SWITCHING INTENTION OF MUSLIM DEPOSITORS IN ISLAMIC DEPOSIT ACCOUNT
DOI:
https://doi.org/10.31436/ijema.v24i1.394Abstract
Islamic finance has achieved remarkable growth all over the world. Without exception, Malaysia has also been enjoying rapid and robust development in Islamic finance. Despite the encouraging growth and the great acceptance of Islamic financial products, one controversy may reverse the perception about Islamic finance. The issue is that recently several Islamic banks introduced the concept of bai‘ al-‘īnah to be applied on deposit account which allows them to promise return to depositors. This strategy may encourage more Muslims to keep their money in Islamic banks. The use of this contract is in principle permissible in Malaysia, albeit admitted as controversial. Therefore, this study attempts to examine the switching intention of Muslim depositors if return on Islamic deposit account is not promised or guaranteed by Islamic banks. The Theory of Reasoned Action, in which intention could be the best determinant of individual behavior, is used as the basis of the study with a 375 participant sample. The findings showed that Muslim depositors do not really care about a promised return for deposit account practiced by several Islamic banks. For that reason, Islamic banks should not worry about introducing a promised-return based product for deposit accounts.
References
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Amin, M., and Z. Isa. “An Examination of the Relationship between Service Quality Perception and Customer Satisfaction: A SEM Approach towards Malaysian Islamic Banking.†International Journal of Islamic and Middle Eastern Finance and Management 1, no. 3 (2008): 191-209.
Bansal, H.S., and S.F. Taylor. “The Service Provider Switching Model (SPSM): A Model of Consumer Switching Behaviour in the Services Industry.†Journal of Service Research 2, no. 2 (1999): 200-18.
_______. “Planned Behaviour in a Service Provider Switching Context.†Psychology and Marketing 19, no. 5 (2002): 407-25.
Chau, P.Y.K., and P.J.H. Hu. “Information Technology Acceptance by Individual Professionals: A Model Comparison Approach.†Decision Science 32, no. 4 (2001): 699-719.
Chen Y. J., and T.L.P. Tang. “The Bright and Dark Sides of Religiosity among University Students: Do Gender, College Major, and Income Matter?†Journal of Business Ethics 115 (2012): 531-53.
Chong, B.S., and M.H. Liu. “Islamic Banking: Interest-Free or Interest-Based?†Pacific-Basin Finance Journal 17 (2009): 125–44.
Clemes, M.D., C. Gan, and T.H. Kao. “Customer Switching Behaviour in the New Zealand Banking Industry.†Banks and Banks System 2, no. 4 (2007): 50-66.
Colgate, M. “Customer Satisfaction and Loyalty: How New Zealand Banks Need to Improve.†University of Auckland Review 1, no. 1 (1999): 36-48.
______, and R. Hedge. “An Investigation into the Switching Process in Retail Banking Services.†The International Journal Bank Marketing 19, no. 4-5 (2001): 201-12.
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Dusuki, A.W., and N.I. Abdullah. Fundamentals of Islamic Banking. Kuala Lumpur: IBFIM, 2011.
Dusuki, A.W., and A. Abozaid. “A Critical Appraisal on the Challenges of Realizing Maqasid Al-Shari‘ah in Islamic Banking and Finance.†IIUM Journal of Economics and Management 15, no. 2 (2007): 143-65.
Ennew, C.T., and M.R. Binks. “The Impact of Service Quality and Service Characteristics on Customer Retention: Small Business and Their Banks in the UK.†British Journal of Management 7, no. 3 (1996): 219-30.
Erol, C., and R. El-Bdour. “Attitudes, Behaviour and Patronage Factors of Bank Customers towards Islamic Banks.†International of Bank Marketing 7, no. 6 (1989): 31-7.
Gerrard, P., and J.B. Cunningham. “The Bank Switching Behaviour of Singapore’s Graduates.†Journal of Financial Service Marketing 5, no. 2 (2000): 118-28.
_______. “Consumer Switching Behaviour in the Asian Banking Market.†Journal of Services Marketing 18, no. 3 (2004): 215-23.
Gopi, M., and T. Ramayah. “Applicability of Theory of Planned Behaviour in Predicting Intention to Trade Online: Some Evidence from a Developing Country.†International Journal of Emerging Markets 2, no. 4 (2007): 348-60.
Gotz, O., K. Liehr-Gobbers, and M. Krafft. “Evaluation of Structural Equation Models Using the Partial Least Square (PLS) Approach.†In Handbook of Partial Least Squares: Concepts, Methods, and Applications, edited by V. Esposito Vinzi, W.W. Chin, J. Henseler, and H. Wang, 691-711. New York: Springer-Verlag Berlin Heidelberg, 2010.
