CHAPTER 1

INTRODUCTION

This chapter consist of the introduction of the study, problem statement, research question,

research objective and hypothesis used for the study. Besides that significant of the study and

definition of selected variables are also included in this study.

1.1 Introduction

The main reason of conducting the research is to find out the determinants of acceptance of

Islamic Banking Products and services among students at the International University of

Malaya-Wales (IUMW). Malaysia has both Islamic banking and conventional banking which

the consumer can select according to their preference. The Islamic Bank can be described as

an institution which is following the banking structure that is form on the idea of Islamic law

also known as Shariah and does not include itself in the proceedings which forbidden by

Shariah (Abdullah, Sidek, & Adnan, 2012). The Islamic bank services provide similar with

the conventional bank for instance saving account, current account, credit card, loan and other

financial services yet it must be accordance and not forbidden by ideology of Shariah. The

earliest Islamic banking structure execute from the year 1983 when the original Islamic bank

which is Bank Islam Malaysia Berhad (BIMB) was run in Malaysia (Ahmad & Haron, 2002).

The strong reason of expanding the Islamic Banking System is to accumulate between the

Muslim and make sure equitable sharing and utilize of collection under the Islamic law and

guidance. In the year 1993, Bank Negara Malaysia (BNM) begin the Islamic framework when

the Interest-Free Banking Scheme was inaugurated. The basis of Bank Negara Malaysia begin

with Islamic framework is to permit the conventional bank to establish the Islamic basis

financial services to all instead introduce numerous new Islamic bank in Malaysia (Ahmad &

Haron, 2002). By July 1993, the Interest-Free Banking Structure was extended to public the

banks in Malaysia with total number of 21 Islamic financial services were expanded. At the

end of year 2000, the Islamic banking structure was constitute by 2 Islamic banks, 5 merchant

banks, 7 discount houses and 17 conventional banks (Ahmad & Haron, 2002). Even though

the Islamic banking structure broadly expanded in Malaysia that nearly all of the financial

institution provided a number of categories of Islamic services but based on the investigation

done by (Haron, Ahmad, & Planisek, 1994) it represented that there are 32 percent of non-

Muslim and 12 percent of Muslim believes that the Islamic bank is for Muslim only. Most of

the non-Muslims individual misinterpret that Islamic Bank is only for Muslim individual.

According to the researchers, public are willing to establish a relationship with Islamic

Banking if there is a chance for them to understand more on Islamic Banking.

Furthermore, the researcher states that if there is a chance to let the public to understand more

about the Islamic bank, they are willing to establish a relationship with Islamic bank.

Islamic Banking is a concept that given by Allah Almighty to carry out the business activities

and function and at the same times to execute the interest free scheme by utilizing the theory

of Shariah. It can be put into words that Islamic Banking is greatly on prohibition of interest

payments (riba) as only products and facilities are entitled to carry a price (Rahman, 2007).

The most significant characteristic of Islamic Banking is splitting of risk among investors, the

bank and the borrowers (Ahmad, Rehman & Humayoun, 2011). According to Uzair (1976),

the working organization of Islamic Banking is a variety of mechanism that applied to present

to subsist with the challenges of dividend and risk (as cited in Ahmad, Rehman, Saif &

Safwan, 2000). In connection, Islamic scholars have keep on with the development of goods

that be resemble to conventional banking products by substituting interest remittance and fees

with rebates and unforeseen payment layout. In the depressed world financial scenario,

mainly the subprime crisis in 2008, Islamic Banking has become visible as a powerful another

financial system. Political and business leaders at the Fifth World Islamic Economic Forum in

Jakarta in March 2009 have praised the Islamic financial institution flexibility opposed to

economic decline citing their abstain from sink money into toxic assets (Loo, 2010). It has set

down an occurrence increase in a short time and has extended $1 trillion US dollar and the

expansion value is 20% yearly. At the present time, there are more than 500 bank globally

which hitherto become a significant segment of the finance and investment industries (Cheng,

Chuah, Bohari, & Adam, 2011).

