The Number Of Pawn Broking In Malaysia

Published Date: 02 Nov 2017

CHAPTER 1

INTRODUCTION

1.1 INTRODUCTION

This chapter discusses on the study background by providing overview for both pawn broking in Malaysia which are conventional pawn broking and Ar-Rahnu. Next section describes the problem statement, followed by research questions, objectives of the study, and significance of the study. Finally, in this chapter summary the whole section in this chapter.

1.2. RESEARCH BACKGROUND

In the current financial landscape, there is no doubt that financial institutions especially banks play an important role in the country’s economic growth. The individuals, business communities and organizations are relying on the banks as their main investment and financial resources. Therefore, the financial institutions have developed various innovative financial instruments in order to meet their customers need in the forms of financing or investment. Besides the formal financial institutions, there are informal financial providers such as moneylenders or pawn broking that have played a complementary role in providing credit to the communities. However, the informal financial providers tend to be hidden from view because their loans are relatively small and the sensitivity attached to credit on lenders and borrowers (Abdul Razak, 2011). Among informal financial providers, pawn broking business has grown importance as a main source to the low income communities. In Malaysia, there are two types of pawn broking business which are conventional pawn broking and Al-Rahnu is normally known as Islamic pawn broking.

Conventional Pawn Broking

In Malaysia, the conventional pawn broking business is business tradition brought by Chinese Hakka from China. According to Abdul-Razak (2011), the business was introduced by the Chinese merchants in the 15th century during the sultanate of Malacca. The business became more popular after the tin mining in Larut in 19th century. In the early stage, the business was not bounded to any laws. However, during the British colonial, the Pawnbrokers Ordinance 1871 was introduced and enforced in the Straits Settlements for the purpose of business licensing and regulating the pawn broking business. This is the first formal regulation for pawn broking business in Malaysia and this ordinance was enforced until it was repealed by the Pawnbrokers Ordinance of 1898 (Wan Abdullah, 1999).

At the same time, the state government also started to introduce their own law to regulate the pawn broking business in state. Initially, there are 13 enactments, ordinance and rules have been introduced and enforced by the states governments. This situation happened because during that time the states in Malaysia are separated under their own administration and have not yet been consolidated under a single federation. Finally, in 1973, the Malaysian government has taken an initiative to standardise and harmonies the pawn broking business in Malaysia including Sabah, Sarawak and Labuan by introducing the Pawnbrokers Act 1972 and Pawnbrokers Regulation 1972. The administration of this act is under supervision of the Ministry of Housing and Local Government (KPKT). This act provides the basic guidelines for both pawnbroker and pawner to ensure healthy pawn broking business and to protect the consumers’ interest. This act still exists until today with the latest amendments done in 2006.

According to Abdul Razak (2011), as at 2010, there were 259 licensed conventional pawn broking operated in Malaysia and the business is still monopolized by the Chinese communities. Their business is governed under the Pawnbrokers Act 1972. From the table 1.1, we noted that conventional pawn broking is dominant in states such as Perak, Johor, Pulau Pinang, Negeri Sembilan and Melaka. Meanwhile, the Ar-Rahnu service is dominant in Kelantan, Terengganu and Sarawak.

Table 1.1: The Number of Pawn Broking in Malaysia in 2010

States

Conventional Pawn Broking

Ar-Rahnu (Islamic Pawn Broking)

Total

Selangor

39

40

79

Perak

40

31

71

Johor

34

30

64

Kelantan

11

50

61

Kedah

29

27

56

Pulau Pinang

27

17

44

Pahang

14

26

40

Kuala Lumpur/ Putrajaya

14

22

36

Terengganu

7

28

35

Negeri Sembilan

18

16

34

Sabah

7

14

21

Melaka

12

7

19

Sarawak

3

15

18

Perlis

4

6

10

Total

259

329

588

Source: Abdul Razak (2011)

Ar-Rahnu

In Malaysia, Ar-Rahnu is operating in parallel with the conventional pawn broking business. Ar-Rahnu has been introduced in order to give an alternative to the Muslim community due to majority of Muslims are afraid to do business with conventional financial institutions as they deal with interest (riba), which is forbidden in Islam and their management of profits is not based on Islamic principles (Nor Mohamed, 1996). Therefore, in an effort to eliminate riba and gharar (uncertainty) in conventional pawn broking business, there was initiative to introduce Ar-Rahnu as an alternative financing for the society especially to muslims’ communities which is not involve riba, more transparent and their scheme is complies with Shari’ah principles.

According to Yaacob (2012), the first Ar-Rahnu was Muassasah Gadaian Islam Terengganu (MGIT), which was set up by the Council of Islamic Religion and Malay Customs Terengganu (MAIDAM) in 1992. The establishment of MGIT is to provide easier and faster secured loan facility for the individual that having cash flow based on the Shari’ah principles. The borrower (Al-Rahin) will pledge an item which is jewellery from gold or diamonds for pawning to the lender (Al-Murtahin) as collateral. Then, the borrower will receives an interest free loan amounting to 80% of the pawned item or not exceeding RM5,000 (MGIT, 2013). The collateral item is held by the lender and the lender will charged storage fee during the period of loan. The period of loan is six months and can be extended to another four months. Upon the maturity, the borrower has to pay back the loan and the lender must return back the item to the owner.

After that, Ar-Rahnu scheme was introduced in Kelantan by Permodalan Kelantan Berhad (PKB) through establishment of Ar-Rahn shop in Kota Bahru and subsequently followed by the Malaysia Islamic Economic Development Foundation (YaPEIM). However, the foundation faced problems as it was against the Pawnbrokers Act 1972. Since there is an urgent need on Islamic pawn broking in Muslim community, Bank Negara Malaysia (BNM) which is the Central Bank of Malaysia has requested Bank Kerjasama Rakyat Malaysia Berhad (Bank Rakyat) to collaborate with YaPEIM to implement Ar-Rahnu. This suggestion was taken seriously by Bank Rakyat who was interested to use their present platform as a starting point for exploring Ar-Rahnu services in order to expand their Islamic financial product and services. As such, in 1993, the Minister of Finance announced the introduction of Ar-Rahnu scheme through the collaboration between Bank Rakyat with YaPEIM. Under this collaboration, Ar-Rahnu was growing and expanding more rapidly. The next financial institution to launch the Ar-Rahnu product and services was Bank Islam Malaysia Berhad (BIMB) in 1997 followed by EON Bank and Bank Pertanian Malaysia (Agro Bank) in 2002 and also by other cooperatives.

