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Consumer
Choosing murabahah to the behaviour
purchase orderer (MPO) vehicle perspective

financing: an Islamic theory of

consumer behaviour perspective
Hanudin Amin Received 4 March 2020
Revised 13 May 2020
Labuan Faculty of International Finance, Universiti Malaysia Sabah, 21 August 2020
Kota Kinabalu, Malaysia Accepted 4 October 2020

Abstract
Purpose – This study aims to examine the effects of Islamic altruism, level of iman and maqasid consumer
index on young intellectuals’ willingness to choose murabahah to the purchase orderer (MPO) vehicle
financing. Besides, the role of the level of iman or faith as a mediator is examined.
Design/methodology/approach – Earlier studies have reported the limited application of the Islamic
theory of consumer behaviour (ITCB) to the vehicle financing context. This lack of theoretical foundation
might provide a potential explanation for the mixed empirical support that has been found. This study,
therefore, uses the ITCB to study young intellectuals’ willingness to take up the facility. The data were
analysed using partial least squares based on 312 respondents.
Findings – The results obtained from this study confirm that the ITCB should be applied to understand the
willingness behaviour amongst young graduates in selecting MPO vehicle financing. The level of iman was
found a key factor not only as an independent variable but also as a mediator.
Research limitations/implications – This study is limited in terms of its generalisation and
research context.
Practical implications – New insight into patronage factors for MPO vehicle financing is provided along
with the applicability outcome of the ITCB.
Originality/value – This paper applies the ITCB into the MPO vehicle financing context and using young
intellectuals to examine the validity and reliability of the ITCB.
Keywords Malaysia, Murabahah, Altruism, Islamic theory of consumer behaviour, Maqasid,
Vehicle financing
Paper type Research paper

Introduction
It has been recognised that without major financial innovations in the Islamic banking
industry, the competitiveness of Islamic banks will stagnate and lose its competence, as well
as its market share in comparison to the continued increase in attractiveness of their
conventional peers. The innovations enable Islamic banks to present new or improved
products to the market and thus strengthen their performance. Of these, the offered
murabahah to the purchase orderer (MPO) vehicle financing is another milestone found in
the industry that boosts the competitive advantage of vehicle financing segment of Islamic
banks along with improved compliance with Shariah. MPO is a cost mark-up financing
transaction involving three parties – an Islamic bank as the seller, the car vendor and the car
buyer (Abdul Rahman, 2012; Amin, 2018). Importantly, MPO vehicle financing is recently Management Research Review
available in the market, those supporting this facility will have the greatest success in © Emerald Publishing Limited
2040-8269
tapping into the profits generated from the car market segment in Malaysia. DOI 10.1108/MRR-03-2020-0118
MRR Such a financial innovation development might explain, at least in part, why the two full-
fledged Islamic banks, namely, Bank Islam Malaysia Berhad (BIMB) and Bank Muamalat
Malaysia Berhad (BMMB) have recently shifted their emphasis from al-ijarah thumma al-
bay (AITAB) to the supporting of MPO vehicle financing. AITAB is a Shariah-compliant car
financing based on the principles to lease (ijarah) followed by sale (al-bay), first introduced
by BIMB in 1995 to meet customers’ financial need for buying motor vehicles. BIMB was
also the first bank in Malaysia that introduced MPO vehicle financing in 2014.
Moreover, the decision of the two banks to consider MPO vehicle financing is shaped by
an effort to strengthen public image on the vehicle financing segment through improved
Shariah (i.e. Islamic religious law) compliance status and at the same to promote sale
transactions instead of leasing to avoid dubious practices of maintenance costs and takaful
(i.e. Islamic insurance) fees – which are previously more favourable to Islamic banks at the
expense of customers’ justice (Kasri and Mohamad, 2013; Amin, 2018).
Likewise, the performance of the offered MPO vehicle financing is based on the demand
of bank customers – whether they are young or old both are of utmost importance
contributing to improved profit segment of Islamic banks. Of these, we focus our study on
the receptiveness of undergraduate students as potential customers for the product, who, in
turn, can influence the banks’ future profit and reputation.
Understanding why consumers accept or reject MPO vehicle financing has proven to be
one of the most challenging research questions in the Islamic banking field (Abdullah and
Dusuki, 2006; Abdullah and Chee, 2010). There is a fallacy in that consumers are only
aiming at obtaining the car that they have chosen from the car vendor without really care
about a Shariah contract used in governing the financing of their bought car (Abdullah and
Chee, 2010; Amin, 2018). To date, past studies have documented limited evidence pertinent
to the patronage factors influencing its acceptance.
Researchers have devoted a great deal of attention to study AITAB vehicle financing in
terms of customers’ perception (Abdullah and Dusuki, 2006), the legality of AITAB (Ramli
and Onn, 2007; Zakaria and Ab Ghani, 2017) and pricing mechanism (Mohamed and Isa,
2017). Of these, Abdullah and Dusuki (2006) provide empirical investigations on customers’
perception per se on AITAB but not patronage factors. In general, however, these research
findings have been mixed, inconclusive and no analyses directed on consumer acceptance of
MPO vehicle financing. To our knowledge, a study by Abdul Rahman and Wahid (2016)
considers a recent one in explaining customers’ perception of MPO vehicle financing but has
a limit in terms of variables used and extensions. The study only provides descriptive
results on customers’ knowledge, maqasid fulfilment and interest. The test of the effects of
Islamic altruism, level of iman and maqasid consumer index on the receptiveness is fallen
short. The lack of specificity of the battery items describing these factors, and failure to
establish their construct validity have remained inconclusive, which warrant further
empirical investigations.
Given these literature analyses, four research gaps identified but are not limited to.
Firstly, past studies in majority only examined AITAB vehicle financing in terms of its
modus operandi, legality and customers’ perception, to mention some. Secondly, efforts
documented by these studies to extend The Islamic theory of consumer behaviour (ITCB) to
the MPO vehicle financing context are inadequate, perhaps, owing to their research gaps in
terms of the paradigm of inquiry. Thirdly, some of these studies have addressed the
importance of studying consumer preference for Islamic vehicle financing, however,
understanding the joint effects of Islamic altruism, religiosity and maqasid consumer index
on the willingness to take up MPO vehicle financing are limited. This remains an interesting
question to be considered in this study. In this line of thought, this study extends the
applicability of the theoretical framework proposed by Khan (1984), Bendjilali (1995) and Consumer
Khan (2014) – ITCB, which then tested and proven valid by Amin (2019) empirically. behaviour
Hence, the present study is aimed at explaining the patronage factors influencing the
receptiveness of MPO vehicle financing in a car market, where young intellectuals are
perspective
brought into play.

