Community's Potential and Preferences for Islamic Banking: The Case
of Indonesia
IMMAS NURHAYATI1, ENDRI ENDRI2, DESMY RIANI1, WIDHI ARIYO BIMO1
1Faculty of Economic and Business,
Universitas Ibn Khaldun Bogor,
Jl. KH Sholeh Iskandar KM 2 Bogor, 16162,
INDONESIA
2Faculty of Economics and Business,
Universitas Mercu Buana,
Jl. Meruya Selatan No. 1, Kembangan, Jakarta Selatan 11650,
INDONESIA
Abstract: - Islamic Banking is an increasingly important part of the Indonesian economy and finance. The
competition between conventional and Islamic banks and customer demographic factors affect the performance
of Islamic Banking. The purpose of this study was to analyze the potential and preferences of the community
towards Islamic banking in terms of a demographic perspective consisting of four factors, namely age, income,
education, and occupation. The potential and preferences of the community are proxied by the ownership of
Islamic banking accounts. The study uses a sample of 620 questionnaires. The methodological approach is
binary logistics regression or multinomial logistic linear regression using IBM SPSS statistics 25 software. The
dependent variable (Y) is the probability of people who have an account in Islamic banking as a proxy to
measure the potential and preference of Islamic banking. The independent variable (X) is several factors that
affect account ownership in Islamic Banking like age, education, occupation, and income. The paper's findings
show that respondents in the segment aged less than 40 years old, in middle education, and working as
entrepreneurs have a lower and significant probability of having an account in Islamic banking than
respondents aged more than 40 years old, highly educated, and working in the company. There is no significant
difference in the probability of account ownership in Islamic banking.
Key-Words: - community’s potential, preferences, customer, Islamic banking, logistic model, Indonesia
Received: October 14, 2021. Revised: July 15, 2022. Accepted: August 18, 2022. Published: September 6, 2022.
1 Introduction
1.1 A Brief History of Islamic Banking in
Indonesia
Islamic banking as an intermediary institution is
required to improve business sustainability with
various development facing competition, especially
with conventional banking. Islamic banking is
valuable in increasing economic growth, especially
in helping financial inclusion for micro, small and
medium enterprises [1]. Islamic banking develops in
line with the demands and preferences of the public,
who want financial transaction services based on
moral values and sharia principles. Islam prohibits
charging interest for savings and loans because
classified as usury [2]. Therefore, one of the
principles in Islamic banking operations is the
application of profit and loss sharing [3]. This
principle does not apply in conventional banking.
Islamic banking with a profit-sharing system first
appeared in Egypt through a business pioneered by
Ahmad El Najjar at the Mit Ghamr Savings Bank in
1963 [2]. In other countries in the 1970s, several
Islamic-based banks emerged and experienced
significant growth [4].
The establishment of Islamic banking in Indonesia
is inseparable from the economic crisis that
occurred in 1998. Islamic banking is quite reliable
and able to survive in crises through the profit-
sharing system that can reduce the effect of
fluctuations in interest rates, thereby reducing the
risk of financial volatility [5-6]. The development of
Islamic banking in Indonesia began in 1991 with the
establishment of the first Islamic bank, Bank
Muamalat Indonesia (BMI), a commercial bank that
carried out business activities based on the profit
and loss sharing principle (PLS). The PLS system
integrates the interests of borrowers, banks, and
depositors [2].
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Indonesia is a country where the majority of the
population is Muslim and has a strong belief in
practicing their religion as well as possible.
Therefore, the existence of Islamic banking in
Indonesia is a necessity. Islamic banking has
progressed quite rapidly in Indonesia due to the
desire of the community to fulfill its obligations in
upholding Islamic principles and ethics [7]. This
implementation of Islamic ethics in the form of
prophetic messages and teaching of Muhammad
(peace be upon him), namely Iman (faith), Niyyah
(intention), Amanah (trust), and 'Adalah (justice),
will maintain loyalty and attract new customers and
can increase customer satisfaction. Therefore, it acts
as another competitive advantage [8, 9, 10].