Now, Ar-Rahnu can be categorized into three main groups which are: (i) state-linked company such as MAIDAM and PKB, (ii) cooperatives under foundation for example YaPEIM, Koperasi Pos, and (iii) subsidiaries of banking institutions such as Bank Rakyat, Agro Bank, BIMB (Maamor et al., 2010). According to Abdul Razak (2011), as at 2010, there were 329 Ar-Rahnu operated in Malaysia.

Table 1.2: The Breakdown of Ar-Rahnu in Malaysia in 2010

States

Ar-Rahnu

Total

MGIT

PKB

Bank Rakyat

YaPEIM

Agro Bank

BIMB

Co-operative

Selangor

23

4

8

5

40

Perak

11

6

12

2

31

Johor

14

9

6

1

30

Kelantan

22

8

9

8

2

1

50

Kedah

9

8

9

1

27

Pulau Pinang

7

5

5

17

Pahang

10

7

7

2

26

Kuala Lumpur/ Putrajaya

13

2

5

2

22

Terengganu

10

6

5

6

1

28

Negeri Sembilan

6

4

5

1

16

Sabah

10

3

1

14

Melaka

4

3

7

Sarawak

10

5

15

Perlis

2

2

2

6

Total

10

22

133

59

84

2

19

329

Source: Abdul Razak (2011)

PROBLEM STATEMENT

In the middle of current economic slowdown, those in financial problem are looking for the various avenues in order to get easy cash. For people who are desperate for money, they may approach the loan shark and in Malaysia loan shark is synonym with Ah Long. Ah Long derived from Cantonese phrase which is a common term for illegal loan sharks in Malaysia and Singapore and they lend money to the people who are unable to obtain loans from financial institutions or other legal sources (Wikipedia, 2013).

Statistic from PDRM shows that 213 Ah Long cases have been referred to PDRM from last January to May 2012 (Utusan Malaysia, 17/06/2012). In 2013, MCA public complaint bureau also highlighted that they have received 11 complaints regarding Ah Long which involve the total loans amounting to RM500,000 across all the races in Malaysia in the first seven days (Bernama, 8/01/2013). In the early this year also, Malaysia has been shocked with the report regarding Ah Long issue involving Royal Malaysian Navy (TLDM). The report highlighted that TLDM successfully solved Ah Long debts amounting RM139,000 which involving 102 their staffs (Utusan Malaysia, 8/1/2013). This Ah Long issue is not a new issue in Malaysia. Statistics recorded by Malaysiakini highlighted that 503 cases in 2006, 539 cases in 2007, 636 cases in 2008, 487 cases in 2009 and 302 cases in 2010 (Malaysiakini, 29/04/11 ).

By taking the loan from Ah Long, the borrowers were burdened with high interest rate imposed on the loan and exposed them to violence by Ah Long. Besides that, they have an option to go to conventional pawn broking if they have valuable accessories such as gold, diamond, or any jewellery that can be pawn to loan some cash. Conventional pawn broking is very popular as it is require simple producers that do not cause too much hassle to borrower as compared to the formal financial institution. However, the borrowers are burdened with the high interest rate imposed on the loans.

Due to this problem, efforts were made to make the Islamic approach in micro credit financing more feasible. In this context, Ar-Rahnu is one of the most appropriate mechanisms as it provides financial assistance especially for those who have difficulties in obtaining loan from financial institutions. Therefore, in the 2010 budget speech by YAB Dato’ Sri Mohd. Najib Tun Abdul Razak, the Prime Minister and Minister of Finance highlighted that Ar-Rahnu is an important instrument to assist those unable to secure financing from financial institution to obtain business capital (The Edge Malaysia, 2009). Malaysian people have been encouraged to take the opportunity to improve their cost of living by engaging in Ar-Rahnu. The Ar-Rahnu plays an important role as a fair, transparent and cheap microcredit financing in fulfilling the different customer requirements. Ar-Rahnu can use as credit channel to those who want to obtain easy cash to meet their financial requirement such as educational need and also can be a credit channel to those who require temporary working capital especially for small and medium size businesses.

Realizing the increasing popularity and recognizing the usefulness and contribution of Ar-Rahnu as one of important medium for financial assistance, this study was conducted to explore more on the determinants that can influence the customers’ intention whether to engage or not to engage Ar-Rahnu.

RESEARCH OBJECTIVES

This study attempts to investigate the determinants on the customers’ intention toward Ar-Rahnu. Specific objectives of this study are:

To examine the relationship between social influence with customers’ intention toward Ar-Rahnu.

To examine the relationship between pricing with customers’ intention toward Ar-Rahnu.

To examine the relationship between location of Ar-Rahnu with customers’ intention toward Ar-Rahnu.

To examine the relationship between advertisement with customers’ intention toward Ar-Rahnu.

RESEARCH QUESTION

Based on the research objective, the following are research questions proposed as part of this study:

Is there is a significant relationship between social influence with customers’ intention toward Ar-Rahnu?

Is there is a significant relationship between pricing with customers’ intention toward Ar-Rahnu.

Is there is a significant relationship between location of Ar-Rahnu with customers’ intention toward Ar-Rahnu.

Is there is a significant relationship between advertisement with customers’ intention toward Ar-Rahnu.

RESEARCH HYPHOTESIS

This study is to investigate on the determinants that influence customers’ intention toward Ar-RAhnu by testing the following hypothesis:

H0: There is no significant relationship between social influence with customers’ intention toward Ar-Rahnu.

H1: There is a significant relationship between social influence with customers’ intention toward Ar-Rahnu?

H0: There is no significant relationship between pricing with customers’ intention toward Ar-Rahnu.

H2: There is a significant relationship between pricing with customers’ intention toward Ar-Rahnu?

H0: There is no significant relationship between location of Ar-Rahnu with customers’ intention toward Ar-Rahnu.

H3: There is a significant relationship between location of Ar-Rahnu with customers’ intention toward Ar-Rahnu?

H0: There is no significant relationship between advertisement with customers’ intention toward Ar-Rahnu.

H4: There is a significant relationship between advertisement with customers’ intention toward Ar-Rahnu?

SIGNIFICANCE OF THE STUDY

This study will provide a better understanding to the community on Ar-Rahnu services which is the services that offered by the MAIDAM, PKB, Bank Rakyat, YaPEIM, Agro Bank, Co-operative and other cooperation as well. The researcher expected that the result from the study can give additional information and knowledge to the community on the concept and structure of Ar-Rahnu businesses. By knowing this, the community will expose to the advantages of Ar-Rahnu as one of the alternative for funding facilities as it offers better valuation for pawned items compared with other similar forms of financing and the monthly payment was much lower, affordable and not burdensome. This can create awareness and attract more consumers to engage with Ar-Rahnu services.

