1

THEPERSISTENCEOFLOWPROFITANDLOSSSHARINGFINANCING
INISLAMICBANKING:THECASEOFINDONESIA

Ascarya
CenterforCentralBankingandEducationStudies,BankIndonesia
Jl.MHThamrinNo.2,SjafruddinPrawiranegaraTower,20
th
fl.,Jakarta10350,Indonesia
Email:ascarya@bi.go.id;Phone:+6221.381.7345;Fax:+6221.350.1912

ABSTRACT
Low profitandloss sharing (PLS) financing in Islamic banking has become a
classic problem which has not been given proportional attention by
practitioners as well as academicians. This study analyzes the problems of
persistence low PLS financing in Indonesias Islamic banking and proposes
alternativesolutionsusingAnalyticNetworkProcess(ANP)method.
The root causes of low PLS financing can be grouped into three aspects,
namely 1) Internal problems, which include upper management, human
resources and technical aspects; 2) System conditions, which include
conventional bank domination, unsupportive environment and competition;
and3)Externalitieswhichincludesociety,theauthoritiesandcustomers.
The results show that the primary problems come from: 1) Authority
(External); 2) Top Management (Internal); 3) Customer (External); 4)
Unsupportive Environment (System); and 5) Conventional Domination
(System). In more detail, the primary problems are: 1) Lack of Knowledge of
the Customer; 2) Lack of Commitment of the Authority; 3) Value in the
Environment; 4) Business Oriented of the Top Management; and 5)
ConventionalCompetitiononProducts.
The primary solutions are: 1) Customer Education; 2) Top Management
Commitment;3)ProtocolandGrandStrategy;4)LawandRegulation;and5)
GovernmentCommitment.Meanwhile,policiesandstrategiesthatshouldbe
prioritized are: 1) Product Development; 2) Fair Treatment; 3) Service
Improvement;4)MarketMapping;and5)Professionalism.
Furthermore,thelevelsofagreementsamongrespondents(KendallsW)are
generallylow,withIslamicbankersshowhigherrateragreementthanthatof
Experts. However, the priority of choices shows greater agreement among
respondents,especiallyamongIslamicbankers.

JELClassification:C14,G21,G28
Keywords:ANP,IslamicBanking,ProfitandLossSharing

WorkingPaper,CenterforCentralBankingEducationandStudies,BankIndonesia,2011.
2

1. INTRODUCTION

1.1 Background
Historically, Islamic banking is banking which is free from interest or riba, so that it is also
called interestfree banking. Conceptually, Islamic banking is not only free from riba, but
alsofreefrommaysir(excessivespeculationorgambling)andgharar(uncleartransaction).
Furthermore, the way Islamic banking operates, instead of using interest system, it applies
trade financing and investment financing. Islamic banks are expected to engage in these
activities only on a profitandloss sharing (PLS) basis. This is where Islamic banks main
income is coming from and this is also from where the investment account holders are
expectedtoderivetheirprofitsfrom.
Gafoor(2004)mentionsthatseveralwritershaveattemptedtoshow,withvaryingdegrees
of success, that Islamic Banking based on the concept of profit and loss sharing (PLS) is
theoreticallysuperiortoconventionalbankingfromdifferentangles.See,forexample,Khan
and Mirakhor (1987). However from the practical point of view things do not seem that
rosy.IntheoverhalfadecadeoffullscaleexperienceinimplementingthePLSschemethe
problemshavebeguntoshowup.Consequently,therapiddevelopmentofIslamicbanking
all over the world has been depended on alternative modes of financing other than PLS
financing;especiallytradefinancingusingmurabahahmodeoffinanceanditsderivatives.
With no exception, Islamic banking in Indonesia has also been developed rapidly (but also
with low PLS financing) since the government and Bank Indonesia (the central bank of
Indonesia)committedtoexpandIslamicbankingmoreseriouslythroughsupportingpolicies,
especiallyeversincetheamendmentofBankingRegulationno.10of1998.
In 2000, there were two Islamic banks and three Islamic branches with only 65 offices and
0.17% share of total assets. While, at the end of 2010 there were 11 Islamic banks and 23
Islamic Business Units (of conventional banks) with the total of 1477 offices and 1277
countersofofficechannelinginconventionalbanks.Shareoftotalassetshasreached3.24%
orRp.97.52trillionwith48%annualgrowth(seefigure1.1).

Figure1.1GrowthofIslamicBankinginIndonesia
2
3
4
8
15
21
27
37
50
66
98
1
2
3
6
12
16
21
28
37
52
76
1
2
3
6
11
15
20
28
38
47
68
52%
49%
94%
95%
36%
28%
37%
36%
33%
48%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Assets Deposits Financing AssetsGrowth
3

The growth of Islamic banking in Indonesia can also be shown from deposits collected and
financing extended. In 2000, deposits was Rp.1.03 trillion and financing extended was
Rp.1.27 trillion, with 123.3% FDR (financing to deposit ratio). At the end of 2010, deposits
grew45.47%ayearandreachedRp.76.04trillions,whilefinancingextendedgrew45.42%a
year and reached Rp.66.18 trillions, with 89.67% FDR. This FDR figure was a great
achievementcomparedtoIslamicbanksinothercountries,anditwasfarbeyondLDR(loan
todepositratio)ofconventionalbanksinIndonesia,whichreachedonly75.21%.
Nevertheless, at the end of 2010, the portfolio of financing comprised of 21.4%
musharakah, 12.7% mudharabah, 55.0% murabahah, and 10.9% other modes of financing
(seefigure1.2).Thisportfolioshowedthedominationofnonprofitandloss(PLS)financing
(65.9%), particularly murabahah. Meanwhile, the share of PLS financing (mudharabah and
musharakah) was only 34.1%, even though PLS financing is not only the essence of Islamic
financing but also more appropriate modes of financing to stimulate the real sector, to
stabilize financial system and to curb inflation, since it can improve direct interaction and
risksharingbetweeninvestorandentrepreneur.Nevertheless,thefigureofPLSfinancingin
Indonesiahasalwaysbeenfarbetterthanthoseofneighboringcountries,likeMalaysiaand
Pakistan.

Figure1.2FinancingPortfolioofIslamicBanks
Figure1.2showsthepersistenceoflowPLSfinancingandhightradefinancinginIndonesias
Islamic banking, with some increasing PLS financing trend up to year 2009 and slight
decreasingtrendafterward.MudharabahPLSmodeoffinancehasbeendecliningsinceyear
2006, while musharakah PLS mode of finance has been increasing since the same year.
Moreover, murabahah nonPLS mode of finance has also been slightly declining overtime.
New modes of finance have decreasing trend since year 2002, and have been increasing
againinapplicationsinceyear2008,andhavereached10.9percentattheendof2010.
TheneverendingissueoflowPLSfinancinginIslamicbankinghasalwaysbeenanimportant
subject to be discussed, even though new studies on this issue have been very limited. It
seems that current conduct of Islamic banking with minimum application of PLS financing
has been generally accepted by the majority of stakeholders. The implication of the
dominationofnonPLSfinancingbringsthepublictoperceivethatIslamicbankingisalmost
15.2 14.4
18.0
20.5 19.9 20.0
16.2
14.1
12.7
1.8
5.5
11.1
12.5
11.4
15.8
19.4
22.2
21.4
70.9
71.5
66.5
62.3
61.7
59.2 58.9
55.9
55.0
12.0
8.6
4.5 4.7
7.0
5.0 5.5
7.8
10.9
2002 2003 2004 2005 2006 2007 2008 2009 2010
Mudharabah Musharakah Murabahah Others
4

no different from conventional banking. This perception could form a reputation risk to
Islamic banking that could create cynicism in public that Islamic banking is just only a re
branding, while the mindset of the bankers are still conventional. The problem of
implementing PLS financing becomes even more acute in countries with dual banking
system,suchasEgypt,Bangladesh,Pakistan,Malaysia,aswellasIndonesia.
The low implementation of PLS financing clearly is not the expected ideal. Islamic banking
industry, the government, as well as the central bank, must strive to improve the system
andinfrastructureandtofindappropriatesolutionstopromotePLSfinancing.Eventhough
theproblemsofimplementingPLSfinancinginIslamicbankingtendtobecomplexandmulti
dimensional, they have to be identified, so that alternative gradual and systemic solutions
canbeproposed,sothatthedevelopmentofIslamicbankingcanberedirectedtowardsits
naturalcharacter.

