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IJHMA
1,3
Choice criteria for Islamic
home financing
Empirical investigation among Malaysian
256 bank customers
Hanudin Amin
Labuan School of International Business and Finance,
Universiti Malaysia Sabah (UMS), Labuan, Malaysia
Abstract
Purpose – The purpose of this paper is to investigate the choice criteria for Islamic home financing
in Malaysian Islamic banks. Most importantly, this study considers establishing a specific rank of
choice criteria for Islamic home financing. Moreover, these choice criteria will also be ranked
according to the selected demographic elements such as gender, marital status and age range.
Design/methodology/approach – This study uses a quantitative study similar to what was
employed by previous researchers. The study presents primary data collected by self-administered
questionnaires involving a sample of 150 Malaysian bank customers in Labuan, Malaysia. Of these,
141 questionnaires were returned with a response rate equivalent to 94 per cent. The Islamic home
financing choice criteria as perceived by the Malaysian bank customers are analysed using
frequencies, independent samples t-test and ANOVA.
Findings – The results suggest that ‘‘Shariah principle’’, ‘‘lower monthly payment’’, ‘‘transparency
practice’’, ‘‘interest-free practice’’ and ‘‘100 per cent financing’’ are the first five decision criteria
considered as being very important. The least preferred criteria, among others, are
‘‘recommendation’’, ‘‘longer financing period’’, ‘‘product range’’ and ‘‘branch location’’. Results also
suggested that a small number of significant differences are apparent in the importance of choice
criteria with respect to gender, marital status and age range.
Research limitations/implications – The study contains three limitations. The first limitation
was based on the sample area for the study which is confined to Labuan, Malaysia. Second, this study
restricted the use of factor analysis since the data did not allow for aggregation. Third, this study was
also unable to perform ANOVA for religion differences as the sample consisted largely of Muslims.
Practical implications – The results are primarily beneficial to academics and practitioners in
Malaysia by offering an insight into choice criteria for Islamic home financing. This study provides
new results about different kinds of customer types and their preferences with regards to Islamic
home financing selection. As such, Islamic bank managers can learn and plan to offer attractive
schemes for the Islamic home financing market that meet Malaysian bank customers’ needs. For the
researcher, this study contributes to existing body of knowledge by providing an investigation of
choice criteria in the Islamic home financing. Indeed, this study is considered an ‘‘eye-opener’’ for
Islamic home financing choice criteria which has limited previous studies.
Originality/value –This study introduces the choice criteria for Islamic financing among Malaysian
bank customers. The study offers an insight into Islamic home financing choice criteria in Malaysia
which has limited previously been investigated.
Keywords Financial management, Personal finance, Islam, Banks, Loans, Malaysia
Paper type Research paper

International Journal of Housing
Markets and Analysis
Vol. 1 No. 3, 2008
pp. 256-274
# Emerald Group Publishing Limited
1753-8270
DOI 10.1108/17538270810895105
Introduction
This study considers Islamic banking products in Malaysia. The year 1983 saw
Malaysia’s entry into the Islamic banking industry, and over the past 20 years, it has
succeeded in developing a vibrant Islamic financial market. Islamic banks in Malaysia
offer a wide range of products, for instance from basic Shariah-compliant retail
products to insurance, mortgages, investment instruments and large-scale project
financing. On the large scale of Islamic banking activities, Malaysia offers various Choice criteria
financial innovations that attract investors to cultivate their investment in Malaysia.
The Islamic financial innovations such as Real Estate Investment Trusts and sukuk
for Islamic
(Islamic bond) have enhanced the Islamic banking activities in Malaysia, and the home financing
investors can diversify their investment portfolios (Rosly, 2007). Now Hong Kong, Japan
and New Zealand to name a few have an interest in sukuk (Aziz, 2008; McMillen, 2007).
In this case, Malaysia can provide expertise to facilitate the development of sukuk in the
said countries. On the small scale of Islamic banking activities, Malaysian bank
257
customers are offered a various number of Shariah-compliant retail products. Indeed,
few people can afford to purchase a house in Malaysia on a cash basis, as normally
they have to go to a bank for a financing facility. In view of a financing facility, Islamic
home financing offers financial assistance to Malaysian bank customers when
purchasing their dream house. This product definitely provides an option as an
alternative to interest-based ones for a Malaysian bank customer to choose the best
financing package for their dream home. As such, the issue of how a Malaysian chooses
Islamic home financing will be addressed in this study. More specifically, this study is
attempts to introduce choice criteria for Islamic home financing.
By definition, mortgage loans or home loans are secured by real property and
provide a schedule of payments of interest and repayments of the principal to a bank
(Tse, 1997). They are generally considered amongst the simpliest products available in
the financial services arena (Devlin, 2002a, b). On the contrary, Islamic home financing
or Islamic mortgage financing is a Shariah-based home financing, where elements of
interest rate and uncertainty are prohibited (Iqbal and Mirakhor, 2007; Khir et al., 2007;
Haron, 2005; Haron and Shanmugam, 2001; Bank Islam Malaysia Berhad, 1994). Unlike
conventional mortgage loans, Islamic mortgage financing have the emphasis on flat
rate or profit rate instead of interest rate (Ebrahim and Joo, 2001; Rosly, 1999). As such,
the monthly payment will be unchanged from the beginning to the settlement. Previous
studies have focused on choice criteria for banking selection in general (Almossawi,
2001; Kennington et al., 1996; Elliot et al., 1996; Reeves and Bednar, 1996; Boyd et al.,
1994). Furthermore, an earlier investigation into mortgage or home loan financing was
found in Lymperopoulos et al. (2006), Devlin and Ennew (2005), Devlin (2002a, b) and
Ford and Jones (2001). As far as Islamic home financing is concerned, none of these
studies explored choice criteria from Islamic perspective. Indeed, the choice criteria
proposed by these studies largely are for a conventional mortgage provider rather than
an Islamic mortgage provider.
There have been few studies performed in the area of choice criteria for Islamic
home financing in Malaysia. In Malaysia, Dusuki and Abdullah (2007) and Haron et al.
(1994) examined banking selection criteria in general, without specifying a particular
product such as an Islamic home financing. Similarly, choice criteria for Islamic home
financing was also largely overlooked in previous studies in other countries
(Lymperopoulos et al., 2006; Devlin and Ennew, 2005; Devlin, 2002a, b; Ford and Jones,
2001), although they have focused their studies on the mortgage or home loans market
as discussed previously. Of course to ensure this study is able to contribute to Islamic
home financing, there is a need to develop research objectives. For this purpose, the
current study is guided by two main objectives. First, the study investigates a ranking
of the various choice criteria for the selection of an Islamic mortgage provider.
Secondly, this study investigates ranking of the various choice criteria for Islamic home
financing with respect to demographic elements such as gender and marital status.
Likewise, testing for differences between choice criteria of the demographic variables
IJHMA are similar to those utilised by Devlin (2002a, b) and Boyd et al. (1994). Generally, this
1,3 study tends to provide an insight that is useful to better reflect the choice criteria for
Islamic home financing in Malaysian Islamic banks. Particularly, the results of the
study are able to add to the scarce knowledge presently available on Islamic home
financing in Malaysian Islamic banks. Investigating Islamic home financing enables
practitioners and academics to gain a deeper insight into the various choice criteria
that accurately reflects an Islamic point of view.
258 The following section considers previous studies relevant to banking selection,
while section 3 considers the details for the methodology necessary to attain the study
objectives. Most importantly, section 4 analyses the findings generated from the survey
work. In the section 5, a further discussion of results and study implications are
highlighted in order to gain more understanding on choice criteria for Islamic banks,
followed by a conclusion.

