Islamic Banking in Malaysia: Data Analysis on Products and Mechanisms

The emergence of Islamic banking in Malaysia has brought a new dimension in the economic system. It is a new alternative to the conventional system which totally promotes interest-based activities to produce income. Unlike the conventional system, Islamic banking avoid businesses that deal with interest to generate profits. Other than avoidance of riba, prohibition of gharar and maysir, Islamic banking should include religious goals in its operation that is among others upholding justices and fairness in dealings. In Islamic banking, since product is among the factors that are able to create customers' satisfaction to the system, it is extremely important to bring understanding to the customers on the products. Good understanding the customers have and good quality products the banks offer will bring success to the bank. However, with the emergence of so many banking institutions introducing the Islamic banking products and services, the amount of the products are not well in knowledge, different terminologies and principles in Shariah used by different banking institutions lead to confusion among the customers. Thus this study is trying to analyze the Islamic banking products offered and the mechanisms employed by all Islamic banks in Malaysia. Briefly, the objectives of this paper is to know the number of Islamic products used by all Islamic banking in Malaysia and to identify the mechanisms the banks utilize for supporting those products. It is believed that by highlighting the products and the mechanisms applied, customers' perception and attitude towards Islamic banking products will change from negative to positive and it is also believed that, it will bring adequate knowledge to the customers in understanding Islamic banking products and give trust to them when dealing with Islamic banks in Malaysia.