, 55.60% of respondents vote

for “Agree”, followed by 18.00% for “Neutral”, 12.40% for “Strongly Disagree”

and there is 10.40% for “Disagree” and only 3.60% for “Strongly Disagree”.

From the third statement “I prefer to deposit in the Islamic bank with online services

provided”, 54.80% of respondents vote for “Agree”, followed by 24.00% for

“Neutral” and 11.60% for “Disagree”, and there is 7.20% for “Strongly Agree” and

only 2.40% for “Strongly Disagree”.

In the last statement “I prefer to deposit in the Islamic bank with online services

provided”, 50.00% of respondents vote for “Agree”, followed by 19.20% for

“Strongly Agree”, 14.00% of respondents vote for “Neutral” and there is 10.40%

for “Disagree” and only 6.40% for “Strongly Disagree”.



62

4.1.2.5 Preferences of non-Muslim Customers (CP)


Preferences of non-Muslim Customer

Statement SD

(%)

D

(%)

N

(%)

A

(%)

SA

(%)

Mean Rank

CP1 Purchasing Islamic

deposit products is a

“must” to prevent

financial difficulties.

10.00 9.20 13.20 38.00 29.60 3.6800 1

CP2 The concepts of interest

free and profit and loss

sharing make me prefer

to Islamic deposit

products rather than

conventional deposit

products.

5.60 14.40 26.00 43.20 10.80 3.3920 4

CP3 I prefer Islamic deposit

products compared to


products because of the

structure and

processing

transparency.

10.00 9.20 19.60 45.20 16.00 3.4800 3

CP4 Engaging in Islamic

deposit products would

be my consideration for

the time to come.

5.60 14.80 17.20 46.80 15.60 3.5200 2




63

Tables 4.11 indicate the measurement of central tendencies of construct in

preferences of non-Muslim Customer. It shows the highest ranking of overall

statement is CP1 which represent “Purchasing Islamic deposit products is a “must”

to prevent financial difficulties.” with 3.68 of mean value. CP4 which represents

“Engaging in Islamic deposit products would be my consideration for the time to

come.” and CP3 which represents “I prefer Islamic deposit products compared to

conventional deposit products because of the structure and processing transparency.”

ranked at the second and third highest with mean value of 3.52 and 3.48 respectively.

However, CP2 (The concepts of interest free and profit and loss sharing make me

prefer to Islamic deposit products rather than conventional deposit products.)

ranked at the lowest with mean value of 3.3920.

In the first statement “Purchasing Islamic deposit products is a “must” to prevent

financial difficulties”, most of the respondents vote for “Agree” which is 38.00%,

followed by 29.60% for “Strongly Agree”, 13.20% for “Neutral” and only 10.00%

for “Strongly Disagree” and 9.20% of respondents vote for “Disagree”.

From the second statement “The concepts of interest free and profit and loss sharing

make me prefer to Islamic deposit products rather than conventional deposit

products)”, 43.20% of respondents vote for “Agree”, followed by 26.00% for

“Neutral”, 14.40% for “Disagree” and there is 10.80% for “Strongly agree” and

only 5.60% for “Strongly Disagree”.

From the third statement “I prefer Islamic deposit products compared to

conventional deposit products because of the structure and processing

transparency”, 45.20% of respondents vote for “Agree”, followed by 19.60% for

“Neutral” and 16.00% for “Strongly Agree”, and there is 10.00% for “Strongly

Disagree” and only 9.20% for “Disagree”.



64

In the last statement “Engaging in Islamic deposit products would be my

consideration for the time to come”, 46.80% of respondents vote for “Strongly

Agree”, followed by 17.20% for “Neutral”, 15.60% of respondents vote for

“Strongly Agree” and there is 14.80% for “Disagree” and only 5.60% for “Strongly

Disagree”.

4.2 Scale Measurement

4.2.1 Internal Reliability Test

According to Drost, reliability is the limits of measurements which are repeatable

where the measurements are performed by different persons, on different situation,

and also under different conditions with any alternative instruments that measure

the same item. By the same token, to further understand the functions of a test, it is

important to concern about the reliability which used to measure some attribute or

behavior. In this research, SPSS Version 23 was used to compute the reliability test

in this chapter. The results will be used to identify the level of reliability of the

selected independent variables in this research.

In addition, the Cronbach’s Alpha rule has been used to estimate the extent of

precision in reliability analysis of this research. Each of the statements under every

variables are correlated with each other and the level of coefficient will be measure

in this chapter. Cronbach’s Alpha rule stated that scales with coefficient alpha

between 0.8 to 0.95 indicates a very strong reliability, 0.70 to 0.79 represent good,

0.60 to 0.69 represent fair, and poor reliability showed while the value is lower than

0.60. Meanwhile, the internal reliability of independent variables towards

preferences of non-Muslim Customer were identified by using the Cronbach’s

Alpha rule. A total of 21 statements were used in this research.



65

Table 4.12 : Reliability Test of Dependent Variable (Preferences of non-

Muslim Customer towards Islamic deposit products)


Preferences of non-Muslim

Customer towards Islamic

deposit products

0.9570 4


According to Table 4.12, the Cronbach’s Alpha value of the dependent value fall in

the range of 0.91 to 1.00 which is 0.9570. The result demonstrated the 3 items

measuring the preferences of non-Muslim customer towards Islamic deposit

products have a very strong reliability. Hence, 95.70% of the questions are reliable

in the measurement of the dependent variable in this research.

Table 4.13 : Reliability Test of Independent Variables


Sharia Compliance 0.9460 4


Customers 0.9410 4

Trust and Confidence 0.9570 5

Flexibility of Withdrawal 0.9480 4


According to Table 4.13, the Cronbach’s Alpa values of all the independent

variables were fall in the range of 0.80 to 0.95. Hence, all of the statements for

independent variables in this research have a strong reliability in measuring the

preferences of non-Muslim customers toward Islamic deposit products.



66

First, the Cronbach’s Alpha value of Sharia compliance showed 0.9460 which

indicates a strong reliability. Thus, 94.60% of the statements are reliable in

measuring the Sharia compliance. Second, the coefficient of Cronbach’s Alpa of

knowledge of customer also showed a strong reliability at 0.9410. In fact, there is

94.10% of the statements which examine the knowledge of customer are reliable.

Third, the reliability test on trust and confidence has a strong reliability at 0.9570

which indicates that 95.70% of the questions are reliable. Lastly, the flexibility of

withdrawal has the strongest reliability which is 0.9480 among all independent

variables. Under this circumstance, 94.80% of the statements are reliable in

measuring the flexibility of withdrawal.

4.3 Inferential Analysis

Inferential analysis is a method for determining relationship between independent

variables and dependent variable. The effects of an independent variable on a

dependent variable can be evaluated by using the inferential statistics analysis. In

this research, the characteristics of both dependent variable and independent

variables were illustrated by using Pearson Correlation and Multiple Regression

analysis.

Table 4.14 : Rules of Thumb about Correlation Coefficient Size

Coefficient Range Strength of Association

± 0.91 - ± 1.00 Very Strong

± 0.71 - ± 0.90 Strong

± 0.41 - ± 0.70 Moderate

± 0.21 - ± 0.40 Small but definite relationship

± 0.00 - ± 0.20 Slight, almost negligible



67

4.3.1 Pearson Correlation Analysis

Table 4.15 : Pearson Correlation Analysis

Variable

Preferences

of non-

Muslim

Customers

Sharia

Compliance

Knowledge

of non-

Muslim

Customer

Trust and

Confidence

Flexibility

of

Withdrawal

Preferences of

non-Muslim

Customers

1 0.865 0.776 0.838 0.811

Sig. 0.000 0.000 0.000 0.000

Sharia

Compliance 0.865 1 0.821 0.859 0.810

Sig. 0.000 0.000 0.000 0.000

Knowledge of

non-Muslim

Customer

0.776 0.821 1 0.817 0.791

Sig. 0.000 0.000 0.000 0.000

Trust and

Confidence 0.838 0.859 0.817 1 0.855

Sig. 0.000 0.000 0.000 0.000

Flexibility of

Withdrawal 0.811 0.810 0.791 0.855 1

Sig. 0.000 0.000 0.000 0.000

**Correlation is significant at the 0.01 level (2-tailed)




68

4.3.1.1 Correlation between Sharia Compliance and Preferences of non-

Muslim Customers toward Islamic Deposit Products

Hypothesis A : Relationship between Sharia Compliance and Preferences of

non-Muslim Customers toward Islamic Deposit Products

H0 A : There is no significant relationship between the Sharia compliance and


H1 A : There is significant relationship between the Sharia compliance and


Table 4.16 : Correlation between Sharia compliance and preferences of

non-Muslim Customers toward Islamic deposit products


Table 4.16 demonstrated the correlation coefficient between Sharia compliance

with and preferences of non-Muslim customers toward Islamic deposit products is

0.865. As result showed, there is positive relationship between Sharia compliance

with and preferences of non-Muslim customers toward Islamic deposit products due

to the p-value of <0.0001 which is lower than the significance value of 0.01.

