GB30403GB30403GB30403GB30403

CURRENT ISSUES IN OFFSHORE CURRENT ISSUES IN OFFSHORE CURRENT ISSUES IN OFFSHORE CURRENT ISSUES IN OFFSHORE

BANKINGBANKINGBANKINGBANKING

GROUP:GROUP:GROUP:GROUP:

-------- CAROLINECAROLINECAROLINECAROLINE WOZNIACKIWOZNIACKIWOZNIACKIWOZNIACKI————-------- CAROLINECAROLINECAROLINECAROLINE WOZNIACKIWOZNIACKIWOZNIACKIWOZNIACKI————

NO NAME MATRIK NUMBER HE

1 TEW JIA FUH BG09110323 20

2 PANG RUEN RIN BG09110285 20

3 ONG SII YIK BG09110179 20

4 CHIN WAN TING BG09110268 20

5 TAN SUK WEN BG09110109 20

6 LIM XIAN CHENG BG09110343 20

1

TITLE:

CUSTOMER’S ACCEPTANCE ON

FINANCIAL INSTITUTIONS’ FINANCIAL INSTITUTIONS’

PRODUCTS: ISLAMIC VERSUS

CONVENTIONAL FINANCIAL

INSTITUTIONS

2

1.0 INTRODUCTION

1.1 Development of Financial Institutions

�Since 1940s and 1950s, theory of financial institutions has

developed. First financial institutions was introduced in 1970s.

�In 1967, “Tabung Haji” introduced by Islamic Bank in

Malaysia.

�Financial institutions has being more developed associated

with the innovation of technology.

3

2.0 OBJECTIVES

Objectives:

� To investigate the relationship between customer acceptance and financial institutions.

� To investigate the differences between Islamic and conventional financial institutions.

4

3.0 DISCUSSION AND FINDINGS

3.1 Customer acceptance

�Interest rates offered� conventional- interest charge on transaction activities;� Islamic – Riba is prohibited� Islamic – Riba is prohibited

�Risk and returns� conventional : long term, high risk and higher return� Islamic : uncertainty (Gharar) is prohibited, their loss/profit will share between consumers and Islamic financial institutions

5

�Quality of services� Highly competency, friendliness, and efficiency of staff

� Islamic financial institutions have to put emphasis in order to get greater acceptance

� Islamic financial institutions provide Islamic products;

� Conventional provides both Islamic & conventional � Conventional provides both Islamic & conventional products

� Example :

� Bond- Sukuk

� Deposits/ savings – Musharakah, Mudarabah

� Financing - Murabaha

6

3.2 Islamic Finance Instruments

Murabahah•is a contract of sale and purchase at a profit margin between the supplier and the purchaser of the good.

Istisna’a•produce a specific thing which is possible to be made according to determined price and for a fixed date of delivery

Islamic Finance instruments

7

good.

Ijara (Leasing)•literally means ‘to give something on rent’

Sukuk (Bond)•is an investment certificate (bond) that represents a proportionate interest in a well-defined pool of assets that yield income and capital returns.

instruments

3.3 Conventional Finance instruments

Mutual Fund•a trust that pools the savings of a number of investors who share a common

Insurance•insurance is a risk transfer mechanism

8

share a common financial goal.

Mortgage Loan•is a loan to finance the purchase of your home

Pension fund•protects individuals and families against loss of income in their retirement years

Conventional Finance instruments

3.4 Activities Prohibited by Islamic Finance

•getting earning through unethical (or non-Islamic) activity

•earning of interest on contracts of loan (or Riba)

9

•uncertainty, risk or speculation (Gharar) in contracts

•debt restructuring that is based on compensations

Activities Prohibited by Islamic Finance

3.5 Which financial institutions better?

� Islamic financial institutions� Ethical norms and social commitments

� Profit-sharing

� Fair distribution

� Eliminate economic ills

�Conventional financial institutions� Borrowers can earn profits from margin

� Regulation of Islamic financial institutions more tight

� Has not to bear risk

� More familiar in customer perception

10

3.6 What are the main results

�Positive relationship between customer acceptance and financial institutions’ products

� Islamic financial institutions are differ from conventional financial institutions

11

4.0 CONCLUSION

� Financial institutions are likely to be more developed and competitive globally.

�Islamic and conventional financial institutions are �Islamic and conventional financial institutions are providing more goods and services to customers.

�Customer must well-known their acceptance against the products offered by financial institutions.

12

Thank you

For your attention!

Q&A Section

13