ProdukHukum BankIndonesia

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Potency, Preference, &

Community’s Attitude

Toward It In

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E x e c u t i v e Su m m a r y

Collaboration between

Islamic Banking Directorate - Bank Indonesia

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BogorAgricultural University

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BA CK GRO U N D

The adoption of islamic in banking system is basically based on two arguments; i.e. (1) the opinion that interest applied in conventional banking is considered as haram (unacceptable) since it is categorized as riba, not only by Islam but also by other religions, (2) from the economy point of view, the risk transfer only to one party is a true violation to the sense of justice. In the longer term, the conventional banking system would cause wealth accumulation on just a few people with considerable capital in hand (Sjahdeini, S. Remy, 1999). The main distinguishing factor between the islamic and the conventional banking system is in the compensation or return for capital investment; that in the conventional system there is a set interest rate for it while in islamic banking the compensation is calculated from the profit or loss gained which percentage is set through “akad”. The ground principle of this “akad” is uttermost sense of justice between the capital provider and user. This principle applies both to debtor and creditor.

The birth of islamic banking system in Indonesia is encouraged by the will around the community (especially of muslims) thinking that interest is truly riba, and therefore is forbidden by the religion. From the law side, the ground rule for islamic banking development is UU No 7 of year 1992. Such regulation still vaguely mention about islamic principle; which is stated as non-interest system (profit-distributed). The more firm statement on islamic principles is depicted in UU No. 10 of year 1998, which is updated by UU No. 23 of year 1999 on the Bank Indonesia (BI) itself and UU No. 3 of year 2004. Thus, the development of financial institution using islamic principles began since 1992, initiated by the establishment of Bank of Muamalat Indonesia (BMI) as the first islamic bank in Indonesia. By May 2004, the number of islamic bank offices reached up to 353 units, with the total asset of 11.6 trillion rupiahs. The amount of fund channeled reached up to 7.56 trillion rupiahs and the third-party fund was up to 7.77 trillion rupiahs. Although the development in business number and growth were quite promising, its national performance was still minuscule, i.e. about one percent.

It is obvious that islamic banking has great potency in the near future. But how great exactly is still left to the market segmentation, prime products to offer that meet community’s expectations, and factors influencing the decision making in choosing financial institution and their behavior. The study over these matters is crucial for making development strategy in the future. This study is designed to come up with the answers to the above questions. Furthermore, this study; scrutinizing on the potency and community’s preferences and attitude toward banking system in general in South Kalimantan; is part of the building block of the BI’s effort to map the potency of islamic banking development in Indonesia which is one of the forms of implementations of the islamic banking development blue print. The result of this study is expected to benefit involving parties in islamic banking as inputs for further islamic network development around potential locations.

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prefer to relate to both kinds of bank depending on their perception on better benefit and service, and (c) people who reluctant to have business with islamic bank; (3) to analyze the relationship among factors influencing the community’s preference toward products and services of islamic bank, both from fund amassing side as well as fund channeling as the ground for sounding and marketing strategies of islamic banks, (4) to provide useful information on the trend analysis and projection of islamic banking development in study sites for years onward, (5) to provide information concerning business saturation level (economic need test) of islamic banking market in study sites based on the potencies of customer, venture, and local economy growth and other supporting factors, and (6) to analyze the respond from the community toward the issuance of MUI negative proposition on the bank interest and the new opening of islamic bank through window system.

The this study covers the analysis of development potency of islamic banking based on the aspects of economy, institution, preference in banking, other influencing factors, and trend analysis on the islamic banking development, saturation, and business competition in islamic banking industry.

The coverage of this study includes 8 districts/municipals in South Kalimantan, with the total respondents of 880 people comprising of 19 islamic -bank only customers, 141 customers to both kind of banks, 605 customers to conventional only bank, and 115 non-customers. The number of respondent in each district/municipal is about 100 people; except for Banjarmasin Municipal, which is 151 respondents. This is to grasp the preference of customers toward islamic banking, since such bank is concentrated in this city.

The regional criteria are based on the actual condition and potency level of socio-economic variables such as number of household, number of religious/prayer sites, population by livelihood, and potency of regional economic growth.

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F RAME OF T H OUGH T

People relate to bank for a lot of reasons, some are related as creditors and some are debtors. The reasons, among others, are: compensation for the sum of capital they put in, security, facilities, return for financial service, and consideration on the ongoing banking system. It means that people’s choice on banking system (interest or interest-free) depends on the respective moving motivation. Of course, such motivation could be constituted by interactions of several reasons.