Sharia

Compliance

Preferences of non-

Muslim customers

Sharia Compliance

Pearson Correlation 1 0.865

P-value 0.000

N 250 250

Preferences of non-

Muslim customers

Pearson Correlation 0.865 1

P-value 0.000

N 250 250



69

The correlation coefficient has value of 0.865 is categorized under strong

relationship at range from +0.71 to +0.90. Hence, the relationship of Sharia

compliance in Islamic banking and preferences of non-Muslim Customers toward

Islamic deposit products is positive. The result shows H0 A will rejected and there is

significant relationship between Sharia compliance and preferences of non-Muslim

customers toward Islamic deposit products in Malaysia.

4.3.1.2 Correlation between Knowledge of non-Muslim Customers and

Preferences of non-Muslim Customers toward Islamic Deposit Products

Hypothesis B : Relationship between Knowledge of non-Muslim Customers

and Preferences of non-Muslim Customers toward Islamic Deposit Products

H0 B : There is no significant relationship between the knowledge of non-Muslim

customers and preferences of non-Muslim customers toward Islamic deposit


H1 B : There is significant relationship between the knowledge of non-Muslim

customers and preferences of non-Muslim customers toward Islamic deposit


4.17 Correlation between knowledge of non-Muslims customer and

preferences of non-Muslim Customers toward Islamic deposit products

Knowledge of non-

Muslim Customers

Preferences of non-

Muslim Customers

Knowledge of

non-Muslim

Customers


P-value 0.000

N 250 250

Preferences of

non-Muslim

Customers


P-value 0.000

N 250 250




70

Table 4.17 showed that the correlation coefficient among Knowledge of non-

Muslim Customers and preferences of non-Muslim customers toward Islamic

Deposit Products is 0.776. In other word, these variables are having a strong

positive relationship. Furthermore, the p-value of <0.0001 is lower than the

significance value of 0.01. Hence, H0D is rejected. In short, there is a significant

positive relationship among Knowledge of non-Muslim Customers and preferences

of non-Muslim customers toward Islamic Deposit Products. This means when the

Knowledge of non-Muslim Customers increase, the preferences of non-Muslim

customers toward Islamic Deposit Products will actually increase.

4.3.1.3 Correlation between Trust and Confidence and Preferences of non-

Muslim Customers toward Islamic Deposit Products

Hypothesis C : Relationship between Trust and Confidence and Preferences of


H0 C : There is no significant relationship between the trust and confidence and


H1 C : There is significant relationship between the trust and confidence and


4.18 Correlation between the trust and confidence and preferences of non-

Muslim Customers toward Islamic deposit products

Trust and

Confidence

Preferences f non-

Muslim Customers

Trust and

Confidence


P-value 0.000

N 250 250

Preferences of non-

Muslim Customers


P-value 0.000

N 250 250




71

Table 4.18 showed the result of correlation between trust and confidence and the

preferences of non-Muslim customers toward Islamic deposit products. As result,

there is significant relationship between them where the p-value is less than 0.0001

significant level. Hence, H1 C will be accepted. As result showed, there is positive

relationship between trust and confidence and the preferences of non-Muslim

customers where the result showed a positive value of correlation coefficient at

0.838. The value of the correlation coefficient 0.838 is falls under the range of +0.71

to +0.90. Hence, the value indicated that the relationship between trust and

confidence and the preferences of non-Muslim customers toward Islamic deposit

products is highly positive.



72

4.3.1.4 Correlation between Flexibility of Withdrawal and Preferences of


Hypothesis D : Relationship between Flexibility of Withdrawal and

Preferences of non-Muslim Customers toward Islamic Deposit Products

H0 D : There is no significant relationship between the flexibility of withdrawal and


H1 D : There is significant relationship between the flexibility of withdrawal and


4.19 Correlation between the flexibility of withdrawal and preferences of

non-Muslim Customers toward Islamic deposit products

Flexibility of

Withdrawal

Preferences of

non-Muslim

Customers

Flexibility of

Withdrawal


P-value 0.000

N 250 250

Preferences of

non-Muslim

Customers


P-value 0.000

N 250 250


As refer to the Table 4.18 above, it shows that the correlation coefficient between

flexibility of withdrawal and preferences of non-Muslim customers toward Islamic

Deposit Products is 0.811. In other word, these variables are having a strong

positive relationship. Furthermore, the p-value (<0.0001) is less than the

significance value of 0.01. Therefore H1D will be accepted while H0D is rejected.

In short, there is a significant positive relationship among flexibility of withdrawal

and preferences of non-Muslim customers toward Islamic Deposit Products. Which



73

means when the flexibility of withdrawal increase, the preferences of non-Muslim

customers toward Islamic Deposit Products will actually increase.

4.3.2 Multiple Regression Analysis

4.3.2.1 Diagnostic Checking

There are few diagnostic tests must be carried out to ensure that there is no violation

of assumptions which might lead to biased results in hypothesis testing before

proceed to interpret the regression model.

4.3.2.1.1 Normality Test

In this research, the error term will be investigated whether it is normally distributed

by using normality test. The Skewness and Kurtosis of residual distribution will be

involved in the normality test. Skewness used to evaluate whether the distribution

is symmetric while the Kurtosis used to measure whether the distribution is flatter

or peaked compared to a normal distribution. According to Park (2008), if the

outcome of Skewness and Kurtosis are close to zero, it indicates that the distribution

is approximately normal distributed.

Table 4.20 : Skewness and Kurtosis of Residuals

N Mean

Standar

d

Deviatio

n

Skewness Kurtosis

Statisti

c

Statisti

c Statistic

Statisti

c

Standar

d Error

Statisti

c

Standar

d Error

Standardiz

ed

Residual

250 14.072

0 4.30592 -0.909 -0.154 -0.179 0.307




74

Table 4.20 showed that the residuals are approximately normal distributed. From

Table 4.19, it showed that Skewness is -0.909 (close to zero) and Kurtosis is -0.179

which indicated that the distribution of residuals is approximately symmetric but

with left skewed data and right-tailed distribution.

4.3.2.1.2 Multicollinearity checking

Table 4.21 : Collinearity Table

Model Collinearity Statistic

Tolerance VIF

Sharia Compliance 0.212 4.727


Customers 0.265 3.779

Trust and Confidence 0.178 3.607

Flexibility of Withdrawal 0.236 4.244


If the independent variables are highly correlated to each other, it may lead to

multicollinearity problem. According to the rule of thumb, when the VIF of a

variable exceeds 10 there is multicollinearity problem which the VIF showed that

it is highly collinear. From Table 4.21, the result showed that all independent

variables have VIF of below 10, therefore there is no multicollinearity problem in

the model.

4.3.2.1.3 Durbin Watson Test (Autocorrelation)

Table 4.22 : Durbin Watson Result

Model R R square Adjusted R

Square

Standard Error of

the Estimate

Durbin –Watson

1 0.891 0.795 0.791 1.96737 1.997




75

The serial correlation whether it is available in the term of regression or not can be

evaluated by using Durbin. It measures that the correct model has no autocorrelation

problem if statistic test falls between the ranges from 1.50 to 2.50. According to

Table 4.22, the Durbin-Watson test showed value of 1.997 which is close to 2,

therefore, the null hypothesis is accepted where there is no autocorrelation in the

model. Moreover, the model can be used for the following test. After passing all

diagnostic checking, the multiple linear regression model can be carried out for

interpreting and hypothesis testing.

4.3.2.2 Multiple Linear Regression Model

The elements of selected independent variable are the factors that will influence

the dependent variable. The regression model showed below can use to determine

the statement stated:

𝐶�̂� = c + β1SC + β2TC + β3KOC + β4FW

Where,

𝐶�̂� = Preferences of non-Muslim customers toward Islamic deposit

products

c = Constant

SC = Sharia Compliance

KOC = Knowledge of non-Muslim Customers

TC = Trust and Confidence

FW = Flexibility of Withdrawal

βi (where i = 1, 2, 3, 4) = Estimated coefficient of SC, KOC, TC, FW



76

Table 4.23 : Coefficient Table

Model

Unstandardized

Coefficients

Standardized

Coefficients t Sig.

