The Journal of Muamalat and Islamic Finance Research <h1><img style="display: block; margin-left: auto; margin-right: auto;" src="/public/site/images/iqmal/homepageImage_en_US1.jpg"></h1> <p style="text-align: justify;"><strong><em>The Journal of Muamalat and Islamic Finance Research (JMIFR)</em></strong>&nbsp;is a fully refereed journal published biannually in June and December by the Faculty of Economics and Muamalat (FEM), Universiti Sains Islam Malaysia (USIM). Its main objective is to provide a channel for the publication of articles, research notes, case studies and book reviews in Muamalat, Islamic Economics, Finance, Banking and its related fields. All article will follow a double-blind review by independent consulting editors. Articles are published in&nbsp;English, Malay and&nbsp;Arabic.&nbsp;JMIFR is indexed and abstracted in MyCite, MyJurnal, Index Islamicus, Al-Manhal, Crossref, OCLC WorldCat, Dimensions, ResearchBib, Asian Digital Library, Scientific Indexing Services and Google Scholar.</p> Faculty of Economics and Muamalat (FEM), Universiti Sains Islam Malaysia (USIM) en-US The Journal of Muamalat and Islamic Finance Research 1823-075X <p>Copyright of the accepted articles will not remain with author(s). Prior to publication of accepted article, author(s) will be asked to assign copyright to the JMIFR. All published articles in the journal are copyrighted to the JMIFR.</p> Analysis of Zakat System in High-Income Islamic Countries <p>Many Islamic countries are facing <em>zakat</em> governance issues including transparency, trust, inconsistency of <em>zakat</em> law with al-Quran and hadith, non-compliance and bureaucracy. Despite of the ongoing issues, little is known about <em>zakat</em> system in Islamic countries particularly the high-income Islamic countries. The high-income Islamic countries should be exemplary models to other Islamic countries as they have unlimited resources to build a dynamic zakat system that includes participation from renowned Islamic scholars to give opinions and fatwa on zakat law and the use of modern technologies to promote transparency and compliance. This study adopts a content analysis technique to analyse <em>zakat</em> system in seven high-income Islamic countries – Bahrain, Brunei Darussalam, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates. The data of <em>zakat</em> governance, <em>zakat </em>collection, <em>zakat</em> distribution, transparency, use of modern technology, issues and recognitions for each country were collected and analysed. This study added value to the minimal <em>zakat</em> system literature in Islamic countries. It is hoped that a harmonized zakat system can be adopted by Islamic countries and a strong commitment by all Islamic countries members to help <em>asnaf </em>particularly those who live in the under-developed countries.</p> Izlawanie Muhammad ##submission.copyrightStatement## 2019-12-02 2019-12-02 1 11 10.33102/jmifr.v16i2.219 The Impact of Ownership Risk in True Sale-Based Financing on Profit Charges: A Structural Equation Modelling (SEM) Approach <p>The fundamental principle of true sale is based on the ownership state of the subject matter of sale where the selling party must own the asset legally and keep full ownership of the goods before making the sale. &nbsp;In the <em>riba</em>-free system, the Islamic bank assumes a role of a trading entity. It undertakes a trading position and exposes itself to business risk as the asset is booked on its balance sheet. It follows that the profit rate it charges the customer will reflect an additional risk-premium to account for the business risk exposure. Due to business risk exposure, this study introduces the financial infrastructural constraints on the use of true sale-based Islamic financing namely 1) economic capital requirement for the on-balance sheet holding of tradable assets and 2) the tax charges by the fiscal authority on the purchase of tradable assets by the bank. Thus, based on this premise, the objective of this study was formulated to empirically investigate the impact of these constructs (cost of fund, overhead, default risk, capital charges, tax burden and profit rate) on profit rate of true sale-based financing. A Survey questionnaire and a semi structured interview were the tools used for data collection. The analysis was done by using Structural Equation Modelling (SEM) technique and the findings revealed that all independent variables except for cost of fund, have positive and significant impacts towards profit rate charged. Given the findings of this study, it is recommended that the true sale-based Islamic financing is to be funded by investment fund rather than deposit fund. Hence, the additional capital and tax charges will be absorbed by the investors. From this study, we hope that future research could be expanded further by investigating cross border Islamic banking practices in terms of the pricing of true sale model and closer comparison can be made between Malaysian Islamic banks and Foreign Islamic banks.</p> Safeza Mohd Sapian Saiful Azhar Rosly Akmal Aini Othman ##submission.copyrightStatement## 2019-12-02 2019-12-02 12 30 10.33102/jmifr.v16i2.220 The Linkages Effect of Service Quality, Customer Satisfaction and Customer Loyalty of Automobile Financing within the Malaysia Islamic Banking Industry <p>Nowadays, Islamic banks are facing tough competition among themselves and conventional banks that offer services and banking products based on Islamic principles. Such competition leads to issue involving customer satisfaction regarding the Islamic financing products and the efficiency of the services offered. Thus, the aims of this paper is to investigate the linkage effect of service quality (efficiency) on customer satisfaction and customer loyalty of Islamic automobile financing in Malaysia. Survey data was collected from 584 walk-in customers of selected bank outlets in the state of Selangor, Wilayah Persekutuan Kuala Lumpur and Putrajaya. The data was then analysed using Pearson Correlation and Multiple Regression technique. Results show that customer satisfaction and customer loyalty were positively affected by quality of service offered by Islamic Banks. Hence, based on the results, Islamic bank should have an effective computerised system, good legal advisory, Islamic compliance, well-trained staff, secure transaction, sufficient bank branches, and as well as sufficient facility and information in order to uplift and improve efficiency of the bank.