In addition, this study is expected to contribute to increase the number of literature in this area for helping future researcher to get more references and information on Ar-Rahnu as well as increase the knowledge on Ar-Rahnu.

This study is also useful for the Ar-Rahnu services provider so that they will have clear view and increase the understanding on factors that influence the customers’ intention towards Ar-Rahnu, so that they can enhance their performance and develop an effective strategy to attract more customers in order to penetrate their market.

SUMMARY

This chapter provides an overview of the overall study by explaining the background of the study, emphasizing the problem statement, highlighting the research objectives and research question and also the significance of the study. This study is important to provide a better understanding on the Ar-Rahnu services, expose to public on the opportunities of Ar-Rahnu as one of the better alternative for funding facilities, increase the number of literature in this area and give advantage to the Ar-Rahnu service providers to enhance their performance and develop an effective strategy to attract more customers in order to penetrate their market.

CHAPTER 2

LITERATURE REVIEW

2.1 INTRODUCTION

This chapter gives a review of the previous research on the determinants that influence customers’ intention towards Ar-Rahnu. The first section of this study is to discuss the definition of Ar-Rahnu and conventional pawn broking. The second section is to emphasize on the principles and concept of Ar-Rahnu. The third section is focus on the number of determinants influencing customers to choose Ar-Rahnu. Finally, the last section of this chapter will touch on the research framework.

2.2 DEFINATION OF AR-RAHNU AND CONVENTIONAL PAWN BROKING

Ar-Rahnu

In this study, Ar-Rahnu is referring to the Islamic pawn broking. Ar-Rahnu is a mechanism whereby a valuable item is used as collateral tied up for a secured debt that can be to paid, in the event of default (Malaysia Co-operative Societies Commission, 2013). The collateral may be disposed in the event of default (Maybank Islamic Bank, 2013). Ar-Rahnu provides a short-term financing to the public by allowing a customer to pawning his/her jewellery to banks or pawnshops as a security. It is one of the micro-credit and financial instruments for who seek for financial assistance mainly to meet of their working capital needs (Amin et. al., 2011).

Conventional Pawn Broking

Encyclopedia Britannica defines pawn broking is business of advancing loans to customers who have pledged household goods or personal effects as security on the loans. Wikipedia refers pawn broking as an individual or business that offers secured loans for the valuable items that used as collateral. If the valuable item is pawned for a loan, the pawner may redeem back within the contractual period by paying back the loan together with the interest. The period of time and interest rate is governed by law or the pawnbroker's policies. If the loan is not paid within the period, the items can sale by the pawnbroker. In Malaysia, pawn broking business includes the business of taking articles in pawn (Pawnbrokers Act 1972).

PRINCIPLES AND CONCEPTS OF AR-RAHNU

Even though there are similarities on the operational between conventional pawn broking and Ar-Rahnu, but there are still have significant different between both services. Ar-Rahnu has a clear concept which is based on Shari’ah principles. According to Mohamed Naim, 2004 as cited in Abd. Razak (2011), the pawning contract has four important components:

Sighah implying "offer and acceptance of both parties’;

Al-rahin (borrower), meaning ‘who pawns an object of his’ and Al-murtahin (lender) ‘who receives the pawned object’;

Al-marhun, ‘the pawned object as insurance of the debt’ and

Al-marhun bih, ‘the debt in lieu of which the object is pawned’.

Basically, most of the Ar-Rahnu services are based on the Islamic concepts such as:

Qardhul Hassan (Benevolent Loan)

This is a loan agreement between the borrower and the lender. The lender will grant a benevolent loan (interest free loan) to the borrower that pawned his item as collateral. The lender is not allowed to request additional amount from the borrower, whereby the borrower is only required to pay the amount that has been borrowed. However, the borrower is encouraged to give some token as a sign of appreciation to the lender.

Al-Wadiah Yad Dhamanah (Safekeeping with guarantee)

The lender accepts guardianship of the valuable items, promise to keep it in a safe place and return it to the borrower upon the end of the contractual period. The lender is responsible to replace the stolen or damaged items to the borrower if they fail to keep the agreement due to their own negligence (Bhatt and Sinnakkannu, 2008).

Al- Ujrah (Safekeeping fee)

Al-Ujrah concept allows the lender to charge a reasonable fee for keeping the valuable pawned items safely and in good condition.

Ar-Rahn

According to Maulidia (2003), Rahn means to detain borrower’s valuable items as a guarantee or collateral for the loan and the detained items must have value so the lender has guarantee to get back all or a part of the loan. The valuable items can be used to pay back the debt if the event of default by borrower (YaPEIM, 2013).

Al-Qard

Al-Qards concept refers to a loan given based on a certain percentage of the pawned item value (marhun value) and safekeeping fee charged is not based on the amount of the loan.

Figure 2.1: Ar-Rahnu Structure

Qardhul Hassan

(Benevolent Loan)

Al-rahin

(Borrower)

Ar-Rahn

(Collateral)

Al-murtahin (Lender)

Al-Wadiah Yad Dhamanah (Safekeeping with guarantee)

Al- Ujrah

(Safekeeping fee)

Overall, the Ar-Rahnu structure can be illustrated in the Figure 2.1 above. When the lenders lend some money to borrower, they will use the concept of al-qardhul hassan. In order to avoid the loan from default, they employ the concept of ar-rahn. For ensuring the pawned items to be kept safely and in good condition by the lender, they employ the concept of al-wadiah yad dhammanah. The lender will charged the borrower a reasonable fee for the safekeeping with guarantee services under the concept of al-ujrah.

DETERMINANTS ON THE CUSTOMERS’ INTENTION

TOWARD AR-RAHNU

There are various studies of Ar-Rahnu were conducted in Malaysia. A study by Mat Nor et. al., (2012) investigate on the relationship between independent variables concerning pricing system, customer service, locality and low income with the customer awareness towards Ar Rahnu scheme at Sungai Buloh. The result from this study showed that all the independent variables have significant impacts towards the customer awareness on the Ar-Rahnu scheme.

The study conducted by Muhamat et. al., (2011) about the non-muslim response towards Ar-Rahnu (Islamic Pawn Broking) services found that the product features and security of pledge items have significant relationship in affecting the non-muslim acceptance of Ar-Rahnu. Among of the two independent variables, product features stand to be important reason for the non-muslin to pursue Ar-Rahnu services. This study also found that the cost of borrowing was not significant correlated with a non-Muslim acceptance of Ar-Rahnu.