Empirical studies have proven that prophetic
treatises and Islamic teachings, including faith,
intention, trust, and fair, transparent profit-sharing
principles (Al-Mudharabah and Al-Musyarakah),
provide high awareness for adherents to obey them
as a command and have succeeded in providing a
positive multiplier effect in banking management.
Islamic banking is a form of obedience to religion to
implement muamalah without usury [11]. Islam
forbids usury, and every Muslim must avoid it to
bring rewards to those who practice it.
The advantages of Islamic banking are the
avoidance of usury/interest on borrowed funds, the
principle of profit-sharing that has an impact on the
distribution of income and wealth, and preventing
speculation as one of the activities that are not
allowed in the banking sector. In Islamic Bank,
there is transparency in banking management
principles, the completeness of transaction facilities
through internet banking that provides convenience
for transactions, and the performance of
professional banking services, effectiveness, and
efficiency [12].
Apart from the advantages, there are several
disadvantages, including dilution. Dilution is the
consequence of equity investment, where in the
scheme, investors are afraid of losing control of
their business and prefer credit financing through
investment loans provided by commercial banks and
other financial institutions. Another weakness of
Islamic banks does not provide business loans. The
non-interest model of Islamic banking makes
investments in Islamic and non-interest banking
unattractive for investors who are interested in
maximizing profits.
Several factors can be the cause of public preference
for Islamic banking, including the existence of a
security guarantee on the funds deposited, where
saving in Islamic banks in Indonesia is guaranteed
by the Deposit Insurance Corporation (LPS), which
bears the risk of losing customer funds of up to Rp2
billion. is an attraction for customers to pledge their
funds to Islamic banking. Other factors that attract
people to become customers of Islamic banks are
demographic and non-demographic. Demographic
or external factors such as income, education level,
age, gender, income, employment, and the values
they believe in, and as cultural background, and
environment. While non-demographic factors or
internal factors such as service quality, banking
policies, and facilities.
Understanding the potential and preferences of the
community in choosing Islamic banking based on
demographic factors is essential for banks in
determining programs and strategic plans to expand
the market and face high competition. The
demographic approach illustrates that the attention
of banks is not only on services and facilities but
also on the public as end-users
Research on public interest in Islamic banking based
on a demographic approach conducted in Bahrain
concluded that there are differences in awareness
and attitudes among community groups based on
education level and gender. There are no differences
based on age aspect [13]. Respondents with lower
income and education levels don't interested in e-
banking 3G mobile communication systems [14,
15]. Based on age perspective, Agarwal and
Rastogi [16] found the aged 31 to 45 years old have
a high tendency to use e-banking applications
because of technological mastery and convenience
in using them. In another study, income had a
positive effect on online banking use, while age and
gender did not affect it [17].
Men are more responsive than women in accepting
changes and adapting quickly to innovations in
banking technology [18]. Men are more likely to
install mobile banking applications because they are
driven by the need for tasks and work, personality,
values, and status [19]. Gan et al. [20] found that
respondents over 56 years old, educated, and have
high income aren't interested in using e-banking
applications. Research on the potential and
preferences of the community towards Islamic
banking is essential in understanding the
community's demographic factors in a more focused
and comprehensive [21].
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The rest of this paper is organized as follows:
Section 1 provides an introduction to explain the
background of title selection, and Section 2 gives a
relevant literature review of the topic discussed.
Section 3 deals with the data and a brief overview of
the research methodology. The fourth section
presents the results of data analysis based on the
materials and method, which will discuss in Section
5; Section 6 is a conclusion.
1.2 Islamic Banking Overview and The
Determinant Factors of The Islamic Banking
Selection.
