CHAPTER 1 INTRODUCTION

1.1

Introduction
This chapter presents about the basic knowledge of this study. It will be the detail explanation about the

background of research, problem statement, objective of the study, research question, justification of study, scope of the study, significance of the study, limitation of study, and the conclusion.

1.2

Background of the study

1.2.1

History of Islamic Banking in Malaysia

The establishment of Islamic banking in Malaysia was influenced by both external and internal factors. The external factor could be referred to the establishment of Islamic banks in the Middle East and Islamic Development Banking. Internal factors include the establishment of the Pilgrims Fund Board in 1963 and the supports from parties such as Bumiputera Economic Congress and National Steering Committee to established Islamic Bank in Malaysia (Islamic World, 2008).The application of Islamic law in banking received tremendous boost with the passing of the Islamic Banking Act 1983. Today, there are seventeen Islamic banking institutions in Malaysia, of which six are wholly foreign-owned and two International Islamic bank which are the Bank Syariah Muamalat Indonesia, Unicorn International Islamic Bank Malaysia Berhad (Bank Negara Malaysia, 2008). Now, there are more than 100 Islamic financial products and services offered by the banks using various Islamic concepts. The main products and services are divided in

5 categories that comprise of deposit, investment, financing, trade finance and card services. The list of Islamic Banks is given in Table 1.1

Table 1.1: Lists of Islamic Bank in Malaysia

No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Name Affin Islamic Bank Berhad Al Rajhi Banking & Investment Corporation (Malaysia) Berhad Alliance Islamic Bank Berhad AmIslamic Bank Berhad Asian Finance Bank Berhad Bank Islam Malaysia Berhad Bank Muamalat Malaysia Berhad CIMB Islamic Bank Berhad EONCAP Islamic Bank Berhad Hong Leong Islamic Bank Berhad HSBC Amanah Malaysia Berhad Kuwait Finance House (Malaysia) Berhad Maybank Islamic Berhad OCBC Al-Amin Bank Berhad Public Islamic Bank Berhad RHB Islamic Bank Berhad Standard Chartered Saadiq Berhad

Ownership Local Foreigner Local Local Foreigner Local Local Local Local Local Foreigner Foreigner Local Foreigner Local Local Foreigner

Source: Bank Negara Malaysia, 2008

The Islamic banking and finance industry (IBF) has experienced tremendous growth and progress. Malaysia is one the most established markets for IBF, in which the local Islamic banks are now expected to compete effectively on level terms with international best players (BNM, 2001). As end 2004, total assets owned by Islamic banking increased to RM94.6 billion or 10.5% of the total assets in the banking system.
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To date, Islamic banking deposits and financing accounted for 11.2% and 11.3%, respectively, of the total deposits and financing of the banking system (BNM, 2004). The government of Malaysia is also committed to position Malaysia as an International Islamic Financial Hub in the region and has set the target for the Islamic banking sector to capture 20% of the market by 2010 (BNM, 2001).

1.3

Problem statement
In Malaysia, customer positives perception towards Islamic banking is far more crucial mainly due to

the fact that Islamic banks have to compete with the long established conventional banks in a Dual Banking System (Dusuki, 2007). There are many reasons why customer chooses to place their financial business with particular banks rather than others, the most being that the institutions that they will enter is institutions that their family and friends had been entered into that bank. According in a study conducted by Haron et al. (1994), reported that almost 100% of Muslims and 75% of non-Muslims in their study were aware of the existence of Islamic bank in Malaysia. Most of them expressed their desire to have a relationship with Islamic bank only if they have a complete understanding of this system. Furthermore, they presented evidence, which suggested that the public were believed that Islamic bank is not meant for Muslim customers only. Islamic Bank gives the option for customers either Muslim or non-Muslim to choose what type of products that made them convenience to have. A recent study indicated that Muslim patronized Islamic bank not so much because of the religious factor, but more because of the returns they would receive from their investment (Erol et.al, 1989). Customers in Islamic countries also did not differentiate between the services offered by conventional and Islamic bank according to Erol et.al (1990). Since religion is no longer the main factor in attracting customers, Islamic banks should recognize that customers view them just like any other commercial bank (Haron et.al, 1994). These situations showed to us that the management team of Islamic banks should be realise and also acknowledge that they can no longer depend on Muslims as their base source of depositors or as their fund users. They have take step to new strategy on how to expand their customers base by including non-Muslims as potential customers.
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The Islamic banking products and services offered by the Islamic banks nowadays are very competitive. This indicate that the Islamic banks are no longer regarded as a business striving only to fulfil the religious obligations to Muslim community but more significantly as a business entity that is unavoidably in need of winning over new customer whilst retaining the regular one as well. A question can be raised to a country like Malaysia where both Islamic as well as conventional operate, as to what are the main factors that motivate the customers to deal with Islamic banks compare to conventional banks especially for those nonMuslims. This is because even though they have an option to choose conventional banking products, but they still choosing Islamic banking products as their choices. One of Islamic Financial and Investment Consultant, Ahmad Sanusi Husin writed an article Crossing Over: Islamic Banking Needs to Reach out New Customers. He said in Malaysia, non-Muslims are major users of Islamic finance products. Some banks reported that a 70% uptake of Islamic financial products by Chinese customers. It means that the Chinese community have accepted Islamic banking products as their authorities in banking transactions. Therefore, this research will be done with the objective to study on what are the factors that have influenced non-Muslim customers to apply the Islamic banking products. This can be done by measuring the level of non-Muslim customers acceptance towards Islamic banking products. The researcher is hoping that the finding of this research will help the Islamic banking institutions mainly in Mersing. In fact to strategize their marketing plan based on the needs of the non-Muslim customers and finally help them to retain the non-Muslim customers and many more.

1.4

Research objective
The objective of this study is to identify the most important factor that influences the non-Muslim

customers acceptance towards Islamic banking products in Mersing, Johor.

1.5

Research question
In this study, researcher needs to know the factors that include the customers acceptance to Islamic

Banking Products. The question that can be arising here is what is the most important factor that influences the non-Muslim customers acceptance towards Islamic banking products in Mersing, Johor?

1.6

Justification of study
Islamic banking has been chosen for this study because it is now having a significant and rapidly growth

in the global financial market and also increasing the marketability and acceptance of these products. Kamal et.al (1999) stated that about 180 Islamic banking and financial institutions operating in Asia, Africa, Europe, and the United States of America with more than 8,000 branches with an estimated $170 billion. Apart from that, the Malaysian Islamic Financial sector is seen as one of the most progressive and attractive in the world given the numerous incentives planned and further liberation in the coming years and Malaysian has been chosen as reference for Islamic Bank in others Asian countries. Besides that, it can be sources for other researches especially in marketing department team to strategies for improving Islamic banking sectors because they know where is their customers level are. It is because the result of this study would be helping the researches to know the relationship between customers acceptance and the three perquisites which are knowledge, perception and the level perceived of awareness towards Islamic banking products among non-Muslim. This study had given researcher the basic knowledge in preparing research study.

1.7

Scope of study
The main focus of this study is to investigate the three factors that are reflecting on customers

acceptance of Islamic banking products. The factors were consist knowledge, perception, and the last factor is awareness. So, this study is only focusing on the relationship between these three factors to the customers acceptance on Islamic banking products. The researcher will analyze are there any relation between the three dependant variable into the independent variable. Which means, are these three variables will be the factors that influenced customers acceptance to Islamic banking products in the Dual Banking System especially in Malaysia. To get the information and the data for this study, the researcher chooses a few of banks that were offering Islamic banking products including conventional banks that were offering Islamic banking products in the Dual Banking System. The banks are including Bank Islam Malaysia Berhad, Bank Rakyat, CIMB Islamic Bank, Agro Bank and BSN which located around Mersing, Johor. Other than that, the researcher also chooses a few of department that the researcher can get the respondents that had been applied or engaged with the Islamic banking products like army, teachers and other government servants.

