ISLAMIC CREDIT CARD ADOPTION: EMPIRICAL EVIDENCE FROM MALAYSIA

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Introduction
Islamic Banking and Finance was emerged in Malaysia for the last 30 years with the first establishment of Islamic commercial banking as known as Bank Islam in 1984.Prior to that, the industry has shown tremendous growth as the Islamic banking starts to explored by the conventional counterpart and some foreign bank interested to invest in.Currently, there are 16 Islamic banks which combination of full fledges and subsidiaries of local and foreign Islamic banks operated in Malaysia.
Interest-free is the one of characteristics for Islamic banking products and operations.Interest is widely used by the terminology of conventional banking term (Usmani, 2008) as an income for their operation.In Islam, interest or also known as riba ' based (Khaf, 2011) is prohibited as evidence in Holy Quran: Allah has allowed trading and forbidden usury.With that, there are many banking products which are free from interest based including the Islamic Credit Card (ICC) which the study will focus more.
The introduction of ICC as an alternative to the conventional was backup by the recommendation resolution scholar of the Council of Islamic Fiqh Academy by IDB (2000:249) which states that '' it is permissible in Shari'ah to issue a Credit Card or use it if its conditions include imposition of usurious interest.This is so even if the card bearer has intention to pay within the moratorium periods that precedes imposition of interest''.Hence, it's give the positive impact on Islamic credit card market in Malaysia as the first Islamic credit card has been produced by AmBank with the name of AmBank Al-Taslif Credit Card on 30 th September 1996.
The numbers of customer on ICC keep increasing recently as most of the Islamic bank in Malaysia interest on it.Maybank Islamic Ikhwan Credit Card, Bank Simpanan Nasional Al Amin Credit Card are the example of ICC existed in the Malaysian market.Even the numbers of Islamic credit card issuing increase the total market for credit card still denominated by the conventional banking.As report by the Maybank annual report 2013, total loans on conventional credit card are RM 5.6 billion and conquer 17.5 market share of the industry.For the financing by ICC, its shows lower productivities with only contribute RM 424 million on the Maybank Islamic revenues and it's still lag behind from the CCCs.But, its shows some improvement as there are 16 percent increase from the previous years.
However, even the development of ICC in Malaysia was shown impressively, there are some issues still comingle around.The pricing for Islamic credit card has been critiques as it is more expensive as their counterpart.According to Asharq Al-Awsat (2008), the charged on ICC is exceeding the interest charge by CCCs and the customers also claim to be charged even though there are no transaction have made.Other than that, Asharq Al-Awsat also mentioned that, the issue of ICC also lack in terms of marketing strategies.Religious symbol and language on the Islamic banking products are making customer misled.Other than that, Billah (2007) revealed that, the promoting on ICC is similar as their conventional counterpart.He suggested that, there are need some additional feature like ethical value and concept underneath to the customers as to be different with the others.
The empirical studies on ICC have produced mixed results.For instance, Mansor and Che-Mat (2009) indicate that income has greater influence on ICC among the existing users.Another studies show that other contributing factors such as shopping, bulk purchase, employment, and concept understanding as determinant of behavioural intention on the ICC (Mohd-Dali et al., 2008;Choo et al., 2007).A study conducted by Azlina (2005) find out that, the level of understanding among Muslims is still at Moderate level.She also added on that, most of the respondents learns on the ICCs are from reading on publsied materials such as pamphlets, browser etc.Other than that, Shahwan and Mohd-Dali n.d suggested that there are need extra support to increase the level of understanding and awareness especially on Muslim customers.It is of paramount importance to justify that the research on ICC adoption is still remained inconclusive and further examination is required to contribute to the body of ICC knowledge.
Therefore, the main objective of this study is to investigate the factors influencing consumer adoption of ICC.More specifically, we intend to develop a theoretical model to examine the relationships among perceived financial cost, subjective norms, and attitudinal behavior on consumer behavioral intention.We believe that the study will offer useful insights for both marketing scholars and executives to understand the intricacies of ICC and to assist marketers in devising better approaches to increase the effectiveness of ICC.
We organized the remainder of this article into four sections.The first section explains the theoretical background of this study.The second section describes the research design and methodology.The results and analysis are presented in the third section.The final section presents a discussion, the implications and limitations of this study, and suggestions for future research.

