investor selection towards shariah and non-shariah compliant investment
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INVESTOR SELECTION TOWARDS SHARIAH AND
NON-SHARIAH COMPLIANT INVESTMENT
FATIN SYAZWANI BINTI SAFIYUDDIN
UNIVERSITI UTARA MALAYSIA
2012
INVESTOR SELECTION TOWARDS SHARIAH AND NON-SHARIAH COMPLIANT INVESTMENT
FATIN SYAZWANI BINTI SAFIYUDDIN (201045)
THIS THESIS SUBMITTED IN PARTIAL FULFILLMENT
OF THE REQUIREMENTS FOR THE BACHELOR OF ISLAMIC FINANCE AND BANKING (HONS)
ISLAMIC BUSINESS SCHOOL COLLEGE OF BUSINESS
UNIVERSITI UTARA MALAYSIA
2012
SUPERVISOR DECLARATION
I, the undersigned, certified that Fatin Syazwani binti Safiyuddin (201045) candidate for
the Bachelor of Islamic Finance and Banking has presented her thesis which is Investor
Selection Towards Shariah and Non-Shariah Compliant Investment have been examined
and accepted as a partial fulfillment of the requirements for the award of Bachelor of Islamic
Finance and Banking with Honors.
____________________________
DR. SELAMAH BINTI MAAMOR
Senior Lecturer /Supervisor
Islamic Business School
College Of Business
Universiti Utara Malaysia
Date:
STUDENT DECLARATION
I agree and full responsible that this dissertation Investor Selection Towards Shariah and
Non-Shariah Compliant Investment is fully done by me. I bear full responsibility for
checking whether material submitted is subject to copyright or ownership right.
___________________________________________
FATIN SYAZWANI BINTI SAFIYUDDIN (201045)
Bachelor of Islamic Finance and Banking (Hons)
Islamic Business School
College Of Business
Universiti Utara Malaysia
Date:
PERMISSION TO USE
In presenting this research paper in partial fulfillment of the requirement of my Degree in
Islamic Finance and Banking from Universiti Utara Malaysia, I agree that the University
Library may make in freely available for inspection. I further agree that permission for
copying of this research in any manner, in whole or in part, for scholarly may be granted by
my supervisor or in their absence by the Dean of College of Business. It is understood that
any copying or publication or use of this research or parts thereof for financial gain shall not
be allowed without my written permission. It is also understood that due recognition shall be
given to me and Universiti Utara Malaysia for any scholarly use which may be made of any
material from my research.
Requests for permission to copy or to make other use of materials in this research, in whole
or in part, should be addressed to
Dean of College of Business
Universiti Utara Malaysia
06010 Sintok
Kedah DarulAman
ABSTRACT
The focus of this research is to study the investor selection towards shariah compliant investment (SCI) and non-shariah compliant investment (NSCI) which considers demographic background, current investment, knowledge and perception of the respondents. Such a study is important in order to know the literature review about the history of Islamic finance and SCI, decision making and selection towards SCI and NSCI, prohibition elements in SCI and criteria to determine the SCI. The research approach adopted in this dissertation includes descriptive and cross-tab analysis. The sample of this study is 100 staff in Universiti Utara Malaysia (UUM). The findings from this research provide evidence that professionals and management group prefer to invest in SCI. In addition, lack of knowledge and information are main factors that influence investor prefer in NSCI. Researcher also found that investors have a positive perception towards the advantages of SCI, the criteria and high confidence level in SCI, however, the consciousness to choose the SCI is still low. This dissertation recommends that the educational system should be restructured and aggressive promotion should be done.
Keyword: Shariah Compliant Investment (SCI), Non-shariah Compliant Investment (NSCI)
PILIHAN PELABUR TERHADAP PELABURAN YANG PATUH DAN TIDAK PATUH SHARIAH
ABSTRAK
Fokus kajian ini adalah untuk mengkaji pemilihan pelabur terhadap pelaburan yang patuh dan tidak patuh shariah dengan mengambil kira faktor demografi, pelaburan semasa, pengetahuan dan persepsi responden. Kajian ini juga melihat kepada kajian-kajian lepas dan telah diklasifikasikan dari aspek sejarah kewangan islam dan pelaburan patuh shariah, proses membuat keputusan dan pemilihan terhadap pelaburan patuh dan tidak patuh shariah, unsur-unsur larangan dalam pelaburan patuh shariah dan kriteria yang diambilkira untuk menentukan status patuh shariah.Penyelidik menggunakan kaedah diskriptif dan cross-tab untuk menganalisis data yang telah diperolehi dari borang kaji selidik. Penyelidik telah mengambil 100 sampel yang melibatkan staf di Universiti Utara Malaysia. Kajian telah mendapati bahawa golongan profesional dan pengurusan memilih untuk melabur dalam pelaburan patuh shariah. Selain itu, kurang pengetahuan dan maklumat menyumbang kepada pemilihan pelabur terhadap pelaburan tidak patuh shariah. Penyelidik juga mendapati bahawa pelabur memberikan persepsi yang positif terhadap kebaikan pelaburan patuh shariah, kriteria untuk membuat pelaburan dan mempunyai keyakinan terhadap pelaburan patuh shariah namun, kesedaran mereka untuk memilih pelaburan patuh shariah masih rendah. Penyelidik memberi cadangan agar penstrukturan semula sistem pendidikan dan promosi yang lebih agresif untuk memberi kesedaran kepada pelabur terhadap pelaburan patuh shariah.
Kata kunci:Pelaburan Patuh Shariah, Pelaburan Tidak Patuh Shariah
ACKNOWLEDGEMENT
Thanks to Allah for his blessing, so I could accomplish this academic research within the prescribed time. Countless thanks to my supervisor, Dr Selamah bt. Maamor for her opinions, guidances, encouragements and attentions throughout this academic research.
For my beloved parents, Safiyuddin b. Hj. Yusof and Fazillah bt. Megat Said in terms of motivation and financial support in completing this academic research.
Last but not least, thank you to the staff of Universiti Utara Malaysia for taking their precious time to answer the questionnaires and give an opportunity to me to complete this academic research.
Thank you also goes to Mr. Zamri Salleh, Hani Nabilah bt. Mazlan Ali, Siti Rahmah Yunita Abdul Rahim, Abdul Malik Abdul Rahim, Muhammad Firdaus Hj. Othman and friends who have contributed directly or indirectly during conducting this academic research.
TABLE OF CONTENTS
PAGE
Supervisor Declaration i
Student Declaration ii
Permission to use iii
Abstract iv
Abstrak v
Acknowledgement vi
Table of content vii
List of table ix
List of exhibit x List of abbreviations xi
CHAPTER 1 INTRODUCTION
1.1 Introduction 1
1.2 Problem Statement 4
1.3 Research Objectives 6
1.4 Significance Of The Study 7
1.5 Scope Of The Study 7
1.6 Organisation Of Study 7
CHAPTER 2 LITERATURE REVIEW
2.1 Introduction 9 2.2 History of Islamic Finance and SCI 9 2.3 Decision Making and Selection Towards SCI and NSCI 12 2.4 Prohibition of SCI 14 2.5 The Criteria To Determine The SCI 15 2.6 Conclusion 18
CHAPTER 3 RESEARCH METHODOLOGY
3.1 Introduction 19 3.2 Questionnaire Design 19 3.3 Sampling Technique 21 3.4 Field Work 21 3.5 Analysis Plan 22 3.6 Conclusion 23
CHAPTER 4 RESULT FINDINGS
4.1 Introduction 24 4.2 Demographic’s Background 25 4.3 Current Investment 26
4.4 Knowledge 28
4.5 Perception 29
4.6 Demographic’s Background, SCI and NSCI 32
4.7 Current Investment, SCI and NSCI 33
4.8 Knowledge, SCI and NSCI 34
4.9 Perception, SCI and NSCI 36
4.10 Conclusion 42
CHAPTER 5 CONCLUSION AND RECOMMENDATION
5.1 Introduction 44 5.2 Summary Of Findings 44 5.3 Policy Implication and Recommendation 46
REFERENCES -1-
APPENDIX -1-
LIST OF TABLE
PAGE
Table 1.1 List of Shariah Compliant Stocks in Bursa Malaysia 5
Table 4.1 Demographic’s Background 25
Table 4.2 Current Investment 27
Table 4.3 Knowledge Towards Basic Islamic Principles and SCI 28
Table 4.5 Perception of Information 30
Table 4.6 Perception of The Advantages of SCI 30
Table 4.7 Perception of Criteria to Make Investment 31
Table 4.8 Confidence Towards SCI 32
Table 4.9 Demographic’s Background Towards SCI and NSCI 33
Table4.10 Current Investment Towards SCI and NSCI 34
Table 4.11 Knowledge Towards SCI and NSCI 35
Table 4.12 Perception of Information 36
Table 4.13 Advantages of SCI 38
Table 4.14 Criteria to Make Investment 40
Table 4.15 Confidence Towards SCI and NSCI 42
LIST OF EXHIBIT
PAGE
Exhibit 3.1 Schematic Diagram of Research Population. 21
LIST OF ABBREVIATIONS
KLSE Kuala Lumpur Stock Exchange
KLSI Kuala Lumpur Shariah Index
MESDAQ Exchange of Securities Dealings & Automated Quotation Bhd
NSCI Non-Shariah Compliant Investment
SAC Shariah Advisory Council
SC Securities Commission
SCI Shariah Compliant Investment
UUM Universiti Utara Malaysia
CHAPTER 1
INTRODUCTION
1.1 INTRODUCTION
The world is now approaching of the second decade of the 21st century. After mid 2008,
the world was jolted by a new economic crisis and financial crisis. Effects are being
felt primarily the United States (U.S.) and Europe. The decline in the global financial sector
are more severe than the financial crisis that hit Asia in 1997. For this moment, U.S. fear the
current crisis, while at the same time the country is struggling with a serious crisis in the
money market. More financial institutions are affected by the credit crunch. Therefore, on
2nd October 2008, Russian President, Dmitry Medvedev in Russian-German Development
Forum said that the best way to overcome this problem was to build a new economic system
which enhance the principle of multi-polar world, the rule of law and concern with
the common needs. It is clear now that the banks are responsible for the decline in system that
impact the world financial crisis. As French President, Nicolas Sarkozy said that "Laissez-
faire was dead". The banking crisis happened because many banks create money on its own
without any collateral at a much higher rate plus an increased rate of real ability development
of the economy which impact the existence of ‘bubbles’. Regarding of this issue, the Former
Prime Minister, Tun Abdullah Ahmad Badawi also said that Islamic financial system has the
strength to face the world economic situations that cannot be expected compared to the
conventional financial system.