1.8

Significance of study
The main purpose of this study is to explore what are the factors that influence non-muslim customers to

choose Islamic banking products. Even there are a lot of recent researches that had been done about these issues, but there are so many things that we can improve regarding to the time movement. By this study, researcher is trying to create the level of awareness, knowledge, and also renew the perceptions of customers among non-Muslim to accept Islamic banking products as the goods banking products refer to the features that was including in this products.

1.9

Limitation of Study
This research has several limitations, those are: respondents in this research involved the non-Muslim

bank customers in Mersing, Johor only. Therefore, the findings are not indicating the acceptance for the whole Malaysian Islamic banking customers. In addition, the findings limited to the population characteristics that involved in this research only. It can be a reference for the similar population characteristics and demographical only. The findings cannot be applied to the different population because the information that was obtained is different.

1.10

Conclusions

Many researches felt that the Islamic Banks should put emphasis on social considerations in training and as well as in their operations and play a more dynamic role in achievement the future growth. After examining the challenges faced by Islamic banks including the competition from conventional banks, it can suggest the major issues to be considered before engaging in Islamic business and transactions. The survival and validity of Islamic banking products depend on their quality of their services and the satisfaction level of awareness, perception, and knowledge of their customers that offered by Islamic banking.

CHAPTER TWO LITERATURE REVIEW

2.1

Introduction
This chapter will be discussing on the comprehensive review of the published work, previous theses and

dissertations from secondary sources of relevant data regarding this research. It establishes what has been in the subject area such as current statement of information from articles, magazines, and journals, and also books. It also enables to gathering of sufficient information to support or refuse arguments.

2.2

Previous Research
After going through the available secondary data, researcher has found out three researches that can be

categorized as relevant data and almost similar to this research. Following are the abstracts of the previous theses: First is a research done by Barathy d/o Doraisamy, Arunagiri s/o Shanmugam, and Ravindran s/o Raman (2011), regarding a study consumer preferences of Islamic Banking Products and Services in Sungai Petani, Kedah. This study examined the reasons of consumers for selecting Islamic Banking services rather than Conventional Banking services. The results show that consumers were aware of Islamic banking products and services to certain degree and the reasons for preferring them are because of the profitability and quality. Even though this research did not classify the customer into Muslim and non-Muslim, but the similarity here is the objective of the research to define the factors of consumers for selecting Islamic Banking services rather than Conventional Banking services. Second is a research about Islamic Banking: Selection Criteria and Implications by Maran Marimuthu, Chan Wai Jing, Lim Phei Gie, Low Pey Mun, and Tan Yew Ping (2010). This research generally offers a
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descriptive discussion of the acceptance of Islamic Banking but more particularly, to seek the factors that determine acceptance of Islamic Banking. Whereby, the researchers want to evaluate the factors that determine the acceptance of Islamic banking. The results indicate that cost-benefits, service delivery, convenience, friends or relatives influence do have significant relationships with the acceptance of Islamic Banking. Compared with the first study, its researchers did not classify customers into Muslims and nonMuslims, but this study had classified the customers into Muslims and non-Muslims. At last, the result shows that be it, Muslims or non-Muslims, factors such as cost-benefit, service delivery, convenience and influence by friends are the main determinants of accepting Islamic banking. In the factors that determine the acceptance of Islamic banking, there were similarities among them. Third is a research done by Juwairiah (2011), regarding a study on the customers acceptance towards Islamic Banking products among non-Muslim in Dual Banking System in Kedahs area. This research more particularly, to investigate the factors of non-Muslim customers acceptance towards Islamic banking products. The factors were knowledge, perception, understanding, and also awareness. The result is, the four factors influence the acceptance of non-Muslim customers of Islamic banking products in Dual Banking system and positive perception has the highest correlation with the customers acceptance toward Islamic banking products and services in Dual Banking system (0.597), followed by knowledge (0.553), perceived of awareness (0.435), and understanding (0.380).

2.3

Conclusion on Previous Research

Overall there are not so many researchers have been done that solely study on the non-Muslims

customers acceptance towards Islamic banking products. Like the research done by Barathy d/o Doraisamy, Arunagiri s/o Shanmugam, and Ravindran s/o Raman (2011), which only focused on the reasons of consumers for selecting Islamic Banking services rather than Conventional Banking services. But since it has done in Malaysia, researcher hope the research can give certain guidance in order to identify the variables that influence customers acceptance towards Islamic banking products. The second research done by Maran Marimuthu, Chan Wai Jing, Lim Phei Gie, Low Pey Mun, and Tan Yew Ping (2010), did not only
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focus on the factors that determine acceptance of Islamic banking, but they have classified the customers into Muslims and non-Muslims. The third research is about a study on the customers acceptance towards Islamic Banking products among non-Muslim in Dual Banking System in Kedahs area by Juwairiah (2011). This research is almost similar to the research that is going to be done by researcher. Which is the researcher was replicate this research but researcher just took three of the variable and choose Mersing, Johor as the location for sample of respondents.

2.4

Acceptance towards Islamic Banking Products

In this study, the researcher has identified three independent variables that may influence the acceptance

towards Islamic Banking products among non-Muslim based on the theoretical framework developed by Juwairiah in. Those are knowledge, perception, and also the level of awareness. Here, knowledge means the fact or condition of knowing something with familiarity gained through experience or association. Next, for the perception, it means a result of perceiving or a mental image or a consciousness of the elements of environment through physical sensation. While for the independent variable awareness, it means having or showing realization, perception or knowledge. In this study, the researcher can identify how far the knowledge, perception and level of awareness of Islamic banking products among non-Muslim customers to accept it. Following is the diagram of independent variables and dependant variables for this study.

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Figure 2.1: Theoretical framework of a Comparative Analysis on the Acceptance towards Islamic Banking products among non-Muslim in Mersing, Johor

INDEPENDENT VARIABLE (IV)

DEPENDANT VARIABLE (DV)

KNOWLEDGE

PERCEPTION

ACCEPTANCE TO ISLAMIC BANKING PRODUCTS

PERCEIVED ON AWARENESS

2.4.1 Knowledge
In the new Oxford Dictionary, knowledge means the information, understanding, and skills that have gained by learning or experience. Furthermore, knowledge can be used as state of knowing about a particular facts or situations. The study explored by Ahmad and Haron (2002), noted that 65% of the respondents admitted to have limited knowledge of Islamic Banks, and while at the same time indicating that they believed the concept had good potential in the Malaysian market. In another study that have done by B.Jorg et al. (2004), seeks to add to this literature by examining more carefully the relationship between knowledge of financial concepts (conventional and Islamic), preferences for either conventional or Islamic financial services, and certain individual characteristics of the raters. One of the driving motivations for this study was the belief that the lack of knowledge of specific Islamic products was in part attributable to the Arabic vocabulary used to identify Islamic financial products. As most of the world is not even minimally fluent in Arabic, and this is true in the Muslim world as well, the
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use of Arabic hinders understanding of what these Islamic products really are. Add to this relative newness of the products offered, the market is generally ignorant of these products. B.Jorg et al. (2004) has addressed that the poor knowledge of Islamic finance principles has been one area of concern in this literature for over ten years (Omer, 1992). Add to this the increase in the number of Islamic Bank terms has been considerable over this period. Additionally, in spite of the growing interest in the field of Islamic Finance, a high level of awareness of the Islamic banks (Haron et al., 1994) and the growing interest in the use of Islamic banks (al-Ahmed, 1996), no general educational initiative has been launched by either government or the financial institution (Hamid and Nordin, 2001) to address this lack of basic product knowledge. Bley and Kuehn (2004) surveyed the business students in United Arab Emirates (Sharjah) on their knowledge of financial aspects of Islamic and conventional banks. The major findings was that Muslim students preferred Islamic Banking services because religious motivations. A secondary finding was that while Arabic Muslims displayed a high level of knowledge of Islamic financial terms and concepts, nonArabic Muslims students had a higher level of knowledge of conventional banking. Students knowledge of conventional and Islamic finance and terms and concepts was surprisingly low. In general, conventional finance knowledge was the highest for those students with poor to no Arabic language fluency, who majored in finance and who was fairly advanced in their programs and had a high level of academic success. In contrast, the level of Islamic finance knowledge was generally the highest for male Muslim students with a high level of Arabic fluency, who are fairly advanced in their program with a high level of academic success, regardless of their business concentration (Bley, J. and Kuehn, K., 2004).

