FACTORS AFFECTING SHARIA BANKING SELECTION IN

INDONESIA

SKRIPSI

By :

Rudi Azwan

008201300076

Presented to the

School of Business President University

In partial fulfillment of the requirements for

Bachelor Degree in Business, Major in Accounting

PRESIDENT UNIVERSITY

Cikarang Baru Bekasi

Indonesia

January 2017

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1 PLAGIARISM DOCUMENT

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 CONSENT FOR INTELLECTUAL PROPERTY RIGHT
Title of Skripsi : FACTORS AFFECTING SHARIA BANKING
SELECTION IN INDONESIA

1. The Author hereby assigns to President University the copyright to the

Contribution named above whereby the University shall have the exclusive right

to publish the Contribution and translation of it wholly or in part throughout the

world during the full term of copyright including renewals and extensions and

all subsidiary rights.

2. The Author retains the right to re-publish the preprint bersion of the

Contribution without charge and subject only to notifying the University of the

intent to do so and to ensuring that the publication by the University is properly

credited and that the relevant copiright notice is repeated verbatim.

3. The Author retains moral and proprietary rights other than copyright, such as

patent and trademark rights to any process or procedure described in the

Contribution.

4. The Author guarantees that the Contribution is original, has not been published

previously, is not under consideration for publication elsewhere and that a

necessary permission to quote or reproduce illustration from anaother source has

been obtained (a copy of any such permission should be sent with this form).

5. The Author guaratees that the Contribution contains no violation of any existing

copyright or other third party right or material of an obscene, indecent, libelious

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or otherwise unlawful nature and will indemnify the University against all

claims arising from any breach of this warranty.

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 ABSTRACT

Sharia banking is a banking that depends on the regulation of Islamic law,

additionally referred to as Shariah law. Two essential standards behind Sharia banking
are the profit loss sharing principle and, fundamentally, the disallowance of the
collection and payment of interest by creditors and investors. Since its first appearance,
Sharia banking has become one of the fastest growing segments of the financial
market industry. Its growth can be seen in the increasing number of its customers. The main
purpose of this study is to investigate four factors that might have influence to the selection of
Sharia banking in Indonesia. Those four factors are Sharia finance regulation, profit loss sharing
principle, acceptance level, and financial benefit. To accomplish this purpose, self-administrated
questionnaires were collected from 115 respondents within the JABODETABEK area. The
likert scale was used to rank the criteria based on the respondents preferences.
The result has shown that Islamic finance regulation has no significant influence on
Islamic banking selection. It means that in Indonesia, people will select Sharia banks as their
conducting banking without concerning to the Sharia compliance or regulation applied. For the
second factor, profit loss sharing principle has significant influence on Islamic banking selection
Indonesia. To avoid risk, people in Indonesia tend to select Sharia banks which only provide
investment based on loss profit sharing principle rather than interest charge. Regarding the third
factor, Sharia banks have products and services that are acceptable to all people without limited
to the religion and thus, its widest applicable to all people contributes to the increasing of its
asset and moreover is indicated as the factor that influence to the increasing numbre of Sharia
banking selection. Finally regarding to the forth factor, this research also has investigated that
Financial benefit has significant influence on Sharia banking selection in Indonesia. It explained
that the respondents believe that by avoiding the bank that involves in the risky investment will
mitigate the risk on their investment. And thus, will give benefit to the stability of the variable
of return in the investment.
In conclusion, this research addresses Sharia banking as one of the
recommended institutions in the field of investment. Then, the author of this research
recommends to people to cleverly select their conducting bank in where they invest,
deposit, and other transactions occured in the banking market.

Key words: Sharia finance regulation, profit loss sharing, acceptance level, Sharia
Banking Selection.

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 ACKNOWLEDGEMENT

Praise and gratitude, I would like to convey to the almighty God, Allah SWT,
for giving me serenity, support, and blessing in finishing this research. Without His
guidance and grace, I cannot finish this thesis well. Other than that, I would like to
express my sincere gratitude toward several people, due to their assistance, support, and
guidance to me.

1. My beloved family, starting to my mother, my alm father, my brother, my sister,

my cousins, and my aunty who always encourage me to finished my thesis
immediately.
2. My beloved thesis advisor, Mr Febrial Pratama, who always gives me guidance,
knowledge, and support patiently. I am very grateful, although he has so many
things to do, he always patiently deal with me patiently.
3. My thesis co-advisor, Kevin Danelo and Cynthia, who always become a good
partner, teacher, and supporter during my thesis period.
4. My beloved best friends, starting from Juan Sam, Jeremiah, Robert lo, Adinda
ad dina, and Deandre. Thank you for always be there everytime I need you.
Thank you for always support and comfort me. Finally we can finished this
together. See you on top!
5. My beloved communities, Zahirul Maala, which I consider as my second family
within my university life.

Cikarang, January 2017

Rudi Azwan

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 TABLE OF CONTENT

APPROVAL SHEET ......................................................................Error! Bookmark not defined.

RECOMMENDATION LETTER...................................................Error! Bookmark not defined.
PLAGIARISM DOCUMENT ........................................................................................................ i
CONSENT FOR INTELLECTUAL PROPERTY RIGHT ......................................................... iii
ABSTRACT ..................................................................................................................................vi
ACKNOWLEDGEMENT ...........................................................................................................vii
TABLE OF CONTENT .............................................................................................................. viii
CHAPTER 1: INTRODUCTION ................................................................................................. 1
1.1. RESEARCH BACKGROUND .......................................................................................... 1
1.2. PROBLEM IDENTIFICATION ........................................................................................ 4
1.3. RESEARCH QUESTION .................................................................................................. 4
1.4. RESEARCH OBJECTIVES .............................................................................................. 5
1.5. SIGNIFICANCE OF THE STUDY ................................................................................... 5
1.6. LIMITATION .................................................................................................................... 6
1.7. ORGANIZATION OF THE THESIS ................................................................................ 6
CHAPTER 2: LITERATURE REVIEW ...................................................................................... 8
2.1. INTRODUCTION .............................................................................................................. 8
2.2. DECISION THEORY ........................................................................................................ 8
2.3. LITERATUR REVIEW ..................................................................................................... 9
2.3.1. SHARIA BANKING SELECTION (DEPENDENT VARIABLE) ............................ 9
2.3.2. SHARIA FINANCE REGULATION ....................................................................... 10
2.3.3. PROFIT LOSS SHARING PRINCIPLE .................................................................. 11
2.3.4. ACCEPTANCE LEVEL ........................................................................................... 14
2.3.5. FINANCIAL BENEFIT ............................................................................................ 15
2.4. RESEARCH GAP ............................................................................................................ 17
CHAPTER 3: METHODOLOGY .............................................................................................. 20
3.1. INTRODUCTION ............................................................................................................ 20
3.2. THEORITICAL FRAMEWORK .................................................................................... 20
3.3. HYPOTHESIS ................................................................................................................. 20
3.3.1. SHARIA REGULATION TOWARDS SHARIA BANKING SELECTION ........... 20

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 3.3.2. PROFIT LOSS SHARING PRINCIPLE TOWARDS SHARIA BANKING
SELECTION ....................................................................................................................... 21
3.3.3. ACCEPTANCE LEVEL TOWARDS SHARIA BANKING SELECTION ............ 22
3.3.4. FINANCIAL BENEFIT TOWARDS SHARIA BANKING SELECTION ............. 22
3.4. OPERATION DEFINITION AND VARIABLE MEASUREMENT ............................. 23
3.4.1. INDEPENDENT VARIABLES ................................................................................ 23
3.4.2. DEPENDENT VARIABLE ...................................................................................... 23
3.5. RESEARCH INSTRUMENT .......................................................................................... 24
3.5.1. QUESTIONNAIRE DESIGN ................................................................................... 24
3.5.2. VALIDITY TESTING .............................................................................................. 24
3.5.3. RELIABILITY TESTING ........................................................................................ 25
3.5.4. PILOT TESTING ...................................................................................................... 25
3.6. SAMPLING PLAN .......................................................................................................... 26
3.6.1. POPULATION .......................................................................................................... 26
3.6.2. SAMPLE SIZE AND SAMPLING TECHNIQUE ................................................... 26
3.7. DATA COLLECTION METHOD................................................................................... 26
3.8. DATA ANALYSIS METHOD ........................................................................................ 26
3.8.1. ANALYTICAL TECHNIQUE ................................................................................. 27
CHAPTER 4: RESULT AND DISCUSSION ............................................................................ 28
4.1. DESCRIPTIVE ANALYSIS............................................................................................ 28
4.1.1. RESPONDENTS PROFILE .................................................................................... 28
4.1.2. DESCRIPTIVE ANALYSIS ..................................................................................... 28
4.2. STRUCTURAL ANALYSIS ........................................................................................... 29
4.2.1. VALIDITY TEST ..................................................................................................... 29
4.2.2. RELIABILITY TEST ............................................................................................... 30
4.3. INFERENTIAL ANALYSIS TEST................................................................................. 30
4.3.1. NORMALITY TEST USING KOLMOGOROV-SMIRNOV .................................. 30
4.3.2. NORMALITY TEST USING HISTOGRAM GRAPH AND P-PLOT .................... 31
4.3.3. HETEROSCEDASTICITY TEST ............................................................................ 31
4.3.4. MULTICOLLINEARITY TEST .............................................................................. 32
4.3.5. AUTOCORRELATION TEST ................................................................................. 33
4.4. HYPOTHESIS TEST ....................................................................................................... 34
4.4.1. MULTIPLE REGRESSION ..................................................................................... 34
4.4.2. DETERMINATION ANALYSIS (R2) ..................................................................... 35

