Do bank customers prefer profit sharing investment accounts? a proposed conceptual framework
The concept of sharing profit earned by Islamic banks with their investors is one of the distinguishing features that set Islamic banks apart from their conventional counterparts. The contract of mudarabah is used by Islamic banks to mobilise funds with the objective to share profit with the investo...
| Main Authors: | , , |
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| Format: | Proceeding Paper |
| Language: | English English |
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SciTePress Digital Library
2019
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| Subjects: | |
| Online Access: | http://irep.iium.edu.my/77118/ http://irep.iium.edu.my/77118/1/77118%20-%20Do%20bank%20customers%20prefer%20profit%20sharing%20investment%20accounts%20a%20proposed%20conceptual%20framework-%20with%20evidence.pdf http://irep.iium.edu.my/77118/7/77118_Do%20Bank%20Customers%20Prefer%20Profit%20Sharing_fulltext.pdf |
| _version_ | 1848788387266297856 |
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| author | Rosman, Romzie Ya’u, Isah Othman, Anwar Hasan Abdullah |
| author_facet | Rosman, Romzie Ya’u, Isah Othman, Anwar Hasan Abdullah |
| author_sort | Rosman, Romzie |
| building | IIUM Repository |
| collection | Online Access |
| description | The concept of sharing profit earned by Islamic banks with their investors is one of the distinguishing features that set Islamic banks apart from their conventional counterparts. The contract of mudarabah is used by Islamic banks to mobilise funds with the objective to share profit with the investors. Any financial losses incurred by the banks in the course of their financing or investment is to be borne entirely by the depositors, except in cases of negligence and breach of contract. Based on literature that investigated the factors effecting the adoption of Islamic banking and finance products, the factors differ based on countries. It is found that GCC countries showed that religious factor in terms of compliance with the provisions of Shariah by the Islamic banks is the most important factor that influences the selection of Islamic banking products in the GCC countries. However, in the MENA region, it could be observed that religious belief and compliance with Shariah by Islamic banks were not the major factors that influence customer’s choice of Islamic banks unlike in the GCC countries. Not only that, it is also found that the factors that influence the choice of Islamic banks amongst customers in Asia were not consistent. Whereas some studies show religious inclination as the most important factor in choosing Islamic banks by customers especially in some studies in Malaysia, other studies show that high profit and low-cost service as the most important selection criteria. Hence, the proposed conceptual framework that integrated both the Theory of Reasoned Action (TRA) and Theory of Planned Behaviour (TPB) together with the unique elements of religiosity and risk tolerance are expected to predict the behaviour of profit sharing investment account holders. By understanding the behaviour of investors in choosing profit sharing investment account, this study can assist the management of the Islamic banks to develop strategies to attract and retain the investments. Moreover, this study can assist regulators to ensure that the rights of this class of investors is protected by the Islamic banks. |
| first_indexed | 2025-11-14T17:40:01Z |
| format | Proceeding Paper |
| id | iium-77118 |
| institution | International Islamic University Malaysia |
| institution_category | Local University |
| language | English English |
| last_indexed | 2025-11-14T17:40:01Z |
| publishDate | 2019 |
| publisher | SciTePress Digital Library |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | iium-771182020-12-22T08:58:51Z http://irep.iium.edu.my/77118/ Do bank customers prefer profit sharing investment accounts? a proposed conceptual framework Rosman, Romzie Ya’u, Isah Othman, Anwar Hasan Abdullah HG1501 Banking The concept of sharing profit earned by Islamic banks with their investors is one of the distinguishing features that set Islamic banks apart from their conventional counterparts. The contract of mudarabah is used by Islamic banks to mobilise funds with the objective to share profit with the investors. Any financial losses incurred by the banks in the course of their financing or investment is to be borne entirely by the depositors, except in cases of negligence and breach of contract. Based on literature that investigated the factors effecting the adoption of Islamic banking and finance products, the factors differ based on countries. It is found that GCC countries showed that religious factor in terms of compliance with the provisions of Shariah by the Islamic banks is the most important factor that influences the selection of Islamic banking products in the GCC countries. However, in the MENA region, it could be observed that religious belief and compliance with Shariah by Islamic banks were not the major factors that influence customer’s choice of Islamic banks unlike in the GCC countries. Not only that, it is also found that the factors that influence the choice of Islamic banks amongst customers in Asia were not consistent. Whereas some studies show religious inclination as the most important factor in choosing Islamic banks by customers especially in some studies in Malaysia, other studies show that high profit and low-cost service as the most important selection criteria. Hence, the proposed conceptual framework that integrated both the Theory of Reasoned Action (TRA) and Theory of Planned Behaviour (TPB) together with the unique elements of religiosity and risk tolerance are expected to predict the behaviour of profit sharing investment account holders. By understanding the behaviour of investors in choosing profit sharing investment account, this study can assist the management of the Islamic banks to develop strategies to attract and retain the investments. Moreover, this study can assist regulators to ensure that the rights of this class of investors is protected by the Islamic banks. SciTePress Digital Library 2019-12-03 Proceeding Paper PeerReviewed application/pdf en http://irep.iium.edu.my/77118/1/77118%20-%20Do%20bank%20customers%20prefer%20profit%20sharing%20investment%20accounts%20a%20proposed%20conceptual%20framework-%20with%20evidence.pdf application/pdf en http://irep.iium.edu.my/77118/7/77118_Do%20Bank%20Customers%20Prefer%20Profit%20Sharing_fulltext.pdf Rosman, Romzie and Ya’u, Isah and Othman, Anwar Hasan Abdullah (2019) Do bank customers prefer profit sharing investment accounts? a proposed conceptual framework. In: The 7th ASEAN Universities International Conference on Islamic Finance (AICIF 2019), Gontor, Indonesia. http://ei.unida.gontor.ac.id/aicif-2019/ DOI:10.5220/0010115701150126 |
| spellingShingle | HG1501 Banking Rosman, Romzie Ya’u, Isah Othman, Anwar Hasan Abdullah Do bank customers prefer profit sharing investment accounts? a proposed conceptual framework |
| title | Do bank customers prefer profit sharing investment accounts? a proposed conceptual framework |
| title_full | Do bank customers prefer profit sharing investment accounts? a proposed conceptual framework |
| title_fullStr | Do bank customers prefer profit sharing investment accounts? a proposed conceptual framework |
| title_full_unstemmed | Do bank customers prefer profit sharing investment accounts? a proposed conceptual framework |
| title_short | Do bank customers prefer profit sharing investment accounts? a proposed conceptual framework |
| title_sort | do bank customers prefer profit sharing investment accounts? a proposed conceptual framework |
| topic | HG1501 Banking |
| url | http://irep.iium.edu.my/77118/ http://irep.iium.edu.my/77118/ http://irep.iium.edu.my/77118/ http://irep.iium.edu.my/77118/1/77118%20-%20Do%20bank%20customers%20prefer%20profit%20sharing%20investment%20accounts%20a%20proposed%20conceptual%20framework-%20with%20evidence.pdf http://irep.iium.edu.my/77118/7/77118_Do%20Bank%20Customers%20Prefer%20Profit%20Sharing_fulltext.pdf |