2.4.2 Perception
According to Pamela S. Lewis et al., (2000) from Management, Challenges in the 21st century perception can be defined as the way people experience, process, define and interpret the world around them. It can be considered an information screen or filter that influences the way in which individuals communicate and
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become aware of sensation and stimuli that exist around them. Acting as a filter, perception helps individuals take in or see only certain elements in a particular situation. Whereas, perceptions are influenced by a variety factors, including an individuals experiences, needs, personality and education. As a result, a persons perceptions are not necessarily accurate. There are unique and help to explain why two individuals may look at the same situation or message and perceive it differently. An individuals cultural background also may influence his or her perception and interpretation of certain company messages or symbols. Turnbull (1983) studied the perceptions of corporate customers towards their banks. He examined the relationship between 44 corporate customers in United Kingdom and their bankers and found that size played an important role in maintaining split banking practices. He also found that large corporations tend to prefer foreign banks than the local banks. Ahsanul Haque et al., (2009) identified that customer perception about Islamic banking is being influenced significantly by quality of services, confidence in bank, social and religious perspective and availability of services. Three coefficients were positive values that mean positive relationship between customer perception and quality of services, social and religious perspective and availability of services. In other word, the positive values of coefficient revealed that positive perception towards Islamic banking. Furthermore, higher level of availability of services and social and religious perspective make the Islamic banking easier and comfortable. It showed that the customers perception can be mediated the effects of the bank service quality and performance. Customer perception and satisfaction can be considered as the key contrast to bank for overall performance.

2.4.3 Awareness
Hamid and Nordin (2001) surveyed that Malaysian commercial bank customer, finding a high awareness of Islamic banking but poor self-reported knowledge of specific Islamic products, including poor understanding of the difference between Islamic and conventional banking. IQRA is the first word in the
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holy Quran revealed to mankind which means read. Wise men used to say, give a man a fish and you will feed him a day but give him the fishing rod and you will feed to his lifetime. Both this quotation emphasized the importance and vitality of education and knowledge to people. While applying Haron et al. (2001), Gerrard and Cunningham (1997), found that just like their counterparts, Singaporeans Muslims more aware of the existence of Islamic banking than the non-Muslims. Similarly, this study found no evidence of Muslims and non-Muslims differing in their banks selection criteria. Detail in their study explained that did not include any question that could measure the intention of their respondents to patronize Islamic banking. In another study of Malaysian commercial customers and their views of Islamic financial services, Ahmad and Haron (2002), noted that 65% of the respondents admitted to have limited knowledge of Islamic banking, while at the same time indicating that they believed the concept had good potential in the Malaysian market. Later, Hamid and Nordin (2001), focused on the awareness of Malaysian consumers towards Islamic banking within the context of the wider promotion of Islamic education. They found that most Malaysians did not differentiate between Islamic and conventional products and services, though the majority had sufficient knowledge of the existence and services offered by Malaysian Islamic banks. Adeilade Rammal and Zurbruegg (2007) surveyed 300 Muslims regarding their awareness of Islamic banking products. Their result indicated that the majority of respondents are interested in and prepared to use Islamic methods of finance, but do not know how they function. In other words, even though most respondents have knowledge about the availability of Islamic financial products, they are still unaware of basic Islamic banking principals and methods. However, Rammal and Zurbruegg (2007) countered that a lack of awareness and experience with halal (food seen as permissible according to Islamic law) does not appear detrimental to consumer willingness to use these products.

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2.5

Conclusions of Chapter Two

From the previous researchers, researcher has found three independent variables that could influence the

non-Muslim customers acceptance towards Islamic banking products. Those are knowledge factors, perception factor, and perceived on awareness factor. These factors will be used as independents variables in the theoretical framework.

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CHAPTER THREE RESEARCH METHODOLOGY

3.1

Introduction
This chapter will discuss about the research methodology and design. The discussion will focus on

theoretical framework, design that has been used in this study, data collection methods such as secondary and primary data, population, sample size, sampling technique, questionnaire design, and statistical analysis.

3.2

Theoretical Framework
Sekaran (2000) has believed that theoretical framework is the foundation on which entire research

project is based. For this research, the research model below is adapted from research made by Hamid and Nordin (2001) surveyed Malaysian commercial bank customers, finding a poor understanding of the difference between Islamic and Conventional Banking. Ahmad and Haron (2002) noted that respondents admitted to having limited knowledge of Islamic Banking. Acceptance research has provided important insights in explaining the success or failure of new products or services (Silberer & Worhlfarht, 2001).

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Figure 3.1: Research Model/ Theoretical Framework

INDEPENDENT VARIABLE (IV)

DEPENDANT VARIABLE (DV)

KNOWLEDGE

PERCEPTION

ACCEPTANCE TO ISLAMIC BANKING PRODUCTS

PERCEIVED ON AWARENESS

This model was created by adopted from Juwairiah (2011). Based on the Theoretical Framework, there are two mains variables in this study, which is consisting of Independent Variables (IV) and Dependant Variables (DV). Here, customers acceptance is a Dependant Variables (DV) and customers knowledge, awareness, and also perception that provided by the Islamic Banks are the Independent Variables (IV). Researcher will determine and analyzed all variables that are significant or not significant with Dependant Variables (DV).

3.3

Research Hypothesis
A hypothesis is an unproven statement or proposition about factor and phenomenon that is of interest to

the researcher. It is a tentative statement about relationship among the variables; a few hypotheses can be developing. There are:

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a) Research Hypothesis: Hypothesis 1 H01: There is no significance relationship between customers knowledge on the Islamic banking terms and concepts and acceptance towards of Islamic banking products among the non-Muslim. H11: There is significance relationship between customers knowledge on the Islamic banking terms and concepts and acceptance towards of Islamic banking products among the non-Muslim. b) Research Hypothesis: Hypothesis 2 H02 There is no significance relationship between positive customers perception towards the Islamic banking system and acceptance towards of Islamic banking products among the non-Muslim. H12: There is significance relationship between positive customers perception towards the Islamic banking system and acceptance towards of Islamic banking products among the non-Muslim. c) Research Hypothesis: Hypothesis 3 H03: There is no significance relationship between customers level perceived of awareness on the existing of Islamic banking products and acceptance towards of Islamic banking products among the non-Muslim. H13: There is significance relationship between customers level perceived of awareness on the existing of Islamic banking products and acceptance towards of Islamic banking products among the non-Muslim.

3.4

Methodology of Study
Methodology is a description of the procedure employed in order to achieve the objective of the study.

The research methodology is to produce the best possible result and findings.

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The best methodology that researcher used in order to ensure that information gathered meet the objectives of this study are primary and secondary data. It also covers the accuracy and the quality of the research findings by using appropriate questionnaire, sampling technique and data analysis method in order to develop relevant, valid and reliable research findings. Questionnaires are a useful tool for investigating patterns and trends in data and are frequently used with success management, marketing and consumer research (Easterby-Smith, 1991).

