COMPARISON BETWEEN TWO ARTICLES

This chapter discussed about the comparison between two articles; (1) Islamic Pawn Broking
(Ar-Rahnu) Critical Success Factor and Application for Co-operatives, and (2) Factors
Affecting the Acceptance on Ar-Rahnu (Islamic Based Pawn Broking): A Case Study of
Islamic Banking in Malaysia.

The comparison between both articles are shown in Table 1.

Table 1 – Comparison between Article 1 and Article 2.

Article 1 - Islamic Pawn Broking (Ar- Article 2 - Factors Affecting the

Rahnu) Critical Success Factor and Acceptance on Ar-Rahnu (Islamic
Application for Co-operatives Based Pawn Broking): A Case Study
of Islamic Banking in Malaysia
Objective To investigate critical success factor of To identify factors that may influence the
Ar-Rahnu providers based on a thorough acceptance of Bank Rakyat’s Islamic
investigation of all main service provider based pawn broking (Ar-Rahnu scheme)
throughout the country. among the public and the customer of
Bank Rakyat.
Variables Operation Shariah view
Type of gold Pricing system
Pawning conditions and charges Pledge assets
Internal control and security. Customer service
Locality
Social
Advertisement
Methodology Face-to-face interview with senior Survey questionnaire (distributed
management staff, board chairmen, personally and through e-mail)
secretaries and cooperative senior
managers.
Survey questionnaire
Findings Cluster 1: customer trust, competitive Influence factors:
safekeeping fees, competency of staff, 1) Shariah View
location and system. 2) Pledge assets
 3) Customer service
Cluster 2: revolving capital, customer 4) Social factor
trust, system, insurance, security and 5) Pricing system
wages rates. 6) Advertisement
7) Locality
Cluster 3: staff competency, revolving
capital, customer trust, system and
competitive wage rates.

Five critical success factors:

1) Customer trust
2) Competitive safekeeping fee
3) Staff competency
4) System
5) Business location

DISCUSSION OF FINDINGS

Based on Table 1, it shows the comparison between two articles. For the article titled Islamic
Pawn Broking (Ar-Rahnu) Critical Success Factor and Application for Co-operatives, the
findings show that the clusters are divided into three based on the similarity of modus operandi,
number of branches and financial strength.

Cluster 1 was in the basis that three organisations were large, had branches nation-wide and
had access to large capital. Cluster 2 was made up of local organization with a smaller number
of branches and equally smaller capital. Cluster 3 consisted of Ar-Rahnu providers made up of
individual cooperatives. These Ar-Rahnu outlets run on their own models and a few are
franchisees.

There are five critical success factors (CSF) for the Ar-Rahnu business. These are customer-
trust, competitive safekeeping fee, staff competency, system and business location. Firstly,
customer trust can increase the volume of business as well as the total collection of safekeeping
charges, the main revenue of Ar-Rahnu. With increased revenue, the profit can increase too.
Next is competitive safekeeping fee. The ability to charge a consistent and competitive
safekeeping fee on the pawned items is vital in order to retain customers.
Furthermore, staff competency is important because they have to determine the purity of gold,
and prevent any fake gold as well as fraud. For this matter, the staff involved in the Ar-Rahnu
transaction need to be sent for training on a continuous basis because any fraud that involved
with fake gold are arising with the advance of technology.

Moreover, an efficient working system enables staff to perform their task effectively and
consistently. Most of the outlets have SOP to guide their operation and this SOP incorporates
elements that are shariah-compliant.

Last but not least, business location is important for the accessibility to customers. Most of the
people want Ar-Rahnu providers to be near to their housing areas, offices, or schools. Hence,
Ar-Rahnu providers should be inclusive by opening their outlets in large cities and small towns
with their target market.

Article titled Factors Affecting the Acceptance on Ar-Rahnu (Islamic Based Pawn
Broking): A Case Study of Islamic Banking in Malaysia. It discussed about the factors that
influence on Bank Rakyat’s Ar-Rahnu by the public. There are seven influence factors that
have been determined which are Shariah view, pledge assets, customer services, social factor,
pricing system, advertisement and locality.

The first and foremost factor is Shariah view. Most people involved in Ar-Rahnu because they
are interested with pawn broking based on Shariah compliant. The Ar-Rahnu is clearly different
from the conventional pawnshop by the implementation of Islamic principles (wadiah, qardhul
Hassan and ujra) that eliminated the elements of riba and gharar. Therefore, the Shariah view
has a very significant relationship with the acceptance on the Islamic based pawnshop.

Next is pledge assets. Pawned items such as gold and jewellery are valuables that always
accepted merchandised by the pawnshop. Ar- Rahnu scheme only accept gold as a pawned
item. Gold, as a collateral item because it is easy to resale, easy determination of purity, little
space for storage and generally, retained a personal ownership.

Furthermore, customer service is significantly related to the acceptance on the Islamic based
pawnshop. The Ar-Rahnu services must maintain the customer’s record, confidentiality of the
record and fair treatment on the customers regardless of their religion and race. It is important
to stress on customer service, in order to strengthen the customer based, beside the concerns
on the Shariah view.
Moreover, social factor has three broad varieties which are compliance, identification and
internationalisation. Informational social influence is an influence to accept information from
others as evidence about reality. As for a pawn broking, a quick procedure and lower
transaction cost are among factors that seen to be considered.

Besides that, pricing system of Ar-Rahnu is comparatively low. A low charge by Ar-Rahnu
contributes to a lower cost of “loan” and help to reduce the cost burden by the customer.
Therefore, it is important for the Ar-Rahnu shop to offer a competitive rate that reflects the
average pricing system in the market.

Other than that, advertisement is the process though which companies attempt to convince
customers to purchase their products. A person may know about the pawnshop by an
advertisement or by passing the pawnshop and asking a friend. The awareness of customers
may give big impact in developing a good advertising about pawn broking.

Lastly, location is a significant factor for the development of a pawnshop. Customers tend to
choose pawnshop that are near to their house. However, most of the pawnshops are built in the
town areas to accommodate the customer to do pawning transactions.