1.2 Objectives
The objectives of this study is to identify factors causing the low implementation of PLS
financing in Indonesias Islamic banking and to find alternative solutions, as well as to
determine gradual and systemic policies and strategies to stimulate and improve the
implementationofPLSfinancinginIndonesiasIslamicbanking,sothatrelatedstakeholders
such as Islamic banking industry, investor, entrepreneur, Bank Indonesia, and the
government can take appropriate policy actions to deal with the current problems and
attaintheexpectedgoalsofstrongandsoundIslamicbanking.

1.3 Methodology
This study will apply Analytic Network Process (ANP) method with three steps. First, focus
groupdiscussion(FGD)andindepthinterviewwillbeconductedwithvariousstakeholders,
suchasscholars,experts,practitioners,customers,andregulatorsofIslamicbanking,tofully
understand the real problems and to identify factors affecting low implementation of PLS
financing.Second,theresultsofthefirststepswillbeusedtodevelopanappropriateANP
network and its questionnaires to obtain proper data from experts and practitioners of
Islamicbanking.Third,ANPanalysiswillbeappliedtosetpriorityonalternativesolutionsas
wellaspoliciesandstrategiestoformulateoptimalpolicyrecommendations.

2. LITERATURREVIEW

The raison dtre of Islamic economics, finance and banking is derived from the Islamic
injunction against riba (interest), maysir (excessive risk or gambling) and gharar (unclear
transaction). In banking operation, Islam prohibits interest on deposits taking and loans or
financing extension regardless of their nature or purpose. As replacements, Islamic bank
providesvariousdepositproductsandfinancingproductswhicharebasedonvariousmodes
of finance. Among those various modes of finance, conceptually, profitandloss sharing
(PLS)istheprimemodeoffinance,representedbymudharabahandmusharakahmodesof
finance,whicharealsotermedasequitybasedfinanceorPLSmodesoffinance.
5

2.1 ProfitandLossSharing
ThemostimportantmodesoffinanceagreedbyMuslimscholarsarePLSmodesoffinance,
namely,mudharabah(trusteeprofitsharing)andmusharakah(jointventureprofitsharing),
thatembedtheprincipleofalghunmbilghurmoralkharjbildamn,meaningthatthere
is no return without involvement in risk (AlOmar and AbdelHaq, 1996), or for every real
economic benefit there must be real economic cost (Khan, 1995). According to Shiddiqi in
Karim (2002), the issues of PLS and partnership have been discussed by Muhammad bin
HasanAlSyaibani(132189AH/750804AD).
Ahmad (20xx) mentions that according to theoretical models developed by Muslim
economists, Islamic banking based on the principle of PLS modes of finance claims to be
superior to interestbased commercial banking in terms of equity, efficiency, stability and
growth. In comparison with other financial systems, Islamic banking will be more just
because the contract of PLS modes of finance is based on the principles of justice and
equity.Itwillbemoreefficientasitwillhelpattainamorerationalandbalancedallocation
offinancialresourcesamongthecompetingprojectsbecausethemainconsiderationinthe
allocationoffundsunderIslamicbankingwouldbetheprofitabilityofrelevantprojectsand
notthesafereturnoftheprincipalamountasinthecaseofconventionalbanking.
Mudharabah is a mode of financing based on trustee partnership for a specific venture in
which the bank provides capital finance and the customerentrepreneur provides
managerialandprofessionalskillstooperatethebusinessproject.Profitsaresharedinthe
preagreedratio,whilelossesareentirelyabsorbedbythebankiftheclientisnotnegligent
or in violation of the terms. Mudharabah can cover one deal, several deals, or a specified
periodoftimeuptoaspecifiedceiling.

Figure2.1MudharabahModeofFinance
ThePracticalstepsofMudharabahareasfollows:
1. EstablishingaMudharabahproject.Thebankprovidesthecapitalasacapitalowneror
Shahibul Maal, while the customer as Mudharib (entrepreneur) provides his effort and
expertisefortheinvestmentofcapitalinexchangeforashareinprofitagreedupon.

THE PROJECT
BANK

SHAHIBUL MAAL
CUSTOMER

MUDHARIB
CAPITAL 100% SKILL 100%

PROFITS

Mudharabah
Contract
CAPITAL
Share of Profits Y
Capital 100%
Share of Profits X
6

2. TheresultsofMudharabah.Thetwopartiescalculatetheearningsanddivideprofitsat
the end of Mudharabah. This can also be done periodically in accordance with the
agreementandlegalcompliance.
3. Payment of Mudharabah capital. The bank: Recovers the Mudharabah capital it
contributed before dividing the profits between the two parties because profit is
protection to capital. In case of agreement to distribute profits periodically before the
finalsettlementitmustbeonaccountuntilthesecurityofcapitalisassured.
4. DistributionofwealthresultingfromMudharabah.
Incaseofloss,thecapitalowner(thebank)bearstheloss.
Profits are divided between the two parties in accordance with the agreement
betweenthemwithobservancetotheprinciple"profitisprotectiontocapital".
MudharabahmodeoffinancingisconsideredtobeanimportantmodebytheIslamicbanks
in their relationship with the depositors who tender their moneys to the bank as capital
owner. This money is invested by the bank as Mudharib on the basis of profit sharing
accordingtospecificpreagreedrates.TheIslamicbanksusethisproducttofinancecapable
professionals such as physicians, engineers, traders or craftsmen. The bank provides
requiredfinanceasacapitalownerinexchangeforashareintheprofittobeagreedupon.
It is worth noting that this mode carries high risk for the bank because the bank delivers
capital to the Mudharib who undertakes the work and management and the Mudharib is
held responsible for loss only in case of negligence. The Islamic banks take necessary
precautionstominimizeriskandtoensurebetterexecutionofMudharabahtransaction.
Musharakah is a mode of financing based on joint venture partnership in which both the
bank and its customerclient contribute to entrepreneurship and capital. Profits are shared
inthepreagreedratio,whilelossesaresharedinproportiontotheircapitalcontributions.
This mode of finance is represented in the contribution of partners to equal or unequal
ratiosofcapitaltoestablishanewprojectortoparticipateinanestablishedone,whereby
each participant owns a share in the capital permanently and deserves his share of the
profit. The partnership originally is intended to continue up to the dissolution of the
company.Itispossiblethatforonereasonoranother,oneofthepartnerssellsitssharein
thecapitaltowithdrawfromtheproject.TheIslamicbanksusethemodeofpartnershipin
manyprojects.Theyfinancetheircustomerswithpartofthecapitalinexchangeofashare
oftheoutputastheymayagreeupon.Mostlytheyleavetheresponsibilityofmanagement
tothecustomerpartnerandretaintherightofsupervisionandfollowup.
ThepracticalstepsofMusharakahareasfollows:
1. Partnership in Capital. The bank tenders part of the capital required in its capacity as a
partnerandauthorizesthecustomer/partnertomanagetheproject,whilethepartner
(customer)tenderspartofthecapitalrequiredfortheprojectandbecomesthetrustee
forbank'sfunds.
2. Results of the project. The work in the project is for the growth of capital. The project
mayachievepositiveornegativeresults.
3. Distributionofwealthaccruedfromtheproject.Incaseofloss,eachpartnerbearspart
ofthelossproportionatetoitsshareincapital.Profitisdividedbetweenthetwoparties
(thebankandthepartner)inaccordancewiththeagreement.
7