A further study by Appannan and Doris, (2011) on Islamic Pawn Broking awareness and factors influencing the scheme in Sungai Petani showed that majority of Indians were not aware of Islamic pawn broking. Majority of Chinese and Malays were aware on the Ar-Rahnu scheme. The findings from this study also indicate that the majority of Ar-Rahnu customers are working in the private sector lower with an income of RM1,000 and below. This reflects that most of the Ar-Rahnu customers are from low income group for Sungai Petani perspective. The most important factor influencing consumers in Sungai Petani to pursue Ar Rahnu was cheap cost of loan. While factors such as confidential, low income, good customer service and locality were appeared to be less important. The researchers also suggested in the future research to add social and advertisement factor for expanding the result of the study.

Prior study done by Ahmad et. al. (2012) resulted that from the selected variables concerning storage charge, service quality, locality and management practices have a significant relationship with the customer acceptance of Ar-Rahnu MAIDAM Dungun. The most significant factor that influences customers to pawn at Ar-RAhnu MAIDAM Dungun was management practices.

Amin et. al. (2007) examined the relationship between the independent variables consisting shariah view, pricing system, pledge asset, customer service and locality of Ar-Rahnu with the acceptance of Ar-Rahnu in Labuan. The results of their study showed that three independent variables which are consist of shariah view, pledge asset and customer service have significant relationship with the customers acceptance of Ar-Rahnu. Other two independent variables which are pricing system and locality of Ar-Rahnu showed insignificant relationship with the acceptance of Ar-Rahnu in Labuan. The researchers also suggested that there is a need for additional variables such as social factor and advertisement factor to predict the acceptance of Ar-Rahnu more accurately in future.

Based on the previous studies and to fill in the gap, this study assumes that the social influence, pricing, location of Ar-Rahnu and advertisement are important determinants of customers’ acceptance to choose Ar-Rahnu. This study aims to investigate further the relationship between the determinants identified above with the customers’ intention towards Ar-Rahnu.

Social Influence

The term social influence used in this study refers to subjective norm (Amin et. al, 2011). Social influence refers to the individual’s perception of the potential referent group or individuals approve or disapprove of performing the given behavior (Fishbein and Ajzen, 1975 as cited in Amin et. al, 2010). The importance of this factor has been addressed by many scholars such as Ramayah et al., (2002) and Gopi and Ramayah (2007). The study by Gopi and Ramayah (2007) found that social influence had a positive relationship towards behavioral intention to use internet stock trading. Similarly, Taib et. al, (2008) also emphasized that social influence found to be more influential predictor of intention to use Islamic home financing than attitude among postgraduate students. These scenario shows that Malaysian consumers like to seek advice or opinion from those who are close to them before engaging the product or services and their opinion and view really have significant effect to their purchase decision later.

Pricing

According to Appannan and Doris (2011), the factor that influences the demand for Islamic pawn broking is pricing system. This statement also supported by Ahmad et. al (2012) highlighted that it is important to have Islamic pawnshop that offered competitive rate to reflect the average pricing system in the market. Therefore, the researcher would like to study this factor and to see how far it can influence customers’ intention towards Ar-Rahnu.

The study by Amin et. al (2007) found that the service charge imposed by Islamic based pawnshop relatively cheaper than the conventional pawn broking. It also supported by Bhatt and Sinnakkannu (2008) in their research shows the cost involved in borrowing from Ar Rahnu is calculated based on the safekeeping charges while the conventional pawn broking is calculated based on the monthly interest charges. Therefore, the cost of fund from Ar-Rahnu is cheaper than conventional pawn broking. By having this alternative will reduce the burden to the customers.

The lower pricing of Ar-Rahnu was one of motivators for community to deal with Ar-Rahnu service provider. This statement is consistent to what analyzed by Amin et. al (2011) which is found that the ‘lower monthly payments’ was ranked second behind ‘transparency practice’. It is also significant to customers’ intention to use Ar-Rahnu as their quick financing resources.

Location of Ar-Rahnu

Based on study done by Dusuki et. al., 2007 found that convenience including location is one of the significant factors contribute to the selection of Islamic bank by Malaysian consumers. This finding is consistent with what Almossawi (2001); Gerard and Cunningham (2001) found that convenience factors were of paramount importance in banking selection criteria as compared to other factors based on their survey conducted on conventional banking customers in Bahrain and Singapore respectively (Almossawi, 2001; Gerrard and Cunningham, 2001 as cited in Dusuki et. al, 2007).

The study done by Ahmad, et. al (2012) also found that the location of Ar-Rahnu outlet has significant relationship between the customer acceptance of Ar Rahnu MAIDAM Dungun. Hanudin et. al (2007), suggested that the individual who want to open Ar-RAhnu should open it in a place that easy to access by the customers. The location of the Ar-RAhnu is important to make public realize on the presence of Ar-Rahnu in their areas. On the basis of these studies above, the researcher interested to test it in this study.

Advertisement

Based on study done by Appannan and Doris (2011), they suggested that it would be reasonable to add the advertisement as one other factor that influence the public intention to pursue Ar-Rahnu to further expanding the result of the study. Thus, it creates interest to researcher to include the advertising as one of the independent variable to be tested in this study.

Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods or services by an identified sponsor via print media (newspapers and magazines), broadcast media (radio and television), network media (telephone, cable, satellite, wireless), electronic media (audiotape, videotape, videodisk, CD-ROM, web page) and display media (billboards, signs, posters) (Kotler and Keller, 2012).

Nowadays, advertising is the most important tool in promoting and marketing of product and services. Advertising can be a cost-effective way to convey message to educate the public regarding the product and services in order to increased public awareness or to build a brand preferences among consumers. In the practice, most of the companies believe that the businesses that keep on advertising regardless of rise or fall in the economic times get a competitive advantage over those that cut their advertising expenses. Therefore, in this study, the researcher want to further examine the relationship between advertisement factor toward customers’ intention to use Ar-Rahnu.

RESEARCH FRAMEWORK

Based on the literature review above, the theoretical framework is constructed as below:

Figure 2.2: The research model

Figure 2.2 above represents the diagram of the theoretical framework that used in this study. From the framework, the researcher identified four factors which are social influence, pricing, location of Ar-Rahnu and advertisement that could be influenced the customers’ intention towards Ar-Rahnu. Therefore, the dependent variable in this study referring to the customers’ intention to choose Ar-Rahnu and the independent variables are social influence, pricing, location of Ar-Rahnu and advertisement. These factors have been chosen to be tested in this study because based on the previous research in various areas found these factors were significantly influence the consumer’s intention and acceptance towards products and services.

