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CHAPTER 1
INTRODUCTION
This chapter consist of the introduction of the study, problem statement, research question,
research objective and hypothesis used for the study. Besides that significant of the study and
definition of selected variables are also included in this study.
1.1 Introduction
The main reason of conducting the research is to find out the determinants of acceptance of
Islamic Banking Products and services among students at the International University of
Malaya-Wales (IUMW). Malaysia has both Islamic banking and conventional banking which
the consumer can select according to their preference. The Islamic Bank can be described as
an institution which is following the banking structure that is form on the idea of Islamic law
also known as Shariah and does not include itself in the proceedings which forbidden by
Shariah (Abdullah, Sidek, & Adnan, 2012). The Islamic bank services provide similar with
the conventional bank for instance saving account, current account, credit card, loan and other
financial services yet it must be accordance and not forbidden by ideology of Shariah. The
earliest Islamic banking structure execute from the year 1983 when the original Islamic bank
which is Bank Islam Malaysia Berhad (BIMB) was run in Malaysia (Ahmad & Haron, 2002).
The strong reason of expanding the Islamic Banking System is to accumulate between the
Muslim and make sure equitable sharing and utilize of collection under the Islamic law and
guidance. In the year 1993, Bank Negara Malaysia (BNM) begin the Islamic framework when
the Interest-Free Banking Scheme was inaugurated. The basis of Bank Negara Malaysia begin
with Islamic framework is to permit the conventional bank to establish the Islamic basis
financial services to all instead introduce numerous new Islamic bank in Malaysia (Ahmad &
Haron, 2002). By July 1993, the Interest-Free Banking Structure was extended to public the
banks in Malaysia with total number of 21 Islamic financial services were expanded. At the
end of year 2000, the Islamic banking structure was constitute by 2 Islamic banks, 5 merchant
banks, 7 discount houses and 17 conventional banks (Ahmad & Haron, 2002). Even though
the Islamic banking structure broadly expanded in Malaysia that nearly all of the financial
institution provided a number of categories of Islamic services but based on the investigation
done by (Haron, Ahmad, & Planisek, 1994) it represented that there are 32 percent of non-
Muslim and 12 percent of Muslim believes that the Islamic bank is for Muslim only. Most of
the non-Muslims individual misinterpret that Islamic Bank is only for Muslim individual.
According to the researchers, public are willing to establish a relationship with Islamic
Banking if there is a chance for them to understand more on Islamic Banking.
Furthermore, the researcher states that if there is a chance to let the public to understand more
about the Islamic bank, they are willing to establish a relationship with Islamic bank.
Islamic Banking is a concept that given by Allah Almighty to carry out the business activities
and function and at the same times to execute the interest free scheme by utilizing the theory
of Shariah. It can be put into words that Islamic Banking is greatly on prohibition of interest
payments (riba) as only products and facilities are entitled to carry a price (Rahman, 2007).
The most significant characteristic of Islamic Banking is splitting of risk among investors, the
bank and the borrowers (Ahmad, Rehman & Humayoun, 2011). According to Uzair (1976),
the working organization of Islamic Banking is a variety of mechanism that applied to present
to subsist with the challenges of dividend and risk (as cited in Ahmad, Rehman, Saif &
Safwan, 2000). In connection, Islamic scholars have keep on with the development of goods
that be resemble to conventional banking products by substituting interest remittance and fees
with rebates and unforeseen payment layout. In the depressed world financial scenario,
mainly the subprime crisis in 2008, Islamic Banking has become visible as a powerful another
financial system. Political and business leaders at the Fifth World Islamic Economic Forum in
Jakarta in March 2009 have praised the Islamic financial institution flexibility opposed to
economic decline citing their abstain from sink money into toxic assets (Loo, 2010). It has set
down an occurrence increase in a short time and has extended $1 trillion US dollar and the
expansion value is 20% yearly. At the present time, there are more than 500 bank globally
which hitherto become a significant segment of the finance and investment industries (Cheng,
Chuah, Bohari, & Adam, 2011).