3.5

Research Design
This type of research intended to measure the level of acceptance towards Islamic banking products

among non-Muslim customers.

3.5.1 Data Collection Method

The data collection methods that have been used in this research preparation are by using primary and secondary data. a) Primary Data Primary data is collected or produced by the researcher specifically to address the research problem, such as relationship between acceptance and knowledge, perception and awareness. The primary data that has been used are questionnaires and personal interview. The questionnaire was included general questions that related to the research topic and have been distributed to the respective and potential respondents.

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b) Secondary Data Secondary data is collected for some purpose other than the problem at hand that related to the variables studied. All the secondary data are very useful because it helped to clarify some of the uncertainties the research topic. Data from various external sources such as reports prepared by various banks that provide Islamic banking products, newspaper, journal, articles, websites and others have been searched to facilitate the study included articles from newspapers and reference books.

3.5.2 Population
For the purpose of this study the population is refer to the non-Muslim communities that were opening account and engaged with the Islamic banking products offered by Bank Rakyat, Bank Islam, BSN, CIMB Islamic Bank and Agro Bank around Mersing Johor. According to data from Majlis Daerah Mersing, Johor there are about 9,033 people which were non-Muslim whose are living in Mersing area. Whereby, 8,180 were Chinese, 736 people were Indian and remained 117 were from others. From the observation and interview with the representative at the banks, there are about 100 non-Muslims customers were picked who were engaging with Islamic window services. In this study, the researcher will take only 100 customers who are engaged with Islamic banking products as the populations. That mean, the questionnaire will distribute to the every departments about 20 respondents for each units. The reason for choosing non-Muslim consumers as the population is to find out their level of acceptance towards this Islamic banking facility and what the factors are those contributing in accepting these products. The selection of samples was based on convenience and was randomly picked. Location in Mersing, Johor was chosen because it near with the researchers industrial training location. The data for this study

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were collected through self-administered questionnaires distributed by researcher. A series of interview with bank personnel and customers were also conducted.

3.5.3 Sampling
Sampling is the process of selecting efficient number of elements from the population. Therefore, by studying the sample and understanding the properties or the characteristics of the sample subjects, it would be possible to generalize the properties or characteristics to the population elements. a) Sample size A sample size is thus a subgroup or subset of the population. By studying the sample, the researcher would be able to draw conclusions that would be generalized to the population interest. 20 samples out of estimation population from the customers among teachers, policemen and nurses around Mersing Johor have been selected. The researcher has distributed 100 questionnaires to the non-Muslim customers.

b) Sampling technique In the presence of sampling technique, questionnaires were distributed to 20 customers who are corning to perform transaction at the each government sector/ servants. The researcher took almost two weeks to collect data through Quasi-random Sampling. This method was selected because it is convenience, simple and faster.

By systematic Quasi-random Sampling, the researcher had been gone to the departments like police station, hospital, primary school and secondary school around Mersing, Johor.

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3.6

Questionnaire Design
Questionnaires have been distributed to 100 customers who are consisting of non-Muslims. The

questionnaire that has been used for this research is divided into five (5) sections, which consists of 24 questions. For the purpose of this study, researcher will be using a set of questionnaire developed by Juwairiah. The types of questions were measured using Closed-ended and Likert scale. The use of Likert scale is because it is easy to prepare, interpret and simple for respondents to answer and also to measure the arts of the respondents survey towards Islamic banking products. Section A contained five personal questions describing the demographic factors. This section covers genders, religion, age, education level of the customer and profession. Section B contained five questions and its cover the customers knowledge in Islamic banking product. In this section this questions were constructed in the form of Likert scale. This section covers the knowledge of Islamic banking products inclusive al-Wadiah, al-Mudarabah, Bai Bithaman Ajil, al-Ijarah and Interest Free Banking System. Section C consist four questions. The questions are constructed on customers perception towards Islamic banks. In this section, the questions were constructed in the form of Likert scale. Section D contained five questions. The questions were constructed on customers awareness toward Islamic banks. In this section the questions were constructed in the form of Likert scale also. Section E consist five questions and it covers the customers level of acceptance towards Islamic banking products that was offered in term of adoption and intention to adopt. In this section, the questions were constructed in the form of Likert scale.

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3.7

Data Analysis
In this research, the quantitative data were measured by descriptive statistic and the datas are coded,

computed and processed using the Statistical Package for Social Science (SPSS) for Window for the purpose of this study. While doing the data analysis, researcher ensured all the items in the questionnaire were already recoded (convert all the negative statements into positive statements by recoding the ordinal scale). Recoding was done through SPSS.

3.8

Conclusions of Chapter Three

This chapter explains the procedures and data collection method that had been used to gather and analyze

the most important factor that influences the non-Muslim customers acceptance towards Islamic banking products. Researcher had been used the questionnaire that were developed by Juawairiah (previous researcher). Respondents of this research consist of 100 respondents which is among non-Muslim bank customers in Mersing only.

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CHAPTER FOUR FINDINGS AND ANALYSIS

4.1

Introduction
This chapter presents the finding of the survey done to factors that contributed to the customers

acceptance on Islamic Banking product and services among non-Muslims customer.

4.2

Procedure for Data Analysis

Data analysis and interpretation of results may be most meaningful explained by referring to a business

research project. Data is being analyzed after it has been collected from all selected respondents. A set of 100 questionnaires was distributed to non-Muslims customers of the Islamic banking and also conventional bank that was offer dual banking system. For instance, the questionnaires were distributed to the customers of CIMB Bank, Public Bank, Bank Simpanan Nasional, Agro Bank, Bank Islam and also Bank Rakyat which were located around Mersing, Johor. Fortunately, the researcher succeeds to get back 100 questionnaires. Moreover, data analysis is important for researcher in developing reliability test, frequency distribution, multiple regressions, Pearson correlation and others. The findings will begin with reliability test followed by a description of the general demographic of the respondent in Section A. For the analysis, the hypotheses testing will use the simple regression method. The detail survey findings were present in the form of tables and written description. In order to analyze all this data, the researcher used the SPSS software programme. The SPSS programme is used to store all the data, processing the data and outputs whereas the output is used to make an analysis

24

for the researcher in order to make the researcher more accurate, faster and easier through a variety of statistics tools that offered by the programme. By the way, for this project paper, the researcher analyzed the collected data from the respondents by developing the reliability test, frequency distribution, hypotheses test, multiple regressions, Pearson correlation, and others.

4.3

Reliability Test
The reliability test is established by testing for both consistency and stability. The consistency would be

showing that how well the items measuring a concept hang together as a set. Cronbachs alpha that generate from this test is reliability coefficient that indicates how well the items in the in a set a positively correlated to one another. The Cronbachs alpha is computed in terms of average inter correlations among the items measuring the concept. According to Sekaran, 2010 the closer Crobachs alpha is to 1, the higher the internal consistency reliability. Sekaran has explained more that, reliabilities less than 0.60 are considered to be poor, those in the range 0.70 are acceptable, and those over 0.80 are considered good. The reliability tests were conducted in a pilot test involving 20 customers who engaged in the Islamic banking products around Mersing, Johor. The purpose of this pilot test is to investigate the customers understanding of sentence structure in the survey form were issued. This study takes almost two week to complete. There are three items of independent variables that are consists knowledge, awareness and perception. The coefficient for each variable is shown in the table below:

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TABLE 4.1: Reliability Statistics for Each Variable VARIABLES NO. OF ITEMS KNOWLEDGE PERCEPTION AWARENESS 5 4 5 CRONBACH'S ALPHA 0.857 0.755 0.915

Source: SPSS output

Based on the result above, it has shown that the alpha value for the first independent variables (knowledge) in this study is 0.86. This Cronbachs alpha value is above than 0.6 and the reliability value considered as having high reliability and accepted in this study. The Cronbachs alpha value for the second variables (perception) in this study is 0.76. This Cronbachs alpha value also is above than 0.6 and the reliability value considered good and accepted in this study. The Cronbachs alpha value for the third variables (awareness) in this study is 0.92. This Cronbachs alpha value is above than 0.6 and almost close to 1 and the reliability value considered as having high reliability and accepted in this study.