Islamic banking products: an overview

Bank Islam Malaysia Berhad (BIMB) was introduced in 1983 in order to provide
Shariah compliant financial products and services to Malaysians, regardless of their
religion. In Malaysia, the first Islamic bank was introduced in 1983. At the same
time, BIMB was the player with a monopoly in the country to offer Shariah
compliant products and services. The conventional banks were not allowed to offer
Shariah compliant products and services due to two main reasons. First, the
government decided to give BIMB a lead period of 10 years before allowing another
Islamic bank to be established. This was to enable the bank to fully focus on the
development of Islamic banking. Secondly, it allows BIMB to create as many
products as possible to provide Malaysian, particularly Muslims, with adequate
Islamic banking products and services.
In early 1990s, the government introduced a concept of an ‘‘Islamic window’’
which allows the existing conventional banks to offer Islamic banking products and
services to customers. The concept of ‘‘Islamic window’’ started in March 1993 when
the Central Bank of Malaysia or Bank Negara Malaysia (BNM) introduced the
‘‘Interest-Free Banking Scheme’’. The foreign financial institutions also participated
in this scheme namely the Standard Chartered, OCBC, HSBC, Citibank, to name a
few. As at end of 2004 the Islamic banking system in Malaysia was represented by
three main Islamic banks namely BIMB, Bank Muamalat Malaysia Berhad (BMMB)
and RHB Islamic Bank whereas Public Bank and Maybank still used an Islamic
window rather than an Islamic subsidiary.
Malaysia is a country that introduced a comprehensive dual banking system. As
such, more financial alternatives are offered to the public and at the same time there are
more options for Malaysian bank customers to choose from. In line with the previous
study by Haron et al. (1994), the current study presents the following principles that
widely used by Islamic banks. These principles are originally extracted from Haron
et al. (1994) with these adjustments:
. Mudarabah: this is basically an agreement between a lender and an
entrepreneur, in which the lender agrees to finance the entrepreneur’s project on
a profit-sharing basis according to a predetermined ratio agreed in the
negotiation between the two parties. The lender will bear any loss incurred;
. Musyarakah: This is a partnership for a specific business activity with the aim of
making a profit, whereby the lender not only provides the capital but also may
 also participate in the management. As in the case of Mudarabah all parties Choice criteria
agree, through negotiation, on the ratio of distribution of profits generated from for Islamic
the business activity, which need not coincide with the ratio of participation in
the financing of the activity. However, in the event of a loss, all parties bear the home financing
loss in proportion to their shares in the financing;
. Murabahah: this is basically the sale of goods at a price covering the purchase
price plus the profit margin agreed on by both parties concerned, which 259
transforms a traditional lending activity into a sale and purchase agreement
under which the lender buys the goods wanted by the borrower for resale to the
borrower at a higher price agreed on by both parties;
. Bai Bithaman Ajil (BBA): this is a variant of the concept of Murabahah, whereby
the borrower is allowed to defer settlement of the payment for the goods
purchased within the period, and in the manner, determined and agreed on by
both parties;
. Al-Ijarah: this is the Shariah0 s concept of leasing finance whereby the bank
purchases the asset required by the customer and then leases the asset to the
customer for a given period, the lease rental and other terms and conditions
having been agreed on by both parties;
. Qard Hasan: this is a ‘‘benevolent loan’’ which obliges a borrower to repay the
lender the principal sum borrowed on maturity of the loan. However, the
borrower has the discretion to reward the lender for his/her loan by paying any
sum over and above the amount of the principal; and
. Wadiah: this is an agreement to deposit an asset, excluding immovable fixed
assets, in the custody of another party who is not the owner, or any such asset
deposited with a non-owner for custody.
As seen above which was also discussed by Haron et al. (1994), several Islamic banking
products have been developed. The following are some examples:
. Mudarabah financing: this financing involves three parties namely depositor,
Islamic bank and entrepreneur. This is popularly known as ‘‘two tier
Mudarabah’’;
. Saving deposit: this product uses al-Wadiah principle. In Malaysia, al-Wadiah
Yad Dhamanah is the correct principle used to govern saving deposit. Under this
principle, Islamic banks are able to utilise customers’ funds for investment and
consumption purposes. In this product, Islamic banks provide hibah or gift to the
customers in the form of currency. However, it is not guaranteed; and
. Islamic home financing: this product uses BBA. Currently, BNM allows Islamic
home financing that runs on the basis of Musharakah Mutanqisah (MM)
principle. Also Kuwait finance house has introduced this new product for Islamic
home financing. The procedures for BBA and MM are similar, although some
differences do remain. In more detail, an individual applies for BBA is entitled to
100 per cent financing. On the other hand, an individual applies for MMA is
entitled up to 90 per cent with the rest borne by the customer as a partner.
This study will concentrate more on Islamic home financing as the subject matter.
IJHMA Literature review
Islamic banking business philosophy
1,3 An Islamic bank is defined as an institution that offers interest-free products and
services where Shariah will curb the operation of the bank through Shariah Advisory
Council or SAC. In general, Islamic banks still perform similar functions to that of
conventional bank, although some differences do remain (Dusuki and Abdullah, 2007;
Iqbal and Mirakhor, 2007). According to Dar and Presley (2000), an Islamic bank is an
260 intermediary and trustee of other people’s money with a key difference, in that it shares
profit and loss with its depositors. Additionally, the Islamic banking operation must
abide by Islamic law commonly known as Shariah. Therefore, a more concise meaning
of an Islamic bank is as follows: it is initially a banking business with theories behind
its products, as well as the ability to put such theories into practice as far as their
products are concerned. The products and operations of the business must follow the
permissible rules as proposed through Ijtihad, which is in line with the Shariah
Islamiyyah. Islamic banks have to operate under strict religious guidelines, which are
based on different principles than those of conventional banks (Haron, 2005; Ghani,
1999).
These principles are:
. prohibition of interest in all forms of transactions – Islamic prohibits interest due
to the fact to combat the concentration of wealth in the hand of few. It is
important to do so, as it is able to promote social harmony (Khir et al., 2007;
Ahmad, 2000);
. undertaking business and trade activities on the basis of fair and legitimate
(halal) profits-Islamic allows trade activities but not to interest taking activities.
This has been documented by many works that deal with fairness in Islamic
banking activities (Khir et al., 2007; Mirakhor, 2000; Warde, 2000);
. payment of the poor due (zakat) from their operations (Lewis and Algaoud, 2001),
zakat is the most important instrument for the redistribution of wealth. This is a
compulsory levy and it constitutes one of the five basic tenets of Islam. Many
Islamic banks in Malaysia become collectors for zakat such as BIMB, BMMB,
Public Bank and Maybank Islamic Berhad to name a few;
. prohibition of exploitative monopoly of resources or economy activities; and
. cooperation in the development of society, by investing only in businesses and
trades, which are not prohibited by Islam.
In line with the above discussion, it can be concluded that the Islamic banking system
should conform with Shariah Islamiyyah. As a guideline (noted above), Islam allows its
followers to accept any fundamentals from conventional banks if they contain an
element of nature (which is sacred or white) and do not contradict Shariah Islamiyyah.
For example, deposit taking products can be used as the terminology in products to be
used for Islamic banking, and using the rate of return (hibah) instead of interest rate or
interest charges associated with conventional banks.
It is argued here that Islamic banking activities or operations must be halal.
Evidently, as noted by Dusuki and Abdullah (2007) and Iqbal and Mirakhor (2007), any
non-halal activities will not be consistent with Islamic teachings. As such, Islamic
home financing is halal financing. There are no financial interest elements which can be
found in Islamic home financing. In Malaysia, the Islamic principle used to govern
Islamic home financing is BBA which is run on the basis of deferred payment practice.
The Malaysian customers will first receive a house, and in terms of payment they Choice criteria
need to pay the installment from the beginning of the contract until the settlement for Islamic
(Khir et al., 2007; Rosly, 1999). Overall, there is a need to investigate why Malaysian
customers are choosing Islamic home financing. As such, the elements of the home financing
Shariah principle including the interest-free practice, the transparency practice and a
longer financing period are tested in the current study in line with Islamic religion
teachings. 261
Choice criteria for home loans
There has been little attention given to studying choice criteria for Islamic home
financing. A review of the relevant literature revealed that very few researchers tried to
examine the choice criteria for a mortgage provider in the home loans market. Studies
by Lymperopoulos et al. (2006), Devlin and Ennew (2005), Devlin (2002a, b) and Ford
and Jones (2001) examined the choice criteria used for a mortgage provider selection.
Evidently, these researchers still overlooked the choice criteria for Islamic home
financing. On the other hand, many studies have examined the choice criteria for a
banking selection in general (Dusuki and Abdullah, 2007; Devlin and Gerrard, 2004;
Lee and Marlowe, 2003; Ahmad and Haron, 2002; Karjaluoto, 2002; Almossawi, 2001;
Elliot et al., 1996; Kennington et al., 1996; Reeves and Bednar, 1996; Boyd et al., 1994).
The following discussion highlights some of the key findings of these studies.
Lymperopoulos et al. (2006) investigated the choice criteria in bank selection for
mortgage loans in Greece. Regarding choice criteria, they found that the bank service
quality is the most important element that customers consider in order to select their
mortgage providers and establish a long-term relationship with them. Other important
criteria for bank selection for home loans are product attributes, access and