In Malaysia, Islamic finance industry has shown a rapid transformation in recent
decades. It has grown into one of the competitive component of the financial system in
Malaysia and become one of the drivers of growth and development of the economy. As
stated by Syed Othman Al-Habshi (1992) Malaysia, as an Islamic country has the potential to
make the Islamic investment as a source that can support economic growth.
With conventional and Islamic financial system operating in tandem, Malaysia continues
to foster the expansion of this sector at local and abroad. Malaysia has emerged as a country
that has the most comprehensive finance in the world, supported by all components required
of a financial system of Islamic banking, takaful and Islamic money market and equity, based
on its own legal system and comprehensive system.
Nor Mohamed Yakcop (1996) has described the concepts and theories of Islamic finance as
practiced in Malaysia. As one of the founders of Islamic financial system in Malaysia and a
vast experience in this field, he felt that the Islamic financial system that consists of a variety
of products and instruments must be developed and explored. Moreover, Zaharuddin (2008)
said that no doubt many of the names of renowned scholars, but not all can provide the right
verdict, especially in the field of modern financial instruments due to the existence of
modern-instrument is a thriving and foreign transactions as referred to in scripture and
classical literature. This situation definitely needs contemporary research in the field of
Islamic finance. Azizi (2009) also stated that Islamic financial market conditions in
Malaysia are growing rapidly, many things can be done to improve the global
competitiveness of Islamic financial products to be an important complement to the
conventional system as well as the need to increase awareness among investors about the
presence of Islamic products.
However, the community in Malaysia especially Muslims are still not aware of the Islamic
Finance Industry subsequently affect their selection towards non-shariah compliant
investment. In fact, every mukallaf has responsibility for making a choice in the daily
activities based on shariah. It should also be adopted in business transactions and investment
by taking into account the significance of religious as a guideline to achieve al-falah which
means happiness in this world and the hereafter.
We are very curious about how individual make the decision to invest especially as a
muslim’s investor. Therefore, we choose to study about the selection towards shariah and
non-shariah compliant investment (NSCI). We believe that demographic’s background,
current investment, level of knowledge and perception are the main factors why muslims
make decision in investing non-shariah compliant investment. For example, the muslims do
not know the differences between islamic and conventional investment and the consequences
when they use their money which come from non-shariah compliant investment.
We want to know how far the individual’s aware the consequences if they invest and take the
profit from non-shariah compliant investment subsequently they are willing to take the
principal amount only in returns and the remainder they will donate it. Besides, they have low
level of appreciation pertaining the value of Islam in seeking of wealth and property. This
occurs through culture, influenced by family and friends without realizing the main goal for
the creation of man is worship to Allah.
Therefore, we believe that the knowledge of Islamic transaction especially in Islamic
investment should be explored and understood for common good. The problem statements
are also stated in the next section in order to explain details why we prefer to study about this
topic.
1.2 PROBLEM STATEMENT
In Malaysia, economy continued to grow although at a moderate pace in the first quarter of
2011 due to unstable global economic conditions. In addition, second capital market master
plan was also launched on 12 April 2011 in order to create new growth opportunities more
diversified. In a report released by Bank Negara Malaysia, Islamic capital markets also give a
positive growth from time to time. Besides, the Treasury Department of Malaysia also stated
that Malaysia is a global leader in Islamic Fund Management Industry which is in the first
seven month of 2011, there was another one Islamic Fund Management companies had been
approved subsequently brought up total 16 companies in this year compared to 15 companies
in 2010. Islamic Unit Trust Funds also rose up from 152 funds (RM 24 billion) in 2010 to
160 funds (RM 26.4 billion) in 2011. Islamic Wholesale Funds was increased to 24 funds in
2011 compared to 19 funds in 2010. Exchange Traded Funds (ETF) was also increased from
RM 579 million in 2010 to RM626 million in 2011. As stated by 25 November 2011, there
are 847 listed companies in main market of Bursa Malaysia Berhad and 88% of the securities
are shariah-compliant investment (SCI). It represents two-thirds of Malaysia’s market
capitalisation. Therefore, investors have many choices to an extensive selection of shariah
compliant securities across diversified industries for broader and deeper investment
portfolios. Yahya and Joni (2009) had analyze the growth of the shariah compliant stocks in
Bursa Malaysia as shown in Table 1.1.
Table 1.1: Shariah Compliant Stocks in Bursa Malaysia
Year The numbers of
stock in Bursa
Malaysia
The numbers of
shariah compliant
stocks
The numbers of shariah
compliant in main board
(KLSI)
The numbers of shariah
compliant in secondary
board
The numbers of shariah
compliant in MESDAQ
Percentage of shariah compliant
counter (%)
1999 757 544 278 286 - 73
2000 796 585 319 266 - 77
2001 812 636 364 272 - 79
2002 885 677 395 273 9 80
2003 906 699 436 240 23 81
2004 963 778 477 254 47 83
2005 1011 857 508 257 65 85
2006 1029 886 521 240 125 86
2007 991 853 513 220 120 86
2008 980 855 522 216 117 87
(Source: Yahya & Joni, 2009)
Based on growth-promoting of the Islamic Investment has been shown, we are still
wondering whether shariah-compliant investments is still not initiated by investors. We want
to see in detail whether the education level of investor will make them more aware of shariah-
compliant investments. In addition, we also wonder whether occupational impact for the
selection of shariah or non-shariah compliant investment. Perhaps the professional and
academician group are exposed about shariah-compliant investment or otherwise. We also
want to see the relationship between monthly income of the investor with the selection of
investment products. Moreover, probably lack of knowledge of the investor will influence
them to choose non-shariah compliant investment. It is possible also lack of the basic
knowledge regarding the principles of Islam itself make investor less concern with the
selection of investment products. Investors may only see that shariah-compliant investment or
halal in food and marriage aspects only and assume that the investment aspects as the
different thing that should not be taken into consideration either it is shariah or non-shariah
compliant investment. We are very curious whether the investor has a negative perception of
shariah compliant investment which is new in capital market compared to non-shariah
compliant investment.
Therefore, several research questions were identified based on discussion of problems and
issues described above. This study will try to answer questions such as:
a) Is there a relationship of demographic’s background of the investor that influence
selection towards shariah compliant investment and non-shariah compliant
investment?
b) Is there a relationship of current investment of the investor that affect selection
towards shariah compliant investment and non-shariah compliant investment?
c) Is there a relationship of knowledge of the investor that influence selection towards
shariah and non-shariah compliant investment?
d) Is there a relationship of perception of the investor that influence selection towards
shariah and non-shariah compliant investment?
We are stated the objective of this study in the next section in order to make the study is in
the line with the topic.
1.3 RESEARCH OBJECTIVES
The objectives of this research are:
a) To study the relationship between the demographic’s background and the investor
selection towards shariah compliant investment and non-shariah compliant
investment.
b) To study the relationship between current investment and the investor selection
towards shariah compliant investment and non-shariah compliant investment.
c) To study the relationship between knowledge and the investor selection towards
shariah compliant investment and non-shariah compliant investment.
d) To study the relationship between perception and the investor selection towards
shariah compliant investment and non-shariah compliant investment.
1.4 SIGNIFICANCE OF THE STUDY
We believe that this study is important to identify the dominant factors that contribute to the
selection of investors to the shariah compliant investment (SCI) and non-shariah compliant
investment (NSCI). Through this study, we will get the factors that influence of the investor
selection towards SCI and NSCI and the data will help the policy maker in order to make a
better improvement. We sincerely hopes that it will increase the understanding of the shariah
compliant investment thus bring awareness to the investor to choose shariah compliant
investment. In addition, the findings of this research will help to enrich the study of Islamic
finance especially in Islamic investment. Besides, this study is will be a source of reference
for researcher in the future. However, the researcher has scope and limit the study because of
several reasons as explained in the next section.
1.5SCOPE OF THE STUDY
This study is about the investor selection towards shariah and non-shariah compliant
investment. It only focusing on the demographic’s background, current investment,
knowledge and perceptions that probably influence the investor towards shariah and non-
shariah compliant investment. The population of this study involve only the staff in UUM.
The study through observations and questionnaires distributed randomly to the staff in UUM
only.
1.6 ORGANISATION OF STUDY
This research report consisted of 5 chapter. Chapter 1 is introduction chapter which divided
into 6 sections. The contents in chapter 1 is background about the global financial crisis and
then,Islamic finance had been suggested to solve the crisis. The chapter also include the
problem statement, objectives, significance and scope of study.