4.4

Frequencies Analysis
First of all frequency can be interpret as a set of data organized by summarizing the number of times a

particular value of a variable occurs. In other words, frequencies refer to the number of times various subcategories of a certain phenomenon occur, from which the percentage of their occurrence can be easily calculated. This analysis is done according to the sections provided in the questionnaire. Each of the questions in the questionnaire is analyzed to show the respondents views on the topic under the study. All the data will be shown in a frequency table that means a simple tabulation that indicates the frequency with which respondent give a particular answer. Frequency analysis for a variable procedure is a table of frequency count, percentages and cumulative percentages for all the values associated with the variable.

26

The profile data of 100 respondents collected was consists gender, religion, age, education level, and professions of respondents. This simple data will explain about the background of respondents who are engaged with the Islamic banking products around Mersing, Johor. Following are the analysis and the elaboration about the respondents demographical information.

4.4.1

Respondents Distribution on Gender Basis

TABLE 4.2: FREQUENCY AND PERCENTAGE ON GENDER BASIS GENDER MALE FEMALE TOTAL FREQUENCY 46 54 100 PERCENT (%) 46 54 100

Source: SPSS output

As shown in table 4.2, female respondents were more compared to male respondents. The female were 54 respondents which has contributed 54% of the respondents while 46 are male respondents which have represented 46%.

4.4.2

Respondents Distribution on Religion Basis

TABLE 4.3: FREQUENCY AND PERCENTAGE ON RELIGION BASIS RELIGION BUDDHIST HINDU CHRISTIAN OTHERS TOTAL FREQUENCY 0 31 38 31 100 PERCENT (%) 0 31 38 31 100

Source: SPSS output

From table 4.3, it shows the religion of respondents, which comprise of Buddha, Hindu, Christian, and others religion. It has been indicated that the highest percentage of respondents is Christian which is 38%, followed by Hindu and Others religion which is 31% in respectively.
27

4.4.3

Respondents Distribution on Age Basis

TABLE 4.4: FREQUENCY AND PERCENTAGE ON AGE BASIS FREQUENC AGE Y <25 YEARS 24 OLD 25-39 YEARS 69 OLD 40-55 YEARS 7 OLD TOTAL 100 PERCENT (%) 24 69 7 100

Source: SPSS output As shown in table 4.4, majority respondents come from age between age group of 25 to 39 years old with 69% of respondents, followed by 24% of respondents from under age 25 years old. The age group of 40 to 55 years old shows 7% of respondents.

4.4.4

Respondents Distribution on Education Level Basis

TABLE 4.5: FREQUENCY AND PERCENTAGE ON EDUCATION LEVEL BASIS EDUCATION PERCENT FREQUENCY LEVEL (%) SECONDARY 32 32 CERTIFICATE 8 8 DIPLOMA 53 53 DEGREE 7 7 TOTAL 100 100

Source: SPSS output

The table 4.5 showed the education level of the respondents. The highest percentage represent 53% of respondents are those of Diploma holder. About 32% of the respondents are from Secondary level and remained 8% and 7% of the respondents are from Certificate level and Degree holder respectively.

28

4.4.5

Respondents Distribution on Profession Basis

TABLE 4.6: FREQUENCY AND PERCENTAGE ON PROFESSION BASIS FREQUEN PROFESSION CY GOVERNMENT EMPLOYEE 71 PRIVATE SECTOR 11 EMPLOYEE SELF EMPLYED 13 OTHER 5 TOTAL 100 PERCE NT (%) 71 11 13 5 100

Source: SPSS output From table 4.6, it showed the profession of the respondents. The highest percentage represents 71% of respondents are those of Government employee. About 13% of the respondents are self employed, 11% of the respondents work under Private sector employee, and 5% are respondents from others.

4.5

Hypotheses Testing of This Study

A statistical technique was used to test the significant level of the hypotheses and the SPSS software was

also used to analyze the data. Meanwhile, the technique being used is Pearson Correlation Test and Simple and Multiple Regression Analysis. There are three hypotheses were being to test for this study. All of the hypotheses were tested to determine whether there was a relationship between the dependant variables and three independent variables.

TABLE 4.7: Correlations KNOWLEDGE KNOWLEDGE Pearson Correlation Sig. (2-tailed) N PERCEPTION Pearson Correlation Sig. (2-tailed) N 100 .966** .000 100 100 1 PERCEPTION .966** .000 100 1 AWARENESS ACCEPTANCE .883** .000 100 .886** .000 100 .667** .000 100 .674** .000 100

29

AWARENESS

Pearson Correlation Sig. (2-tailed) N

.883** .000 100 .667

**

.886** .000 100 .674

**

.910** .000

100 .910
**

100 1

ACCEPTANCE Pearson Correlation Sig. (2-tailed) N

.000 100

.000 100

.000 100 100

**. Correlation is significant at the 0.01 level (2-tailed).

Source: SPSS output

a)

Research Hypothesis: Hypothesis 1

H01: There is no significance relationship between customers knowledge on the Islamic banking terms and concepts and acceptance towards of Islamic banking products among the non-Muslim. H11: There is significance relationship between customers knowledge on the Islamic banking terms and concepts and acceptance towards of Islamic banking products among the non-Muslim. Table 4.7 shows that the Pearson Correlation between knowledge of banking terms and concepts and acceptance towards of Islamic banking products among non-Muslim customers indicates that there is significant correlation (p value = 0.000 < 0.05). This is further supported by the strong positive coefficient of correlation value, r = 0.667. Therefore, the null hypotheses (H0) is rejected and the alternate hypotheses (H1) is accepted.

b) Research Hypothesis: Hypothesis 2 H02 There is no significance relationship between positive customers perception towards the Islamic banking system and acceptance towards of Islamic banking products among the non-Muslim. H12: There is significance relationship between positive customers perception towards the Islamic banking system and acceptance towards of Islamic banking products among the non-Muslim.
30

Table 4.7 shows that the Pearson Correlation between positive customers perception towards the Islamic banking system and acceptance towards of Islamic banking products among the nonMuslim indicates that there is significant correlation (p value = 0.000 < 0.05). This is further supported by the strong positive coefficient of correlation value, r = 0.674. Therefore, the null hypotheses (H0) is rejected and the alternate hypotheses (H1) is accepted.

c) Research Hypothesis: Hypothesis 3 H03: There is no significance relationship between customers level perceived of awareness on the existing of Islamic banking products and acceptance towards of Islamic banking products among the non-Muslim. H13: There is significance relationship between customers level perceived of awareness on the existing of Islamic banking products and acceptance towards of Islamic banking products among the non-Muslim. Table 4.7 shows that the Pearson Correlation between positive customers level perceived of awareness on the existing of Islamic banking products and acceptance towards of Islamic banking products among the non-Muslim indicates that there is significant correlation (p value = 0.000 < 0.05). This is further supported by the strong positive coefficient of correlation value, r = 0.910. Therefore, the null hypotheses (H0) is rejected and the alternate hypotheses (H1) is accepted.

4.6

Correlation
Sekaran (2003), has stated that correlation, coefficient of less than 0.3, can be indicate small or weak

relationship. While correlation, coefficient of greater than 0.3, less than 0.5, indicate moderate or medium relationship and correlation, coefficient of greater than 0.5, indicate a large and strong relationship.

