DETERMINANTS OF ABANDONED HOUSING PROJECTS IN MALAYSIA

The issues of abandoned housing projects are not new in Malaysia.Without proper measures to tackle, they will continue to haunt homebuyers. This study examines responses of 328 customersobtained bymeans of self-administered questionnaires. Four variables namelylack of justice and equity, methods of computing and pricing, natureof contract and lack of legal and governance were used as variables.The results indicated that all the hypothesized relationships aresupported. Of these, the nature of contract was found to be the maincause of the problem. The results contributes to the scanty empiricalresearch in this area. It also benefits managers of Islamic banksto address issues that are affectingabandoned housing projects inMalaysia

Alternative mode to Islamic home financing

A Canadian-based cooperative is looking at forging a working relationship with a Malaysian cooperative to develop the musharakah mutanaqisah (diminishing partnership) mode for home financing. The initiative, discussed at a recent conference organised by the IIUM Institute of Islamic Banking and Finance (IIiBF), could possibly bring forward another venue for Islamic finance financing via the coperative movement. Dzuljastri Abdul Razak, a senior academic fellow at International Islamic University Malaysia's (IIUM) Kulliyah of Economics and Management Sciences discusses the issue

Customers’ attitude and purchase intention toward diminishing partnership home financing in Malaysia: a structural equation modeling approach

Home financing in Malaysia is mainly focus on the debt-based Bai Bithaman Ajil (BBA) mode implemented for the first time in 1983. This concept is viewed by many scholars as similar to debt-based conventional home financing. As an alternative, the equity-based Musharakah Mutanaqisah or Diminishing Partnership (DP) financing was introduced in 2005. This study gauges customers’ perception on the salient features of DP home financing through a survey of 504 respondents comprise officers, managers and academician. Further analysis using the Structural Equation Modeling (SEM) was conducted to find out factors that influence customers’ intention for DP using the Theory of Reasoned Action (TRA) framework. The main findings indicated that customers perceived the equity sharing features in DP home financing mode differ from the conventional and BBA home financing modes. The analysis using SEM further indicates that customers’ intention for DP is influenced by their attitude and subjective norms

Diminishing partnership as an alternative Islamic home financing in Malaysia: issues and perceptions.

Rumah adalah keperluan asas kepada semua manusia. Kaedah Bai Bithaman Ajil (BBA) atau jualan dengan bayaran tertanguh adalah kaedah yang paling dominan dalam pembiayaan perumahan di Malaysia sejak penubuhan sektor perbankan Islam pada tahun 1983. Home is a basic necessity for everyone. The Bai Bithaman Ajil (BBA) or Deferred Installment Sales facility is the most predominant mode of home financing in Malaysia since the establishment of Islamic banking in 1983

Islamic home financing practices in selected OIC countries: an assessment in the light of Maqasid al-Shariah

Home is one of the basic needs and an inborn dream for everyone. Home financing practiced by banks is a critical issue in meeting the objectives Maqasid Al-Shariah. The purpose of this study is to compare Islamic home financing practices adopted by banks in selected OIC countries namely Malaysia, Indonesia, Bangladesh and Syria and investigate the extent to which it has fulfilled these objectives and whether they are affordable. The methodology is by means of content analysis based on the literature review and library research. Although both conventional and Islamic housing schemes can provide assistance to people in acquiring their dream home, they are also subjected to high financing rates beyond the means of individuals. These practices bind the customers financially for long duration posing a burden that extends to the next generation. The result would assist Islamic banks towards improving the product features in terms of justice and fairness. It will also assist the governments and regulators to address the issue of affordability and high prices of houses especially in fulfilling the needs of the low-income household

Small medium enterprises (smes) in Turkey and Malaysia a comparative discussion on issues and challenges

Small and medium-sized enterprises (SMEs) inTurkey and Malaysia play significant economic and social roles by offering new job opportunities, lowering unemployment rate, increasing competition, productivity and providing substantial benefits to the economy of both countries. It has contributed to more than 90 percent of total establishments and more than 40 percent of countries GDP. The purpose of this study is to investigate issues and challenges that have affected the growth of SMEs in both countries. In identifying the issues and challenges, three factors in the Kobayashi (1997) micro model for SMEs namely, financial assistance, the impact of knowledge-based economy and impact of marketing assistance were analyzed. The methodology employed is by means of secondary data and literature review. This study will contribute to the understanding of the similarities and differences on issues and challenges faced by SMEs in both countries. This will assist policymakers and regulators in taking the remedial steps to improve their performance

Consumers’ perception on Islamic home financing: empirical evidences on Bai Bithaman Ajil (BBA) and diminishing partnership (DP) in Malaysia