Islamic banking activities must comply with sharia
principles guided by the Qur'an and As-Sunnah,
where the existence of an interest in both receipts
and payments is prohibited [22]. The principles of
halal, ethics, and moral values are the basis of all its
activities. Islamic banking applies sharia principles
by avoiding usury, applying the principle of profit-
sharing (mudharabah), buying and selling goods at a
profit (Murabahah), equity participation
(musharakah), or financing of capital goods based
on sharia principles, and the pure lease without
choice (ijarah) or with the option of transferring
ownership of the goods leased from the bank by
another party (ijarah was iqtina).
Money in the Islamic banking view is considered a
medium of exchange. It's different from money in
conventional banking, where interest transactions
are the main product, implying that money is traded
as a commodity. Several things that must be
implemented in Islamic banking include 1)
prohibition of payment of loans with a value higher
than the principal of the loan, and 2) prohibition of
profit and loss sharing as a result of the business
results of institutions that borrow funds. 3) prohibit
making money from money. 4) prohibit elements of
gharar (uncertainty, speculation). 5) prohibit
investments and other businesses that are not
prohibited in Islam [23]. In recent years, Islamic
banks have experienced extraordinary growth, and
the challenge of obtaining customer satisfaction and
loyalty must remain a priority to compete with more
established conventional banks. Knowledge about
customer preference, need, and satisfaction is a
significant challenge in the banking dimension of
marketing. Preference is a subjective tendency that
is influenced by demographic, non-demographic
factors such as bank reputation and service quality
[24, 25, 26].
The empirical studies of community preferences and
potential toward Islamic banking provide a new
perspective through a demographic approach to
increase service expansion based on user
characteristics [27]. Demographic factors assist
management in making operational strategies
decisions, regarding products and target markets
related to market segmentation [28], besides being
influenced by other demographical factors such as
psychology, religion, social, and culture [29],
although in several studies, customer characteristics
have an indirect effect on banking programs (26).
The relationship between religious involvement
(practice and interest) and attitude toward Islamic
banks is a significant factor that affects customer
decisions in banking services in Muslim countries
[30, 31, 32].
Research in the United Arab Emirates (UAE) about
the determinants of bank selection for Islamic and
conventional banks based on demographic and non-
demographic factors concluded that religious factors
are the main factors in choosing a bank. In contrast,
non-demographic factors such as bank reputation
and profit expectations are not determinants of bank
selection [33]. A significant factor in the choice of
Islamic banking in Nigeria is Islamic ethics and
Islamic bank services awareness [34].
Using a structural equation model, research
conducted on 790 respondents analyzing gender and
religious factors to determine the bank type
concludes that Muslim consumers are more
concerned and selective in choosing banking
products than non-Muslims. This study also found
that social factors and bank facilities had no
significant effect on Muslim and non-Muslim
consumers [35]. Besides religious factors, several
research results prove a relationship between other
demographic factors such as gender, age, education,
and income with banking services programs. Male
and the younger group of customers (18 – 24 years
old) are more attracted to Islamic banks than female
and adult age group (25 – 34 years old) customers
are more inclined toward conventional systems [36].
Education level also affects the tendency to have a
credit card. Customers with 31 to 35 years old and
higher education levels tend to have conventional
credit cards compared to sharia lower education
customers between 20 and 30 years old. Good
customer service and the recommendations of
parents and friends are the criteria for US and
Ghanaian are determining factors for generation Y
in the UK and the US [37].
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Demographic factors such as age, income,
education, religion, gender, and marital status are
not related to population characteristics. Non-
demographic factors such as low-interest rate, speed
of service, easy way of obtaining a loan, and higher
interest on deposits have a positive and significant
influence on choosing a bank and affect the public
appreciation of Islamic banking [38, 39].
Service dimensions such as quality of staff, safety
and security, proficiency, and management systems
are given high importance by customers when
choosing a bank. Honest staff, a helping attitude, an
adequate safety system at ATMs, secure banking,
and maintaining the confidentiality of customer data
are important items in banking choices [40]. In
China, a convenient network and the government's
protection are the dominant factors influencing bank
selection, whereas cultural aspects such as “guanxi”
or personal relationship are only of minor
importance [41].