1.1.1 Background of Islamic Banking in Malaysia
Malaysia, is a powerful defenders of Islamic Banking, and also a nation with multiracial
which governed by Malays (Bumiputera) who are Muslim by birth (Loo, 2010). Malaysia has
been encouraging the suggestion with the major reason to generate a similar in conventional
banking system by handing out of an equitable funding in concession with Islamic Concept
and to generate the integration spirit among Muslims by takeaway of Islamic Banking System
(IBS) (Loo, 2010). Bank Islam Malaysia has begun its operation in 1983. In 1993, under the
Islamic Banking Scheme (IBS), finance companies, merchant banks and also commercial
banks are permitted to give out Islamic goods and services (Ahmad & Kazmi, 2010).
Furthermore, Malaysia has also encouraged itself as a significant hub for the Islamic research
and studies. The International Shariah Research Academy was establish in 2008, while in
2006, there is a setup of International Centre for Education in Islamic Finance (INCEIF) (Loo,
2010). The services of Shariah Finance can be purchased by Muslims and non-Muslim since it
is a sort of most significant concept of present-time and the combine of Islamic Economies.
Besides that, a great number of commercial banks in Malaysia attempt to start up Islamic
banking business to obtain the chances of the $US 1 trillion industry. In Islamic banking,
many rule procedure attempt to increase faith and also revamp the risk management through
Islamic law framework (Shariah). At a recent time, partial of the Malaysia Islamic Banks’
consumers are Non-Muslims. The desirability of Islamic Banking is relatable to the principled
values and innate dedication to straight forward that makes the Islamic banking to obtain
identification as an substitute to the long-established commercial banking. Through this
perception, it makes the industry to grow fast (Cheng et al., 2011). According to Haron,
Ahamd and Planisek (1994), who are pioneer research on bank patronage in Malaysia, finds
that almost 100% Muslims and 75% Non-Muslims are aware of existence of Islamic Banks.
Most of them desire to have a connection with related banks after they are familiar with the
existing IBS. As such, a study on the perceptions of individual towards Islamic Bank must be
done rather than emphasizing on Muslims and Non-Muslims as in the earlier researches.
Competitive rivalry in between Islamic banking and conventional banking, and amongst
Islamic banks itself shall raise the challenges faced, to name a few would be misperception of
non-Muslims, innovation of products offered, inadequacy of qualified expertise, and
mainstreaming of Islamic banking.
1.2 Problem Statement
Islamic banking is a control an account framework that rely on the guideline of Islamic law
which known as Shariah and guided by Islamic economics (Root, 2006). In a simple word
Islamic banking is a financial institution that manage their facility that include the component
which is permitted by the Religion of Islam.
Besides, nowadays Islamic banking are missing on promoting or advertising Islamic banking
services to public through mass media. This will influence to public where they do not known
about the principle and policy that the Islamic banking owns and provide to the public.
Furthermore, banks are focusing more on developing Islamic Bank due to great competition
brought by the conventional banking industries. Among the Muslim countries, Malaysia is
one of them which is committed to developing not only an Islamic banking system, but a
complete Islamic financial system. Nonetheless, the government introduced the concept of
Islamic windows, which enable the existing conventional banks to introduce Islamic banking
products to customers instead of creating many new Islamic banks. However, the Islamic
products has not been fully accepted by consumers. Therefore, there is a need to understand
the students' behaviour toward the favourable reception on Islamic banks. To gain deeper
understanding about the favourable reception on Islamic bank of individual consumer of
IUMW. According to the research conducted by Ahmad & Haron (2002) stated that
conventional bank had total deposit RM381 billion but the total deposit hold by Islamic
system was RM31 billion. In the case of loans, there was RM416 billion extended by the
conventional banking system while the Islamic system was given out RM21 billion to the
public. Based on the statistic figure, we can know that the conventional banking system has
captured most of the market share as compare to the Islamic banking system. Besides that, we
also know that the conventional Banking system is much stronger than the Islamic banking
system so we need to investigate the reason for affecting this scenario. The main problems
that affecting the determinants of acceptance on Islamic banks among the university student
are, customers are unfamiliar with the Islamic banking system. There are still many people do
not understand what is actually the Islamic banking either Muslim or non-Muslim. Customers
do not familiar with the products and services offered by the Islamic banks. Thus, Islamic
bank needs to be dynamic and innovative in fulfilling customers’ expectations and
requirements. According to the study conducted by Ahmad & Haron (2002), there is a
misconception against Islamic banking. Both the researchers said that many customers have
misunderstanding against Islamic banking which the Islamic banking is only for Muslims.