1.1.1 Background of Islamic Banking in Malaysia

Malaysia, is a powerful defenders of Islamic Banking, and also a nation with multiracial

which governed by Malays (Bumiputera) who are Muslim by birth (Loo, 2010). Malaysia has

been encouraging the suggestion with the major reason to generate a similar in conventional

banking system by handing out of an equitable funding in concession with Islamic Concept

and to generate the integration spirit among Muslims by takeaway of Islamic Banking System

(IBS) (Loo, 2010). Bank Islam Malaysia has begun its operation in 1983. In 1993, under the

Islamic Banking Scheme (IBS), finance companies, merchant banks and also commercial

banks are permitted to give out Islamic goods and services (Ahmad & Kazmi, 2010).

Furthermore, Malaysia has also encouraged itself as a significant hub for the Islamic research

and studies. The International Shariah Research Academy was establish in 2008, while in

2006, there is a setup of International Centre for Education in Islamic Finance (INCEIF) (Loo,

2010). The services of Shariah Finance can be purchased by Muslims and non-Muslim since it

is a sort of most significant concept of present-time and the combine of Islamic Economies.

Besides that, a great number of commercial banks in Malaysia attempt to start up Islamic

banking business to obtain the chances of the $US 1 trillion industry. In Islamic banking,

many rule procedure attempt to increase faith and also revamp the risk management through

Islamic law framework (Shariah). At a recent time, partial of the Malaysia Islamic Banks’

consumers are Non-Muslims. The desirability of Islamic Banking is relatable to the principled

values and innate dedication to straight forward that makes the Islamic banking to obtain

identification as an substitute to the long-established commercial banking. Through this

perception, it makes the industry to grow fast (Cheng et al., 2011). According to Haron,

Ahamd and Planisek (1994), who are pioneer research on bank patronage in Malaysia, finds

that almost 100% Muslims and 75% Non-Muslims are aware of existence of Islamic Banks.

Most of them desire to have a connection with related banks after they are familiar with the

existing IBS. As such, a study on the perceptions of individual towards Islamic Bank must be

done rather than emphasizing on Muslims and Non-Muslims as in the earlier researches.

Competitive rivalry in between Islamic banking and conventional banking, and amongst

Islamic banks itself shall raise the challenges faced, to name a few would be misperception of

non-Muslims, innovation of products offered, inadequacy of qualified expertise, and

mainstreaming of Islamic banking.

1.2 Problem Statement

Islamic banking is a control an account framework that rely on the guideline of Islamic law

which known as Shariah and guided by Islamic economics (Root, 2006). In a simple word

Islamic banking is a financial institution that manage their facility that include the component

which is permitted by the Religion of Islam.

Besides, nowadays Islamic banking are missing on promoting or advertising Islamic banking

services to public through mass media. This will influence to public where they do not known

about the principle and policy that the Islamic banking owns and provide to the public.

Furthermore, banks are focusing more on developing Islamic Bank due to great competition

brought by the conventional banking industries. Among the Muslim countries, Malaysia is

one of them which is committed to developing not only an Islamic banking system, but a

complete Islamic financial system. Nonetheless, the government introduced the concept of

Islamic windows, which enable the existing conventional banks to introduce Islamic banking

products to customers instead of creating many new Islamic banks. However, the Islamic

products has not been fully accepted by consumers. Therefore, there is a need to understand

the students' behaviour toward the favourable reception on Islamic banks. To gain deeper

understanding about the favourable reception on Islamic bank of individual consumer of

IUMW. According to the research conducted by Ahmad & Haron (2002) stated that

conventional bank had total deposit RM381 billion but the total deposit hold by Islamic

system was RM31 billion. In the case of loans, there was RM416 billion extended by the

conventional banking system while the Islamic system was given out RM21 billion to the

public. Based on the statistic figure, we can know that the conventional banking system has

captured most of the market share as compare to the Islamic banking system. Besides that, we

also know that the conventional Banking system is much stronger than the Islamic banking

system so we need to investigate the reason for affecting this scenario. The main problems

that affecting the determinants of acceptance on Islamic banks among the university student

are, customers are unfamiliar with the Islamic banking system. There are still many people do

not understand what is actually the Islamic banking either Muslim or non-Muslim. Customers

do not familiar with the products and services offered by the Islamic banks. Thus, Islamic

bank needs to be dynamic and innovative in fulfilling customers’ expectations and

requirements. According to the study conducted by Ahmad & Haron (2002), there is a

misconception against Islamic banking. Both the researchers said that many customers have

misunderstanding against Islamic banking which the Islamic banking is only for Muslims.