Beta Std. Error Beta

(Constant) -1.551 0.537 -2.890 0.004

Sharia Compliance 0.536 0.071 0.473 7.515 0.000

Knowledge of non-

Muslim Customers 0.057 0.067 0.048 0.861 0.390

Trust and

Confidence 0.198 0.062 0.219 3.198 0.002

Flexibility of

Withdrawal 0.239 0.070 0.202 3.390 0.001


Referring to the Table 4.23, the equation can be written as follow:

(Preferences of non-Muslim customers toward Islamic deposit products) = -1.551+

0.536 (Sharia Compliance) + 0.057 (Knowledge of non-Muslim Customers) +

0.198 (Trust and Confidence) + 0.239 (Flexibility of Withdrawal)

The interpretation of constant term is usually not meaningful. It merely indicates

that even there is zero units for sharia compliance, knowledge of customer, trust

and confidence and flexibility of withdrawal, the Preferences of non-Muslim

customers toward Islamic deposit products will still be -1.551 units.

Sharia Compliance has the significant positive influence towards acceptance level

since p-value = 0.000 (less than 0.01 significant level). Beta = 0.536, this means

that for every one unit increases in Sharia Compliance, the Preferences of non-

Muslim customers toward Islamic deposit products will increase by 0.536 units,

holding other factors constant.



77

For Knowledge of non-Muslim Customers, it also shows an insignificant influence

toward Preferences of non-Muslim customers toward Islamic deposit product. The

results show that p-value = 0.390 (more than 0.01 significant level). Beta = 0.057,

thus, for every one unit increases in Knowledge of non-Muslim Customers, the

Preferences of non-Muslim customers toward Islamic deposit products will

decrease by 0.057 units, holding other factors constant.

Furthermore, the result shows that the Trust and Confidence also has significant

positive influences towards acceptance level since p-value = 0.002 (less than 0.01

significant level). Beta =0.198 shows that for every one unit increases in Trust and

Confidence in Islamic banking, the Preferences of non-Muslim customers toward

Islamic deposit products will increase by 0.198 units, holding other factors constant.

Lastly, the result shows that the Flexibility of Withdrawal also has significant

positive influence towards acceptance level since p-value = 0.001 (less than 0.01

significant level). Beta =0.239, shows that for every one unit increases in Flexibility

of Withdrawal in Islamic banking, the Preferences of non-Muslim customers toward

Islamic deposit products will increase by 0.239 units, holding other factors constant

4.3.2.2.1 Coefficient of Determination (R2)

Table 4.24 : Model Summary

Model R R square Adjusted R

Square

Standard Error of

the Estimate

Durbin –Watson

1 0.891 0.795 0.791 1.96737 1.997


According to this regression equation, it illustrates the relationship between the

sharia compliance, knowledge of customer, trust and confidence and flexibility of

withdrawal and the preferences of non-Muslim customers toward Islamic deposit

products. Based on the Table 4.24, all the three independent variables are



78

significantly correlated with the dependent variable, except an independent variable

which is insignificant correlated with dependent variable which is the preferences

of non-Muslim customers because the correlation, R, is 0.891. From the analysis,

the coefficient of determination, R2, is 0.795 for the examined regression model. It

shows that 79.50% of the total variations in consumer preferences can be explained

by total variations in those three independent variables excluded knowledge of

customer. In contrast, there is a 21.90% show that the variation of consumer

preferences could not be presented by the equation. This can be explained that there

are other additional variables that also important in interpreting the consumer

preference.

4.3.2.2.2 Adjusted Coefficient of Determination (Adjusted R2)

The adjusted R2 will give the result more accurate and it is adjusted according to

the number of independent variables in the model. Additionally, the adjusted R2

avoid overestimating by adding an independent variable into the multiple regression

models. Referring to the Table 4.24, it shows that the adjusted R2 is 79.1%, indicates

that, after considering the degree of freedom, there are 79.1% of the variation in

predicted consumer preferences can be explained by the variation in the sharia

compliance, trust and confidence and flexibility of withdrawal, except the

knowledge of customer.

4.3.2.2.3 ANOVA Table

Table 4.25 : ANOVA table for multiple linear regression

Model Sum of

Squares df Mean Square F Sig.

Regression 3668.422 4 917.106 236.945 0.000

Residual 948.282 245 3.871

Total 4616.704 249




79

In the ANOVA Table 4.25, it showed that the F value of 236.945 is significant at

p-value equal to 0.000 which is lower than significant level of 0.001 (p < 0.01). In

fact, the regression model with those independent variables of sharia compliance,

trust and confidence and flexibility of withdrawal are suitable in evaluating the

dependent variable in the model, the preferences of non-Muslim customers, except

the one of independent variable knowledge of customer.

4.3.3 Hypothesis Testing

4.3.3.1 Overall F-test (Hypothesis E)

H0 E : There is no significant relationship between independent variables (Sharia




H1 E : There is significant relationship between the independent variables (Sharia




The significant of the Multiple Linear Regression is examine by using the overall

F-test. By referring to the ANOVA Table 4.26, the significant level of 0.01 is larger

than p-value which is 0.000 in the test. Hence, reject null hypothesis and conclude

that the independent variables have effects on acceptance level which is 0.01

significant level.



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4.3.3.2 T-test Hypothesis A

T-test used to examine the effect on independent variable on the dependent variable.

The effect can be determined by comparing the p-value. (refer to Table 4.23)





The Table 4.23 showed the p-value of Sharia compliance is 0.000 which is smaller

than the significant level of 0.01. Hence, the null hypothesis is reject. The Sharia

compliance has beta coefficient which is positive 0.536 and concluded that Sharia

compliance and the preferences of non-Muslim customers toward Islamic deposit

products has significant positive effect on acceptance level at 0.01 significant level.

4.3.3.3 T-test Hypothesis B







The Table 4.23 showed the p-value of knowledge of non-Muslim customers is 0.390

which is larger than the significant level of 0.01. Therefore, the null hypothesis is

not reject. The beta coefficient of knowledge of non-Muslim customers is positive

0.057 and it is conclude that knowledge of non-Muslim customers and the

preferences of non-Muslim customers toward Islamic deposit products has

insignificant positive effect on acceptance level at 0.01 significant level.



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4.3.3.4 T-test Hypothesis C





According to Table 4.23, the trust and confidence showed p-value of 0.002 which

is lower than significant level of 0.01, therefore, the null hypothesis is rejected. The

result concluded that the trust and confidence has significant relationship to the

preferences of non-Muslim customers toward Islamic deposit products in Malaysia

because the beta coefficient is positive 0.198.

4.3.3.5 T-test Hypothesis D



Malaysia.



According to Table 4.23, the flexibility of withdrawal showed p-value of 0.001

which is lower than significant level of 0.01, therefore the null hypothesis is rejected.

The result concluded that the flexibility of withdrawal has significant relationship

to the preferences of non-Muslim customers toward Islamic deposit products in

Malaysia because the beta coefficient is positive 0.239.



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4.4 Conclusion

In conclusion, particular of respondents like age, race, marital status, high education

level, employment status and monthly income is analyzed by using descriptive

analysis. The analysis is based on the measurement of central tendencies. By using

the reliability analysis, it helps to identify the reliability of the all four independent

variables in this study. Besides, this research used the Pearson correlation analysis

to evaluate the correlation between the independent variables which are Shari

compliance, knowledge of non-Muslim customers, trust and confidence, and

flexibility with the dependent variable, preferences of non-Muslim customers

toward Islamic deposit products. Then, run the diagnostic checking then only

interpreting the model. Furthermore, multiple linear regressions are used to estimate

the value of one dependent variable (customers’ preference) depend on two or more

independent variables (knowledge, trust and confidence and flexibility). After that,

ANOVA is used to test the model significance. At last, the hypothesis testing is

used to examine the correlation of each independent variable to one dependent

variable.

http://www.statisticssolutions.com/academic-solutions/membership-resources/member-profile/data-analysis-plan-templates/data-analysis-plan-multiple-linear-regression/



83

CHAPTER 5 : DISCUSSION AND CONCLUSION

5.0 Introduction

In Chapter 5, the data presented in previous chapter will be discussed in details of

the result and the hypotheses will be determined whether it were supported by the

data. This chapter including summary of statistical analysis, discussion of major

findings, discussion and implications of study, limitation of study, and

recommendation for the future researches. However, an overall conclusion of this

study in line with research objectives will be discussed.

5.1 Summary of Statistical Analysis

This study examines the preferences of non-Muslim customers toward Islamic

deposit product based upon the independent variable of Sharia compliance,

knowledge of non-Muslim customer, trust and confidence, and flexibility of

withdrawal.

