Norhazlina Ibrahim and Safeza Mohd Sapian
The purpose of this study is to investigate whether Tawarruq Islamic home financing (IHF) products remain untouched and maintain their position as the top IHF product in Malaysia.
Abstract
Purpose
The purpose of this study is to investigate whether Tawarruq Islamic home financing (IHF) products remain untouched and maintain their position as the top IHF product in Malaysia.
Design/methodology/approach
The study adopted a qualitative research methodology that included both literature review and content analysis. Firstly, the existing studies and literature were reviewed to compare different types of IHF. The composition of IHF products offered by these Islamic banks was then investigated further to analyse each bank’s progress in IHF from 2015 to 2019. The data were gathered from bank websites, brochures, product disclosure sheets and annual reports.
Findings
The findings reveal that around 62.5% of Islamic banks offered Tawarruq for IHF in the year 2020. For the banks that offered Tawarruq, the amount of the financing continued to grow each year. The plausible reason for the preference for Tawarruq was its less risky nature, despite facing numerous operating, legal and Shariah issues.
Research limitations/implications
This study has several limitations, including the fact that it was limited to home financing products only, the methodology used and the research period.
Practical implications
This study aimed to provide beneficial insights into the use of Tawarruq, which has been a source of concern for regulators as well as steps made to reduce its usage in the industry. Islamic banks should be more proactive in developing non-Tawarruq products to enhance product innovation in the market and minimise the heavy reliance on debt-based products.
Originality/value
This study provides useful insights by analysing IHF in depth for each Islamic bank and making recommendations for future research. Specifically, the method facilitated critical discussions and comparisons to previous research findings as to why Tawarruq has remained popular.
Details
Keywords
Norhazlina Ibrahim and Safeza Mohd Sapian
This study, using systematic literature review (SLR) aims to highlight and summarise current studies on the factors influencing customers’ Islamic home financing (IHF) selection…
Abstract
Purpose
This study, using systematic literature review (SLR) aims to highlight and summarise current studies on the factors influencing customers’ Islamic home financing (IHF) selection and Islamic banking product preference, which has gained popularity within the banking sector over the past three decades. The SLR could map evolution and research fields, recommend a particular categorisation and determine primary issues to demonstrate current trends, future research directions and theoretical development.
Design/methodology/approach
The SLR was performed with a four-step reporting standard for the systematic evidence syntheses review method (research question formulation, systematic searching, quality assessment and data extraction) using 33 screened articles between 2008 and 2020 from two primary databases (Scopus and Web of Science) and one supporting database (Google Scholar).
Findings
The resulting factors could be categorised into four primary themes: consumer behaviour, consumer attributes, bank attributes and bank attributes (Islamic). The themes were subsequently divided into 16 sub-themes. Notably, all the factors proved essential for consumers’ evolving preferences and product competitiveness in the market.
Research limitations/implications
This study encountered two limitations based on database selection and research period.
Practical implications
This SLR aimed to offer useful insights into the factors that should be prioritised by financial institutions for marketing approaches by investigating consumer behaviours.
Originality/value
This study pioneered an SLR on the study area for useful insights into the current research limitations and recommendations on future study directions. Specifically, the study method facilitated critical discussions and comparisons to past research outcomes and objectivity with triangulation from distinct perspectives.