Literature review
The Islamic theory of consumer behaviour
The ITCB is first coined by a prominent scholar in Islamic economics, Kahf (1978), who
examines the theory of consumption from an Islamic perspective. Afterwards, Kahf’s (1978)
idea is extended by Khan (1984) through his published work titled “macro consumption
function in an Islamic framework” who asserts the need to have the ITCB specifically to
capture Islamic consumption practices that are related to Islamic worldview elements (God
and religion). Following Khan (1984), the key ingredient in Muslim behaviour is the
spending to achieve the well-being in this world and the spending for others to obtain
rewards in the hereafter. Though these studies uphold such a need, the limited empirical
framework proposed by them, leaving the validity and reliability remains unexplored for the
ITCB.
The theory has been used by past scholars in different ways. A study by Bendjilali (1993)
uses to extend the theory to explore consumer preference using a mathematical model and
managed to uncover the link existed between the utility function and falah function through
religiosity or iman. In another context, however, a study by Khan (2014) uses the theory in
the formation of new assumptions related to spending and consumption of Muslims in
modern society. He asserts that the theory shall consider well-being, need, right-mindedness
and community, as factors or consequences. These two studies are of utmost importance in
supporting the theory but yet only in 2019 a work by Amin (2019) suggests a formal
framework to measure the ITCB and applied to Islamic home financing context. The study
managed to validate three factors as contributing factors in explaining consumer behaviour
or acceptance. These include religiosity, support and maqasid factor. Though this
considered a breakthrough, much works needed to explain its extensions and
generalisations.
Following Khan (1984, 2014), the elements of moderation and halal (i.e. permissible)
consumption are unheeded in the conventional theories, and due to their nature too in that,
the emphasis is the promotion of individualistic and materialistic types of behaviours. Many
have benefited from the theories out of parsimony and applicability factors, implying they
are easier to be adapted but subject to modifications when necessary. Though useful, the
theories to a certain extent have paid limited attention to the importance of Muslim
consumers’ consumption status – Muslim consumers allow to consume tayibat (good) and
halal (permissible) products only (Naqvi, 1981). Following Bendjilali (1993), conventional
theories are not suitable for explaining the behaviour of Muslim consumers. A Muslim is
born with a faith that the religion of Islam comes with an Islamic worldview in that the
motivation of living is to serve the Allah SWT better and performing good deeds in
obtaining blessings from Him, acting as sustenance for the hereafter.
A study by Ahmed A. El-Ashker (1985) provides a theoretical argument pertinent to the
ITCB but, somewhat to be influenced by Khan (1984), who studies on how the consumers
allocate their income between different heads and how they decide how much to consume.
Important findings and arguments are drawn from Khan (1984) are related to the spending
to achieve satisfaction in this world and spending for others to earn a reward in the
hereafter. Consumption is factored from one’s God-fearing that is related to piety or taqwa
MRR that determines consumer behaviour of a Muslim. Following Ahmed A. El-Ashker’s (1985),
who considers 150 respondents in Scotland, finds out that the respondents prioritise the
buying of accommodation first before others follow. It is worth noting that this study
portrays the buying of car for own transport is not regarded as a luxury good but as a need.
This assertion in line with what is examined in the current context, where the buying of a
car or vehicle is intended as a basic need, and therefore the taking up of MPO vehicle
financing is fulfiling the need accordingly.
Bendjilali (1995), furthermore examines the demand for consumer credit in an Islamic
setting in which one is considering his religion when applying for murabahah financing for
basic needs’ fulfilment. His research is somewhat influenced by Mannan (1970). Mannan
(1970) explicates four principles regarding loan consumption in Islam. These are:
(1) The first principle is a genuineness that arises from the fact that the taking of a
loan without any valid reason is discouraged in Islam;
(2) The second principle is Shariah compliance. Shariah becomes the law governing
entire aspects of the products linked to Islamic personal cash financing (IPCF).
These include pricing, documentation, procedures and dispute resolutions comply
with Shariah, to mention some;
(3) The third principle is helping people or prosocial behaviours. Extending the IPCF
to help people in distress and not to stimulate them to fall into debt as is found in
the present-day credit market; and
(4) The fourth principle is the repayment of debt. Consumers are directed to make
every effort to make payment of the financing facility obtained from the bank.