Besides that, this study provides as an indicator showing that the provider of Islamic banking
products and services have not done enough in educating customer and marketing their
products. Most customers are not aware of the products and services offered by the Islamic
banks.
1.3 Research question
I) What is the relationship between religious obligation and determinants of
acceptance of Islamic Banking Products and Services among students at the
International University of Malaya-Wales (IUMW)?
II) What is the relationship between availability of products and services and
determinants of acceptance of Islamic Banking Products and Services among
students at the International University of Malaya-Wales (IUMW)?
III) What is the relationship between image and reputation towards bank and
determinants of acceptance of Islamic Banking Products and Services among
students at the International University of Malaya-Wales (IUMW)?
1.3 Research Objective
General objectives:
To examine the favourable reception on Islamic banks of individual consumer of
International University of Malaya - Wales.
Specific Objectives
I. To determine the relationship between religious obligation and determinants of
acceptance of Islamic Banking Products and Services among students at the
International University of Malaya-Wales (IUMW)
II. To investigate the relationship between availability of products and services and
determinants of acceptance of Islamic Banking Products and Services among
students at the International University of Malaya-Wales (IUMW)
III. To examine the relationship between image and reputation towards bank and
determinants of acceptance of Islamic Banking Products and Services among
students at the International University of Malaya-Wales (IUMW)
1.5 Hypothesis
There are three hypotheses for this research paper which derived from the research objectives.
The five hypotheses are as below:
H 0 : There is no relationship between religious obligation, availability of products
and services, and image and reputation towards bank and determinants of
acceptance of Islamic Banking products and services among students at the
International University of Malaya – Wales (IUMW).
H1: There is a significant relationship between religious obligation and determinants
of acceptance of Islamic Banking products and services among students at the
International University of Malaya – Wales (IUMW).
H 2: There is a significant relationship between availability of products and services
and determinants of acceptance of Islamic Banking products and services
among students at the International University of Malaya – Wales (IUMW).
H 3: There is a significants relationship between image and reputation towards bank
and determinants of acceptance of Islamic Banking products and services
among students at the International University of Malaya – Wales (IUMW).
1.6 Significant of study
Practical
Islamic bank is not widely known and acceptable as contrast with conventional bank by
Malaysian. Therefore, this study can further favour to the Islamic bank and banks like Bank
Muamalat Malaysia Berhad by studying what criteria that remarkably influencing the
favourable reception on Islamic banking. Thus, the Islamic bank and financial institutions can
come out with a latest plan and make their institutions stronger.
Theoretical
The outcome of this research will also be a useful source of information for banking students.
The research outcome will be helpful for the banking students who wish to further understand
the standard that remarkably affecting the acceptance on the Islamic bank.
CHAPTER 2
LITERATURE REVIEW
This chapter discusses all the variables and explores the relationship between variables from
the past studies, which are favourable reception towards Islamic Banking among individual
consumer in IUMW through religious obligation, availability of products and services, and
image and reputation towards bank. The conceptual framework will also be presented in this
chapter. Before the study is conducted, we must first understand the characteristics of Islamic
banking. In the studies of Khan (2010), he has explained how ―Islamic‖ in Islamic bank.
Islamic banking is commonly synonymous with ―interest-free banking‖ or ―risk-sharing
banking‖. According to Sole (2007), Islamic bank has been grown to all over the world over
these years. The area covered was not only limited to the nations of majority Muslim
populations but also over other countries where Muslim is a minority, such as the United
Kingdom and Japan.