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 4.4.3. SIMULTANEOUS TEST (F-TEST)......................................................................... 35
4.4.4. PARTIAL TEST (T-TEST) ...................................................................................... 37
4.5. INTERPRETATION RESULT ........................................................................................ 39
4.5.1. INFULENCE OF SHARIA FINANCE REGULATION TOWARDS SHARIA
BANKING SELECTION .................................................................................................... 40
4.5.2. INFULENCE OF PROFIT LOSS SHARNG PRINCIPLE TOWARDS SHARIA
BANKING SELECTION .................................................................................................... 40
4.5.3. INFULENCE OF ACCEPTANCE LEVEL TOWARDS SHARIA BANKING
SELECTION ....................................................................................................................... 41
4.5.4. INFULENCE OF FINANCIAL BENEFIT TOWARDS SHARIA BANKING
SELECTION ....................................................................................................................... 42
CHAPTER 5: CONCLUSION .................................................................................................... 43
5.1. SUMMARY OF THESIS................................................................................................. 43
5.2. LIMITATION AND FUTURE RECOMMENDATION ................................................. 44
5.3. RECOMMENDATION ................................................................................................... 46
REFERENCES:........................................................................................................................... 47
APPENDICS ............................................................................................................................... 49

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 CHAPTER 1

INTRODUCTION

1.1. RESEARCH BACKGROUND

Sharia banking is a banking that depends on the regulation of Islamic law,

additionally referred to as Shariah law. Two essential standards behind Sharia banking

are the profit loss sharing principle and, fundamentally, the disallowance of the

collection and payment of interest by creditors and investors. In the Middle Ages,

exchange and business movement in the Muslim world depended on Sharia law, and

these thoughts were spread across the world through Spain, Mediterranean, and Baltic

States, moreover giving a portion of the premise to western banking standards. In the

1960s to the 1970s, Sharia banking re-emerged in the advanced world.

Since its first re-emergence in the advance world, Sharia banking has become

one of the fastest growing segments of the financial market industry, operating

through more than 300 institutions in 75 countries (Katherine 2013). In the banking

asset worldwide, Sharia banking assets worldwide have demonstrated a wonderful

development, coming to the level of USD 882 billion in 2014 with a steady growth rate

at 16 per cent. In Indonesia, Sharia banking apparently has great potential and quality in

the worldwide Sharia finance advancement - 10 biggest nations in the field of Sharia

financial, in the end of 2014 having average asset growth of 33,2 per cent annually with

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the accumulated total asset IDR 272,343.1 In facing the period of crisis, Sharia banking

was able to maintain its profitability from the financial crisis influence.

One of the achievements of Sharia banking regarding on facing crisis period in

Indonesia can be seen in 1997. At that time, the banking crisis in Indonesia made a

challenging environment from which the nation has still not completely recuperated.

The issues incorporated high interest costs, which attracted deposits, yet banks were still

hesitant to channel credit due to a high rate of Non - Performing Loans (NPLs) and slow

segment restructuring. In such conditions, notwithstanding, Sharia banks had kept up

their performance. Their NPL level was lower, and they were enhancing faster than

conventional banks. In addition, conventional banks' Loan to Deposit Ratio (LDR) had

declined to beneath half, while Islamic banks' Financing to Deposit Ratio (FDR)

remains stable (Danelo, 2016).

Accoring to Mousa (2014), Favorable macro-economic conditions, bank size

and equity capital are imperative figures expanding Sharia banks' profitability. Thus,

expanding owners equity diminished the effect of monetary crisis on Sharia bankings

profitability. The avoidance of Interest charge by Sharia banking causing the capability

of maintaining crisis is consistence with the sharia regulation. Sharia banking is based

on compliance with Shariah law, which generally prohibits the sale and purchase of

debt contracts in order to receive an interest gain, profit taking under uncertainty

activities, and investment in the prohibited business. As people these days are getting

even more elevated instructive level, they will be more aware of the gainfulness that a

1
The World Sharia Banking Competitiveness Report, 2016

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bank can offer to them. On the other hand, this phenomenon has influenced the peoples

intention to the Sharia banking selection and thus, affecting the offering of Sharia

products and services worldwide by Not only financial institutions originating from

Muslim countries but also many multinational banks to their customers, Muslims or

non-Muslims.

Moreover, Sharia banking products and services are acceptable to all people.

According to Sol j.,(2007), the expansion of Sharia banking is not only in countries

with majority Muslim populations, but also in other countries where Muslims are a

minority, such as the United Kingdom and Japan. Its widest expansion therefore give

recognition to the people upon its products and services. Thus, the portfolios had and

recogized by widest range of community will result to the selection on Sharia banking.

Graph 1.1. Trend in global Islamic banking assets

In light of the graph above, Sharia banking asset has grown essentially

throughout the years to end up distinctly a noticeable part of the worldwide banking

system. The value of Sharia baking asset overall increased from USD 150 billion in the

mid-1990s to about USD 1.6 trillion by end-2012. It is eventually in line with the

increasing number of people selecting Sharia bank since its developmet and financial

benefit provided to its customer are increasing without the influence of global financial

crisis period that occurred between 2007 to 2009. Thus, it can be concluded that people

obviously are aware on some factors while selecting their canducting bank.

Based on the phenomena and the literatur reviews explained in above

paragraphs, the author of this research has summarized and analyzed that there are four

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factors affecting peoples intention to the Sharia Banking selection, which are Sharia

finance regulation, profit loss sharing principle, acceptance level, and financial benefit.

It is notable that an incomprehensible number of experimental reviews in the Sharia

finance literature have dealt with those factors. However, those investigations dealing

with Sharia banking practice in Indonesia are still very limited. Thus, this study is

conducted in order to examine for those four factors whether or not they will affect

people's intention towards Sharia banking selection in Indonesia.

1.2. PROBLEM IDENTIFICATION

Initially peoples intentions toward Sharia Banking selection were slow but with

passage of time it is increasing and still in growth consistent with the increasing number

of asset had by Sharia banking as what can be seen in the graph 1.1. It is questionnable

regarding on what are the factors behind that growth. As what have been explained in

the background, the author of this research found four factors becoming the

fundamental basis toward the intention of Sharia banking selection. These four factors

which are Sharia finance regulation, profit loss sharing principle, acceptance level, and

financial benefit will be the independent variables of this research with the purpose is

how significant it will influence to the Sharia banking selection in Indonesia.

1.3. RESEARCH QUESTION

Bellows are research questions developed to examine and investigate the Sharia

banking selection in Indonesia:

1. Will Sharia finance regulation affect Sharia banking selection?

2. Will Profit loss sharing principle affect Sharia banking selection?

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 3. Will Acceptance level affect Sharia banking selection?

4 Will Financial benefit affect Sharia banking selection?

1.4. RESEARCH OBJECTIVES

The objectives of this reaserch is to examine whether Sharia finance regulation,

profit loss sharing principle, acceptance level, and financial benefit will affect Sharia

banking selection in Indonesia.

1.5. SIGNIFICANCE OF THE STUDY

This study will be a significant endeavor in helping institutions either already

providing sharia products or services or are willing to establish sharia branches in their

business line to deeply look and understand what the customers need to satisfy

themselves upon products and services especially in accordance with sharia principle.

This study will also be beneficial to the people either Muslim or the other believers in

selection banks criteria to fulfill their satisfaction. By understanding the needs of the

customers and benefits of quality economic in Indonesia, these banking finances and

customers would be assured of a competitive advantage. Moreover, this research will

provide recommendations on how to evaluate the performance of a certain institution in

accordance to providing Sharia financial products and services.

Moreover, this study will be helpful to the students in universities and

practitioners in the field of Sharia economic in training and informing them in the area

of customers need upon banking systems in line with Sharia principles. It will also serve

as a future reference for researchers on the subject of FACTORS AFFECTING

SHARIA BANKING SELECTION. Importantly, this research will educate people in

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assuring on whether a Sharia banking industry is really fulfilling its system in line with

Sharia principle or is just using the name of Islam without the application of its

principles to promote its business.

1.6. LIMITATION

This study only limited itself to the variables such as:

1. Sharia finance regulation which consist of the avoidance of the payment and the

acceptance of interest and the investment in harmful business.

2. The Profit loss sharing principle which are the alternative way regarding the

avoidance of interest

3. The applicable of Sharia banking products and services to all people that

determines its Acceptance level.

4. The increasing variable rate of return without financial crisis influence that

assumed as Financial benefit.

Only those variables investigated in this research that assumed to be the factors

that will affect Sharia banking selection in Indonesia.

1.7. ORGANIZATION OF THE THESIS

This research uses a systematic approach. In which the first chapter contains the

introduction, explaining the research background, problem identification, and research

benefits. The second chapter will consist of a literature review that will cover the main

variables involved. The third chapter, methodology, will explain the method of

approach for the research, discussing; sampling selection, and data collection methods

to name a few. The forth chapter is about the processing the data from the respondents

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and then interpreting the result of it. Finally, the fifth chapter explains the conclussion,

limitation, and future recommendation.

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 2 CHAPTER 2

3 LITERATURE REVIEW

2.1. INTRODUCTION

This chapter discusses all the variables and explores the relationship between

variables from the past studies. This introduction is followed by review of literature of

dependent and independent variables and research gap.

2.2. DECISION THEORY

Decision theory is the investigation of the reason underlying a persons choices.

Decision theory can be broken into two branches: normative theory, which gives

counsel on the most proficient method to settle on the best choices, given an

arrangement of indeterminate convictions and an arrangement of qualities; and

descriptive theory, which dissects how existing, conceivably irrational person decide

(Steele et al, 2015).

Researchers realized that decision makers actually possess a set of approaches

ranging from painstaking analysis to pure whim, depending on the importance of what

they are utilizing and how much effort the person is willing to put into the decision.