5.1.1 Descriptive Analysis

5.1.1.1 Respondents’ Demographic Profile

Respondents’ demographic profile analysis has been conducted by including the

items of age, race, marital status, highest education level, employment status, and

monthly income. In this research, a total of 250 respondents were participated.

Majority of the respondents were from the age group of between 17 to 25 years

which has 134 respondents (53.60%) and the minority of the respondents belong to

age group of 50 years and above which has only 15 respondents (6.00%). Besides,

a total of 211 respondents (84.40%) are Chinese, 32 respondents (12.80) are Indian

and the remaining are other races. Moreover, majority of the respondent are single



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which total up to 190 respondents (76.00%) and 60 respondents (24.00%) are

married in marital status.

For the highest education level, majority of the respondents are holding bachelor of

degree which is 154 respondents (61.60%) and the minority is only 1 respondent

(0.40%) who holding a PHD. Furthermore, a total of 120 respondents (48.00%) are

students and there is 1 respondent (0.40%) was retired and same goes to

employment status of unable to work. For the monthly income of respondent, a total

of 204 respondents (81.60%) are having income below RM2500 and only 3

respondents (1.20%) are having income more than RM4500.

5.1.1.2 Central Tendencies Measurement of Construct

The frequency analysis used in this research to analyse the four selected

independent variables and one independent variable that were constructed for the

research purpose. The four selected independent variables are Sharia compliance,

knowledge of non-Muslim customers, trust and confidence, and flexibility of

withdrawal while the dependent variable is preferences of non-Muslim customers

toward Islamic deposit products. Each variable are included few statement that are

relevant, the statement with the highest mean is the most important statement over

others.

First, the statement of “I can obtain Mudarabah or Wakalah after I deposit my

saving in the Islamic bank.” which under independent variable Sharia compliance

ranked at the first place with mean value of 3.7800. This showed that this statement

is most significantly affecting the preferences of non-Muslim customers toward

Islamic deposit products among other statements under independent variable Sharia

compliance.



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Second, for independent variable knowledge of non-Muslim customers, the

statement of “Conventional bank and Islamic bank provides the same information

for customers” has the highest ranking in mean with value of 3.7040. This result

demonstrated that this statement are most important in determining the preferences

of non-Muslim customers toward Islamic banking products among other statements.

Third, under trust and confidence for independent variable, the statement of “If the

bank has higher image and reputation will make me more trust and confidence to

deposits” with mean value of 3.8280 was ranked at the first place. This showed that

this statement under this variable is significantly influencing the preferences of non-

Muslim customers toward Islamic deposit products.

Next, the statement of “I prefer to deposit in the Islamic bank which have higher

availability of credit” under the independent variable flexibility of withdrawal is

most significantly influencing the preferences of non-Muslim customers toward

Islamic deposit products. This statement has the highest ranking in mean among

other statements with value of 3.6520.

Lastly, for the dependent variable, the statement of “Purchasing Islamic deposit

products is a “must” to prevent financial difficulties” has the highest ranking with

mean value of 3.6800. This demonstrated that this statement is most significantly

affecting the preferences of non-Muslim customers toward Islamic deposit products

among other statement.



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5.1.1.3 Scale Measurement

The scale measurement for this study was based on the internal reliability test of

dependent variable and independent variables. The internal reliability test across the

Cronbach’s Alpha of 5constructs and 21 items to evaluate the level of reliability in

this research, included Sharia compliance, knowledge of non-Muslim customers,

trust and confidence, flexibility of withdrawal, and the preferences of non-Muslim

customers toward Islamic deposit products.

In this research, the construct of preferences of non-Muslim customers toward

Islamic deposit products and the construct of trust and confidence has the same

score value with Cronbach’s Alpha of 0.9570 which are the highest among the 5

constructs. The second highest score value showed by the construct of flexibility of

withdrawal with Cronbach’s Alpha of 0.9480 and it is followed by Sharia

compliance with a value of 0.9460. Lastly, the construct of knowledge of non-

Muslim customers has the lowest score value with Cronbach’s Alpha of 0.9410.

In fact, although there are different score value of Cronbach’s Alpha among the 5

constructs but it showed that all the value of reliability are greater than 0.70. Hence,

the 5 constructs have a very strong reliability.

5.1.2 Inferential Analysis

5.1.2.1 Pearson Correlation Analysis

In this research, the relationships between the 4 selected independent variables and

the preferences of non-Muslim customers toward Islamic deposit products were

examined by using Pearson Correlation Analysis.

From the results, it showed that all the fours independent variables have a positive

relationship with the preferences of non-Muslim customers toward Islamic deposit

products. First, the Sharia compliance has the highest significant positive

correlation with preferences of non-Muslim customers toward Islamic deposit



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products at 0.865. Second, the independent of knowledge of non-Muslim customers

has a coefficient correlation of 0.776 showed that it is significantly positive

correlated with preferences of non-Muslim customers toward Islamic deposit

products. Third, trust and confidence is significantly positive correlated with

preference of non-Muslim customers toward Islamic deposit products at 0.838.

Lastly, the independent variable of flexibility of withdrawal with coefficient

correlation of 0.811 demonstrated that it is significantly positive correlated with the

dependent variable.

Therefore, the result showed that the Sharia compliance has the strongest impact on

the preferences of non-Muslim customers toward Islamic deposit products, and it is

followed by trust and confidence, flexibility of withdrawal and lastly the knowledge

of non-Muslim customers.



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5.1.2.2 Multiple Linear Regressions

According to the multiple linear regression analysis result, it showed that the

correlation coefficient, R, between the three independent variables (Sharia

Compliance, Knowledge of Customer, Trust and Confidence and Flexibility of

withdrawal) with the dependent variable (Customer preferences) is 0.891. This

indicates there is a strong positive linear relationship exists between the dependent

variable and all those independent variables. Besides that, the coefficient of

determination (R2) is 0.795, indicating 79.5% of the total variance in customer

preferences has been explained by Sharia compliance, knowledge of customer, trust

and confidence and flexibility of withdrawal. The ANOVA table indicates that the

F-value of 236.945 is significant (p-value = 0.000 < 0.01 significant level). In

conclusion, according to the table of coefficients, the regression question below is

formulated:

𝑪𝑷 ̂ (Preferences of non-Muslim customers) = -1.551 + 0.536(Sharia

Compliance) + 0.057 (Knowledge of non-Muslim Customers) + 0.198(Trust

and Confidence) + 0.239 (Flexibility of Withdrawal)

Sharia compliance has the strongest impact on customer preferences due to its

highest beta coefficient value of 0.536, when compared to the other independent

variables which are Flexibility of withdrawal (beta coefficient value = 0 .239),

knowledge of customer (beta coefficient value = 0.057) and trust and confidence

(beta coefficient value = 0.198).



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5.2 Discussions on Major Findings

Table 5.1 : Summary of the results of hypothesis testing

Hypothesis Accepted Results

H1 A : There is significant relationship between the Sharia

compliance and preferences of non-Muslim customers

toward Islamic deposit products in Malaysia.

𝛽1̂=0.536

t test p-value = 0.000

H0 B : There is no significant relationship between the

knowledge of non-Muslim customers and preferences of

non-Muslim customers toward Islamic deposit products in

Malaysia.

𝛽2̂= 0. 057

t test p-value =0.390

H1 C : There is significant relationship between the trust

and confidence and preferences of non-Muslim customers

toward Islamic deposit products in Malaysia.

𝛽3̂ = 0. 198


H1 D : There is significant relationship between the

flexibility of withdrawal and preferences of non-Muslim


𝛽4̂ = 0. 239


H1 E : There is significant relationship between the

independent variables and preferences of non-Muslim


R2 = 0.795

Adjusted R2 = 0.791

F test p-value = 0.000



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5.2.1 The effect of all independents variables on preferences of non-

Muslim customers toward Islamic deposit products.

H1 E : There is significant relationship between the independent variables and


Refer to Table 5.1, the alternative hypothesis is accepted when the p-value is less

than significant level, and the result shows that p-value equal to 0.000 which is

lower than 0.01 significant level. The results show that all the independent variables

have significant effects on customer preferences, except knowledge of customer is

below than the significant level (p-value = 0.390 > 0.05). Hence these are the

influencing factors to individual consumers in choosing Islamic banking.

In the following sections will more explained about the effect of each independent

variables towards customer preference.

5.2.2 The effect of Sharia compliance on preferences of non-Muslim

customers towards Islamic deposit products.