2.1 Acceptance towards Islamic Banking Products and Services
Islamic banking approach was introduced in Malaysia for just 50 years since establishment of
Tabung Haji. Islamic banking systems in Arabic countries are distinctively different
compared to Malaysia’s Islamic banking. The market is still not fully developed because the
majority of consumers are more familiar with conventional banking. Therefore, it can be said
that Islamic banking is still new for Malaysians. According to Rehman and Shabbir (2010),
customers’ perception would have an effect on a new products acceptance. In acceptance of
new product, customers will make choices over the products that match to their experiences
and needs as compared to the existing products (Rogers, 1983). Besides, awareness or
knowledge about a product is a moderating factor in selecting a new product (Lai, 1991). It
can be summarized that acceptance of Islamic banking would be a consideration of consumers
based on their perception, experiences, needs and knowledge.
Kahf (2004) has discussed the winning factors of Islamic banking in his studies. According to
his opinions, Islamic banks have to pay great attention on the quality of products and services
they offer to the consumers even if they are monopolizing the market based on the specialties
of their services. Besides, they have to expand their base of banking services. Even though
Islamic bank is specially for Muslims that are not allowed to patronize into conventional
banks, however the services provided should not limited to the preference of Muslims only.
They should also provide services like investment funds (Takaful) so that they could attract
more consumers regardless of their religious views. Moreover, Islamic bank must be able to
build a high level of trust between customers and team. There is evidence to show that high
level of trust is the foundation of success of a bank. In order to achieve this target, effectively
supervise of the implementation of standards and collective religious rulings in the actual
deals and transactions with customers, depositors and shareholders will become a very
important issue to Islamic bank. Hanif (2011) has explained the difference of Islamic banking
with conventional banking in his studies. Before the introduction of Islamic banking, banker
was a dealer of money that handles all the money of depositors and also provides loans to
borrowers. In this case, interest should be paid to the depositors and received from the
borrowers as a reward of using the money according to the capitalist system. However, the
practice of Shariah (Islamic Law) has prevented the Islamic banks from applying the same
system with the conventional bank. Shariah states that the charging or paying of interest as
known as Riba in the Islamic words is forbidden in the Shariah. Therefore, Muslims have no
other way but to establish their own bank with the brand new system. This system challenges
the interest based system that has been practiced by the people for few centuries even in the
Muslim countries. On the other way, it applies the profit and loss sharing system which fits
more to the Shariah. By using this approach, Islamic banks have successfully created trust
between depositors and them because the profit or loss is no longer fixed but according to the
performance of Islamic banks.
2.2 Religious Obligation
Perspective is defined in Oxford Dictionary as the mental view of the relative importance of
things. In terms of religion and education, “the mental view” refers to the teaching and
learning process whereas “relative importance” refers to emphasis and progression.
Perspective is mainly proposed the need for a well defined viewing point, from all other
things or religious phenomena which can be viewed and relative to each other. However, any
viewpoint that is contrast with others may affect the perspectives of the subject matter. In
Islamic banking, it has been proved that the availability of products and services , religious
obligation at enables highly the consumers feel easier and more comfortable. As time
progresses, it leads to higher acceptance level of consumers on Islamic banking (Haque,
Osman & Ismail, 2009).
The earlier researches by Erol and El-Bdour (1989) and Erol, Kaynak and ElBdour (1990)
confirm that there are three key factors that influence the consumers perception towards
Islamic banking: fast and efficient services, reputation and confidentiality, meanwhile
religious is not a main intention criterion. However, in a study explored by Haque et al.
(2009) finds that a significant difference of perception between races towards Islamic
banking. Different religious group such as Buddhism, Christianity, Islam and others have
different beliefs, as revealed by Rehman and Shabbir (2010). Researchers discovered that
consumers do not have so much knowledge or information regarding the Islamic term used
such as Mudharaba, Mushaaraka and Murabaha but they invest those products mostly because
of the religion reason. Other than that, according to Khan, Hassan and Shahid (2007) who
conduct a research on 100 customers of Islamic bank in Bangladesh and find the religious
principles is the main factor for bank selection criterion. Moreover, understanding or
clarifying consumers demographics on bank acceptance criteria is an effective measurement
tool to modified group-behavior of the customer. Whereby , it is compatible for the bank to
position amongst the banking consumers needs.