communication. Devlin (2002a, b) examined the choice criteria in bank selection for
home loans in UK. Furthermore, Devlin (2002a, b) also examined the choice criteria by
investigating several demographic factors namely gender, social class, household
income and financial maturity. Devlin (2002a, b) found that professional advice is the
most common choice criteria. Additionally, interest rates, loan availability, and
previous relationship with the bank are also considered to be important factors in
selecting a mortgage provider. On the other hand, service quality was found to be the
least important choice criterion. This outcome is somewhat contradict to what found
by Lymperopoulos et al. (2006) that claimed service quality is important for a selection
of a mortgage provider.
Another study by Devlin and Ennew (2005) investigated the choice criteria for a
range of financial services including home loans. They found that professional advice
is the most important factor for all customers, but is more important for young
financial services consumers. The interest rate charged is also more important as a
mortgage choice criterion for younger consumers. Furthermore, choosing a mortgage
with an institution at which a previous mortgage or another account is held is more
important for other financial services consumers. Moreover, Ford and Jones (2001)
investigated ‘‘choosing a mortgage’’ in London. They found that the choice criterion for
home loans is mainly influenced by customers’ previous experience with the provider.
In addition, the advice of intermediaries also affected an individual with a selection of a
mortgage provider. Ford and Jones (2001) also found that reputation is the important
criteria in selecting a mortgage provider.
IJHMA Choice criteria for banking
The investigation of choice criteria for Islamic banking by Erol and El-Bdour (1989)
1,3 discovered that the most important criteria considered by customers in patronising
Islamic banks are the provision of fast and efficient services, the bank’s reputation and
image and confidentiality. This finding by Erol and El-Bdour (1989) was supported by
Naser et al. (1999) who studied Jordanian customers’ satisfaction which mainly focused
on the bank’s name, image, confidentiality and reputation. Indeed, provision of fast and
262 efficient services are always regarded as high-quality services by bank customers who
value time and expect the transaction to be completed as quickly as possible.
Therefore, it is argued here that in order to survive, Islamic banks should not rely on
religious factor alone since other factors as stated earlier are also important.
Interestingly, this research identified three studies in Malaysia on banking selection
by Dusuki and Abdullah (2007), Ahmad and Haron (2002) and Haron et al. (1994). The
recent work by Dusuki and Abdullah (2007) investigated the banking selection in
Peninsular of Malaysia or West-Malaysia and concentrated its sample to Kelantan,
Penang, Kuala Lumpur and Johore. Two States of Malaysia, Sabah and Sarawak,
remained scarce on banking selection criteria studies. In more detail, they found that
financial reputation and quality service are the key factors affecting bank customers’
decision to select banks. Furthermore, they also found that other factors such as good
social responsibility practices, convenience and product price are important factors in
explaining why customers choose banks. Dusuki and Abdullah (2007) also argued that
Islamic bankers can no longer depend on the marketing strategy of attracting pious
and religious customers who might only concern about Islamicity of financial products.
Other factors beyond religious factor are required to attract bank customers for
businesses.
This is consistent with findings from Haron et al. (1994) who based in their study in
Alor Setar, Sungai Petani and Kangar and found fast and efficient services, speed of
transactions, friendliness of bank personnel and confidentiality of bank are important
factors affecting banking selection. The results also indicated that Islamic banks do not
need to rely on the religious factor as a strategy in attracting customers, but they
should focus more on provision of quality and efficient services. The lesson from these
studies is that both religious and non-religious factors are important in bank selection.
Contrary to this, the results from Dusuki and Abdullah (2007) and Haron et al. (1994)
were found to be inconsistent to what Ahmad and Haron (2002) found, where religious
factors were the chief factors affecting banking selection. However, this criterion has
been treated as a minor contributor for banking selection. Additionally, cost/benefit,
service delivery, reputation and location are also factors for banking selection.
Furthermore, Devlin and Gerrard (2004) presented an analysis of trends in the
relative importance of bank choice criteria. In particular, the researchers provided
findings from 7,033 consumers and showed that the influence of recommendations is
now the most important choice criterion. Other factors, which have also increased in
importance, are the offering of incentives, the wide product range, the interest rate paid
and the relevant fees and charges. Locational factors have decreased in importance,
while certain criteria such as the bank’s image and reputation and expectations about
level of service have retained their degree of importance in consumers’ minds. Gerrard
and Cunningham (1997) replicated Haron et al.’s (1994) study in Singapore and found
that Muslims, in contrast to non-Muslims, had a different attitude towards Islamic
banking. Similar to Malaysians the Singaporeans, both Muslims and non-Muslims, did
not differ in their bank selection criteria. However, some statistically significant
differences were noted. For example, Muslims placed relatively lower importance on Choice criteria
the need to be paid a high rate of interest on their savings. Also Muslims were for Islamic
influenced by third parties in a greater way than non-Muslims, such third parties being
relatives, friends and the media. home financing
A study by Metawa and Almossawi (1998) pointed out that provision of Shariah
compliant products and services were highly regarded by majority customers while
selecting banks. Other factors were the reward given by banks, family influence,
convenient location and customers’ education and knowledge. This study does not
263
seem to uphold the findings by Haron et al. (1994) and Gerrard and Cunningham (2001)
where the important lessons are twofold. Haron et al. (1994) did a study in Malaysia on
the dual banking framework where multicultural societies are found and about 60
per cent of the population are Muslims. Gerrard and Cunningham (1997) undertook a
study in Singapore where non-Muslims are 70 per cent and over. Conversely, most of
the respondents employed by Metawa and Almossawi (1998) study were Muslim
equating to 90 per cent and over. These factors have contributed to different results.
Kennington et al. (1996) investigated banking selection in Poland and found that
reputation, price and service are the key factors affecting bank customers’ decision to
select banks. Furthermore, they also found that the bank’s image, stability and
continuity, the service-charge policy and the competitiveness of rates, the quick, polite
and friendly service are the most important factors in explaining how customers
choose banks. As far as Poland is concerned, time, efficiency and pleasant treatment
are critical for bank customers in judging banks to patronise. It is then important for a
banking institution to stress these choice criteria in attracting customers.
Boyd et al. (1994) found the five most important factors affecting bank customers’
selection for bank are:
(1) Bank reputation.
(2) Interest on savings accounts.
(3) Interest charged on loans.
(4) Quick service.
(5) Location in the city.
Here, reputation is the chief choice criterion in explaining a selection for a bank, which
is consistent to what Kennington et al. (1996) found and concluded that the reputation
of the bank is the factor. Concerning the element of demographics, they found that the
relative importance of these criteria varied between groups of respondents with
different demographic characteristics, with the exception of reputation, which was
selected by all household categories except divorced people.
A study of bank selection in Bahrain by Almossawi (2001) found that reputation,
parking space near the bank, friendliness of bank personnel and the availability of
automated teller machines are the four most important factors affecting bank
customers’ selection of a bank. There is a need, therefore, that such factors should be
considered seriously by the commercial banks in designing their marketing strategies.
Obviously, reputation is the chief choice criteria as similar to Kennington et al. (1996)
and Boyd et al. (1994). The findings by the Almossawi (2001) study can possibly be
generalised to other Gulf countries which share many common factors (for example,
economy, culture, language, religion, standard of living, geography and political
system). The important lesson from the Almossawi (2001) study is that it can extend its
IJHMA applicability by replicating similar studies in other Gulf countries such UAE and
Oman.
1,3 Elliot et al. (1996) investigated the banking behaviour among customers in USA and
found that price, speed and access are particularly important. Most customers place a
higher value on lower prices and higher transaction speeds than they do on
personalised service. On the other hand, Reeves and Bednar (1996) found that customer
service is more important than price and that customers may use additional criteria
264 beyond price, speed and access to choose between banks, according to where they live
(i.e. large cities or in the countryside) and other market conditions. Particularly, both of
these studies have produced different results with regard to choice criteria mainly in
pricing, or the costs borne by customers using bank services and products.
Focusing on a specific banking product, Karjaluoto (2002) tried to identify selection
criteria for a mode of bill payment in Finland. The study results showed that primary
factors affecting the choice of a mode of bill payment are speed, security and
trustworthiness, easy-to-use, and price of the payment. On the contrary, Lee and
Marlowe (2003) tried to identify how consumers decide on which financial institution to
choose for a checking account. The research results showed that convenience (in terms
of location of office, payroll deduction and direct deposit), low fees, minimum balances
requirements, personal services, and range of services are the main decision-making
criteria, which though may vary according to customers’ socioeconomic and
demographic profile. These two studies have also provided a guide to draw more
attention to study Islamic products. As such, Islamic home financing study is interesting
to investigate as one of the Islamic banking areas with limited previous research.