Islamic Credit Card
The ICC supports the maslahah al-mursalih concept.It has been used as a means to avoid those affordable Muslims to continuously used conventional credit card, which is prohibited by the teaching of Islam.The credit card is an essential mode of payments in today's society, and it has become one of the important pillars of consumerism.According to Billah (2003), the credit card provides consumers with instant access of financial benefits that helps them to attain credit facility, cash advance, easy payment, charge card and prestige.Indeed, the credit card has symbolized the status of wealth of a person in order to make her/him special than others.Over the years, credit card industries are getting popular among the Malaysian societies (Mansor, 2005).The credit cards that circulated in Malaysia could be clustered into two categories, which are conventional and Islamic-based credit cards (Yee et al., 2007).Although in nature, these cards are the same, but they are differences in terms of principles, fees and operations.For instance, conventional credit card allows interest in its programme whereby Islamic credit card allows fees instead of interest in its programme.
As far as the discrepancy between conventional and Islamic credit cards is concerned, the need to differentiate is thus of considerable interest.Particularly, there are three generic differences which could be shared: (1) Islamic credit card is free from compounding interest whilst conventional has, (2) Islamic credit card is of value to fix the profit margin for whole contract period whilst the profit margin for conventional credit card is not predetermined, and (3) Islamic credit card is guided by Shariah principles whilst conventional is not.In line with the (3) the doctrine of Bay al-Inah is recognized and used to validate the credit card transaction (Kazi, 2002).The Bay al-Inah contract works based on two (2) separate agreements, notably Bay al-Mutlak (cash sale) and Bay Bithaman Ajil (deferred sale) (Darwish, 2003).The former is the bank's agreement to sell an item to the customer at an agreed price, while the latter agreement covers the customer selling back to the bank at a lower price.The difference is the bank's profit on the transaction and is a predetermined amount.But the doctrine of Bay al-Inah is not recognized by some scholars from Middle-East.They decided that the solution to riba avoidance was to exercise the acceptable right of charging for the provision of a financial guarantee called the guarantee system (Darwish, 2003).
There is paucity of studies that have adequately addressed the effects of attitude, subjective norm and perceived financial cost on the Islamic credit card adoption context.Particularly in Malaysia, there have been studies in the literature about credit cards (Mansor and Che-Mat, 2009;Mohd-Dali et al., 2008;Choo et al., 2007).In these studies, Islamic credit card is addressed differently in terms of purpose, statistical analyses and findings.
Mansor and Che-Mat (2009) investigated the impact of demographic factors on the Islamic credit card use.The study was conducted by involving a total of 305 respondents as a sample of study and frequency and chi-square analyse were used to analyse the data.The study reported that income was an influential predictor for the use of Islamic credit card among the existing users.Theoretically, consumers tend to increase their spending pattern when their income increases.It was reported that there were no statistical differences between males and females in the use of credit card.However when considered the variables pertaining to levels of education and income, there was a sign of certain degree of differences appeared to exist when observing the three levels of education and the four levels of income.The authors also noted that among those with lower and middle income were prone to use credit cards as it was able to provide safety and convenience features.Mohd-Dali et al. (2008) developed a study to identify the credit card holders' satisfaction factors in Malaysia using a self-administered survey.The study is first of its kind in Malaysia in using web-based selfadministered questionnaire for Islamic credit card study.A total of 127 respondents were participated.Using exploratory factor analysis (EFA) and logistic regression, the study satisfied the research objective.The study found out that shopping, bulk purchase, concept understanding was considered as the key factors determining one's satisfaction on the Islamic credit card use.As what we can learn from this study, the context of the study is particularly varied when it is compared with the current research, in which the latter will employ one endogenous variable and several exogenous variables, which are not examined in a study by Mohd-Dali et al. (2008).The current study is expected to add the literature on the Islamic credit card along with the presence of findings by Mansor and Che-Mat (2009) and Mohd-Dali et al. (2008).
Another interesting study by Choo et al. (2007), examined the consumer choice of Islamic-based credit card using a bivariate probit model.The study contributes to the literature in terms of model used and in terms of the model specific constructs.The study used a survey-questionnaire approach on the basis of convenience sampling, in order to meet the research objective.The study found out that the employment section was the only one that found to have significant influence on probability of choosing Islamic-based credit card.Not surprisingly, those from private sector of the opinion to have less preference on the Islamic credit card use.On the other hand, the authors noted that the government staffs had higher tendency to choose Islamic-based credit card, which is perhaps most of the government staffs were Islam.Interestingly, the study also noted that the perceived or actual frequent of using credit card online purchase was significantly related to the probability of choosing Islamic-based credit card.An increase in the frequency increases the probability of choosing and using the card.The card had a positive impact, in which this tells us that Islamic credit card is more secure, and cheaper (Choo et al., 2007).

