Islamic Bank Customers Prefer Istishna Over Salam, Study Finds in Ambon
Customers of Islamic banks in Ambon City are more likely to choose istishna financing contracts over salam contracts, according to a 2026 study published in the Multitech Journal of Science and Technology. The research was conducted by Arizal Hamizar, Fatmah Watty Pelupessy, Afdhal Yaman, Dety A. Relubun, and M. Reza Nacikit from UIN Abdul Muthalib Sangadji Ambon.
The findings matter for Islamic banking institutions seeking to design financing products that better match customer expectations while maintaining Sharia compliance. By understanding why customers prefer one contract over another, Islamic banks can refine their service models and strengthen public trust in Sharia-based finance.
Why Financing Contracts Matter in Islamic Banking
In Islamic banking, financial transactions must follow Sharia principles. Instead of using interest-based loans, Islamic banks apply specific contracts known as akad. Two common contracts are istishna and salam.
- Istishna is used to finance the production of goods that do not yet exist. The bank commissions a manufacturer to produce goods requested by the customer. Payment is typically made after completion or in stages.
- Salam involves upfront payment for goods that will be delivered later, often agricultural or standardized products.
Both contracts are widely recognized in Islamic finance theory and practice. However, customer behavior in choosing between them has not been widely explored, particularly at the local level in eastern Indonesia.
The study by Arizal Hamizar and colleagues addresses that gap by examining how customers actually make decisions when applying for financing in Islamic banks.
How the Research Was Conducted
The researchers used a qualitative approach, focusing on in-depth interviews with Islamic bank customers in Ambon City who had experience using both istishna and salam contracts.
Participants were selected purposively, meaning they met specific criteria: they had applied for financing through either or both contracts. Interviews explored their experiences, perceptions, trust levels, and decision-making considerations.
The research team then analyzed the data through coding, theme mapping, and verification to identify consistent patterns in customer preferences.
Key Findings: Four Main Reasons Customers Prefer Istishna
The study reveals that most customers prefer istishna contracts. Four main factors explain this preference:
1. Perceived Ease of Process
Although salam contracts are considered faster in procedural terms, many respondents described istishna as more flexible and manageable overall.
Customers appreciate the structured arrangement in istishna, where:
- The bank handles coordination with manufacturers.
- Payment arrangements can be adjusted.
- The production process is supervised.
Even if it takes longer, customers feel more comfortable with the clarity and flexibility offered under istishna.
2. Higher Level of Trust
Trust emerged as a decisive factor.
Customers expressed strong confidence in the quality assurance mechanisms embedded in istishna contracts. Because the bank oversees the production process and works with manufacturers, customers believe product quality is better guaranteed.
According to Arizal Hamizar and his colleagues from UIN Abdul Muthalib Sangadji Ambon, customer trust is closely linked to perceptions of manufacturer reputation and bank supervision. When customers believe the bank ensures quality control, their confidence increases.
This trust strengthens long-term relationships between customers and Islamic banks.
3. Lower Perceived Risk
Risk perception significantly shapes financing decisions.
Under salam contracts, customers must pay in advance before receiving goods. Some respondents view this as risky, especially if delivery delays or quality mismatches occur.
In contrast, istishna allows payment after production or in stages tied to progress. Customers perceive this structure as safer because:
- Goods are completed before final payment.
- Quality can be verified.
- Financial loss risks feel lower.
The researchers found that customers consistently prefer financing options that minimize uncertainty.
4. Availability and Customization of Goods
Istishna enables customers to order goods that are not yet available in the market.
This flexibility is especially important for:
- Custom-built products
- Specialized equipment
- Unique business needs
Customers value the ability to request goods according to their specifications. The bank’s role in ensuring production and availability further strengthens the appeal of istishna.
A Smaller Group Still Prefers Salam
Despite the dominance of istishna, the study found that some customers still choose salam contracts.
These customers typically:
- Have expertise in evaluating product quality independently.
- Possess higher risk tolerance.
- Value faster processes.
This suggests that financial literacy and experience influence contract choice. Customers who feel confident assessing quality may accept upfront payment arrangements.
Implications for Islamic Banks
The findings offer practical guidance for Islamic banking institutions.
First, Islamic banks should strengthen service quality and transparency in salam contracts if they want to increase adoption. Customers need stronger guarantees and clearer communication regarding risk management.
Second, banks can highlight the risk-reduction features of istishna in marketing communications. Emphasizing supervision, staged payment systems, and quality assurance may attract more customers.
Third, improving public financial literacy about Sharia contracts could help customers make more informed decisions.
As noted by the research team at UIN Abdul Muthalib Sangadji Ambon, enhancing trust and minimizing perceived risk are central strategies for expanding Islamic financing products.
Broader Impact on Islamic Finance
This study contributes to understanding consumer behavior within Islamic banking. It shows that customer decisions are shaped not only by religious compliance but also by practical considerations such as trust, risk, flexibility, and product availability.
For policymakers, the findings highlight the importance of strengthening regulatory frameworks that protect customers and ensure transparency in Sharia-based contracts.
For businesses and entrepreneurs, the research clarifies which financing models may be more attractive when seeking Islamic bank funding.
Ultimately, the study reinforces the idea that Islamic finance must combine Sharia principles with strong service quality and customer-oriented strategies to remain competitive.
Author Profile
Arizal Hamizar, M.E. is a lecturer and researcher in Islamic economics at UIN Abdul Muthalib Sangadji Ambon. His research focuses on consumer behavior, Islamic finance, and Sharia economic systems.
He co-authored this study with Fatmah Watty Pelupessy, Afdhal Yaman, Dety A. Relubun, and M. Reza Nacikit, also affiliated with UIN Abdul Muthalib Sangadji Ambon.
Source
URL Resmi : https://slamultitechpublisher.my.id/index.php/mjst/index
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