Apart from understanding the procedure of the customer decision-making process,

industries also try to determine what influences in peoples choice affect this

process.

Obviously, decision theory is consistent with the methodology used in this

research. Based on the the quetionaire delivering method as the method used in this

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research, the researecher would like to know when people are given such statement

regarding the situation or perception on such thing, they are examined whether to agree

on the statement or to refuse on it. Moreover, based on the previous researches such as

(Okumus, H. S., & Genc, E. G. (2013), Hao, L. S., How, N. K., & Ravindran, S. (2013),

Sohail, A., Hamzah, M., Ijaz, F., & Azeem, M. (2014)) they used the decisions resulted

from the respondents to be the basis for determining the significant factors affecting

Sharia banking selection.

2.3. LITERATUR REVIEW

2.3.1. SHARIA BANKING SELECTION (DEPENDENT VARIABLE)

According to Cheng Wei, et al (2011), Bank selection criteria refers to the most

favorable bank and customers will choose it as their conducting bank between the wide

variety of bank in the industry of banking and finance. Many researchers investigated

that the factors such as the banks reputation, fast and efficient service, higher rate of

return, and confidentiality of the bank are among the most important variables to

measure financial banking selection.

Additionally, According to Okumus (2013), a system without payment and

acceptance of interest and uncertainties also becomes the consideration in the selection

criteria of the bank. Interest rate delivers unfairly the portion of profits and losses

towards banks and lenders and unacceptably disadvantages the borrower. Due to high

demands on loans either needed by a bank or by a customer, it results high interest rate

in the market. Interest that should be paid from the loan could give significant expense

that many parties try to manipulate it. Sharia bank is the only bank that avoids

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acceptance and payment of interest. In case to generate earnings without payment or

acceptance interest, Sharia banks use equity capital principle (Shofwan, 2013). When a

bank gives loans to a party, it provides shares in the profit instead of charging interest in

the loans. If the business defaults on the loan or does not earn any profits, the bank does

not receive any profit either.

2.3.2. SHARIA FINANCE REGULATION

The term Sharia banking refers to a system of banking or banking activity that

is consistent with Sharia law (Sharia) principles and guided by Sharia economics. The

contemporary movement of Sharia finance is based on the belief that "all forms of

interest are riba and hence prohibited.2 Moreover, Sharia bank principle forbids any

investment in the forbidden business, such business as selling harmful goods (pork,

alcohol, etc.), and also entertainment business related to pornography or gossip. In the

mechanism of acquiring or issuing shares and sukuk (known as bond in the

conventional bank), Sharia bank forbids what is called Gharar and "Maysir". Maysir

means the derivatives contract where the acquisition of certain goods lies to the

uncertain activity that is defined as speculative transaction or Gharar. Both transactions

result in significant risk and therefore are predicted to involve fraudulent and forbidden

behavior.

In the banking sector, both Sharia and conventional baking have the profit

oriented purposes. The distinction is the compliance to Sharia law. Sharia banking

operation is based on Sharia law, which operates on risk-sharing as a component of

2
Khan, What Is Wrong with Sharia Economics?, 2013: p.xv-xvi

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trade instead of risk-transfer as the system the conventional used. The implication of

sharia regulation in the field of banking system is also different in every country.

According to Humayon Dar (2010), the Sharia Republic of Iran applies a more liberal

understanding of the Sharia than Malaysia and Pakistan, whose understanding is more

liberal than Turkey or Arab countries. Mohammed Ariff also found less exacting

understanding of Sharia compliance in Iran where the government had stated "that

government borrowing on the basis of a fixed rate of return from the nationalized

banking system would not amount to interest and would hence be permissible."3 Even

though they are different in the implication, but the principles are the same which avoid

uncertainties, investment in harmful business, and other activities that can harm equal

benefit to huge amount of people as regulated in Sharia law to be implemented in Sharia

banking system. Muhamad A (2012), found the religion as the fundamental

consideration influencing people recognition on choicing Sharia banking. Whereas,

Marimuthu (2010) found in his study in Malaysia, 57.6% respondents were not

aware of basic Sharia banking concepts. Then this research examines those different

investigation results in Indonesia whether Sharia regulation will affect or not the

selection of Sharia banking products and services.

2.3.3. PROFIT LOSS SHARING PRINCIPLE

There are several concepts introduced in the field of profit loss sharing principle that

comply with Sharia law:

Mudarabah (profit loss sharing)

3
Ariff, Mohammed. (1988) (Sharia banking. Asian-Pacific Economic Literature 2 (2)
(September); 46-62

11
 Mudarabah is a kind of contract where a party provides money as the capital while

another party uses the capital to manage the investment in a commercial enterprise or other

activities that can generate earnings (Saleh, 1986). Profits generated are shared between both

parties according to a pre-agreed ratio. If there is a loss, the first partner "rabb-ul-mal" will lose

his capital, and the other party "mudarib" will lose the time and effort invested in the project.

Sharia bank combines funds from the investors and expects the profit and loss of the

shares. To be perceived as Sharia bank, a sharia body screening for the compliance of sharia low

in certain banking has emerged. The investigation is conducted to filter company's operation to

ensure if the source of income is prohibited (for example, if the company is holding too much

debt or if the company is engaged in prohibited lines of business). In addition to actively

manage mutual funds, passive ones exist as well based on such indexes as the Dow Jones Sharia

Market Index and the FTSE Global Sharia Index.

Partnership and joint stock ownership (musharakah).

Musharakah is a merger agreement between the shareholders to finance and

operate a project, profits are shared in proportion to each partners share of capital,

while the losses are being charged to the shareholders in proportion to each partners

share of capital. In musharakah, each party in the partnership involves in the capital

contribution for the business project. The profits from the business are shared fairly in

accordance with profit loss sharing principle.

According to Ahmad supriyadi (2016), there are elements contained in

cooperation of Musyarakah:

1. The presence of two or more parties

2. The presence of certain business based on Sharia law

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 3. Each of the parties enters a venture capital in certain amount

4. The existence of the business objects exchanged within a certain period

5. The existence of sharing of risks and benefits of the business.

Musyarakah finance practice in Sharia banking comprises of Permanent

Musyarakah which is a Musyarakah having an amount of fixed capital untill the end of

Musyarakah then the profits and losses are shared every month and also Mutanaqisah

musyarakah (decreased Musyarakah)which is a Musyarakah whose the amount of

capital gradually decreases because it is purchased by business partner. Parts of the bank

capital switch gradually to the partner and in the end of their contract partner, it will

belong to the partner (Ahmad supriyadi, 2016).

In view of these Musharakah practices in Sharia bank, customers can utilize it to

build up their business. There are high opportunities in developing business, but the way

to do it needs huge amount of money. Therefore, people can benefit musharakah

provided by Sharia bank which has large of capital to build up their business operation.

The synergy between both parties can produce better life in the society to make them

useful for themselves and to prevent poverty causing the occurrence of criminal.

According to economist Tarik M. Yousef, long-term financing with mudarabah

or musharakah (both profit-and-loss-sharing mechanisms) is "far riskier and costlier"

than the long term or medium-term lending of the conventional banks.4 This far riskier

4
Yousef, Tarik M. (2015). "The Murabaha Syndrome in Sharia Finance: Laws, Institutions, and Politics".
In Henry, Clement M.; Wilson, Rodney. THE POLITICS OF SHARIAFINANCE (PDF). Edinburgh: Edinburgh
University Press,.

13
and costlier system influenced intentions to conduct business using profit loss sharing

principle provided by Sharia bank.

2.3.4. ACCEPTANCE LEVEL

The appearance of Sharia bank in Indonesia started in 1992 since the

establishment of Bank Muamalat Indonesia. Comparing to the Sharia bank in Arabic

countries, Sharia banking market and system in Indonesia is still not fully implemented

and developed because Indonesian people are more familiar with conventional banking.

According to Rehman and Shabbir (2010), customers perception would have an effect

on a new products adoption. In adopting a 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). Similarly, to implicate the

findings from these researchers to Sharia banking, it can be summarized as acceptance

of Sharia banking would be a consideration of people based on their perception,

experiences, needs and knowledge.

Moreover, Sharia banking products and services are acceptable to all people.

According to Sol j.,(2007), the expansion of Sharia banking is not only in countries

with majority Muslim populations, but also in other countries where Muslims are a

minority, such as the United Kingdom and Japan. This research concludes that its wide

acceptance and applicable to all people cause intentions to people to accept Sharia

banking as their conducting bank.

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2.3.5. FINANCIAL BENEFIT

Ahmad and Noor (2011) had established that the bank's profitability has a

positive connection with in fact effectiveness level. In alternate words, the more

effective banks have a tendency to be more productive. The reasons are the save money

with higher proficiency will have higher market share and lower non-performing credits

proportion. Ariss (2010), discovered that the benefit part of Sharia banking is not quite

the same as the conventional banking. The reasons why the arrangement of the portfolio

held under the Sharia bank and conventional bank is diverse in light of their procedures.

For Sharia banks, they dispense an incredible huge share of their resources for back or

advances contrasted with conventional banks, inferring an awesome exposure of credit

risk. As an arrival, Sharia banks can adjust the high portfolio risk with the low monetary

risk through the high capitalization levels. This gives an alternative to the clients to pick

possibly one risk that they want to expect.

According to world Sharia banking competitiveness report (2013-14), Sharia

banking assets with commercial banks globally are set to cross US$1,7 billion in 2013,

suggesting an annual growth of 17,6% over last four years. QISMUT also made an

analysis about Sharia banking future in their geographical area. In economy, combined

gross domestic product is set to cross $4,8t by 2008, growing at 6,7% annually and has

average per capital income range between US$5,500 and US$103,000. In banking

reputation, by 2018 Sharia bank will gain reputation in excess of 419 million with 286

million between the age of 15 and 64 years. In market penetration, Sharia banking asset

is still much lower than conventional banking. Otherwise, Sharia banking is pursuing

15
market share at the expense of conventional practices and is also helping replace the

economic crisis.