According to Haque, Ahmed and Jahan (2010), Holy Quran act as a life code for all Muslims
which Allah has provided them complete ethical guidelines towards their daily life. In
between that, Shariah principles are the ethical guides for Muslims when handling businesses
and banking activities. Therefore, a follower of Islam must follow to the Shariah principles,
committing to Islamic lifestyle and refrains from crimes committed which has been outlined
by the Shariah. According to Beck et al. (2013), Shariah prohibits the Islamic banks from
charging of interest payment (Riba) on the financial products and services provided. In this
case, Muslims have no other way but to improvise the existing way of doing business with
their own products and services. Therefore, Islamic banking has been introduced and together
Shariah compliant products and services have been introduced. These products and services
resemble the conventional banking products and services by replacing the interest payment
with contingency payments or fees. The use of this factor is able to attract the Muslims who
are bound to follow the Shariah. This has been further explained by Bhatti et al. (2010). They
found out that the most significant reason of consumers in dealing with Islamic bank is that
Islamic banks are providing the same facility and returns with the benefit of Shariah
compliance as were offered by conventional banks but without the benefit of Shariah
compliance. However, there are still issues faced by Islamic banking due to these Shariah
principles. V. Sundararajan and Errico (2002) have mentioned that Shariah has not only
prohibited the Riba but also the taking of excessive risk (Gharar). In the other words, many
risk taking instruments and techniques used by the conventional banks nowadays are not yet
compatible to Islamic Banks. For example like options, futures and forwards. This will be a
problem for those Islamic banking users that want to manage their risks for their businesses.
Besides, Awan and Bukhari (2011) has further determined that Shariah principle has also
prohibited the businesses associated with the particular sins sectors like alcohol, pornography
or gambling. These activities are ―Haram‖ in the aspect of Islam and so Muslims are not
allowed to get involved or participate in any part of these activities. Thus, these restrictions
are not applied to conventional banks.
2.3 Availability and Quality of Services
According to Islamic Shariah principles, it is said that Islamic banking products have some
proscribed standard which differs from the conventional banking products (Damirchi &
Shafai, 2011). The meaning of Shariah acquiescent the law approved by the Shariah board of
the bank. They stand from, asset-backed, social responsibility, profit and risk sharing, and
Islamic based economic perspective activities which Gharar is prohibited. Furthermore,
Islamic banks disapproves simply lending out money at interest, this Islamic rule is to prevent
the illegal outcome or speculative transactions also known as “Maysir” and “Gharar”
(Hussein, 2010; Damirchi & Shafai, 2011). In order to create an efficient and progressive
Islamic bank system, Bank Islam Malaysia develops a variety of products and services to gain
more consciousness among Malaysian citizens. All fund invested must be in Halal modes
under supervision of the Shariah Advisory Board of Bank Negara Malaysia. Currently,
Malaysian banks have introduced many appealing Islamic products and services under Islamic
contracts of Mudharabah, Musharakah, Murabahah, Bai Bithaman Ajil, Ijarah and many
others
Idiab, Haron and Hj. Ahmad (2012) has discussed about the services provided by the Islamic
bank. They found out that Islamic banking services can be divided into two major parts which
are services that include credit operations and services that do not include credit operations.