Bendjilali (1995) asserts that borrowing is assumed to be bad if it resorts to unnecessary

purchases such as, for demonstration purposes and should be discouraged even on cash
payment. Islam does not encourage an extravagant consumption economy and calls for
moderation. He believes that the Muslim consumer will borrow only when it is necessary to
borrow. It is also believed that the Islamic teachings incite the Muslim consumer to live from
his work and according to his means.
Two interesting works by Khan (2014) and Kahf (2011) also provide clarification about
the need for the ITCB.
Firstly, Khan (2014), anything that does not contribute to well-being positively is not a
need in Islamic framework and is not pursued. Well-being is related to life, health, material
wealth, religion, capacity, intellects and his family life. Likewise, the fulfilment of one’s need
can contribute to his well-being. Hitherto, the community oversees individual’s behaviour
and visible deviation from Islamic norms in meeting one’s need may trigger various forms of
community pressures. Besides, one should screen his instinctive desires to distinguish for
him what is good for him from what is not, what his need is and what is not. His belief in
Islam and adherence to Islamic rules and norms of behaviour provide him with a very
strong filter to identify for him a list of needs and order them in a priority that would
enhance his well-being.
Secondly, Kahf (2011) asserts that consumers may even obtain detailed information
about offers available in the market from different channels of information, including
advertisements made by producers, agencies and government agencies, to mention some.
New information makes consumers revise their initial plans and ideas before they decide to
enter into a transaction. Likewise, Kahf (2011) also notes that religious beliefs influence the
consumer choice of distributing income for alternative consumptions. One’s beliefs and
religion interfere in the formation of consumers’ choice as they determine lawfulness and
non-lawfulness of goods, indicate desirability or encouragement for certain kinds Consumer
and affecting the quantity consumed of goods and services via the concept of modesty and behaviour
condemnation of extravagance.
Drawing from these studies, three important lessons can be learnt but are not confined to:
perspective
(1) Firstly, the ITCB considers the importance of religiosity when one is extending his
spending and consumption. In our case, however, the term level of iman is used to
provide a closer perspective to Islamic worldview that considers as a foundation of
why a man is created by Allah SWT;
(2) Secondly, the ITCB considers the significance of maqasid al-Shariah – be it direct
or indirect. One intends to buy a vehicle for his family need rather than used for
show-off or whatsoever that is considered prohibited in Islam. Five elements of the
maqasid explain why need should be prioritised than that of want. These include
life, religion, intellect, property and lineage; and
(3) Thirdly, the ITCB considers the importance of brotherhood, where ihsan is brought
into play. Ihsan is termed as Islamic altruism in our current’s context. Explained in
more detail, it is about supporting the Islamic banking industry by patronising
MPO vehicle financing facility as a priority when intending to own a vehicle to
improve well-being.

Given these assertions, our current work expects that the ITCB will provide an improved
understanding pertinent to the patronage factors affecting young intellectuals’ to opt MPO
vehicle financing. Similarly, this study provides new insight into the ITCB significance,
where MPO vehicle financing comes into play.

Proposed framework: hypotheses development

Islamic altruism. In our context, however, we propose the term “Islamic altruism” that can
be defined as one’s support on Islamic financing facilities or products by giving priority
in terms of patronisation compared with conventional banking products. A work by
Mannan (1989) argues that altruism is essential in the formation of one’s conduct or
behaviour, in which he believes that one should not confine his good deed to himself alone
but also extending it to make others’ feel the sense of belonging. Following Kahf (1996)
asserts that doing good for others are recorded and rewarded by Allah SWT well, and Allah
SWT loves good things and so do when people do good things. Jointly, Mannan (1989) and
Kahf (1996) learn the significance of altruism from the primary sources of Islam, when
Surah Al-Baqarah [2:195] comes into play. One is encouraged to promote his generosity for
the cause of Allah and if possible, mainly to extend his hand to others to make the balance
between his need, followed by his family and ummah as well. In another context, Rizal and
Amin (2017) find a significant relationship between altruism and the formation of one’s
behaviour in charitable giving.
There are many benefits by supporting the products, like in the case of MPO vehicle
financing. The reasons are two-fold. Firstly, patronising MPO vehicle financing can be of a
contributing factor in strengthening the market share of Islamic banking segment in
Malaysia. Through demand, the profit drawn from the financing facility is certainly
improved and become a source of income for Islamic banks. Secondly, the supporters of
Islamic banking products including MPO vehicle financing can promote positive words of
mouth pertinent to the facility by explaining and conveying positive public image about the
financing facility. There exist shreds of evidence that hold a perspective that one’s support
on Islamic banking products can help to improve the demand, like the one studied by
MRR Abdullah and Dusuki (2006) prove that improved customers’ perception can lead to the
receptiveness of Islamic hire purchase facility in Malaysia. Afterwards, Dusuki and
Abdullah (2007) prove supporting Islamic banking products can help to sustain the
sustainability of the Islamic banking industry, and therefore the authors suggested selection
criteria to improve demand.
Though related, the above-mentioned have paid little attention concerning the link
between altruism and the willingness. A study by Amin (2019) provides an exemption in
which Islamic altruism, termed as Islamic mortgage support is instrumental in determining
the consumer behaviour as bank customers believe their support can improve the survival
and performance of an Islamic banking product. We postulate that “Islamic altruism” can
also be a pushing factor in determining the willingness to patronise MPO vehicle financing.
Thus, H1 is hypothesised as:

H1. Islamic altruism has a direct positive effect on the willingness to take up MPO
vehicle financing.
Level of iman. Iman is the term that refers to religion, specifically the religion of Islam.
Following Kahf (1978), religion can influence one’s consumption of any permissible goods
and services, as allowed by God. Two consumption types explained by Kahf (1978) are
foodstuffs and sadaqah (i.e. charitable giving), in which the former has an instantaneous
effect in this world but the latter has afterlife effect. This means that one’s consumption if it
is sincerely developed for God, the reward can be of greater in upholding the significance of
goodness and prosocial behaviours. God likes good things and for that one who is
performing good things will be rewarded and his life is blessed with joy and happiness. The
Kahf’s (1978) perspective is also supported by a well-known scholar in Islamic economics,
Zarqa (1980) in which he asserts that there is a positive relationship between worldly
consumption and reward in the afterlife and because of that this world should be seen as a
good means to a good end. Given these avowals, we can view that Muslims spending and
consumption are tied up with their religion, implying the higher the extent of their good
consumptions, the better is the reward in the hereafter, where mardhatillah comes into play.
In this line of thought, Choudhury (1986) asserts that Islamic worldview is related to
one’s behaviour in this world. In other words, their belief in God, religion, aim in life, man
purpose and nature protection, to mention some are related to guide one’s behaviour for the
achievement of success in both worlds – be it today’s world or the hereafter. Influenced by
Choudhury (1986), Khan (1995), one of the important Islamic economists asserts that one’s
religiosity is instrumental in determining consumption mainly when dedicated to
moderation and halal consumptions. Following Essoo and Dibb (2004), highly religious
individuals tend to be conservative, insightful and mature – explaining why those who are
highly religious will be reluctant to consume a product if they are not confident to perform
such behaviour. In Islam, those who are highly religious are inclined to consume halal
products, including the case of a financing product, given that this behaviour is supported in
Islam (Al Qaradawi, 1981, see p. 35).
Bendjilali (1993) offers a sharp perspective on consumer behaviour from an Islamic realm
using a mathematical approach. He strongly asserts that the level of iman and Shariah
compliance have a positive relationship. His work extends in 1995 when he asserts that the
lower the iman of the Muslim consumer, the less he is disposed to comply internally with the
Shariah (Bendjilali, 1995). For instance, he might get satisfaction by gathering wealth
through riba and try to find a justification for it. A Muslim consumer who has a low level of
iman might very well have selfish conduct in his lifetime and as a result, might get
satisfaction out of his conducts but the result will be a negative success (falah). Following
Khan (2014), a Muslim consumer with a high level of iman opts action that permits him to Consumer
comply with Shariah and consequently improved his success. Influenced by Khan (2014), behaviour
Amin (2019) finds a significant relationship between the role of iman and consumer
behaviour – implying the higher the extent of the role of iman, the better is consumer
perspective
behaviour. Earlier, Amin (2017) uses the ITCB to explain consumer behaviour and the
religiosity factor also a contributing factor to the formation of the behaviour. In a similar
vein, Shaikh et al. (2017) assert that the principle of moderation in consumption that is
drawn from a high level of iman helps improve one’s spending to be according to his
capacity – observing humbleness and shun pride. The same behaviour is expected when one
chooses a car that meets his basic need and later financed by a halal financing source.
Jointly, these reviewed works suggest that religion and Muslim consumption are
typically correlated, implying when one level of iman is higher, the compliance to
consuming halal products will also be higher. Hence, H2 is hypothesised as:

H2. Level of iman has a direct positive effect on the willingness to take up MPO vehicle
financing.
Maqasid consumer index. The full term for maqasid used in this study is maqasid al-
Shariah, which means the objective of Shariah. Following Ashur and Al-Tahir (2006),
maqasid refers to the people’s interest or somewhat the welfare of people at large. The
pioneer, the earliest contributor of the theory, Abdul-Malik Al Juwwaini, asserted public
interests, al-masalih al-ammah or al-maqasid can be used interchangeably. A work by Auda
(2008) supports this definition of maqasid al-Shariah in which he argues that maqasid is
about objective, purpose and principle, where the interest of humanity is brought into play.
Maqasid al-Shariah is particularly a global issue and earned attention from many
scholars when applying the term to the context of Islamic banking products and operations.
An interesting assertion by Bakar (2016) indicates that maqasid al-Shariah is important but
cannot create or induce any law on its own, without the intervention of the state or relevant
policy. It does not make a contract valid or invalid but importantly can persuade or influence
particularly the policymakers to make a policy that could not only provide the basis of a
specific Shariah ruling but could also overrule any specific evidence of the Shariah.
Likewise, the importance of maqasid al-Shariah in Islamic banking products has been
addressed by prominent scholars in Islamic finance (Ahmed, 2011; Dusuki and Bouheraoua,
2011). Following Ahmed (2011), the maqasid implies two sets of Shariah requirements, one
is legal and second is social. The former can be identified through the fulfilment of form and
substance of Islamic law at the contract level while the latter is based on market needs
served by a product. Three product categories are explained. A pseudo-Islamic product
conforms to the legal form only but does not meet the substance of Shariah or serve the
social needs. A Shariah-compliant product satisfies the form and substance of Shariah but
fails to meet social needs. A Shariah-based product is a product that fulfils legal and social
needs coherently.
Furthermore, MPO vehicle financing is criticised owing to its heavy reliance on
targetting fixed income streams’ individuals like teachers at the expense of needy and poor
individuals. The attention is lesser on the maqasid al-Shariah, and for that, the willingness
by young intellectuals’ to patronise MPO vehicle financing for their car ownership will be
marginal. Likewise, this avowal is in tandem with Dusuki and Bouheraoua (2011), who
prioritise the importance of preservation of wealth in owning certain types of properties to
improve one’s well-being in this world. Ownership of a vehicle is generally addressed and
the ability of individuals to use something or a benefit by making use of it directly essential.
MRR This means, no a vehicle should be taken from its owner without his consent and fair
compensation should be given for any utilisation of one’s property.
Though essential Ahmed (2011) and Dusuki and Bouheraoua (2011) have not considered
MPO vehicle financing in their arguments, out of the paradigm of inquiry and different
research scope. As MPO vehicle financing is part of the offered Islamic financing products,
its link to maqasid al-Shariah is important. Studies by Amin (2017) and Amin (2019) have
confirmed a significant relationship between maqasid factor and consumer behaviour. In
other words, the maqasid consumer index plays a significant role in determining why people
choose Islamic banking products. Earlier, Amin et al. (2014) prove maqasid factor
determines one’s willingness and behaviour. To explore it further in this study, H3 is
hypothesised as:

H3. Maqasid consumer index has a direct positive effect on the willingness to take up
MPO vehicle financing.
Besides, we expect the level of iman to serve as a mediator for the relationship between
Islamic altruism, maqasid consumer index and willingness to take up MPO vehicle
financing. In a Malaysia context, level of iman has been essential not only as an explanatory
variable but also as a mediator (Shah Alam et al., 2011). Thus, our work attempts to bridge
the gap by providing a basis in explaining the roles of iman both as the explanatory variable
and also a mediator in the MPO vehicle financing’s context specifically. As such, the
following hypotheses are developed:

H4. Islamic altruism has a direct positive effect on the level of iman towards the
willingness.
H5. Maqasid consumer index has a direct positive effect on the level of iman towards
the willingness.
H6. Level of iman mediates the relationship between Islamic altruism and willingness
to take up MPO vehicle financing.
H7. Level of iman mediates the relationship between maqasid consumer index and
willingness to take up MPO vehicle financing.
Based on the discussions drawn from the literature, the following model is proposed
(Figure 1).

Islamic
altruism

Level of Willingness
iman to take up

Figure 1.
Proposed ITCB for
Maqasid
MPO vehicle consumer
financing index
Research methodology Consumer
Subjects behaviour
This study is conducted in a public university in East Malaysia by considering the final year
students – who will complete their degree’s life soon. The data collection was taken place
perspective
from 1st December 2019 until 31st January 2020. The reasons are two-fold. Firstly, the
students are considered as a new potential customer base for the vehicle segment of Islamic
banking, once they enter the job market. Secondly, the students chosen are well-trained
about financial matters including the management of personal wealth and finance. This
study uses judgemental sampling in selecting the respondents under contemplation. The
criteria used are mentioned as follows:

The students chosen are intended to take up MPO vehicle financing when they are
entering the job market after completing their bachelor degree;

The students chosen know Islamic banking products including Islamic financing
products. These include Islamic personal financing, Islamic vehicle financing and
Islamic mortgage, to mention some; and

The students chosen are those third-year students out of adulthood factor and
enhanced learning experience.

As for data collection, a total of 350 questionnaires are provided to elicit responses from the
respondents chosen. Of these, we managed to obtain 312 usable questionnaires that qualify
them for further analysis of the data collected. This meets the Hair et al.’s (2006)
recommendation (detailed as 10 x battery items’ number, which is 10 x 12 = 120) – implying
our sample size is somewhat adequate to provide precision and constancy in findings
obtained (Table 1).

Measures
Following Churchill (1979), the current research develops measurement items from the
extant pieces of literature in which the analysed battery items are adapted from previous
studies. Though found limited in the literature, the details are provided as follows:

Demographic Detail Sample (%)

Gender Female 178 57.05

Male 134 42.95
Marital status Single 292 93.59
Married 20 6.41
Ethnic Aboriginal sabahan 97 31.09
Aboriginal sarawakian 55 17.63
Malay 89 28.53
Chinese 40 12.82
India 31 9.94
Age Less than 20 0 0.00
20–30 307 98.40
More than 30 5 1.60
Monthly spending (MYR) Less than 400 97 31.09
400–600 182 58.33
More than 600 33 10.58
Table 1.
Note: *MYR = Malaysian Ringgit Demographic items
MRR
Three battery items for the level of iman are adapted from Bendjilali (1993);

Three battery items measuring Islamic altruism are adapted from Khan (2014); and

Three battery items measuring the maqasid consumer index are adapted from Amin
(2019).

Measurement scales for willingness to take up MPO vehicle financing are self-created,
developed specifically in this study.
The construct’s items are developed through literature analyses that help identify
whether specific items for the willingness to choose MPO are available or not (Churchill,
1979). Two studies of Amin (2017, 2019) have used the ITCB but relatively no construct’s
items are developed for the willingness but instead actual behaviour. Our close
examinations to four studies of Abdul Rahman and Wahid (2016), Abdullah and Dusuki
(2006), Dusuki and Abdullah (2007) and Ramli and Onn (2007) also do not suggest battery
items for the willingness though they jointly examine car financing in Malaysia.
Importantly, Khan (1995) recommends Muslim scholars to develop their distinct framework
when studying consumers’ choices and actions in Islamic society to better capture Islamic
worldview elements (God, religion, man, nature and aim in life, to mention some) for an
enhanced practice of moderation amongst Muslims in spending and consumption.
Following Khan (1995), the present study is, therefore, developed the construct’s items as
follows:

I will choose MPO vehicle financing;

I will put an effort to select MPO vehicle financing; and

I will prioritise MPO vehicle financing.