SUMMARY

In conclusion, the researcher presented the literature review from the view and opinion of the prior studies done by previous researcher in related areas regarding the determinants such as social influence, pricing, location of Ar-Rahnu and advertisement influencing customers’ intention towards Ar-Rahnu. Besides that, this chapter also showed the research framework of this study to explain the independent variables and dependent variable.

CHAPTER 3

LITERATURE REVIEW

3.1 RESEARCH METHODOLOGY

This chapter discusses on the methodology that are used for conducting the study. The main purpose of the study is to investigate the determinants that influence the customers’ intention toward Ar-Rahnu. The research methodology adopted can divided into seven main section which are, study variables, population and sampling design, research instruments, data collections, data analysis, study planning and conclusion.

3.2 STUDY VARIABLES

3.2.1 The Independent Variables

The Independent variables (IV) for this study are social influence, pricing, location of Ar-Rahnu and advertisement.

3.2.2 The Dependent Variable

Dependent variable (DV) for this study is customers’ intention toward Ar-Rahnu.

3.3 POPULATION AND SAMPLING DESIGN

3.3.1 Population

In this study, the target population is defines as public within Lembah Kelang.

3.3.2 Sample

The sample of this study was the respondents at ministries in Putrajaya, customers of Ar-Rahnu Bank Rakyat in Putrajaya, conventional pawn broking in Dengkil, Selangor, customers from shops and shopping mall at Bangi, The sample size was about 150 respondents.

3.3.3 Sampling Technique

In conducting this study, the determination of sampling is important because it will help the researcher to identify which group to be selected. This study used nonprobability sampling which is convenience sampling method. This means that the findings from the study of the sample cannot be generalized to the population. The researcher chooses to use the convenience sampling because this method allows the researcher to obtain a large number of respondents to complete the questionnaires quickly, efficiently and economically.

3.4 RESEARCH DESIGN

This study is using quantitative method to analysis the data. The quantitative method using by the researcher is questionnaire.

3.4.1 Questionnaire

This study was conducted on personally administrated questionnaires to the respondents at ministries in Putrajaya, customers of Ar-Rahnu Bank Rakyat in Putrajaya, conventional pawn broking in Dengkil, Selangor, customers from shops and shopping mall at Bangi,. The researcher was approached the respondents politely, explained to the the purpose of the study and asked their cooperation to fill in the questionnaire. Once the questionnaire completed, the researcher thanked the respondent of willingness to be respondent of the study. This method effectively ensure that all the questionnaires distributed were returned back on the same day. Besides that, it gives the respondents chance to ask any questions and get clarification regarding the questionnaire on the spot.

3.4.2 Questionnaire Design

The questionnaire consists of closed-ended questions that help the respondents to make a decision. The questionnaire items were grouped into six sections. Section A consists of demographic elements to gather information such as gender, age, race, religion, marital status, working status, education background and level of monthly income. In this section, the items will be measured using nominal scale.

Section B of the questionnaire gathered information on motivation for pawning by using rank scale and nominal scale.

Section C of the questionnaire collected data on awareness and preferences toward Ar-Rahnu.

Section D of questionnaire asked on the customers’ intention toward Ar-Rahnu.

Section E of questionnaire gathered information regarding determinants influence the customers’ intention toward Ar-Rahnu such as social influence, pricing, location of Ar-Rahnu and advertisement. The items in the section D and E were measured using a 5-point Likert scale which consists: 1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = agree, 5 = strongly agree.

Lastly, Section F of questionnaire was open ended questions regarding the respondent’s view on the challenges and difficulties using Ar-Rahnu services and also opinion to improve the services.

The questionnaire was designed in Malay and English language since it could provide more convenience to the respondents. The respondents can choose to answer the questionnaire either in Malay or in English according to their preferences.

3.5 DATA COLLECTIONS

In order to gather the information for this study, the researcher used primary data and secondary data. These types of data include all the various types of information researcher might use during the study.

3.5.1 Primary Data

In this study, the researcher used a survey method. A questionnaire is the main sources to collect the data on the customers’ intention towards Ar-Rahnu.

3.5.2 Secondary data

In this study, the researcher used the external data and sources are taken from printed material such as articles, journal and previous thesis. These materials are taken from books, journal, magazine, internet and case study. Besides that, the researcher also will use company’s annual report as a part of information resources. By referring to the annual report, the researcher can gather the information and compare their strategy on the operation, system, product and service offer and problem faced by the company in providing their product and services to customers.

3.6 DATA ANALYSIS

The data collected through questionnaires are coded, categorized and processed to make an analysis for the research finding. The data was analysed using a software program; "Statistical Package for Social Science" (SPSS) version 20 and moved on with a number of statistical analyses.

3.6.1 Descriptive Statistic Analysis

In this study, the descriptive analysis used to analyze demographic items pertaining their evaluation of customers’ intention towards Ar-Rahnu. The analysis involve in examining the mean, median and standard deviation of the items in the questionnaire. Besides that, the frequency analysis also has been used to analyze the overall information of respondent based on demographic items

3.6.2 Reliability Analysis

For the purpose of this study, a coefficient alpha or also known as Cronbach’s alpha will be used to measure the reliability. Cronbach’s alpha is a reliability coefficient that indicates how well the items in a set are positively correlated to one another. The closer Cronbach’s alpha is to 1.0, the higher the internal consistency reliability. Reliabilities less than 0.60 are considered poor, those in the 0.70 range acceptable and those over 0.80 is good (Sekaran and Bougie, 2011). This means that when the Cronbach’s alpha scores more than 0.70 then the measuring items are considered acceptable reliable for further analysis.

3.6.3 Correlation Analysis

Correlation analysis used to explain of association and strength of the relationship between the independent variables which are social influence, pricing, location of AR-Rahnu and advertisement with the dependent variable which is customers’ intention toward Ar-Rahnu. The strength and direction of the association between variables can be determined based on the value of the correlation coefficient (r). The measure of goodness between the variables should fall within the range of 1 to -1. If the r = 1, there is perfect direct linear relationship between 2 variables. Besides, if r = -1, there is negative relationship between 2 variables (Sekaran and Bougie, 2011).