Greuning, H.V., and S.B. Bratanovic. Analyzing Banking Risk: A Framework for Assessing Corporate Governance and Financial Risk Management. Washington DC: The World Bank, 1999.
Hair, J.F., W.C. Black, B.J. Babin, and R.E. Anderson. Multivariate Data Analysis. New Jersey: Prentice-Hall, 2010.
Haron, S., N. Ahmad, and S.L. Planisek. “Bank Patronage Factors of Muslim and Non-Muslim Customers.†International of Bank Marketing 12, no. 1 (1994): 32-40.
Hasan, A. Fundamentals of Shari‘ah in Islamic Finance. Kuala Lumpur: IBFIM, 2011.
Hosen, M.N., and Nahrawi, A.A. “Comparative Analysis of Islamic Banking Products between Malaysia and Indonesia.†International Journal of Academic Research in Economics and Management Sciences 1, no. 2 (2012): 120-43.
International Shari‘ah Research Academy for Islamic Finance (ISRA). Islamic Financial System: Principles and Operations. Kuala Lumpur: ISRA, 2012.
Iqbal, M., and P. Molyneux. “Thirty Years of Islamic Banking: History, Performance and Prospect.†Islamic Economic Research Centre 19, no. 1 (2005): 37-9.
Jayawardhena, C. “Personal Values’ Influence on E-Shopping Attitude and Behaviour.†Internet Research 14, no. 2 (2004): 127-38.
Kassim, S., and M.S.A. Majid. “The Role of Bank Loans and Deposits in the Monetary Transmission Mechanism in Malaysia.†International Journal of Banking and Finance 6, no. 2 (2009): 37-59.
Levesque, T.J., and G. McDougall. “Determinants of Customer Satisfaction in Retail Banking.†International Journal of Bank Marketing 14, no. 7 (1996): 12-20.
Lim, H., and A.J. Dubinsky. “The Theory of Planned Behavior in e-Commerce: Making a Case for Interdependencies between Salient Beliefs.†Psychology and Marketing 22, no. 10 (2005): 833-55.
Lotfizadeh, F. “Religion and Family Structure: Two Factors Affecting on Consumer Decision Making Style in Iran.†International Journal Business Research 3, no. 2 (2013): 107-19.
Manan, S.K.A., and N. Kamaluddin. “The Underlying Contracts of Islamic Banking (IB) Products and Some Related Issues in the Current Practice.†Malaysian Accounting Review, Special Issues 9, no. 2 (2010): 99-114.
Matthews, C., and D. Murray. “Helping Bank Customers’ Switch: A Case Study.†Journal of Financial Services Marketing 11, no. 4 (2007): 360-70.
Metawa, S.A., and M. Almossawi. “Banking Behavior of Islamic Bank Customers: Perspectives and Implications.†International Journal of Bank Marketing 16, no. 7(1998): 299-313.
Mokhlis, S. “Relevancy and Measurement of Religiosity in Consumer Behavior Research.†International Business Research 2, no. 3 (2009): 75-84.
Naser, K., A. Jamal, and K. Al-Khatib. “Islamic Banking: A Study of Customer Satisfaction and Preference in Jordan.†International of Bank Marketing 17, no. 3 (1999): 135-50.
Noor, M.A., and N.H. Ahmad. “The Determinants of Efficiency of Islamic Banks.†Journal of Bank Management 11, no. 2 (2012): 32-70.
Rehman, A., and M.S. Shabbir. “The Relationship between Religiosity and New Product Adoption.†Journal of Islamic Marketing 1, no. 1 (2010): 63-9.
Ringle, C.M., S. Wende, and A. Will. SmartPLS 2.0.M3. Hamburg: SmartPLS, 2003. http://www.smartpls.com.
Ryan, M.J., and E.H. Bonfield. “Fishbein’s Intentions Model: A Test of External and Pragmatic Validity.†Journal of Marketing 44, no. 2 (1980): 82-95.
Sekaran, U. Research Methods for Business: A Skill Building Approach. New York: John Wiley and Sons, Inc., 2003.
Shah, S.F., M.W. Raza, and M.R. Khurshid. “Islamic Banking Controversies and Challenges.†Interdisciplinary Journal of Contemporary Research in Business 3, no. 10 (2012): 1018-26.
Shih, Y.Y., and K. Fang. “The Use of a Decomposed Theory of Planned Behavior to Study Internet Banking in Taiwan.†Internet Research 14, no. 3 (2004), 213-23.
Stewart, K. “An Exploration of Customer Exit in Retail Banking.†International Journal of Bank Marketing 16, no. 1 (1998): 6-14.