The Bai Bithaman Ajil (BBA) or Deferred Installment Sales facility is the most predominant mode of home financing in Malaysia since the introduction of Islamic banking in 1983. It is based on the debt financing where the bank buys the property from the customer and sells it back to the customer inclusive of profit. Customers make repayments at end of each month. This research examines the impact of using the prevailing debt concept which is claimed to have caused high price, customers‟ dissatisfaction, injustice and criticism by international scholars. In order to address these issues an alternative concept known as Musharakah Mutanaqisah or the Diminishing Partnership (DP) is also examined. In DP, bank and customers purchase the house jointly. The bank leases the house to the customers and rental payments are shared between them based on profit sharing ratio. The customer redeems the bank‟s share on monthly basis until full settlement after which the house is transferred to the customer. The study investigates the perceptions of customers between BBA and DP home financing products. A survey questionnaire was conducted on 300 owners and potential house owners to gauge their features and operations. The result of paired t–test indicated significant differences between these two products. DP home financing is a viable alternative to BBA home financing measured from the descriptive results and hypothesis testing. The actual implementation of DP is a challenge for the banks and requires a paradigm shift from their present role as traditional financiers

Diminishing partnership home financing concept as an alternative to Bai Bithaman Ajil (BBA): empirical evidences from the perceptions of Shariah scholars and bankers

Meera and Abdul Razak (2005) suggested that the Diminishing Partnership (DP) Home Financing concept can be a viable alternative to Bai Bithaman Ajil (BBA) Home Financing. They argued that DP concept can address issues faced by BBA which is still the main financing mode of Islamic financial institutions to date. The major issues that have arisen are related to the concepts used, methods of computation, pricing based on interest rate benchmark, Shariah compliant, justice and societal well being. On the other hand, the DP concept is claimed to be free from the above mentioned shortcomings and said to be in line with the spirit of Islam, which promotes risk sharing and its pricing based on rental is considered to be just and fair. As these issues requires in depth understanding of the Shariah parameter as well and banking operations, semi-structured interviews were conducted with six Shariah scholars and six bankers to seek their opinions and viewpoints on the variables investigated. The Shariah scholars generally agreed that DP concept possess greater justice, equity and follows the true spirit of Islam. Contrary to expectation, the overall views of the bankers support the implementation of DP, although there were a few reservations regarding its operations. The actual implementation of DP is a challenge for bankers which require a paradigm shift from their present role as traditional financiers. Key words: Islamic home financing, Bai Bithaman Ajil (BBA), Diminishing Partnership (DP), Shariah scholars, Bankers and Shariah compliant

Consumer acceptance of Islamic home financing

Purpose – This study aims to examine the factors influencing the consumer acceptance on Islamic home financing products amongst clients of Islamic banks. For the purpose, the study extends the theory of planned behaviour (TPB) in explaining the Islamic home financing adoption along. Further, the study also intends to analyze the effects of “Islamicity of product” and seven demographic factors on the consumer acceptance of Islamic home financing products. Design/methodology/approach – Using the TPB model as a baseline theory, data are collected from bank customers in East Malaysia involving two cities, namely, Kota Kinabalu and Labuan, using self-administered questionnaires. A total of 300 questionnaires are distributed; however, only 278 are found usable. We use ordered probit model to analyze the effects of attitude, subjective norm, perceived behavioural control, Islamicity of product and demographic factors. Findings – Using the ordered probit model, this study finds that attitude, subjective norm, perceived control and Islamicity of product are instrumental in determining the consumer acceptance of Islamic home financing products. Concerned with demographic items, the study finds that marital status, ethnic, occupation and religion are influential. It is also discovered, however, that gender, academic qualification and monthly income have little effects on the consumer acceptance. Research limitations/implications – Three limitations are available for future studies. First, the current work does not include the experienced users who patronize Islamic home financing products. Second, the contribution of the present study is confined to the analyzed explanatory variables. Third, this study also has geographical constraint in which it is conducted in East Malaysia whilst samples from West-Malaysia are overlooked. These limitations, however, provide directions for further future research. Practical implications – Essentially, this study is a pioneering effort in applying the TPB model to the new context of Islamic home financing products in Malaysia. The study integrates the effects of Islamicity of product and demographic factors on the consumer acceptance on Islamic home financing products. The TPB model is proven valid and is reliable in predicting the consumer acceptance on Islamic home financing products. Originality/value – This study introduces Islamicity of product and demographic factors in explaining the consumer acceptance on Islamic home financing products. Most fundamentally, this study proposes a modified theoretical framework that is of paramount importance to predict the demand of Islamic home financing products in the future