Besides that, this study provides as an indicator showing that the provider of Islamic banking

products and services have not done enough in educating customer and marketing their

products. Most customers are not aware of the products and services offered by the Islamic

banks.

1.3 Research question

I) What is the relationship between religious obligation and determinants of

acceptance of Islamic Banking Products and Services among students at the

International University of Malaya-Wales (IUMW)?

II) What is the relationship between availability of products and services and

determinants of acceptance of Islamic Banking Products and Services among

students at the International University of Malaya-Wales (IUMW)?

III) What is the relationship between image and reputation towards bank and

determinants of acceptance of Islamic Banking Products and Services among

students at the International University of Malaya-Wales (IUMW)?

1.3 Research Objective

General objectives:

To examine the favourable reception on Islamic banks of individual consumer of

International University of Malaya - Wales.

Specific Objectives

I. To determine the relationship between religious obligation and determinants of

acceptance of Islamic Banking Products and Services among students at the

International University of Malaya-Wales (IUMW)

II. To investigate the relationship between availability of products and services and

determinants of acceptance of Islamic Banking Products and Services among

students at the International University of Malaya-Wales (IUMW)

III. To examine the relationship between image and reputation towards bank and

determinants of acceptance of Islamic Banking Products and Services among

students at the International University of Malaya-Wales (IUMW)

1.5 Hypothesis

There are three hypotheses for this research paper which derived from the research objectives.

The five hypotheses are as below:

H 0 : There is no relationship between religious obligation, availability of products

and services, and image and reputation towards bank and determinants of

acceptance of Islamic Banking products and services among students at the

International University of Malaya – Wales (IUMW).

H1: There is a significant relationship between religious obligation and determinants

of acceptance of Islamic Banking products and services among students at the

International University of Malaya – Wales (IUMW).

H 2: There is a significant relationship between availability of products and services

and determinants of acceptance of Islamic Banking products and services

among students at the International University of Malaya – Wales (IUMW).

H 3: There is a significants relationship between image and reputation towards bank

and determinants of acceptance of Islamic Banking products and services

among students at the International University of Malaya – Wales (IUMW).

1.6 Significant of study

Practical

Islamic bank is not widely known and acceptable as contrast with conventional bank by

Malaysian. Therefore, this study can further favour to the Islamic bank and banks like Bank

Muamalat Malaysia Berhad by studying what criteria that remarkably influencing the

favourable reception on Islamic banking. Thus, the Islamic bank and financial institutions can

come out with a latest plan and make their institutions stronger.

Theoretical

The outcome of this research will also be a useful source of information for banking students.

The research outcome will be helpful for the banking students who wish to further understand

the standard that remarkably affecting the acceptance on the Islamic bank.

CHAPTER 2

LITERATURE REVIEW

This chapter discusses all the variables and explores the relationship between variables from

the past studies, which are favourable reception towards Islamic Banking among individual

consumer in IUMW through religious obligation, availability of products and services, and

image and reputation towards bank. The conceptual framework will also be presented in this

chapter. Before the study is conducted, we must first understand the characteristics of Islamic

banking. In the studies of Khan (2010), he has explained how ―Islamic‖ in Islamic bank.

Islamic banking is commonly synonymous with ―interest-free banking‖ or ―risk-sharing

banking‖. According to Sole (2007), Islamic bank has been grown to all over the world over

these years. The area covered was not only limited to the nations of majority Muslim

populations but also over other countries where Muslim is a minority, such as the United

Kingdom and Japan.