Sulaiman, M. “The Influence of Riba and Zakat on Islamic Accounting.†Indonesia Management and Accounting Review 2, no. 2 (2003): 149-67.
Taib, F.M., T. Ramayah, and D.A. Razak. “Factors Influencing Intention to Use Diminishing Partnership Home Financing.†International Journal of Islamic and Middle Eastern Finance and Management 1, no. 3 (2008): 235-48.
Taylor, S., and P. Todd. “Understanding the Information Technology Usage: A Test of Competing Models.†Information Systems Research 6, no. 2(1995): 144-76.
Teo, T.S.H., and S.H. Pok. “Adoption of WAP-Enabled Mobile Phones among Internet Users.†The International Journal of Management Science 31 (2003): 483-98.
Vitell, S.J., and J.G.P. Paolillo. “Consumer Ethics: The Role of Religiosity.†Journal of Business Ethics 46 (2003): 151-62.
Worthington, Jr., E.L., N.G. Wade, T.L. Hight, M.E. McCullough, J.S. Ripley, J.W. Berry, M.M. Schmitt, J.T. Berry, K.H. Bursley, and L. O’Connor. “The Religious Commitment Inventory-10: Development, Refinement, Validation of a Brief Scale for Research and Counseling.†Journal of Counseling Psychology 50, no. 1 (2003): 84-96.
Yulihasri, T. “Retailing on Internet: The Buying Intention.†MBA Thesis, School of Management, Universiti Sains Malaysia, Penang, 2004.
Abdullah, A.A., R. Sidek, and A.A. Adnan. “Perception of Non-Muslims Customers Towards Islamic Banks in Malaysia.†International Journal of Business and Social Science 3, no. 11 (2012): 151-63.
Ajzen, I. “From Intentions to Actions: A Theory of Planned Behavior.†In Action Control: From Cognition to Behavior, edited by Julius Kuhl and Jürgen Beckmann, 11-39. New York: Springer-Verlag, 1985.
Alam, S.S., H. Janor, Zanariah, C.A.C. Wel, and M.N. Ahsan. “Is Religiosity an Important Factor in Influencing the Intention to Undertake Islamic Home Financing in Klang Valley.†World Applied Sciences Journal 19, no. 7 (2012): 1030-41.
Alam, S.S., R. Mohd, and B. Hisham. “Is Religiosity an Important Determinant on Muslim Consumer Behaviour in Malaysia?†Journal of Islamic Marketing 2, no. 1 (2011): 83-96.
Ali, H., I. Osman, J. Othman, and H. Othman. Islamic Financial Services. Malaysia: University Publication Centre (UPENA), 2008.
Amin, H., A.R.A. Rahman, S.L. Sondoh Jr, and A.M.C. Hwa, “Determinants of Customers’ Intention to Use Islamic Personal Financing: The Case of Malaysian Islamic Banks.†Journal of Islamic Accounting and Business Research 2, no. 1 (2011): 22-42.
Amin, M., and Z. Isa. “An Examination of the Relationship between Service Quality Perception and Customer Satisfaction: A SEM Approach towards Malaysian Islamic Banking.†International Journal of Islamic and Middle Eastern Finance and Management 1, no. 3 (2008): 191-209.
Bansal, H.S., and S.F. Taylor. “The Service Provider Switching Model (SPSM): A Model of Consumer Switching Behaviour in the Services Industry.†Journal of Service Research 2, no. 2 (1999): 200-18.
_______. “Planned Behaviour in a Service Provider Switching Context.†Psychology and Marketing 19, no. 5 (2002): 407-25.
Chau, P.Y.K., and P.J.H. Hu. “Information Technology Acceptance by Individual Professionals: A Model Comparison Approach.†Decision Science 32, no. 4 (2001): 699-719.
Chen Y. J., and T.L.P. Tang. “The Bright and Dark Sides of Religiosity among University Students: Do Gender, College Major, and Income Matter?†Journal of Business Ethics 115 (2012): 531-53.
Chong, B.S., and M.H. Liu. “Islamic Banking: Interest-Free or Interest-Based?†Pacific-Basin Finance Journal 17 (2009): 125–44.
Clemes, M.D., C. Gan, and T.H. Kao. “Customer Switching Behaviour in the New Zealand Banking Industry.†Banks and Banks System 2, no. 4 (2007): 50-66.
Colgate, M. “Customer Satisfaction and Loyalty: How New Zealand Banks Need to Improve.†University of Auckland Review 1, no. 1 (1999): 36-48.