It can be concluded that Sharia banking is in developing its assets even though

not as well developed as the conventional. Hence, according to world Sharia banking

competitiveness report (2013-14) its existence helps solving out crisis problem in

several countries. According to some researches, this phenomenon is caused by the

distribution of profit fairly. We just take a look to what is happened with Metro

Goldwyn Mayer (MGM). MGM increase inward generation, and additionally keeping

creation going at UA, which incorporated the lucrative James Bond film establishment.

It additionally caused huge measures of obligation to expand creation. The studio

assumed extra obligation as a progression of proprietors assumed responsibility in the

1980s and mid-1990s. In 1986, Ted Turner purchased MGM, however a couple of

months after the fact, sold the organization back to Kerkorian to recover huge

obligation, while keeping the library resources for himself. The arrangement of

arrangements left MGM considerably more intensely paying off debtors. MGM was

purchased by Path Communications (drove by Italian distributing head honcho

Giancarlo Parretti) in 1990, however Parretti lost control of Path and defaulted on the

advances used to buy the studio. The French keeping money aggregate Crdit Lyonnais,

the studio's real leaser, then took control of MGM. Much more profoundly under water,

MGM was obtained by a joint wander between Kerkorian, maker Frank Mancuso, and

Australia's Seven Network in 1996.

16
2.4. RESEARCH GAP

Many researchers have investigated variables that affect selection criterion in the

banking sector. Those researches are conducted under the needs of people in decision

making in where should they invest or acquire money as the sources in their business.

High demands on financial resources in people business and the must to gain high profit

in banking sector create intense competitions in the banking sector.

Abduh, M., et al (2012), found the religion, the basic regulation for Sharia

banking operaton, as the fundamental consideration influencing people recognition on

choicing Sharia banking. Then, It defines that regulation in Sharia banking such as

speculation and interest avoidance will affect Sharia banking selection. Whereas,

Marimuthu (2010) found in his study, 57.6% respondents in Malaysia were not

aware of the Sharia banking regulation. It gives explanation that the regulation in

Sharia banking doesnt affect selection of it.

According to economist Tarik M. Yousef (2015), long-term financing with

mudarabah or musharakah (both profit-and-loss-sharing mechanisms) is "far riskier and

costlier" than the long term or medium-term lending of the conventional banks.

However, Cihak and Hesse (2008) found out that credit risk management will be more

difficult when the portfolio using profit loss sharing principle in Sharia banks grows.

The larger portfolio will cause more complexity for the management and monitoring

process. As a result, the risk of Sharia banks will raise and achieve a consistent with

conventional banks.

17
 According to Sol j.,(2007), the expansion of Sharia banking is not only in

countries with majority Muslim populations, but also in other countries where Muslims

are a minority, such as the United Kingdom and Japan. This research concludes that its

wide accaptence and applicable to all people cause intentions to people to accept Sharia

banking as their conducting bank. Another study regarding Sharia baning selection in

Pakistan was completed by Ahmad et.al. (2011). To explore the relationship between

consumer loyalty and performance of Sharia banks, the researchers gathered

information from 864 respondents out of 72 branches. In light of observational

discoveries, they presumed that there was a powerless relationship between consumer

loyalty and Sharia banks' execution, proposing that bankers ought to present new,

broadened and attractive items to address the issues of their clients originating from the

diverse segments of the society.

The study conducted by Abduh, M., et al (2012), that the service quality

dimensions in Indonesia Sharia banks are divided into five dimensions which are bank-

staff, profitability, bank-physical appearance, accessibility, and costs/charges. However,

the profitability is not significantly influencing customers switching behavior. The

factors considered important in the decision process of switching among the Sharia

banks customers are bank-staff, bank physical appearance, accessibility, and

costs/charges. Using logistic regression, this study confirms that the better the

performance of the Sharia bank services particularly in staff-customer relationship,

costs and charges applied and bank accessibility, the lower the likelihood of the

customers to switch from those banks. This study confirmed that the stability of Sharia

18
finance in banking sector caused by the way the Sharia banking treat the customers in

better treatment.

Conversly, in Malaysia, Abduh, M., et al (2012) concluded that the most

important factors in determining the attitudes of Sharia bank consumers were religion

followed by profitability. Moreover, Bhatti et al. (2010) had discovered that the

inclination of Sharia banking selection influenced by the financial benefit received from

the bank. As people these days is getting ever more elevated instructive level, they will

be more aware of the gainfulness that a bank can offer to them.

Based on the literature reviews above, there are gaps between the researchers

and then, this research would like to investigate those gaps whether or not they are

affecting Sharia banking selection.

19
 4 CHAPTER 3

5 METHODOLOGY

3.1. INTRODUCTION

This chapter will focus on the methodology of conducting this research. The

following research uses a quantitative approach in which the hypotheses will be proven

statistically. The quantitative research methodology aims to data taken from a large

sample of respondents, through statistical analysis. The major sections in this chapter

include the theoretical framework, the hypotheses analysis, operation definition and

variable measurements, research instrument analysis, and the overall sampling plan.

3.2. THEORITICAL FRAMEWORK

Figure 3.1 Research Model

Based on the previous reaserch, this research will investigate should Sharia banking

selection directly affected by Sharia finance regulation, profit loss sharing, acceptance

level, and financial benefit.

3.3. HYPOTHESIS

3.3.1. SHARIA REGULATION TOWARDS SHARIA BANKING SELECTION

Kirkpatrick (2005) investigated that religion, the principle of sharia banking as

mental association, overwhelming enthusiastic relationship to things. Religion is a

cause, guideline, or a system of belief, practices held to with faith. Sharia bank has a

soul and theory of Islam, with respect to interest free exchanges and risk sharing.

20
Metawa and Almossawi (1998) found the religion as the fundamental figure influence

people intention to the choice of Sharia banking. In expansion he discovered religiosity

as sharia regulation principle is positioned most noteworthy variable influencing choice

criteria took after by profitability. In UK, the volume of stores of Muslims in Sharia

financial institution related establishments in basically impacted by the compliance of

Sharia regulation(Omer, 1992).The same finding is upheld by Othmen and Owen

(2001); Walkhid and Afrita (2007): Haron et al (1994), where religion as the regulation

principle is major compelling variable of Sharia banking selection criterion.

Then, it can be concluded that sharia finance regulation will affect significantly to the

selection of Sharia banking. Thus, for the first hypothesis of this research is:

H1: Sharia finance regulation will affect Sharia banking selection.

3.3.2. PROFIT LOSS SHARING PRINCIPLE TOWARDS SHARIA BANKING

SELECTION

Rammal and Zurbruegg (2007), in their review has the intention was to learn the

awareness of, and interest for the Sharia products in view of profit loss sharing principle

in Australia among the practitioners Muslims. In this review, the respondents

investigated that they were keen on purchasing Sharia banking products. In any case,

the respondents additionally investigated that they were missing of learning of how

those items work. Besides, in light of the discoveries of the investigation the researchers

noticed that profit loss sharing products and services at Islamic banks was the

precondition for Australian Muslims to save money with those banks in Australia.

21
 Based in the literature review above, this research examined that the profit loss

sharing princple influences sharia banking selection. Then, the second hypothesis of this

research is:

H2: Profit loss sharing principle will affect Sharia banking selection.

3.3.3. ACCEPTANCE LEVEL TOWARDS SHARIA BANKING SELECTION

According to Sol j.,(2007), the expansion of Sharia banking is not only in

countries with majority Muslim populations, but also in other countries where Muslims

are a minority, such as the United Kingdom and Japan. This research concludes that its

wide accaptence and applicable to all people cause intentions to people to accept Sharia

banking as their conducting bank. Then, the third hypothesis of this research is:

H3: Acceptance level criteria will affect Sharia banking selection.

3.3.4. FINANCIAL BENEFIT TOWARDS SHARIA BANKING SELECTION

In Bahrain, Metawa and Almossawi (1998) concluded that the most important

factors in determining the attitudes of Sharia bank consumers were religion followed by

profitability. Moreover, Bhatti et al. (2010) had discovered that the inclination of Sharia

banking selection influenced by the productivity of the bank. As people these days is

getting ever more elevated instructive level, they will be more aware of the gainfulness

that a bank can offer to them. Then, the fourth hypothesis of this research is:

H4: Financial benefit will affect Sharia banking selection.

22
3.4. OPERATION DEFINITION AND VARIABLE MEASUREMENT

3.4.1. INDEPENDENT VARIABLES

Independent variable is the variable that has influence to the dependent variable

in either positive or negative way. The independent variables of this research are:

1. Sharia finance regulation. Sharia finance regulation obligates to conduct

every transaction based on Sharia rules and regulation which avoids interest

gahar and maysir as explained in theprevious chapter.

2. Profit loss sharing principle. In order to avoid interest in the transactioin.

Sharia bank adopts profit loss sharing principle that delivers the profit

equally both to the investee and the investor.

3. Acceptance level criteria. Sharia banking products and services are

accepted and useful both for Muslims and non-Muslims, doesnt limit its

scope only to arabic countries, but also to the all countries in this world.

4. Financial benefit. As people these days is getting ever more elevated

instructive level, they will be more aware of the gainfulness that a bank can

offer to them. Then how significant is the sharia banks can generate earnings

and maintain risk will affect peoples selection on their products and

services.

3.4.2. DEPENDENT VARIABLE

Dependent variable is the primary variable in this research. Through the

analysis of the dependent variable, it is possible to find answers or solutions to the

problem. For this research, the dependent variable is Sharia Banking Selection. Sharia

23
Banking Selection Criteria as a variable itself is also tested using a set of questionnaires

similar to that of the dependent variables.