2.1 Acceptance towards Islamic Banking Products and Services

Islamic banking approach was introduced in Malaysia for just 50 years since establishment of

Tabung Haji. Islamic banking systems in Arabic countries are distinctively different

compared to Malaysia’s Islamic banking. The market is still not fully developed because the

majority of consumers are more familiar with conventional banking. Therefore, it can be said

that Islamic banking is still new for Malaysians. According to Rehman and Shabbir (2010),

customers’ perception would have an effect on a new products acceptance. In acceptance of

new product, customers will make choices over the products that match to their experiences

and needs as compared to the existing products (Rogers, 1983). Besides, awareness or

knowledge about a product is a moderating factor in selecting a new product (Lai, 1991). It

can be summarized that acceptance of Islamic banking would be a consideration of consumers

based on their perception, experiences, needs and knowledge.

Kahf (2004) has discussed the winning factors of Islamic banking in his studies. According to

his opinions, Islamic banks have to pay great attention on the quality of products and services

they offer to the consumers even if they are monopolizing the market based on the specialties

of their services. Besides, they have to expand their base of banking services. Even though

Islamic bank is specially for Muslims that are not allowed to patronize into conventional

banks, however the services provided should not limited to the preference of Muslims only.

They should also provide services like investment funds (Takaful) so that they could attract

more consumers regardless of their religious views. Moreover, Islamic bank must be able to

build a high level of trust between customers and team. There is evidence to show that high

level of trust is the foundation of success of a bank. In order to achieve this target, effectively

supervise of the implementation of standards and collective religious rulings in the actual

deals and transactions with customers, depositors and shareholders will become a very

important issue to Islamic bank. Hanif (2011) has explained the difference of Islamic banking

with conventional banking in his studies. Before the introduction of Islamic banking, banker

was a dealer of money that handles all the money of depositors and also provides loans to

borrowers. In this case, interest should be paid to the depositors and received from the

borrowers as a reward of using the money according to the capitalist system. However, the

practice of Shariah (Islamic Law) has prevented the Islamic banks from applying the same

system with the conventional bank. Shariah states that the charging or paying of interest as

known as Riba in the Islamic words is forbidden in the Shariah. Therefore, Muslims have no

other way but to establish their own bank with the brand new system. This system challenges

the interest based system that has been practiced by the people for few centuries even in the

Muslim countries. On the other way, it applies the profit and loss sharing system which fits

more to the Shariah. By using this approach, Islamic banks have successfully created trust

between depositors and them because the profit or loss is no longer fixed but according to the

performance of Islamic banks.

2.2 Religious Obligation

Perspective is defined in Oxford Dictionary as the mental view of the relative importance of

things. In terms of religion and education, “the mental view” refers to the teaching and

learning process whereas “relative importance” refers to emphasis and progression.

Perspective is mainly proposed the need for a well defined viewing point, from all other

things or religious phenomena which can be viewed and relative to each other. However, any

viewpoint that is contrast with others may affect the perspectives of the subject matter. In

Islamic banking, it has been proved that the availability of products and services , religious

obligation at enables highly the consumers feel easier and more comfortable. As time

progresses, it leads to higher acceptance level of consumers on Islamic banking (Haque,

Osman & Ismail, 2009).

The earlier researches by Erol and El-Bdour (1989) and Erol, Kaynak and ElBdour (1990)

confirm that there are three key factors that influence the consumers perception towards

Islamic banking: fast and efficient services, reputation and confidentiality, meanwhile

religious is not a main intention criterion. However, in a study explored by Haque et al.

(2009) finds that a significant difference of perception between races towards Islamic

banking. Different religious group such as Buddhism, Christianity, Islam and others have

different beliefs, as revealed by Rehman and Shabbir (2010). Researchers discovered that

consumers do not have so much knowledge or information regarding the Islamic term used

such as Mudharaba, Mushaaraka and Murabaha but they invest those products mostly because

of the religion reason. Other than that, according to Khan, Hassan and Shahid (2007) who

conduct a research on 100 customers of Islamic bank in Bangladesh and find the religious

principles is the main factor for bank selection criterion. Moreover, understanding or

clarifying consumers demographics on bank acceptance criteria is an effective measurement

tool to modified group-behavior of the customer. Whereby , it is compatible for the bank to

position amongst the banking consumers needs.

