DEMOGRAPHIC CHARACTERISTICS INFLUENCING PREFERENCES ON ISLAMIC RETAIL FINANCIAL PRODUCTS : A DESCRIPTIVE STUDY

Abstract

Each individual is practicing different lifestyle because they come from different demographic background. Age, income, education level, marriage status and occupation will direct/indirectly affects individual in making decision towards financial matters. The Credit Counselling and Debt Management Agency (AKPK) has announced latest statistics of indebtedness level among Malaysian people. Malaysia household debt-to-gross domestic products is still in high rate, which standing at 83.8 per cent in the first half of 2018. Among the factors is because people failed to manage financial efficiently. As regard to this, Bank Negara Malaysia proposed to conduct programs in order to increase the level of financial knowledge and management among people. Some cannot match the background profiles with investment portfolio and thus keeping money only as saving deposits. Financial market, particularly Islamic financial institutions has offer variety of products. People is free to choose based on their main preferences. Thus this study is aims to propose a framework in order to know what are the factors influencing people to choose Islamic financial institutions products namely bank deposit, Tabung Haji, Islamic Unit Trust and Takaful. Is the factor of demographics affect them to choose certain products over other products? This study also uses behavioral finance theory in order to examine what factors influence individual to choose particular products.

Keywords: Financial Preference, Islamic Retail Products, Behavior Finance