Methodology
Sampling
The present study samples are based on 150 bank customers of the banks, targeted at
the Islamic home financing market segment. The respondents of this study are users of
Islamic home financing that using Islamic banks’ home financing product. Since this
study employs users of Islamic home financing, therefore, it has an effect on the
generalisation of findings for the users of home financing population in Labuan. With
the sample of 141, this study is still able to contribute significantly to the existing body
of knowledge, at least at an exploratory level. In more detail, the term ‘‘users’’ refer to
potential groups of people who have experience in using the Islamic home financing
facility. In this study, only two Islamic banks were involved, notably BIMB and BMMB.
There are two reasons of selecting these banks; First, these banks operate on the basis
of pure Islamic banking operation. Secondly, these banks are concentrating their
business on Islamic banking activities only, where the Shariah compliant financial
products are offered more specifically, such as Islamic home financing, and there are no
elements of a window. In order to invite participation in this study, the respondents are
asked if they would fill in the questionnaire. Once they had agreed, the researchers then
handed over the questionnaire to be answered and the questionnaire was collected once
completed where the study utilised convenience sampling. Due to the time and
financial resources constraints, the respondents were selected from among the Islamic
banking institutions’ customers in Labuan. Labuan is situated in East Malaysia, a
small Island that is also known as Labuan International Offshore Financial Centre. In
more detail, Labuan Island is located off the northwest coast of Borneo, north of Brunei
Bay and faces the South China Sea. Indeed, the sample from Labuan is different
compared with what Dusuki and Abdullah (2007) employed, since people in Labuan do
not share many common factors compared to other cities in West Malaysia (i.e. Kuala Choice criteria
Lumpur, Johor Bahru). This is due to the culture, standard of living, geography and the for Islamic
housing project types. As such, in Labuan more lower cost housing is developed
compared with a higher cost of housing due to the cost of living. The actual survey for home financing
data collection in November 2007 provided about 200 questionnaires provided, with
only 150 distributed due to financial and time constraints. Of these, 141 questionnaires
were filled completely without errors with a response rate equivalent to 94 per cent. 265
The demographic profile of the respondents is outlined in Table I.
With regard to gender, male respondents contributed largely to the sample (64.5
per cent) with the remainder being female respondents (35.5 per cent). The sample was
not well distributed since majority of the respondents were Muslim with 93.6 per cent,
followed by Christian with 3.5 per cent, Hindu with 2.1 per cent and Buddha with 0.7
per cent. This has not allowed the research to perform ANOVA for the religion factor.
Finally, about 54.6 per cent of respondents were married and about 45.4 per cent
respondents were unmarried. In terms of the age range, a large portion of the sample
were aged between 21 and 30 years, being the active individuals participated in the
employment. Interestingly, the study also reported that 12.8 per cent of the respondents
owned their house as depicted in Table I, which is due to family financial support and
attractive financing packages (i.e. payment holiday) offered by Islamic banks. These
demographic factors have motivated the researcher to investigate the choice criteria
with respect to gender, religion, marital status and age range. However, only three
demographic elements are employed for further analysis notably gender, marital status
and age range, while the religion factor is not included.