H1 A : There is significant relationship between the Sharia compliance and


Refer to Table 5.1, the alternative hypothesis is accepted when the p-value is less

than significant level, and the result shows that p-value = 0.000 < 0.01 significant

level. Sharia compliance has significant effect preferences of non-Muslim

customers toward Islamic deposit products in Malaysia. Beta coefficient indicates

one unit increases in Sharia compliance, the customer preferences will also increase

by 0.536units, holding other factors constant.

Hence, there is significant positive effect of Sharia compliance and customer

preferences. This hypothesis is supported with various studies and research findings.



91

According to the journal of Abdullah, Sidek & Adnan (2012), the result is shows

that Sharia has positive relationship with non-Muslim customer when the demand

of products which attach with the Sharia will higher than which did not attach with

Sharia. Many customers prefer a secured product than none secured product, thus

the product which attached with Sharia will more attractive customer to purchase.

Normally it was effectively in long term products, because long term products more

uncertainty if no attach with Sharia compliance. Sharia compliance which is

processing with profit sharing and prohibit uncertainty, thus it can make customer

not that worried when in long term investing. Based on Azhar. M. & Awan, A. G.

(2014), they found that customer will more prefer to choose the products which are

processing by Sharia. That was because they believed that Sharia can protect their

benefits and there was prohibiting uncertainty. It can let customers believe that the

product which is attached by Sharia is more safety than others.

5.2.3 The effect of knowledge of non-Muslim customers on preferences

of non-Muslim customers towards Islamic deposit products.




According to Table 5.1, the alternative hypothesis is rejected with p-value equal to

0.390 which is higher than 0.01 significant level. Knowledge of customer has no

significant effect on preferences of non-Muslim customers toward Islamic deposit

products in Malaysia. Thus, there is no relationship between knowledge of customer

and preferences of non-Muslim customers toward Islamic deposit products in

Malaysia.

Haque, Osman, and Ismail (2009) stated that there education is no significant effect

impact on selection towards Islamic banking because the p-value= (0.613> 0.05).

So, it indicates that there is no relationship between knowledge and of non-Muslim



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customers toward Islamic deposit products in Malaysia. There is a justification for

the result, although the knowledge of Islamic deposit products are well-known by

non-Muslim customers, but they will choose conventional deposit products as the

benefit offered is better.

5.2.4 The effect of trust and confidence on preferences of non-Muslim

customers towards Islamic deposit products.

H1 C : There is significant relationship between the trust and confidence and


Malaysia.

According to Table 5.1, the alternative hypothesis is accepted with p-value equal

to 0.002 but still less than 0.01 significant level. Trust and confidence has

significant effect on preferences of non-Muslim customers toward Islamic deposit

products in Malaysia. Beta coefficient indicates one unit increases in Trust and

confidence, the customer preferences will also increase by 0.198 units, holding

other factors constant. Hence, there is significant positive relationship between

trust and confidence and customer preferences. This hypothesis is supported with

various studies and research findings.

Based on the study by Ergun and Djedovic (2011), the result of 0.559 is found in

confidence in Islamic banking which indicates that confidence has the effect on

customers’ preference. Research by Omar and Rahim (2016) proved that

confidence has a significant effect on the acceptance toward the Islamic banking.

Also, in El Nagar and El Biely (2011), assurance dimension has been proved has

the highest effect toward the customers’ preference among the other variables in

the study. Thus, it can be conclude that when the customer is satisfied, they tend

to consume more products.



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5.2.5 The effect of flexibility of withdrawal on preferences of non-

Muslim customers towards Islamic deposit products.

H1 D : There is significant relationship between the flexibility of withdrawal and


Malaysia.

According to Table 5.2.5, the alternative hypothesis is accepted with p-value equal

to 0.000 which is lower than 0.01 significant levels, flexibility of withdrawal have

significant effect on preferences of non-Muslim customers. Beta coefficient

indicates one unit increases in flexibility of withdrawal in Islamic banking; the

preferences of non-Muslims customers will also increase by 0.239 units, holding

other factors constant. Hence, there is significant positive effect by flexibility of

withdrawal in Islamic banking towards consumer preferences.

Researchers have discovered significant positive effect of Islamic banking products

and flexibility of withdrawal. In the study, the researchers found that the lower cost

of liquidity maintenance serve as reassurance to the potential suppliers of funds

about the credibility of the bank, thus will enhancing the bank's ability to borrow

(Greuning & Bratanovic, 1999).

Based on (Fabozzi & Modigliani, 2003) the inter-bank money market allows

surplus banks to channel funds to deficit banks using various instruments, thereby

maintaining the funding and liquidity mechanism necessary to promote stability in

the system. In addition, the researchers Awan (2009) stated that Islamic banks have

more profitability and liquidity than conventional banks. However, Haque (2010)

found that consumers in Malaysia have positive attitudes but males and females

attitudes are different towards Islamic banks.



94

It can observe that the increased popularity of Islamic banking in days by days might

be influenced by its resilience to financial crisis. It does not mean that Islamic banks

are not at all affected by financial crisis, but explain by Parashar and Venkatesh

(2010) that Islamic banks are less susceptible to financial crisis. This point is further

supported by Beck (2010) relatively better performance of Islamic banks during

financial crisis since Islamic banks carries higher capitalization plus more liquidity

reserves. Furthermore based on Hasan and Dridi (2010) found that Islamic banks

showed more resilience during global financial crisis.

Moreover, Islamic banks can perform well their short-term liquidity needs by

issuing a set of acceptable instruments through the Islamic inter-bank money market

(Maroun, 2002).Based on Abdul Majid (2003) external source that can be used for

liquidity purposes is the central bank’s liquidity supply to the Islamic banks under

a Shari’ah compliancy-code.



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5.3 Implications of the Study

5.3.1 Managerial Implications

The outcome significances can be a perspective to Islamic bankers about the

behaviour of Malaysia non-Muslim customers on Islamic deposit products

currently. Therefore, Islamic bankers can provide a better service to customers

such as innovate the products and enhance non-Muslim customers’ confidence

toward Islamic banking by understanding the trend of non-Muslim customers’

preferences. Moreover, a huge amount of the respondents does not consume

Islamic banking products and services. Hence, there is a very huge market to be

focused and developed. Therefore this study provides implications to

policymakers since Malaysia is targeting to become a financial Islamic hub in

South East Asia, it is vital for policymakers to promote Islamic banking to seek

for higher acceptance level to wider coverage of Malaysians and establish a very

concrete Islamic banking and finance foundation. Policymakers can organized a

talk to educate the non-Muslim customers about the knowledge of Islamic deposit

products. Besides that, the website of Islamic banks can provide the details of the

related Islamic deposit product for the non-Muslim customers to refer before

transact any products.



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5.4 Limitation of Study

In this studies, the objective is to determine the factors that affect non-Muslims

customers’ preference against Islamic deposit products in Malaysia. The target

group of the respondents in this research will be the customers 17 years old and

above.

In this studies, there is few limitation need to be concerned. The sample size of this

studies is small and the location to conduct the survey is limited. There are 250 sets

of survey questionnaires was randomly issued to the respondents through hand to

hand method. The survey questionnaires was conducted in Kuala Lumpur, Ipoh,

Johor Bahru and George Town. Most of the data collected was from urban area as

the transportation to rural area was limited. Although the area was limited, the

studies was decided to continue to proceed with small amount of sample size

although it may cause the outcome less reliable.

Therefore, the knowledge of non-Muslim customers was inadequate in Islamic

deposit product offer by Islamic bank. The conventional banks in Malaysia was

allowed to offer Islamic banking products and services to customers under the dual-

window concept. Hence, this can lead non-Muslim customers confused and difficult

to differentiate the conventional bank and Islamic bank as both bank offer same

products and services. The result of the questionnaires will be inaccurate when the

respondents fill the answer based on their understanding of Islamic products and

services.

Limitation is a platform and idea to help future researchers to overcome the

obstacles. The result of the studies will more accurate if the researchers refer on

the limitation provide by previous researchers.



97

5.5 Recommendation for Future Researches

There is some recommendation to help future researchers to cope with the problem

which similar to the studies. Researchers need to increase the number of the

questionnaire distribution to the participants. The increasing in sample size of the

studies can improve the reliability of the result as the sample size is an important

element in primary data studies. The chances to get significance difference between

the variable will increase. Hence, the studies can reflect the more accurate actual

result which more closer to the reality.

