Risks of Marketing Credit sales Service in Islamic Banks

Transcription

1 Rik of Marketing Credit ale Service in Ilamic Bank Dr. Abdullah Ibrahim Nazal Jordan Abtract Thi tudy concentrate on rik of marketing credit ale ervice in Ilamic bank in capitalim economic ytem. It give idea about the rik which come a reult to Ilamic bank managing and financing credit ale ervice to cover conumer need and it aim. Thi affect on chooing line of credit ale ervice a aet mix and affect on chooing marketing mix for thee ervice. Becaue every bank ha different ability in competition, rik will be different up to chooing marketing mix. A reult to thi tudy there are limit affect on rik of marketing becaue of Ilamic rule. Which divided into fixed rule which have to follow and flexibility rule to managing and financing ervice up to conumer need and bank aim and managing rik. There fore to evaluate credit ale ervice in any Ilamic Bank marketing mix mut be tudied a affection on quality a reult to marketing rik. Key word: Marketing, Credit Service, Rik, Ilamic Bank and Competition. 1. Introduction Capitalim economic ytem affect on marketing credit ervice in Ilamic bank. Thi affection tranlated to rik which have to be controlled to keep it competition ability. Product, price, promotion and place are called (4p) of marketing major item. It mix i away to manage marketing credit ervice. Rik of mix i different from Ilamic bank to other up to competition ability and there i no fixed model in pite of obligating Ilamic rule. It follow Ilamic flexibility rule which change up to environment change. The problem ha been formulated by thee quetion: 1- What are the credit ale ervice in Ilamic bank? 2- What i the affect of marketing on credit ale ervice rik in Ilamic bank? The Problem in Ilamic bank come a reult to time value. It manage credit ale ervice by increae margin of profit to cot. Thi margin i not fixed. It i increaed by increaing delay time to buy. But thi increae mut be limited after conumer igning the contract. There fore if the conumer doe not buy at limited time there will not increae margin of profit which wa be agreed in the contract. There were tudie on Ilamic bank ervice rik a reult to it important in managing, financing and marketing policie. Some tudie concentrate on Ilamic rule a organizing tool to organize Ilamic bank ervice rik management and ervice marketing. There were tudie claified Ilamic bank ervice rik a any elling company with comparing between Ilamic bank and tradition bank. On other hand there were tudie concentrate on olving the problem of in Ilamic bank ervice fall tage.(abdullah, 2006) 2. Formulation of credit ale ervice in Ilamic bank There are difference between credit ervice in Ilamic bank and Traditional bank. It deal with. So Ilamic bank i reponible about rik after owning and 1

2 until the conumer become the owner. The difference make Ilamic bank pecialized. It come a reult to Ilamic rule. There are fixed rule to organize and control credit ervice at any place or time. It make ure there i no interet dealing or ignorance lead to conflict up to Ilamic principle (Tariqullah, 1999: pp2, 26). On other hand there are flexibility rule help managing to face change of environment factor. So there are no elling debt, no increaing interet on loan, no elling bond, no dicounting promiory note and no preferred hare. Even financing hare buying by credit i not accepted. There fore line of credit ervice in Ilamic bank i maller than Traditional bank. (See below): figure no (1): Product Line Of Credit Service in Ilamic Bank Loan with out interet Qard Haan Credit ale Credit Card Sale Guarantee Service Guarantee letter Documentary Credit Delay payment Mourabaha Itennah Mouazy Salam Mouazy Intallment payment Mourabaha Itennah Mouazy Salam Mouazy Leae-ale contract 3. Marketing Credit Sale Service in Ilamic bank Marketing efficiency lead to cover conumer' different need at the limited time and limited place with acceptable cot whether for Ilamic bank or conumer. Thi can be tranlated in marketing mix ucceful and the balance heet item mix. Product line i hown by follow aet ditribution mix in balance heet. So if mix ucce, revenue will be acceptable becaue of ditribution recoure amount, chooing credit ervice line ditribution and ucce marketing mix item for each. Becaue aet are different from each other in liquidity, rik and Profitability, it i important to chooe aet mixed to get target. Aet mixed affected by aet lifecycle management there fore The ucceful aet will give profit and make aet mixed ucceful.for example: Sharing aet in indutry, commercial and agriculture comanie can manage Ilamic bank cah flow need, it can get it all haring profit yearly, or it can get part of haring profit yearly and invet the other part, or it can get haring profit up to the contract of good or ervice can be ell(salman, 2011:p22). 3.1 Marketing Mix of Credit Sale Service in Ilamic bank Marketing mix affected by different conumer need and cot. There are four item how that, 1- Product of Credit Service: to cover conumer need from good or ervice. 2- Price of Credit Service : to price good or ervice in away which conumer can buy and can achieve uitable profit. 3- Promotion of Credit Service : to guiding conumer how do not deal with interet. 4- Place to ditribute Credit Service : where conumer can get to cover hi need. 2

