Religiosity and Islamic Banking Product Decision: Survey on Employees of PT Telekomunikasi Indonesia

The objective of this research is to examine the religiosity on Islamic banking product decision. A survey method was employed using a sample of 2.627 employees at different level of education, level of income, gender, age, marital status, length of service, work location (provincial based), ownership of conventional banking products as well as ownership of sharia banking products among employees of PT. Telekomunikasi Indonesia. The study also developed valid and reliable scales for religiosity and selection of sharia banking product. The ﬁndings of the study revealed that dimensions of religiosity affected understanding of Islamic Banking Concept and also affected Bank Selection Criteria. Future research is required to investigate private employees and semi government employees, even in military institutions to find different figure of religiosity and preference of sharia banking products, by identifying the speciﬁc areas of religiosity that have particular impact in determining the sharia banking products.DOI: 10.15408/etk.v16i1.4379


INTRODUCTION
One of the basic characteristics of an Islamic economic system is that it is free of riba or usury or interest rate. The Arabic word riba means an increase in or addition to, but in practice riba refers to the additional amount, in excess of the principal, that a lender charges a borrower. The riba systems were practiced in the money lending and barter trade activities even in the pre-Islamic period. During this period whenever a person borrowed money from a lender, the borrower asked the lender to extend the period of payment and in return the borrower had to pay the lender a fixed amount of money in excess of the SULQFLSDO $W WKH WLPH RI WKH UHYHODWLRQV RI WKH 4XU·DQ RQ ULED WKHUH H[LVWHG PDQ\ IRUPV RI riba. For example, when a person sold an item the buyer would be made aware of the period of payment. When the buyer failed to make repayment within this specified period, he was given more time to make the payment but the lender charged the borrower an additional amount. And in the case of lending money, the lender asked the borrower to repay the principal together with an additional amount of money within a specified period of time.