Services that include credit operations are the services that provided especially for the purpose
of investment. However, services that do not include credit operations are the services
implemented on the basis of commission or fee is charged over the submissive or recall. The
most vital is that Islamic bank does not offer traditional banking services that are in
contravention with the provision of Islamic Law. This differs from conventional bank and
Islamic bank, so it helps the consumers to choose the services that they prefer more easily. In
the studies of Quresh, Hussain and Rehman (2012), they found out that the important
attractions of consumer on behalf of the Islamic banking or conventional banking is services
and facilities that the bank provide. There are many banks in the market and so the consumers
can switch their banks easily. In other words, consumers have the right to switch bank to bank
depending if the bank can offer them the facilities and services that differ itself from other
competitors. They also requested the banks to emphasise on advertising the products and
services that are different from the competitors and the financial benefit that will be provided
by these products in order to attract the attention of the consumers. On the other hand,, Saad
(2012) has mentioned that besides of the type of services, the quality of services is a crutial
role as well. She found out that it improves the quality of services and can improve the
competitiveness of a bank in the market. Besides, he also found out that improving the
physical facilities in a bank will have the similar effect as well. Osman, Zainuddin, Rashid
and Jusoff (2009) had provided the same inference before Saad. They stated that improving
quality of services will entail customers‘ satisfaction and ultimately customers‘ loyalty.
2.4 Image and Attitude towards Islamic Banking in Malaysia
The need of Islamic banking system is vital to satisfy Muslims community in Malaysia need
and wants with respect to the Shariah rule. The religion mirrors a strong impact on customer’s
perception and influenced people’s attitude in different aspect of life. Therefore, Islam also
functions as guide in Islamic banking system. (Mossafa, 2014) States that the religion affects
the customer’s verdict in Islamic banking system and other influences are not matters. The
operation of Islamic bank is parallel to the operation of commercial bank but difference is that
IB work according to Islamic laws (Henry and Wilson, 2004). Meanwhile, from the
perspective of Islamic banking, The religious roles and profit in Islamic bank inspires the
people to invest in Islamic bank (Ramdhony, 2013). Thus, the relativity of image and attitude
towards IB in Malaysia and the overall understanding of the governed Shariah rule absorbed
into the banking practices is directly proportionate.
Hence, to summarize, image and attitude towards Islamic banking in Malaysia can be
abridged as the image the Islamic banks reflect based on the Shariah rules avoiding interests,
differentiating from conventional banks and displaying a unique selling point.
According to Ahmad, Rustam and Dent (2011), they determined that bank reputation and
status are the most leading factors of the selection of bank for customers. Although the ideas
of Islamic banking are still at the infant stage in some of the countries and yet to be widely
understood by other races besides Muslim, however it has been successfully attracted great
attention of foreign and local investors. As a brand new idea in the market, there is a great
potential for Islamic banking to attract new customers and larger market share in the future.
Furthermore, Chebab and Zribi (2012) have further explained that customers will have
positive perception on the bank‘s reputation and status. This will influence customers to
having the strong believe that a bank with a good reputation and status shows that it will have
good performance in their products and services. Thus, a positively amplified image and
attitude towards the IB in Malaysia will improvise. The well education is necessary for the
awareness of Islamic banking products (Doraisamy, 2011). Hence, without sufficient
knowledge on the availability of banking products offered within IB in Malaysia, the image
and attitude towards IB in Malaysia barely is improved as awareness is the setback to be
revised. In the studies, there is still a majority of people in Malaysia indicates that their
knowledge on Islamic banking is still limited. Even though they know that Muslim is not
allowed to patronize conventional banks due to the interest is prohibited in Islam, however
there is still some misconception among people about the objective and philosophy of the
establishment of Islamic bank. People believed that the Islamic bank must adopt the profit
maximization principle but it is contradictory with the objective Islamic bank that looking for
the combination of moral and profit motives. These conflicts and misunderstandings between
the customers and Islamic bank may cause the customers to swap their preference. In the
studies of Hoq, Sultana and Amin (2010), they found out that trust plays a very important role
on improving the bank‘s reputation and status. They recommended that bank should pay great
attention to improve the trust of customers towards them as it leads to a positive impact on the
reputation of the bank. This will not only assist them to sustain their customers but also help
them to develop their customer base. Besides, Awan and Bukhari (2011) has found out the
reputation and status of the bank has been the main reason that a customer for joining a new
bank. This is because of the reputation and status is the first thing that influences the image
and reputation of IB in Malaysia in the mind-set of the customers before the customer has any
contact with other aspects of the bank. In general, awareness of products, trust , reputation and
status are equivalent aspects judged when drawing out a certain image and reputation towards
the IB in Malaysia in whole.
