The Islamic theory of consumer behaviour for ijarah home financing

Abstract

Purpose This study aims to examine the factors that determine consumer behaviour of ijarah home financing using the Islamic theory of consumer behaviour (ITCB). In particular, the specific contract used is al-ijarah muntahia biltamleek. Subsequently, the term al-ijarah muntahia biltamleek home financing is used throughout the paper. Design/methodology/approach Drawing upon the ITCB, the present study examines patronage factors for al-ijarah muntahia biltamleek home financing. This study’s data were drawn from valid 409 usable questionnaires. Findings Partial least square results suggest that the role of iman, Islamic mortgage support and maqasid consumer index are significantly related to consumer behaviour. In turn, consumer behaviour is instrumental in determining religious satisfaction. Research limitations/implications Two limitations were observed that provide direction for future studies. Firstly, the current study is only tested in one particular Islamic home financing product that may explain why the generalisation is an issue. Secondly, the theory is still in its infancy stage, which, of course leads to some criticisms pertinent to its parsimony and applicability to other settings. Despite these limitations, however, this study aims to suggest a so-called Islamic model of factors that can explain consumer behaviour of a particular Islamic home financing product. In particular, scrutinising the product acceptance from the context of the ITCB can open a new debate in this area. Practical implications This study indeed reduces the theory–practice gap by suggesting new indicators that are workable to improve consumers’ positive perception of Islamic home financing. Given the results obtained, the ITCB provides a better prediction for consumer behaviour of al-ijarah muntahia biltamleek home financing. Originality/value This study expands the applicability of the ITCB to include al-ijarah muntahia biltamleek home financing.

Choosing murabahah to the purchase orderer (MPO) vehicle financing: an Islamic theory of consumer behaviour perspective

“…This remains an interesting question to be considered in this study. In this line of thought, this study extends the applicability of the theoretical framework proposed by Khan (1984), Bendjilali (1995) and Khan (2014) – ITCB, which then tested and proven valid by Amin (2019) empirically.…”

“…Following Khan (2014), a Muslim consumer with a high level of iman opts action that permits him to comply with Shariah and consequently improved his success. Influenced by Khan (2014), Amin (2019) finds a significant relationship between the role of iman and consumer behaviour – implying the higher the extent of the role of iman , the better is consumer behaviour. Earlier, Amin (2017) uses the ITCB to explain consumer behaviour and the religiosity factor also a contributing factor to the formation of the behaviour.…”

“…Following Churchill (1979), the current research develops measurement items from the extant pieces of literature in which the analysed battery items are adapted from previous studies. Though found limited in the literature, the details are provided as follows: Three battery items for the level of iman are adapted from Bendjilali (1993); Three battery items measuring Islamic altruism are adapted from Khan (2014); and Three battery items measuring the maqasid consumer index are adapted from Amin (2019). …”

“…The construct’s items are developed through literature analyses that help identify whether specific items for the willingness to choose MPO are available or not (Churchill, 1979). Two studies of Amin (2017, 2019) have used the ITCB but relatively no construct’s items are developed for the willingness but instead actual behaviour. Our close examinations to four studies of Abdul Rahman and Wahid (2016), Abdullah and Dusuki (2006), Dusuki and Abdullah (2007) and Ramli and Onn (2007) also do not suggest battery items for the willingness though they jointly examine car financing in Malaysia.…”

“…He asserts that the theory shall consider well-being, need, right-mindedness and community, as factors or consequences. These two studies are of utmost importance in supporting the theory but yet only in 2019 a work by Amin (2019) suggests a formal framework to measure the ITCB and applied to Islamic home financing context. The study managed to validate three factors as contributing factors in explaining consumer behaviour or acceptance.…”