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been different views among the Islamic scholars on the concept of riba. Fortunately, there DUH D QXPEHU RI YHUVHV LQ WKH 4XU·DQ DQG KDGLWh, which are related to riba. These two sources of reference help Moslem scholars to explain the concept of riba. Specifically, Allah says:
The Prophet condemned not only those who took riba but also those who gave riba and those who recorded or witnessed the transaction involving riba, reminded the Moslems that these people were all committing sins. The Prophet (PBUH) explained in his hadith that riba existed in cash loans, money transactions, and in barter trade whenever one party received excess over and above the commodity being exchanged. Thus, the essence of riba is the excess, whether it is in the commodity exchange or in money exchange such as when one dinar is exchanged for two dinars. In the case of a barter trade, which is an exchange of goods for goods, riba is committed when more of one commodity is exchanged for exactly similar commodity. Islamic Banking is growing rapidly in various parts of the globe. Islamic banking initially established to cater for the needs of Moslems customers, as Moslems are obliged to obey the Sharia principles (Islamic Jurisprudence) in all aspects of life. It is argued that Moslems patronize Islamic banking due to religious consideration however; it is not clear why the non-Moslems patronize Islamic banking.
Islamic banks operate worldwide in over 75 countries mostly in Middle East and Southeast Asia, with Bahrain and Malaysia as the biggest hubs. Islamic banking has established itself as a choice of banking alongside the conventional interest-based banking, and it has been expanding rapidly over the last two decades in both Moslem and non-Moslem countries. As it is expanding from its niche, the Islamic banking industry is becoming a market that could rival the conventional sector in many countries. Dusuki and Abdullah (2006) described Islamic banking as no longer a business entity operated only to fulfill the religious obligations of the Moslem community, but more significantly, it is striving to fulfill the needs and demands of new customers as well.
The distinguishing feature of an Islamic banking from its counterpart, the conventional banking, is that it is free of riba. Islam prohibits Moslems from taking as well as giving riba. The prohibition of riba is mentioned in four different revelations in the Qur'an. The first revelation clarifies that charging interest is equivalent to taking away the wealth of Allah from a person; the second revelation condemns it since riba is a wrongful appropriation of wealth belonging to others. The third revelation asks all Moslems to avoid riba altogether. The fourth revelation makes a clear distinction between interest and trade, asking Moslems to take only the principal and even forgo this principal if a borrower is unable to repay the loan. The Qur'an warns those who disobey the prohibition of riba that they are actually at war with God and His Prophet (PBUH).
It has been argued that profit rate helps to allocate resources efficiently. As the profit rate determined by market forces therefore capital will flow into the sectors, which offer the highest profit rate. The owner of capital may invest his capital by giving it to an entrepreneur with a viable economic project, idea, expertise, and experience and use the capital for production activities and they are permitted to share the profits between them. In the case of losses, it will be borne wholly by the owner of capital. This type of financing is termed as mudarabah and it was practiced even in the pre-4XU·DQ GD\V $QRWKHU legitimate form of financing in Islam is based on equity participation termed as musharakah when the partners use their capital jointly to generate economic activities. Profits or losses will be shared between the partners according to the agreed upon formula based on the equity ratio.
Mudarabah and musharakah are the two basic principles of Islamic banking. An Islamic bank provides depository facilities such as saving deposit, current account, and investment deposit and manages the mudarabah funds of the depositors to generate profits subject to the rules of mudarabah. The bank then uses the mudarabah fund of the depositors to extend loans to the borrowers based on mudarabah and other forms of Islamic financing. The bank may choose to enter into musharakah contracts with the borrowers of the funds, sharing profits and losses between them.
Demographic factors such as age; gender, education level, majors and income
The role of Islam has become a key public and political concern in recent years These beliefs cannot be avoided when a society is analyzed (Fam et al., 2002). These religious commitments and beliefs have inÁXHQFHG WKH IHHOLQJV DQG DWWLWXGH RI SHRSOH towards consumption (Jamal, 2003). For example, in England, the consumption pattern of the Indian society as compared to the indigenous white British society is different due to FRPPLWPHQW WR VSHFLÀF FRPPXQDO RU religious groups (Lindridge, 2005). Furthermore, it is WKH UHOLJLRQ ZKLFK VSHFLÀHV SURKLELWHG DQG QRQ-SURKLELWHG WKLQJV ZKLFK LQÁXHQFH WKH
Halal products are those that are Sharia compliant, i.e. do not involve: the use of haram (prohibited) ingredients, exploitation of labor or environment, and are not harmful or intended for harmful use. Moslems are obliged by religion to clearly scrutinize products to make sure they are halal. And, they are strongly encouraged by the Islamic teachings to shy away from consumables that are doubted.
Previous studies on perceptions of Islamic banking customers can be categorized into four. The first category is studies on perception towards Islamic banking that have been conducted in either predominantly Moslem countries such as Pakistan or predominantly non-Moslem countries such as Singapore. The second group of studies has focused on Islamic banking customer in general without separating them by religious affiliations such as Moslems and non-Moslem. The third category is a comparative study on customers of Islamic and conventional banking. The final category that has relation to the present studies conducted on non-Moslem customers of Islamic banking. Yet, we will elaborate much more on Islamic in Islamic state or in the country with Moslem as majority.  (Haron et al., 1994;Ahmad & Haron, 2002). The variables deemed important under religious (Islamic) construct that include compliance to Sharia rules, offerings of Sharia compliant services, and offering interest free loans, among others. Rashid et.al (2008) found compliance to Sharia law is one of influential factor for banking selection among customers in Bangladesh.

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Studies on religious issue as banking selection criteria showed different findings as it perceived to be the most important criteria especially among Moslems, while not to non-Moslems. Some studies showed religious issues as not to be the most important factor of banking selection. Bley and Kuehn (2004) found that among Moslems in UAE the preference for Islamic banking was primarily driven by religious beliefs, not financial knowledge. That is, the stronger the religious commitment, the greater preference for Islamic banking services. Consequently, a study conducted by Dusuki and Abdullah (2007) in Malaysia found that religious factor is not the main criteria for banking selection. They found that competent and knowledgeable personnel, followed by friendly personnel and service quality as their main patronage factors.
Although the religious dimension plays an important role in banking selection, quality and attractiveness of offerings is also perceived as significantly important for the customers to patronize Islamic banking. Since some previous research indicated that religion is no longer the main factor in attracting customers, Islamic banks should recognize that customers view them just like any other commercial bank. Thus the quality of service and the products and services offered must be comparable with those offered by the commercial banks. Rashid et.al. (2008) found the higher demand of Islamic banking products and services requires existence of superior quality in service, beside the efficiency in system, strict compliance to Sharia and satisfactory community service through job creation and In this research we tried to find whether there was a correlation between