31

The entire table below showed the correlations of independent variables (knowledge, perspective and awareness) with dependant variables (customers acceptance on Islamic banking products among nonMuslim).
TABLE 4.8: Dimension of Correlation Analysis VARIABLES ACCEPTANCE Knowledge Perception Awareness 0.667 0.674 0.910

Source: SPSS output Table 4.8 shows the correlation between the three independent variables with the dependant variables. Based on correlation analysis, the researcher found that the independent variables (knowledge, perception and awareness) and the customers acceptance on Islamic banking products among non-Muslim is a significant positive relation. This shows that four factors influence the acceptance of non-Muslim customers of Islamic banking products in Dual Banking Systems. This analysis showed that perceived of awareness has the highest correlation relation with the customers acceptance toward Islamic banking product in Dual Banking System (0.910), and followed by positive perception (0.674) and knowledge (0.667).

4.7

Multiple Regressions
Regression analysis is powerful and flexible procedure for analyzing associative relationship between a

metric dependent variable and one or more independent variables. Since this study has more than one independent variable, the multiple regression analysis is most suitable to apply.

TABLE 4.9: Model Summaryb

32

Adjusted R Model 1 R .958a R Square .918 Square .915

Std. Error of the Estimate .10155 Durbin-Watson .691

a. Predictors: (Constant), AWARENESS, KNOWLEDGE, PERCEPTION b. Dependent Variable: ACCEPTANCE

Table 4.9 shows the regression models which explain 91.8% of the customers acceptance towards Islamic banking products among non-Muslim in Mersing, Johor are by perceived of awareness, knowledge and perception. The remaining 8.2% is explained by other variables.

TABLE 4.10: ANOVAb Model 1 Regression Residual Total Sum of Squares 11.040 .990 12.030 Df 3 96 99 Mean Square 3.680 .010 F 356.856 Sig. .000a

a. Predictors: (Constant), AWARENESS, KNOWLEDGE, PERCEPTION b. Dependent Variable: ACCEPTANCE

Table 4.10 test the overall significance of the regression model. Whereby, F value as 356.856 and significant at Sig. 0.000. Since p -value = 0.000 < = 0.05, the model is highly significant and can be used to explain customers acceptance factor towards Islamic banking products among non-Muslim in Mersing, Johor. Hence, H0 is rejected and H1 is accepted.

TABLE 4.11: Coefficientsa Standardized Unstandardized Coefficients Model 1 (Constant) KNOWLEDGE PERCEPTION AWARENESS B -.088 -.362 -.300 1.677 Std. Error .128 .114 .118 .072 -.369 -.299 1.501 Coefficients Beta t -.684 -3.186 -2.549 23.154 Sig. .496 .002 .012 .000

a. Dependent Variable: ACCEPTANCE

Source: SPSS output

33

Based on table 4.11, it shows all of the three variables are significant. Beta coefficients indicate which variables are important to the model by looking at the largest value (ignoring negative signs). Based on coefficient table, it shows that the highest Beta value in unstandardized coefficient is 1.677 (awareness) and significant at 0.000. Therefore, perceived of awareness on the existing of Islamic banking products are the most critical factors that can influence customers among non-Muslim in Mersing, Johor.

Knowledge = -0.362 With an increasing and more knowledge about Islamic banking products and services, the customers acceptance among non-Muslim will decrease, provided the other factor are the same. Perception = -0.300 With an increasing and more perception about Islamic banking products and services, the customers acceptance among non-Muslim will decrease, provided the other factor are the same. Awareness = 1.677 With an increasing and more awareness about Islamic banking products and services, the customers acceptance among non-Muslim will increase, provided the other factor are the same.

4.8

Conclusion of Chapter Four

The data obtained by the researcher had been analyzed properly in a good manner in order to achieve all

the objectives. Based on the analysis done by the researcher, it was found that perceived of awareness is the most factors that drives non-Muslim customers acceptance toward Islamic banking products. It becomes stronger when multiple regression tests also showed the same result.

34

CHAPTER FIVE CONCLUSIONS AND RECOMMENDATION

5.1

Introduction
This chapter presents the conclusion of the study, discussion of findings, suggestion or recommendation,

and also suggestion for the future research. Finally, after completing and analyzing the data by providing sufficient evidence, the study is able to help improvise Islamic banking system in determining the effectiveness and how to attract customers to be as one of account holder on Islamic banking products not only for Muslim customers but also among nonMuslim customers. Malaysia is second potential countries in implementing Islamic financial after Singapore in this region. This is because of the political stability and also because of the population in this country. Hence, it was encouraging many countries over the world try to open their bank in Malaysia and operate the Islamic banking system. Some expertise in this area said that, according to the research that was conduct by them shows that 70% of account holder in Islamic banking were consist non-Muslim customers. In the study that was conducted about five months, the researcher tried to learn the factor that lead to nonMuslim customers to engage in Islamic banking products. Previous researcher has made a study of the factors that cause people prefer to use Islamic banking products. But the study made whole without specializing to any religion. So, researcher in this study attempts to examine some factors may be a factors in the selection of Islamic banking products among non-Muslim customers. Whether that factors related to the acceptance of the customer to choose this type of banking system. The factor studied were consists of the customers knowledge about Islamic banking products. Second is customer awareness about the existence of Islamic banking system, and the last factor is a customers
35

positive perception on products in Islamic banking. If these factors involved, the researcher has to identify whether these factors have a strong relationship with the customers acceptance of Islamic banking products or not.

5.2

Discussion of Findings

In a nutshell, Researcher has carried out some analysis on information collected from 100 non-Muslim customers who have engaged with the Islamic banking products in Dual Banking System. Some analysis such as reliability test, frequency analysis, correlation analysis and multiple regression analysis were performed to obtain the results of the study. First analysis was used is correlation analysis. In this analysis, the researcher tries to test the hypotheses that were built on the early stage of study. Three hypotheses were designed by researcher. All the result showed that null hypotheses were rejected and all the alternate hypotheses accepted. Besides accepted the alternate hypotheses, the result of analysis also showed that perceive of awareness of among non-Muslim customers towards Islamic banking products has the highest correlation with customers acceptance toward on Islamic banking product, followed by positive perception and knowledge. All the independent variables have positive correlation with the dependant variable. This is mean, that there are positive relation between the customers knowledge of banking term and concepts, customers positive perception toward Islamic banking terms and concepts and level perceived of awareness on the existing of Islamic banking products with the customers acceptance toward Islamic banking product among non-Muslim customers. Second analysis is to test the hypotheses is by using multiple regression analysis. This analysis also generated results as correlation analysis. It showed that the four independent variables explained the variance in the customers acceptance toward Islamic banking products in dual banking system is large to explain it. Hence, null hypotheses is rejected and all alternate hypotheses is accepted. In fact, based on coefficients

36

table, it shows that perceived of awareness was the critical factor that was drives non-Muslim customers acceptance toward Islamic banking products in Dual Banking System around Mersing, Johor. The result of the analysis as concluded as below:

i.

There is significance relationship between customers knowledge of banking terms and concepts and acceptance towards of Islamic banking product among non-Muslim.

ii.

There is significance relationship between customers positive perception toward Islamic banking term and concepts and acceptance towards of Islamic banking Islamic banking product among non-Muslim.

iii.

There is significance relationship between level perceived of awareness on the existing of Islamic banking products and acceptance towards of Islamic banking product among non-Muslim.

Based on these result, most of the non-Muslim customers accept the Islamic banking system because of their level knowledge on the Islamic banking system. Most of them have a good knowledge on the Islamic banking system whether for the short term or for the future. They believe this system will be able to survive due to aggressive growth that we can be seen today. Whereby, at the beginning of the existence of Islamic banking system in Malaysia, they only offered a few of products comparing for just now. Furthermore, many other countries have opened a bank in Malaysia and offering Islamic banking system as their main services. For example, Kuwait Finance House (KFH) has expansion their market as Islamic Sharia Compliant product and services provider in Malaysia since 1980s. Other than KFH, there also have five more foreign banks that were given license by BNM to operate Islamic banking system in Malaysia. For instance, Al-Rajhi Banking and Investment Corporation (Malaysia) Bhd, Asian Finance Bank Bhd, HSBC Amanah Malaysia Bhd, OCBC Al-Amin Bank Bhd, and also Standard Chartered Saadiq Bhd.