______, and R. Hedge. “An Investigation into the Switching Process in Retail Banking Services.†The International Journal Bank Marketing 19, no. 4-5 (2001): 201-12.
Department of Statistics of Malaysia. Population Distribution and Basic Demographic Characteristic Report 2010. http://www.statistics.gov.my/portal/download_Population/files/census2010/Taburan_Penduduk_dan_Ciri-ciri_Asas_Demografi.pdf
Department of Statistics of Malaysia. Population Distribution by State, Malaysia, 2010. http://www.statistics.gov.my/portal/
download_Population/files/census2010/Taburan_Penduduk_dan_Ciri-ciri_Asas_Demografi.pdf
Desbarats, J. “Spatial Choice and Constraints on Behavior.†Annals of the Association of American Geographers 73, no. 3 (1983): 340-57.
Duran, J.J., and M.J.G. Lopez. “The Internationalization of Islamic Banking and Finance: The Co-Evolution of Institutional Changes and Financial Services Integration.†International Journal of Business and Management 7, no. 13 (2012): 49-74.
Dusuki, A.W., and N.I. Abdullah. Fundamentals of Islamic Banking. Kuala Lumpur: IBFIM, 2011.
Dusuki, A.W., and A. Abozaid. “A Critical Appraisal on the Challenges of Realizing Maqasid Al-Shari‘ah in Islamic Banking and Finance.†IIUM Journal of Economics and Management 15, no. 2 (2007): 143-65.
Ennew, C.T., and M.R. Binks. “The Impact of Service Quality and Service Characteristics on Customer Retention: Small Business and Their Banks in the UK.†British Journal of Management 7, no. 3 (1996): 219-30.
Erol, C., and R. El-Bdour. “Attitudes, Behaviour and Patronage Factors of Bank Customers towards Islamic Banks.†International of Bank Marketing 7, no. 6 (1989): 31-7.
Gerrard, P., and J.B. Cunningham. “The Bank Switching Behaviour of Singapore’s Graduates.†Journal of Financial Service Marketing 5, no. 2 (2000): 118-28.
_______. “Consumer Switching Behaviour in the Asian Banking Market.†Journal of Services Marketing 18, no. 3 (2004): 215-23.
Gopi, M., and T. Ramayah. “Applicability of Theory of Planned Behaviour in Predicting Intention to Trade Online: Some Evidence from a Developing Country.†International Journal of Emerging Markets 2, no. 4 (2007): 348-60.
Gotz, O., K. Liehr-Gobbers, and M. Krafft. “Evaluation of Structural Equation Models Using the Partial Least Square (PLS) Approach.†In Handbook of Partial Least Squares: Concepts, Methods, and Applications, edited by V. Esposito Vinzi, W.W. Chin, J. Henseler, and H. Wang, 691-711. New York: Springer-Verlag Berlin Heidelberg, 2010.
Greuning, H.V., and S.B. Bratanovic. Analyzing Banking Risk: A Framework for Assessing Corporate Governance and Financial Risk Management. Washington DC: The World Bank, 1999.
Hair, J.F., W.C. Black, B.J. Babin, and R.E. Anderson. Multivariate Data Analysis. New Jersey: Prentice-Hall, 2010.
Haron, S., N. Ahmad, and S.L. Planisek. “Bank Patronage Factors of Muslim and Non-Muslim Customers.†International of Bank Marketing 12, no. 1 (1994): 32-40.
Hasan, A. Fundamentals of Shari‘ah in Islamic Finance. Kuala Lumpur: IBFIM, 2011.
Hosen, M.N., and Nahrawi, A.A. “Comparative Analysis of Islamic Banking Products between Malaysia and Indonesia.†International Journal of Academic Research in Economics and Management Sciences 1, no. 2 (2012): 120-43.
International Shari‘ah Research Academy for Islamic Finance (ISRA). Islamic Financial System: Principles and Operations. Kuala Lumpur: ISRA, 2012.
Iqbal, M., and P. Molyneux. “Thirty Years of Islamic Banking: History, Performance and Prospect.†Islamic Economic Research Centre 19, no. 1 (2005): 37-9.
Jayawardhena, C. “Personal Values’ Influence on E-Shopping Attitude and Behaviour.†Internet Research 14, no. 2 (2004): 127-38.
Kassim, S., and M.S.A. Majid. “The Role of Bank Loans and Deposits in the Monetary Transmission Mechanism in Malaysia.†International Journal of Banking and Finance 6, no. 2 (2009): 37-59.
Levesque, T.J., and G. McDougall. “Determinants of Customer Satisfaction in Retail Banking.†International Journal of Bank Marketing 14, no. 7 (1996): 12-20.