Likewise, they are evaluated by 30 respondents for face validity via pilot test and later the
rechecking to the items is taken place involving 5 respondents identified from the pilot test,
who are also the final year students at the university. All items through reliability test and
face validity are found acceptable – implying the appropriateness of the items developed to
measure the “willingness to take up MPO vehicle financing”.
The construct’s battery items are self-created due to these reasons but are not limited to:

Firstly, there are no measurement items that are reported to validate the perception
of the willingness to take up MPO vehicle financing in the context of the Islamic
banking market. The previous measures are relatively inadequate (Abdul Rahman
and Wahid, 2016). Through our examination, previous studies using the ITCB have
not considered any efforts to develop the so-called “willingness construct” but
instead the actual behaviour (Amin, 2017, 2019), driven by their different scope of
research. This present study is conducted to reduce the gap and

Secondly, the present study is aimed at generating research inventories that become
as a source of reference for future researchers to undertake the same field of study
or extending them to other Islamic banking products, where adaptation is brought
into play. This study develops the three battery items in allowing future researchers
to tap into their potentials without putting unnecessary efforts to suggest newly
developed measures to reflect the construct in the realm of the ITCB.

As noted earlier, we have conducted a pilot test not only to the self-developed construct
but also to the level of iman, Islamic altruism and the maqasid consumer index to identify
any ambiguities associated with the battery items and based on our finding, the
improvements are directed only in terms of the layout and vocabulary for clarity. As for all
items studied, we measure them using a five-point Likert scale, implying 1-strongly Consumer
disagree, 2-disagree, 3-slightly agree, 4-agree and 5-strongly agree. We choose this scale behaviour
because of its flexibility and wide empirical supports obtained from the existing literature.
perspective
Partial least squares analysis
A software named SmartPLS2.0 partial least squares (PLS) developed by Ringle et al. (2005)
is used to examine our research objectives. The PLS is used to test the effects of Islamic
altruism, level of iman and maqasid consumer index on young intellectuals’ willingness to
choose MPO vehicle financing. Following Lee and Kozar’s (2008) work, our sample size is
312 greater than the threshold value of 250, which is acceptable for PLS to produce
improved estimates for hypotheses under contemplation. PLS is the chosen approach in
the current study. PLS is preferred over covariance-based structural equation modelling, as
the current model is theory development, which includes new factors and battery items
(Shiue et al., 2010). Hence, the use of PLS deems appropriate.

Results
Measurement model
This study uses a two-stage approach to analyse data. Firstly, the approach considers the
measurement model that can take some particular steps for data purification and the
avoidance of cross-loadings in factor analysis. The analyses included are factor loadings,
reliability test and composite reliability, to mention some. If all items meet these analyses, all
of them will be retained for the second stage. In the second stage, a structural analysis
displays the relationship between the variables tested and the criterion variable. This stage
is useful to examine whether the null hypotheses need to be rejected or not, and later
inferences can be documented accordingly.
Table 2 presents the results obtained from factor analysis. All items were statistically
significant in representing the variables that they supposed to measure with. All items were
loaded beyond the recommended value of 0.707 and for that, the discriminant validity is not
an issue.

No. Measures Source

Level of iman
1 My religion helps me to choose MPO vehicle financing Bendjilali (1993)
2 My religion teaches me to ask God blessing when choosing MPO vehicle financing Bendjilali (1993)
3 My religion shows my decision to choose MPO vehicle financing is God’s will Bendjilali (1993)
Islamic altruism
4 It is a priority to support MPO vehicle financing Khan (2014)
5 It is good to see others support MPO vehicle financing Khan (2014)
6 It is always good to support MPO vehicle financing Khan (2014)
Maqasid consumer index
7 Choosing MPO vehicle financing preserves my faith Amin (2019)
8 Choosing MPO vehicle financing protects my financial right Amin (2019)
9 Choosing MPO vehicle financing preserves my wealth Amin (2019)
Willingness to take up MPO vehicle financing
10 I will choose MPO vehicle financing Self-created
11 I will put an effort to select MPO vehicle financing Self-created Table 2.
12 I will prioritise MPO vehicle financing Self-created Battery items
MRR Besides factor analysis, we examine the data obtained using the average variance extracted
(AVE), composite reliability (CR) and Cronbach’s alpha. The details are presented in Table 2.
As for AVE, the results obtained indicate that all variables under contemplation were
greater than the threshold value of 0.5, meeting the convergent validity. As for CR, the
results also indicate that the reliability for all constructs was beyond the recommended
value of 0.70, implying the convergent validity for the said constructs (Lee and Kozar, 2008).
Cronbach’s alpha values for all variables were greater than the required value of 0.6,
confirming acceptable internal consistency.
Moreover, a discriminant validity analysis is conducted to examine whether variables are
distinct compared with others. Table 3 shows the square root of AVE for each variable was
greater than the correlation with other constructs (bold values), meeting the test for discriminant
validity (Fornell and Larcker, 1981). This means that each variable is different compared with
other variables, implying the discriminant validity result is acceptable (Table 4).

Structural model analysis

We analyse the data obtained using PLS to examine the effects of Islamic altruism, level of
iman and maqasid consumer index on willingness to take up MPO vehicle financing. Results

Item MCI IA LOI WLS

MCI1 0.903 0.364 0.491 0.364

MCI2 0.913 0.322 0.304 0.355
MCI3 0.857 0.373 0.449 0.352
IA1 0.367 0.918 0.309 0.354
IA2 0.366 0.891 0.418 0.353
IA3 0.487 0.824 0.322 0.381
LOI1 0.437 0.418 0.866 0.482
LOI2 0.481 0.448 0.918 0.356
LOI3 0.323 0.416 0.887 0.319
WLS1 0.397 0.305 0.371 0.925
WLS3 0.372 0.353 0.357 0.957
WLS2 0.306 0.362 0.316 0.936
AVE 0.794 0.772 0.793 0.882
Composite reliability 0.921 0.910 0.920 0.957
Cronbach’s alpha 0.870 0.852 0.870 0.933
Table 3. Notes: MCI = maqasid consumer index, IA = Islamic altruism, LOI = level of iman and WLS = willingness
Factor analysis to take up an MPO vehicle financing