37

It seems that Malaysia not only has potential in Islamic banking system but also overall system of finance is very huge. Besides of that, this type of banking system is also not limiting their customers for Muslim only. Non-Muslim customers also have high knowledge about Islamic banking system especially in Malaysia. According to the some respondents said, they know about existence of Islamic banking in Malaysia and most of them know that the principle complied in Islamic banking system is different with the conventional banking system. From the observation, some of non-Muslim customers experienced engaged with the Islamic banking system is more than five years, and they also know that the name of the banks that were offered Islamic banking system not only local bank, but also foreign banks. The knowledge of Islamic banking system not only gathered from formal learning but also from informal way. It is because of some of the respondents doesnt have the highest level background of education. They got the information about Islamic banking system from their reading, promotion from bank staffs, and also from their friends that were experience engaged with Islamic banking system. As per study done by Ahmad and Haron (2002) study on customers perception and noted that positive perception of the customers has been important factor in accepting the Islamic banking products. Customers knowledge and the level perceived of awareness toward Islamic banking products features and advantages were second variables that need to consider by the bank.

5.3

Recommendation
Recommendation in this part is based on the findings in Chapter 4. Following are the recommendation to

the organization specifically the Islamic banks and the conventional banks who offer Islamic banking.

38

5.3.1

Recommendation for the Organization

Researcher has outlined several recommendations that could help any related organization in the Islamic banking sector. Recommendations suggested by researcher were based on researchers own findings, idea, observation, and experiences. Among the recommendations are: i. Increase promotional programs. Based on the observation, the promotional about introducing Islamic banking system is not so much released in media. There were so many seminars, conferences, and other formal programs that were organized by education institutions, banking institutions, and private organizations, but the responses were not so good. Most of audiences were from academician, organizations staff who was asked from the top management to join, and students. So, these programs were not giving opportunity to public to get knowledge about the Islamic banking systems. This situation was happened because the programs only focused on the segment of communities. The management should think that not only this segment would be the customers of Islamic banking system but all segment communities. Hence, to overcome this situation, the organization that were organized this type of programs should broad their focus segment audiences and try to commercial this programs to get more audiences to join to the programs. At the end, this afford will be improving the knowledge, awareness and also perspective among the public on the Islamic banking system in Malaysia.

ii.

Improvise the knowledge and skills among bank staff. Nowadays, undeniably that many of the bank employees who were transferred from conventional

banking to Islamic banking due to change in bank management likes mergers or so on. Furthermore, they are not expertise in the Islamic banking sector. This condition may be contributing to the unable to give the best information delivery on Islamic banking systems and Islamic banking products as well.

39

Therefore, to overcome this problem, the banking management should give the best training to them or advised to them to further their study especially in this area. Besides improving their skills and knowledge in the Islamic banking system area, they improvise their level of education and they also would be able to overcome the confusion experienced by the customer.

iii.

Recruiting new thinkers. Our country is among the countries that was providing the best learning facilities to students. There

are about 20 pieces of public higher education institutions and 42 private institutions have been established in Malaysia. The development of education sector was also contributed to the increasing number of the talented new thinkers in the Islamic banking areas which were one of famous field had chosen by community in Malaysia and International students. This opportunity should be grabbing by Islamic banking management. The new comers may be not good as existence expertise but the presence of them in this industry may be will give the innovation in the existence system without change the originality of the concept of the products principles. That means, they can involve in the formulation of strategy to improvise promotion method, improvise the filling system, or to improve the operation banking system. So that, the benefit is not only for increasing the customers that will engage with Islamic banking system but also the services of the banks can also improvised.

iv.

Simplify the transaction procedures. Some of the banking arrangement has so many procedures to complete. One of that would be to get

the approval about the application. The long of waiting time should be decrease by bank because some of customers does not time for waiting especially for the urgent matters. This situation might be one of the factors that people will switch to the other banks.

40

5.3.2

Recommendation for the Future Research

In this part, researcher will recommend several suggestions for the future research based on research findings. i. Researcher recommends this research scope can be expanded to more respondents and to a broad geographical area. For example, future researcher can make a research in a few of District or even in any state.

ii.

Improvise the content of the study. That means, future researcher should expand their study including adding more factors in the independent variables. Previous study had been shown that there are many factors that influence non-Muslim customers to patronage Islamic banking system. The future researcher can adding more factors and tries to test how critical that factors to influence customers toward Islamic banking system.

5.4

Conclusion
The intention of this chapter is to give an overall view and conclusions to this research. In this chapter

also, researcher has outlined several suggestion to the Islamic banking institutions and for the future researcher. For overall findings, researcher concludes that non-Muslims customers in Mersing, Johor have positive relation between the customers knowledge of banking term and concepts, customers positive perception toward Islamic banking terms and concepts and level perceived of awareness on the existing of Islamic banking products with the customers acceptance toward Islamic banking product. Lastly, researcher hopes that this research with its findings could help the Islamic banking institutions to create new ideas on how to attract more non-Muslims customers to apply Islamic banking system. Last but not least, this research is hoped could help other researchers to continue the research that related to Islamic banking.

41

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Haron, S., Ahmad, N., (2002). Perception of Malaysian corporate customers towards Islamic banking products and services. International Journal of Islamic Finance Services, 3(4).

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Range of Islamic banking products and services in Malaysia. From http://www.mifc.com/06104_ibprodserv.htm

Sekaran, U. (2003). Research Methods for Business: A Skill Building Approach (4th ed.). New York: John Wiley & Sons Inc.

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APPENDICES

45

Dear Sir / Madam

I am carrying out survey entitled

A STUDY ON THE CUSTOMERS ACCEPTANCE TOWARDS ISLAMIC BANKING PRODUCTS AMONG NON-MUSLIM IN MERSING, JOHOR

This set of questionnaire is being prepared as part of course requirement for BBA program - UiTM Graduate School of Business

Your kind cooperation and response are very much appreciated. Confidentiality of your response is therefore assured as this survey is solely intended for academic purposes. Your identity will not be disclosed because information will be in aggregate form instead of individual responses.

Thank you.

NURUL AINI BINTI MADUN

2010657072

46

SECTION A
Please mark (/) at the provided space Sila tandakan (/) pada ruang yang disediakan 1. Gender / Jantina Male / Lelaki Female / Perempuan

2. Religion / Agama V Buddhist Hindu Christian Others

3. Age / Umur <25 years old 25-39 years old 40-55 years old

4. Education level / Tahap Pendidikan Secondary / Lepasan SPM Certificate / Sijil Diploma / Diploma Degree / Ijazah

5. Profession / Profesion Government employee / Kakitangan Kerajaan Private Sector employee / Sektor Pekerja Swasta Self employed / Bekerja Sendiri Others / Lain-lain

Please mark (/) an appropriate scale which best describes your agreement for each statement, where: Sila tandakan (/) skala yang sesuai yang terbaik yang menggambarkan persetujuan anda untuk setiap kenyataan, di mana: 1. = Strongly disagree / Sangat Tidak Bersetuju 2. = Disagree / Tidak Bersetuju 3. = Neutral / Biasa 4. = Agree / Bersetuju 5. = Strongly agree / Sangat Bersetuju
47