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Community’s opinion and respond to islamic banking depend on the original concept of islamic bank and the characteristics of the community (respondent). Therefore, before the respondent gives out his/her opinion on islamic bank, the ground concept must be totally understood by the respective respondent. The answers are expected to be function of livelihood, previous experience with bank, education, religion, and other related factors. Furthermore, livelihood and previous experience with bank are closely associated with the characteristics of district/municipal. Respondent who lives closer to islamic bank has better chance to have better knowledge about it.

DAT A T YPE AN D SOURCE

Data are of primary and secondary. Secondary data include banking condition, especially its number and distribution, and socio-economic condition of surrounding community which covers population, job opportunity structure, education structure, age, and so on. Primary data are the ones related to community’s perception on banking systems (islamic and conventional), and variables influencing respondent’s decision in choosing banking system.

Secondary data are from related institutions such as Bappeda (regional development planning agency), Sub-district offices (Kantor Kecamatan), and related departmental institutions. On the other hand, primary data are gained through direct interview with respondents by questionnaire. The general contents of the questionnaire are: 1) preliminary screening of respondent, 2) respondent’s characteristics, which includes demographic information such as education, age, sex, social features like cosmopolitan level, social status, religion, openness to ideas, and economic variables such as income level, livelihood, regional accessibility, and expenditure pattern, 3) variables concerning opinion and understanding over interest in conventional banking, whether or not it is associated with the forbidden riba, 4) variables regarding important factors which become motivator around the community to do transactions with financial institution/bank, 5) variables regarding respondent’s level of understanding on operational system, products, and services of islamic banking, and people’s understanding on the basic differences between the two banking systems, 6) variables regarding factors encouraging respondent to interact with and understand islamic bank (self driven effort and information from personal contacts), 7) islamic bank’s customers’ attitude toward the bank itself and their consistency, 8) community’s attitude toward the change in banking system.

AN AL YSIS ME T H OD

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The analysis is by analyzing (1) qualitatively (descriptive analysis), and (2) quantitatively (logit model) in order to analyze the probability of people’s choosing certain kind of banking system and variables affecting such decision, (3) econometric model to view banking industry performance and probability of its development, and (4) the bi-plot method to see the psycho-graphic aspect of the respondents.

SAMP L IN G T E CH N I QUE AN D DAT A COL L E CT ION

Sampling technique for respondents uses systematic sampling method. The district selection is done by criteria of household number, number of religious/prayer site, population by livelihood, and potency of economic growth and researcher’s consideration. Two or three sub-districts are then sampled out from each selected district/municipal by the same criteria for district selection, especially sub-districts with relatively more developed economy and with islamic public banks or islamic people’s credit bank (BPRS). The number of respondent for each selected district/municipal is 100 peoples. Regions (district/municipal or sub-district) with better condition in economy and number of islamic public and credit bank will have larger number of sampled bank customers taken to anticipate regions with none islamic bank. Based on this arrangement, the respondents sampled are 19 of islamic bank customers, 141 of islamic and conventional bank customers, 605 of conventional bank customers, and 115 of non-bank customers.

ST UDY SIT E S AN D T IME F RAME

The study is done in South Kalimantan Province, sampling out 8 districts/municipals. The criteria used for district/municipal sampling are variables of socio-economic, such as number of household, number of religious/prayer sites, population by livelihood, potency of economic growth, and researcher’s consideration. Such criteria result in 8 districts/municipals, i.e.: Banjarmasin Municipal, Barito Kuala District, Banjar District, Tapin District, Banjar Baru District, Tanah Laut District, Hulu Sungai Selatan District, and Hulu Sungai Utara District. The data collection is done concurrently in all sampled sites in March 2004.

STU DY RESU LTS

DE VE L OP ME N T OF I SL AMIC B AN K AN D RE SP ON DE N T ’S CH ARACT E RI ST ICS

After the two regulations are implemented (UU No. 7 and PP No. 72 of year 1992), the islamic banking industry developed quite rapidly. At national level, this is shown by the increase in number of branch offices in the last four years and significant asset increase from 479 billion rupiah in 1998 to 7.4 trillion rupiah by the end of 2003. The same phenomenon also applied in KBI Banjarmasin work region that the fund amassment and channeling developed progressively. From the amassment side (current, deposit, and saving accounts) increased up to 160%; while the channeling product with good prospect was mudharabah with the total value of 6 billion rupiahs.

