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 incl...

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Main Authors:	Abdul Razak, Dzuljastri, Md Taib, Fauziah
Format:	Conference or Workshop Item
Language:	English
Published:	2009
Subjects:	HG1501 Banking
Online Access:	http://irep.iium.edu.my/3241/ http://irep.iium.edu.my/3241/1/8th_AAM_Conference.pdf

id	iium-3241
recordtype	eprints
spelling	iium-32412012-08-15T15:35:08Z http://irep.iium.edu.my/3241/ Consumers’ perception on Islamic home financing: empirical evidences on Bai Bithaman Ajil (BBA) and diminishing partnership (DP) in Malaysia Abdul Razak, Dzuljastri Md Taib, Fauziah HG1501 Banking 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. 2009-10-28 Conference or Workshop Item PeerReviewed application/pdf en http://irep.iium.edu.my/3241/1/8th_AAM_Conference.pdf Abdul Razak, Dzuljastri and Md Taib, Fauziah (2009) Consumers’ perception on Islamic home financing: empirical evidences on Bai Bithaman Ajil (BBA) and diminishing partnership (DP) in Malaysia. In: The 8th Asian Academy of Management International Conference, 18-20 December 2009, Kuantan, Pahang.
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	HG1501 Banking
spellingShingle	HG1501 Banking Abdul Razak, Dzuljastri Md Taib, Fauziah Consumers’ perception on Islamic home financing: empirical evidences on Bai Bithaman Ajil (BBA) and diminishing partnership (DP) in Malaysia
description	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.
format	Conference or Workshop Item
author	Abdul Razak, Dzuljastri Md Taib, Fauziah
author_facet	Abdul Razak, Dzuljastri Md Taib, Fauziah
author_sort	Abdul Razak, Dzuljastri
title	Consumers’ perception on Islamic home financing: empirical evidences on Bai Bithaman Ajil (BBA) and diminishing partnership (DP) in Malaysia
title_short	Consumers’ perception on Islamic home financing: empirical evidences on Bai Bithaman Ajil (BBA) and diminishing partnership (DP) in Malaysia
title_full	Consumers’ perception on Islamic home financing: empirical evidences on Bai Bithaman Ajil (BBA) and diminishing partnership (DP) in Malaysia
title_fullStr	Consumers’ perception on Islamic home financing: empirical evidences on Bai Bithaman Ajil (BBA) and diminishing partnership (DP) in Malaysia
title_full_unstemmed	Consumers’ perception on Islamic home financing: empirical evidences on Bai Bithaman Ajil (BBA) and diminishing partnership (DP) in Malaysia
title_sort	consumers’ perception on islamic home financing: empirical evidences on bai bithaman ajil (bba) and diminishing partnership (dp) in malaysia
publishDate	2009
url	http://irep.iium.edu.my/3241/ http://irep.iium.edu.my/3241/1/8th_AAM_Conference.pdf
first_indexed	2023-09-18T20:10:59Z
last_indexed	2023-09-18T20:10:59Z
_version_	1777407475929055232

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

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