Variable IA LOI MCI WLS

IA 0.879
LOI 0.480 0.891
MC 0.658 0.541 0.891
WLS 0.618 0.584 0.537 0.939
Table 4. Notes: MCI = maqasid consumer index, IA = Islamic altruism, LOI = level of iman and WLS = willingness
Discriminant validity to take up an MPO vehicle financing
of the effects of Islamic altruism and maqasid consumer index on the level of iman are also Consumer
examined using PLS. Besides PLS, we analyse the effect of level of iman as a mediating behaviour
variable using Microsoft Excel through the computation of mediation effect, the standard
deviation for a mediating variable and upper and lower level of the mediation. SmartPLS2.0
perspective
does not provide direct mediation calculation. As such, the mediating effects of the level of
iman in this study are computed using Microsoft Excel to generate Lower Effect and Upper
Effect – estimated using this formula b 6 (Standard Error x 1.96). To calculate both effects,
the path coefficient results drawn from SmartPLS2.0 Bootstrapping of 5,000 samples are
used.
This study ran one’s estimation that included all variables under contemplation. There
are no two estimations or separate analyses done – be they independent variables or a
mediator. The analyses were conducted simultaneously. The model proposed has two
dependent variables, namely, the level of iman and willingness to take up. As for the former,
Islamic altruism and maqasid consumer index explain the level of iman about 31.9%, while
for the latter Islamic altruism, level of iman and maqasid consumer index explain the
willingness to take up about 66.5%. All R2 values exceeded the threshold value of 20%,
inferring that the model explains satisfactorily the variability of the response data around
its mean (Hulland, 1999) (Table 5).
Islamic altruism was significantly related to the willingness (t = 3.420, p-value < 0.000) –
implying the higher the extent of Islamic altruism, the better is the willingness. The result
indicates that the respondents believe that their supports are essential to jack up the demand
for MPO vehicle financing. Such a finding is also caused due to the fact the respondents
selected were raised in the society of collectivism where the practice of helping others is
essential and so do in promoting Islamic finance. This finding extends the generalisability of
altruism to include Islamic financing, which has been excluded in the work of Rizal and
Amin (2017). Hence, H1 is supported that confirm the validity of the pathway from Islamic
altruism to the willingness.
Level of iman was considerably associated with the willingness (t = 4.458, p-value <
0.000). This implies that one who has a great amount of iman is the one who will be
patronising MPO vehicle financing. One’s selection of halal products is faith and obligatory
to comply with Allah SWT commandment because of his improved compliance on Islamic
worldview. The result obtained supports the assertion by Bendjilali (1993) in which good
iman influences one’s selection on murabahah financing. Another reason is linked to the
battery items have been developed properly by considering relevant literature and Shariah
scholars’ opinion via expert feedbacks. In all, H2 is confirmed that denotes in-kind the level
of iman is a valid factor that links to the willingness and, thus extends its validity to include
MPO vehicle financing.

Pathway Beta Hypothesis SD t-value Supported

IA ! LOI 0.219 H4 0.064 3.420 Yes

IA ! WLS 0.367 H1 0.058 6.363 Yes
LOI ! WLS 0.198 H2 0.044 4.458 Yes
MCI ! LOI 0.396 H5 0.064 6.185 Yes
MCI ! WLS 0.388 H3 0.051 7.604 Yes

Notes: MCI = maqasid consumer index, IA = Islamic altruism, LOI = level of iman and WLS = willingness Table 5.
to take up an MPO vehicle financing Structural analysis
MRR Maqasid consumer index was considerably associated with the willingness (t = 7.604, p-
value < 0.000) and the relationship is positive, implying the higher the extent of maqasid
consumer index, the better is the willingness’ formation. This result indicates that the
respondents approached had sufficed literacy on maqasid mainly the five elements drawn
from the concept that includes life, religion, intellect, property and leniency. This supports
H3, explaining the pathway developed from the maqasid to the willingness is valid. The
reason is sprung from improved reading culture amongst respondents, which is formed
through their learning experiences and knowledge sharing from social media platforms. Our
finding supports Amin (2019) assertion that the maqasid consumer index is a contributing
factor influencing consumers’ patronage on Islamic banking products.
Besides, Islamic altruism and maqasid consumer index were determining one’s level of
iman. The results of these pathways were significant and positive – denoting H4 and H5 are
confirmed to validate our research model. Proper selection of respondents and appropriate
battery items are identified as the contributing factors for the results obtained. In all, our
study extends the applicability of the ITCB to include MPO vehicle financing but still, more
works can be directed to improve further the theory contribution and practically
contributing towards the changing landscape of vehicle industry in Malaysia.
Based on the results obtained, the following analysed model is presented (Figure 2).

Post hoc analysis

Following Preacher and Hayes (2008), a mediation analysis of the level of iman is conducted.
Level of iman is hypothesised to be a mediating variable in this present study. To improve
the statistical power of mediation analysis, the study applies resampling with a replacement
or bootstrapping.
The bootstrapping results are reported in Table 6. In more detail, b 1 = 0.043 and b 2 =
0.078 are significant with t-values of 2.382 and 3.891, respectively. This denotes that level of
iman mediates the relationship between Islamic altruism and willingness and the same
outcome is also found for the second testing – the level of iman becomes a mediator for the
relationship between maqasid consumer index and willingness. Further examination
indicates that CI for estimation of indirect effects did not straddle across zero. Thus, H6 and
H7 are confirmed and validated, suggesting mediation effects.