Theory of Reasoned Action (TRA)
Many studies have employed the Theory of Reasoned Action (TRA) into their model of studies.The reasons behind the wide empirical supports of the theory are particular because of three fundamental reasons."A" the theory is well suited for the purpose of examining and predicting a particular behavior.As stated by Taib et al. (2008), the fundamental constructs of the theory are essential in order to explain why people using Musharakah Mutanaqisah."B" the theory has been praised for its flexibility to be applied into a different context of research.The TRA has been applied in online stock trading (Gopi and Ramayah;Ramayah et al., 2009), knowledge sharing (Ryu et al., 2003) andHA the marketing area."C" the TRA can be used to measure behavioral intention and actual of a particular situations, systems or even products.Previous researches have supported the importance of the TRA in predicting the behavioral intention and actual use (Ramayah et al, 2009).The present study used to measure behavioural intention to use Islamic credit card amongst Malaysian bank customers, thus using the TRA is of considerable relevant in the current study.
The TRA was introduced by Fishbein and Ajzen (1975) in order to establish links between beliefs, attitudes, intentions and behaviors (Taib et al., 2008).Recently, the theory has been applied in Islamic finance contexts.For instance, the study by Taib et al. (2008) used TRA in order to examine bank customers' perception over Musharakah Mutanaqisah home financing in the Malaysian context.Musharakah Mutanaqisah is also known as "Musharakah diminishing to ownership" where capital is not permanent and every repayment of capital by the bank customer will diminish the total capital ratio for the bank.This will increase the total capital ratio for the customer until the customer becomes the sole proprietor for the bought house (Abdul Rahman, 2007).In a similar vein, Amin et al. ( 2009) used TRA to examine undergraduate students' acceptance of Islamic accounting.

Hypotheses Development
The present study extends TRA to an Islamic credit card financing context.Two unique determinants of TRA, namely attitude and subjective norm are applied in the present study since previous studies indicated that acceptance of Islamic financing could be explained by the determinants of TRA (Amin et al., 2009;Taib et al., 2008).As such, the determinants are included to help explain the reasons bank customers use Islamic credit card.
Further, the TRA is modified to better explain the intention to use Islamic credit card.Previously, the model has also been modified to better explain behavioral studies in the areas of management, psychology, and marketing.Taib et al. (2008) and Ramayah and Suki (2005) have modified the TRA and to reconcile the applicability of the TRA into a new context of research.The model is modified only by including the behavioral intention, attitude and subjective norm, whilst other branches of the TRA are skipped.
Attitude has been recognize as the main indicator that can give guide on the future behavior or the cause the intention that give the huge impact on the particular behavior, In this study, the attitude factor is to evaluate and analyze the intention of the customer on their preference and un-preference on adoption of the Islamic credit card (Azjen, 1981).According to Park & Chen, (2007) there are positive relationship between attitude and individual decision to adopt to certain behavior.Hence, the proposed hyphothesis is: H1: There are significant relationship (negative or positive) between attitude and intention to use Islamic credit card.
According to Athiyaman (cited in Karami, 2006) subjective norms can be simplified as any decision made by the individuals is still can be negotiated.It will be looked into the referent group factors such as family, friends and others on their action.Therefore, the subjective norms are more collectivists than individualist and its match with the Malaysia culture (Hofstede,1980).Intention to use Islamic Credit card are expected to be under influenced by the particular groups (family, friends and others) and subsequently encourage the idea with group norms to apply the Islamic Credit Card on their payment system.With that, the relevant hyphothesis can be summaries as: H2: There are significant relationship (negative or positive) between subjective norms and intention to use Islamic credit card.
To measure the intention to use Islamic credit card by Malaysian bank customers, the current research includes perceived financial cost into the research framework.However, despite its paramount importance in the consumer banking research, only a handful of empirical studies have examined the significance of perceived financial cost in the Islamic banking context.Perceived financial cost describes the extent to which a person believes that using Islamic credit card will cost financial burden.Studies by Luarn and Lin (2005) and Mathieson et al. (2001) show that perceived financial cost significantly influences consumer behavioral intention.Ramayah et al. (2006) also provides a groundwork pertaining to the inclusion of perceived financial cost in explaining behavioral intention.Ramayah et al. (2006) found that price was not significantly related to the Internet banking acceptance.The result by Ramayah et al. (2006) is not in consonance to that of Luarn and Lin (2005) and Mathieson et al. (2001).To overcome such debates, it is worth noting that our research for perceived financial cost is of considerable interest to be further examined.It is also anticipated the outcomes could also be generalized into the Islamic credit card context.Therefore, the relevant hyphothesis is as follows: H3: There are significant relationship (negative or positive) between perceived financial cost and intention to use Islamic credit card.

