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Selection Factors of Customer towards Islamic and Conventional Home Financing: A Case Study in Johor, Malaysia

Abd Jalil, Mohamad Isa and Yusoff, Remali and Mahmud, Roslinah (2010): Selection Factors of Customer towards Islamic and Conventional Home Financing: A Case Study in Johor, Malaysia.

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Abstract

Malaysia is one of the world financial centres for Islamic finance outside the Middle East. The purpose of the study was to find out the choice criteria for home financing among Malayan Banking Berhad customers which is the biggest bank in Malaysia. 350 of Malayan Banking Berhad home financing products customer among public servants, private sector workers, and self-employment were chosen as respondent. By using the Principal Component Analysis with Varimax Rotation, fourteen independent variables (selection factors) used had been reduced to only three main factors for both Islamic and conventional financing. The Research had found that the “advantage and goodness of products”, the “income and advice from the third party”, and the “lifestyle” were the factors that motivate customer in choosing Islamic home financing. In contrast, the customers prefer conventional home financing because of “products advantage and lifestyle”, “advice from the third party”, and “market performance” as the factors that motivate them to choose conventional home financing.

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