Islamic
altruism

0.367**

0.219**
Level of 0.198** Willingness
iman to take up

0.396**
Maqasid
consumer 0.388**
index

Significant =
Figure 2. Non-Significant =
Analysed ITCB **Significant at 1%
Research contributions Consumer
Theoretical contributions behaviour
Several theoretical contributions can be drawn from this study. This study extends the
applicability of the ITCB to include MPO vehicle financing within a Malaysia context. All
perspective
hypothesised relationships have shown to be positively related to the willingness of the
financing facility. Concerning the theory building, this study develops a specific theoretical
framework that describes consumer acceptance of a vehicle financing segment in the Islamic
banking industry. This study extends the ITCB from the context of MPO vehicle financing.
A major finding of this study is the critical role shaped by maqasid consumer index in the
formation of the receptivity from young intellectuals who targetted their first car ownership.
Besides, this study acknowledges the inclusion of the level of iman in the MPO vehicle
financing context when explaining its consumer acceptance. Similarly, one’s prosocial
behaviour through Islamic altruism is tied up with the inclination to support MPO vehicle
financing. Altogether, the unification of these factors might provide a richer representation
with which to comprehend how MPO vehicle financing is accepted in a voluntary
atmosphere in Malaysia.

Practical contributions
The results obtained in this study can guide managers of Islamic banks whose objective is
to promote their MPO vehicle financing use. Firstly, it has been shown in this study that the
maqasid consumer index was the dominant reason. Hence, the managers might develop, for
instance, communication and education aimed at strengthening the value of maqasid al-
Shariah in car ownership amongst millennials, in particular, could have a positive influence
of their willingness to choose the facility. It could also be lightened through support
opportunities like rebates and the presence of role of Shariah scholars in promoting the
facility could partially be advertised. Secondly, this study discovered another key factor,
namely, Islamic altruism derived after maqasid consumer index, claiming to support the
industry is essential – be it from the industry to the customer or vice versa. It might be
interesting for the managers to develop a perception that one’s support on MPO vehicle
financing for his car ownership can ensure the industry a success, shared via viral
marketing. A retired father who bought a car on credit through his son as a guarantor
should be promoted to tap into Islamic altruism potentials. Unlike these two factors, the
level of iman though in general appeared less in importance can still make an impact on the
adoption, and therefore should also be considered in managers’ strategies. It might be
possible to influence new buyers by publicising the faith dimensions found in the offered
MPO vehicle financing by instituting incentive strategies to breed the acceptance.

Percentile bootstrap
95% confidence
interval
Indirect effect Hypothesis Estimate ( b ) Standard error (SE) t-values Lower Upper

b 1 = a1bx H6 0.043 0.018 2.382 0.008 0.079

b 2 = a2bx H7 0.078 0.020 3.891 0.039 0.118
Table 6.
Notes: b 1 = IA ! LOI ! WLS and b 2 = MCI ! LOI ! WLS Mediation testing
MRR Methodological contributions
This study also contributes to the generation of improved measurement scales that capture
directly the context of MPO vehicle financing. This study generates three major factors
representing the ITCB and for that, we operationalise the factors involved with three battery
items each for consistency to improve validity. Through our examinations, no items
involved deleted from the analysis and so do in other statistical analyses that are retaining
all of them to be tested in the structural analysis for hypotheses confirmation. The effects of
these variables, Islamic altruism, level of iman and maqasid consumer index are enhanced
through the use of PLS and the same approach of the test also includes the significant role of
the level of iman as a mediator for the relationships between Islamic altruism, maqasid
consumer index and the willingness.

Conclusion and future research

The results obtained indicate that the financing facility will become a priority by consumers
when the elements of Islamic altruism, iman and maqasid al-Shariah in the offered of MPO
vehicle financing are upheld. The most essential finding from those data suggests that
Islamic banks should improve maqasid al-Shariah compliance at both operational and
consumers’ levels for improved adoption of MPO vehicle financing. It requires Islamic banks
to be fully focused and consistent when applying this strategy to generate impacts.
Several limitations of the study should be considered in future investigations of the
ITCB. Firstly, the respondents used were from one university that indicates the results
obtained should be generalised with caution. Hence, future studies need to include
respondents from other universities and more inclusion in samples needed to contrast the
findings. Secondly, this study relied on a single Islamic financing product to make
inferences. Therefore, future research should attempt to investigate a comparative analysis
between MPO and AITAB vehicle financing facilities by using the same variables to extend
the research findings.
In this study, we tested only a simplified version of the ITCB applied to the context of
MPO vehicle financing through empirical investigations. Future studies should validate the
predictive dimension of the theory through its application to various Islamic banking
products like tawarruq- based products.
In this line of thought, this study is not aiming at challenging any existing consumer
theories but is designed to uncover the ITCB’s applicability to our context, which generates
the richness of empirical investigations in consumer acceptance of the facility without being
limited by the theory.
Terminologies
1. Al-ijarah thumma al-bay (AITAB) – Islamic hire purchase
2. Al-masalih al-ammah – Public interests
3. Halal – Permissible
4. Iman – Faith
5. Maqasid al-Shariah – Objective of Shariah
6. Mardhatillah – The blessings
7. Murabahah – Mark-up sale
8. Muslim – Believer of Islam
9. Riba al-jahiliyyah – Interest on late payment
10. Riba al-qard – Interest on the loan
11. Shariah – Islamic law
12. Tawarruq – A tripartite contract
13. Tayibat – Good things
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Corresponding author
Hanudin Amin can be contacted at: hanudin@ums.edu.my

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