The studies were conducted by Ltifi et al. [42] in
Tunisia and Tanzania Islamic banks [43] and Naim
et al. [25] in Malaysia Islamic bank, Awan and
Bukhari [10] in Pakistan Islamic bank. Mansour et
al. [31] in UK Islamic bank prove that the effect of
banking service quality like compliance, tangibility,
and reliability of product choice and Islamic debt
policy has a significant relationship to customers’
satisfaction and can influence consumer attitude
selecting Islamic banks. Research to determine the
selection criteria of Islamic banks found that the
factors “cost and affordability” and “rates and
return” are prioritized above “Sharīʿah-compliance”
factors [44]. Based on the gender and age approach,
customers between 18 and 25 years old and females
are the dominant factors influencing the selection
criteria in the Federal Territory of Labuan,
Malaysia. The non-demographic factors such as
bank services, people influences, electronic services,
and banking security, and those female students
attach more importance to each of these factors than
their male counterparts [45]. The low cost of bank
services and religion is the determining factor that
drives the process of becoming a UK customer [31,
46]Both demographic and non-demographic
variables are important factors in determining the
steps in adjusting the marketing strategy to
influence the targeted market segments [47].
Internal factors such as sharing costs are secure and
profitable, vast parking area, beautiful building
(physical), and easy transaction (process), and
external factors such as interest, family support, and
the bank prospect are a significant effect on the
customer’s choice of Bank Syariah [48]. The
selection criteria of customers for Islamic home
financing in Pakistan concerning gender, age,
income, and occupation factors conclude the shariah
principle, fast and efficient services, price, bank
reputation, and product flexibility are the important
factors in choosing Islamic mortgages [49].
Research on demographic and non-demographic
factors such as behavior, characteristics, and public
perception of Islamic banks that influence the
society's potential and preference toward Islamic
banks, especially in Indonesia is still limited.
Research conducted by Setiawan et al. [21].
Research about an overview of the behavior and
public perception of Islamic banks proves that
deposit security guarantees, ease of transaction, and
implementation of sharia principles are the reasons
for choosing an Islamic bank. Other non-
demographic factors that also influence the decision
to select Islamic banks in Indonesia include staff
friendliness, sharia compliance, and fast and
efficient banking service [50]. There are three
conclusions of the discussion on demographic and
non-demographic factors in the bank selection
process in Indonesia. First, bank commitment,
competence, and complete service as the main
factors for bank selection criteria. Second, the
bank's competence, commitment, and reputation
affect satisfaction. Third, service speed, location,
convenience, competence, and friendliness of bank
staff are important factors that determine
institutional performance [47].
This study will analyze account ownership in
Islamic banking based on demographic variables
such as age, education, occupation, and income.
The hypotheses can be postulated as follows :
Ho1 = There is no significant difference in
opportunities for the community less
than 25 years old having an Islamic
banking account.
Ha1 = There is a significant difference in
opportunities for the community less
than 25 years old to have an Islamic
banking account.
Ho2 = There is no significant difference in
opportunities for the community 25 to 40
years old having an Islamic banking
account.
Ha2 = There is a significant difference in
opportunities for the community 25 to 40
years old having an Islamic banking
account.
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Ho3 = There is no significant difference in
opportunities for the low education
community to have an Islamic banking
account.
Ha3 = There is a significant difference in
opportunities for the low community to
have an Islamic banking account
Ho4 = There is no significant difference in
opportunities for the middle education
community to have an Islamic banking
account.
Ha4 = There is a significant difference in
opportunities for the middle education
community to have an Islamic banking
account.
Ho5 = There is no significant difference in
opportunities for the community who
works as civil servants having an Islamic
banking account.