Figure2.2MusharakahModeofFinance
Musharakahmodeoffinancingorpartnershipisconsideredtobeanappropriatemodefor
collective investment in modern economic life. The Islamic banks use partnership by
contributing capital to new or established projects. They also bear part of the cost of a
project in the ratios of their shares in capital. The Islamic banks by using partnership as a
mode of investment make sufficient liquidity available to the customer for a long period.
TheIslamicbanksareusuallyactivepartnersandparticipateindeterminingthemethodsof
production and the objectives of the establishment. They also supervise and follow up the
performanceoftheestablishment.TheIslamicbanksshareprofitorlosswiththecustomer
(partner) without burdening the customer with debt or any financial liabilities which the
customerhastopayunderallcircumstances.
PLSmodesoffinancehavebeenproventheoreticallysuperiortoothermodesoffinancein
generatingmacroeconomicbenefits.Someempiricalstudieshavealsobeendonetoprove
thissuperiorityforthecaseofIndonesia.
Ryandono (2006) compares interest system and PLS system. He concludes that interest
(riba) system has negative relationship with the economy and causes money turn over
becomes ineffective and inefficient at macro and micro levels that subsequently will cause
instabilityintheeconomy.Interest(riba)systemcanalsoimpedeinvestmentandeconomic
growth. Thus, it is difficult to synchronize monetary sector and real sector, since the two
sides have different interests and objectives in the economy which is difficult to settle. In
contrast,PLSsystemhaspositiverelationshipwiththeeconomyandcausesmoneyturnover
becomes effective and efficient at macro and micro levels that subsequently will cause
stability in the economy. PLS system can also stimulate investment and economic growth.
Thus, it will synchronize monetary sector and real sector, since the two sides have similar
interestsandobjectivesintheeconomy.
Ascarya, et al. (2008b) tries to compare demand for money and monetary stability under
dual monetary system. The results show that demand for money in Islamic system is more
stable in response to the shock of other variables than that of demand for money in
conventional system. Conventional demand for money shows the behavior for transaction
and investment, while Islamic demand for money shows the behavior for transaction only.
Moreover, PLS system outperforms interest system in terms of efficiency, fairness, and

THE PROJECT
BANK

PARTNER
CUSTOMER

PARTNER
CAPITAL&SKILL CAPITAL&SKILL

PROFITS

Musharakah
Contract
CAPITAL
Share of Profits Y
Share of Capital X
Share of Profits X
Share of Capital Y
8

stability.Therefore,PLSreturncanbeusedasanalternativetointerestrateasamonetary
policyinstrument.
Ascarya (2009) tries to investigate the determinants of Inflation under dual monetary
system in Indonesia. The result shows that the main sources of inflation (78.1%) in
conventional economic/financial system are interest rate (54.7%) and fiat money (23.4%).
Whenthesetwomainpillarsofconventionaleconomic/financialsystemarereplacedbyPLS
andgoldstandard,theyonlyaffectinflationby2.9%and0.5%,respectively.Thismeansthat
theimplementationofPLSsystemtoreplaceinterestsystemwillreduce51.8percentshare
ofinflationinIndonesia.
Furthermore, Ascarya and Yumanita (2009) tries to compare the financial stability under
conventional and Islamic financial systems. The results show that although its share is still
small,IslamicbankinghasgivenpositiveimpacttoIndonesianfinancialsystemasawholein
termsoffinancialstability.ThestudyfindsthatIslamicFSI(FinancialStabilityIndex)ismore
stable than Conventional FSI. Moreover, Islamic FSI influences the stability of Conventional
FSItothebetter,whileConventionalFSIdoesnotinfluenceIslamicFSI.

2.2 PreviousStudies
Although PLS financing has been proven theoretically and empirically superior to other
modes of financing to macroeconomic conditions, from practical point of views things do
notseemthatpromising.
The earliest study by Khan (1995) has mentioned aversion to risk from Islamic bankers, as
well as moral hazard due to asymmetric information from customers as the main causes
why PLS financing is not popular. Other scholars, such as Dar and Presley (2000), Chapra
(2000), Algoud and Lewis (2001), Muljawan (2001), Al Jarhi (2002), Iqbal and Llewellyn
(2002) and Parinduri (2003), agree with these main problems with the addition of adverse
selection due to asymmetric information from Islamic bankers. In addition, Sarker (1999)
divides the lack of PLS financing problem of Islamic banking into several macro and micro
operations. Macro operation include: a) there is no uniform opinions on the Shariah
jurisprudence;b)lackofskilledandexperthumanresourcesinIslamicbankingandShariah;
c) fierce competition in financial sector; and d) lack of uniform operational procedures.
While, micro operations include: a) increase cost of information; b) not ready to handle
higher risk; c) lack of Shariah manual; d) lack of methodology to analyze and measure
investment risk Islamicly; d) unsupportive tax regulation; and e) lack of Shariah
managementmanual.
Meanwhile, the main study of the lack of PLS financing in Indonesias Islamic banking has
done by Ascarya and Yumanita (2005 and 2006). The problem was grouped into four
aspects,namelyIslamicbankinternalities,customers,regulations,andtheGovernment.The
clusters were grouped into problems, alternative solutions, and development strategies.
Internal problems include: 1) Lack of understanding of Islamic banking fundamentals; 2)
Emphasis on business or profit orientation (businessoriented); 3) Lack of quality and
quantityofhumanresources;4)Islamicbanksarestillaversetoefforts;and5)Islamicbanks
are still averse to risks. Customer problems include: 1) Lack of understanding of Islamic
banking fundamentals; and 2) Customers are still averse to risks. Regulation problems
include: 1) Lack of incentives to stimulate PLS financing; and 2) Lack of supportive
9

regulations. Meanwhile, government problem is lack of government commitment and
support.
SomeoftheseearlierlacksofPLSfinancingproblemshavebeenresolvedinIndonesia,such
asfatwas(legalShariahopinion)onPLSfinancing,equaltaxtreatmentAct,IslamicBanking
Act, and Sukuk Act. However, fundamental problems still remain, such as asymmetric
information (moral hazard, adverse selection, and increased costs) and lack of human
resource.Moreover,dynamicdevelopmentofIslamicbankingalsogeneratesnewproblems
(orpreviouslyunseenproblems).
AfterthestudybyAscaryaandYumanita(2005and2006),thereareonlyafewnewstudies
on the lack of PLS financing, lately. Gafoor (2004) states that there are four main areas
wheretheIslamicbanksfinditdifficulttofinanceunderthePLSscheme:a)participatingin
longterm lowyield projects, b) financing the small businessman, c)granting non
participating loans to running businesses, and d) financing government borrowing. IFSB
(2005) concludes that the lack of PLS financing is caused by credit risk, equity investment
risk, market risk, liquidity risk, rate of return risk, and operational risk. Iqbal and Greuning
(2007) study finds that inherent risks, low appetite for risk, monitoring cost, lack of
transparency,depositorsriskaversion,aswellasasymmetricinformationarethecausesof
lowPLSfinancing.Moreover,FebiantoandKasri(2007)findthatlackofriskmanagementis
themaincauseofthelackofPLSfinancing.
The study of Ascarya and Yumanita (2005) has been revisited by Ascarya (2009) to see the
newestdevelopmentonlackofPLSfinancinginIndonesiasIslamicbanking.Comparisonof
theresultscanbeseenintable2.1.
Table2.1Summaryof2005and2009Results
ASPECTS 2005STUDY 2009STUDY
1
st
2
nd
1
st
2
nd

Internal
Problems
LackofQuality&
QuantityofHuman
Resource
AversetoRisk Technical:No
Managementtools;
HigherRisk
TopManagement:Lack
ofCommitment;
BusinessOriented
Internal
Solutions
HumanResource
Improvement
Technical:IT&SOP TopManagement:
Commitment
External
Problems
Regulation:Lackof
Supportive
Regulations
Government:
LackofSupport
Authority:Lackof
Commitment;Lack
ofSupport
Society:LackofTrust;
LackofPerception
External
Solutions
Supportive
Regulations
Incentive Authority:
Commitment
Society:Communication;
Dawah
Policies
DirectedMarket
Driven
DirectedMarket
Driven
Professionalism
Strategies
Service
Improvement
Socialization&
CommunicationProgram