3 Thee are the factor which can Ilamic bank ue to manage marketing Credit Service to cover different need. Thee need can be hown in table no (1). Producing credit ervice mut cover conumer' need and achieve the bank aim, See table no (1): Table no (1): Ilamic bank aim of producing credit ervice and conumer need credit ervice Mourabaha Salam Itinah Leae-ale contract Ilamic bank aim of producing credit ervice Way to get revenue in hort term, medium term and long term which can give ability to manage cah flow need and invetment in. Way to get revenue by elling agriculture in le price than market price Way to get revenue by make indutry up to conumer need rather than importing becaue of decreae cot Way to get revenue by leaing. It help to manage cah flow need and inveting. At the end of contract time, it will ell the leaing with out marketing cot conumer need To finance buying ale by debt becaue he need money or rather than lo hi liquidity And avoid rik of increaing price poibility To finance agriculture project, and decreae marketing cot To finance buying indutry ale in le cot To finance buying ale by debt becaue he need money or rather than lo hi liquidity and give ability to decreae tax And decreae rik of the Ilamic bank choice to improving and developing producing credit ervice i hown in table no (2): (Abdullah,2006). Table no (2): improving and developing Aet in Ilamic Bank Improving Developing 1- By added condition a option condition 1- To convert contract a convert leae to ha quality in buying contract. contract to elling contract in leae- ale 2- By added documentation condition a contract. guarantor in elling and buying contract 2- Merge aet a merge Ilamic Bank haring in one company. 3- Collecting aet a collecting elling contract to achieve cale economie. On other hand managing marketing mix of line of Credit Service i hown in the table no (3). It how marketing mix of credit ale ervice, which include: Mourabaha, Itennah Mouazy, Salam Mouazy and Leae-ale contract. Table no (3): Managing marketing mix of line of Credit Sale Service line Promotion Place Price Credit ale Service Mourabah a Delay payment Conumer need Ilamic bank reputation Owning which i available in the market with Ability to control cah 3 own good

4 Salam Mouazy Different Intallme nt payment Equal Intallme nt payment elling price mut be paid currently flow need and ditribution with Ilamic principle Whether conumer i peronal or private company or government company Delay Owning agriculture by le price than the market price with Ability to delay getting until harvet eaon time up to Ilamic principle Whether conumer i peronal or private company or government company torage ha ervice and good ha no torage or do not ha no torage or agriculture do not owning. 2- cot 3- cot of currency exchange rate 4- cot of ale price change 5- cot of procedure until conumer get 6-cot of control procedure until conumer buy debt. 7- Cot of tranfer bank owning to conumer owning. owning. 2- cot of procedure until conumer get 3- Cot of control procedure until conumer buy debt. 4- Cot of tranfer bank owning to conumer owning. owning. 2- cot of procedure until conumer get 3- Cot of control procedure until conumer buy debt. 4- Cot of tranfer bank owning to conumer owning. Credit Service Leaeale contract line Equal Intallmen t payment Conumer need Promotion Ilamic bank reputation Delay owning which can be leaed in the market with Place own good Price 1- cot of bank 4

5 Itennah Mouazy Different Intallmen t payment Equal Intallmen t payment Different Intallmen t payment Ability to reduce tax with Ilamic principle Whether conumer i peronal or private company or government company Delay owning which can be indutrialize later but it i miing in the market now With le price than market and of Ilamic principle Whether conumer i peronal or private company or government company torage ha ervice and good ha no torage or do not ha no torage or indutry do not owning. 2- cot 3- cot of currency exchange rate 4- cot of ale price change 5- cot of procedure until conumer get 6-cot of control procedure until conumer buy debt. 7- Cot of tranfer bank owning to conumer owning. owning. 2- cot of procedure until conumer get 3- Cot of control procedure until conumer buy debt. 4- Cot of tranfer bank owning to conumer owning. owning. 2- cot of procedure until conumer get 3- Cot of control procedure until conumer buy debt. 4- Cot of tranfer bank owning to conumer owning. 3.2 Marketing Credit Sale Service in Ilamic bank balance heet Almot Ilamic bank balance heet how that 95% of invetment reource ditribution goe to Morabaha ale becaue of the affected factor which how in the table no (4) :( Abdullah and Raad, 2009). 5