Chapter two is literature review which contains about the basic of terminologies and
definition that will be easy to understand the contents. In addition, chapter two also explain
where the works that have been done and related works published by other researchers in this
field. The collection is from year 1992 until 2011. We also give some critics on behalf of her
opinion.
Chapter three about research methodology. The contents in this chapter is questionnaire
design, sampling technique, field work, analysis plan and conclusion. The method using for
this research also discussed in this chapter.
Chapter four about the analysis of results and findings from the data collection. In this
chapter, we use descriptive analysis and crosstab to analyse the result which use SPSS 16.0.
Chapter five, we make a conclusion and give some recommendations regarding the investor
selection towards shariah and non-shariah compliant investment.
CHAPTER 2
LITERATURE REVIEW
2.1 INTRODUCTION
In this chapter, we have view previous research from other researchers regarding on the same
topic which is Shariah Compliant Investment (SCI). Previous research focused their study on
the SCI products, the prohibition elements in SCI products and the supervisory bodies that
monitor the shariah listed company which is Shariah Advisory Council (SAC) of Securities
Commission (SC). However, there is no studies found about the investor selection regarding
the shariah and non-shariah compliant investment (NSCI). Most of the previous research
focused their study in Malaysia.
This chapter will be a guideline in order to make this research more accurate and avoiding
bias. This chapter consists of 6 sections which is introduction, history of Islamic finance and
SCI, decision making towards shariah and non-shariah compliant investment, prohibition in
SCI and criteria to determine the SCI. The details about the history of Islamic finance and
SCI will be explained in the next section.
2.2 HISTORY OF ISLAMIC FINANCE AND SCI
Islamic finance has grown successfully since it first emerged in the 1970's and the core values
in Islamic finance is prohibition to any activities which involve interest, gambling and
speculative trading. Based on Akmal Hassan (2011), the existence of shariah-compliant
investments in Malaysia date back more than four decades but it was only in the last eleven
years that interest and investment in this sphere has really taken off.
According to Rusniyati (2009), the development of Islamic financial system in Malaysia
officially began with the establishment of Lembaga Tabung Haji in 1969. Even though it was
established to meet the objectives of the Muslims community to save and invest for the
purpose of pertaining pilgrimage in Mecca, the existence of this agency shows that Malaysia
is moving towards Islamic finance which provide the interest free transaction.
Then, Maznah and Ain (2009) stated that the first Islamic banks namely Bank Islam Malaysia
Berhad was established in 1983 developed the Islamic financial system in Malaysia.
The development of Islamic financial system was expanded to the first Islamic insurance
company which is Syarikat Takaful Malaysia Berhad in 1984, clarified by Nasir (2009).
According to Fadhilah Mansor (2007), the development of Islamic finance followed with the
developments in Islamic financial market that involve the money market and capital market.
Islamic money market began in January 1994 and it was the first Islamic money market in the
world at that time.
According to Securities Commission websites, the Shariah Advisory Council was established
in May 1996. Hashim Yahya (2002) also stated that the history started since August 1995
when Securities Commission and Islamic Instrument Study Group (KPII) are collaborated
together in order to analyse the securities in KLSE which is now known as Bursa Malaysia.
From that, the basic criteria and guidelines was succesfully designed to evaluate the listed
securities whether it follow the shariah requirement or not. Then, Islamic Instrument Study
Group was upgraded to Shariah Advisory Council of Securities Commission to announce the
list of approved securities based on the Shariah principles in June 1997. It was because
Islamic finance industry is a relatively new entrance to the world of finance and the operating
principles differ from non-shariah compliant transaction or conventional finance which is
traditionally practiced in the West.
Yahya and Joni (2009) stated that Islamic Stock Market refers to a market whether in the
form of stock or on the counter market in which shares of the company’s activities involved
conducted in a manner that does not conflict with Islamic’s view and Shariah principles. He
also stated that Islamic stock market applying Islamic law in the stock market transaction in
which the market is free from the elements of interest, uncertainty and gambling.
Besides, Yahya and Joni (2009) desribed that during the operational period of Islamic stock
market in Malaysia, a number of Islamic stock indices have been introduced to provide the
choices to the investor such as RHB Islamic Index (1996), Kuala Lumpur Shariah Index
(1999), Dow Jones-RHB Islamic Malaysia Index (2005) to replace the RHB Islamic Index,
FBM EMAS Shariah Index (2007) which replace the Kuala Lumpur Shariah Index and FBM
Hijrah Shariah Index (2007).
Based on Yahya and Joni (2009), in order to evaluate the listed securities, the Shariah
Advisory Council built the basic characteristics as a guideline. The characteristics based on
primary and secondary sources. The primary sources which is refered by Shariah Advisory
Council is Al-Quran and As-Sunnah. It is because, Islam encourages its followers to refer that
sources to solve the problems in life. Shariah Advisory Council also use secondary sources to
support their decision such as Ijma’, Qiyas, Maslahah, Istihsan, Istishab, Sadd Zari’ah, Urf,
Maqasid Syariah, Siyasah Syari’iyah, Ta’wil, Istiqra’ and Talfiq which are approved by
Islamic law.
In overall, the variety of shariah-compliant investment products are offered by banks and
financial institution year by year. However, the investors are still not aware the existence of
the products. It is probably due to negative assumptions towards shariah compliant
investment. Therefore, the bank and financial institution should take the appropriate action in
order to promote shariah compliant investment products and subsequently affect the investor
selection towards shariah and non-shariah compliant investment.
2.3 DECISION MAKING TOWARDS SCI AND NSCI
After seeing the history of Islamic finance and shariah compliant investment, we continue to
the factors that would influence an investor selection towards shariah and non-shariah
compliant investment.
Several factors influence financial decision making. These factors, including past experience
(Juliusson, Karlsson, & Garling, 2005), age and individual differences (Bruin, Parker, &
Fischoff, 2007), belief in personal relevance (Acevedo, & Krueger, 2004), and an escalation
of commitment, influence what choices people make. Understanding the factors that
influence financial decision making process is important to understand what decisions are
made. That is, the factors that influence the process may impact the outcomes.
In addition, according to Schmidt and Sevak (2006), from the earlier studies, it shows women
invest their asset portfolios more conservatively than their male counterparts. Besides,
women’s investment has historically been lower than men’s for several reasons, including
social and various demographic concern.
Karthikeyan (2001) conducted research on Small Investors Perception on
Post office Saving Schemes and found that there was significant difference among the four
age groups, in the level of awareness for Kisan Vikas Patra (KVP), National Savings
Scheme (NSS), and Deposit Scheme for Retired Employees (DSRE), and the Overall Score
Confirmed that the level of awareness among investors in the old age group was higher
than in those of young age group.
Other than demographic’s background, Syed Othman Al-Habshi (1992) stated the aspects of
knowledge is a key factor to make an investment decision. It is shown from the perspective of
history, Islam is a religion which is based on practical wisdom. In addition, Arab societies
have also been used to partnership contracts, the basic principles of contracts and business
complications since the 8th century. They came to know the insurance contracts in ensuring
sailing throughout the year. Then, Azizi (2009) added that they managed to do business as
well as to set up various companies and make all trade agreements and in accordance with
shariah compliant. However, everything is in history as Muslims currently faces two major
dilemmas and that are lack of knowledge and secondly moral problems.
Syed Othman Al-Habshi (1992) also stated lack of knowledge among Muslims is seen as a
major barrier to develop Islamic financial system. The Islamic products cannot be developed
unless the existence of large numbers of scholars to think about this problem.
Based on Saharudin (2003), lack of expertise and knowledge in banking, takaful and shariah
compliant securities are barriers in development of Islamic capital market today. This
phenomenon occurs not only in Malaysia but also worldwide.
Nowadays, there is no doubt that there are various forms of literature debate on Islamic
finance, especially in the aspects of shariah compliant securities investment but it is very
limited. In the modern Islamic references on this problem is not found and deeply discussed
and sometimes just a small topic in a book and magazine. This also can be seen in the
writings of Sya’ban Muhammad Islam al-Burwary (2007) about “Islamic Point of View in
The Stock Exchange” which explained the Islamic capital market industry but the explanation
was still limited.
Many papers and studies discussed about Islamic financial matters which consist about
shariah compliant investment, but the writing does not keep pace with the implementation as
now in Malaysia exist of variety contemporary transactions and sometimes the fiqh hukm on
that transaction does not specifically identified. Regarding of this issue, many people
wondered whether this investment lawful implementation in Islam and also valid. Therefore,
the next section will explain details about the prohibition in shariah compliant investment.
2.4 PROHIBITION OF SHARIAH COMPLIANT INVESTMENT
This subtopic is very important to clarify to understand deeply about the prohibition elements
in shariah compliant investment. These prohibition elements have also been described in
previous research such as Yahya and Joni (2009), Azizi (2009), Hussin Salamon (2009) and
Hashim Yahya (2002). Therefore, we are very confident that this suptopic is very important
to disclose.
According to Hussin Salamon (2009), there are 7 prohibitions in shariah compliant
investment and that are prohibition of al-tanajusy, prohibition of al-gharar, prohibition of
tadlis al-‘aib, prohibition of al-ghabn al-fahisy, prohibition of al-ghalat, prohibition of riba
and prohibition of maisir. The terms had been stated by Hussin Salamon (2009) will be
detailed as below.
Al-tanajusy or known as market manipulation which is normally occur in capital market
especially in stock market. For example collusion between sellers and buyers who pretend to
what to buy at higher prices with intention to deceive other buyers.