</p> W Muhammad Zainuddin Wan Abdullah Muhammad Ridhwan Ab. Aziz Wan Nur Rahini Aznie Zainuddin ##submission.copyrightStatement## 2019-12-02 2019-12-02 31 47 10.33102/jmifr.v16i2.221 Understanding the Motivation to Invest: A Profile Analysis of Islamic Funds’ Investors <p>This paper seeks to provide a preliminary profile analysis of investors of Islamic funds based on their underlying motivation to invest, which at present received little interest in the literature. The experience of faith-based and socially responsible investment clearly reveals the heterogeneity of investors with divergent investment motives, and this is highly likely to be true among Islamic funds’ investors as well. For this purpose, the study surveys Investors of Islamic funds from three fund management companies in Malaysia with a total sample of 451 respondents. The profiling employs a cluster analysis of the respondents using religion, percentage invested in Islamic funds, and four potential motivations to invest. The result shows a possible segmentation of the investors into three groups, with Muslim investors being segmented into two categories, ‘committed’ and ‘pragmatic’ investors, while the third category being the ‘non-Muslim’ investors. The clusters represent a clear distinction between the three groups in terms of their commitment to Shariah principles in investment, the importance of earning halal vis-à-vis high returns, and the benefits of diversification between Islamic and conventional funds. The findings provide valuable insights for fund management companies in terms of understanding the different segments of investors and their issues of concerns for better investment services, product innovation and offering, as well as marketing strategies.</p> Mohd Nizam Barom ##submission.copyrightStatement## 2019-12-01 2019-12-01 48 59 10.33102/jmifr.v16i2.222 The Roles of Lifestyle, Future Need and Customer Preferences in Customer’s Satisfaction on Islamic Banks Products and Services <p>This paper aims to address the relationship and the influence of lifestyle, future need, customer preferences toward customer’s satisfaction on Islamic banks products and services in northern region of Malaysia. This study used quantitative research method. Data were collected via questionnaires from 250 respondents from four different Islamic banks and data was analysed using SPSS v22 software. The study found that all the independent variables have positive significant relationship towards the satisfaction of Islamic banks’ services with the highest correlation is lifestyle and the lowest is future need factor. The study concluded that the lifestyle variable has the strongest influence to the dependent variable, followed by future need and customer preferences. This study provides a useful analysis to the policy makers in helping them to draft new policies and programmes relating to Islamic products and services which affects the masses. Besides, the result helps marketing team in Islamic banks to formulate strategies for future promotional activities. This paper empirically identified the relationship and the influence factors between lifestyle, future needs, customer preferences and the satisfaction among customers in using Islamic banks services.</p> Asmadi Mohamed Naim Mohd Liki Abd. Hamid Muhammad Zarunnaim Haji Wahab ##submission.copyrightStatement## 2019-12-01 2019-12-01 60 76 10.33102/jmifr.v16i2.223 In Two Minds of Replacing Life Insurance Policy <p>The case is about how Maju Takaful Resources (MTR), a takaful consultation firm, dealt with their agents’ grievances regarding the regulation of Replacement of Policy (ROP) imposed by Bank Negara Malaysia (BNM). The regulation was imposed to curb unwarranted replacement of life insurance policy and to ensure the interest of the policyholders is continuously safeguarded. The regulation specified that agents shall not receive any commission for any policy which is construed as ROP. However, the regulation has placed MTR at a great disadvantage, since most of their clients, whom previously subscribed to conventional life insurance policy wished to switch to family takaful (a shariah-compliant version of life insurance). Unfortunately, according to ROP regulation, these cases were still considered as ROP. The case allowed students to learn the effects of ROP on different stakeholders within the insurance and takaful industries in Malaysia.</p> Nor Haziah Hashim Zurina Kefeli Nursilah Ahmad ##submission.copyrightStatement## 2019-12-01 2019-12-01 77 85 10.33102/jmifr.v16i2.224 Productivity of Islamic and Conventional Banks in Malaysia –During the Pre and Post Global Financial Crisis <p>The global financial crisis has evidenced sluggish progress in the growth of Malaysian banking sector’s assets, deposits, and loans. The scenario could have affMalmquist Productivity Indexected the productivity of Malaysian banks which consists of Islamic and conventional banks. This study aims to evaluate and distinguish the productivity change of 17 Malaysian Islamic banks and 21 conventional banks during the pre and post global financial crisis. To estimate total productivity change of both type of banks, this study employs the Malmquist Productivity Index (MPI) method. In calculating the MPI, the study considers total deposits, personnel expenses and fixed assets as the inputs while for the outputs, the study considers loans, investment and non-interest income. The empirical results reveal that the Islamic and conventional banks have been productive throughout the period of observation. However, the results pointed out that Islamic banks have been more productive than its conventional counterparts. Interestingly, the study indicates that both Islamic and conventional banks have failed to operate at an optimal scale of operations. This could have negative effect on the productivity level of these banks. Furthermore, the recent global financial crisis has negative impact on the productivity level of Islamic and conventional banks in Malaysia.</p> Muhamad Azhari Wahid Mohd Shukor Harun ##submission.copyrightStatement## 2019-12-01 2019-12-01 86 95 10.33102/jmifr.v16i2.225