The research model
Our model includes attitude toward behavior, subjective norm and perceived financial cost as the independent variables.Behavioral intention conversely acts as the dependent variable.Figure 1 depicts the said model.

Figure 1
Research model

Measurement
The questionnaire items were extracted from selected studies.Questionnaire items were adapted from prior studies which can be described as follows: (1) Attitude (Ramayah et al., 2008), (2) Subjective norm (Yuserrie et al., 2004), and (3) Behavioral intention (Taib et al., 2008).The questionnaire items for added variable (4) Perceived financial are derived and adjusted from Luarn and Lin (2005).The adjustments were made in order to ensure all employed items would better reflecting Islamic credit card context.The respondents were required to rate their level of agreement with statements using fivepoint scales ranging from "strongly disagree" (1) to "strongly agree" (5).This scale has been used in previous survey related research (e.g. Pikkarainen et al., 2004).
Prior to the actual survey four-questionnaires were provided in order to facilitate a pilot study to be conducted among lecturers majoring Islamic finance and marketing.The pilot study is important in order to digest any problems relevant to the instrument used for the study.Fortunately, all respondents to the test commented that the questions were easily understood.Only formatting and some editing work were done to the questionnaire prior to the actual survey.A total of 300 questionnaires were printed.

Respondents' profile
The sample size of the study was 257 of Malaysians who were serving Islamic banking products and services at the time during the survey conducted.Non-probability sampling that is purposive sampling was applied owing to the fact that Bank and Financial Institutions Act (BAFIA) 1989 did not allow the disclosure of such information (Ramayah et al., 2006;Ramayah et al., 2003).According to Sekaran (2003), purposive sampling can be used while the researcher set the predetermine criteria to that particular people to become respondents due to the chosen person can provide the desire information.Therefore, the respondents for this study is those individual who own In addition, commercial banks did not disclose such information since it has confidentiality value for the purpose of competitive advantage of any bank (Amin and Ramayah, 2010).The study results are rooted in bank customers' intention to Islamic credit card intention to use which is derived from previous Theory of Reasoned Action (TRA) (Amin and Ramayah, 2010).Out of these respondents, a total of 92 respondents were males while the remainder 165 respondents were females.In terms of marital status, a total of 202 respondents were unmarried whilst the rest of 21.4 percent were married.With respect to ethnicity, most of the respondents were Malays with 129 (50.2 percent).
Malay accounted the majority of respondents (50.2 percent) followed by others (19.8 percent), Kadazan-Dusun (10.9 percent), Bajau (9.7 percent), Murut (5.4 percent) and Suluk (3.9 percent).In terms of age, most of the respondents were aged 20-30 years old (73.9 percent) as this group of age was considered appropriate for being Islamic credit card users in the future.

Reliability analysis
This section provides the analysis and discussion of findings in order to meet the objectives of the study.Importantly, factor analysis was conducted prior to the regression analysis in order to identify the appropriate items for the analysis.Factor analysis is a data reduction technique that uses correlations between data variables.The underlying assumption of factor analysis is that a number of factors exist to explain the correlations or inter-relationships among observed variables (Chatfield and Collins, 1992).The study performed factor analysis using a Principal Component Analysis (PCA) alongside with Varimax with Kaiser Normalization rotation method until the eigenvalue of each factor was equal to 1 or more.According to Tabachnick and Fidell (1996), there are several methods of rotation used in a research-based study such as Quartimax, Direct Oblimin and Varimax rotation.
Varimax rotation is most commonly used and it aims to maximize the variance of factor loadings by making a high loading higher and low ones lower for each factor.The tested items refer to the independent variables' items were remained the same as reported in Table 2.It was due to the fact that the each item had a value of 0.60 and higher.It was also reported that factor 1 could be labeled as "attitude", factor 2 could be labeled as "subjective norm" whilst the last factor could be labeled as "perceived financial cost".
The results for reliability test are presented in Table 2.According to Black (1999) "reliability is an indication of consistency between two measures of the same thing".To understand the relationship between the two groups of data, it is necessary to quantify the reliability of the data.The reliability of the factors needs to be determined in order to support any measures of validity that may be employed (Nunnally, 1978).The employed items in this research were found to be reliable.All values ranged from .894 to .969.Explained in more detail, the results for the tested items were as follows: attitude .969(5), subjective norm 0.946 (5), perceived financial cost .894(5) and intention to use Islamic credit card is .946(5).Thus, all items were deemed reliable (Ramayah et al., 2003).
With respect to the Kaiser-Meyer-Olkin (KMO) measure, the combined items of the independent variables had a value of 0.891, indicating that the sampling adequacy was greater than 0.5 and therefore satisfactory.Barletts Test showed a χ² of 4672.27 with a significance level of 1 percent, where the total variance explained was 81.565 out of 3 components.KMO for the dependent variable, on the other angle, depicts a value of .875 which implied that the sampling was satisfactory.Barletts Test also found to be significant at 1 per cent significance level.Pertaining to the outcome from the factor analysis, the items for independent variables and the dependent variable were aggregated in which factor loadings exceeded .60 were selected.Once the data were aggregated, the multiple regression was conducted to reveal how different factors affect intention to use Islamic credit card.This approach has been widely employed in the survey -based studies (Luarn and Lin, 2005;Ramayah et al., 2003).Aggregation of the research results allows combining of all items under one particular heading or label, which thus is easy to analyze using regression analyses.