3.5. RESEARCH INSTRUMENT

3.5.1. QUESTIONNAIRE DESIGN

The instrument of research will be a questionnaire. Where the questionnaire

will be based off of the Mayankgupta (2011), Imam Buchari et al. (2014), and Alsedak

H, Gait (2015), and Le Shihao et al. (2013), and will consist of generic questions

regarding the five variables: Sharia financial regulation, profit loss sharing principle,

acceptance level, financial benefit, and Sharia banking selection. The questionnaire uses

the LIKERT Scale as an approach to measure each variable. The scale ranges from 1

(highly unlikely/disagree) to 5 (highly likely/agree). Distribution of questionnaire will

be done both manually and electronically. The electronic websites will be distributed

through online questionnaire sites, where respondents are only clicks away from

finishing the questionnaire.

3.5.2. VALIDITY TESTING

The study conducted using questionnaire method should be tested fo its validity.

Validity test is useful to determine the validity of the review and questionnaire

conformity the researchers used to review the data obtained from the respondents.

Validity refers to how much proof and hypothesis bolster the understandings of test

scores involved by proposed employments of tests. The instrument (or questionnaire) is

deemed valid when the statements in the questionnaire are able to measure and reveal

24
the data from the identified variable correctly. Validity testing uses the Bivariate

Pearson Correlation, with the following criterion:

- If r count r table (2-side test with significance of 0.05) the instrument

has significant correlation to the total score, and is deemed valid.

- If r count < r table (2-side test with significance of 0.05) the instrument

does not have significant correlation to the total score, and is deemed

invalid.

3.5.3. RELIABILITY TESTING

Reliability Testing is conducted, to measure the consistency of the data results from the

instrument. The reliability testing will result in a cronchbach alpha that should result at

a value higher than 0.6 to be deemed reliable, according to Ghazali (2006).

3.5.4. PILOT TESTING

The pilot testing method is a small-scale trial, in which a smaller sample of

respondents take the questionnaire to test whether or not the questionnaire consists of

any flaws that may potentially produce errors in the later stages of data processing.

Since the initial questionnaire, adopted from several previous research, was in English.

The pilot test will be conducted in both English and Indonesian to see which one would

be more efficient to be used for this study. The first phase of the test would be to

administer the questionnaire to a mere percentage of the population to gain any input,

corrections, and/or suggestions from respondents on the mechanics of the questionnaire

itself. The second phase would repeat the first phase, this time with an improved

25
questionnaire (based on first phase critics), and distribute to different respondents from

the first phase.

3.6. SAMPLING PLAN

3.6.1. POPULATION

The population of the respondents in this study are students in universities,

workers in the public and private companies, and businessman who conduct their

business who all of them are located in JABODETABEK area.

3.6.2. SAMPLE SIZE AND SAMPLING TECHNIQUE

In this research, the questionnaires were delivered to 115 respondents who are students,

employees, and businessmen located in JABODETABEK. Distribution of questionnaire

will be done both manually and electronically. The electronic websites will be

distributed through online questionnaire sites, where respondents are only clicks away

from finishing the questionnaire.

3.7. DATA COLLECTION METHOD

In collecting the data from the respondents, this research uses questionnaire

method. The questions are using the 1-5 Likert scale to obtain data that has interval

characteristics.

3.8. DATA ANALYSIS METHOD

Data analysis method is an approach to translate the information prepared to

answer the questions shows up in the examination. This research uses SPSS software in

processing the data.

26
3.8.1. ANALYTICAL TECHNIQUE
This research uses multiple regression analysis as its regression technique.

Regression analysis is a method or technique used to explore the relationship between

one variable with other variables expressed in mathematical form in a functional

relationship. In another sense, regression analysis wants to find the relationship of two

or more variables by which one variable depends on other variables. The equation for

this research would be:

S = 0 + 1.SFR + 2.PLS + 3.AC + 4.FB + e

Description :

S = Sharia banking selection criteria

0 = Constanta

1, 2, 3, 4 = Coefficient of independent variables

SFR = Sharia finance regulation

PLS = Ptofit loss sharing

FB = Financial benefit

e = Error term

The postive value of independent variables coefficient will positively impact

towards the dependent variable. Coversly, the negative value of independent variables

will negatively impact towards the dependent variable.

27
 6 CHAPTER 4

7 RESULT AND DISCUSSION

4.1. DESCRIPTIVE ANALYSIS

4.1.1. RESPONDENTS PROFILE

After collecting the questionnaires from the respondents. The actual number of

them are 115, but because of several revaluation the manual validity of the credible

questionnaire, there were found six questionnaires which are not feasible to be used in

this research.

Table 4.1. Socio-Demographic Background of the Respondents

Based on the table, the total number of the questionnaires are 109 which consist

of 41 per cent male and 59 per cent female respondents. Most of respondents are from

the age group of 18-28 years old accounted for 56% and followed by respondents from

the age group of 25-34 years old and 35-44 years old both accounted for 35 and 9 per

cent. Percentage of respondents occupying as student is 47 percent, employee is 37 per

cent, and businessman is 16 per cent. The respondents whose religion are Muslims

accounted for 64% and the rests are those from non Muslims

4.1.2. DESCRIPTIVE ANALYSIS

Descriptive statistics are used to describe the basic features of the data in a

study. They provide simple summaries about the sample and the measures. Together

28
with simple graphics analysis, they form the basis of virtually every quantitative

analysis of data.

Table 4.2. Descriptive Analysis

From the table, it can be concluded that there are four independent variables

used in this research which are Sharia finance regulation, profit loss sharing, acceptance

level, and financial benefit, and the independent variable is Sharia banking selection.

There are 109 data were processed for each of variables obtained from the

questionnaires.

4.2. STRUCTURAL ANALYSIS

4.2.1. VALIDITY TEST

To determine whether a questionnaire is valid or not. It is important to find the r

count that would be compared to the r table. If the r count > r table, with level

significance of 5%, then, the questionnaire is valid.

Table 4.3. Validity test

Based on the data, using a sample to test the questionnaire of 25 respondents

with a significance of 5%, from here it was obtained the value of df = n-2, df = 25-2 =

23. Too read the table r, it can be seen the table r product moment at the 5%

significance, it was obtained r table = 0.3961. It can be concluded that all the questiones

in the questionnaire are above 0,3961 which means they are valid to be used in the

research.

29
4.2.2. RELIABILITY TEST

Reliability test is examined to measure whether the research instrument is

consistence and stable to minimize the bias. Cronbach Alpha can be used as the

measurement of it. The minimum result to determine as if it is reliable is 0,6.

Table 4.4. Reliability test

The same as the r table in the validity test resulted 0,3961, it determines all the

questions are above the r table amount and are reliable to be used in the research.

4.3. INFERENTIAL ANALYSIS TEST

4.3.1. NORMALITY TEST USING KOLMOGOROV-SMIRNOV

Normality test is one part of the data analysis requirements test or classical

assumption test, it means that before conducting the true analysis, the data research

Should be tested its normality of distribution. Basis for a decision in the normality test

are if the value is significantly greater than 0.05 then the data is normally distributed.

Conversely, if the value is significantly greater than 0.05 then the data is not normally

distributed.

Table 4.5 One-Sample Kolmogorov-Smirnov Test

Based on the output above, noted that the significance value of 0.410 is greater

than 0.05, so it can be concluded that the data tested was normally distributed.

30
4.3.2. NORMALITY TEST USING HISTOGRAM GRAPH AND P-PLOT

Basically, normality of a data can be recognized or detected by looking at the

distribution of the data (points) on the diagonal axis of the Histogram graph of its

residual.

1. Data is recognized to be normally distributed, if the data is spread around the

diagonal line and follow the direction of the diagonal line or histogram chart.

2. Conversely, the data is not normally distributed if it is spread away from the

direction of the line or not follow diagonal or histogram graph.

Graph 4.1. Histogram Graph and P-Plot Graph

Based on the output display of the chart above, it can be seen that the histogram

graph provides distribution patterns deviated to right which means that it is the normal

distribution of data. Furthermore, on a P-PLOT visible dots followed and approached

the diagonal line so it can be inferred that the regression model assumptions met its

normality.

4.3.3. HETEROSCEDASTICITY TEST

Heteroskedasticity is one part of the classical assumptions in the regression

model. To detect the presence or absence of heteroskedasticity in a data, it can be done

in several ways such as using Glejser Test, Park Test, White Test, and

Heteroscedasticity test to see a graph of the scatterplot in SPSS output. Basis for a

decision in the heteroscedasticity test with scatterplot graph is as follows:

31
 1. If there is a specific pattern on a scatterplot graph SPSS, as the points that form a

regular pattern (wavy, spread later narrowed), it can be concluded that there has

been heteroskedasticity.

2. Conversely, if there is no clear pattern, as well as point to point spreads, the

indications are not going heteroskedasticity.

Graph 4.2. Heteroscedasticity Test

Based on Scatterplot output above, shown that those points spread and do not

form a specific clear pattern. It is concluded that there was no trouble in

heteroskedasticity. Heteroskedasticity test by looking at the Scatterplot chart has a

significant drawback, because the number of observations is too greatly affect the

outcome plotting. Therefore, to confirm whether there are heteroskedasticity problems

or not, it is necessary to test heteroscedasticity test with glejser.

4.3.4. MULTICOLLINEARITY TEST

Multicollinearity test aims to test whether in the regression model found a

correlation between independent variables. A good regression model should not happen

correlation between independent variables (not happening multicollinearity). If the

independent variables are correlated, then the variable is not orthogonal variable which

means the independent variable correlation values between the members of the

independent variable equal to zero.

Every statistical tests performed there must be a basis for decision-making.

