Abstract
Being established as a special Islamic financial institutions dedicated for managing hajj fund, Lembaga Tabung Haji (TH) plays a crucial role to ensure going concern of the institutions. Thus, it is highly important to preserve depositors trust and loyalty on the institution. Financial and management issues faced by TH, couple with the widespread use of social media reporting inaccurate information about the institutions may give impact to the depositors' trust, evidencing by a sudden deposits withdrawal and closure of account in year 2017. As it is a special institution only for Muslims, its depositors carry different characteristics as compared to the other financial institutions. Using literature survey, this study develops a conceptual model to examine the depositors' trust and loyalty on the institution by examining three mediating variables namely depositors' financial literacy, depositors' understanding about hajj and depositors' awareness about current development of the institutions. Finally, both theoretical and practical implications were also discussed.Keywords: Financial Literacy, Hajj, Awareness, Trust, Loyalty JEL Classification: G53DOI: https://doi.org/10.32479/irmm.8315
Highlights
Lembaga Tabung Haji (TH) was established in year 1963 and has been serving an important role in managing deposits and administrating hajj of Muslims in Malaysia
The theoretical implication for this study is the proposed model can be applied for further research on Hajj Institution which the nature of activities and demographic significantly differs from other financial institutions
As the research on trust and loyalty of Hajj Institution are still lacking, this study would contribute to necessary actions to be taken by the institution to further restore depositors’ trust on them
Summary
Lembaga Tabung Haji (TH) was established in year 1963 and has been serving an important role in managing deposits and administrating hajj of Muslims in Malaysia. TH has gained high level of confidence from Malaysian evidencing by its strong capital, high growth of deposits and profit level every year as well as efficient management of hajj It is a popular choice of saving instrument among the Muslims in Malaysia due high amount of yearly hibah and subsidy for their hajj cost. The reputation of TH become more severe at the end of year 2018 when the new management of TH announce the misrepresentation of financial statements for year 2017, mainly on the overstated of profit and asset position, which lead to the declaration of high hibah amount Another series of an independent audit was performed which concludes alarming financial position which subsequently, put TH under the restructuring exercise. The model examines the impact of mediating variables namely depositors’ financial literacy, depositors’ hajj understanding and depositors’ awareness on the depositors’ trust towards their loyalty on TH
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