Lim, H., and A.J. Dubinsky. “The Theory of Planned Behavior in e-Commerce: Making a Case for Interdependencies between Salient Beliefs.†Psychology and Marketing 22, no. 10 (2005): 833-55.
Lotfizadeh, F. “Religion and Family Structure: Two Factors Affecting on Consumer Decision Making Style in Iran.†International Journal Business Research 3, no. 2 (2013): 107-19.
Manan, S.K.A., and N. Kamaluddin. “The Underlying Contracts of Islamic Banking (IB) Products and Some Related Issues in the Current Practice.†Malaysian Accounting Review, Special Issues 9, no. 2 (2010): 99-114.
Matthews, C., and D. Murray. “Helping Bank Customers’ Switch: A Case Study.†Journal of Financial Services Marketing 11, no. 4 (2007): 360-70.
Metawa, S.A., and M. Almossawi. “Banking Behavior of Islamic Bank Customers: Perspectives and Implications.†International Journal of Bank Marketing 16, no. 7(1998): 299-313.
Mokhlis, S. “Relevancy and Measurement of Religiosity in Consumer Behavior Research.†International Business Research 2, no. 3 (2009): 75-84.
Naser, K., A. Jamal, and K. Al-Khatib. “Islamic Banking: A Study of Customer Satisfaction and Preference in Jordan.†International of Bank Marketing 17, no. 3 (1999): 135-50.
Noor, M.A., and N.H. Ahmad. “The Determinants of Efficiency of Islamic Banks.†Journal of Bank Management 11, no. 2 (2012): 32-70.
Rehman, A., and M.S. Shabbir. “The Relationship between Religiosity and New Product Adoption.†Journal of Islamic Marketing 1, no. 1 (2010): 63-9.
Ringle, C.M., S. Wende, and A. Will. SmartPLS 2.0.M3. Hamburg: SmartPLS, 2003. http://www.smartpls.com.
Ryan, M.J., and E.H. Bonfield. “Fishbein’s Intentions Model: A Test of External and Pragmatic Validity.†Journal of Marketing 44, no. 2 (1980): 82-95.
Sekaran, U. Research Methods for Business: A Skill Building Approach. New York: John Wiley and Sons, Inc., 2003.
Shah, S.F., M.W. Raza, and M.R. Khurshid. “Islamic Banking Controversies and Challenges.†Interdisciplinary Journal of Contemporary Research in Business 3, no. 10 (2012): 1018-26.
Shih, Y.Y., and K. Fang. “The Use of a Decomposed Theory of Planned Behavior to Study Internet Banking in Taiwan.†Internet Research 14, no. 3 (2004), 213-23.
Stewart, K. “An Exploration of Customer Exit in Retail Banking.†International Journal of Bank Marketing 16, no. 1 (1998): 6-14.
Sulaiman, M. “The Influence of Riba and Zakat on Islamic Accounting.†Indonesia Management and Accounting Review 2, no. 2 (2003): 149-67.
Taib, F.M., T. Ramayah, and D.A. Razak. “Factors Influencing Intention to Use Diminishing Partnership Home Financing.†International Journal of Islamic and Middle Eastern Finance and Management 1, no. 3 (2008): 235-48.
Taylor, S., and P. Todd. “Understanding the Information Technology Usage: A Test of Competing Models.†Information Systems Research 6, no. 2(1995): 144-76.
Teo, T.S.H., and S.H. Pok. “Adoption of WAP-Enabled Mobile Phones among Internet Users.†The International Journal of Management Science 31 (2003): 483-98.
Vitell, S.J., and J.G.P. Paolillo. “Consumer Ethics: The Role of Religiosity.†Journal of Business Ethics 46 (2003): 151-62.
Worthington, Jr., E.L., N.G. Wade, T.L. Hight, M.E. McCullough, J.S. Ripley, J.W. Berry, M.M. Schmitt, J.T. Berry, K.H. Bursley, and L. O’Connor. “The Religious Commitment Inventory-10: Development, Refinement, Validation of a Brief Scale for Research and Counseling.†Journal of Counseling Psychology 50, no. 1 (2003): 84-96.
Yulihasri, T. “Retailing on Internet: The Buying Intention.†MBA Thesis, School of Management, Universiti Sains Malaysia, Penang, 2004.
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2016-06-30
How to Cite
Abdullah, S. N., Hassan, S. H., & Masron, T. A. (2016). SWITCHING INTENTION OF MUSLIM DEPOSITORS IN ISLAMIC DEPOSIT ACCOUNT. International Journal of Economics, Management and Accounting, 24(1), 83–106. https://doi.org/10.31436/ijema.v24i1.394
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