Table 2.1 shows that the problems have shifted and expanded, the priority solutions have
also changed, while the priority policies and strategies have also expanded. Nevertheless,
themainproblemoflackofPLSfinancingremains.
The newest study and analysis on PLS financing has done by Tarsidin (2010), which views
thatthedeterminantsofthelackofPLSfinancingare;a)asymmetricinformationproblems,
suchasprivateinformation,adverseselection,moralhazardtypeI(disincentive),andmoral
10

hazard type II (falsification); b) profit function and utility function of capital owner and
entrepreneur, c) willingness to pay; d) reservation utility; e) incentive compatibility; and f)
participation. Other determinants include risk aversion, financial constraint, length of
contract,performancestandard,andsignal.Basedontheseconstraintshedevelopsoptimal
scheme(firstbestandsecondbest)ofPLSfinancing(mudharabahandmusharakah),which
canbeappliedbyIslamicfinancialinstitutions,instaticanddynamicenvironments.
PLSfinancingorequityfinancingdoesnotexclusivelybelongtoIslamicfinance,butalsohas
longbeenusedanddiscussedinconventionalfinance.Stiglitz(1974)statesthatprofitand
losssharinghasbeenwidelyadoptedinfarmingsectorusingsharecroppingscheme,where
laborwillequalizehis/hershareofoutputwithmarginalproductivityoflabormultipliedby
marginal disutility of work. Laffont and Matoussi (1995) develop theory of sharecropping
basedonmoralhazardandfinancialconstraints,aswellasriskaversion.BothStiglitz(1974)
as well as Laffont and Matoussi (1995) conclude that sharecropping is a tradeoff between
incentiveandrisksharing.

11

3. METHODOLOGY

3.1 AnalyticNetworkProcess
3.1.1 Overview
Saaty (1999) defined analytic network process (ANP) as a general theory of relative
measurement used to derive composite priority ratio from individual ratio scale reflecting
relativemeasurementofinterconnectedelementswithincontrolcriteria.While,Azis(2003)
described ANP as a mathematic theory that allows one to deal systematically with
dependenceandfeedbackandthatcancaptureandcombinetangibleandintangiblefactors
byusingratioscale.
ANP is a new approach in decision making process that provides general framework in
treating decisions without making any assumption about independency of elements in
higher level from elements in lower level and about independency of elements within the
samelevel.Moreover,ANPusesnetworkwithouthavingtodeterminelevelasinhierarchy
usedinAnalyticHierarchyProcess(AHP),whichisastartingpointofANP.Themainconcept
ofANPisinfluence,whilethemainconceptofAHPispreference.AHPwithitsdependency
assumptionsonclustersandelementsareaspecialcasesofANP.
In AHP network, there are levels of goal, criteria, sub criteria, and alternative, where each
level has its own elements. Meanwhile, in ANP network, level in AHP is called cluster that
canconsistofcriteriaandalternativewhichnowiscallednode(seefigure3.1)
With the feedback, alternatives can depend on criteria, like in a hierarchy, but it can also
depend on other criteria. Furthermore, those criteria themselves can depend on
alternativesandothercriteria(seefigure3.1).Meanwhile,feedbackimprovesprioritywhich
derivedfromjudgmentandmakespredictionmoreaccurate.Therefore,theresultofANPis
expected to be more stable. From feedback network in figure 3.1, it can be seen that the
parent node or element and nodes to be compared can be in different clusters. For
example,thereisadirectlinkfromparentnodeclusterC4totheotherclusters(C2andC3),
which called outer dependence. Meanwhile, there is parent node and nodes to be
compared lie within the same cluster, so that this cluster will be connected with itself and
createlooplink.Thisiscalledinnerdependence.
Inanetwork,elementoftheclustercanbeaperson(e.g.anindividualinBankofIndonesia)
and element in another cluster can be also a person (e.g. an individual in the parliament).
Elementinoneclustercaninfluenceotherelementsinthesamecluster(innerdependence)
and can also influence elements in other clusters (outer dependence) with respect to each
criteria.
The intended output of ANP is to determine the overall influence from all elements.
Therefore, all criteria must be configured and set their priority in a framework of control
hierarchy or network. After that, do the comparison and synthesis to obtain the order of
priorityfromthesecriteria.Then,wederivetheinfluencefromelementinfeedbacksystem
withrespecttoeachcriterion.Finally,theresultsoftheseinfluencesareweightedaccording
to the important level of the criteria, and summed them up to get overall influence from
eachelement.
12

Figure3.1ComparisonsofHierarchyandNetwork
SevenAHPpillarscanbeusedasstartingpointofANP
1
.ANPisacombinationoftwoparts.
Firstpartconsistsofcontrolhierarchyornetworkfromcriteriaandsubcriteriathatcontrol
interaction.Thesecondpartisnetworkofinfluencesamongelementsandclusters.
AHP and ANP utilize ratio scale. Priorities in ratio scales are fundamental number which
makesbasicarithmeticoperationpossible,suchasadditionandsubtractionwithinthesame
scale, multiplication and division of different scale, and combination of both operations by
weightingandaddingdifferentscalestoobtainunidimensionalscale.
Itshouldbenotedthatratioscalesarealsoabsolutescales.Bothofthemarederivedfrom
pairwise comparisons using judgments or derive from pairwise dominance ratios using
actual measurements. When using judgments, in AHP one asks which one is more
preferred or more important? while in ANP one asks which one has greater influence?
Thesecondquestionobviouslyrequiresfactualobservationandknowledgetoproducevalid
answer.Thismakesthesecondquestionmoreobjectivethanthefirstone.
3.1.2 AxiomofANP
Every theory is based on axioms. The simpler and the fewer the axioms, the more general
and applicable the theory is. AHP has four (ANP has three) relatively simple axioms which
carefullyrestrictthescopeofaproblem.
1. Reciprocal.ThisaxiomrequiresthatifP
C
(E
A
,E
B
)isapairedcomparisonofelementsA
andBwithrespecttotheirparent,elementC,representinghowmanytimesmorethe
element A possesses a property than does element B, then P
C
(E
B
,E
A
) = 1/ P
C
(E
A
,E
B
).
Forinstance,ifAis4timeslargerthanB,thenBisoneforthaslargeasA.
2. Homogeneity. This axiom states that the elements being compared should not differ
by too much, else there will tend to be larger errors in judgment. The verbal scale of
ANP ranges from one to nine, or about an order of magnitude (see Table 3.1). Saaty
and Vargas (2005) state that According to mathematician and cognitive
neuropsychologist Stanislas Dehaene (1997): introspection suggests that we can
mentally represent the meaning of numbers 1 through 9 with actual acuity. Indeed,

1
Formoredetails,seeThomasL.SaatyTheSevenPillarsoftheAnalyticHierarchyProcess(2003).

Goal
Criteria
Subcriteria
A loop indicates that each
element depends only on it self
Component,
Cluster
(Level)
Element
C
3

C
1

C
2

C
4

Linear Hierarchy Feedback Network

Feedback
Source: Saaty and Vargas (2006)
13

thesesymbolsseemequivalenttous.Theyallseemequallyeasytoworkwith,andwe
feelthatwecanaddorcompareanytwodigitsinasmallandfixedamountoftimelike
acomputer.
Table3.1ComparisonofVerbalandNumericScales
VerbalScale NumericScale
MuchMoreGreaterInfluence 9
8
MuchGreaterInfluence 7
6
GreaterInfluence 5
4
SlightlyGreaterInfluence 3
2
EqualInfluence 1