6 Table no (4): factor affected on chooing Morabaha a aet in Ilamic bank Factor affected in ide the Ilamic bank 1- eaier to collect net profit. 2- eaier to control contact. 3- le cot of managing 4- eaier to control liquidity to cover cah need. 5-a elling good ome bank develop Morabaha in away to avoid torage managing and cot to achieve high net profit. It ha been developed to Morabaha Murakaba: it mean bank will buy the jut if conumer order to ell hem the after own it. Factor affected out ide the Ilamic bank The major factor affected out ide the bank i Center Bank law which applied one control table rik of aet for any bank.to control credit policy. Morabaha margin profit i calculated up to interet rate. There fore it i eaier to get Center Bank agreement on Ilamic Bank balance heet ditribution. A reult to deciion which make 95% of invetment reource ditribution goe to Morabaha the 95% of invetment reource will be affected by Morabaha rik. Thi mean if Morabaha aet i in loe 95% of invetment reource will be in loe and if Morabaha aet i in profit 95% of invetment reource will be in profit. 3.3 Rik of Marketing Credit Sale Service in Ilamic bank The way of chooing (4 p) to marketing credit ale ervice i important to cover conumer need and bank aim. On other hand, the way of managing marketing mix may reduce or increae rik. So it' important to tudy rik of marketing. Rik affect on credit ale ervice life cycle which hown in the next table. (Zeithaml and Bitner, 2000: p198). Table no (1): Lifecycle tage and Bank trategy Bank trategy Aet Lifecycle Stage Expanionim: a it will produce new aet If there i Introducing tage poible need in market, enough reource, competition, and poibility to reduce cot. Permeation: a it will promote the advantage of the aet Growth tage to keep growth of profit Defene: a improving aet to keep profit Maturity tage Reparation: a releaing lo aet Fall tage 4. Financing Rik of Marketing Credit Sale Service in Ilamic bank There are way to finance credit ale ervice in Ilamic bank. Every way ha rik. Financing can be done by the following: 1- Current Account: it i contract to keep conumer cah money in on condition that he can get hi cah money any time with out getting any additional profit. The rik come a reult to conumer getting hi cah any time. So ha limit to ue current account Specially it will lead to create money which increae inflation.there fore center bank put rule to decreae financing by current account. A Ilamic bank can make profit by ale it may looe. Looing will affect on reputation negatively. 6

7 2- Shareholder: Almot hareholder looking for profit in hort time. To finance credit ale ervice by profit appropriation thi need more effort from manager to peruade hareholder on other hand looing of ale will affect on elling bank financial bank negatively. 3- Invetment account: Almot invetment conumer looking for profit in hort term. Rik in Ilamic bank come a reult to invetment rik. Looing i poible and can affect negatively on reputation. 4.1 Market Rik Of Marketing Credit Sale Service in Ilamic bank There are many change in market becaue of upply and demand on, exchange of currency price and competitor' ability to cover conumer need with reduce cot or increaing quality. Morabaha a example i aet. It rik come from delay of payment in Morabaha intallment elling and delayed elling. On other hand a elling good it affected by good demand and upply. And becaue of calculating Morabaha margin profit up to interet rate, Ilamic bank will affected by traditional bank credit operation a competitor and Center Bank credit policy a ruler in ing market. Morabaha i affected by inflation which make value of net profit decreae. Alo Morabaha intallment net profit value i decreae when conumer pay in local currency at time that local currency rate exchange ha been decreaed. (A.L.M, 2011:pp54-55). 4.2 Managing Rik of Procedure until Conumer Get Product To get any credit ale ervice in Ilamic bank, there are tep and procedure. If thee are eay to be done unaccepted time, cot and place, it will be ucceeded. To make thi poibility bank ha deign ervice line a good line by tudy every tep Until conumer get. On other hand tep and procedure are ruled by Ilamic rule and legally law of the country. There fore flexibility i limited. A every ervice ha rik, managing rik will affect on tep and procedure. It will ue any way to achieve aim if flexibility can be poible. For example: Ilamic bank prefer dealing with Morabah Morakabah to avoid torage cot and marketing cot. Thi way of managing Make tep and procedure too long becaue conumer ha to ign promiing contract when buy the demand he mut buy. And there i other time and other contract until own the demand. The econd one i the elling contract. So there are gap and poibility of buying deire can be changed becaue of market change. Alo thi way of managing Morabaha ha faced it reputation in ome countrie up to different conumer' culture. There are three type: 1- Conumer how think Ilamic bank ervice by Morabah Morakabah i againt Ilamic rule becaue of imilarity a traditional bank credit ervice. 2- Conumer how looking for information to courage there buying. 3- Conumer how deal with the Ilamic bank a any bank can cover hi need. There fore, thi cae really need more marketing cot to avoid the negative affection on bank reputation, or managing Morabah Morakabah rik by other way. Developing or Improving ha advantage, a increaing quality to be imilar a competitor or olving conumer problem which had with competitor or giving unique benefit to conumer or etablihing tandard better than competitor (Rebecca and Kwaku, 2011:106). 5. Concluion and Recommendation Thi tudy concentrate on rik of marketing credit ale ervice in Ilamic bank in capitalim economic ytem. It give idea about the rik which come a reult to Ilamic bank managing and financing credit ale ervice to cover conumer need and it aim. Thee rik are fixed by Ilamic fixed rule rather than the flexibility rule 7