3.6.4 Regression Analysis

By using multiple regression analysis, the researcher able to see how much a variance in the dependent variable is possible to be explained by the independent variable. This analysis also can determine the relationship between independent variables included social influence, pricing, location of AR-Rahnu and advertisement with the dependent variable is customers’ intention toward Ar-Rahnu and identify which are the significant variables that influence the customers’ intention towards Ar-Rahnu.

3.7 STUDY PLANNING

This study will be conducted for four months starting from January 2013 until April 2013. The project paper will be finalized and submitted to Putra Business School at early May 2013.

3.8 SUMMARY

Under this chapter, the researcher described research methodology adopted in this study. This study was conducted in Lembah Kelang by focusing to the 150 respondents which are comprised the respondents from ministries, customers from both conventional pawn broking and Ar-Rahnu, shops and mall in Putrajaya and Selangor. Data collection methods used primary data which is based on survey through personally administrated questionnaire and secondary data from articles, journals, previous thesis and company annual reports. In interpreting the data obtained from the respondents, the researcher used statistical output by using SPSS version 20 to analyze and evaluate the data.

CHAPTER 4

RESULT AND DISCUSSION

4.1 INTRODUCTION

This chapter presents the result of the study on the determinants of customers’ intention toward Ar-Rahnu based on the research objectives and hypothesis identified in previous chapter. This study aims to determine the relationship between the social influence, pricing, location of Ar-Rahnu and advertisement with customers’ intention to use Ar-Rahnu. The results of the findings for the study show in the descriptive statistic on demographic analysis, reliability test, normality test, correlation analysis and regression analysis.

4.2. DESCRIPTIVE ANALYSIS ON DEMOGRAPHIC PROFILE

A total of 150 questionnaires was distributed to the respondents at the ministries in Putrajaya, customers of Ar-Rahnu Bank Rakyat in Putrajaya and conventional pawn broking in Dengkil, Selangor. Besides that, the respondents also involved customers from shops and shopping mall located at Bangi, Selangor. Out of 150 distributed questionnaires, only 130 questionnaires used in data analysis.

The demographic items comprised of eight (8) questions which included gender, age, race, religion, highest education level attained, marital status, occupation and gross monthly income.

Descriptive statistic was used to analyse the demographic profile. The following table shows the summary of the frequency distribution on the demographic information of the respondents.

Table 4.1: Demographic Information of Respondents

VARIABLES

VALUES

NO. OF RESPONDENT

PERCENTAGE (%)

Gender

Male

75

57.7

Female

55

42.3

TOTAL

130

100

Age

Below 20

0

0

21 – 30

55

42.3

31 – 40

40

30.8

41 – 50

18

13.8

51 and above

17

13.1

TOTAL

130

100

Race

Malay

110

84.9

Chinese

12

9.2

Indian

8

6.2

Total

130

100

Religion

Islam

110

84.9

Buddhist

12

9.2

Hindu

8

6.2

Christian

0

0

TOTAL

130

100

Highest Educational Level Attained

Primary School

4

3.1

Secondary Level

41

31.5

Certificate/Diploma

31

23.8

Bachelor Degree

33

25.4

Master Degree

21

16.2

PhD

0

0

TOTAL

130

100

Marital Status

Single

44

33.8

Married

82

63.1

Widow/Widower

4

3.1

TOTAL

130

100

Occupation

Government

74

56.9

Private Sector

30

23.1

Housewife

1

0.8

Student

8

6.2

Businessman

12

9.2

Unemployed

3

2.3

Retired

0

0

Self-employed

2

1.5

TOTAL

130

100

Gross Monthly Income

Less than RM1,500

24

18.5

RM1,501 – RM3,000

57

43.8

RM3,001 – RM4,500

26

20.0

RM4,501 – RM6,000

9

6.9

Above RM6,000

14

10.8

TOTAL

130

100

Based on the Table 4.1, we can see that the respondents are dominated by male which comprised 57.7% as compared to 42.3% for female. From the total of respondents, 63.1% of the respondents are married, 33.8% comes from single respondents and the lowest percentage comes from widow and widower which constitute 3.1%.

In terms of age, the majority of these respondents age between 21 - 30 years old at 42.3% and followed with age between 31 – 40 years old with 30.8%. The remaining 13.8% and 13.1% of respondents are belong to the age group of 41-50 years old and 41 and above respectively.

With the respect of race, the respondents are skewed towards Malay descent at 84.9% of the total respondents with those of Chinese descent at 9.2% and India descent at 6.2%. Since the majority of respondents are Malay descent, it is anticipated that the majority of respondents are Islam religion which is take 84.6% from the total respondents, followed by Buddhist religion at 9.2% and the lowest is Indian religion with 6.2%.

The result reported from table above also shows that the majority of 85 respondents which represented 65.4% of the respondents are well educated, with more than 23% are certificate or diploma holder, about 25% holding a bachelor degree and about 16% are with master degree. The remaining 34.6% respondents are olding SPM certificate or below.

Table 4.1 above also shows that in total of 130 respondents, more than half of the respondents are government people which this group represented by 74 respondents (56.9%). Out of 130 respondents, 30 of them are working in private sector which represented 23.1% of the total respondents, 12 respondents (9.2%) having their own business, 8 respondents (6.2%) are students and the other 2 respondents (1.5%) are self employed. Only 1 respondent (0.8%) is housewife and the remaining 3 respondents (2.3%) are unemployed or looking for a job.

Based on the frequency analysis for the level of gross monthly income shows that most of the respondents earn monthly income between RM1,500 to RM3,000 which is 43% and followed by the range of income per month between RM3,000 – RM4,500 which is 20%. A total of 18.5% of the respondents earn income less than RM1,500. This is followed by monthly income that more than RM6,000 which constitute of 14 respondent (10.8%) and the remaining 9 respondents (6.9%) earn income at range between RM4,500 to RM6,000.

4.3. RELIABILITY TEST

Reliability test was performed to measure the internal consistency of a set of multiple Likert scale items as a group (IDRE UCLA, 2013). This reliability test is important to ensure the scale that has been used is reliable and free from random error. The reliability test was carried out to evaluate a coefficient alpha or also known as Cronbach’s alpha values for all the independent variable which were social influence, pricing, location of Ar-Rahnu and advertisement as well as dependant variable which was customers’ intention. When Cronbach’s Alpha exceeds 0.70, all the measuring items are interrelated and considered acceptable reliable for further analysis (Sekaran and Bougie, 2011). This Cronbach’s alpha values were calculated using SPSS.