Basis for a decision on multicollinearity test can be done in two ways:

Seeing the value of tolerance:

32
 1. If the tolerance value is more than 0.10 it means that not happen

multicollinearity against data in the test.

2. If the tolerance value is less than 0.10 it means going multicollinearities against

data in the test.

See VIF (Variance Inflation Factor)

1. If the value is smaller than 10.00 VIF will mean not happen multicollinearity

against data in the test.

2. If the VIF values greater than 10.00 multicollinearity it means going against the

data in the test.

Table 4.6. Multicollinearity Test

Based on the output above, the tolerance values of Regulation (X1), PL (X2),

Acceptance (X3), and Benefit (X4) variables sequentially are 0,431, 0,416, 0,381, 0,291

higher than 0,10. Meanwhile, VIF value of Regulation (X1), PL (X2), Acceptance (X3),

and Benefit (X4) variables sequentially are 2,323, 2,402, 2,622, 3,435 lower than 10,00.

It can be concluded that multicollinearity did not happen.

4.3.5. AUTOCORRELATION TEST

Autocorrelation test is used to determine the presence or absence of classical

assumption deviation. Autocorrelation is the correlation between the residuals on one

observation by other observations in the regression model. Prerequisites that must be

met is the absence of autocorrelation in the regression model. Frequently used test

method is the test of Durbin-Watson (DW test) under the following conditions:

1. If d is smaller than dL or greater than (4-dL) then hypothesis zero is rejected,

which means there is autocorrelation.

33
 2. If d is located between dU and (4-dU), the null hypothesis is accepted, which

means no autocorrelation.

3. If d lies between dL and dU or between (4-dU) and (4-dL), it does not produce

any definitive conclusions.

Du and dl value can be obtained from statistical tables Durbin Watson which

rely on a number of observations and many variables explained.

Table 4.7. Autocorrelation Test

From the results obtained, output value over the DW resulting from the

regression model is 2.003. While the table DW by 0.05 and the number of data (n) =

109, seta k = 4 (k is the number of independent variables) obtained a value dU

amounted to 1,808. The value of DW is 2,003 greater than the margin of dU (1,808) and

less then (4-dU) 4-1,808 = 2,192, it can be concluded that the autocorrelation did not

happen.

4.4. HYPOTHESIS TEST

4.4.1. MULTIPLE REGRESSION

Regression analysis is a method or technique used to explore the relationship

between one variable with other variables expressed in mathematical form in a

functional relationship. In another sense, regression analysis wants to find the

relationship of two or more variables by which one variable depends on other variables.

In general, it also can be stated that if you want to know the effect of the variable X to

the variable Y, then use simple regression analysis, and if you want to know the effect

34
of two or more variable X to variable Y, then used multiple regression analysis

(multiple).

Table 4.10. T-Test

From the tabel, the equation of this model of multiple regression is:

S = 1,213 - 0,071 Regulation + 0,253 PL + 0,367 Acceptance + 0,514 Benefit

4.4.2. DETERMINATION ANALYSIS (R2)

The coefficient on R2 test is examined to know how much independent variables

influence the dependent variable.

Table 4.8. R2 Test

The result of R square in this research is 0,789 0r 79%, it means that all the four

independent variables influence to the dependent variable. While, the remaining 21%

could be investigated by other variables outside this research.

4.4.3. SIMULTANEOUS TEST (F-TEST)

There are two ways used to determine whether a significant influence exists or

not in F test. First way, we can compare the value of F calculation with F table. While

the second way, we can compare the significance value or the probability value of SPSS

calculation results whether the significance value is greater than or less than the

statistical standard that is 0.05.

Basis for decision making in the F test based on the value F calculation and F table:

1. If the value of F count> F table, then independent variables simultaneously

affect the dependent variable.

35
 2. Conversely, if the value of F arithmetic <F table then simultaneously

independent variable has no effect on the dependent variable.

Basis for decision making in the F test based on the significant results from SPSS

output:

1. If the significant value <0.05, then the independent variables together have

significant effect on the dependent variable.

2. If the significant value> 0.05, then the independent variables together have no

significant effect on the dependent variable

Table 4.9. F-Test

Based on the SPSS output above, obtained F value calculation with amount

97,019. For the next step is comparing it with the F table. The formula is (k; n-k) where

k is the total number of independent variables and n is the total number of respondents.

Based on the output above, k= 4 (independent variables in total) and n= 109. The next

step, these amounts will be included to the formula, then it will become (4; 109-4) = (4;

105), this amount will be the basis for knowing F value table in the F table of statistic.

The table shows that the value of F table is 2,46. Because the F calculation value

is 97,019 greater then F table 2,46, it can be concluded that all the independent variables

have influence to the dependent variable.

Similarly, based on the basis for decision making in the F test based on the

significant results from SPSS output, it shows that the significant value is 0,000.

36
Clearly, the value 0,000 < 0,05 defines that all the independent variables simultaneously

having influence to the dependent variable.

4.4.4. PARTIAL TEST (T-TEST)

Partial t test in multiple regression analysis aims to determine whether the

independent variables partially have a significant effect on the dependent variable.

However, if the thing to be known is the influence of independent variables along with

the dependent variable, then it is called F test.

Based on the value of t count and t table:

1. If t count> t table, then the independent variables affect the dependent variable.

2. If t <t table, then the independent variables have no effect on the dependent

variable.

Based on the significant value of the output of SPSS

1. If the value of Sig. <0.05, then the independent variables have a significant

effect on the dependent variable.

2. If the value of Sig. > 0.05, then the independent variables have no significant

effect on the dependent variable.

Table 4.10. T-Test

By seeing the output above, here must be four hypotheses proposed in this t test:

1. H1: Islamic finance regulation has significant influence on Islamic banking

selection.

37
 2. H2: Profit loss sharing principle has significant influence on Islamic banking

selection.

3. H3: Acceptance level criteria has significant influence on Islamic banking

selection.

4. H4: Financial benefit has significant influence on Islamic banking selection.

Based on the coefficient output, noted that the value of the all the independent

variables are 0,071, 0,253, 0,367, 0,514 and all of them worth positive +, so it can be

seen that those independent variables have positive influence on the dependent

variables.

To determine its influence is significant or not, the authors tested the regression

coefficients of the all independent variables.

Here is the formula:

T table = (/4; n-k-1)

= (0,0125; 104)

Then, t table is 2,368

Based on analytical regression result, obtained:

1. H1: Islamic finance regulation has significant influence on Islamic banking

selection.

T count value amounted to 0.087 <t table 1.985 and significance value (Sig.)

0.421> 0.05. So, it can be concluded that H1 is rejected.

38
 2. H2: Profit loss sharing principle has significant influence on Islamic banking

selection.

T count value amounted to 2.184 >t table 2.368 and significance value (Sig.)

0.031< 0.05. So, it can be concluded that H1 is accepted.

3. H3: Acceptance level criteria has significant influence on Islamic banking

selection.

T count value amounted to 3.892 >t table 2.368 and significance value (Sig.)

0.000< 0.05. So, it can be concluded that H3 is accepted.

4. H4: Financial benefit has significant influence on Islamic banking selection.

T count value amounted to 5.982 <t table 2.368 and significance value (Sig.)

0.000< 0.05. So, it can be concluded that H4 is accepted.

4.5 INTERPRETATION RESULT

The main objective of this research is to investigate whether or not the Sharia

finance regulation, profit loss sharing principle, acceptance level, and financial benefit

will significantly influence to the Sharia banking selection. The result of the hypothesis

test is shown in the table below:

Code Hypothesis Result

H1 Islamic finance regulation has significant Rejected

influence on Islamic banking selection.

H2 Profit loss sharing principle has significant Accepted

influence on Islamic banking selection.

39
H3 Acceptance level criteria has significant Accepted

influence on Islamic banking selection.

H4 Financial benefit has significant influence Accepted

on Islamic banking selection.

4.5.1. INFULENCE OF SHARIA FINANCE REGULATION TOWARDS SHARIA

BANKING SELECTION

From the statistic result using SPSS software, Sharia finance regulation has no

significant influence to the Sharia banking selection, moreover its coefficient regression

value is positive which means that based on the respondents prespectives, the more

Sharia finance regulation applied the more insignificant it influence to the Sharia

banking selection. This is the same as what had been investigated by Marimuthu (2010)

and than re-investigated by Hao, L. S et al (2013) who found in their study conducted in

Malaysia that 57.6% respondents in Malaysia were not aware of the Sharia banking

regulation. The respondents are only aware on the profitability of the bank whether it is

in compliance with the Sharia regultaion or not. The psychological reason behind is as

what has been stated by Humayon Dar (2010), that indonesia applies a more liberal

understanding of the Sharia than Arabic country.

4.5.2. INFULENCE OF PROFIT LOSS SHARNG PRINCIPLE TOWARDS SHARIA

BANKING SELECTION

The SPSS result indicates that Profit loss sharing principle has significant

influence on Islamic banking selection. The avoidance in the involvment of both

delivering and acquiring interest charge is believed as the way to maintain the

40
sustainable of the bank. Therefore, Sharia banking use the profit loss sharing principle

as the altirnavie. Moreover, Yousef (2015) investigated that profit loss sharing

principle is less riskier and costlier rather than interest charge. Thus, it must be the

cause of the significance influence to the Sharia banking selection in Indonesia.

Some cases regarding the banking failures in the collection of their money in the

debtors accounts and other cases related to the bankruptcy caused by interest charge

made people in Indonesia avoid to invest or borrow money in the investment institusion

which implement interest charge. Thus, it might be the logic for the result of this

research that explain the significant influence of profit loss sharing on Sharia banking

selection in Indonesia.

