Browsing by Author "Nur Harena Redzuan"

The takaful industry in Malaysia has begun to actively offer microtakaful products and services to the B40 population, following the issuance of the Discussion Paper on Microinsurance and Microtakaful by Bank Negara Malaysia (BNM) in 2016. However, the participation rate of the B40 population, a demographic characterised by lower-income levels continues to remain low. The objectives of this study are to (i) assess the main issues and challenges faced by the takaful industry on the current microtakaful initiatives, (ii) structure a microtakaful model that practically and smoothly collates and distributes products and services to the B40 in Malaysia; (iii) explore a sustainable funding mechanism for the proposed microtakaful model which utilises various sources of funding, including Islamic social finance instruments, namely zakat and waqf; and (iv) increase the effectiveness of the proposed microtakaful model’s financial literacy and awareness programme for the B40. The study utilises a thematic literature review as well as a one-to-one interview with takaful industry stakeholders, namely the key personnel of takaful operators (TO), Shariah committee members, a member of a board of directors (BOD), and two representatives of State Islamic Religious Councils (SIRCs). The findings and feedback are then utilised to produce a microtakaful framework that serves as a foundation for the formulation of a robust microtakaful model that not only addresses the challenges, but also ensures an effective and efficient distribution of products and services, tailored to the unique needs of the B40. The interviews explored diverse funding sources, including Islamic social finance instruments such as zakat and waqf, in order to develop a financial framework that would ensure long-term stability and resilience of the microtakaful model, which aligns with the broader objective of enhancing financial inclusivity among the B40 population. In addition, a tailored financial literacy and awareness programme will also be established to encourage effective participation in microtakaful products among the B40. The study provides evidences revealing concerns among the key stakeholders in relation to product oversupply, limited awareness and literacy, and regulatory compliance that overshadow the genuine needs of the B40. The study then progresses to propose strategies for the structuring of an effective microtakaful model, emphasising on Shariah compliance, fund management, non-governmental organisations’ (NGOs) involvement, and community engagement. To address the critical issue of sustainable funding, the study identifies a number of solutions involving corporate social responsibility (CSR) funds, increased government participation, collaboration with state entities, and effective marketing. The study highlights improvements in financial literacy programmes for the B40 through the proposed microtakaful model, emphasising stakeholder coherence, poverty alleviation and technological leverage. In conclusion, the study offers a comprehensive understanding of challenges and solutions in advancing microtakaful initiatives in Malaysia. The envisioned microtakaful model is expected to enhance coordination, sustainability, and penetration rates among the B40.

This research paper sought to assess the elements of Islamic home financing and why customers choose the products. The main problem of this study is to investigate the selection criteria that influence customers in adopting the diminishing partnership of Islamic financing transaction in purchasing a house. It is to determine the key factors among selection criteria of home financing, where the factors of ranking will be provided. This study is basically a survey method of quantitative approaches. A structured questionnaire was developed, pre-tested and personally administrated to the target population of existing home financing customers as well as potential home financing customers. One hundred and forty three (143) respondents were sampled from the target population using purposive sampling. This study focuses on innate characteristics and acceptance ofDP home financing, the respondents for this sampling were selected based on their knowledge in Islamic banking and finance field as to eliminate effects from imbalance marketing and promotionThe factors influencing selection of diminishing partnership are identified; "concept of equity financing", "method of computing and pricing of equity based", "Shariah compliance", "justice and equality", "societal wellbeing of society and equitable distribution" and "overall view and preference".Respondents rated the importance of these aspects along a Likert-type scale. The fivepoint scale was represented by the following anchors: 1 = Strongly Disagree, 2 = Disagree, 3 = Somewhat Agree, 4 =Agree, 5 = Strongly Agree. The study is conducted by using Exploratory Factor Analysis (EF A). The finding shows that the factor "Shariah compliance" was the first ranking as the reason for selection of DP home financing product preferred choice.On the external validity of findings, this study recommends for future research to expand the survey in a larger sample for a better accuracy. The EFA method can be enhanced by using confirmatory factor analysis. It would provide the pattern of correlation among the set of variables and confirm each item that constructs the variables.

Islamic financial institutions offer home financing products which are fully compliant with Shariah. A problem lies in the fact that the musyarakah mutanaqisah home financing product lacks a reference, or price benchmark, which is independent on the interest rate. Many have suggested to price this product based on rental rate, as this rate is indicative of the real value of the property being occupied. The main objective of this study is to assess the viability of rental yield as a pricing reference for musyarakah mutanaqisah home financing, as an alternative to reliance on the market interest rate. This study adopts a multi-step research approach to arrive at conclusive findings. The first step is to determine whether the rental yield is reflective of real economic conditions, while the second is to examine the future trend for rental yield in four different states in Malaysia - Kuala Lumpur, Selangor, Johor, and Penang. In the third step, the forecast data are used to discern the details of musyarakah mutanaqisah home financing products, and, lastly, the resulting price between musyarakah mutanaqisah home financing based on rental yield is compared with murabahah and conventional home financing. This research utilizes the autoregressive distributed lag (ARDL) model to analyze the relationship between rental yield with selected macroeconomic and housing market variables for the 1988 to 2016 period using annual data. The forecasting technique of the auto regressive integrated moving average (ARIMA) and artificial neural network (ANN) models are adopted to assess the predictability of the rental yield for a period of 20 years. The study provides evidence that rental yield is found to be reflective when regressed against the macroeconomic and housing market indicators. The analysis shows that a short period is required for the model to adjust back to the long-term equilibrium. The result observes the future movements of the housing market by considering the rental yield. Based on a simulation exercise, the projected Islamic financial institution’s gain for musyarakah mutanaqisah home financing for Kuala Lumpur is RM278,143.76, which is the highest amount among four different states in Malaysia. While the projected Islamic financial institution’s gain for home financing in Penang is RM89,888.52, which is the lowest amount among the selected states. The difference in total payments made by a customer for musyarakah mutanaqisah home financing and murabahah/conventional housing loan amounts to RM36,640.02. The evidence in this research benefits to those stakeholders of Islamic financial institutions that want to refer to the rental yield as pricing benchmark for Islamic home financing. In conclusion, the rental yield is proposed as being a suitable alternative as the reference rate to benchmark price of Islamic home financing products, based on the musyarakah mutanaqisah model. Rental yield is regarded as a rate that is fair to both the customer and Islamic financial institutions, as it measures the actual rate of return to both parties in musyarakah mutanaqisah contract. The proposed rental yield is more stable, having less fluctuations and yet comparable to the conventional interest rates. The customers should gain more transparency as the rental yield measures the true usufruct of the property, as appose to the interest charges which are not tied to the property’s usufruct.