According to Haque, Ahmed and Jahan (2010), Holy Quran act as a life code for all Muslims

which Allah has provided them complete ethical guidelines towards their daily life. In

between that, Shariah principles are the ethical guides for Muslims when handling businesses

and banking activities. Therefore, a follower of Islam must follow to the Shariah principles,

committing to Islamic lifestyle and refrains from crimes committed which has been outlined

by the Shariah. According to Beck et al. (2013), Shariah prohibits the Islamic banks from

charging of interest payment (Riba) on the financial products and services provided. In this

case, Muslims have no other way but to improvise the existing way of doing business with

their own products and services. Therefore, Islamic banking has been introduced and together

Shariah compliant products and services have been introduced. These products and services

resemble the conventional banking products and services by replacing the interest payment

with contingency payments or fees. The use of this factor is able to attract the Muslims who

are bound to follow the Shariah. This has been further explained by Bhatti et al. (2010). They

found out that the most significant reason of consumers in dealing with Islamic bank is that

Islamic banks are providing the same facility and returns with the benefit of Shariah

compliance as were offered by conventional banks but without the benefit of Shariah

compliance. However, there are still issues faced by Islamic banking due to these Shariah

principles. V. Sundararajan and Errico (2002) have mentioned that Shariah has not only

prohibited the Riba but also the taking of excessive risk (Gharar). In the other words, many

risk taking instruments and techniques used by the conventional banks nowadays are not yet

compatible to Islamic Banks. For example like options, futures and forwards. This will be a

problem for those Islamic banking users that want to manage their risks for their businesses.

Besides, Awan and Bukhari (2011) has further determined that Shariah principle has also

prohibited the businesses associated with the particular sins sectors like alcohol, pornography

or gambling. These activities are ―Haram‖ in the aspect of Islam and so Muslims are not

allowed to get involved or participate in any part of these activities. Thus, these restrictions

are not applied to conventional banks.

2.3 Availability and Quality of Services

According to Islamic Shariah principles, it is said that Islamic banking products have some

proscribed standard which differs from the conventional banking products (Damirchi &

Shafai, 2011). The meaning of Shariah acquiescent the law approved by the Shariah board of

the bank. They stand from, asset-backed, social responsibility, profit and risk sharing, and

Islamic based economic perspective activities which Gharar is prohibited. Furthermore,

Islamic banks disapproves simply lending out money at interest, this Islamic rule is to prevent

the illegal outcome or speculative transactions also known as “Maysir” and “Gharar”

(Hussein, 2010; Damirchi & Shafai, 2011). In order to create an efficient and progressive

Islamic bank system, Bank Islam Malaysia develops a variety of products and services to gain

more consciousness among Malaysian citizens. All fund invested must be in Halal modes

under supervision of the Shariah Advisory Board of Bank Negara Malaysia. Currently,

Malaysian banks have introduced many appealing Islamic products and services under Islamic

contracts of Mudharabah, Musharakah, Murabahah, Bai Bithaman Ajil, Ijarah and many

others

Idiab, Haron and Hj. Ahmad (2012) has discussed about the services provided by the Islamic

bank. They found out that Islamic banking services can be divided into two major parts which

are services that include credit operations and services that do not include credit operations.

Services that include credit operations are the services that provided especially for the purpose

of investment. However, services that do not include credit operations are the services

implemented on the basis of commission or fee is charged over the submissive or recall. The

most vital is that Islamic bank does not offer traditional banking services that are in

contravention with the provision of Islamic Law. This differs from conventional bank and

Islamic bank, so it helps the consumers to choose the services that they prefer more easily. In

the studies of Quresh, Hussain and Rehman (2012), they found out that the important

attractions of consumer on behalf of the Islamic banking or conventional banking is services

and facilities that the bank provide. There are many banks in the market and so the consumers

can switch their banks easily. In other words, consumers have the right to switch bank to bank

depending if the bank can offer them the facilities and services that differ itself from other

competitors. They also requested the banks to emphasise on advertising the products and

services that are different from the competitors and the financial benefit that will be provided

by these products in order to attract the attention of the consumers. On the other hand,, Saad