Dimensions of Religiosity and Sharia Banking Service Selection. We developed Islamic
Religiosity Index by Shabbir as follows: Ideological dimension/belief (X 1 ), Ritual Dimension/X 2, Intellectual Dimension/X 3, Conceptual Dimension/X 4, and Experiential Dimension/X 5 , as cause variables. While the result variables were Sharia Banking Services, which consisted of Islamic Banking Concept (Y 1 ) and Bank Selection Criteria/Y 2

RESULT AND DISCUSSION
The correlation coefficient between the cause variables X 1 , X 2 , X 3 , X 4 and X 5 to the result variable Y 1 are shown in the following Table 2. These results indicated that there were significant positive relationship among the cause variables of X 1 , X 2 , X 3 , X 4 and X 5 with result variable Y 1 indicated by the positive correlation coefficient with significance level . = less than 0.05. The strongest linkage between result variables Y 1 and the cause variables is demonstrated by the relationship between X 5 and Y 1 with a correlation coefficient of r = 0.437; while the weakest relationship is shown by the relationship between X 1 and Y 1 with a correlation coefficient of r = 0.338.  Predictors: (Constant), X 5 , X 1 , X 4 , X 2 , X 3 b Predictors: (Constant), X 5 , X 1 , X 4 , X 2 c Predictors: (Constant), X 5 , X 1 , X 4 The results of Hypotheses test on the effect of X 1 , X 4 , X 2 , X 3 and X 5 to Y 1 can be determined simultaneously by testing the significance of the simultaneous correlation coefficient and the coefficient of determination by using F as shown in the following ANOVA table. Model 1: Y 1 = 0.065X 1 -0.022X 2 + 0.001X 3 + 0.241X 4 + 0.258X 5 Based on the significance of the correlation coefficient, it is shown that the value of the correlation coefficient significance X2 and X3 which was 0.509 and 0.980 had larger values than 0.05; which showed that in partial, cause variable X2 and X3 had no significant effect on the result variable Y1. To obtain the best equation model using backward method, the next step is to exclude the least significant cause variable to the result variable Y1, which was cause variable X3, then we obtained the model 2.
Model 2: Y1 = 0.066X 1 -0.021X 2 + 0.241X 4 + 0.258X 5 Based on the significance of the correlation coefficient, it is shown that the value of the correlation coefficient significance X2 was 0.476 which had a larger value than . = 0.05; which showed that in partial cause variable X2 had no significant effect on the result variable Y1. To obtain the best equation model using backward method, the next step was to exclude a cause variable, which was not significant to result variable Y1, then we obtained the model 3.
Model 3: Y 1 = 0.054X 1 + 0.234X 4 + 0.256X 5 Based on the significance values of the correlation coefficient, we conclude that the cause variables in this model had significant value smaller than . = 0.05; which showed that in partial cause variables of X 1 , X 4 and X 5 had a significant partial effect to result variable Y 1 . The results of Hypotheses test on the influence of the cause variables X 1 , X 2 , X 3 , X 4 , and X 5 to result variable Y 1 partially showed that only the variables X 1 , X 4 , and X 5 had significant partial effects to result variable Y 1 . These results indicate that there were significant positive relationships among the cause variables of X1, X2, X3, X4 and X5 with result variable Y2 indicated by the positive correlation coefficient with significance level less than . = 0.05. The strongest linkage between cause variables and result variable Y2 is shown by the relationship between X5 and Y2 with a correlation coefficient of r = 0.351; while the weakest relationship is shown by the relationship between the X3 and Y2 with a correlation coefficient of r = 0.273.
Hypotheses test, either simultaneous using the F test and partially by using the t test was performed by applying the backward method, to obtain the best path analysis equation model, by excluding the least significant cause variable one by one until we found entire cause variables affected partially to the result variable.  a Predictors: (Constant), X 5 , X 1 , X 4 , X 2 , X 3 b Predictors: (Constant), X 5 , X 1 , X 4 , X 3 This table 7 shows that in model 1, the simultaneous influence of cause variables X 1 , X 2 , X 3 , X 4 , and X 5 to Y 2 is equal to 15.2%, and in model 2 the simultaneous influence of cause variables X 1 , X 3 , X 4 , and X 5 to Y 2 is equal to 15.2%,. The results of Hypotheses test on the effect of X 1 , X 2 , X 3 , X 4 and X 5 to Y 2 simultaneously can be determined by test the significance of the simultaneous correlation coefficient and the coefficient of determination by using F as shown in Table 8.  Table 8 shows that the path analysis equation models, whether model 1 and model 2 had a significance level less than . = 0.05. This suggests that research Hypotheses "there are significant variables X 1 , X 2 , X 3 , X 4 and X 5 simultaneously affected to Y 2 " can be accepted (indicated by Model 1), or in other words that X 1 , X 2 , X 3 , X 4 and X 5 showed simultaneous significant effect to Y 2 . Hypotheses test on the effect of X 1 , X 2 , X 3 , X 4 and X 5 to Y 2 partially by using the t test, the results are shown in Table 9. Model 1: Y2 = 0.096X1 -0.004X2 -0.081X3 + 0.214X4 + 0.212X5 Based on the significance of the correlation coefficient, it is shown that the value of the correlation coefficient significance X 2 which was 0.909 had a larger value than . = 0.05; which shows that in partial, cause variable X 2 had no significant effect on the result variable Y=. To obtain the best equation model using backward method, the next step is to exclude the least significant cause variable to the result variable Y 2 , which was cause variable X 2 , then we obtained the model 2 Model 2: Y 2 = 0.094X 1 -0.083X 3 + 0.213X 4 + 0.212X 5 Based on the correlation coefficient significance values, it is indicated that all of the cause variables in this model had significant value smaller than . = 0.05; which showed that in partial cause of X 1 , X 3 , X 4 and X 5 had a significant partial effect to result variable Y 2 . Usman (2015) found that the religious norms have significant affects on the decision in using the Islamic banks. Besides that, he also found that the religious norms among moslems classified into two categories, such as: traditional and contemporary group.
Islamic banks also had to increase the satisfaction of customer. Customer satisfaction will increase the loyalty of customer. Suryani and Hendryadi (2015) shown that service quality and communication are dominate factors affecting satisfaction. Cahyani (2016) find that customer satisfaction about service quality in Islamic banks has been above the moderate. Dayyan (2016) found that the people in Langsa not yet fully trust the operational of Islamic banks. The people think that there is no difference between Islamic banks and conventional banks. Rusydiana (2016) found that there are several problems in Islamic banking industry that need to be resolved. Besides that, other factors that had to consider by Islamic banks is promotion. Al Arif (2010) stated that the promotion cost had an impact on third party funds in Islamic banks.
One strategy that imposed by the policy maker to accelerate the Islamic banking industry is through spin-RII SROLF\ $FFRUGLQJ WR %DQN RI ,QGRQHVLD·V VXUYH\ LQ ZKLFK in this survey said that almost the respondent still had a same thought between Islamic banking and conventional banking. Based on this survey, the spin-off policy established. Al Arif (2014) found that the spin-off policy can had an impact on third party funds in the Indonesian Islamic banking industry. But, the spin-off policy also had an impact on Islamic EDQN·V HIILFLHQF\ $O $ULI VWDWHG that there is a efficiency difference between pre and post spin-off in the Indonesian Islamic banking industry. Miftah and Wibowo (2017)  offered other strategy, which they research found that another alternatives strategy is through merger.