Ha5 = There is a significant difference in
opportunities for the community who
works as civil servants having an Islamic
banking account.
Ho6 = There is no significant difference in
opportunities for entrepreneurs having an
Islamic banking account.
Ha6 = There is a significant difference in
opportunities for entrepreneurs to have an
Islamic banking account.
Ho7 = There is no significant difference in
opportunities for the community who have
income less than IDR 2,500,000 having an
Islamic banking account.
Ha7 = There is a significant difference in
opportunities for the community who have
income less than IDR 2,500,000 having an
Islamic banking account
Ho8 = There is no significant difference in
opportunities for the community who have
an income of IDR 2,500,000 to IDR
5,000,000 having an Islamic banking
account
Ha8 = There is a significant difference in
opportunities for the community who have
an income of IDR 2,500,000 to IDR
5,000,000 having an Islamic banking
account
To prove hypotheses 1 to 8, a multinomial logistic
linear regression approach was used. The data used
for X and Y variables are qualitative data with a
dummy. The significant differences in having an
account in Islamic banking can be described in the
following scheme.
Fig. 1: Conceptual Framework
2 Methodology
This study was conducted in Indonesia. Of the 620
respondents, ten percent respondents do not have an
Islamic banking account, and ninety percent or
about 558 respondents (90%) have an Islamic
banking account. Eighty-six respondents fewer than
25 years old were 25 to 40 years old, and others
were more than 40 years old. 165 respondents were
in the education level of elementary to senior high
school, 250 respondents (40.3%) were respondents
in the education level of bachelor to diploma, and
others were respondents in the education level of
master to doctor.
Based on employment, fifty percent of respondents
were civil servants, 297 (47.9%) were
entrepreneurs, and 289 (46.6%) worked as
employees. Middle-income respondents with an
income of IDR 2,500,000 to IDR 5,000,000 per
month totaled 242 respondents (39%). Thirty-eight
percent of respondents were in a low-income level
of less than Rp 2,500,000 per month, and 169
respondents (27.3%) high income above IDR
5,000,000. Statistical descriptions as shown in Table
1 below.
Tabel 1. Case Processing Summary
POTENTIAL
AND
PREFERENCE
OF ISLAMIC
BANKING
JOB
AGE EDUCATION
INCOME
N
Percentage
IBACCOUNT
Do not have an Islamic bank
account
62
10.0%
Have an Islamic bank account
558
90.0%
AGE1
Less than 25 years old
86
13.9%
AGE2
25 to 40 years old
243
39.2%
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The collected data will be classified and processed
into categorical and reference variables using
binary logistics regression or multinomial logistic
linear regression using IBM SPSS statistics 25
software. Multinomial logistic regression analysis
is used when the dependent variable has
polychromes or a multinomial scale, which is a
nominal scale with more than two categories [51].
Binary logistic regression analysis was also used in
studies that analyzed the relationship between
income and employment classified by company
size, education (high school graduation department
and university), and employment status [52].
The research variables consist of dependent
variables and independent variables. The dependent
variable (Y) is the probability of people who have
an Islamic banking account (IBACCOUNT) as a
proxy to measure the potential and preference of
Islamic banking. The independent variable (X) is
several factors that affect account ownership in
Islamic banking. These factors are age, education,
occupation, and income. The dependent and
independent variables will be given coding with the
values of 1 and 0. Y variable will have a value of 1
(0) if the respondent has (doesn't have) an Islamic
banking account.
The age factor consists of AGE1, AGE2, and
AGE3. AGE1 is the age less than 25 years old with
a value of 1, AGE2 is the age between 25 to 40
years old with a value of 2, AGE3 is the age more
than 40 years old with a value of 3, and age more
than 40 years old as a categorical comparison
(reference). Educational factors consist of EDUC1,
EDUC2, and EDUC3. EDUC1 (elementary to
senior high school) with a value of 1, EDUC2
(diploma to a bachelor) with a value of 2, and
EDUC3 (master to doctor) with a value of 3, and
higher education as categorical variables for
comparison (reference). The occupation factors
consist of JOB1, JOB2, and JOB3. JOB1 is
government employees with a value of 1, JOB2 is
entrepreneurs with a value of 2, and JOB3 is private
employees with a value of 3. The employee is a
reference category. The income factors consist of
INCOME1, INCOME2, and INCOME3.