(2012) has mentioned that besides of the type of services, the quality of services is a crutial

role as well. She found out that it improves the quality of services and can improve the

competitiveness of a bank in the market. Besides, he also found out that improving the

physical facilities in a bank will have the similar effect as well. Osman, Zainuddin, Rashid

and Jusoff (2009) had provided the same inference before Saad. They stated that improving

quality of services will entail customers‘ satisfaction and ultimately customers‘ loyalty.

2.4 Image and Attitude towards Islamic Banking in Malaysia

The need of Islamic banking system is vital to satisfy Muslims community in Malaysia need

and wants with respect to the Shariah rule. The religion mirrors a strong impact on customer’s

perception and influenced people’s attitude in different aspect of life. Therefore, Islam also

functions as guide in Islamic banking system. (Mossafa, 2014) States that the religion affects

the customer’s verdict in Islamic banking system and other influences are not matters. The

operation of Islamic bank is parallel to the operation of commercial bank but difference is that

IB work according to Islamic laws (Henry and Wilson, 2004). Meanwhile, from the

perspective of Islamic banking, The religious roles and profit in Islamic bank inspires the

people to invest in Islamic bank (Ramdhony, 2013). Thus, the relativity of image and attitude

towards IB in Malaysia and the overall understanding of the governed Shariah rule absorbed

into the banking practices is directly proportionate.

Hence, to summarize, image and attitude towards Islamic banking in Malaysia can be

abridged as the image the Islamic banks reflect based on the Shariah rules avoiding interests,

differentiating from conventional banks and displaying a unique selling point.

According to Ahmad, Rustam and Dent (2011), they determined that bank reputation and

status are the most leading factors of the selection of bank for customers. Although the ideas

of Islamic banking are still at the infant stage in some of the countries and yet to be widely

understood by other races besides Muslim, however it has been successfully attracted great

attention of foreign and local investors. As a brand new idea in the market, there is a great

potential for Islamic banking to attract new customers and larger market share in the future.

Furthermore, Chebab and Zribi (2012) have further explained that customers will have

positive perception on the bank‘s reputation and status. This will influence customers to

having the strong believe that a bank with a good reputation and status shows that it will have

good performance in their products and services. Thus, a positively amplified image and

attitude towards the IB in Malaysia will improvise. The well education is necessary for the

awareness of Islamic banking products (Doraisamy, 2011). Hence, without sufficient

knowledge on the availability of banking products offered within IB in Malaysia, the image

and attitude towards IB in Malaysia barely is improved as awareness is the setback to be

revised. In the studies, there is still a majority of people in Malaysia indicates that their

knowledge on Islamic banking is still limited. Even though they know that Muslim is not

allowed to patronize conventional banks due to the interest is prohibited in Islam, however

there is still some misconception among people about the objective and philosophy of the

establishment of Islamic bank. People believed that the Islamic bank must adopt the profit

maximization principle but it is contradictory with the objective Islamic bank that looking for

the combination of moral and profit motives. These conflicts and misunderstandings between

the customers and Islamic bank may cause the customers to swap their preference. In the

studies of Hoq, Sultana and Amin (2010), they found out that trust plays a very important role

on improving the bank‘s reputation and status. They recommended that bank should pay great

attention to improve the trust of customers towards them as it leads to a positive impact on the

reputation of the bank. This will not only assist them to sustain their customers but also help

them to develop their customer base. Besides, Awan and Bukhari (2011) has found out the

reputation and status of the bank has been the main reason that a customer for joining a new

bank. This is because of the reputation and status is the first thing that influences the image

and reputation of IB in Malaysia in the mind-set of the customers before the customer has any

contact with other aspects of the bank. In general, awareness of products, trust , reputation and

status are equivalent aspects judged when drawing out a certain image and reputation towards

the IB in Malaysia in whole.