Al-gharar means uncertainty or lack of knowledge regarding the subject matter or price in a
contract of exchange. In fiqh literature term gharar is associated with risks and uncertainties
in contractual agreements. For example, one is dealing with forward, futures and option
trading such as a contract to buy or sell commodity and financial instrument at some date in
the future. This transaction have the ambiguities or uncertainties and it is not comply with
shariah principles.
Tadlis al-‘aib is any methods employed to conceal the defects found in the goods sold in the
contract of sale. Sales of goods, hire the handicapped should be returned and the contract is
made void by itself. This situation is still void even the seller do not know about the defect of
the goods.
Al-Ghabn means less. If any element of this done deliberately as a way of cheating to gain
profit in a contract, it is forbidden in Islam whether it is done by the buyer or the seller of the
contract.
In conclusion, community especially investors are concern about the sources of income and
in flows of money because we already have the alternative which choose the Islamic
institution to deposit our money. Normally, people think of the lawful source of revenue
came from work and effort without considering small matter such as where the money we
saved and invested and how the transaction process. Many assumptions that we discussed in
research and mass media about the Muslim community today lack of moral values but believe
it or not the consequences of Muslim character because of the illegal sources of the income
itself. How can we develop the pure hearts of Muslim while in their flowing blood from
illegal sources and syubhah?
2.5 THE CRITERIA TO DETERMINE THE SCI
After stating the prohibition of shariah compliant investment, we will explain about the
criteria necessary for an investment to be classified as shariah compliant investment. These
criteria determined by Shariah Advisory Council of Securities Commission to ensure that a
company is meet the criteria and will be announced as a listed shariah compliant companies.
As Mehdi Sadeghi (2008) stated that the selection of shariah compliant investment
determined by the main activities of a financial institution or company in terms of products
and services offered. Rationally, the main activity that provides opportunities to financial
institution or companies subsequently distributed to shareholders in form of profits and
dividend. Therefore, SAC will do a screening process based on qualitative and quantitative
parameters.
The qualitative parameters use in order to evaluate the status of companies and to ensure that
the companies do not involve in financial services based on riba (usury), gharar
(uncertainty), maisir (gambling) and production in non-halal goods.
Yahya and Joni (2009) described that the financial service based on riba as conducted by
conventional financial institutions including commercial banks, finance companies and
others. According to Muhammad Ayub (2007), riba means an increase, but it does not meant
all things that increased considered as riba according to law jurisprudence. Based on Hashim
Yahya (2002), riba has two categories which is riba al-Qurudh that occurs through debt or
loan and riba al-Buyu’ that occurs in selling and buying transaction.
In addition, Yahya and Joni (2009) mentioned that gharar normally occurs in conventional
insurance and that is why the conventional insurance is prohibited in shariah compliant
investment. Muhammad Ayub (2007) explained that gharar is refer to the uncertainty or
hazard caused by lack of clarity regarding the subject matter or the price in a contract of
exchange. A sale or any other business contract which entails an element of gharar is
prohibited.
According to Daud Bakar (2000), the jurists says that conventional contract is not allowed in
the laws because such contracts involve the elements of uncertainty in terms of total premium
and the amount of compensation received. Related to the conventional insurance issue, it
contains the element of gharar in term of policyholder enters into a business deal in which
his liability and the right both remain contingent. He losses the amount given as premium if
the event of insurance does not occur, as in the case of general insurance. The insurer or
company does not know how much he will owe to the insured. In many cases, an insured also
does not know how much he will ultimately to the insurer. In life policies, a policyholder has
generally to lose all premiums that he had paid if he cancels his policy within the first two or
three years of the contract.
Furthermore, Yahya and Joni (2009) described that maisir such as casino and sport toto.
Muhammad Ayub (2007) explained that maisir or qimar is like games of chance and it refers
to easily available wealth or acquisition of wealth by chance, whether or not it deprives the
other’s right.
Last but not least, Yahya and Joni (2009) mentioned that provide non halal services or
products such as pork, wine and carcass. The other prohibition elements are tobacco based
products such as cigarettes, brokerage or trading securities that do not comply with shariah
and other activities found that do not comply with shariah such as the practice of prostitution
and immoral activities.
Mehdi Sadeghi (2008) also stated that SAC considers the additional criteria for the company
that involve in halal and non-halal elements such as public perception must be a good
corporate image and the company’s core activities give the maslahah (goodness in general) to
the Muslims and state and the elements that do not comply with shariah is very small and
involve umum al-balwa, ‘urf, and the rights of Muslims who are accepted by Islam.
Mehdi Sadeghi (2008) also stated that quantitative parameters are mainly used to determine
the level of mixed contribution from halal and non-halal elements towards revenue and
profits of the company. According to this parameter, if the contribution of non-halal elements
exceed the benchmark, the company will not be classified as shariah compliant. The
benchmark determined by Shariah Advisory Council of Securities Commission and further
explained by Yahya and Joni (2009) is 5% to measure the level of mixed contributions from
the activities that are clearly non-compliant shariah as usury, gambling, liquor and excessive
entertainment. Then, 10% to measure the level of mixed contributions from activities
involving umum al-balwa which is involve the most people and hard to avoid. For example
interest income from fixed deposit account of conventional bank and tobacco-related
activities. The benchmark cannot exceed 20% for rental receive from the activities which is
not comply with shariah such as rental of premises used in gambling, liquor and pub. In
addition, 25% is used to measure the level of mixed contributions from the activities that are
generally in line with shariah and have maslahah to the public, but there are other elements
that may affect the status of shariah compliant activities such as operating hotels, share
trading, brokerage that probably involve other activities not in line with shariah.
In Malaysia, even though many studies in the Islamic finance and Islamic economics have
been conducted, but there is no specifically concern about the selection of investor towards
shariah and non-shariah compliant investment whereas it should be a pillar in an investment
decision. Therefore, studies in this field is very important to know in order to increase the
understanding about the criteria of the shariah compliant investment. Besides, this criteria
will be a meaningful information to the investor in order to make an investment decision.
This research could create a high personal building consequences from the exposure of the
Islamic financial system especially in shariah compliant investment.
2.6 CONCLUSION
Based on the literature review, shariah compliant investment which a part of Islamic Capital
Market is a popular topic to discuss in the context of ilmiah compared to the other areas such
as law, economic and social. However, the tendency of Islamic thinkers to discuss this issues
are very limited. Mostly the presented written before this just like a legal arbiterand lead to
the classical method based on the current environment. Therefore, refer back to the objective
in chapter 1 which is to study the investor selection towards shariah and non-shariah
compliant investment based on demographic’s background, current investment, knowledge
and perception then the methodology that used in this research had been explained in Chapter
3.
CHAPTER 3
RESEARCH METHODOLOGY
3.1 INTRODUCTION
The objective of this research is going to determine whether demographic’s background,
current investment, knowledge and perception of investor have relationship with the investor
selection towards shariah compliant investment (SCI) and non-shariah compliant investment
(NSCI). In order to achieve the objective, we will use descriptive method to clarify the data
collection and also use cross-tab method to analyze specifically about the findings.
This chapter consists of 6 sections which are introduction, questionnaire design, sampling
technique, field work, analysis plan and conclusion. We also collect data as a central part of
study to gain a data. For the purpose of gaining the data, we had gathered the data through
questionnaire. The questionnaire consists of four parts and that are demographic’s
background, current investment, knowledge and perception. In sampling technique consist of
the population of this research and details of sample uses. The details about the questionnaire
design will be explain in the next section.
3.2QUESTIONNAIRE DESIGN
According to Mohammad Najib Abdul Ghafar (1999), the questionnaire method is one of the
most popular method among researchers as easily administered after the data was built. It is
easily processed to analyse. It is appropriate because the respondents will have the
opportunity and free to answer all the questions without any forcet. The questionnaires will
be distributes to the sample as well as interviewing through face to face. A questionnaire is
formalized set of question for eliciting information that will be given to 100 respondents. The
respondent of this questionnaire is staffs in UUM.
The questionnaire set consists 4 main sections which is demographic’s background, current
investment, knowledge and perception.
The questions in the Section A asked about the demographic’s background of the
respondents that include gender, age, marital status, race, education level, occupation,
residence, monthly income and dependents.
Then, in the Section B, the respondents will be asked about their current investment including
the questions about the type of current investment whether it is shariah or non-shariah
compliant investment, current investment’s institution, current percentage of SCI, sources of
the investment, resources to invest, zakat payment and willingness for investment.
Last but not least, in Section C, the respondents will be tested about the knowledge towards
basic principles in Islam including the meaning of Islam, five pillars of Islam, faith pillars,
prayer obligation, fasting obligation, zakat obligation and aurat obligation. The questions
also ask about the basic knowledge in SCI principles such as the limitation of SCI, meaning
of usury and gambling, obligation to invest in SCI, the prohibition of investment in tobacco
and non-shariah compliant brokerage.
Next, in Section D, the questions about the perception of respondents towards SCI. In this
section, we use likert scale 1 (strongly disagree) to 5 (strongly agree) to know the perception
of the investor towards shariah and non-shariah compliant investment. It consists of four parts
such as part A about information, part B about the advantages of SCI, part C about the
criteria to make an investment and part D about confidence level towards SCI. Please refer to
the Appendix A for further details.
After the questionnaire was developed, we had conducted the pilot test. A pilot test is
conducted using a small of respondents with characteristic similar to the target populations. A
set of 10 pretest questionnaires will be distribute to measure its reliability and validity before
the actual numbers are distributed. The next section will explain about the research sampling.