INCOME1 is less than IDR 2,500,000 with the
value of 1, INCOME2 is IDR 2,500,000 to IDR
5,000,000 with the value of 2, and INCOME3 is
more than IDR 5,000,000 with the value of 3, and
income more than 5,000,000 as a reference
category.
The dependent variable is the factors that affect the
ownership of Islamic banking accounts, which
consists of age (AGE1 and AGE2), education
(EDUC1 and EDUC2), occupation (JOB1 and JOB
2), and income (INCOME1 AND INCOME2).
The coding of each variable is as follows: IB
ACCOUNT will have a value of 1 if respondents
have an Islamic banking account and 0 if
respondents don't have an Islamic banking account.
AGE1 will have a value of 1 if less than 25 years
old and 0 if others. AGE2 will have a value of 1 if
between 25 to 40 years old and 0 if others.
EDUC1 will have a value of 1 if respondents are in
the elementary school to senior high school and 0 if
others, EDUC2 will have a value of 1 if
respondents are in bachelor to diploma, 0 if others.
JOB1 will have a value of 1 if respondents are
government employees and 0 if others. JOB2 will
have a value of 1 if entrepreneur and 0 if others.
INCOME1 has a value of 1 if the respondent's
income was less than IDR 2,500,000 and 0 if
others, INCOME2 will have a value of 1 if the
respondent's income is IDR 2,500,000 to IDR
5,000,000 and 0 if other. The following table shows
the coding for each independent variable.
AGE3
More than 25 years old
291
46.9%
EDUC1
Elementary to Senior high school
165
26.6%
EDUC2
Bachelor - Master
250
40.3%
EDUC3
Doctoral
205
33.1%
JOB1
Civil servant
34
5.5%
JOB2
Entrepreneur
297
47.9%
JOB3
Employee
289
46.6%
INCOME1
Less than IDR 2,500,000
209
33.7%
INCOME2
IDR 2,500,000 to IDR 5,000,000
242
39.0%
INCOME3
More than IDR 5,000,000
169
27.3%
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Table 2. Coding Variable
Variable
Coding Parameters
1
2
Age (X1 dan X2)
1
1
0
2
0
1
3
0
0
Education (X3 dan X4)
1
1
0
2
0
1
3
0
0
Occupation (X5 dan X6)
1
1
0
2
0
1
3
0
0
Income (X7 dan X8)
1
1
0
2
0
1
3
0
0
Islamic Banking Account (Y)
1
0
The collected data will then be processed using
IBM SPSS Statistics 25 software using a
multinomial logistic linear regression model. Y
and X variables are qualitative data with dummy
variables. Independent and dependent variables
are qualitative data that will change into
categorical data with one reference (categoric
comparison). The multinomial logistic linear
regression model is as follows.:
(1)
3 Results and Discussion
Model fitting information provides information on
whether the independent variables contained in the
equation model can get a better logistic regression
model. Table 3 showed that the decrease in the
value of -2 log-likelihood from 225.777 to 130.721
with a chi-square value of 95.057 and significance
at 0.000 indicates that the multinomial logistic
regression model with the presence of independent
variables can provide better accuracy for predicting
potential and the public's preference for Islamic
banking ownership. Based on the Pseudo R-Square
using Nagelkerke, it's known that all independent
variables can explain the dependent variable by
27.7%, and 71.3% explained by other variables.
