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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
Ar-Rahnu providers based on a thorough the acceptance of Bank Rakyats Islamic
investigation of all main service based pawn broking (Ar-Rahnu scheme)
provider 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
Methodolog Face-to-face interview with senior Survey questionnaire (distributed
y management staff, board chairmen, personally and through e-mail)
secretaries and cooperative senior
Survey questionnaire
Findings Cluster 1: customer trust, competitive Influence factors:
safekeeping fees, competency of staff, 1) Shariah View
2) Pledge assets
location and system.
3) Customer service
4) Social factor
5) Pricing system
Cluster 2: revolving capital, customer
6) Advertisement
trust, system, insurance, security and 7) Locality
wages rates.

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


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 Rakyats 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

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 customers 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.