Besides that, the survey questionnaire can proceed with various techniques such as

online survey questionnaire, face to face interview or paper survey. These method

can help the survey achieve the data with a more effective way as the researchers

can save time and cost to visit the survey locations. Besides that, respondents can

consult researchers before proceed answer the questionnaires. When face to face

interview, researchers can direct ask the respondents about the knowledge toward

Islamic products and services. Respondents can inquiry the knowledge about

Islamic products and services such as the different between the conventional bank

and Islamic bank. Through this method, researchers can interaction with more

respondents in an effective way. Respondents can more understand with the purpose

in the survey.

Lastly, the questions set by the researchers in the questionnaire should be relevant

to the topic and do not confused the non-Muslim respondents. Questionnaire is the

core of the studies as it acquired the data that need to analysis in the later processing

stage. The accuracy of the data can save the time that use in the filtering process as

the fraud is minor in the questionnaires. The length of the questions set should be

simple and direct to the main purpose of the topic. The reason is because to answer

the paper questionnaires is consume of time, respondents will try to answer it

randomly to finish the questionnaires. This will highly probability to happen error

in the data.



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5.6 Conclusion

In the course of this studies, the studies has demonstrated that the factors that affect

non-Muslims customers’ preference against Islamic deposit products in Malaysia.

The factors include Sharia compliance, knowledge of non-Muslim customers, trust

and confidence and flexibility of withdrawal of non-Muslims toward Islamic

deposit products. A primary data survey is conducted by using the factors to create

questionnaires for all respondents.

Based on the analysis of data, the result show major of the factors was significance

to the non-Muslims preference against Islamic deposit products in Malaysia except

knowledge of non-Muslims customers. In conclusion, this studies has meet the

objectives where the preference of non-Muslim customers against Islamic deposit

product and it is positive relationship to the factors as examined in the studies.



99

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Appendix A: Survey Questionnaire

UNIVERSITI TUNKU ABDUL RAHMAN

FACULTY OF BUSINESS AND FINANCE

BACHELOR OF BANKING AND FINANCE (HONS)

FINAL YEAR PROJECT

TITLE OF TOPIC :

FACTORS THAT AFFECT NON-MUSLIM CUSTOMERS’

PREFERENCE AGAINST ISLAMIC DEPOSIT PRODUCTS IN

MALAYSIA.

Dear Respondent,

Thank you for participating in our study.

The questionnaire is aim to collect the information about the factors that affect Non-

Muslim customers' preference against Islamic deposit products in Malaysia for our

academic final year project. There are 6 pages contain in this questionnaire and will

take you some time, but please be patient, pay more attention to each question and

as cautious as possible to answer this questionnaire. The instructions are very clear

and we would very appreciate it if you can finish the questionnaire as fast as

possible.

The personal information in the questionnaire will be treated with secrecy, and

participants name will not be revealed in this questionnaire. The answers provided



114

will only be used for this study and once again, we would very appreciate for your

cooperation in filling this questionnaire.

Section A: Demographic Profile

The following questions refer to the demographic profile of the respondent.

Please provide the appropriate information by placing a ( √ ) in the bracket

provided to represent your answer.

1. Age

17 – 25 years

26 – 35 years

36 – 50 years

50 years and above

2. Race

Chinese

Indian

3. Martials Status

Married

Single

4. Highest Education Level

UPSR/PMR/SRP/SPM


Diploma/Advanced Diploma

Bachelor Degree

Master Degree

PHD

Others : _________________



115

5. Employment Status

Students

Employed for wages

Self-employed

Homemaker

Retired

Unable to work

6. Monthly Income

Less than RM2500

RM2500 – RM 3500

RM3500 – RM 4500

More than RM4500



116

Section B: Sources of Information

1. Please answer the following questions by placing a ( √ ) in the bucket

provided for five different level which are Strongly Disagree, Disagree,

Neutral, Agree and Strongly Agree.

Shariah Compliance

Strongly

Disagree

Disagree Neutral Agree Strongly

Agree

1. I prefer Shariah

deposit products more

than Non- Shariah

deposit products from

the bank.

2. I cannot obtain profit

sharing after I deposit

my saving in the

Islamic bank.

3. Islamic product is

avoid from the

activities such as

alcohol, gambling,

pornography, tobacco

and pork processing.

4. When facing any risk

of economic, the

Islamic products

provide by Islamic

bank will be





117




Knowledge of Customer

Strongly

Disagree


Agree

1. I can easily obtain

useful information

about Islamic deposit

products from the

bank.

2. Conventional bank and

Islamic bank are

provide the same

information toward the

customer.

3. I believe bank’s staffs

have enough

knowledge to answer

questions regarding

Islamic deposit


the bank.

4. The different age of

people could not

receive the information

accurately.



118




Trust and Confidence

Strongly

Disagree

Disagre

e

Neutra

l

Agree Stron

gly

Agree

1. I trust Islamic banking

because it strictly upholds

the confidentiality of


2. I believe Islamic banks

provide the sameness of

true and exact information

of the products and

services to all consumers.

3. I trust the Islamic banks’

account and operational


4. I am confident with the

Islamic bank because it

accreted with Shariah

principle.

5. If the bank has higher

image and reputation will

make me more trust and

confidence to deposits.



119




Flexibility of Withdrawal

Strongly

Disagree


Agree

1. I prefer to deposit in the

Islamic bank which have

higher availability of

credit.

2. I will choose the Islamic

bank which provides ATM

at convenient location.


Hospital)


Islamic bank with online

services provided.


Islamic bank which can

fulfil my personal needs.

(Eg: Emergency

withdrawal)



120

Section C: Customers preference toward Islamic deposit products

Please answer the following questions by placing a ( √ ) in the bucket provided for

five different level which are Strongly Disagree, Disagree, Neutral, Agree and

Strongly Agree.

Customers’ preference Strongly

Disagree


Agree

1. Purchasing Islamic

deposit products is a

“must” to prevent

financial difficulties.

2.The concepts of

interest free and profit

and loss sharing make

me prefer to Islamic

deposit products rather

than conventional

deposit products.

3.I prefer to Islamic

deposit products

compared to


products because of the

structure and processing

transparency.

4.Engaging in Islamic

deposit products would

be my consideration for

the time to come.



121

Appendix B: Pilot test reliability output

RELIABILITY

/VARIABLES=KOC1 KOC2 KOC3 KOC4

/SCALE('ALL VARIABLES') ALL

/MODEL=ALPHA.

Reliability

Scale: ALL VARIABLE

Case Processing Summary

N %

Cases Valid 30 100.0

Excludeda 0 .0

Total 30 100.0

a. Listwise deletion based on all variables in

the procedure.

Reliability Statistics

Cronbach's

Alpha N of Items

.875 4



122

RELIABILITY

/VARIABLES=TC1 TC2 TC3 TC4 TC5


/MODEL=ALPHA.

Reliability

Scale: ALL VARIABLES


N %


Excludeda 0 .0

Total 30 100.0


the procedure.


Cronbach's

Alpha N of Items

.742 5



123

RELIABILITY

/VARIABLES=FW1 FW2 FW3 FW4


/MODEL=ALPHA.

Reliability



N %


Excludeda 0 .0

Total 30 100.0


the procedure.


Cronbach's

Alpha N of Items

.958 4



124

RELIABILITY

/VARIABLES=CP1 CP2 CP3 CP4


/MODEL=ALPHA.

Reliability



N %


Excludeda 0 .0

Total 30 100.0


the procedure.


Cronbach's

Alpha N of Items

.935 4



125

Appendix C: Frequency output

DEMOGRAPHIC PROFILE

FREQUENCIES VARIABLES=Age Race Marital_status Education_level

Employment_status Monthly_income

/ORDER=ANALYSIS.

Frequency Table

Age

Frequency Percent

Valid

Percent

Cumulative

Percent

Valid 17 to 25 Years 134 53.6 53.6 53.6

26 to 35 years 76 30.4 30.4 84.0

36 to 50 years 25 10.0 10.0 94.0

50 years and above 15 6.0 6.0 100.0

Total 250 100.0 100.0

Race

Frequency Percent Valid Percent

Cumulative

Percent

Valid Chinese 211 84.4 84.4 84.4

Indian 32 12.8 12.8 97.2

Other 7 2.8 2.8 100.0

Total 250 100.0 100.0

Marital_status


Cumulative

Percent

Valid Single 190 76.0 76.0 76.0

Married 60 24.0 24.0 100.0

Total 250 100.0 100.0



126

Education_level

Frequency Percent

Valid

Percent

Cumulative

Percent

Valid UPSR/PMR/SRP/SPM 18 7.2 7.2 7.2

STPM/A-

Level/Foundation 33 13.2 13.2 20.4

Diploma/Advanced

Diploma 31 12.4 12.4 32.8

Bachelor Degree 154 61.6 61.6 94.4

Master Degree 4 1.6 1.6 96.0

PHD 1 .4 .4 96.4

Other 9 3.6 3.6 100.0

Total 250 100.0 100.0

Employment_status

Frequency Percent

Valid

Percent

Cumulative

Percent

Valid Students 120 48.0 48.0 48.0

Employed for wages 93 37.2 37.2 85.2

Self-employed 25 10.0 10.0 95.2

Homemaker 10 4.0 4.0 99.2

Retired 1 .4 .4 99.6

Unable to work 1 .4 .4 100.0

Total 250 100.0 100.0



127

Monthly_Income

Frequency Percent

Valid

Percent

Cumulative

Percent

Valid Less than RM2500 204 81.6 81.6 81.6

RM2500 – RM 3500 28 11.2 11.2 92.8

RM3500 – RM 4500 15 6.0 6.0 98.8

More than RM4500 3 1.2 1.2 100.0

Total 250 100.0 100.0

SHARIA COMPLIANCE

FREQUENCIES VARIABLES=SC1 SC2 SC3 SC4

/ORDER=ANALYSIS.

Frequencies

Statistics

SC1 SC2 SC3 SC4

N Valid 250 250 250 250

Missing 0 0 0 0

SC1


Cumulative

Percent

Valid Strongly Disagree 14 5.6 5.6 5.6

Agree 37 14.8 14.8 20.4

Neutral 63 25.2 25.2 45.6

Agree 108 43.2 43.2 88.8

Strongly Disagree 28 11.2 11.2 100.0

Total 250 100.0 100.0



128

SC2


Cumulative

Percent


Agree 14 5.6 5.6 10.0

Neutral 55 22.0 22.0 32.0

Agree 109 43.6 43.6 75.6


Total 250 100.0 100.0

SC3


Cumulative

Percent


Agree 23 9.2 9.2 11.2

Neutral 61 24.4 24.4 35.6

Agree 99 39.6 39.6 75.2


Total 250 100.0 100.0

SC4


Cumulative

Percent


Agree 26 10.4 10.4 16.8

Neutral 76 30.4 30.4 47.2

Agree 104 41.6 41.6 88.8


Total 250 100.0 100.0



129

DESCRIPTIVES VARIABLES=SC1 SC2 SC3 SC4

/STATISTICS=MEAN STDDEV MIN MAX.

Descriptive

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

SC1 250 1.0000 5.0000 3.396000 1.0486097

SC2 250 1.0000 5.0000 3.780000 1.0196858

SC3 250 1.0000 5.0000 3.760000 .9931492

SC4 250 1.0000 5.0000 3.408000 1.0304286

Valid N (listwise) 250

KNOWLEDGE OF NON-MUSLIM CUSTOMERS

FREQUENCIES VARIABLES=KOC1 KOC2 KOC3 KOC4

/ORDER=ANALYSIS.

Frequencies

Statistics

KOC1 KOC2 KOC3 KOC4

N Valid 250 250 250 250

Missing 0 0 0 0

Frequency Table

KOC1


Cumulative

Percent


Agree 47 18.8 18.8 21.2

Neutral 37 14.8 14.8 36.0

Agree 125 50.0 50.0 86.0


Total 250 100.0 100.0



130

KOC2


Cumulative

Percent


Agree 28 11.2 11.2 14.8

Neutral 43 17.2 17.2 32.0

Agree 118 47.2 47.2 79.2


Total 250 100.0 100.0

KOC3


Cumulative

Percent


Agree 26 10.4 10.4 14.0

Neutral 64 25.6 25.6 39.6

Agree 109 43.6 43.6 83.2


Total 250 100.0 100.0

KOC4


Cumulative

Percent


Agree 26 10.4 10.4 13.2

Neutral 101 40.4 40.4 53.6

Agree 96 38.4 38.4 92.0


Total 250 100.0 100.0



131

DESCRIPTIVES VARIABLES=KOC1 KOC2 KOC3 KOC4


Descriptives



KOC1 250 1.0000 5.0000 3.544000 1.0258036

KOC2 250 1.0000 5.0000 3.704000 1.0337595

KOC3 250 1.0000 5.0000 3.596000 1.0023987

KOC4 250 1.0000 5.0000 3.384000 .8807080


TRUST AND CONFIDENCE

FREQUENCIES VARIABLES=TC1 TC2 TC3 TC4 TC5

/ORDER=ANALYSIS.

Frequencies

Statistics

TC1 TC2 TC3 TC4 TC5

N Valid 250 250 250 250 250

Missing 0 0 0 0 0

Frequency Table

TC1


Cumulative

Percent


Agree 29 11.6 11.6 14.0

Neutral 44 17.6 17.6 31.6

Agree 132 52.8 52.8 84.4


Total 250 100.0 100.0



132

TC2


Cumulative

Percent


Agree 26 10.4 10.4 13.2

Neutral 50 20.0 20.0 33.2

Agree 127 50.8 50.8 84.0


Total 250 100.0 100.0

TC3


Cumulative

Percent


Agree 29 11.6 11.6 14.0

Neutral 42 16.8 16.8 30.8

Agree 140 56.0 56.0 86.8


Total 250 100.0 100.0

TC4


Cumulative

Percent


Agree 26 10.4 10.4 16.8

Neutral 27 10.8 10.8 27.6

Agree 125 50.0 50.0 77.6


Total 250 100.0 100.0



133

TC5


Cumulative

Percent


Agree 47 18.8 18.8 21.2

Neutral 23 9.2 9.2 30.4

Agree 82 32.8 32.8 63.2


Total 250 100.0 100.0

DESCRIPTIVES VARIABLES=TC1 TC2 TC3 TC4 TC5


Descriptives



TC1 250 1.0000 5.0000 3.676000 .9542886

TC2 250 1.0000 5.0000 3.668000 .9599280

TC3 250 1.0000 5.0000 3.660000 .9315962

TC4 250 1.0000 5.0000 3.716000 1.1172902

TC5 250 1.0000 5.0000 3.828000 1.1849186




134

FLEXIBILITY OF WITHDRAWAL

FREQUENCIES VARIABLES=FW1 FW2 FW3 FW4

/ORDER=ANALYSIS.

Frequencies

Statistics

FW1 FW2 FW3 FW4

N Valid 250 250 250 250

Missing 0 0 0 0

Frequency Table

FW1


Cumulative

Percent


Agree 28 11.2 11.2 14.8

Neutral 43 17.2 17.2 32.0

Agree 135 54.0 54.0 86.0


Total 250 100.0 100.0

FW2


Cumulative

Percent


Agree 26 10.4 10.4 14.0

Neutral 45 18.0 18.0 32.0

Agree 139 55.6 55.6 87.6


Total 250 100.0 100.0



135

FW3


Cumulative

Percent


Agree 29 11.6 11.6 14.0

Neutral 60 24.0 24.0 38.0

Agree 137 54.8 54.8 92.8


Total 250 100.0 100.0

FW4


Cumulative

Percent


Agree 26 10.4 10.4 16.8

Neutral 35 14.0 14.0 30.8

Agree 125 50.0 50.0 80.8


Total 250 100.0 100.0



136

DESCRIPTIVES VARIABLES=FW1 FW2 FW3 FW4


Descriptive



FW1 250 1.0000 5.0000 3.636000 .9774074

FW2 250 1.0000 5.0000 3.628000 .9535476

FW3 250 1.0000 5.0000 3.528000 .8788090

FW4 250 1.0000 5.0000 3.652000 1.0989663


CUSTOMERS’ PREFERENCES

FREQUENCIES VARIABLES=CP1 CP2 CP3 CP4

/ORDER=ANALYSIS.

Frequencies

Statistics

CP1 CP2 CP3 CP4

N Valid 250 250 250 250

Missing 0 0 0 0

Frequency Table

CP1


Cumulative

Percent


Agree 23 9.2 9.2 19.2

Neutral 33 13.2 13.2 32.4

Agree 95 38.0 38.0 70.4


Total 250 100.0 100.0



137

CP2


Cumulative

Percent


Agree 36 14.4 14.4 20.0

Neutral 65 26.0 26.0 46.0

Agree 108 43.2 43.2 89.2


Total 250 100.0 100.0

CP3


Cumulative

Percent


Agree 23 9.2 9.2 19.2

Neutral 49 19.6 19.6 38.8

Agree 113 45.2 45.2 84.0


Total 250 100.0 100.0

CP4


Cumulative

Percent


Agree 37 14.8 14.8 20.4

Neutral 43 17.2 17.2 37.6

Agree 117 46.8 46.8 84.4


Total 250 100.0 100.0



138

DESCRIPTIVES VARIABLES=CP1 CP2 CP3 CP4

/STATISTICS=MEAN STDDEV MIN MAX

Descriptives



CP1 250 1.0000 5.0000 3.680000 1.2649111

CP2 250 1.0000 5.0000 3.392000 1.0405127

CP3 250 1.0000 5.0000 3.480000 1.1657771

CP4 250 1.0000 5.0000 3.520000 1.0947116




139

Appendix D: Reliability test output

SSHARIA COMPLIANCE

RELIABILITY

/VARIABLES=SC1 SC2 SC3 SC4


/MODEL=ALPHA.