The low contribution of all independent variables
to the dependent variable shows that other variables
influence respondents' tendencies towards Islamic
banking, including for non-demographic reasons
such as service, reputation, professionalism, etc. It's
in line with the results of previous studies that
stated that most people chose service factors or
non-demographic factors (internal) as factors that
attracted them to choose a bank [38, 39, 40,41, 53].
Tabel 3. Model Fitting Information
Model
Model Fitting Criteria
Likelihood Ratio Tests
-2 Log-Likelihood
Chi-Square
df
Sig.
Intercept Only
225.777
Final
130.721
95.057
9
.000
Based on the estimation parameter as shown in
table 4, the equations of the multinomial logistic
model obtained are as follows:
Although the joint test showed significant results, it
turns out that the individual coefficient tests carried
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out with the Wald test showed that several
coefficients that are insignificant at 0.05 level are
JOB1, INCOME1, and INCOME2. There is no
difference in opportunities between people who
have jobs as government employees with those
who work as employees in having Islamic banking
accounts. INCOME1 and INCOME 2 with a
significance greater than 0.05 shows an
insignificant difference between low-income (less
than IDR 2,500,000) and middle-income (IDR
2,500,000 to IDR 5,000,000) with more than IDR
5,000,000 in having an Islamic banking account.
The variables AGE1 and AGE2 are significant at a
0.05 level, suggesting that there is a difference in
the probability of having an Islamic banking
account between people aged less than 25 years old
and 25 to 40 years old with those aged more than
40 years old in having an Islamic banking account.
Education variables EDUC1 and EDUC2, with a
significantly less than 0.05 level, indicate a
difference in opportunities between people with
low and secondary education with high education
in having an Islamic banking account. JOB2,
people who work as entrepreneurs significantly
differ from people who work as employees in
having an Islamic banking account. The intercept
of 20.835 means that people with higher education,
who work as employees with an average monthly
income of more than IDR 5,000,000, 40 years old,
have a 99% chance of having an Islamic banking
account. The coefficient of the AGE1 variable is -
1.613 means the probability of people aged less
than 25 years old choosing an Islamic banking
account is lower than people aged 40 years old.
Based on exp (B), the tendency of people aged less
than 25 years old to have an account in Islamic
banking is 0.19 times people over 40 years old. The
coefficient value of the AGE2 variable is -17.002
indicating the probability of people between 25 to
40 years old choosing an Islamic banking account
is lower than that people of more than 40 years old.
People aged 25 and 40 years old have a lower
chance of choosing an Islamic bank account than
4.130E-08 times those over 40 years old The
coefficient of EDUC1 of -2.304 and EDUC 2 of -
2.853 indicate the probability of people with low
and middle education choosing Islamic banking
accounts is lower than 0.01 and 0.058 times higher
than educated people. The coefficient value of the
JOB2 variable is -2.047 indicating the probability
of people who have jobs as entrepreneurs and
others such as housewives to choose an Islamic
banking account is 0.129 times lower than people
who work as employees.
The results of this study are inconsistent with the
results of research conducted by Ahmad et al. [36]
that respondents in the younger group (18 – 24
years old) have an interest in Islamic banking
compared to the older age group. In the education
segment, it is not by the results of research
conducted by Endri [5], where these researchers
concluded that it was customers at a younger age
who tended to Islamic banking. The insignificant
differences in opportunities for ownership of
Islamic banking accounts at all income levels
indicate the tendency of Islamic banking ownership
to be relatively the same for all incomes.
Tabel 4. Variables in the Equation
B
Std. Error
Wald
Df
Sig.
