The Economics Determinants

Economic determinants are indirectly affect the rate of economic growth such as an increase in real Gross Domestic Products (GDP) of an economy as mentioned in the video. There are some economics determinants that lay behind the success story of the country which are attitude, social influence, pricing of Islamic personel financing and the growth of dual banking system in Malaysia, government’s support and principle of Islamic bank in banking system

Firstly, growth of dual banking system in Malaysia is one of the economic determinant. Malaysia has develops dual banking systems, which are conventional and Islamic financial system. Malaysia is a country unique in Islamic banking system as adopted the dual banking system : conventional and Islamic Bank. Both of these bank

Secondary, government’s support is also one of the economic determinant. With a strong support from government , lead to economic growth. For example , Saudi Arabia or UAE to ketchup Malaysia economy had  its ups and downs having expanded 5.6 percent at the beginning of 2015 and is only slow to 4.5 percent in January 2016 as mentioned in the video. On the other word, government support can help to push Islamic finance.

Besides that, attitude also one of the economic determinant. Attitude towards the behaviour refers to the individual’s favourable or unfavourable evaluating of the behaviour (Ajzen and Fishbein,1980). People have their right to choose their preferences. For example, the number of non-muslims subscribe to Islamic finance products so Islamic finance products are not confined merely to Muslims but also to non-muslims .

Moreover, pricing of Islamic personel financing is also one of the economic determinant. Price is defined as the amount of money that is charged for different goods and services in a market economy. Price act as signals that influence the behaviour of both consumer and producers of these goods and services (Farnham, 2005). Metawa & Almossawi (2008) has suggested that cheaper financing rate is one of the main factors for customer. It was also supported by Marimuthu et al.(2010) that cost was the most important criteria for customer in selecting Islamic Finance. Thus, given that cost or price is one of the main factors for customers to choose Islamic finance.

In addition, principles of an Islamic bank in banking system is also one of the economic. All the dealings, transactions, business approaches, investment focus and responsibilities are derived from Sharia Law.

reference

Ajzen, I. and Fishbein,M.(1980). Understanding Attitude and Predicting Social Behavior,Prentice-Hall, Englewood,Cliffs,NJ.

Meta, S.A and Almossawi, M(1998), “Banking Behaviour of Islamic Bank Customers : Perspectives and Implications”, International Journal of Bank Marketing, vol.16,7:11-31

Marimuthu, M., Chan,W.J.,Lim, P.G.,Low, P.M. and Tan, Y.P(2010), “Islamic Banking:Selection Criteria and Implications”, Global Journal of Human Social Science, vol.10,4:52-62