8 which give flexibility to achieve bank aim and cover conumer need. The chooing way to managing and financing ervice a reduce cot will affect on marketing mix of each ervice. Becaue every bank ha different ability in competition, rik will be different up to chooing marketing mix. There fore to evaluate credit ale ervice in any Ilamic Bank, marketing mix mut be tudied a affection on quality a reult to marketing rik. 8

9 Reference: 1-Abdullah Nazal (2006) The Effect of Sharia Control on Development of Banking Service-A Theoretical Empirical Study, Ph.D. Dieration, College of Banking and Financial Science, Amman, Jordan. 2- Abdullah Nazal and Raad Jaber( 2009) Managing Ilamic Bank Credit Rik in International financial crii, Zarqa univerity conference, Jordan. 3- A.L.M Abdul Gafoor(2011) Money, Gold and Inflation ome hitory and obervation, Journal of Ilamic Banking & Finance, International Aociation of Ilamic Bank, Karachi, Pakitan, Vol. 28, No3. 4- Benjamine Leter, Andrew Pot Lewaite, Randall Wrigt, Information and Liquidity, Journal of Money,Credit and Banking, Wiley Black well, Ohio State Univerity, Vol.43, no Midan, A (1988) Bank Marketing Management, 2ND Edition, Machmillan Education LTD,London,England,. 6- Pedro S. Amaral And Erwan Quintin(2010) Limited Enforcement, Financial Intermediation, and Economic development: A Quantitative Aement, International Economic Review, Economic Department of Univerity of Pennylvania and the Oaka Univerity Intitute of Social and Economic Reearch Aociation, Augut,VoL. 51, No.3. 8-Rabecca.J.Slotegraf & Kwaku Atuahene Gima( 2011)Product development Team lability and new Product advantage: the Role of Deciion Marketing Procee, Journal of Marketing, American Marketing Aociation, U.S.A, Vol.75, No. 1 9-Salman Ahmed Shaikh(2011) A Critical Analyi of Mudarabah & Anew Approach to Equity financing In Ilamic finance, Journal of Ilamic Banking & Finance, International Aociation of Ilamic Bank, Karachi, Pakitan, Vol. 28, No3. 10-Tariqullah Khan(1999) Ilamic Quai Equity (Debt) Intrument and Challenge of Balance Sheet Hedging: An Exploratory Analyi, Ilamic Economic Studie, Ilamic Reearch and Training, Ilamic Development Bank, Jeddah, Kingdome of Saudi Arabia, vol.7, No 1&2. 11-Thoma H.W, Zieeme (2011) Saving finance emigration and worker remittance erve to make taying rather than migrating poible, international Economic Journal, UK, vol. 25, no Zeithaml,Valarie A and Bitner,Mary Jo, 2000, Service Marketing International Cutomer Focu Acro the Firm, Second Edition, McGraw-Hill Companie, Inc, U.S.A. 13- Lawrence J. Gitman, 2000, Principle of Managerial Finance,ninth edition,addion Weley Publihing Company, U.S.A,chapter 5, chapter 16and chapter