Measurement
The questionnaire for this study was constructed into two sections. The first section
consisted of demographic elements namely gender, religion, marital status and age
range. The second section consisted of the selection criteria. The measures employed in
this study are extracted from the previous studies. However, some selection criteria are
self-created in order to better reflect Islamic home financing. The following are the
selection criteria employed:
. lower service charges (Haron et al., 1994);
. lower monthly payment (Karjaluoto, 2002; Elliot et al., 1996);

No. Items Frequency Percentile (%)

1. Gender Male 91 64.5

Female 50 35.5
2. Religion Islam 132 93.6
Buddha 1 0.7
Hindu 3 2.1
Christian 5 3.5
3. Marital status Single 64 45.4
Married 77 54.6
4. Age range Less than 20 18 12.8
21-30 71 50.4
31-40 41 29.1 Table I.
41-50 11 7.8 Profile of respondents
IJHMA . Discount or rebate (Devlin, 2002a, b);
1,3 . 100 per cent financing (self-created);
. fast approval (self-created);
. longer financing period (self-created);
. product range (Devlin and Gerrard, 2004; Lee and Marlowe, 2003; Devlin,
266 2002a, b);
. fast and efficient service (Haron et al., 1994);
. professional advice (Devlin and Ennew, 2005; Devlin, 2002a, b);
. recommendation (Almossawi, 2001; Ford and Jones, 2001);
. branch location (Lee and Marlowe, 2003; Boyd et al., 1994);
. Shariah principle (self-created);
. transparency practice (self-created); and
. interest-free practice (self-created).
In measuring the above choice criteria, a five-point Likert-type scale ranking from
‘‘1’’ ¼ sstrongly disagree to ‘‘5’’ ¼ strongly agree was used. This approach is similar to
the one employed by Lymperopoulos et al. (2006), Devlin (2002a, b) and Haron et al.
(1994). The questionnaire was written in English and Malay. Back translation was used
for the translation of the language in the questionnaire (Green and White, 1976 as cited
in de Run and Ting, 2006). Prior to the actual survey five questionnaires were provided
in order to facilitate a pilot study to be conducted among bank customers of Islamic
banks. The reason for this test was to identify any problems associated with the study
instrument as well as other issues. All respondents to the test commented that the
questions were easily understood with an average completion time of 5 min, being
similar to what practiced by de Run and Ting (2006).

Data analysis
SPSS version 11.0 was employed to analyse the raw data in this study. A number of
statistical analyses were performed, notably frequency analysis which uses to extract
the characteristics of respondents and then followed by mean analysis, used to rank
the choice criteria. For the investigation to examine differences between choice criteria
and demographic factors, two analyses were used, notably independent samples t-test
and ANOVA. The former was employed in order to compare the means for two groups
of cases and used to test whether the difference in means of one variable in two groups
of respondents is significantly different from zero. It is used to test gender and marital
status with respect to choice criteria for Islamic home financing. Unlike independent
samples t-test, ANOVA is used to compare the means for more than two groups of
cases such as age range. Like any other studies, factor analysis is applied in order to
identify the factors that facilitate individual choice for a mortgage provider. However,
in this study factor analysis is not common due to the structure of data. There is zero
communality in the data and the result of factor analysis would be 14 factors identical
to the original scale items. Factor analysis of choice criteria scales is not common in
this type of study, and for similar reasons Cronbach’s alpha is also not tested.
Results Choice criteria
This part considers mean analysis, independent samples t-test and ANOVA. The for Islamic
former is used to analyse choice criteria in general whilst the latter is used to analyse
choice criteria with respect to gender and marital status. ANOVA is employed in order home financing
to analyse choice criteria with regard to age range. As presented in Table II, most of the
respondents believed that ‘‘Shariah principle’’ is the main criteria that influenced them
to choose Islamic home financing, followed by ‘‘lower monthly payment’’. The concept 267
of ‘‘lower monthly payment’’ is the price paid by customers to settle Islamic home
financing facilities. In the real world, customers practically chose an Islamic mortgage
provider on the basis of ‘‘lower monthly payment’’. Criteria number 3 is ‘‘transparency
practice’’, criteria number 4 is ‘‘interest-free practice’’ and criteria number 5 is ‘‘100 per
cent financing’’.