CONCLUSION
Based on the results of hypotheses test using path analysis we can conclude that the Ideological dimension/belief (X 1 ), Ritual Dimension (X 2, ), Intellectual Dimension (X 3 ) , Conceptual Dimension (X 4, ) and Experiential Dimension (X 5 ) affected Islamic Banking Concept (Y 1 ). Ideological dimension, Conceptual Dimension and Experiential Dimension respectively affected Islamic Banking concept since people with these three "attributes" will always find any idea to enhance their understanding on the phenomenon of Islamic Banking Concept. It is a bit beyond authors' expectation that Intellectual Dimension did not partially affect the Islamic Banking Concept, while ideally people should apply their intellectual to understand the concept.
Based on the results of hypotheses test using path analysis we can conclude that the Ideological dimension/belief (X 1 ), Ritual Dimension (X 2, ), Intellectual Dimension (X 3 ) , Conceptual Dimension (X 4, ) and Experiential Dimension (X 5 ) simultaneously affected Bank Selection Criteria / Y 2 significantly (15.2%). Ideological dimension, Conceptual Dimension,

Intellectual Dimension and Experiential Dimension respectively affected Bank Selection
Criteria since people with these "attributes" will always find any idea to enhance their understanding to select the most suitable bank to save their money or to make investment.
It is -off course -according to authors' expectation that ritual dimension will not partially affect the Bank selection Criteria, since -ideally -people should relate their daily ritual to the selection the bank.