3.3 SAMPLING TECHNIQUE
In order to meet the objectives of this study, we get the total number of staff in Universiti
Utara Malaysia (UUM) from Registrar Department of UUM. The total number of staff is
3102 from 36 departments in UUM. From this figure, we assume that only 50% of them are
investors. Then, we target to collect the data from 150 respondents. However, because of time
constraint and some other problems, we only get 100 respondents to answer the questionnaire
and it is still appropriate according to Sekaran (2009), the rules of thumb for determine the
sample size is larger than 30 and less than 500 are appropriate for most research in order to
avoid the inaccurate and unreliable. The details about the research population will be
explained in Exhibit 3.1 as below.
Exhibit 3.1: Schematic diagram of research population
Sampling is a strategy to obtain information about a population of some of the
individuals who comprise the population (Mohd Najib Konting, 2004). According to Sekaran
(2009), non-probability sampling technique refers to the elements do not have a known or
predetermined chance of being selected as subjects. In addition to that, according to Malhotra
(2006), probability sampling as a sampling procedure in which each element of the
population has a fixed probabilities chance of being selected for the sample.
3.4 FIELD WORK The field work process consist of 5 steps include set up questionnaire, pilot test, editing
questionnaire, and distribute the questionnaires. The first step began on September 2011
which have several sections related to the objective of the study. Then, the pilot test was
conducted where 10 respondents with similar characteristics of the respondents was selected.
The purpose is to test the understanding of the questionnaire. Then, we will make
100 OF STAFF WILL BE CHOOSE
RANDOMLY
9 OF SELECTED DEPARTMENTS
IN UUM
STAFF IN UUM
SUBJECT POPULATION SAMPLING FRAME SAMPLE
STAFF IN
UUM
9 SELECTED
DEPARTMENTS
IN UUM
100 OF STAFF
WILL BE CHOOSE
RANDOMLY
modification based on the finding during the pilot test and the questionnaire will be tested
again. Finally, the questionnaire will be distribute to the staff randomly in several
departments starting on 31 October 2011. This step was conducted almost 1 month to
accomplish all the questionnaire. The table below shows the timeline in field work process.
Date Description
September Set up questionnaire
2nd October 2011 Pilot test
11th October 2011 Questionnaire editing
18th October 2011 Questionnaire testing
31st October 2011 Questionnaire distribution
29th November 2011 End of questionnaire distribution
3.5 ANALYSIS PLAN
In overall, we use the descriptive analysis to know the frequency of demographic’s
background, current investment, knowledge and perception to achieve the objectives of this
study.
In demographic’s background, there are 9 questions had been asked including gender, age,
marital status, race, level of education, occupation, residence, monthly income and
dependents. The descriptive analysis will show the frequency of the output. Because of only
100 respondents involved in this research, we do not show the percentage because it has
similar figure with the frequency.
In Section B, there are 8 questions about the current investment include the type of
investment, investment’s institution, percentage of shariah compliant investment, purpose of
the investment, sources, resources, zakat payment obligation and the percentage of
willingness for investment.
Then, in Section C, there are two parts which is knowledge towards basic Islamic principles
and knowledge towards shariah compliant investment. In this part, we have to mark the
answer first because some of the questions are wrong statement. In order to know the level of
knowledge of the respondent, we will identify the frequency of correct and wrong answer
from the respondent.
Last but not least, in Section D, there are four parts regarding the perception of the
respondents such as information, the advantages of SCI, criteria to make an investment and
confidence level. The likert scale from 1 (strongly disagree) to 5 (strongly agree) are given in
this section. The frequency shows how many of respondents choose 1, 2, 3, 4 or 5.
Furthermore, to analyze the relationship between demographic’s background of the investor,
current investment, knowledge and perception towards shariah and non-shariah compliant
investment, we use cross-tab method. We also use mean analysis to analyse the question in
Section C and Section D to know the tendency of the investor towards shariah and non-
shariah compliant investment.
3.6 CONCLUSION
In conclusion, this research will analyze the investor selection towards shariah and non-
shariah compliant investment which use the data of demographic’s background, current
investment, knowledge and perception of the respondents. All the data will be analyze in
SPSS 16.0 version and the statistical results will be discussed in Chapter 4.
CHAPTER 4
RESULT FINDINGS
4.1 INTRODUCTION
The objective of this study is to study the relationship between demographic’s background,
current investment, knowledge and perception of the investor selection towards shariah
compliant investment (SCI) and non-shariah compliant investment (NSCI). The first
objective will be analyzed by using descriptive methods while the second objective will be
analyzed using cross-tab method to know the relationship between the demographic’s
background, current investment, knowledge and perception towards shariah and non-shariah
compliant investment. By using the methodology that we had explained in Chapter 3, the
research objective achieved. Therefore, this chapter will elaborate in details the findings.
This chapter is divided into two parts which are descriptive and cross-tab. In descriptive part
consisted of demographic’s background, current investment, knowledge and perception. The
cross-tab part consist of demographic’s background with shariah and non-shariah compliant
investment, current investment with shariah and non-shariah compliant investment,
knowledge with shariah and non-shariah compliant investment and perception with shariah
and non-shariah compliant investment.
The discussion is divided into 9 sections. The following section shows the descriptive
analysis for analysis for demographic’s background including gender, age, marital status,
race, level of education, occupation, residence, monthly income and dependents. The second
section will discuss about the current investment and followed by the knowledge in third
section. Then, section four about perception of the respondents. In section five, we make a
conclusion and give some recommendations.
4.2 DEMOGRAPHIC’S BACKGROUND
The respondents of this study are from Universiti Utara Malaysia (UUM) staff where 100 of
staff was selected from the professional and management level, academicians and
administration staff. The respondents from the data collection shows that most of respondent
are female which are 76% compared to male only 24%. Most of the respondent’s age
between 21-30 years old which are 44% and age between 51-60 years old is 6%. The staff in
Universiti Utara Malaysia mostly married which is 79% while single is only 21%. Most of
respondents are 48% in Master or PhD level and the least is 9% in STPM or Diploma level.
Most of respondents work as administration staff which is 49% while 9% work as
professional and management. Most of the respondents urban area in city which is 46%.
Most respondents have monthly income less than RM2000 which is 43% and the least is
more than RM8001 which 1%. Most of respondents have no dependents which 37% while
dependents more than 10 is 4%.
Table 4.1: Demographic’s Background
Details Frequency (n=100)
Gender
Female 76
Male 24
Age
21-30 44
31-40 39
41-50 11
51-60 6
Status
Married 79
Single 21
Education
SPM 12
STPM/ Diploma 9
Bachelor Degree 31
Master/PhD 48
Occupation
Administration staff 49
Academicians 42
Professional and Management 9
Residence
City 46
Small Town 37
Rural 17
Monthly Income
< RM2000 43
RM2001-RM4000 21
RM4001-RM6000 29
RM6001-RM8000 6
> RM8001 1
Dependents
0 37
1-5 39
6-10 20
>10 4
4.3 CURRENT INVESTMENT
The section of current investment is the investment’s information of respondents in order to
know which type of investment they used and preferred to use. The finding shows that most
of respondent choose shariah compliant investment which are 68% and most of them choose
bank to invest which is 64% compared to other financial institutions (26%). However, only
47% of the respondents confident that their investment percentage is 100% in shariah
compliant investment. The purpose of the investment of the respondent mostly said that for
retirement which is 80% and the least is for other purpose which is only 3%. Most of
respondents got information from electronic or print media which is 70% while the least is
from seminar and workshop only 8%. The resources of their investment mostly come from
their saving or excessive income which is 50%. The finding of this study also found that only
43% of the respondent confident that their zakat was paid. In addition, 84% of the
respondents willings to invest below than 20% of their income.
Table 4.2: Current Investment
Details Frequency (n=100)
Shariah Compliant Investment Yes 68 No 32
Non-Shariah Compliant Investment Yes 5 No 95
Not sure whether SCI or NSCI Yes 30 No 70
Institution-Bank Yes 64 No 36
Institution-Takaful Yes 44 No 56
Institution-Financial Institution Yes 26 No 74
Percentage of SCI
100% 47 80-99% 5 60-79% 15 40-59% 25 20-39% 8
Purpose-Retirement Yes 80 No 20
Purpose-Children Education Yes 53 No 47
Purpose-Land, Property Yes 31 No 69
Purpose-Business Capital Yes 7 No 93
Purpose-Financial Freedom Yes 24 No 76
Purpose-Protect from Inflation Yes 6 No 94
Purpose-Dividend Yes 57 No 43
Purpose-Not sure Yes 4 No 96
Purpose-Others Yes 3 No 97
Sources of Information Electronic/ Media Print 70
Seminar/ Workshop 8 Friends and Relatives 22
Resources
Saving/ Excess Income 50 Loan 7
Monthly Income 42 Others 1
Zakat payment Yes 43 No 25
Not sure 32
Willingness to invest <20% 84
21-30% 9 31-40% 7
4.4 KNOWLEDGE
This section shows the level of respondent’s knowledge towards basic principles of Islam and
knowledge about the basic principles of SCI. We had marks the questionnaire first in order to
know the correct and wrong answers given by respondents. The highest mean shows the
failure of respondents to answer correctly. Based on the Table 4.3, the report found that most
of respondents cannot answer the question about the meaning of gambling correctly (mean
1.85). Moreover, all the respondents correctly answered the question about 5 pillars of Islam,
fasting obligation and aurat obligation (mean 1.00).
