Academic journal article International Journal of Business and Society

Determinants of Qardhul Hassan Financing Acceptance among Malaysian Bank Customers: An Empirical Analysis

Academic journal article International Journal of Business and Society

Determinants of Qardhul Hassan Financing Acceptance among Malaysian Bank Customers: An Empirical Analysis

Article excerpt


The purpose of this study is to examine the factors that determine Qardhul Hassan financing acceptance among Malaysian bank customers. Explained in more detail, the main objectives of the study are twofold. First is to test the applicability of conventional theory, notably theory of reasoned action (TRA) to the Qardhul Hassan financing acceptance. Second is to examine the effect of pricing to Qardhul Hassan financing acceptance. TRA was employed in order to examine its applicability to the context of Qardhul Hassan financing. Besides the original constructs of the model, the pricing construct is added in order to justify further the determinants of the Qardhul Hassan financing. As such, this study used survey approach in order to investigate the objectives of the study. The study found that "attitude", "subjective norm" were important determinants to influence bank customers' perception of accepting Qardhul Hassan financing. These results, on the other hand, proved the suitability of the determinants to the context of Qardhul Hassan financing. Besides "attitude" and "subjective norm" constructs, this study, on the other viewpoint, contributes to the existing body of knowledge by proving that the pricing factor was also an important as a key determinant of Qardhul Hassan financing acceptance. Although this study proved the importance of "attitude", "subjective norm" and "price of Qardhul Hassan financing" factors, there still exists an opportunity for the future research relevant in this area in which it is due to limitations embedded in the current study. This study, however, is useful for Islamic banks in order to beautify Qardhul Hassan financing facility.

Keywords: Banking, Islam, Qardhul Hassan, Survey, Bank Customers, Personal Finance, Bank Management.


The financing facility is one of the primary functions of Islamic banks. This activity, on the other hand, contributes to Islamic banks profit generation. Islamically speaking, Islamic banks are prohibited from making loans with interest, which in turn, lead to the concentration of wealth in the hand of few. Alternatively Islamic banks financing is interest free, in addition to the Shariah principles. One of the Shariah principles that is of interest, is Qardhul Hassan financing also considers as a scope of the current study. By definition, Qardhul Hassan financing is defined as interest free financing or also known as a benevolent financing, in which it is provided by Islamic banks (Haron and Shanmugam, 2001). This financing facility allows a customer to finance his need at the varying amount of financing, which can be obtained from Islamic banks. Generally speaking, the minimum financing amount of Qardhul Hassan is approximately at RM1,000, while the maximum financing amount is estimated at RM100,000. These amounts, on the other hand, vary on Islamic banks' policy (Khir, et al., 2008; Haron, 2005; Bank Islam Malaysia Berhad, 1994). Further, the need of Qardhul Hassan financing is purely on cooperation and mutual help, for instance, to help a customer to release himself from a financial hardship like for durable good payments. The financing scheme also concerns of the customer welfare by condemning interest payments on the loan and by providing rebates to reduce the customer payback burden (Maali, et al., 2006; Rosly, 1999).

Islamic societies have become affected since Islamic banking system inception in Malaysia in 1983, by the introduction of Bank Islam Malaysia Berhad (BIMB). Since then, the bank considered as a national heritage to cater the Islamic financial needs of Malaysians like for Qardhul Hassan financing. Despite the availability of Qardhul Hassan financing in Malaysian banking environment, there exists scarce study conducted to explain what factors cause bank customers acceptance of the financing facility. Prior studies have overlooked the importance of this topic as their scope of research (Taib, et al. …

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