Exp(B)
Intercept
20.835
1.184
309.585
1
0.000
AGE1
-1.613
0.399
16.328
1
0.000
0.199
AGE2
-
17.002
0.354
2304.963
1
0.000
4.130E-
08
EDUC1
-2.304
0.642
12.883
1
0.000
0.100
EDUC2
-2.853
0.569
25.093
1
0.000
0.058
JOB1
-0.932
0.708
1.732
1
0.188
0.394
JOB2
-2.047
0.334
37.486
1
0.000
0.129
INCOME1
-0.183
0.440
0.172
1
0.678
0.833
INCOME2
-0.026
0.429
0.004
1
0.952
0.974
Based on data processing, the use of multinomial
logistic linear regression shows that people aged
less than 25 years old and 25 - 30 years old with
low and middle education and work as
entrepreneurs have a significant effect on having
Islamic banking accounts. The coefficient value of
the people aged less than 25 and 25 - 30 years old
with low and middle-level education and work as
WSEAS TRANSACTIONS on ENVIRONMENT and DEVELOPMENT
DOI: 10.37394/232015.2022.18.104
Immas Nurhayati, Endri Endri,
Desmy Riani, Widhi Ariyo Bimo
E-ISSN: 2224-3496
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entrepreneurs indicates the probability of having an
Islamic banking account is lower than people aged
more than 40 years old, with high education, and
work as an employee. These findings suggest that
educated peoples, who work as employees with an
average monthly income of more than IDR
5,000,000 and aged more than 40 years old, 99%
have a chance to have an Islamic banking account.
This research found the probability of a younger
age group (less than 25 years old and 25 to 40 years
old) having a bank sharia account is lower than the
probability of the older age group (more than 40
years old), by previous research that young people
prefer conventional banking to Islamic banking
[36]. In the education factor, this study result isn't
in line with the research earlier results found that
people with higher education prefer to have credit
cards from the conventional bank than sharia. This
study result found that the probability of ownership
of an Islamic banking account for people with high
education is higher than low education. The
differences in research findings are because of the
characteristics of the community, cultural
background, education, binding norms, ethics,
morals, behavior, and others. The research gap is a
challenge to our further research. An understanding
of the communities potential and preference
towards Islamic banking through a demographic
approach shows that banking isn't focused on
aspects of bank service but also on the community
as end-users. Banks need to know more about the
profiles of customers who use Islamic banking
services to meet the public's need for the existence
of Islamic banks, which is the contribution of this
research.
4 Conclusion
This study concludes that age, education, and job
significantly influence having an Islamic banking
account, while the income variables cannot explain
the effect of having an Islamic banking account.
Knowing the potential and tendencies of the public
towards Islamic banking based on the criteria of
age, income, education, and occupation is valuable
for banks as the basis for making decisions on
market penetration strategies so that the programs
launched by the bank get a positive response from
the target community.
This study is not free from some limitations.
Developing the number of samples, using other
demographic variables such as gender, marital
status, and non-demographic factors such as
service, friendliness, security, comfort,
completeness of facilities, and technology can be
done for further research.
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Contribution of Individual Authors to the
Creation of a Scientific Article (Ghostwriting
Policy)
Conceptualization: Immas Nurhayati, Desmy
Riani Data curation: Desmy Riani, Widhi Ariyo
Bimo, Formal analysis: Immas Nurhayati, Endri
Endri. Funding acquisition: Immas Nurhayati,
Endri Endri Investigation: Immas Nurhayati,
Endri Endri, Desmy Riani, Widhi Ariyo Bimo.
Methodology: Immas Nurhayati, Endri Endri,
Desmy Riani. Project administration: Immas
Nurhayati, Endri Endri, Resources: Desmy Riani,
Widhi Ariyo Bimo. Software: Immas Nurhayati
Endri Endri, Supervision: Immas Nurhayati, Endri
Endri, Desmy Riani, Widhi Ariyo Bimo.
Validation: Immas Nurhayati, Endri Endri.
Visualization: Immas Nurhayati, Endri Endri .
Writing – original draft: Immas Nurhayati,
Desmy Riani. Writing – review & editing: Immas
Nurhayati, Endri Endri.
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DOI: 10.37394/232015.2022.18.104
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Desmy Riani, Widhi Ariyo Bimo
E-ISSN: 2224-3496
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