4.5.3. INFULENCE OF ACCEPTANCE LEVEL TOWARDS SHARIA BANKING

SELECTION

Acceptance level has significant influence on Islamic banking selection. Sharia

banking products and services are recognized, suitable, and accepted by the all range of

people. Its widest and well known products and services must be the contribution to the

significant influence of the selection on it.

When the quality of some products or services is acknowledge by people but it

is not applicable to them because of some reasons, they will assume it as the unfamiliar

thing and then those products or services will be impossible to survive its existency.

Whereas According to Sol j.,(2007), the expansion of Sharia banking that is not only

in countries with majority Muslim populations, but also in other countries where

Muslims are a minority, such as the United Kingdom and Japan, and thus it widest

41
applicable to all people contribute to the increasing of its asset and moreover is

indicated as the factor that influence to the increasing numbre of Sharia banking.

4.5.4. INFULENCE OF FINANCIAL BENEFIT TOWARDS SHARIA

BANKING SELECTION
Financial benefit has significant influence on Islamic banking selection. As

people these days is getting even more elevated instructive level, they will be more

aware of the gainfulness that a bank can offer to them. Thus, its well known portfolios

regarding the abality to maintain development without financial crisis influence cause

the significant influence to the Sharia banking selection. This is the same as what the

researcher found before, Abduh M, et al (2012) investigated in Malaysia that financial

benefit is the consideration for people to choose Sharia banking.

42
 CHAPTER 5

CONCLUSION

5.1. SUMMARY OF THESIS

This study aimed to detect the Sharia bank selection criteria in Indonesia. On the

basis of analysis in chapter four, Islamic finance regulation has no significant influence

on Islamic banking selection. It means that in Indonesia, people will select Sharia banks

as their conducting banking without concerning to the Sharia compliance or regulation

applied. moreover its coefficient regression value is positive which means that based on

the respondents prespectives, the more Sharia finance regulation applied the more

insignificant it influence to the Sharia banking selection.

Profit loss sharing principle has significant influence on Islamic banking

selection Indonesia. To avoid risk, people in Indonesia tend to select Sharia banks

which only provide investment based on loss profit sharing principle rather than interest

charge.

Sharia banks have products and services that are acceptable to all people without

limited to race and religion. This acceptable products and services will attracts peoples

concern in the banking selection criterion. Because when the quality of some products

or services is acknowledge by people but it is not applicable to them because of some

reasons, they will assume it as the unfamiliar thing and then those products or services

will be impossible to survive its existency. Whereas According to Sol j.,(2007), the

expansion of Sharia banking that is not only in countries with majority Muslim

populations, but also in other countries where Muslims are a minority, such as the

43
United Kingdom and Japan, and thus it widest applicable to all people contribute to the

increasing of its asset and moreover is indicated as the factor that influence to the

increasing numbre of Sharia banking.

Islamic bank can adjust the high portfolio risk with the low monetary risk

through the high capitalization levels. The lower risk held by a bank, the lower tendency

they will face to bankruptcy. This research also has investigated that Financial benefit

has significant influence on Sharia banking selection in Indonesia. It explained that the

respondents believe that by avoiding the bank that involves in the risky investment will

mitigate the risk on their investment. And thus, will give benefit to the stability of the

variable of return in the investment

5.2. LIMITATION AND FUTURE RECOMMENDATION

While this study has revealed some interesting results about the selection criteria

in relation to Sharia Banking, there are some limitations that might become the

suggestions for the future research, they are:

1. The scope of the study is respondents in JABODETABEK which covers

only few areas of Indonesia.

2. The occupation of the respondents in this research are only limited to those

who understand commonly the Sharia banking principles and thus, assumed

that basically can not represent enaugh evidence related to the Sharia

banking selection criteria.

44
 3. Since this study only focusing on the general acceptance level regarding the

applicable of Sharia products and services to different religions, this study

did not make a comparative analysis of the various religions of Indonesia.

4. This study only examines four variables causing intention to the people to

selec Sharia banking in Indonesia.

Based on the limitations above, the author of this research suggests for future

reseach:

1. In obtaining respondents, future research should attempt to cover the widest

regions of Indonesia.

2. In preparing the questins in the questionnaire, future research is suggested to

ensure that the respondents will understand those questions, therefore the

respondents occupations are not limited to those who can understand

commonly the Sharia banking principles.

3. To make comparative analysis between the Muslim and non-Muslim

banking customers, and customers of different religions in Indonesia, so that

more precise results on the selection criteria of Sharia banking can be

identified.

4. The authors of this research suggest to add variables such as quality service,

transparency, and other variables that could give influence to the selection

of Sharia banking products and services.

45
5.3. RECOMMENDATION

This research investigated from the literature reviews and phenomenon

regarding Sharia bankings growth that Sharia banking is one of the safest institutions

for the investment. Then, the author of this research recommends to people to cleverly

select their conducting bank in where they invest, deposit, and other transactions

occured in the bank.

Moreover, the author of this research recommends to the institutions operating

in the field of banking industry to understand what the peoples need to satisfy

themselves upon products and services especially in accordance with sharia principle,

and eventually, to the students in universities and practitioners in the field of Sharia

economic in training and informing them in the area of customers need upon banking

systems in line with Sharia principles.

46
 REFERENCES:

Abduh, M., & Omar, M. A. (2012). IslamicBank Selection Criteria In Malaysia; an

AHP Approach . Business Intelligence Journal, Vol.5 No.2.
Abduh, M., Kassim, S., & Dahari, Z. (2012). Customer Satisfaction and Switching
Behaviour in Islamic Banking: Evidence from Indonesia. School of Doctoral
Studies (European Union) Journal.
Almanaseer, M. (2014). The Impact of the Financial Crisis on the Islamci Banks
Profitability-Evidence from GCC. International Journal of Financial Research ,
Vol. 5, No. 3.
Awan, A. G., & Azhar, M. (2014). Consumer Behaviour Towards Islamic Banking in
Pakistan. European Journal of Accounting Auditing and Finance Research , 42-
65.
Aziz, F., Anjam, M., Fahim, S. M., & Saleem, F. (2013). Mudarabah in Islamic
Finance: A Critical Analysis of Interpretation & Implication. International
Journal of Asian Social Science.
Dar, H. A. (2010). Islamic banking in Iran and Sudan. Business Asia, 27.
Hallaq, W. (2013). The impossible state: Islam, politics, and modernity's moral
predicament. New York: Columbia University Press.
Hao, L. S., How, N. K., & Ravindran, S. (2013). Adoption on Islamic banks: A study on
Malaysia University Students. Universiti Tunku Abdul Rahman.
Johnson, K. (2013). The Role of Islamic Banking in Economic Growth. CMC Senior
Theses.
Kania, D. (2015, September 13). Nasabah Bank Syariah 18,75 Persen dari Total
Konvensional. Retrieved from Beritasatu Web Site: http://www.beritasatu.com
Mauro, F., Caristi, P., & Couderc, S. (2013). Islamic FInance in Europe. Occasional
Paper Series No 146.
Okumus, H. S. (2015). Customers' Bank Selection, Awareness and Satisfaction in
Islamic Banking: Evidence from Turkey. International Journal of Business and
Social Science, Vol.6, No.4.
Okumus, H. S., & Genc, E. G. (2013). Interest Free Banking in Turkey: A Study if
Customer Satisfaction and Bank Selection. European Scientific Journal vol 9,
No.16.
Sana. (2016). Problems and Potential of Islamic Banking in India. International Journal
of Accounting and Financial Management Research (IJAFMR), 9-20.

47
Sohail, A., Hamzah, M., Ijaz, F., & Azeem, M. (2014). Perception of Individual
Consumers toward Islamic Banking Products and Services in Pakistan. Journal
of Poverty, Investment, and Development, Vol. 5.
Steel, K., & Stefansson, H. O. (2015). "Decision Theory. The Stanford Encyclopedia of
Philosophy.
Supriyadi, A. (2016). The prospect of Musyarakah Finance in Islamic Bank For Facing
Asean Economic Community (AEC). ADDIN, Volume 10, Number 2.
Tara, N., Irshad, M., Khan, M. R., & Yamin, M. (2014). Factors Influencing Adoption
of Islamic Banking: A Study from Pakistan. Journal of Public Administration
and Governance, Vol. 4, No. 3.

48
 APPENDICS

Questionnaire:

Dear Sir/ Madam

My name is Rudi Azwan. I am a final year student from President University

majoring in Accounting. Currently I am working on my thesis entitled "A study of

Sharia banking selection in Indonesia". Thus, I will be sincerely grateful if you assist to

fill this questionnaire to expedite my research process.

Please follow the instructions and fill this questionnaire with the most honest

answer based on your opinion and experience. All answers are correct and confidential

for educational purpose only.

Thank you in advance.