Table 4.3: Knowledge Towards Basic Principles in Islam and SCI
NO ITEM
Frequency
(n=100)
MEAN
1
Gambling is the interest rate is
guaranteed for an investment made
Correct 25
1.85 Wrong 65
Not sure 10
2
Usury is a bet to get a profit
Correct 16
1.84 Wrong 84
Not sure 0
3 The fifth pillar of Faith is pilgrimage
Correct 36 1.64
Wrong 64
4 Production and sale of tobacco
products is not allowed in Islam
Correct 70
1.49 Wrong 11
Not sure 19
5 Islam means peaceful
Correct 72 1.28
Wrong 28
6 Brokerage and trading of securities
are not prohibited in the Islamic
shariah compliant
Correct 84
1.24 Wrong 8
Not sure 8
7 Shariah-
compliant investments arenot
limited to Muslims only
Correct 91
1.15 Wrong 3
Not sure 6
8 Muslims must pray 17 rakaat per
day
Correct 86 1.14
Wrong 14
9 Muslims are encouraged to help the
poor through zakat
Correct 97
1.03 Wrong
3
10 Muslims must choose shariah-
compliant investment
Correct 99 1.01
Wrong 1
11 Muslims fasting during Ramadhan
Correct 100 1.00
Wrong 0
12 Muslims who have reached
puberty mustcover his/ her aurat
Correct 100 1.00
Wrong 0
13 There are 5 pillars of Islam
Correct 100 1.00
Wrong 0
4.5 PERCEPTION This sections consists of four parts which are information towards basic Islamic principles,
advantages of shariah compliant investment, criteria to make investment and confidence
towards shariah compliant investment. The details of information as below.
A) INFORMATION
Table 4.4shows the level of information towards shariah compliant investment.
There are 3 questions asked. The result found that most of the respondents do not
have much information about shariah compliant investment because the tendency
of them in choosing disagree according to likert scale given. The highest mean
shows that the respondents have a lot of information of the items asked. Most of
the respondents have adequate information about SCI which represent the mean
2.96. Moreover, most of respondents have adequate information regarding the
differences between SCI and NSCI which represent the mean (2.84). Most of
respondents have adequate information on elements do not comply with shariah
(mean 2.76).
Table 4.4: Perception of Information
No Items 1 2 3 4 5 MEAN 1 I have a lot of information
about SCI 15 21 31 19 14
2.96 2 I have a lot of information
about the differences between SCI and NSCI
15 30 25 16 14
2.84
3 I have a lot of information on elements that do not comply with shariah
16 29 25 23 7 2.76
*n=100 B) ADVANTAGES OF SCI
Table 4.5 shows the level of advantages towards shariah compliant investment. There are 7
questions asked. The highest mean shows that the respondents agree with the items asked to
them. Most of respondents are strongly agree when asked whether SCI is free from the
interest (mean 4.58). The least of respondents agree about the statement of SCI can reduce
the unemployment rate with represent the mean (3.82).
Table 4.5: Perception of the Advantages of SCI
No Items 1 2 3 4 5 MEAN 1 SCI is free from the interest
0
0
7
28
65
4.58
2 SCI could help economic growth 0
0
1
42
57
4.56
3 SCI can increase social welfare 0 7 1 27 65 4.50 4 SCI can increase the norms
of personal and family 6
0
5
32
57
4.34
5 SCI guarantees a safe investment 0
7
3
42
48
4.31
6 SCI will diversify the financial portfolio
0
11
9
39
41
4.10
7 SCI can reduce the unemployment rate
6
0
27
40
27
3.82
*n=100
C) CRITERIA TO MAKE INVESTMENT
The study also tries to identify the most important criteria that convince the respondents to
take into their consideration in making an investment. The result found that most of the
respondents would choose only a safe investment which mean 4.42. Another criteria of
concern is respondents would prefer SCI products only which mean 4.41. The criteria
that are rarely given attention is respondents would select investment based on advertising
only which mean 2.37 and respondents would invest if they are pressured by family which
mean 2.28. The details show in Table 4.6 as below.
Table 4.6 : Perception of Criteria To Make Investment
No Items 1 2 3 4 5 MEAN 1 I will choose only a safe investment 0 0 15 28 57 4.42 2 I would prefer SCI products only 0 8 4 27 61 4.41 3 I will choose the financial institution
that has a good image and performance only
0 6 7 33 54
4.35
4 I will choose investments that provide high returns only
0
4
22
23
51
4.21
5 I will choose the FI / investment company that has been approved by the Securities Commission Shariah Advisory Council only
0 12 12 30 46
4.10
6 I will choose the investment of institutional services quickly and efficiently only
0 1 31 26 42
4.09
7 I will invest only if there is extra money 6 4 20 36 34 3.88 8 I will diversify my investment products 3 10 18 41 28 3.81 9 I will choose the
financial institution serving customers with a friendly and good manner only
9
20
13
29
29
3.49
10 I will choose a low-risk investment 6 19 34 14 27 3.37 11 I will select investments based on
the views of my friends and family 20 24 21 18 17
2.88
12 I will select investments based on advertising only
28 27 28 14 3
2.37
13 I will invest if pressured by family 39 18 24 14 5
2.28
*n=100
D) CONFIDENCE TOWARDS SCI
This section explains about confidence level of the respondents towards shariah and non-
shariah compliant investment. There are four questions asked. According to this table, most
of the respondents are strongly agree with the statement of SCI is stronger in the market
which mean 4.00. Besides, most of the respondents have high confidence in SCI in the
market today which mean 3.98. Another report found that most of the respondents are
strongly agree to accept lower returns as long as SCI which mean 3.63. The least of
respondents disagree with the statement ensuring that SCI returns to be gained must be equal
to the NSCI returns which mean 2.81.
Table 4.7 : Confidence Towards SCI
No Items 1 2 3 4 5 MEAN 1 For me, SCI is stronger in the
market 0
11
16
35
38 4.00
2 I have high confidence in SCI in the market today 4 15 6 29 46
3.98
3 I am willing to accept lower returns as long as SCI 2 19 23 26 30
3.63
4 I will ensure that SCI returns to be gained must be equal to the NSCI returns 23 22 20 21 14
2.81
*n=100
4.6 DEMOGRAPHIC’S BACKGROUND, SCI AND NSCI This sections explains about the demographic’s background of the respondents towards
shariah and non-shariah compliant investment. According to the Table 4.9, it shows thatmost
of respondentswhich invest in SCI are Master or PhD holders (41%), are working as
anadministration staff (54%) and having monthly income below than RM2000 (44%).
Meanwhile, most of respondents which invest in NSCI are Master or PhD holders (63%), are
working as an academicians (63%) and having monthly income between RM4001-RM6000
(47%).
Table 4.8: Demographic’s Background Towards SCI and NSCI
NO
ITEM SCI
NSCI
n=68 % n=32 %
1
Level of Education
SPM 10 14.8 2 6.25
STPM/ Diploma 8 11.76 1 3.13
Bachelor Degree 22 32.35 9 28.13
Master/ PhD 28 41.18 20 62.5
2
Occupation
Professional and Management 9 13.24 0 0
Academicians 22 32.35 20 62.5
Administration Staff 37 54.41 12 37.5
3
Monthly Income
<RM2000 30 44.12 13 40.62
RM2001-RM4000 19 27.94 2 6.25
RM4001-RM6000 14 20.59 15 46.88
RM6001-RM8000 4 5.88 2 6.25
>RM8001 1 1.47 0 0
4.7 CURRENT INVESTMENT, SCI AND NSCI
This section shows the current investment information of the respondents towards shariah and
non-shariah compliant investment. Table 4.9 shows that most of the respondents which invest
in SCI are choosing insurance or takaful companies as an investment institution (59%), 69%
are confident that their percentage of SCI is 100%. Besides, they gain knowledge about their
investment from electronic or print media (62%) and confidents that their zakat was paid
(49%).
While in NSCI, most of respondents are choosing bank as an investment institution (84%)
and 47% confident that their percentage of SCI is only 40-59%. Moreover, they gain
knowledge about their investment from electronic and print media (88%) and confidents that
their zakat was paid (31%).
Table 4.9: Current Investment Towards SCI AND NSCI
NO
ITEM SCI
NSCI
n=68 % n=32 %
1
Investment
Institution
Bank Yes 37 54.41 27 84.38
No 31 45.59 5 15.63
Insurance companies/
takaful
Yes 40 58.82 4 12.5
No 28 41.18 28 87.5
Financial Institution Yes 21 30.88 5 15.63
No 47 69.12 27 84.38
2
Percentage SCI
100% 47 69.12 0 0
80-99% 5 7.35 0 0
60-79% 6 8.82 9 28.13
40-59% 10 14.7 15 46.88
20-39% 0 0 8 25
3
Sources
Electronic media/ print 42 61.76 28 87.5
Friends and Relatives 21 30.88 1 3.13
Seminar/ workshop 5 7.35 3 9.38
4
Zakat
Yes 33 48.53 10 31.25
No 19 27.94 6 18.75
Not sure 16 23.53 16 50
4.8KNOWLEDGE, SCI AND NSCI This section shows the level of respondent’s knowledge towards basic princples of Islam and
knowledge about the basic principles of SCI in order to know whether the level of knowledge
affecting their choice in making investment. Table 4.10 shows that most of respondents
which invest in SCI are wrongly answer about the meaning of gambling (60%) and 81% are
wrongly answer about the meaning of usury.
While most respondents which invest in NSCI are wrongly answer about the meaning of
gambling (75%) and 91% are wrongly answer the meaning of usury and the pillar of faith.
All the respondents which invest in SCI and NSCI are correctly answer the question about
fasting obligation, aurat obligation and five pillars of Islam.
