ISLAMIC BANKING IN MALAYSIA

by

ABSTRACT

The purpose of this study is to find out the current trend of Islamic banking in Malaysia from customers perspective. It is eminent to note that apart from public opinion and ideas, other researchers have also proved that Islamic banking is more effective and highly influential form of banking and offers more benefits as compared to the convention methods and forms of banking. On one hand, Islamic banking is more effective and on the other hand, it is safer and secure as compared to other banking forms. The recent global economic crises also proves that the Islamic banks offer more security to the costumers as compared to other banks and thus the increasing inclination of customers towards Islamic banking can be linked to financial reasons as well, in addition to the religious reasons and issues. It is essential to note that the high level of comfort of costumer with the Islamic banks, combined with the fact that the costumers are more inclined towards honest, open as well as transparent business culture indicates that the choice of Islamic banks is linked to the increase in information and knowledge regarding Islamic banking, and the same is also linked to the increasing awareness regarding Islamic banking and Islamic finance. It is essential to note that the increase in knowledge regarding the matter is not only counted as a positive step forward but at the same time, it also seeks to change the general perceptions and ignorance regarding banking matter, allowing the costumers to make informed and conversant choice about the area of their choice. The factor is not only essential in determining the general inclination of the costumes in particular and the society in general but at the same time it also provides assistance in defining and determining the right direction for the bankers that must be followed in order to provide best possible facilities to the costumers.

CHAPTER 1: INTRODUCTION1

Background of the Study1

Aim and Objectives8

Objectives8

Significance of the Study8

Statement of the problem8

Research Questions9

Research Hypothesis9

Theoretical framework9

Chapter Outline10

Limitations10

CHAPTER 2: LITERATURE REVIEW12

Introduction12

Islamic Banking from the perspectives of Malaysia15

Governments Point of View in Islamic Banking30

Conventional Banking v/s Islamic Banking32

Islamic banking36

CHAPTER 3: METHODOLOGY42

Introduction42

Research Design and Methodology43

Research Design44

Research Approach46

Data Collection46

Collection of Primary Data47

Collection of Secondary Data48

Data Analysis48

Research Framework49

Limitations of Mixed Research Methodology52

Research method55

Mixed method58

Rationale for quantitative Approach65

Data collection65

Research instruments66

Data analysis67

Research Ethics69

Informed Consent70

Confidentiality71

Reliability and validity71

Time horizon73

CHAPTER 4: DATA ANALYSIS AND FINDINGS74

Descriptive Analysis74

Would you want to do business with an Islamic Institution?76

Regression analysis93

Hypothesis testing93

Correlation analysis95

Independent variables95

Dependent variable95

Discussion96

Conventional and Islamic banks in Malaysia104

Islamic finance and Malaysia105

Islamic Financial Products in Malaysia Islamic banking system108

CHAPTER 5: CONCLUSION AND RECOMMENDATIONS113

The Findings113

Discussion of the Findings114

Conclusion115

Significance of the Study116

Recommendations116

Limitations of the Study117

Suggestions for Further Research118

REFERENCES120

CHAPTER 1: INTRODUCTION

Background of the Study

In the financial sector, banking industry is comprised of imminent services that have a direct impact on economy's development. Stability and growth of economy are directly depended on the banking industry's stability. Between the deficit and surplus units, its functions works as an intermediary links which helps in facilitating funds for the production ...