1. Respondents Identity

a. Gender : ( ) Male; ( ) Female

b. Age :

c. Occupation:

2. Instruction

Please indicate your level or agreement/ disagreement with each statement

below on a scale 1 - 5, weather you:

1=Sangat tidak setuju

2=Tidak setuju

3=Netral

4=Setuju

49
 5=Sanga setuju

Sharia finance regulation

1. I understand the key concept of Sharia guided Islamic banking and finance.
Saya memahami keuangan perbankan syariah yang dipandu oleh konsep dasar
Islam.
2. Islamic bank operates according to sharia law.
Perbankan syariah beroperasi sesuai dengan hukum Islam
3. Financial matters and religion are inseparable.
Konsep keuangan dan agama tidak dapat dipisahkan
4. A bank can operate successfully without payment and acceptance of interest
which at present is the only type of Sharia banking available.
Perbankan dapat beroperasi dengan sukses tanpa pembayaran dan penerimaan
bunga
5. Islamic bank prohibits major uncertainty in all form transactions.
Perbankan syariah melarang ketidakpastian pada setiap transaksi
6. Both Islamic and conventional bank must adopt profit maximization principle in
order to survive.
Perbankan syariah dan konvensional harus menerapkan prinsip memaksimalkan
keuntungan jika ingin bertahan.
Profit loss sharing
1. Profit loss sharing method allows you to invest or borrow on a fair basis.
Metode bagi hasi untung/ rugi memungkinkan anda untuk berinvestasi atau
meminjam secara adil
2. Islamic bank may invest according to profit loss sharing only.
Perbankan syariah hanya berinvestasi sesuai dengan metode bagi hasil untung/
rugi
3. Islamic bank lends money according to profit loss sharing method.
Perbankan syariah hanya meminjamkan uang sesuai dengan metode bagi hasi
untung/ rugi
4. Returns on Islamic banking are based on profit sharing basis instead of interest.
Sistem pengembalian dalam perbankan syariah hanya berdasarkan dengan
metode bagi hasil bukan dengan bunga
Acceptance level
1. Islamic banking products and services are acceptable among all Muslims and
non-Muslims.
Produk dan layanan perbankan syariah dapat diterima oleh semua muslim dan
non-muslim
2. Personal background and religion are not my consideration when choosing the
Islamic banking products and services.

50
 Latar belakang pribadi dan agama tidak menjadi pertimbangan saya ketika
memilih produk dan layanan perbankan syariah
3. The concept of interest free and profit loss sharing encourage me to choose
Islamic banking products and services.
Konsep tanpa bunga dan bagi hasil untung/ rugi mendorong saya untuk memilih
produk dan layanan perbankan syariah
4. Structure and processing transparency makes me choose Islamic banking
products and services.
Struktur dan operational secara transparan membuat saya memilih produk dan
layanan perbankan syariah
5. Engaging in Islamic baking products and services would be my consideration in
the near future.
Terlibat dalam produk dan layanan perbankan syariah akan menjadi
pertimbangan saya dalam waktu dekat
Financial benefit
1. The potential of Islamic banking products in corporate sector is EXCELLENT.
Potensi perbankan syariah dalam sector korporasi adalah EXCELLENT
2. Investments are more secure in Islamic banking.
Berinvestasi lebih aman dalam perbankan syariah
3. Deposits with Islamic banks would realise a higher variable rate of return.
Deposit dalam perbankan syariah akan menghasilkan tingkat variable
pngembalian yang lebih tinggi
4. Parties in Islamic banking cannot predetermine a guaranteed profit.
Pihak-pihak dalam perbankan syariah tidak dapat memperkirkan (spekulasi)
jaminan keuntungan
5. Islamic banks only invest in businesses that are not prohibited by Islam or halal
business.
Perbankan syariah hanya berinvestasi dalam bisnis yang tidak dilarang oleh
Islam atau hanya berinvestasi dalam bisnis yang halal.
6. Islamic banks goal is not only limited to maximization of shareholders wealth
but also include enhancement of standard of living and welfare society.
Tujuan dari perbankan syariah tidak hanya terbatas pada memaksimalkan
keuntungan pemegang saham, tetapi juga mencakup peningkatan standar
kesejahteraan masyarakat
7. Islamic bank established a system to capture a risk ahead of time.
Perbankan syariah membuat system untuk mengetahui resiko diwaktu
mendatang
8. Structure of Islamic banks strengthens monitoring and control over risks.
Struktur dalam perbankan syariah memperkuat monitor dan kontrol atas resiko
Selection of Islamic banking
1. Islamic Banks are well known locally and globally.

51
 Perbankan syariah dikenal baik secara lokal dan global
2. Islamic banking can be seen as an alternative to the conventional system of
banking.
Perbankan syariah dapat dilihat sebagai alternative dari perbankan konvensional
3. I will support fully operational Islamic bank approved by Sharia board.
Saya akan mendukung secara penuh perbankan syariah yang disetujui oleh
dewan syariah
4. Islamic bank provides lease financing.
Perbankan syariah menyediakan pembiayaan sewa guna usaha tanpa bunga.
5. Islamic bank provides trade financing methods.
Perbankan syariah menyediakan metoe pembiayaan perdagangan tanpa bunga
6. Islamic bank provides industrial financing.
Perbankan syariah menyediakan pembiayaan industry tanpa bunga

52
 Table 4.1. Socio-Demographic Background of the Respondents

Frequency %
Age
18-24 years old 61 56
25-34 years old 38 35
35-44 years old 10 9
Gender
Male 45 41
Female 64 59
Occupation
Student 51 47
Employee 41 37
Businessman 17 16
Religion
Muslim 70 64
Non-Muslim 39 36

53
 Table 4.2. Descriptive Statistics

Descriptive Statistics

Minimu Maxim Std. Varian

N Range m um Mean Deviation ce Skewness Kurtosis

Statisti Statisti Statisti Statisti Statisti Std. Statisti Statisti Std. Statisti Std.
c c c c c Error Statistic c c Error c Error

Regulation 109 20 10 30 22.83 .411 4.289 18.398 -.678 .231 .734 .459

PL 109 16 4 20 15.68 .318 3.316 10.998 -.786 .231 .779 .459

Acceptanc
109 20 5 25 19.72 .407 4.251 18.072 -.572 .231 .122 .459
e

Benefit 109 28 7 35 27.56 .512 5.341 28.527 -1.104 .231 2.749 .459

Selection 109 27 8 35 28.21 .526 5.494 30.187 -.902 .231 1.143 .459

Valid N
109
(listwise)

Table 4.3. Validity test

rxy rtable
X1
Q1 0,799 0,3961 VALID
Q2 0,545 0,3961 VALID
Q3 0,759 0,3961 VALID
Q4 0,834 0,3961 VALID
Q5 0,810 0,3961 VALID
Q6 0,513 0,3961 VALID
X2
Q1 0,742 0,3961 VALID
Q2 0,689 0,3961 VALID
Q3 0,770 0,3961 VALID
Q4 0,810 0,3961 VALID
X3
Q1 0,735 0,3961 VALID
Q2 0,656 0,3961 VALID
Q3 0,760 0,3961 VALID
Q4 0,679 0,3961 VALID
Q5 0,588 0,3961 VALID

54
 X4
Q1 0,769 0,3961 VALID
Q2 0,741 0,3961 VALID
Q3 0,706 0,3961 VALID
Q4 0,719 0,3961 VALID
Q5 0,718 0,3961 VALID
Q6 0,721 0,3961 VALID
Q7 0,766 0,3961 VALID
Y
Q1 0,733 0,3961 VALID
Q2 0,548 0,3961 VALID
Q3 0,440 0,3961 VALID
Q4 0,805 0,3961 VALID
Q5 0,818 0,3961 VALID
Q6 0,866 0,3961 VALID
Q7 0,885 0,3961 VALID

Table 4.4. Reliability test

Variables Cronbach Alpha Result
Sharia finance regulation 0,810 Reliable
Profit loss sharing 0,746 Reliable
Acceptance level 0,697 Reliable
Profitability 0,853 Reliable
Sharia banking selection 0,842 Reliable

Table 4.5. One-Sample Kolmogorov-Smirnov Test

One-Sample Kolmogorov-Smirnov Test

Unstandardized Residual

N 109

Normal Parametersa Mean .0000000

Std. Deviation 2.52584828

Most Extreme Differences Absolute .085

Positive .085

Negative -.057

Kolmogorov-Smirnov Z .888

Asymp. Sig. (2-tailed) .410

a. Test distribution is Normal

55
 Table 4.6. Multicolleniarity Test

Coefficientsa

Unstandardized Standardized Collinearity

Coefficients Coefficients Statistics

Model B Std. Error Beta t Sig. Tolerance VIF

1 (Constant) 1.213 1.475 .822 .413

Regulation .071 .088 .055 .807 .421 .431 2.323

PL .253 .116 .153 2.184 .031 .416 2.402

Acceptanc
.367 .094 .284 3.892 .000 .381 2.622
e

Benefit .514 .086 .500 5.982 .000 .291 3.435

a. Dependent Variable: Selection

Table 4.7. Autocorrelation Test

Model Summaryb

Adjusted R Std. Error of the

Model R R Square Square Estimate Durbin-Watson

1 .888a .789 .781 2.574 2.003

a. Predictors: (Constant), Benefit, Regulation, PL, Acceptance

b. Dependent Variable: Selection

Table 4.8. R2 Test

Model Summary

Adjusted R Std. Error of the

Model R R Square Square Estimate

1 .888a .789 .781 2.574

a. Predictors: (Constant), Benefit, Regulation, PL, Acceptance

56
 Table 4.9. F-Test
ANOVAb

Model Sum of Squares Df Mean Square F Sig.

1 Regression 2571.117 4 642.779 97.019 .000a

Residual 689.030 104 6.625

Total 3260.147 108

a. Predictors: (Constant), Benefit, Regulation, PL, Acceptance

b. Dependent Variable: Sellection

Table 4.10. T-Test

Coefficientsa

Standardized
Unstandardized Coefficients Coefficients

Model B Std. Error Beta T Sig.

1 (Constant) 1.213 1.475 .822 .413

Regulation .071 .088 .055 .807 .421

PL .253 .116 .153 2.184 .031

Acceptance .367 .094 .284 3.892 .000

Benefit .514 .086 .500 5.982 .000

a. Dependent Variable: Selection

57
Graph 1.1. Trend in global Islamic banking assets

Source: Islamic Finance in Europe Research, published by Occasional Paper Series No

146.
Graph 4.1. Histogram Graph and P-Plot Graph

58
Graph 4.2. Heteroscedasticity Test

59
 Figure 3.1 Research Model

Sharia Finance
regulation

Profit loss
sharing Sharia banking
selection
Acceptance
level

Financial
benefit

60
61