Table 4.10: Knowledge Towards SCI and NSCI
NO
ITEM
SCI
NSCI
n=68 % n=32 %
1
Gambling is the interest rate is
guaranteed for an investment made
Correct 20 29.41 5 15.63
Wrong 41 60.3 24 75
Not sure 7 10.29 3 9.38
2
Usury is a bet to get a profit
Correct 13 19.12 3 9.38
Wrong 55 80.88 29 90.63
Not sure 0 0 0 0
3 The fifth pillar of Faith is pilgrimage
Correct 33 48.53 3 9.38
Wrong 35 51.47 29 90.63
4 Production and sale of tobacco products
is not allowed in Islam
Correct 42 61.76 28 87.5
Wrong 7 10.29 4 12.5
Not sure 19 27.94 0 0
5 Islam means peace
Correct 44 64.71 28 87.5
Wrong 24 35.29 4 12.5
6 Brokerage and trading of securities are
not prohibited in the Islamic shariah
compliant
Correct 56 82.35 28 87.5
Wrong 4 5.88 4 12.5
Not sure 8 11.76 0 0
7 Shariah-compliant investments are not
limited to Muslims only
Correct 59 86.76 32 100
Wrong 3 4.41 0 0
Not sure 6 8.82 0 0
8
Muslims must pray 17 rakaat per day
Correct 54 79.41 32 100
Wrong 14 20.59 0 0
Not sure 0 0 0 0
9 Muslims are encouraged to help the Correct 65 95.59 32 100
poor through zakat Wrong 3 4.42 0 0
Not sure 0 0 0 0
10 Muslims must choose shariah-
compliant investment
Correct 68 100 31 96.88
Wrong 0 0 1 3.13
Not sure 0 0 0 0
11 Muslims fasting during Ramadhan
Correct 68 100 32 100
Wrong 0 0 0 0
12 Muslims who have reached
puberty mustcover his/ her aurat
Correct 68 100 32 100
Wrong 0 0 0 0
13 There are 5 pillars of Islam
Correct 68 100 32 100
Wrong 0 0 0 0
4.9 PERCEPTION, SCI AND NSCI This section consists of four parts which is perception of the information, perception of the
advantages of shariah compliant investment, perception of the criteria to make investment
and perception of the confidence towards shariah compliant investment.
A) INFORMATION
This section shows the perception in the level of information towards shariah
compliant investment. The result found that most of the respondents do not have
much information about shariah compliant investment because the tendency of them
in choosing near to strongly disagree according to likert scale given. Most of
respondents which invest in SCI, 33% are in the third level in terms of information
towards SCI, 28% are near to strongly disagree in terms of the differences between
SCI and NSCI. Moreover, 26% are near to strongly disagree towards information on
elements that do not comply with shariah.
While most of the respondents which invest in NSCI, 34% are near to strongly
disagree towards the information about SCI, the differences between SCI and
NSCI (34%) and the elements that do not comply with shariah (34%).
Table 4.11: Perception of Information
No Items 1 2 3 4 5 1 I have a lot of
information about SCI SCI n=68 %
9 13.24
10
14.71
23
33.82
14
20.59
12
17.65
NSCI n=32 %
6
18.75
11 34.38
8
25
5
15.63
2
6.25
2 I have a lot of information about the differences between shariah and non-shariah compliant investment
SCI n=68 %
9
13.24
19
27.94
17
25
11
16.18
12
17.65
NSCI n=32 %
6
18.75
11
34.38
8
25
5
15.63
2
6.25
3 I have a lot of information on elements that do not comply with shariah
SCI n=68 %
10
14.71
18
26.47
17
25
17
25
6
18.75
NSCI n=32 %
6
18.75
11
34.38
8
25
6
18.75
1
3.13
B) ADVANTAGES OF SCI
This section shows the perception of the advantages towards shariah compliant investment
in order to know whether the perception affecting the respondents choice towards SCI and
NSCI. Based on the Table 4.12, most of the respondents which invest in SCI, 69% are
strongly agree that SCI is free from the interest, 56% are strongly agree that SCI could help
economic growth and 65% are strongly agree that SCI can increase social welfare.
Furthermore, most of respondents which invest in SCI are strongly agree that SCI can
increase the norms of personal and family (57%) and guarantees a safe investment (50%).
They also strongly agree that SCI will diversify the financial portfolio (43%) and 38% are
in the third level in terms of SCI can reduce the unemployment rate.
Meanwhile, most of respondents which invest in NSCI, 56% are strongly agree that SCI is
free from the interest, 59% are strongly agree that SCI could help economic growth and
65% are strongly agree that SCI can increase social welfare. Moreover, most of respondents
which invest in NSCI are strongly agree that SCI can increase the norms of personal and
family (56%) and near to strongly agree in terms of guarantees a safe investment (47%).
They also near to stronglyagree that SCI will diversify the financial portfolio (53%) and SCI
can reduce the unemployment rate (56%).
Table 4.12: Advantages of SCI
No Items 1 2 3 4 5
1 SCI is free from the interest
SCI n=68 %
0
0
0 0
7
10.29
14
20.59
47
69.12
NSCI n=32 %
0 0
0 0
0 0
14
43.75
18 56.25
2 SCI could help economic growth
SCI n=68 %
0
0
0 0
1
1.47
29
42.65
38 55.88
NSCI n=32 %
0
0
0 0
0 0
13
40.63
19 59.38
3 SCI can increase social welfare
SCI n=68 %
0
0
6
8.82
1
1.47
17
25
44
64.71
NSCI n=32 %
0
0
1
3.13
0 0
10
31.25
21
65.63
4 SCI can increase the norms of personal and family
SCI n=68 %
6
8.82
0 0
5
7.35
18
26.47
39
57.35
NSCI n=32 %
0 0
0 0
0
0
14
43.75
18
56.25
5 SCI guarantees a safe investment
SCI n=68 %
0 0
4
5.88
3
4.41
27
39.71
34
50
NSCI n=32 %
0 0
3
9.38
0 0
15
46.88
14
43.75
6 SCI will diversify the financial portfolio
SCI n=68 %
0 0
8
11.76
9 13.24
22
32.35
29
42.65
NSCI n=32 %
0 0
3
9.38
0 0
17
53.13
12
37.5
7 SCI can reduce the unemployment rate
SCI n=68 %
3
4.41
0 0
26
38.24
22
32.35
17
25
NSCI n=32 %
3
9.38
0 0
1
3.13
18
56.25
10
31.25
C) CRITERIA TO MAKE INVESTMENT
This section details the perception of the criteria to make an investment in order to know
whether the perception of the criteria to make investment affect the selection of the
respondents towards SCI and NSCI. According to the Table 4.13, most of the respondents
which invest in SCI, 58% are strongly agree that they will choose only a safe investment and
71% are strongly agree that they will prefer SCI products only. Besides, most of respondents
which invest in SCI, 51% are strongly agree that the criteria should be concern is the good
image and performance of the financial institution and the investments that provide high
returns only. Most of respondents which invest in SCI are strongly disagree that they will
invest if they have been pressured by family (32%).
While most of respondents which invest in NSCI, 53% are strongly agree that they will
choose only a safe investment, prefer SCI products only (41%) and choose the good image
and performance of the financial institution (59%). Furthermore, most of respondents which
invest in NSCI, 50% are strongly agree that they will choose the investments that provide
high returns only and most of respondents are strongly disagree that they will invest if they
have been pressured by family (53%).
Table 4.13: Criteria For Making Investment Items
No Items 1 2 3 4 5 1 I will choose only a safe investment SCI
n=68 %
0 0
0 0
15
22.06
13
19.12
40
58.82
NSCI n=32 %
0 0
0 0
0 0
15
46.88
17
53.13
2 I would prefer SCI products only SCI n=68 %
0 0
1
1.47
4
5.88
15
22.06
48
70.59
NSCI n=32 %
0 0
7
21.88
0 0
12
37.5
13
40.63
3 I will choose the financial institution that has a good image and performance only
SCI n=68 %
0 0
6
8.82
7
10.29
20
29.41
35
51.47
NSCI n=32 %
0 0
0 0
0 0
13
40.63
19
59.38
4 I will choose investments that provide high returns only
SCI n=68 %
0 0
4
5.88
19
27.94
10
14.71
35
51.47
NSCI n=32 %
0 0
0 0
3
9.38
13
40.63
16
50
5 I will choose the financial institution / investment company that has been approved by the Securities Commission Shariah Advisory Council only
SCI n=68 %
0 0
6
8.82
7
10.29
18
26.47
37
54.41
NSCI n=32 %
0 0
6
18.75
5
15.63
12
37.5
9
28.13
6 I will choose the investment of institutional services quickly and efficiently only
SCI n=68 %
0 0
1
1.47
23
33.82
20
29.41
24
35.29
NSCI n=32 %
0 0
0 0
8
25
6
18.75
18
56.25
7 I will invest only if there is extra money SCI n=68 %
4
5.88
4
5.88
17
25
18
26.47
25
36.76
NSCI n=32 %
2
6.25
0 0
3
9.38
18
56.25
9
9.38
8 I will diversify my investment products SCI n=68 %
2
2.94
5
7.35
12
17.65
29
42.65
20
29.41
NSCI n=32 %
1
3.13
5
15.63
6
18.75
12
37.5
8
25
9 I will choose the financial institution serving customers with a friendly only.
SCI n=68 %
8
11.76
8
11.76
7
10.29
20
29.41
25
36.76
NSCI n=32 %
1
3.13
12
37.5
6
18.75
9
28.13
4
12.5
10 I will choose a low-risk investment SCI n=68 %
3
4.41
7
10.29
34
50
9
13.24
15
22.06
NSCI n=32 %
3
9.38
12
37.5
0 0
5
15.63
12
37.5
11 I will select investments based on the views of my friends and family
SCI n=68 %
11
16.18
18
26.47
15
0.22
11
16.18
13
19.12
NSCI n=32 %
9
28.13
6
18.75
6
18.75
7
21.88
4
12.5
12 I will select investments based on advertising only
SCI n=68 %
15
22.06
20
29.41
25
36.76
5
7.35
3
4.41
NSCI n=32 %
13
40.63
7
21.88
3
9.38
9
28.13
0 0
13 I will invest if pressured by family SCI n=68 %
22
32.35
13
19.12
21
30.88
7
10.29
5
7.35
NSCI n=32 %
17
53.13
5
15.63
3
9.38
7
21.88
0 0
D) CONFIDENCE TOWARDS SCI This section shows the perception in the level of confidence towards shariah compliant
investment. According to the Table 4.14, most of the respondents which invest in SCI are
strongly agree that SCI is stronger in the market (40%) and 41% and are strongly agree that
they have high confidence in SCI in the market today.Besides, 32% are strongly agree that
they are willing to accept lower returns as long as SCI. 29% are in the third level in terms of
ensuring the SCI returns to be gained must be equal to the NSCI returns.