SECTION B
No. 7 8 Questions You know that there is Islamic banking in Malaysia. Anda tahu bahawa terdapat perbankan Islam di Malaysia You are well verse in Islamic banking products. Anda sangat memahami mengenai produk perbankan Islam. You are well verse in Islamic banking products' concepts and principles. Anda sangat memahami mengenai konsep dan prinsip yang digunakan di dalam produk perbankan Islam. You are well verse in interest free banking scheme (IFBS). Anda sangat memahami mengenai Faedah Skim Perbankan Percuma (IFBS). You know that there are differences between Islamic banking services and conventional banking products. Anda tahu bahawa terdapat perbezaan diantara servis perbankan Islam dan juga servis perbankan konvensional. 1 2 3 4 5

10

11

SECTION C
No. Questions Islamic banking products were introduced because Muslims is prohibited from interest (Riba). Produk perbankan Islam telah diperkenalkan kerana umat Islam adalah dilarang daripada faedah (Riba). Islamic banking product features and terms are totally different from conventional. Cirri-ciri produk perbankan Islam dan terma adalah sama sekali berbeza daripada konvensional. The interest free banking scheme (IBS) is the only principle that can replace the element of interest in existing banking system. Skim faedah perbankan Islam (IBS) adalah satu-satunya prinsip yang boleh menggantikan elemen kepentingan di dalam system perbankan yang sedia ada. The potential of Islamic banking product offered by Islamic banking are very good. Potensi produk perbankan Islam yang ditawarkan oleh perbankan Islam adalah sangat baik. 1 2 3 4 5

12

13

14

15

48

SECTION D
No. Questions Product knowledge depends on customers awareness when using the Islamic banking product. Pengetahuan mengenai produk bergantung kepada kesedaran pelanggan itu apabila menggunakan produk perbankan Islam. Forum and conferences are important to create awareness about Islamic banking product. Forum dan persidangan adalah penting untuk mewujudkan kesedaran tetang produk perbankan Islam. I aware that there are no hidden factors in Islamic banking contract. Saya sedar bahawa tidak ada factor tersembunyi dalam kontrak perbankan Islam. Many customers are not aware the basic rules and principles of Islamic banking product. Ramai pelanggan yang tidak mengetahui peraturan dan prinsip-prinsip asas produk perbankan Islam. In order to create awareness to the customers, Islamic banking services should do advertising and promotional campaign as a success factor. Bagi mewujudkan kesedaran kepada pelanggan, perkhidmatan perbankan Islam perlu melakukan pengiklanan dan kempen promosi sebagai factor kejayaan. 1 2 3 4 5

16

17

18

19

20

SECTION E
No. 21 Questions You have an intention to engage with Islamic banking facilities. Anda mempunyai niat untuk melibatkan diri dengan kemudahan perbankan Islam. The Islamic banking products and facilities are your preferences. Produk dan kemudahan perbankan Islam adalah keutamaan anda. Good understanding about Islamic banking theory and principle has an impact on customers to accept Islamic banking product. Kefahaman yang baik mengenai teori dan prinsip perbankan Islam mempunyai impak ke atas pelanggan menerima produk perbankan Islam. Perceptions factors toward Islamic banking product have influenced me to select that product. Faktor persepsi terhadap produk perbankan Islam telah mempengaruhi saya untuk memilih produk itu. Good promotion and advertising have influenced me to select Islamic banking product. Promosi dan pengiklanan yang baik telah mempengaruhi saya untuk memilih produk perbankan Islam. 1 2 3 4 5

22

23

24

25

THANK YOU FOR YOUR COOPERATION

49

SPSS ANALYSIS 1. RELIABILITY TEST

TABLE: Reliability Statistics for Variable Knowledge Cronbach's Alpha Based on Cronbach's Alpha 0.857 Standardized Items 0.868 N of Items 5

Source: SPSS output

TABLE: Reliability Statistics for Variable Perception Cronbach's Alpha Based on Cronbach's Alpha 0.755 Standardized Items 0.762 N of Items 4

Source: SPSS output

TABLE: Reliability Statistics for Variable Awareness Cronbach's Alpha Based on Cronbach's Alpha 0.915 Standardized Items 0.913 N of Items 5

Source: SPSS output

50

2. FREQUENCY ANALYSIS

TABLE: FREQUENCY AND PERCENTAGE ON GENDER BASIS Cumulative Frequency Valid MALE FEMALE Total 46 54 100 Percent 46.0 54.0 100.0 Valid Percent 46.0 54.0 100.0 Percent 46.0 100.0

Source: SPSS output

TABLE: FREQUENCY AND PERCENTAGE ON RELIGION BASIS Cumulative Frequency Valid HINDU CHRISTIAN OTHERS Total 31 38 31 100 Percent 31.0 38.0 31.0 100.0 Valid Percent 31.0 38.0 31.0 100.0 Percent 31.0 69.0 100.0

Source: SPSS output

TABLE: FREQUENCY AND PERCENTAGE ON AGE BASIS Cumulative Frequency Valid <25 YEARS OLD 25-39 YEARS OLD 40-55 YEARS OLD Total 24 69 7 100 Percent 24.0 69.0 7.0 100.0 Valid Percent 24.0 69.0 7.0 100.0 Percent 24.0 93.0 100.0

Source: SPSS output

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TABLE: FREQUENCY AND PERCENTAGE ON EDUCATION LEVEL BASIS Cumulative Frequency Valid SECONDARY CERTIFICATE DIPLOMA DEGREE Total 32 8 53 7 100 Percent 32.0 8.0 53.0 7.0 100.0 Valid Percent 32.0 8.0 53.0 7.0 100.0 Percent 32.0 40.0 93.0 100.0

Source: SPSS output

TABLE: FREQUENCY AND PERCENTAGE ON PROFESSION BASIS Cumulative Frequency Valid GOVERNMENT EMPLOYEE PRIVATE SECTOR EMPLOYEE SELF EMPLOYED OTHERS Total 71 Percent 71.0 Valid Percent 71.0 Percent 71.0

11 13 5 100

11.0 13.0 5.0 100.0

11.0 13.0 5.0 100.0

82.0 95.0 100.0

Source: SPSS output

3. HYPOTHESES TESTING
TABLE: Correlations KNOWLEDGE KNOWLEDGE Pearson Correlation Sig. (2-tailed) N PERCEPTION Pearson Correlation Sig. (2-tailed) N AWARENESS Pearson Correlation Sig. (2-tailed) N 100 .966** .000 100 .883** .000 100 100 .886** .000 100 100 1 PERCEPTION .966** .000 100 1 AWARENESS ACCEPTANCE .883** .000 100 .886** .000 100 1 .667** .000 100 .674** .000 100 .910** .000 100

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ACCEPTANCE Pearson Correlation Sig. (2-tailed) N

.667** .000 100

.674** .000 100

.910** .000 100

100

**. Correlation is significant at the 0.01 level (2-tailed).

TABLE: Model Summaryb Adjusted R Model 1 R .958a R Square .918 Square .915 Std. Error of the Estimate .10155 Durbin-Watson .691

a. Predictors: (Constant), AWARENESS, KNOWLEDGE, PERCEPTION b. Dependent Variable: ACCEPTANCE

TABLE: ANOVAb Model 1 Regression Residual Total Sum of Squares 11.040 .990 12.030 Df 3 96 99 Mean Square 3.680 .010 F 356.856 Sig. .000a

a. Predictors: (Constant), AWARENESS, KNOWLEDGE, PERCEPTION b. Dependent Variable: ACCEPTANCE

TABLE: Coefficientsa Standardized Unstandardized Coefficients Model 1 (Constant) KNOWLEDGE PERCEPTION AWARENESS B -.088 -.362 -.300 1.677 Std. Error .128 .114 .118 .072 -.369 -.299 1.501 Coefficients Beta t -.684 -3.186 -2.549 23.154 Sig. .496 .002 .012 .000

a. Dependent Variable: ACCEPTANCE

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