In this study, the researcher would like to identify the relationship that influence customers’ intention towards Ar-Rahnu with focusing to social influence, pricing, location of Ar-Rahnu and advertisement. All the information on the variables was measured by using Likert scales at Section D and Section E in the questionnaire. All the variables were measured by five questions each starting from question 17 until question 41. The summary of the reliability test for the variables were presented in the Table 4.2 below.

Table 4.2: Reliability Test

Variables

Cronbach’s Alpha

No. Of Items

Customers’ Intention

0.928

5

Social Influence

0.869

5

Pricing

0.886

5

Location of Ar-Rahnu

0.740

5

Advertisement

0.901

5

4.3.1 CUSTOMERS’ INTENTION

Customers’ intention towards Ar-Rahnu was measured by 5 questions under Section D (question 17 – 21) in the questionnaires. All the 5 items were analysed and the result was presented in the table 4.2 showed that the Cronbach’s Alpha value was 0.928. This highest value described that the strength of alpha for customers’ intention was very good. The closer the Cronbach’s alpha value to 1.0 is the better.

4.3.2 SOCIAL INFLUENCE

Social influence is one of the four independent variables identified for this study. This variable was examined by 5 questions under Section E (question 22 until 26) in the questionnaire. The value of Cronbach’s alpha for social influence is 0.869. This condition shows that high consistency of the measuring items use for social influence and can be considered good for further analysis.

4.3.3 PRICING

The pricing variable was measured by 5 questions starting from question 27 until question 31 in the questionnaire. The result of Cronbach’s alpha value is 0.886. This result indicates that the items use for measuring pricing are reliable and considered good to proceed for further analysis.

4.3.4 LOCATION OF AR-RAHNU

Location of Ar-Rahnu was also measured by 5 questions under Section E starting from question 32 until 36. Reliability test conducted for this variable shows satisfactory result even though slightly lower as compared to social influence, pricing and customers’ intention variables. The result shows the value of Cronbach’s alpha was 0.740 for location of Ar-Rahnu. The measuring items still considered acceptable and reliable for further analysis.

4.3.5 ADVERTISEMENT

Advertisement variable in the Section E of the questionnaire were measured by 5 items also starting from question 37 to question 42. The reliability of the measure items is good which represented by 0.901 of the value of Cronbach’s alpha. When the alpha value more than 0.70, this implies that the measuring items are highly reliable for further analysis later.

4.4. NORMALITY TEST

Before conducting the correlation, it is important for the researcher to check the normality of the data used in this study. The purpose of normality test to check whether the data uses to measure the variables are normally distributed or not. If the data is normally distributed, we can use Pearson correlation analysis to measure the association between variables later. This is because Pearson correlation has assumption to fulfil that the data for the measurable variable should normally distributed.

In order to measure the distribution of data, the researcher was used skewness and kurtosis measurement. According to George and Mallery (2006), data is normally distributed when the value of skewness and kurtosis are zero and when the value outside the range between +2 or -2 are considered as non-normality. The result of the normality test for all the variables showed in Table 4.3.

Table 4.3: Normality Test

Variables

N

Mean

Std. Dev.

Min.

Max.

Skewness

Kurtosis

Statistic

Statistic

Std

Error

Statistic

Std Error

Customers’ Intention

130

3.572

0.785

1

5

-0.490

0.212

0.967

0.422

Social Influence

130

3.342

0.627

1

5

-0.091

.212

1.726

0.422

Pricing

130

3.685

0.653

2

5

-0.146

0.212

0.156

0.422

Location of

Ar-Rahnu

130

3.563

0.582

2

5

0.057

0.212

0.069

0.422

Advertisement

130

3.980

0.623

2

5

-0.434

0.212

0.567

0.422

From the Table 4.3, we noted that the skewness or kurtosis value for customers’ intention, social influence, pricing and advertising is between the range of +2 or -2. This condition indicates that the data for all variables used for this study are considered as normally distributed. Since the data for this study is normally distributed, The researcher used Pearson correlation analysis and multiple regression analysis to explore the association and relationship between the variables.

4.5 PEARSON CORRELATION ANALYSIS

The Pearson correlation analysis was used to examine the association between two variables which is between independent variables include social influence, pricing, location of Ar-Rahnu and advertisement with dependent variable is customers’ intention towards Ar Rahnu. The strength of the relationship between variables determined based on the value of Pearson correlation coefficient using Guildford (1973)’s Rule of Thumb. A correlation coefficient less than 0.2 indicates a negligible correlation, a correlation coefficient between 0.2 to 0.4 indicates a low correlation, a correlation coefficient between 0.4 to 0.7 is moderate correlation, while a correlation coefficient between 0.7 to 0.9 is high correlation and a correlation coefficient more than 0.9 is very high correlation.

Table 4.4 describes the summary of Pearson correlation analysis between independent variables and dependent variable for this study.

Table 4.4: Pearson Correlation Analysis

Independent Variables

Customers’ Intention toward Ar-Rahnu

Social Influence

Pearson Correlation

0.692**

Sig. (2 tailed)

0.000

Pricing

Pearson Correlation

0.494**

Sig. (2 tailed)

0.000

Location of Ar-Rahnu

Pearson Correlation

0.427**

Sig. (2 tailed)

0.000

Advertisement

Pearson Correlation

0.498**

Sig. (2 tailed)

0.000

**Correlation is significant p<0.05 (2-tailed)

Pearson correlation analysis was conduct for the purpose to examine the existence and strength of association between social influence, pricing, location of Ar-Rahnu and advertisement with customers’ intention toward Ar-Rahnu.

From the Table 4.4, we noted that for all the variables tested, the statistical significant at 0.000 which is less than P-value of 0.05. With this condition, we can conclude that there is association between social influence, pricing, location of Ar-Rahnu and advertisement with customers’ intention towards Ar-Rahnu. The strength of the association between variables can be determined by correlation coefficient value for each variable.

Based on the table above shows that the correlation coefficient between social influence with customers’ intention toward Ar-Rahnu is 0.635. Since the correlation coefficient for both variables was 0.635, this means that there is moderate positive association between social influence and customers’ intention toward Ar-Rahnu.

The strength of the association between pricing and customers’ intention toward Ar-Rahnu can be determined by the correlation coefficient value which is 0.436. This means that there is also moderate positive association between pricing and customers’ intention toward Ar-Rahnu.

The correlation coefficient value for location of Ar-Rahnu with customers’ intention toward Ar-Rahnu is 0.343. Based on Guildford (1973)’s Rule of Thumb, if correlation coefficient between 0.2 to 0.4 is low relationship. Therefore, there is low positive association between location of Ar-Rahnu and customers’ intention toward Ar-Rahnu.

