Ar-Rahnu Scheme Among Low-Income Civil Servants in Malaysian Public Universities

Abstract

Ar-Rahnu scheme which provides short-term, fast, hassle-free, and riba-free financing to the public becomes more popular nowadays. Several factors can motivate the public to subscribe to Ar-Rahnu products, namely customers' Shariah view, good customer service, pledge asset, good pricing system, locality, product management, and advertisement. This study reveals that Shariah view, pledge asset, pricing system, locality, and advertisement have a significant relationship with the acceptance of the civil servants in Malaysian public universities towards the Ar-Rahnu scheme. The most dominant factor contributing to the acceptance of low-income civil servants in Malaysian public universities towards Ar-Rahnu scheme in Malaysia is locality. The respondents from the lower-income group in Malaysian public universities agree that the locality of financial institutions providing Ar-Rahnu scheme in their system is considered an important element in enhancing the acceptance towards Ar-Rahnu scheme in Malaysia. Subsequently, future study is needed to acknowledge the acceptance and effect of Ar-Rahnu towards all levels of societies and wider areas.

Religiosity Towards Ar-Rahnu Customer Retention: The Moderating Role of Awareness

“…Customers have also shown concern about the Shariah elements of the product to ensure that their transactions are ethical (Azim et al, 2018). The convenience of proximity to Ar-Rahnu branches emerged as a significant driver of customer acceptance in a recent study, particularly for low-income customers who prefer to have Ar-Rahnu locations nearby for easy access via public transportation, home, workplace, and malls (Indra et al, 2021). While these factors have been shown to increase usage of Ar-Rahnu products, it is unclear how they affect the retention of customers.…”

“…In the case of the Ar-Rahnu facility in Malaysia, customers already had some awareness of the product, but only in regards to its Shariah-compliant nature. Previous studies have looked at factors that may increase awareness, such as customer service (Hamid et al, 2014), location (Indra et al, 2021), and advertisement (Amin et al, 2007). However, it is not clear how these factors would encourage customers to stay with Ar-Rahnu providers.…”