3. Hierarchy Structure (not applicable to ANP). This axiom states that judgments about,
or the priorities of, the elements in a hierarchy do not depend on lower level
elements.Thisaxiomrequirestheapplicationofhierarchystructure.
4. Thisaxiomstatesthatindividualswhohavereasonsfortheirbeliefsshouldmakesure
that their ideas are adequately represented for the outcome to match these
expectations.
From the experience, the first two axioms are completely consonant with real world
applications,whilethethirdaxiomrequirescarefulapplications,asitisnotuncommonforit
tobeviolated,because(inchoiceapplications,forexample)thepreferenceforalternatives
is almost always dependent on higher level elements (i.e., the objectives), while the
importance of the objectives might be dependent on lower level elements (i.e., the
alternatives).Whensuchdependentexists,thethirdaxiomofAHPdoesnotapply.Thereis
feedback from lower level factors to higher level factors in the hierarchy. Supermatrix
calculationinANPaccommodatessuchsituation,sothatthestructureofhierarchyisjusta
specialcaseofANP.
Meanwhile,theforthaxiommightsoundabitvague.But,itisimportantsincethegenerality
of AHP/ANP makes it possible to apply it in a variety of ways, and the application of this
axiomwillpreventtheapplicationofAHP/ANPininappropriateways.
Thesimplerthetheorythemorepreferableitisinpractice.MostpractitionersofAHP/ANP
feel that AHP/ANPs axioms are simpler and more realistic than other decision theories. In
addition, AHP/ANP is applicable to areas besides choice decisions (such as forecasting and
resource allocation) and the ratio scale measures produced by AHP/ANP makes it more
powerfulthanothertheoriesthatrelyonordinalorintervalmeasures.
3.1.3 BasicPrinciplesofANP
There are three related basic principles of AHP/ANP, namely decomposition, comparative
judgments,andhierarchiccompositionorsynthesisofpriorities(Saaty,1994).
14

1. Decomposition. The principle of decomposition is applied to structure a complex
problemintoahierarchyornetworkofclusters,subclusters,subsubclusters,andso
on. In other words, decomposition tries to model the problem into AHP/ANP
framework.
2. Comparative Judgments. The principle of comparative judgments is applied to
construct pairwise comparisons of all combinations of elements in a cluster with
respect to the parent of the cluster. These pairwise comparisons are used to derive
localprioritiesoftheelementsinaclusterwithrespecttotheirparent.
3. Hierarchic Composition or Synthesis. The principle of hierarchic composition or
synthesis is applied to multiply the local priorities of the elements in a cluster by the
global priority of the parent element, producing global priorities throughout the
hierarchy or network and then adding the global priorities for the lowest level
elements(usuallythealternatives).
3.1.4 ThePrimaryFunctionsofANP
In line with its basic principles, there are three primary functions of AHP/ANP, namely,
structuringcomplexity,measurementonaratioscale,andsynthesis.
1. Structuring Complexity. AHP/ANP chooses a simple way to deal with complexity.
Simple enough so that lay people with no formal training could understand and
participate. Saaty found one thing common in numerous examples of the ways
humans had dealt with complexity over the ages that was the hierarchical
structuring of complexity into homogeneous clusters of factors previously thought by
L.L. Whyte (1969) and Herbert Simon (1972). Structuring complexity includes
developingANPnetworkoftheproblem.Saaty(undated)statesthatOnestructuresa
hierarchy from a goal downwards to criteria, subcriteria and goals, involving actors
and stakeholders and terminating in alternatives at the bottom. The ideas to go
graduallyfromthegeneraltotheparticular.Inanetwork,elementsareputinclusters
orcomponentswiththeirconnectionsindicatinginfluence.
2. Measurement on a Ratio or Absolute Scale. Earlier decision making methodologies
relied on lower levels of measurement, while AHP/ANP employs ratio scales
measurement that believed to be the most accurately measure the factors that
comprised the hierarchy. Thereare five levelsof measurements (scales) rangingfrom
thelowesttothehighest,namelyNominal,Ordinal,Interval,Ratio,andAbsolute.Each
levelhasallofthemeaningofthelevelsbelowplusadditionalmeaning.Ratiomeasure
is necessary to represent proportion. To keep the methodology simple, Saaty
proposed using judgments of the ratios of each pair of factors in the hierarchy or
network to derive (rather than assign) ratio scale measures. Saaty (undated) states
that Comparisons are more scientific in deriving scales because they use a unit and
estimatemultiplesofthatunitratherthansimplyassigningnumbersbyguessing.
Anyhierarchicallystructuredmethodologymustuseratioscaleprioritiesforelements
above the lowest level of the hierarchy. This is necessary since the priorities (or
weights) of the elements at any level of the hierarchy are determined by multiplying
the priorities of the elements in that level by the priorities of the parent element.
Sincetheproductoftwointervallevelmeasuresismathematicallymeaningless,ratio
scales are required for this multiplication. The ratio scale, being a higher level of
15

measurement, is particularly important if the priorities are to be used not only in
choice application, but for other types of application such as resource allocation. The
measurement includes pairwise comparisons on the elements and relative weight
estimationofalldependenceandfeedbackrelationshipsintheANPnetwork.
Furthermore, the ratio of two numbers from the same ratio scale is an absolute
number, which is dimensionless. Saaty (undated) states that If the objects are
homogeneousandifwehaveknowledgeandexperience,pairedcomparisonsactually
derive measurements that are likely to be close and that indicate magnitude on an
absolute scale. For example, the ratio of two readings from a ratio scale such as
dividing 6 kg of bananas by 3 kg of bananas yields the number 2, which is a number
thatbelongstoanabsolutescalethatsaysthatthe6kgbananasistwiceheavierthan
the 3 kg bananas. Numbers from the same ratio scale, being invariant under the
identitytransformation,canbeaddedandmultiplied.
3. Synthesis. Synthesis is the opposite of analysis. While analysis means separating a
material or abstract entity into its constituent elements, synthesis means putting
togetherorcombiningpartsintoawhole.Becausecomplex,crucialdecisionsituations,
orforecasts,orresourceallocationsofteninvolvetoomanydimensionsforhumansto
synthesize intuitively, we need a way to synthesize over many dimensions. Although
AHP/ANP facilitates analysis, an even more important function is the ability of
AHP/ANP to help measure and synthesize multitude of factors in a hierarchy or
network. There is no other methodology that facilitates synthesis as does AHP/ANP.
Synthesis involves: a) construction of original (unweighted) supermatrix; b)
constructionofweightedsupermatrix;andc)calculationoftheglobalpriorityweights
(byconstructionoflimitingsupermatrix).
3.1.5 ConsistencyinANP
The comparison mode in AHP/ANP allows for inconsistent transitivity relationships of
preference.Theaxiomoftransitivitymusthold.Forexample:
If
2 1
a a and
3 2
a a ,then
3 1
a a ; meanspreferredto
If
2 1
4a a and
3 1
8a a ,then
3 2
8 4 a a
Underasinglecriterionrubric,wemightnotordinarilyexpecttohaveintransitiverelations.
But, for multicriteria problems, it is often impossible not to have intransitivities, as the
decisionmakercannotsimplifythecomplexitiesoftheproblemtoachievetruetransitivity.
Forexample,professorAisabouttochangejobs.Heknowsthatiftwooffersarefarapart
onsalary,thesalarywillbethedeterminingfactorinhischoice.Otherwise,factorssuchas
prestigeoftheuniversitywillcometoplay.Heeventuallyreceivesthreeoffers,describedin
partasfollows:
University Salary Prestige
X $65.000 Low
Y $50.000 High
Z $58.000 Medium
16

On reflection, A concludes that Y X , Z Y , and X Z . The intransitivity makes the
professordifficulttomakethebestdecision.
Sinceitisdifficulttoachieveconsistency,AHP/ANPintroducesthenotionofdeviationfrom
consistency so that the decision maker can proceed accordingly. It is recommended that
inconsistencyshouldnotbegreaterthantenpercents.
Moreover,oneshouldnotcomparemorethan7(seven)elements(SaatyandVargas,2005),
since when comparing more than 7 elements, each additional element introduces such a
small relative inconsistency that it becomes very difficult to tell which element is most
responsiblefortheinconsistency.
3.1.6 ProceduretoObtainRatioScale
2

LetA
1
,A
2
,A
3
,...,A
n
benelementsinamatrixwithinahierarchy.Thepairwisecomparisons
onpairsofelements(A
i
,A
j
)thatwehavetomakearerepresentedbyannbynmatrixA=
(a
ij
), where i,j = 1, 2, 3,....., n. Define a set of numerical weights w
1
, w
2
, w
3
, ..., w
n
that
reflectstherecordedcomparisons,sothatwecanwrite:
A
1
A
2
A
n

n n n
n
n
n w w w w
w w w w w w
w w w w w w
A
A
A
A
/ ... ... ... /
... ... ... ... ...
... ... ... ... ...
/ ... ... / /
/ ... ... / /
.
.
1
2 2 2 1 2
1 2 1 1 1
2
1
(3.1)