Mean and choice criteria

As noted above, ‘‘Shariah principle’’ considers the important factors affecting a bank
customer’s decision in selecting Islamic home financing, which is due to the fact that
about 93.6 per cent respondents to this study are Muslim. This result is consistent to
what Dusuki and Abdullah (2007) found, who claimed that Islamic banks must show
Islamic activities in their operation and at the same time the banks are able to provide
quality services.

Independent samples t-test

In order to develop more insights into the factors affecting the choice of Islamic
mortgage providers, a number of independent samples t-tests were conducted. This
test compares the means for two groups of cases such as male and female respondents,
where we use a series of t-tests to compare the mean ratings (Devlin, 2002a, b). Table III
shows the ranking of choice criteria among male–female bank customers. With respect
to male customers, the main factor in choosing banks for Islamic home financing is
‘‘Shariah principle’’, followed by ‘‘lower monthly payment’’, ‘‘interest-free practice’’,
‘‘transparency practice’’ as well as ‘‘100 per cent financing’’. On the other hand, the least
important choice criteria are ‘‘recommendation’’, ‘‘longer financing period’’, ‘‘branch
location’’, ‘‘product range’’, and ‘‘discount or rebate’’. For female customers, the chief

Choice criteria N Minimum Maximum Mean SD Ranking

Shariah principle 141 3.00 5.00 4.6383 0.53821 1

Lower monthly payment 141 3.00 5.00 4.6312 0.53999 2
Transparency practice 141 3.00 5.00 4.5816 0.59948 3
Interest-free practice 141 3.00 5.00 4.5603 0.63661 4
100% financing 141 2.00 5.00 4.4965 0.66143 5
Fast and efficient service 141 3.00 5.00 4.4397 0.66942 6
Lower service charges 141 1.00 5.00 4.4255 0.78589 7
Professional advice 141 3.00 5.00 4.4184 0.66715 8
Fast approval 141 2.00 5.00 4.4113 0.73748 9
Discount or rebate 141 1.00 5.00 4.3404 0.78221 10
Branch location 141 1.00 5.00 4.2766 0.82900 11 Table II.
Product range 141 2.00 5.00 4.2411 0.81854 12 Ranking of choice
Longer financing period 141 1.00 5.00 4.1206 1.03147 13 criteria for Islamic home
Recommendation 141 2.00 5.00 3.9362 0.91193 14 financing
IJHMA Male Female
1,3 Choice criteria Mean Ranking Mean Ranking T Significant

Lower service charges 4.4066 8 4.4600 5 0.385 0.445

Lower monthly payment 4.6154 2 4.6154 2 0.468 0.149
Discount or rebate 4.2967 10 4.4200 8 0.895 0.117
100% financing 4.5165 5 4.4600 6 0.484 0.868
268 Fast approval 4.3846 9 4.4600 7 0.919 0.504
Longer financing period 4.0769 13 4.2000 13 0.677 0.646
Product range 4.2527 11 4.2200 12 0.226 0.611
Fast and efficient service 4.4725 7 4.3800 9 0.784 0.192
Professional advice 4.5055 6 4.2600 11 2.116 0.653
Recommendation 3.8571 14 4.0800 14 1.393 0.140
Branch location 4.2418 12 4.3400 10 0.672 0.189
Shariah principle 4.6703 1 4.5800 3 0.953 0.342
Transparency practice 4.5385 4 4.6600 1 1.153 0.025*
Table III. Interest-free practice 4.6044 3 4.4800 4 0.486 0.377
Choice criteria and
gender Note: *Significant at 5 per cent level

choice criteria are ‘‘transparency practice’’, followed by ‘‘lower monthly payment’’,

‘‘Shariah principle’’, interest-free practice’’ and ‘‘lower service charges’’.
As presented in Table III, there are a limited number of significant differences found
between the different gender groups. Transparency practice is significant at 5 per cent
so, this means the null hypothesis is rejected. Therefore, a conclusion can be made that
a discrepancy exists between both male and female samples with respect to the
criterion as discussed earlier. Females believed that ‘‘transparency practice’’ is
important in choosing banks for Islamic home financing, (mean ¼ 4.6600, t ¼ 1.153,
p-value ¼ 0.025). On the other hand, males are less likely to choose a mortgage provider
on the basis of ‘‘transparency practice’’ (mean ¼ 4.5385, t ¼ 1.153, p-value ¼ 0.025).
However, the remainder of about 13 criteria are found to be insignificant. Statistically
speaking, they are the same for both male and female samples.
Table IV shows the results of the analysis of choice criteria and marital status. For a
single person, the main choice criterion for Islamic home financing is ‘‘lower monthly
payment’’, ‘‘Shariah principle’’, ‘‘interest-free practice’’, ‘‘transparency practice’’ and
‘‘professional advice’’ to name a few. On the other hand, for those who married the main
criteria for the basis of selecting banks for Islamic home financing is ‘‘Shariah
principle’’, ‘‘transparency practice’’, ‘‘lower monthly payment’’, ‘‘100 per cent financing’’
as well as ‘‘interest-free practice’’.
As depicted in Table IV, there are a small number of significant differences found for
the different religion groups, which leads to the rejection of null hypotheses for ‘‘lower
monthly payment’’ and ‘‘recommendation’’. Explained in more detail, an unmarried
person is associated with a significantly higher chance that ‘‘lower monthly payment’’
is the primary reason for choosing a mortgage provider (mean ¼ 4.7500, t ¼ 2.423,
p-value ¼ 0.000) while it is less important to a married person (mean ¼ 4.5325,
t ¼ 2.423, p-value ¼ 0.000). With regard to ‘‘recommendation’’, a married person is
associated with a significantly higher chance that ‘‘recommendation’’ is the primary
reason for choosing a mortgage provider compared to an unmarried person
(mean ¼ 3.9610, t ¼ 0.354, p-value ¼ 0.008). While for an unmarried person,
 Single Married Choice criteria
Choice criteria Mean Ranking Mean Ranking T Significant for Islamic
Lower service charges 4.4688 7 4.3896 8 0.594 0.552
home financing
Lower monthly payment 4.7500 1 4.5325 3 2.423 0.000*
Discount or rebate 4.4219 9 4.2727 10 1.128 0.662
100% financing 4.4688 8 4.5195 4 0.452 0.683
Fast approval 4.3750 11 4.4416 6 0.532 0.743 269
Longer financing period 4.2813 12 3.9870 13 1.698 0.257
Product range 4.4219 10 4.0909 12 2.432 0.730
Fast and efficient service 4.4844 6 4.4026 7 0.721 0.646
Professional advice 4.5938 5 4.2727 11 2.920 0.333
Recommendation 3.9063 14 3.9610 14 0.354 0.008*
Branch location 4.1563 13 4.3766 9 1.580 0.123
Shariah principle 4.6563 2 4.6234 1 0.360 0.920
Transparency practice 4.6094 4 4.5584 2 0.501 0.758
Interest-free practice 4.6250 3 4.5065 5 1.101 0.632 Table IV.
Choice criteria and
Note: *Significant at 5 per cent level marital status