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businessman or non-businessman. E ven around islamic bank customers, almost 87% of them possessed were in trading business. Most of islamic bank customer were of middle income class; while customers of the two banks (islamic and conventional) belonged to mid to high income level class. The accessibility was not such a problem to the whole respondents since most of them said that there was quite an accessible public transportation most of the time to the center of the economic activity and the street infrastructure was more than adequate for them with vehicles of their own. Furthermore, they also had adequate information accessibility. The information media usually accessed was television, radio, and newspaper; while the type of program most viewed in the three mediums was relatively the same, i.e. news, entertainment, and dialog of both politic and economy.

COMMUN IT Y’S PE RCE PT ION AN D AT T IT UDE T OWARD CON VE N T ION AL B AN K

Most respondents (94.5%) concurred to banking role in their daily lives. The main reason was that such financial institution was considered beneficial and important for capital support. Those who opposed (5.5%) said that the interest (of conventional bank) was definite riba. Most respondents (84.8%) were conventional bank customers. The preference to conventional kind was of location (accessibility), credibility/security, service professionalism, and that it was obligated. While the banks status, popularity, bonuses and gifts, and interest rate were not dominant factors to count. For those who chose not to use conventional bank, they thought that interest was riba and that they found no use of bank. The sources of information for respondent on financial institution were obtained from friend/family/colleague (49.5%), directly from the bank itself (32.3%), television (30.8%), newspaper (21.8%), and brochure (16.5%).

Some of respondents used more than one bank product/service. The dominant type of product is saving account (96.5%); followed by ATM product. Transfer service was among the most used (37.4%); then loan service (35.4%). From the composition of number of customer by product, creditor was dominant over creditor. The main reason for this was security, fast service, and facility in transaction. Gift/prizes and interest rate were not among the main reason for using the saving account product. Meanwhile, the main reason for loaning money was fast service, low interest, and good service. In this fund channeling, the interest rate factor became a dominant reason, but still a little behind the fast service.

Respondent’s perception on the advantage of conventional bank is that it usually is located in a strategic place, comes with various facilities, has broad ATM network, fast and accurate service with good hospitality, guaranteed by the government, and low interest of loan. Generally, only few people report that there is weakness in conventional bank, some say that it still lack of branch offices and ATM network, tedious procedure, and they also think that interest is the forbidden riba.

COMMUN IT Y’S PE RCE PT ION AN D AT T IT UDE T OWARD ISL AMIC B AN K

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information whatsoever about it (24.4%). They usually consider it as bank with profit-distributed system (51.6%), bank operating in non-interest system (34.3%), bank that is based on Islamic regulations (29.0%), and bank operating according to Islamic principles (20.1%). In this question of the first impression, they may reply with more than one answer.

Information about islamic bank is generally obtained through electronic media (television) (47.7%), friend/family/work colleagues (36.8%), and print media (newspaper) (33.9%). These three media are the main source of information for most community in all study sites. This is important as input for related parties in choosing the right media for the islamic bank socialization. Moreover, for the three media, the most viewed programs are the news, entertainment, and dialog of politic or economy.

In addition to adoption attitude toward islamic bank, 160 respondents (18.2%) say that the reasons they choose islamic bank are because of its compliance to Islamic regulations (72.5%), location/accessibility (35%), professionalism in service (16.9%), credibility (16.9%), and facility (16.9%). Meanwhile, the type of product of islamic bank they usually use is mudharabah saving account (90.6%). Fund channeling products are still limited, with murabahah as the dominant type. As for service, only wak alah which is relatively usable. Respondent’s motivations in using fund amassment product of islamic bank are to apply Islamic principles (58.8%), islamic bank does not use interest system (43.1%), clear profit-distributed system (38.1%), and fast service (25.6%). In using the fund channeling products, the dominant reasons are the non-interest system and that it is compliance to Islamic principles. Other reason is its profit-distribution feature (equality), and fast service. In service usage, the dominant reasons are fast service, application of Islamic principles, and low cost of transaction.

Most respondents choose not to answer when they are asked about the advantages of islamic bank. Some who admit the advantages of islamic bank say that it does not operate on riba (which is halal), the profit-distribution is not burdening, its products are already fulfilling their expectances, and preferable hospitality, fast, and accurate in service. Nevertheless, people still question if the Islamic principles are already correctly applied in islamic bank; about the information on products, which is considered very limited; and the obscure calculation of risk/profit distribution.

COMMUN IT Y’S AT T IT UDE CON SIST E N CY T OWARD PRIN CIPL E AN D APPL I CAT ION OF

IN T E RE ST SYST E M

Community’s consistency is based on the answers on two questions; i.e. ”do you think that the interest system is against your religion?” and “are you agree to the application of interest system in banking?”. The first question is supposed to be answered by three possible answers; i.e. yes, no, or do not know; while the second question is by two answers; yes or no. Consistent respondent would answer ”yes-no” or ”no-yes” for both questions. On the other hand, inconsistent one would answer ”yes-yes” or ”no-no” to the questions. Respondents who answer ”do not know” belong to abstain respondents.

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respondent group, most of them (79.3%) who are conventional bank customers think that bank interest system is against their religion; that they refuse its application in banking system. It means that the consistency is still in the attitude level, not yet in behavior. The reason for this is that there is not yet a islamic bank that qualifies the terms of region distribution, number, supporting facilities, and transaction services compared to conventional bank. There is a tendency, though, that the more informed respondent, the higher consistency he/she has about islamic bank, although it is not always linear.

COMMUN IT Y’S RE SPON D T O MUI PROP OSIT ION ON B AN K IN T E RE ST AN D T H E

OPE N IN G OF I SL AMIC B AN K B Y WI N DOW SYST E M

Most respondents say that they have already known the issuance of such proposition (68.9%), especially from the group of islamic -conventional bank customers. The source of information generally is electronic and print media. Information from ulama is relatively minimum. Although the respondents (70.1%) state that they support such proposition, most respondents admit they have not done anything yet in favor for this proposition. The response of most respondents is to open islamic bank saving account without leaving the conventional banking and transfer the money to islamic bank. Furthermore, some respondents say that they would transfer their money to islamic bank and but still leave their accounts in the conventional bank open. Nevertheless, most of them choose to become abstain and do nothing.

Almost every respondent has no idea on the forms and the features of islamic bank. This shows that most community has minimum knowledge and chooses not to know about the mechanism and form of a financial institution; and only concentrates on what the services, products, and supporting facilities will be.

COMMUN IT Y’S P RE F E RE N CE ON ISL AMIC B AN K

The analysis on community’s preference on islamic bank is done through logit model; i.e. by identifying variables that significantly affect the community in adopting islamic bank, variables affecting community to keep adopting islamic bank and affecting respondents who currently are not yet islamic bank customers, and analyzing variables affecting community to want to adopt islamic bank. The three logit models established are able to explain the community attitude in choosing to adopt products of islamic bank or not, choosing to keep adopting or give up, and interest to adopt islamic bank.

Variables affecting the potency in community’s decision making to adopt products of islamic bank; according to the level of sensitivity; are: existence of islamic bank, information on islamic bank, the perception that interest is actually riba, consideration in selection of bank, its used products, impression on islamic bank, social status in the society, type of livelihood, accessibility, consideration in bank choosing and its used products.

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bank, impression on islamic bank, and conformity in following religion. Moreover, the variables of level of income, agreement to banking role in daily life, and the position in society have no significant effect.

Analysis of bank customer potency factor; shown by the willingness of the community to adopt islamic bank; reveals that variables with significant effect in the community’s enthusiasm to adopt islamic bank cover: agreement to islamic principles, non-formal education, type of livelihood, knowledge on islamic bank, openness to information, social status, impression on islamic bank, respondent’s status, and agreement to operational of islamic principles. Variables of level of education, level of income, agreement to role of banking and existence of islamic bank have no significant impact on community’s eagerness to adopt islamic bank.

The psychographic analysis through biplot method shows that the community with characteristics of row model or pioneer type, Islamic in nature, but a slow follower in change is the potential market for islamic banking. It is obvious to point out that those are the people with adequate knowledge and consciousness in religion. But still, the emerging group of “slow follower in change” in this category could mean that they might adopt islamic bank products more for the “pressure” rather than rational economical judgments. This condition is advantageous for banking in establishing marketing strategy that such potential market could be targeted specifically.

SAT URAT ION L E VE L AN D DYN AMIC OF ISL AMIC B AN K CUST OME R

The performance of banking industry is analyzed by the development of both islamic and conventional banking performance, by the number of branch office, and number of fund amassment and channeling. The fund amassment experiences quite a growth for the last ten years of the two bank types; i.e. as much as 17.63% per year. The highest increase happens in fund amassment development with average rate of 43.68% per year. The growth in fund channeling is relatively lower than fund amassment, with average rate of 34.75% per year. The opposite thing happens in Bank Perk reditan Rak yat (People’s Credit Bank), the rate of credit channeling is much higher than the fund amassment; i.e. 40.36% to 33.33% per year.

In order to further see the islamic bank development potency; besides from the regional economic indicator performance and banking performance in general; we should also analyze specifically the islamic bank performance and do projection on its development for the next few years. Performance indicator for islamic bank is viewed by aspects of asset value, and fund amassment and channeling. Based on the three mentioned indicators, it shows that the development of islamic bank is quite rapid with the average growth rate of 9% per month for asset and fund channeling, while the fund amassment grows by 8% per month.

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channeling with LDR of 188%. This position stands until the year 2002. In December 2003, it drops to 95%, and by the end of 2004, it is projected to again spike to 105.6%.

If the islamic bank could keep the current performance by maintaining the growth of both fund amassment and channeling, there will be quite a drop in fund channeling performance. It is projected that in 2005, the total asset value will reach up to 622.3 billion rupiah, the fund channeling will be up to 508.9 billion and faun amassment will be up to 582.3 billion rupiah. The FDR position in 2005 will be 87.4%. When this condition happens, then the performance of bank fund channeling will decrease so that it should be anticipated to avoid disturbance to the whole islamic bank performance. The condition of banking industry in South Kalimantan Province shows that the complete saturation point is yet to be reached and that it is still in increasing growth.

POTE NCY OF COMMUNITY’S DE MAND ON ISLAMICBANK PRODUCTS

The potency of this demand is seen from the indicator of community’s enthusiasm in adopting islamic bank. In general, the number of non- islamic bank customer who wishes to adopt islamic bank is relatively high; i.e. about 63.6%, in doubts is 26.7%, and refuse to adopt is 9.7%. One of the reasons for such high respondent number in doubts is because of the fact that the information is given in a short notice that many of the respondents still have doubts. The doubts will subside if the information is given in a more continuous and in a relatively longer period and so the process of adoption could be staging in by (1) level of education, (2) type of livelihood, (3) level of income. From the aspect of education, the potential market segment is in the group with relatively higher education. From the livelihood aspect, it seems that enthusiasm to adopt comes from industrial businessperson group (76.9%) and the lowest is in manual labor group (60.8%). From the aspect of income; higher income level group shows greater eagerness to islamic bank rather than lower group.

The willingness of respondent to adopt islamic bank is generally based on several reasons; i.e.: (1) the islamic bank operational conforms with islamic principles, (2) curiosity to try out, since it is something new, (3) islamic bank is interest-free, and (4) islamic bank is considered to be fairer to customer. Meanwhile, the doubtful respondents base their doubts on several reasons: (1) lack of information, (2) questionable credibility for it is new, (3) still no urge to try out, and (4) still in skepticism over the implementation of islamic principles. The refusing respondents explain that they do not understand the thing, lack of interest, and the islamicbank is not yet proven reliable.

The most wanted product of islamic bank is the saving account of mudharabah and hajj saving. While the dominant fund channeling product is syirk ah. For the service, only small portion of respondents intend to use it, especially around islamic bank only customer group and non-bank customer.

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on islamic bank, and the psychographic condition featuring high Islamic characteristics. The high Islamic characteristics are indicated by the answers to psychographic questions like frequent time spared to study Islam and always try to choose and use Islamic products. The knowledge on islamic bank is only distinguished to not know and know about one or more banking systems and or products of islamic bank. Level of adoption is to show whether or not the respondents are customer to islamic bank, both as creditor or debtor.

The analysis shows that the level of community’s knowledge on islamic bank is still low. But there is a positive relationship between the knowledge level and the adoption of islamic bank. And so is Islamic characteristic that the level of adoption of community with better Islamic characteristics is higher than the people with the lower ones. The same condition applies also to adoption potency that people with better knowledge on islamic bank or possess Islamic characteristics have better chance to adopt islamic bank, and they are able to perform with higher confidence. This is indicated by the lower number of respondents who say that they are in doubts in this group.