Since every row is a constant multiple of the first row, A has a unit rank. By multiplying A
withthevectorofweightsw,
Aw=nw (3.2)
Torecoverthescalefromthematrixratios,thefollowingsystemoughttobesolved:
(AnI)w=0 (3.3)
Clearly, a nontrivial solution can be obtained if and only if det(AnI) vanishes, i.e., the
characteristicequationofA.Hence,nisaneigenvalueandwisaneigenvector,ofA.Given
thatAhasaunitrank,allitseigenvaluesexceptonearezero.Thus,thetraceofAisequalto
n.
IfeachentryinAisdenotedbya
ij
,thena
ij
=1/a
ji
(reciprocalproperty)holds,andsodoesa
jk
= a
ik
/a
ij
(consistency property). By definition, a
ii
= a
jj
= 1 (when comparing two same
elements). Therefore, if we are to rank n number of elements, i.e., A is of the size nbyn,
the required number of inputs (from the paired comparison) is less than n
2
; it is equal to
only the number of entries of the subdiagonal part of A (see Saaty, 1994). Hence, if there
arethreeelementsinaparticularlevelofahierarchy,onlythreepairwisecomparisonsare
required.
Ingeneral,however,theprecisevalueofw
i
/w
j

ishardlyknownsimplybecausethepairwise
comparisons we made is only an estimate, suggesting that there are some perturbations.

2
Azis(2003),pp.34.
17

While the reciprocal property still holds, the consistency property does not. By taking the
largesteigenvaluedenotedby
max
,
A
P
w
P
=
max
.w
P
(3.4)
where A
p

is the actual, or the given, matrix (perturbed from matrix A). Although (3.2) and
(3.4)arenotidentical,ifw
p
isobtainedbysolving(3),thematrixwhoseentriesarew
i
/w
j

is
stillaconsistentmatrix;itisaconsistentestimateofA,althoughA
p

itselfdoesnotneedto
be consistent. Note that A
p
will be consistent if and only if
max
= n. As long as the precise
value of w
i
/w
j
cannot be given, which is common in a real case due to the bias in the
comparisons,
max
isalwaysgreaterthanorequalton(hence,ameasureofconsistencycan
bederivedbasedonthedeviationof
max

fromn).
Whenmorethantwoelementsarecompared,thenotionofconsistencycanbeassociated
withtransitivitycondition:if
2 1
A A ,and
3 2
A A ,then
3 1
A A .Itshouldbeclearthatin
solving for w, the transitivity assumption is not strictly required; the inputted comparisons
do not have to reflect a full consistency. Yet,as shown above, the resulting matrix and the
corresponding vector remain consistent. It is this consistent vector w that reflects the
priority ranking of the elements in each level. Hence, in a standard hierarchy with three
levels (goals, criteria, and alternative policies), the elements in each level are pairwise
compared with respect to elements in the level above it, and the resulting vector for the
bottomlevelreflectsthepriorityrankingofthealternativepolicies.

3.1.7 SupermatrixinANP
3

WhilebothAHPandANPusetheaboveproceduretoderivetheratioscales,thepresenceof
feedbackinfluencesinANPrequiresalargematrixknownassupermatrixcontainingasetof
submatrices.Thissupermatrixshouldcapturetheinfluenceofelementsonotherelements
inthenetwork.
Denoting a cluster by C
h
, h = 1, , N, and assuming that it has n
h

elements e
h1
, e
h2
, e
h3

, ,
e
hmh
,Equation3.5showsthesupermatrixofthehierarchy.
(3.5)
When the bottom level affects the top level of the hierarchy, a form of network known as
holarchyisformed,thesupermatrixofwhichwilllookliketheonedisplayedinFigure3.3.

3
Azis(2003),pp.47.
18

Notice that the entry in the last row and column of the supermatrix in equation 3.5 is the
identity matrix I corresponding to a loop at the bottom level of the hierarchy. This is a
necessaryaspectofahierarchyviewedwithinthecontextofthesupermatrix.Ontheother
hand, the entry in the first row and last column of a holarchy in equation 3.6 is nonzero,
indicatingthatthetopleveldependsonthebottomlevel.
(3.6)
Ingeneral,whenfeedbackinfluencesarepresentasinFigure3.1(right),thesupermatrixis
formed by laying out all the clusters and all the elements in each cluster both vertically on
theleftandhorizontallyatthetopasinequation3.7.
(3.7)
Typicalentryoftheabovesupermatrixis:
(3.8)
whereiandjdenotetheaffectedandaffectingclusterrespectively,andnistheelementof
therespectedcluster.
The entries of submatrices in W
ij

are the ratio scales derived from paired comparisons

performed on the elements within the clusters themselves according to their influence on
eachelementinanothercluster(outerdependence)orelementsintheirowncluster(inner
e
N1

e
N2
e
2
1

C
1
C
2
C
N
e
11
e
1
e
21
e
2
e
N1
e
N
W
11
W
12
W
1N
C
1

e
1
1

W
21
W
22
W
2N
W
N1
W
N2
W
NN
W=

C
2

C
N

19

dependence)
4
.

Theresultingunweightedsupermatrixisthentransformedintoamatrixeach
ofwhosecolumnssumstounitytogenerateastochasticsupermatrix.Thederivedweights
are used to weight the elements of the corresponding column blocks (cluster) of the
supermatrix, resulting in a weighted supermatrix which is also stochastic. The stochastic
natureisrequiredforthereasonsdescribedbelow.
It has been shown that such a limit exists given the stochastic nature of the weighted
supermatrix (Saaty, 2001). There are 3 cases to consider in deriving W
k
: (1)
max

= 1 is a
simplerootandtherearenootherrootsofunityinwhichcasegiventhenonnegativematrix
Wisprimitive,wehavelim
k
W
k
=we
T

,implyingthatitissufficienttoraisetheprimitive
stochasticmatrixWtolargepowerstoyieldthelimitoutcome;(2)thereareotherrootsof
unitythatcausecycling,inwhichcaseCesarosumisapplied
5
;and(3)
max

=1isamultiple
root, in which case the Sylvesters formula with
max

= 1 is applied
6
.

Hence, the powers of

thesupermatrixdonotconvergeunlessitisstochastic,becausethenitslargesteigenvalue
isone.Whenaconvergenceisfailedtoachieve(acycliccase)theaverageofthesuccessive
matricesoftheentirecyclegivesthefinalpriorities(Cesarosum),inwhichthelimitcyclesin
blocks and the different limits are summed and averaged and again normalized to one for
eachcluster
7
.
In practice, however, one simply needs to raise the stochastic supermatrix to large powers
to read off the final priorities in which all thecolumns of the matrix are identical and each
givestherelativeprioritiesoftheelementsfromwhichtheprioritiesoftheelementsineach
cluster are normalized to one. At any rate, raising the stochastic supermatrix to large
powersgiveswhatisknownaslimitingsupermatrix.
Hence, there are 3 supermatrices: (1) the original unweighted supermatrix of column
eigenvectors obtained from pairwise comparison matrices of elements; (2) the weighted
supermatrix in which each block of column eigenvectors belonging to a cluster is weighted
by the priority of influence of that cluster, rendering the weighted supermatrix column
stochastic;and(3)thelimitingsupermatrixobtainedbyraisingtheweightedsupermatrixto
largepowers.