2.5 Conceptual Framework
In conceptual framework, the independent variables are religious obligation,
availability of products and services and image and reputation towards bank while the
dependent variable is favourable reception towards Islamic Banking.
CHAPTER 3
RESEARCH METHODOLOGY
In this chapter, the research methodology is the methods that used to deal with data collected,
analysed and interpreted. Thus, this is the most important part in the research project.
Determinants of Acceptance of Islamic Banking Products and
Services among Students at the International
University of Malaya - Wales
Religious Obligation
Availability of Products and
Services
Image and Attitude
towards Islamic Banking in Malaysia
Research methodologies include research design, questionnaire design, pilot test, sampling
design, data collection methods, measurement scale, and the data analysis. Besides that, it also
provides a clear view to the readers on how the research is carried out.
3.1 Research Design
This research is conduct by using hypothesis testing with quantitative approach. In this study,
the questionnaire will be distributed among the students in IUMW and the data collected will
be quantified for statistical calculation to examine the relationship between the dependent
variable and independent variables.
According to Zikmund, Babin, Carr and Giffin (2010), the research design is an overall plan
that specifies the methods and procedures for collecting and analyzing the related information.
In this research, quantitative research will be conducted. Quantitative research is collecting
the numerical data that explain a phenomenon and analyze the data using mathematical
methods (Aliaga & Gunderson, 2002). Quantitative data is more efficient to test the
hypothesis. Therefore, it can be effectively helped us to measure on the Religious Obligation,
Availability and Quality of services, and also Confidence in Bank, that reflects the favourable
reception towards Islamic banking by individual consumer in IUMW. In this research, we
have used descriptive research. Descriptive research involves large samples which used to
observe and measure the behavior and opinion in particular condition. We choose descriptive
research as we using questionnaire method. Questionnaires have to distribute to respondents
and collected back to get evidence and making conclusions on our research. We want to find
out the relationship between the dependent variable and independent variables.
3.2 Research Location
The sampling location will focus on Block A and C, City Campus International University of
Malaya-Wales (IUMW), Jalan Tun Ismail, 50480 Kuala Lumpur. According to the sample
size table of Krejcie and Morgan (1970) as shown in appendix 3.1, the sample size should be
approximately 278 for the population size 1000. And hence 300 questionnaires were
distributed in order to make sure that at least 278 questionnaires are collected. The sampling
frame of this research is all the students from International University of Malaya-Wales
(IUMW).
3.3 Target Population and Sampling Technique
It is definitely hard to target the market as a whole, therefore we are specifying the target
population to students from the International University of Malaya – Wales (IUMW).
Collected data will be based on convenience sampling. Convenience sampling is made up of
students who are easy to access, available at the time and willing to take part. No reason tied
to purposes of research. students of International University of Malaya-Wales are easy to
cooperate randomly and use lowest cost and consume lesser time in carrying out the
questionnaires. Therefore, IUMW students are chosen as our target population.
The two types of sampling techniques are non-probability and probability sampling. In our
research, we used non-sampling technique. A non - probability technique is used in selecting
target respondent. This is because the sampling frame covers the huge amount of suitable
respondents. In our studies, we used convenience sampling. Convenience sampling is one of
the non-sampling techniques. Besides that, the subjects are selected because of their
convenient accessibility and proximity to the research. In our research we chose students from
the International University of Malaya-Wales (IUMW) and the questionnaires was distributed
to them.
3.4 Variables Measurement
The questionnaire is divided into five parts which are part A, part B, part C, part D and part E.
In part A, the respondents need to fill up the demographic background as requested in the
questions. The independent variables which are loyalty, leadership skills and quality of work
are questioned in part B, C and D of the questionnaire. The last part of the questionnaire is the
dependent variable which is the employee engagement on performance. Part A requires the
respondents to tick inside the box based on their demographic background. Whereas part B, C
and D are evaluated through Likert Scale with five options of strongly disagree (1), disagree
(2), neutral (3), agree (4) and strongly agree (5).