2.5 Conceptual Framework

In conceptual framework, the independent variables are religious obligation,

availability of products and services and image and reputation towards bank while the

dependent variable is favourable reception towards Islamic Banking.

CHAPTER 3

RESEARCH METHODOLOGY

In this chapter, the research methodology is the methods that used to deal with data collected,

analysed and interpreted. Thus, this is the most important part in the research project.

Determinants of Acceptance of Islamic Banking Products and

Services among Students at the International

University of Malaya - Wales

Religious Obligation

Availability of Products and

Services

Image and Attitude

towards Islamic Banking in Malaysia

Research methodologies include research design, questionnaire design, pilot test, sampling

design, data collection methods, measurement scale, and the data analysis. Besides that, it also

provides a clear view to the readers on how the research is carried out.

3.1 Research Design

This research is conduct by using hypothesis testing with quantitative approach. In this study,

the questionnaire will be distributed among the students in IUMW and the data collected will

be quantified for statistical calculation to examine the relationship between the dependent

variable and independent variables.

According to Zikmund, Babin, Carr and Giffin (2010), the research design is an overall plan

that specifies the methods and procedures for collecting and analyzing the related information.

In this research, quantitative research will be conducted. Quantitative research is collecting

the numerical data that explain a phenomenon and analyze the data using mathematical

methods (Aliaga & Gunderson, 2002). Quantitative data is more efficient to test the

hypothesis. Therefore, it can be effectively helped us to measure on the Religious Obligation,

Availability and Quality of services, and also Confidence in Bank, that reflects the favourable

reception towards Islamic banking by individual consumer in IUMW. In this research, we

have used descriptive research. Descriptive research involves large samples which used to

observe and measure the behavior and opinion in particular condition. We choose descriptive

research as we using questionnaire method. Questionnaires have to distribute to respondents

and collected back to get evidence and making conclusions on our research. We want to find

out the relationship between the dependent variable and independent variables.

3.2 Research Location

The sampling location will focus on Block A and C, City Campus International University of

Malaya-Wales (IUMW), Jalan Tun Ismail, 50480 Kuala Lumpur. According to the sample

size table of Krejcie and Morgan (1970) as shown in appendix 3.1, the sample size should be

approximately 278 for the population size 1000. And hence 300 questionnaires were

distributed in order to make sure that at least 278 questionnaires are collected. The sampling

frame of this research is all the students from International University of Malaya-Wales

(IUMW).

3.3 Target Population and Sampling Technique

It is definitely hard to target the market as a whole, therefore we are specifying the target

population to students from the International University of Malaya – Wales (IUMW).

Collected data will be based on convenience sampling. Convenience sampling is made up of

students who are easy to access, available at the time and willing to take part. No reason tied

to purposes of research. students of International University of Malaya-Wales are easy to

cooperate randomly and use lowest cost and consume lesser time in carrying out the

questionnaires. Therefore, IUMW students are chosen as our target population.

The two types of sampling techniques are non-probability and probability sampling. In our

research, we used non-sampling technique. A non - probability technique is used in selecting

target respondent. This is because the sampling frame covers the huge amount of suitable

respondents. In our studies, we used convenience sampling. Convenience sampling is one of

the non-sampling techniques. Besides that, the subjects are selected because of their

convenient accessibility and proximity to the research. In our research we chose students from

the International University of Malaya-Wales (IUMW) and the questionnaires was distributed

to them.

3.4 Variables Measurement

The questionnaire is divided into five parts which are part A, part B, part C, part D and part E.

In part A, the respondents need to fill up the demographic background as requested in the

questions. The independent variables which are loyalty, leadership skills and quality of work

are questioned in part B, C and D of the questionnaire. The last part of the questionnaire is the

dependent variable which is the employee engagement on performance. Part A requires the

respondents to tick inside the box based on their demographic background. Whereas part B, C

and D are evaluated through Likert Scale with five options of strongly disagree (1), disagree

(2), neutral (3), agree (4) and strongly agree (5).