Hypotheses testing
The study employed tolerance and variance inflation factor (VIF) values to clarify the multicollinearity problem.Results of the study revealed no multicollinearity problem for attitude, subjective norm, and perceived financial cost since these variables were significant.The tolerance values for the variables are greater than 0.1, which means the results raise no multicollinearity problem (Hair et al, 2006;Pallant, 2005).On the other hand, the VIF values are greater than 10 shows collinearity existed (Hair et al, 2006;Pallant, 2005).The VIF values for the present study were all below 10 and the tolerance values were all above 0.1, which could be concluded that there was no collinearity with the data of the study.In order to test the three proposed hypotheses, the authors employed a multiple regression.Table 4 presents the regression results of "attitude", "subjective norm", "perceived financial cost" and "intention to use Islamic credit card".The R² was 0.654 indicating that 65.4% of the variation in intention to use Islamic credit card could be explained by the two named variables and the F-value of 159.29 was significant at the 0.01 level.Attitude was positively related to intention to use Islamic credit card and so was subjective norm.On the other angle, perceived financial cost was negatively related to intention to use Islamic credit card.Consequently, H1, H2 and H3 were supported.These outcomes are consistent with previous studies (Taib et al., 2008;Yuserrie et al., 2004 andLuarn andLin, 2005).Thus, the more positive the attitude, the more likely that Islamic credit card is selected by the customers.Yet, the more positive the subjective norm, the more likely that Islamic credit card is selected by the customers.In sum, the results show the appropriateness of the fundamental elements of TRA in Islamic credit card context.It is confirmed that attitude and subjective norm had strong influence over the behavioral intention to use Islamic credit card.
In addition, the study also showed that the greater the perceived financial cost, the likelihood that Islamic credit card is selected will be lower.This result corroborates with the findings of Luarn and Lin (2005), where the financial cost is of value to explaining the motivation of use for Islamic credit card.

Conclusion, Practical Implication and Future Research
This research examined the intention to use Islamic credit card by exploring three possible key factors namely attitude, subjective norm and perceived financial cost.Drawing upon the TRA, the effects of the three key factors were uncovered, explaining that attitude, subjective norm and perceived financial cost were pivotal to addressing the usage intentions.These results have managerial implications for bank managers and for researchers.To be specific, banks may opt to strengthen attitude and subjective norm roles.Pertaining to the attitude, publishing cogent information for Islamic credit cards could be better market the cards to the users, thus impacting positive attitude, which in turn is leading to the acceptance.Regarding the subjective norm, building up a database for existing users and encouraging the users to attract newest customers will be appropriate to be carried out.Financial incentives and fee waiver are of interest to be rewarded to the existing users who perform such task.In terms of financial cost, it is of paramount importance to offer the services of Islamic credit cards at the discriminated cost associated with the level of usage rather than fixed it as normally conducted.
The research contributed to the literature from several aspects.Firstly, to the best of our knowledge this study is a pioneering effort in applying the TRA to the newly context of Islamic credit card, which has been available in Malaysia since 2000s.Secondly, the study adds perceived financial cost to the existing TRA in order to better justify the context of Islamic credit card.
Concerned with limitations, the study acknowledges two main shortcomings.Firstly, our sample involved only a specific user group in a particular geography as the study was conducted in Eastern Malaysia whilst the sample from Western Malaysia was not studied.The findings may generalize to users in Eastern Malaysia but not in Western Malaysia.Secondly, the model of factors of the current research is limited to three exogenous variables which are in nature limit our possible research implications.For the sake of further studies, the first limitation can be overcome by calling other friends in Peninsula to reinvestigate Islamic credit card usage, which in turn may offer generalization of findings to the users in Peninsula.Lastly, future researches may use a richer set of variables, including not only up to the three factors here but also including prior experience and personal factors, as predictors to provide better explanatory power for Islamic credit card adoption