Reliability



N %


Excludeda 0 .0

Total 250 100.0


the procedure.


Cronbach's

Alpha N of Items

.946 4



140

KNOWLEDGE OF NON-MUSLIM CUSTOMERS

RELIABILITY

/VARIABLES=KOC1 KOC2 KOC3 KOC4


/MODEL=ALPHA.

Reliability



N %


Excludeda 0 .0

Total 250 100.0


the procedure.


Cronbach's

Alpha N of Items

.941 4



141

TRUST AND CONFIDENCE

RELIABILITY

/VARIABLES=TC1 TC2 TC3 TC4 TC5


/MODEL=ALPHA.

Reliability



N %


Excludeda 0 .0

Total 250 100.0


the procedure.


Cronbach's

Alpha N of Items

.957 5



142

FLEXIBILITY OF WITHDRAWAL

RELIABILITY

/VARIABLES=FW1 FW2 FW3 FW4


/MODEL=ALPHA



N %


Excludeda 0 .0

Total 250 100.0


the procedure.


Cronbach's

Alpha N of Items

.948 4



143

CUSTOERMS’ PREFERENCES

RELIABILITY

/VARIABLES=CP1 CP2 CP3 CP4


/MODEL=ALPHA.

Reliability



N %


Excludeda 0 .0

Total 250 100.0


the procedure.


Cronbach's

Alpha N of Items

.957 4



144

Appendix E: Correlation output

CORRELATIONS

/VARIABLES=Customer_preferences Sharia_Compliance

Knowledge_of_Customer Trust_and_Confidence

Flexibility_of_withdrawal/PRINT=TWOTAIL NOSIG

/MISSING=PAIRWISE.

Customer

preferences

Sharia

Compliance

Knowledge

of_Customer

Trust and

Confidence

Flexibility of

withdrawal

Customer

preferences

Pearson Correlation 1 .865 .776 .838 .811

Sig. (2-tailed) .000 .000 .000 .000

N 250 250 250 250 250

Sharia

Compliance

Pearson Correlation .865 1 .821 .859 .810

Sig. (2-tailed) .000 .000 .000 .000

N 250 250 250 250 250

Knowledge

of Customer

Pearson Correlation .776 .821 1 .817 .791

Sig. (2-tailed) .000 .000 .000 .000

N 250 250 250 250 250

Trust and

Confidence

Pearson Correlation .838 .859 .817 1 .855

Sig. (2-tailed) .000 .000 .000 .000

N 250 250 250 250 250

Flexibility

of

withdrawal

Pearson Correlation .811 .810 .791 .855 1

Sig. (2-tailed) .000 .000 .000 .000

N 250 250 250 250 250

**. Correlation is significant at the 0.01 level (2-tailed).



145

Appendix F: Normality test output

Regression

Variables Entered/Removeda

Model

Variables

Entered

Variables

Removed Method

1 Flexibility_of

_withdrawal,

Knowledge_o

f_Customer,

Sharia_Comp

liance,

Trust_and_Co

nfidenceb

. Enter

a. Dependent Variable: Customer_preferences

b. All requested variables entered.

Residuals Statisticsa

Minimu

m Maximum Mean

Std.

Deviation N

Predicted Value 4.6304 20.0382 14.0720 3.83831 250

Residual -4.34300 6.04966 .00000 1.95150 250

Std. Predicted

Value -2.460 1.554 .000 1.000 250

Std. Residual -2.208 3.075 .000 .992 250




146

DESCRIPTIVES VARIABLES=Customer_preferences

/STATISTICS=MEAN STDDEV KURTOSIS SKEWNESS.


N Mean

Std.

Deviation Skewness Kurtosis

Statistic Statistic Statistic Statistic

Std.

Error Statistic

Std.

Error

Customer

preferences 250 14.0720 4.30592 -.909 .154 -.179 .307

Valid N

(listwise) 250



147

Appendix G: Collinearity output

REGRESSION

/MISSING LISTWISE

/STATISTICS COLLIN TOL

/CRITERIA=PIN(.05) POUT(.10)

/NOORIGIN

/DEPENDENT Customer_preferences

/METHOD=ENTER Sharia_Compliance Knowledge_of_Customer

Trust_and_Confidence

Flexibility_of_withdrawal

/RESIDUALS DURBIN.

Regression


Model

Variables

Entered

Variables

Removed Method

1 Flexibility_of_

withdrawal,

Knowledge_of

_Customer,

Sharia_Compli

ance,

Trust_and_Co

nfidenceb

. Enter





148

Model Summaryb

Model Durbin-Watson

1 1.997a

a. Predictors: (Constant), Flexibility_of_withdrawal,

Knowledge_of_Customer, Sharia_Compliance, Trust_and_Confidence

b. Dependent Variable: Customer_preferences

Coefficientsa

Mod

el

Collinearity Statistics

Tolerance VIF

1 Sharia Compliance .212 4.727

Knowledge of Customer .265 3.779

Trust and Confidence .178 5.607

Flexibility of withdrawal .236 4.244

Collinearity Diagnosticsa

Mod

el

Dimensi

on

Eigenva

lue

Conditi

on

Index

Variance Proportions

(Consta

nt)

Sharia

Complian

ce

Knowled

ge_of_Cu

stomer

Trust_an

d_Confid

ence

Flexibili

ty_of_

withdra

wal

1 1 4.924 1.000 .00 .00 .00 .00 .00

2 .044 10.583 .98 .02 .01 .01 .01

3 .013 19.314 .00 .03 .65 .06 .39

4 .011 20.916 .02 .65 .34 .02 .26

5 .008 24.989 .00 .30 .00 .90 .33




149


Minimum Maximum Mean Std. Deviation N

Predicted Value 4.6304 20.0382 14.0720 3.83831 250

Residual -4.34300 6.04966 .00000 1.95150 250

Std. Predicted Value -2.460 1.554 .000 1.000 250

Std. Residual -2.208 3.075 .000 .992 250




150

Appendix H: Multiple linear regression model output

REGRESSION

/MISSING LISTWISE

/STATISTICS COEFF OUTS R ANOVA

/CRITERIA=PIN(.05) POUT(.10)

/NOORIGIN

/DEPENDENT Customer_preferences

/METHOD=ENTER Sharia_Compliance Knowledge_of_Customer


Flexibility_of_withdrawal.

Regression


Model Variables Entered Variables Removed Method

1 Flexibility_of_withdra

wal, .

Enter

Knowledge_of_Custom

er,

Sharia_Compliance,

Trust_and_Confidenceb





151

Model Summary

Model R R Square

Adjusted R

Square

Std. Error of

the Estimate

1 .891a .795 .791 1.96737

a. Predictors: (Constant), Flexibility_of_withdrawal,

Knowledge_of_Customer, Sharia_Compliance,


ANOVAa

Model

Sum of

Squares df Mean Square F Sig.

1 Regression 3668.422 4 917.106 236.945 .000b

Residual 948.282 245 3.871

Total 4616.704 249

a. Dependent Variable: Customer preferences

b. Predictors: (Constant), Flexibility of withdrawal, Knowledge of Customer, Sharia

Compliance, Trust and Confidence



152

Coefficientsa

Model

Unstandardized

Coefficients

Standardized

Coefficients

t Sig. B Std. Error Beta

1 (Constant) -1.551 .537 -2.890 .004

Sharia

Compliance .536 .071 .473 7.515 .000

Knowledge

of

Customer

.057 .067 .048 .861 .390

Trust and

Confidence .198 .062 .219 3.198 .002

Flexibility

of

withdrawal

.239 .070 .202 3.390 .001



Minimum Maximum Mean Std. Deviation N

Predicted Value 4.6304 20.0382 14.0720 3.83831 250

Residual -4.34300 6.04966 .00000 1.95150 250

Std. Predicted Value -2.460 1.554 .000 1.000 250

Std. Residual -2.208 3.075 .000 .992 250




153

Appendix J: Chi square distribution table

Documents

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