The islamic bank development potency analysis in each study site is done by combining several socio-economic indicators development among regions and from the logit analysis which shows variables of social, economic, and demographic that are dominantly affect the community’s decision in adopting islamic bank. We can relatively arrange the order of islamic bank development potency in study sites. Social variables included are: population, number of muslim, and number of religion/prayer sites. Variable of economic feature is banking performance like total asset, and fund channeling, including fund for small-to-middle scale entrepreneurship, and cooperative institution. Demographic variables of the logit analysis to further view market segment are variables that significantly affect the community’s decision in adopting islamic bank; they are level of education; both formal and non-formal, type of livelihood, and income level.

Based on the banking performance indicator which generally experience high growth, we can say that the potency for South Kalimantan’s regional economic growth is quite high that the market opportunity for islamic bank is still wide open. The result of inter-regions scoring analysis shows that the relative order of development potency of islamic bank is: Banjarmasin Municipal, Banjar District, Hulu Sungai Utara District, Barito Kuala District, Tanah Laut District, Hulu Sungai Selatan District, Tapin District, and Banjar Baru District.

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development. Other fund channeling product with good potency is consumptive credit. In Barito Kuala District, the potential market segment is employees of state and private companies.

Banjar Baru District has the lowest islamic bank development potency relatively. Specially for this district, we need to study more on this region since the data availability are relatively limited so that the result could only be with lower reliability. But geographically, the Banjar Baru location is near to Banjarmasin and Banjar District which means that the accessibility is relatively adequate. Seen from this parameter, the chance of islamic bank development is still open. Although it may also means that the both regions could already cover the islamic banking service in this site. Anyhow, the potential segment in Banjar Baru District is employees of state and private companies and entrepreneurs, especially of processing indutries. For the two other districts; Tanah Laut and Tapin; the potential segment is service entrepreneurs and people with high education.

CO N CLU SI O N A N D PO LI C

CO N CLU SI O N A N D PO LI CY I M PLI CA TI O N

Y I M PLI CA TI O N

CON CL USI ON

The demand potency on islamic bank in South Kalimantan is very high. Indicators showing this high potency are: (1) regional economic performance that is indicated by the whole banking performance in fund amassment and credit channeling; (2) islamic banking performance covering asset development and fund amassment and credit channeling, where islamic bank performance development is still in increasing growth stage; and (3) community’s interest to adopt and keep on adopting the islamic banking system is very high. Based on the regional economic development indicator and the result of logit analysis, places with relatively high islamic bank development potency are (in order): Banjarmasin Municipal, Banjar District, Hulu Sungai Utara District, and Barito Kuala District.

Potential market segments for islamic bank in South Kalimantan; based on the logit analysis are: entrepreneurs in industry and service; people with formal and non-formal education; people with income, livelihood, social status in religion, and community with positive image toward islamic bank. Therefore, this building up positive image should get more serious attention from islamic bankers.

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People’s considerations in choosing bank; both of conventional and islamic; are relatively the same. The main considerations are accessibility, credibility, professionalism in service, and supporting facilities. Interest/profit-sharing is not the main concern.

People’s understanding over islamic bank is still low and partial which cause in the inconsistency of attitude toward interest system in banking operational. Most people see that interest system is against their religion, but still they concord its implementation and/or become the customer to conventional banks. On the other hand, the better knowledge of one over islamic bank, the higher his/her chance to adopt it. Therefore, the effort to improve people’s understanding on islamic bank must become the major strategic issue in the islamic bank development. Most people still dominantly adopt islamic bank because of the religious emotion; and not yet by rational considerations. This is due to the dominant religious reasoning in adopting islamic bank.

Most people still have no idea there is a MUI proposition on interest system. Most people who know; claim to support such proposition; but only few respond by real action. Almost all respondents know nothing about the windows system in the islamic bank operational. Generally they do not care about the forms of islamic bank office.

The main sources of information about banking (conventional and islamic) are friend/colleagues, television, and newspaper; and so are for MUI proposition on bank interest system that mainly from television and newspaper. This shows that the role of ulama in the socialization of islamic banking and MUI proposition is still low.

RE COMME N DAT ION

This study only depicts the condition of potency and preference toward islamic banking in general in South Kalimantan. In order to really view the market potency of islamic bank in any site, a further study of thorough marketing research must be done.

The limited knowledge and understanding over islamic bank make the intensive, comprehensive, and structuralized socialization effort; including the aspects of economic rationality and not only of religious; is very crucial. Along with such an effort, islamic bank must also improve its performance, especially in its facilities, accessibility, and human resource to be able to compete with the conventional bank in banking service.