‘‘recommendation’’ is less important in affecting his or her decision to choose a

mortgage provider (mean ¼ 3.9063, t ¼ 0.354, p-value ¼ 0.008). These findings in
general appear to acknowledge that the decisions of married persons are influenced by
the recommendation that they received from their spouse. A married person is
associated with a slightly increased size of family members and his responsibility to
choose a mortgage provider that satisfies family needs.
However, the remaining 12 criteria are found to be insignificant. Statistically
speaking, they are the same for both unmarried and married respondents.

ANOVA by age range

Table V shows the ranking of choice criteria and age range for bank customers. With
respect to those aged <20 years, the main criteria when choosing banks for Islamic
home financing is ‘‘lower monthly payment’’, followed by ‘‘professional advice’’, as well
as ‘‘100 per cent financing’’.. For those aged between 21 and 30 years, the main criteria
in choosing banks for Islamic home financing is ‘‘lower monthly payment’’, followed by
‘‘Shariah principle’’, as well as ‘‘interest-free practice’’. While ‘‘Shariah principle’’,
‘‘transparency practice’’ and ‘‘100 per cent financing’’ are important for those aged
around 31-40 years, for those aged 41-50 years, the chief driver is ‘‘fast and efficient
service’’, ‘‘transparency practice’’ and ‘‘lower monthly payment’’.
The results of the ANOVA test in Table V yielded some statistically significant
differences in means between the different age groups with two selection criteria found
to be insignificant. Explained in more detail, professional advice was insignificant for
the different age groups (F ¼ 3.086, p-value ¼ 0.029). Similarly, branch location was
also insignificant for the different age groups (F ¼ 3.440, p-value ¼ 0.019).
Furthermore, those respondents aged ‘‘41-50’’ are more likely to choose a mortgage
provider on the basis of ‘‘branch location’’ (mean ¼ 4.4545, t ¼ 3.440, p-value ¼ 0.019).
On the contrary, the respondents aged ‘‘Less than 20 years’’ are less likely to choose a
mortgage provider on the basis of ‘‘branch location, with respondents aged ‘‘Less than
20’’ more likely to choose a mortgage provider on the basis of ‘‘professional advice’’
(mean ¼ 4.6667, t ¼ 3.086, p-value ¼ 0.029). Contrary to this, those respondents aged
IJHMA <20 21-30 31-40 41-50
1,3 Choice criteria mean R mean R mean R mean R F Significant

Lower service charges 4.3889 8 4.5211 5 4.3659 8 4.0909 13 1.109 0.348

Lower monthly payment 4.8333 1 4.6620 1 4.5366 5 4.4545 3 1.758 0.158
Discount or rebate 4.3333 9 4.3662 10 4.2927 9 4.3636 8 0.079 0.971
100% financing 4.6111 3 4.4366 8 4.5854 3 4.3636 9 0.765 0.516
270 Fast approval 4.0556 12 4.4366 9 4.5610 4 4.2727 10 2.169 0.094
Longer financing period 4.4444 7 4.1690 13 3.8537 13 4.2727 11 1.662 0.178
Product ranges 4.1667 11 4.3099 11 4.0976 12 4.4545 4 0.884 0.451
Fast and efficient service 4.3333 10 4.5211 6 4.2927 10 4.6364 1 1.493 0.219
Professional advice 4.6667 2 4.5070 7 4.1951 11 4.2727 12 3.086 0.029*
Recommendation 3.6667 14 3.9155 14 3.5455 14 3.9362 14 2.380 0.072
Branch location 3.7222 13 4.3099 12 4.4146 7 4.4545 5 3.440 0.019*
Shariah principle 4.5000 5 4.6620 2 4.7073 1 4.4545 6 1.096 0.353
Transparency practice 4.5000 6 4.5775 4 4.6341 2 4.5455 2 0.227 0.878
Interest-free practice 4.6111 4 4.5915 3 4.5122 6 4.4545 7 0.270 0.847
Table V.
Choice criteria and age Note: R denotes ranking; *significant at 5 per cent level

‘‘31-40 years’’ are also less likely to choose a mortgage provider on the basis of
‘‘professional advice’’.

Discussion of results
This part presents the interesting findings to materialise from the analysis. The
analysis showed that in general, the single most important choice criterion in the home
loan market is choosing on the basis of ‘‘Shariah principle’’ and followed by ‘‘lower
monthly payment’’. The result for ‘‘lower monthly income’’ is consistent with the
previous results by Elliot et al. (1996). Explained in more detail, the lower price or the
lower monthly payment then the greater customer chance of selecting Islamic home
financing. The next three decision criteria are ‘‘lower monthly payment’’, ‘‘transparency
practice’’, ‘‘interest-free practice’’ and ‘‘100 per cent financing’’. Although these criteria
are not suggested in the previous studies (see Dusuki and Abdullah, 2007; Devlin,
2002a, b; Haron et al., 1994), these criteria are important for Islamic home financing.
Evidently, the present study also supports the results of the study conducted by Devlin
and Gerrard (2004), where the recommendation was found to be unrealistic choice
criteria. The other least important choice criteria, among others, are ‘‘longer financing
period’’ as well as ‘‘product range’’. Specifically, this study revealed a small number of
significant differences in regard to gender, marital status and age range.
Furthermore, females are significantly less likely to choose a mortgage provider
primarily on the basis of ‘‘professional advice’’ as compared to males. This has
supported the previous findings of Devlin (2002a, b) who claimed that female are less
affected by ‘‘professional advice’’. However, only one significant difference can be
found, notably ‘‘transparency practice’’ where females will more likely choose a
mortgage provider on this basis rather than males. In this study, females seek to have a
clean and clear transaction to avoid doubt and loss. Overall, only a small number of
significant differences were found in gender, but nevertheless ‘‘lower monthly
payment’’ was ranked evenly for both females and males.
The present study also indicates different results with regard to marital status.
Relatively speaking, there is little difference between the ranking for the selection
criteria between individuals. For an unmarried person, a mortgage provider will be Choice criteria
chosen on the basis of ‘‘lower monthly payment’’, followed by the next four choice for Islamic
criteria notably ‘‘Shariah principle’’, ‘‘interest-free practice’’, ‘‘transparency practice’’
and ‘‘professional advice’’. On the other hand, for a married person the mortgage home financing
provider will be selected on the basis of ‘‘Shariah principle’’, followed by ‘‘transparency
practice’’, ‘‘lower monthly payment’’, ‘‘100 per cent financing’’ and ‘‘interest-free
practice’’. There is little evidence from previous studies to explore the role of marital
status in choice criteria for Islamic home financing. As such, married people tend to
271
choose their Islamic mortgage providers (Islamic banks) if both Shariah and non-
Shariah requirements are satisfied and fulfilled. This statement is consistent to what
Dusuki and Abdullah (2007) and Haron et al. (1994) found.
With regards to age range, it is interesting to note that those aged ‘‘less than 20
years old’’ ask for more information about Islamic home financing directly through
face-to-face conversations between them and bank officers in order to seek
‘‘professional advice’’. Respondents at this age range believe that a good level
of awareness and knowledge about Islamic home financing from various sources of
information will able to enhance their understanding, which leads to utilisation of
Islamic home financing. Therefore, it is predictable that the more an individual knows
about Islamic home financing, the better is the perception and usage of the product in
the future. For the respondents aged ‘‘41-50 years old’’, they are highly predictable
where they choose banks on the basis of ‘‘branch location’’. Walking distant is
preferable by those in this age range. As such, Islamic banks also need to give attention
for those in this age range about the locality of Islamic bank. This seems to uphold the
findings by Boyd et al. (1994).

Conclusion and practical implications

From an Islamic point of view, ‘‘Shariah principle’’, ‘‘lower monthly payment’’,
‘‘transparency practice’’, ‘‘interest-free practice’’ and ‘‘100 per cent financing’’ are
considered to be the first five choice criteria affecting a bank customer’s decision to
choose a mortgage provider, notably an Islamic bank. Statistically speaking, this study
reported that gender, marital status and age range produced a small number of
statistical differences using independent samples t-test and ANOVA. It is confirmed
that, a proper handling of customers should be tailored with regard to gender, marital
status and age range. All in all, this study extended the choice criteria for home
financing from conventional perspective based on the work of Lymperopoulos et al.
(2006), Devlin and Ennew (2005), Devlin (2002) and Ford and Jones (2001) to abd Islamic
perspective. Needless to say, this study proposed the latest perceptions about choice
criteria for Islamic home financing.
This study identified a number of implications for both practitioners and academics:
(1) The manager of Islamic banks can learn from the results in this study where
the manager can set out to establish an attractive scheme for Islamic home
financing. The ‘‘Shariah principle’’, offering ‘‘lower monthly payment’’,
‘‘transparency practice’’ and ‘‘interest free practice’’ should be taken into
consideration in Islamic home financing schemes in order to entertain the bank
customers at large. As such, the traditional methods of advertisements and the
electronic methods of advertisement can be used to promote the scheme.
(2) An indoor training workshop can also be organised by Islamic bank managers
on Islamic home financing product to their assigned officers. The purpose is to
IJHMA ensure the assigned officers are able to fully understand good practice for
1,3 Islamic home financing. This will also ensure the assigned officers are able to
serve customers with a good level of satisfaction by stressing that both the
Islamic and the cost of the scheme are suitable for Islamic home financing.
(3) As independent samples t-test was applied where single and married
individuals were found to be statistically difference in ‘‘lower monthly
272 payment’’. There is a need, therefore to offering attractive rates that should also
need to be tailored according to these differences and the price or cost should be
affordable for both single and married individuals.
(4) When ANOVA is applied, respondents can be treated differently with regard to
‘‘professional advice’’ and ‘‘branch location’’. As such, more advice about
financing should be given to bank customers aged less than 20 years. It is
helpful to have knowledgeable bank officers to deal with these issues. At the
same time, the bank officers are willing to give assistance through other means
of communication such as via telephone and SMS.
(5) On the academic research side, this study was able to add to the scarce
knowledge about selection criteria for Islamic home financing. The study of
banking selection in Malaysia can be rotated into new areas for specific Islamic
home financing which has limited to explore in the previous studies (Dusuki
and Abdullah, 2007; Haron et al. 1994).
No study is free from limitations where this study had three limitations. First, this
study was only confined to Labuan where the next study will overcome this limitation
by increasing the sample size to include a cross city study for Islamic home financing
in Kota Kinabalu, Tawau, Miri and Kuching. Choosing these cities is due to the fact
they are fast growing cities in East Malaysia. Second, this study has restricted the use
of factor analysis since the data did not allow for aggregation, therefore future study
should expand the structure of the data to allow for aggregation. For this purpose, each
of the items should be labeled and consist of sub-items for aggregation. Third, this
study has also unable to perform ANOVA for religion differences due to the sample
being largely contributed by Muslims. Future studies need to pay attention to this by
obtaining adequate numbers of Buddha, Hindu and Christian respondents for the
analysis. Despite these limitations, this study has investigated Islamic home financing
selection from Malaysian customers’ point of view, thus is useful for both practitioners
and researchers.
Most importantly, this study fills the research gap in financial services research by
providing new results about different kinds of customer types and their preferences
with regard to Islamic home financing selection. Future research should also need to
investigate Islamic home financing selection from dual banking institutions such as
full-fledged Islamic banks, Islamic subsidiaries (Hong Leong Islamic Bank and
Maybank Islamic Berhad), and Islamic windows (Public Bank Berhad).

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Hanudin Amin can be contacted at: hanudin_zu@yahoo.com

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