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Perceptions On Islamic Banking Essay

2520 words - 11 pages

Bank Employees Perceptions on Islamic Banking Acceptance


This research was conducted to investigate bank employee perceptions on Islamic banking acceptance. The questionnaires were distributed to bank employee at Maybank Islamic Wangsa Maju (Islamic bank) and Maybank Setapak (Islamic window) Kuala Lumpur. Interestingly, few of the bank employees possessed a relevant academic background or relevant experience in banking on this career. The bank employee also claimed that they had very limited knowledge in this area prior to working with the banks; thus, the issue of the availability of well-trained and skilled employees must be addressed critically by the government, industry ...view middle of the document...

However, it should be borne in mind that although the emergence of Islamic banking was in response to the market needs of Muslims, these banks are not religious institutions, as they provide banking services for non-Muslim customers as well. Further proof of the viability of Islamic banking is the fact that many conventional banks, including some major multinational Western banks, have also started using Islamic banking techniques.

Malaysia is among the countries that have chosen to operate Islamic banking alongside the conventional system. This is achieved by the opening of “Islamic windows” in conventional institutions, or the establishment of separate banks or branches and subsidiaries specializing in Islamic financial products. Serious research over the past two-and-a-half decades has shown that Islamic banking is not only feasible and viable, but is an efficient and productive form of financial intermediation.

It has been stated that the idea of creating actual Islamic financial institutions was visualized as early as the 1940s (Khan, 1987). However, it is stated that the first attempt to establish such institutions was in Pakistan in the late 1950s, with the establishment of a local bank in a rural area, although this did not have a lasting impact (Wilson, 1983). The second attempt to establish an Islamic bank took place in Egypt, in Mit Ghamr .In the Nile delta from 1963 to 1967, this model being adopted by its founder, Ahmed Al-Najjar, from the concepts of the German savings bank (Scharf, 1983). The experiment of the Mit Ghamr Savings Bank came to an end for political reasons in late 1967, when its operations were undertaken by the National Bank of Egypt and the Central Bank.

Such an undertaking had a significant impact on the Mit Ghamr Savings Bank; operational policies consequently changed, with the operations of the bank being run on an interest basis, so that interest-free banking was deserted. However, the Mit Ghamr experiment had opened the way for the establishment of the Nasser Social Bank in 1971, which was a kind of revival (El-Ashker, 1990).

Islamic banking in Malaysia started back in 1983 with the establishment of the first Islamic bank; Bank Islam Malaysia Berhad (BIMB). In March 1993, introduction of the Interest-free Banking Scheme in the conventional banks, which then saw the emergence of the dual-banking system in Malaysia. This scheme allows conventional banks to offer Islamic banking products and services under the same roof, utilizing the same infrastructures and employees. The interest free banking scheme was changed to the Islamic Banking System to reflect the importance and specific roles of the Islamic banking system in Malaysia in 1998. The second Islamic bank was added to the list as the second Islamic bank is Bank Muamalat in 1999. To date, there are 12 full-fledged Islamic Banks, including 2 foreign banks, Al-Rajhi Banking & Investment Corporation (Malaysia) Berhad and Kuwait Finance House...

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