3.5 Data Collection

The questionnaires are allocated to the students in International University of Malaya-Wales

(IUMW) who are free to corporate during this research. The research questionnaires will be

given to the students from all the faculty which include Foundation Studies, Arts &

Humanities, Business & Law, Health & Social Sciences, and Science, Technology,

Engineering & Mathematics. The data collection will be conducted during weekdays because

most of the student will be at the location during weekday. The respondents will be provided

10 minutes to answer the questionnaire to avoid the answer is inaccurate due to time

constraint imposed.

3.6 Data Analysis Method

IBM SPSS version 24 will be the tools that be used for the data entry and analysis of this

research. The main statistical analysis is the descriptive statistics. Reliability of the

instruments is to be tested in order to valid result in this research. Normality test and

correlation test are used for the hypothesis testing. Data is tested by using Skewness and

Kurtosis test for normality test. Moreover, Pearson product-moment correlation coefficient is

used to test relationship between hypothesis by estimate the level of confidence which is set

as 0.05 if it is below 0.05, H0 will be rejected and H1 will be accepted.

3.7 Research Instrument

Questionnaire Design

Personal self-administered questionnaire has been utilized as a medium for data collection as

it able to reach out large number of respondents. The questionnaire consists of 33 questions

and divided into 5 sections which are Section A, B, C, D and E. Declaration of private and

confidential is highlighted in the survey so that the respondents are comfort in answering the

questions. Besides that, fixed substitutive question is also widely used to collect data because

it is easier and more time efficient for the respondents to answer the survey question and for

the researcher to analyze the data that have been collected.

There are 8 questions in the section A. The purpose of this section designed is to gather the

demographics and personal information of the respondents. The questions asked are gender,

age, religion, marital status, highest education level, current occupation, individual monthly

income, and household monthly income. For section A, the personal information of

respondents is gathered through the dichotomous alternative and determinant-choices

questions. According to Zikmund (2003), all the respondents are required to choose one

answer from several alternatives that given in a question.

Section B is designed to know whether or not the respondent is a consumer of Islamic

banking. The respondents have to select from a list of Islamic banking products and services

that are shown if they are using such products or services.

Section C is to know how far the respondent understands about Islamic banking. Some

general knowledge of Islamic banking has been asked such as awareness about existence of

Islamic banking, its banking operation and Islamic contracts. For Section C, the types of

questions are dichotomous alternatives and determinant-choice questions.

Section D is constructed for the independent variable of this research which are, religious

obligation, availability and quality of services, as well as confidence in Islamic banking.

There are 5 questions in each independent variable. The first part of the questions is to clarify

which Islamic banking products and services are attractive to respondents. The second part is

to know how the respondents percept from religious views. The third part is to measure how

much confidence the respondents have on Islamic banking. The last part of the questionnaire,

section E is used to measuring the dependent variable which is the favourable reception

toward Islamic banking. For Section D and E, the types of questions are attitude rating scale

which is Likert scale. From the Likert scale, the level of attitude is measured when the

respondents is try to express how strongly agree or disagree with the constructed statements, it

also used to indicating their responses ranging from very positive to very negative toward an

attitudinal object. Overall, the respondents are generally been choose from five alternatives

which are strongly agreed, agree, neutral, disagree and strongly disagree (Zikmund, 2003).

3.8 Pilot Test

Pilot test is a type of test that used to collect the data from the ultimate subject of the research

project to serve as a guide for the large study (Zikmund, 2003). The pilot test is often used to

conduct prior to the distribution of actual surveys to figure out some major and minor errors

that were being neglected in the questions. Besides that, the pilot test was primary used to

check the reliability, validity and accuracy of the questionnaires. There are around 5 sets of

questionnaire are distributed to students in IUMW and the data that have been collected is

being tested its reliability by using the IBM SPSS Version 24 software. During the pilot test,

some suggestions were highlighted from the pilot test respondents which are the students from

IUMW. There are few results are abnormal but the overall result is still reliable. When pilot

test was completed, there are some amendments on the questions were made, at last, there are

170 set of questionnaire are distributed to the target respondents in IUMW.