SUSTAINABILITY AND COMPETITIVENESS OF ISLAMIC PAWNBROKER IN MALAYSIA: FROM THE PIONEERS PERSPECTIVE

Purpose – The purpose of this study is to analyze the perception of three Malaysian pioneers on Islamic pawnbroking in terms of their motivations for establishing the institution and the challenges faced by institutions such as the sustainability of the product, lending usage on consumption, and the awareness of the society towards the ar-rahnu financing existence. Methodology – This study employs a qualitative method where semistructured interviews were conducted with the three Malaysian pioneers on Islamic pawnbroking such as MGIT/ ar-Rahnu MAIDAM, YaPEIM and Bank Rakyat. Findings – Islamic pawnbroking scheme are competitive and sustainable due to the characteristics of the scheme such as the underlying principles of shariah, lower safe keeping fee, and welfare maximizing orientation. The government role is also important for the sustainability of the scheme, particularly in establishing a specific regulation for the scheme and expanding license granting to the potential Islamic pawnbrokers. Originality/ Value - The implication of this study proved that Islamic pawnbroking is able to compete and sustain due to the underlying syariah principle with lower safe keeping fee, and non-profit orientation.