The result from the table above shows the correlation coefficient between advertisement with customers’ intention is 0.445. This indicates that there is positive moderate association between advertisement and customers’ intention toward Ar-Rahnu. Between all four independent variables noted that a correlation coefficient for social influence is the highest and followed by advertisement, pricing and lastly but not least is location of Ar-Rahnu. This indicates that the association between social influence with customers’ intention is the strongest as compared to the other three variables.

4.6. MULTIPLE REGRESSION ANALYSIS

In order to measure the relationship between all the independent variables including social influence, pricing, location of Ar-Rahnu and advertisement and dependent variable which is customers’ intention toward Ar-Rahnu, the researcher used multiple regression analysis. By using this analysis, we able to see how much the variance in the dependent variable can be explained by independent variables and also give us ability to make prediction the set of independent variables that have impact to the dependent variable.

This multiple regression analysis was conducted to test how good independent variables with social influence, pricing, location of Ar-Rahnu and advertisement to predict the customers’ intention towards Ar-Rahnu. All the four independent variables were entered concurrently in order to examine the relationship using this analysis. The results of the multiple regression analysis are presented in Table 4.5 below.

Table 4.5: Regression Analysis

Model

Independent variables

B

Beta

R2

Adj. R2

F

t

Sig.

1

(Constant)

-0.520

0.557

0.543

39.248*

-1.441

0.152

Social Influence

0.688

0.549

7.978

0.000

Pricing

0.097

0.081

1.038

0.301

Location

0.161

0.119

1.584

0.116

Advertisement

0.217

0.172

2.190

0.030

** p<0.05

Based on the Table 4.5, the regression model can be evaluated by looking into coefficient determination which is R2 value. R2 value explains to us how much of the variant in the dependent variable is explained by the regression model (Pallant, 2011). The table above shows that the R2 is 0.557. This means that 55.7% of the variation in the customers’ intention toward Ar-Rahnu can be explained by social influence, pricing, location of Ar-Rahnu and advertisement in the regression model. The balance of 44.3% remains unexplained which is there are other factors also can be the determinants of customers’ intention toward Ar-Rahnu. This regression model is statistically significant as indicated by the Sig. F value which is less than P-value of 0.05.

4.6.1 The Relationship between Social Influence with Customers’ Intention

Multiple regression analysis was conduct for the purpose to examine the relationship between social influence and customers’ intention toward Ar-Rahnu. The analysis was conducted according to hypothesis H1 which is stated as below:

H1: There is a significant relationship between social influence and customers’ intention toward Ar-Rahnu

From the Table 4.5 shows that the statistical significant at 0.000 which is less than P-value of 0.05, thus reject the hypothesis null. Based on this finding, we can conclude that there is a significant relationship between social influence with the customers’ intention towards Ar-Rahnu. Therefore hypothesis H1 is supported.

In order to identify either the social influence is the best predictor to influence the customers’ toward Ar-Rahnu by assessing the Beta coefficient value. The result shows that social influence has the highest Beta coefficient value among the other three independent variables which is 0.549. This indicates that social influence is the most important factor that influences customers’ intention towards Ar-Rahnu.

4.6.2 The Relationship between Pricing with Customers’ Intention

The multiple regression analysis was used to test the hypothesis H2. The statement for hypothesis H2 is as below.

H2: There is a significant relationship between pricing with customers’ intention toward Ar-Rahnu

Based on table 4.5 above, noted that the significant level at 0.301 which is higher than P-value of 0.05. Thus, fail to reject the hypothesis null. When the finding shows fail to reject hypothesis null, we can conclude that there is a no significant relationship between pricing with customers’ intention towards Ar-Rahnu. As a result, hypothesis H2 is rejected.

4.6.3 The Relationship between Location of Ar-Rahnu with Customers’ Intention

This multiple regression analysis was conducted in order to investigate the relationship between location of Ar-Rahnu with customers’ intention toward Ar-Rahnu. The test was done according to hypothesis H3 which is stated that there is a significant relationship between location of Ar-Rahnu with customers’ intention toward Ar-Rahnu.

H3: There is a significant relationship between location of Ar-Rahnu with customers’ intention toward Ar-Rahnu

Table 4.5 shows that the significant level at 0.116 which is higher than P-value of 0.05. Thus, fail to reject the hypothesis null. With that we can conclude that there is no significant relationship between location of Ar-Rahnu with customers’ intention toward Ar-Rahnu. Hence, hypothesis H3 is rejected.

4.6.4 The Relationship between Advertisement with Customers’ Intention

The multiple regression analysis was conduct to examine hypothesis H4 as stated below:

H4: There is a significant relationship between advertisement and customers’ intention toward Ar-Rahnu

According to the Table 4.5 shows that the significant level at 0.030 which is less than P-value of 0.05, thus reject the hypothesis null. This means that there is a significant relationship between advertisement with customers’ intention toward Ar-Rahnu at the 5% significant level. Therefore hypothesis H4 is supported.

From the Table 4.5 also we noted that the value of Beta coefficient for advertisement is 0.172 which showed that advertisement had a positive effect on the customers’ intention toward Ar-Rahnu. This independent variable is the second important variable factor that influence customers’ intention towards Ar-Rahnu after social influence,

4.6. DISCUSSION OF THE FINDINGS

Basically, based on the multiple regression analysis we noted that social influence and advertisement obtained statistically significant at 0.000 and 0.030 respectively which are less than P-value of 0.05. These findings indicate that social influence and advertisement have significant relationship with customers’ intention toward Ar-Rahnu. These two factors have influential effect to the customers’ intention toward Ar-Rahnu. The social influence stands to be the major contribution to the customers’ intention toward Ar-Rahnu and followed by advertisement.

This finding is consistent with the finding of Amin and Chong (2011) whereby in their study found that the social influence has significant relationship with Ar-Rahnu usage intention. The greater the social influence is, the greater the individual intention to use Ar-Rahnu. This finding seem logical because people which closer to us such as our spouses, family members, friends, colleagues, teachers and lectures can be an agent to give an impact on our behaviour intention. This is because most of Malaysian consumers like to seek for advice from people that close to them first before engaging the product and services.

Advertisement is a new independent variable selected by the researcher to be tested in this research as suggested by Appannan and Doris (2011). According to Khan et al., (2012) advertisement increases the purchase intention of customers. This finding is in line with the result for this study as there is significant relationship between advertisement with customers intention toward Ar-Rahnu. Advertisement on Ar-Rahnu is also important because it can help to create awareness, giving information on the services and helping consumer to determine the value of the services.