3.2 StepofResearch
Based on ANP discussion, the main steps of ANP modeling are: 1) Decomposition, which is
the development of ANP network of the problem; 2) Measurement, which is pairwise
comparisons on the elements and relative weight estimation of all dependence and
feedback relationships in the ANP network; and 3) Synthesis, which includes construction

4
If the clusters influence and be influenced by other clusters, paired comparisons on the clusters are to be
madeaswell.
5
Cesarosummabilitybasicallystipulatesthatifasequenceconvergesthenthesequenceofarithmeticmeans
formedfromthatsequencealsoconvergestothesamelimitasthesequence(seeSaaty,2001).
6
JamesJosephSylvester(18141897),whowasanEnglishpoetandgreatcreatorsoftermsinmathematics,
developed a mathematical formula that allows limit priorities to be obtained from a reducible stochastic
matrixWwith
max

=1beingamultipleroot.
7
Inotherwords,onehastocomputethelimitprioritiesofthestochasticsupermatrixaccordingtowhetherit
isirreducible(primitiveorimprimitive[cyclic])oritisreduciblewithonebeingasimpleoramultiplerootand
whetherthesystemiscyclicornot.
20

and calculation of original unweighted supermatrix, weighted supermatrix, and limiting
supermatrix(theglobalpriorityweights).
This study comprises of several extended steps of main ANP modeling, which can be
grouped into three phases. Phase 1 is model construction or decomposition to identify,
analyze and structure the complexity of the problems into an appropriate ANP network,
which includes: a) Literature reviews, questionnaires and indepth interviews with experts
andpractitioners(Islamicbankers)tocomprehendtheproblemfully;b)ConstructionofANP
network; and c) Validation of ANP network. Phase 2 is model quantification or pairwise
comparison, includes: a) Design pairwise questionnaires in accordance with ANP network;
b)Testthepairwisequestionnairestorespondents(expertsand/orIslamicbankers);andc)
Survey to respondents to fill out pairwise questionnaires. Phase 3 is synthesis and results
analysis, which includes: a) Data processing and synthesis using ANP software
SUPERDECISIONS, as well as results analyses to calculate geometric mean and rater
agreement;b)Validationoftheresults;andc)Interpretationsoftheresults.

Figure3.2StepsofResearch

3.2.1 ModelConstruction
ToconstructANPmodelinphase1,basedontheoreticalandempiricalliteraturereviewsof
the problem, open questionnaires are sent via email to 20 practitioners (Islamic bankers)
from various Islamic banks and 15 Islamic banking experts from various institutions,
universities and consulting firms. Followup is conducted through indepth interviews to
garner more detailed information to be able to comprehend the real problems. Based on
this comprehensive understanding, ANP network is developed and refined further by
validation from experts and/or Islamic bankers. ANP network is then inputted to the
computerusingSUPERDECISIONSsoftware.

LiteratureReview
IndepthInterview
Questionnaire
ANPModelConstruction
ANPModelValidation
PairwiseQuestionnaireDesign
PairwiseQuestionnaireTesting
PairwiseSurvey
DataSynthesis&Analysis
ResultsValidation
ResultsInterpretation
PHASE1
Model
Construction
RESEARCHER
EXPERTS
iBANKERS
PHASE2
Model
Quantification
PHASE3
Results
Analysis
21

Figure3.3ANPModelDevelopment
3.2.2 ModelQuantification
ToquantifyandmeasuretheANPmodelornetworkinphase2,pairwisequestionnairesare
drawn based on final ANP network designed in phase 1, which has been automatically
formed in SUPERDECISIONS software. To make sure that the questionnaires are worked
effectively within allowable inconsistency, questionnaire testing is conducted to
respondents. In this step, modification to questionnaires might be needed to improve its
effectiveness to gather appropriate data. Subsequently, pairwise surveys to experts and
Islamicbankersareconductedusingfinalpairwisequestionnaires.Pairwisedatacollected
are then inputted to the ANP Network in SUPERDECISIONS software to be processed to
produce outputs in the form of priorities and supermatrices. Each respondent will be
inputtedintooneindividualANPnetwork.

Figure3.4InputOutputProcessofANP
3.2.3 SynthesisandAnalysis
In phase 3, Results or synthesis of ANP network in SUPERDECISIONS software for each
respondent can be generated. The data are then exported to excel worksheet to be
manipulated to produce the desired outputs. To produce scientific consensus results,
geometricmeansofallrespondentsresponsesarecalculated,reinputtedtoANP network
inSUPERDECISIONSsoftware,andresynthesized.Tomakesurethatallresultsarecorrect,
validation is done for each step of procedure. Kendalls coefficient of concordance can be
calculated to assess the agreement among respondents. Finally, interpretation of detailed
(individual) and overall (geometric mean) results is completed to be able to draw
conclusionsandtoproposepolicyrecommendations.
ANPModel
PRIORITY
OFCHOICES
INPUT
(PairwiseComparisons)
EXPERTS
OPINIONS
PROCESS
(SuperDecisions)
OUTPUT
(Supermatrices)
Literature
Reviews
(THEORY)
Literature
Reviews
(EMPIRICAL)
InDepth
Interviews
ANP
Network
Questionnaires
EXPERTS
iBANKERS
22

Figure3.5DetailedInputOutputProcessofANP
a. GeometricMean
The Geometric Mean, which is a theorem in mathematics, is the unique way to combine
group judgments. Instead of obtaining pairwise questionnaires from FGD consensus of all
respondents, pairwise questionnaires of each respondent can be combined to obtain
geometricmeanconsensus.
Geometric mean is a type of mean or average in mathematics, which indicates the central
tendency or typical value of a set of numbers. To calculate geometric mean, the numbers
are multiplied and then the n
th
root of the resulting product is taken (n is the count of
numbersintheset).Thegeometricmeanofadataset{a
1
,a
2
,,a
n
}isgivenby:
( o

n
=1
)
1n
= o
1
o
2
o
n
n
(3.9)
Thegeometricmeanofadatasetislessthanorequaltothedatasetsarithmeticmean(the
two means are equal if and only if all members of the data set are equal). This allows the
definition of the arithmeticgeometric mean, a mixture of the two which always lies in
between.
b. RaterAgreement
Kendalls coefficient of concordance or Kendalls W is a nonparametric statistic, which
measuresandassessesthelevelofagreementamongratersorrespondents.KendallsWis
anormalizationofthestatisticoftheFriedmantest,whichrangesfrom0(noagreement)to
1 (complete agreement). If the value of W is 1, it means that all the survey respondents
have been unanimous, and each respondent has assigned the same order to the list of
concerns.IfthevalueofWis0,itmeansthatthereisnooveralltrendofagreementamong
therespondents,andtheirresponsesmayberegardedasessentiallyrandom.Intermediate
values of 0 < W < 1 indicate a greater or lesser degree of unanimity among various
respondents.
TocalculateKendallsW,supposethatobjectiisgiventherankr
i,j
byjudgenumberj,where
thereareintotalnobjectsandmjudges.Thenthetotalrankgiventoobjectiis:
R

= r
,]
m
]=1
(3.10)
andthemeanvalueofthesetotalranksis:
R =
1
2
m(n +1) (3.11)
ANP
SuperDecisions
Pairwise
Questionnaires
(7iB+7Ex)
Individual
ANPPairwise
(7iB+7Ex)
Geo.Mean
ANPPairwise
(iB,Ex,Tot)
Individual
OUTPUTS
(7iB+7Ex)
Geo.Mean
OUTPUTS
(iB,Ex,Tot)
RESULTS
Detailed
Overall
Rater
Agreement
G
e
o
m
e
t
r
i
c

M
e
a
n

23

Thesumofsquareddeviations,S,isdefinedas:
S = (R

-R

)
2 n
=1
(3.12)
andthenKendall'sWisdefinedas
8
:
w =
12S
m
2
(n
3
-n)
(3.13)
When the value of test statistic W is 1, it can be concluded that all the judges or survey
respondents have been unanimous, and each judge or respondent has assigned the same
order to the list of objects or concerns. When the value of test statistic W is 0, it can be
concluded that there is no overall trend of agreement among the respondents, and their
responses may be regarded as essentially random. Intermediate values of test statistic 0 <
W < 0 indicate a greater or lesser degree of unanimity among the various judges or
respondents.

4. RESULTSANDANALYSIS

The discussion of this chapter will follow the steps of ANP, which are decomposition, pair
wisecomparison,synthesis,andanalysis.