While most of the respondents which invest in NSCI, 34% are strongly agree that SCI is
stronger in the market, 56% are strongly agree that they have high confidence in SCI in the
market today and 31% are near to strongly disagree that they are willing to accept lower
returns as long as SCI. Besides, 44% of the respondents are near to strongly agree that they
will ensure the SCI returns to be gained must be equal to the NSCI returns.
Table 4.14: Confidence Towards SCI
No Items 1 2 3 4 5 1 For me, shariah
compliant investments is stronger in the market
SCI n=68 %
0
0
6
8.82
10
14.71
25
36.76
27
39.71
NSCI n=32 %
0 0
5
15.63
6
18.75
10
14.71
11
34.38
2 I have high confidence in Shariah compliant investments in the market today
SCI n=68 %
1
1.47
13
19.12
6
8.82
20
29.41
28
41.18
NSCI n=32 %
3
9.38
2
6.25
0
0
9
28.13
18
56.25
3 I am willing to accept lower returns as long as Shariah compliant investment
SCI n=68 %
0 0
9
13.24
17
25
20
29.41
22
32.35
NSCI n=32 %
2
6.25
10
31.25
6
18.75
6
18.75
8
25
4 I will ensure that SCI returns to be gained must be equal to the NSCI returns
SCI n=68 %
18
26.47
19
27.94
20
29.41
7
10.29
4
5.88
NSCI n=32 %
5
15.63
3
9.38
0 0
14 43.75
10
31.25
4.10 CONCLUSION
As a conclusion, there are 100 respondents. All respondents were
testedquestionnaires on 3 sections which is current investment, knowledge towards
basic Islamic principles and SCI principles and perception. Overall, most of
respondents choose to invest in bank and gain the information from electronic
media or print. Besides, respondents are lack of knowledge towards SCI principles
and they cannot answer the questions about basic principles of Islam correctly.
However, most of the respondents admit the advantages of SCI and they have high
confidence level towards SCI.
Besides, from the cross-tab analysis, it shows that most of respondents which invest
in SCI are having the highest level of education and they are choosing insurance or
takaful companies as an investment institution. Furthermore, most of respondents
which invest in SCI and NSCI gain the information from electronic and print media
and they are lack of knowledge and information towards SCI. Most of respondents
which invest in SCI are strongly agree that they will prefer SCI products only while
the respondents which invest in NSCI are strongly agree that they will choose the
financial institution that has good image and performance only.Finally, all the
findings will be concluded and some policy implication also suggestion details
regarding this topic had been described in Chapter 5.
CHAPTER 5
CONCLUSION AND RECOMMENDATION
5.1 INTRODUCTION
This chapter will conclude this study from chapter 1 to chapter 4 and subsequently further to
policy implication. The objective of this paper is to study the relationship between
demographic’s background, current investment, knowledge and perception of the investor
selection towards shariah and non-shariah compliant investment. From the previous research,
many of researchers only discussed about the criteria to determine the status of shariah
compliant investment without considering the investor selection towards shariah and non-
shariah compliant investment. Therefore, we are very interested in understanding the factors
that influence the selection of the investor towards shariah and non-shariah compliant
investment. To study the selection of the investor, we used descriptive analysis and cross-tab
as explained in the chapter 3 and the details of findings in chapter 4.
Besides, this chapter will also suggests the recommendation to the policy maker and
financial institution in order to enhance the investor selection towards shariah compliant
investment. The next section will discuss about the summary of findings.
5.2 SUMMARY OF FINDINGS
The findings in chapter 4 shows that, the respondents which have high level of education are
more exposed to the investment. However, most of them invested in non-shariah compliant
investment. Besides, the findings also shows that most of respondents are not alert whether
the zakat from their investment were paid or not. According to the result, only 48.5% of the
respondents who invest in shariah compliant investment confident that their zakat were paid.
According to the findings, most of the respondents are lack of knowledge in basic principles
of Islam and shariah compliant investment principles. Most of respondents are unable to
answer correctly about the pillars of faith, meaning of Islam, prayer obligation, zakat and the
obligation to choose the shariah compliant investment. The report shows that all respondents
can answer the fasting obligation, aurat obligation and five pillars of Islam correctly. It
means that the respondents only alert the things that occur around them. The respondents
also cannot understand the correct meaning of gambling and usury. It means that the
respondents do not know the meaning or difference of these two terms. Moreover, the
respondents are still confused about the investment in the production and sale of tobacco
products. From this finding, it also shows that most of the respondents who are wrongly
answered the questions about the definition of gambling,usury and others invested in non-
shariah compliant investment. In other words, lack of knowledge of the respondents affect
their decision in making investment. Probably, the respondents only think that investment is
not a part of ibadah and therefore they do not care whether the investment is comply with
shariah or not, instead of food that always all people realize to choose only the halal food.
In addition, the findings show that most of respondents are confused regarding the
information of shariah compliant investment, the difference between shariah and non-shariah
compliant investment and the elements that do not comply with shariah. It means, even
though they choose shariah compliant investment, it is not the decision that come from their
pure heart.
According to the findings, most of respondents realize the advantages of shariah compliant
investment is free from interest. Besides, shariah compliant investment could help the
economic growth and shariah compliant investment can enhance the social welfare. It means
that this is the best time to promote shariah compliant investment in this area.
The findings shows that safe investment is most priority in making an investment.
Rationally, safe investment is important to attract the investor to invest. The second criteria is
the respondents prefer shariah compliant investment. It means that the shariah compliant
investment is acceptable nowadays. The respondents also choose the financial institution that
has a good image and performance only. This criteria is important in order to reduce the risk
of loss.
According to the findings, most of respondents agree about shariah compliant investment is
more stronger in the market and they are highly confidence in shariah compliant investment
in the market today. It means, the respondents realize about shariah compliant investment is
the best way to solve the financial crisis in the middle of 2008.
For overall evaluation, there is a relationship between demographic’s background, current
investment, knowledge and perception towards shariah and non-shariah compliant
investment. The objectives of this study are successfully achieved.
5.2 POLICY IMPLICATION AND RECOMMENDATION
Based on the findings of this research, an improvement should be implemented in order to
increase the investor awareness towards shariah and non-shariah compliant investment. It is
important to build a free-interest financial system especially in investment. Here are some of
the recommendation that should be considered by government as a policy regulator and other
financial institution.
First, a transformation for educational system should be implemented. Apart from providing
academic instruction through educational syllabus, other curriculum in religious aspects need
to be increased. This is important because as seen in chapter 4, most of respondents who are
higher educational level invested in non-shariah compliant investment. It means that even
though they are excellent in studies in their field, they are still lack in terms of religious
knowledge. Therefore, a new syillabus should be restuctured in order to build not only an
expert person in their field only but also meet the demands of their religious and subsequently
make them are very aware about the investment product selection before they invest. Besides,
most of respondents are still unable to answer the question relating to the basic Islamic
principles. If the educational syllabus is not emphasized about the demands of religious,
awareness and knowledge of the religion of Islam itself getting lost subsequently the investor
will be greedy to generate the income without identifying the sources of money is permissible
in Islam.
Furthermore, the other suggestion is to provide more information towards shariah and non-
shariah compliant investment. Based on findings, most of respondents are lack of
information. Therefore, to overcome this problem, information about shariah compliant
investment should be given to public, especially to muslims. Electronic media is the best way
to promote the shariah compliant investment because from the findings, most of respondents
got information from that medium. Next, the continuous promotion should be done. As we
know, promotion is the best way to introduce the new products in order to increase the
information about shariah compliant investment. The promotion can be done from time to
time in the places that visited by many people such as shopping centers, colleges, goverment
offices, non-govermental organizations and others. The information also should be provided
by an easy access system and one regulation company will monitor the system to make the
information can be spread quickly and accurately.
In addition, this study found that most of respondent realize about the advantages of shariah
compliant investment but their selection of non-shariah compliant investment is still high.
Therefore, the financial instituion and banking sector which offer shariah compliant
investment products should make a program such as seminar or workshop to explain about
the importance of shariah compliant investment deeply. The financial institution and bank
need to make a better plan of action to promote shariah compliant investment product is not
offered for fun but it is an alternative to provide an opportunity to generate the income in
Islamic way. This step is in line with a goal of Islam is not only to have the wealth but simply
having the wealth to ummah. Moreover, investors should realize that even though shariah
compliant investment sometimes offer the low return investment, it is considered as a jihad if
they are willing to invest in shariah compliant investment with the intention to help the
growth of shariah compliant investment.
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