3.5 Data Collection
The questionnaires are allocated to the students in International University of Malaya-Wales
(IUMW) who are free to corporate during this research. The research questionnaires will be
given to the students from all the faculty which include Foundation Studies, Arts &
Humanities, Business & Law, Health & Social Sciences, and Science, Technology,
Engineering & Mathematics. The data collection will be conducted during weekdays because
most of the student will be at the location during weekday. The respondents will be provided
10 minutes to answer the questionnaire to avoid the answer is inaccurate due to time
constraint imposed.
3.6 Data Analysis Method
IBM SPSS version 24 will be the tools that be used for the data entry and analysis of this
research. The main statistical analysis is the descriptive statistics. Reliability of the
instruments is to be tested in order to valid result in this research. Normality test and
correlation test are used for the hypothesis testing. Data is tested by using Skewness and
Kurtosis test for normality test. Moreover, Pearson product-moment correlation coefficient is
used to test relationship between hypothesis by estimate the level of confidence which is set
as 0.05 if it is below 0.05, H0 will be rejected and H1 will be accepted.
3.7 Research Instrument
Questionnaire Design
Personal self-administered questionnaire has been utilized as a medium for data collection as
it able to reach out large number of respondents. The questionnaire consists of 33 questions
and divided into 5 sections which are Section A, B, C, D and E. Declaration of private and
confidential is highlighted in the survey so that the respondents are comfort in answering the
questions. Besides that, fixed substitutive question is also widely used to collect data because
it is easier and more time efficient for the respondents to answer the survey question and for
the researcher to analyze the data that have been collected.
There are 8 questions in the section A. The purpose of this section designed is to gather the
demographics and personal information of the respondents. The questions asked are gender,
age, religion, marital status, highest education level, current occupation, individual monthly
income, and household monthly income. For section A, the personal information of
respondents is gathered through the dichotomous alternative and determinant-choices
questions. According to Zikmund (2003), all the respondents are required to choose one
answer from several alternatives that given in a question.
Section B is designed to know whether or not the respondent is a consumer of Islamic
banking. The respondents have to select from a list of Islamic banking products and services
that are shown if they are using such products or services.
Section C is to know how far the respondent understands about Islamic banking. Some
general knowledge of Islamic banking has been asked such as awareness about existence of
Islamic banking, its banking operation and Islamic contracts. For Section C, the types of
questions are dichotomous alternatives and determinant-choice questions.
Section D is constructed for the independent variable of this research which are, religious
obligation, availability and quality of services, as well as confidence in Islamic banking.
There are 5 questions in each independent variable. The first part of the questions is to clarify
which Islamic banking products and services are attractive to respondents. The second part is
to know how the respondents percept from religious views. The third part is to measure how
much confidence the respondents have on Islamic banking. The last part of the questionnaire,
section E is used to measuring the dependent variable which is the favourable reception
toward Islamic banking. For Section D and E, the types of questions are attitude rating scale
which is Likert scale. From the Likert scale, the level of attitude is measured when the
respondents is try to express how strongly agree or disagree with the constructed statements, it
also used to indicating their responses ranging from very positive to very negative toward an
attitudinal object. Overall, the respondents are generally been choose from five alternatives
which are strongly agreed, agree, neutral, disagree and strongly disagree (Zikmund, 2003).
3.8 Pilot Test
Pilot test is a type of test that used to collect the data from the ultimate subject of the research
project to serve as a guide for the large study (Zikmund, 2003). The pilot test is often used to
conduct prior to the distribution of actual surveys to figure out some major and minor errors
that were being neglected in the questions. Besides that, the pilot test was primary used to
check the reliability, validity and accuracy of the questionnaires. There are around 5 sets of
questionnaire are distributed to students in IUMW and the data that have been collected is
being tested its reliability by using the IBM SPSS Version 24 software. During the pilot test,
some suggestions were highlighted from the pilot test respondents which are the students from
IUMW. There are few results are abnormal but the overall result is still reliable. When pilot
test was completed, there are some amendments on the questions were made, at last, there are
170 set of questionnaire are distributed to the target respondents in IUMW.