4.1 Decomposition
4.1.1 ProblemIdentification
According to several experts opinions
9
, as well as questionnaire and indepth interviews
withlocalexpertsandpractitioners,contemporaryfactorscausinglowPLSfinancingcanstill
be viewed from internally and externally. Internal aspects include upper management,
humanresources,andtechnical,whileexternalaspectsincludesociety,theauthorities,and
customers. The subsequent clusters are grouped into problems, solutions, policies and
strategieswiththedetailsasfollows.
a. InternalProblems
Internalproblems(IP)arelackofPLSfinancingproblemscomingfrominternalorganization.
IP could be grouped into three, namely: 1) Upper Management (including Board of
CommissionersandBoardofDirectors);2)HumanResources;and3)Technical.Elementsof
eachgroupareasfollows.
1. Upper Management (Board of Commissioners and Board of Directors), include: a) Lack
ofunderstandinginIslamiceconomy,financeandbankingfundamentals;b)Emphasison
business or profit orientation (businessoriented); c) Risk averse and risk transfer
behavior still leads to the inability to accept the possibility of loss; and d) Lack of
commitmenttoimprovetheportfolioofPLSfinancing.

8
Legendre, P (2005) Species Associations: The Kendall Coefficient of Concordance Revisited. Journal of
Agricultural,BiologicalandEnvironmentalStatistics,10(2),226245.
9
Chapra(2000),IqbalandLlewellyn(2002),DarandPresley(2000),Sarker(1999),AlgaoudandLewis(2001),
Mulyawan(2001),AlJarhi(2002)andParinduri(2003).
24

2. Human Resources, include: a) Lack of knowledgeable and skilled human resources with
expertise in Islamic banking and Shariah Law; b) Emphasis on business targets or profit
(targetoriented);c)Riskaverseandrisktransferbehaviorstillleadtoinabilitytoaccept
the possibility of loss; and d) Aversion to diversification efforts because it is more
complicatedtodealwithPLSfinancingthantodealwithothermodesoffinancing.
3. TechnicalAspects,include:a)Lessapplicablethanothermodesoffinancingforworking
capital, small businesses or longterm projects; b) Higher risk than other modes of
financing, while Islamic banks are still unable to manage higher risk; c) More
complicated to structure and deal with PLS financing than to structure and deal with
other modes of financing; and d) Islamic banks have insufficient management tools to
manage higher risk or to analyze and measure investment risk adhering to Islamic
principles.
b. SystemProblems
Systemproblems(SP)arelackofPLSfinancingproblemscomingfromexistingconditionsof
the system. SP could be grouped into three, namely: 1) Conventional Domination; 2)
Unsupportive Environment; and 3) Conventional Competition. Elements of each group are
asfollows.
1. Conventional Domination reflects the condition of general system in Indonesia which
still dominates by conventional system. This includes: a) Mindset and ideology of all
stakeholders and general population, which are still mostly conventional capitalistic; b)
Existing Social system; c) Existing Political system which is largely democratic system;
andd)ExistingEconomicsystemwhichisdominatedbycapitalisticsystem.
2. Unsupportive Environment reflects the condition of general environment in Indonesia
which is influenced by monarchy, Dutch occupation and Islam. This includes: a) Value
system; b) Culture which is dominated by a mix of local culture and pop culture; c)
Infrastructures;andd)Rulesandregulations.
3. ConventionalCompetitionreflectstheconditionoffinancialmarketwhichisdominated
byconventionalbankingandfinance.Thisincludes:a)Financialinstitutions;b)Financial
instruments;c)Financialproducts;andd)Financialservices.
c. ExternalProblems
Externalproblems(EP)arelackofPLSfinancingproblemscomingfromoutsideorganization.
EPcouldbegroupedintothree,namely:1)Society;2)Authority;and3)Customer.Elements
ofeachgroupareasfollows.
1. Society,include:a)Multiethnicandmultireligiousaffiliationshavesensitizedsocietyto
issuesofethnicityandreligiosity(unitythroughdiversityismoreimportant);b)Lack/loss
oftrustinsocietyhasintroducedagencyproblemandasymmetricinformationthatlead
tomoralhazardandadverseselection;c)InaccurateperceptionsofIslamandribahave
madesocietyignoranttoIslamicfinanceandbanking;andd)Lackofunderstandingand
knowledgeregardingthefundamentalsoftheIslamiceconomy,financeandbanking;
2. Authority, include: a) Lack of understanding in Islamic economy, finance and banking
fundamentals; b) Lack of political commitment, political will, and political courage to
support the development of Islamic finance and banking; c) Lack of supporting
25

infrastructure(hardandsoft)inthedevelopmentofIslamicfinanceandbanking;andd)
LackofincentivesandeffortstopromotePLSbasedfinance.
3. Customer, include: a) Lack of understanding and knowledge concerning the
fundamentals of the Islamic economy, finance, and banking; b) Customers
(depositors/borrowers)arenaturallyriskaversebecausetheyarenotaccustomedtothe
possibilityoflossandareaccustomedtoaninterestratesystem;c)LowdemandforPLS
financingduetoitslimitedapplicabilityandunpopularity;andd)ThemajorityofIslamic
bankscustomersarefloating(notloyal)customers.
d. InternalSolutions
Internalsolutions(IS)arealternativesolutionstointernalproblemsoflackofPLSfinancing.
IS could also be grouped into three, namely: 1) Upper Management (including Board of
CommissionersandBoardofDirectors);2)HumanResources;and3)Technical.Elementsof
eachgroupareasfollows.
1. Upper Management, include: a) Appropriate Fit and Proper Test for BOC or BOD
candidates; b) Management commitment to apply PLS financing as the main mode of
financing;andc)RewardandPunishmentmechanismtopromotePLSfinancing.
2. Human Resources, include: a) Introduce a thorough human resource selection process;
b)AmelioratehumanresourcesknowledgeandskillsinIslamicbankingandShariahLaw;
andc)IncentivesystemforIslamicbankofficersextendingPLSbasedfinancing.
3. Technical Aspects, include: a) Simplification of standards and procedures in the
application of PLS based financing; b) Development of innovative and attractive yet
simple PLSbased products; and c) Development of Information Technology and
StandardOperatingProceduresintheextensionofPLSfinancing.
e. SystemSolutions
System solutions (SS) are alternative solutions to system problems of lack of PLS financing.
SScouldalsobegroupedintothree,namely:1)ConventionalDomination;2)Unsupportive
Environment;and3)ConventionalCompetition.Elementsofeachgroupareasfollows.
1. Solutionstoconventionaldominationinclude:a)Unionandcooperation;b)Protocoland
grandstrategy;andc)Economicstrengthening.
2. Solutionstounsupportiveenvironmentinclude:a)Lawsandregulations;b)Appropriate
infrastructures;andc)alternativeIslamicsystem.
3. Solutions to conventional competition include: a) Increase share of Islamic banking; b)
Improve standards to be comparable to their conventional counterparts; and c)
DiversificationofIslamicfinancialproductsandservices.
f. ExternalSolutions
Externalsolutions(ES)arealternativesolutionstoexternalproblemsoflackofPLSfinancing.
ES could also be grouped into three, namely: 1) Society; 2) Authority; and 3) Customer.
Elementsofeachgroupareasfollows.
1. Society, include: a) Extensive and intensive socialization of IEFB and PLS financing; b)
Effectivedawah(outreachtothepeople)forIEFBandPLSfinancing;c)Systematicand
comprehensiveeducationsystemfromelementaryschooluptohighereducation;
26

2. Government/Authority, include: a) Political commitment, political will and political
couragetosupportthedevelopmentofIEFBandPLSfinancing;b)Governmentsupport
ofhardandsoftinfrastructureinthedevelopmentofIEFB;andc)Supportiveregulations
tofosterIEFBandPLSbasedfinancing.
3. Customer,include:a)Educationofferedtocustomersandpotentialcustomersregarding
PLSfinancing;b)AsystematicandconcertednationalpromotionprogramtonurturePLS
financing;andc)AnincentivesystemforcustomerstochoosePLSbasedfinancing.
g. