Abstract
This research examines three variable components of M40 Muslim behavior comprise of understanding of Islamic debt principles, credit facilities offered and confidence in Islamic banking / financial products towards the purpose of indebtedness for luxury from an Islamic perspective. The M40 Muslim household's attitude towards debt is a mediator to the relationship between the independent and dependent variables. This research uses a quantitative research approach by distributing questionnaires to M40 Muslim debtors in Selangor. Data were collected using samples of 438 respondents from M40 Muslim who were indebted in Selangor based on stratified random sampling techniques and analyzed using Structural Equation Modeling (PLS-SEM). The findings of this research have shown that with the variable of understanding of Islamic debt principles, credit facilities offered are significant to the attitude of Muslim debtors, while Muslim confidence in Islamic banking / financial products is not significant to Muslim’s attitude of debt. In addition, the findings also show that the attitude of Muslims to debt is significant and is capable of being a mediator between the variables of M40 Muslim households with the aim of being indebted to enjoy the luxury. In this research, the understanding of Islamic debt, the credit facilities offered and the attitude of indebtedness have a significant impact towards the motivation among the Muslim households to be indebted for luxurious means.
Highlights
These days, debt transactions have become part and parcel of very household in order for it to be able to have basic necessities (Hodari, 2014)
M40 Muslims who are indebted become the research sample to take into account the middle income group that plays an important role in the national economic development (Dyck, Hansakul & Saxena, 2009) and the Malays are the race who has been noted to constitute the highest percentage of bankruptcy compared to the Chinese and Indians (Malaysian Insolvency Department, 2017)
Diagram 2 shows the outcome of the hypothesis model analysis that fulfils the criteria of the measurement model evaluation based on the Partial Least Squares Structural Equation Modeling (PLS-SEM) analysis procedure using the software Smart-PLS 3.2.7
Summary
These days, debt transactions have become part and parcel of very household in order for it to be able to have basic necessities (Hodari, 2014). Literature Review The past literature presents the four instruments that influence the indebted society namely luxury, attitude, the understanding about the debt principle in Islam and the credit facilities offered. The third hypothesis is as follows: H3: The confidence towards the Islamic banking/financing products has a significant influence on the attitude of M40 Muslims to make debts. M40 Muslims who are indebted become the research sample to take into account the middle income group that plays an important role in the national economic development (Dyck, Hansakul & Saxena, 2009) and the Malays are the race who has been noted to constitute the highest percentage of bankruptcy compared to the Chinese and Indians (Malaysian Insolvency Department, 2017). It is difficult to own a house when the housing prices continue to rise, housing loans approvals are getting stricter and less choices are available for the middle income group (Baqutaya, Ariffin & Raji, 2016)
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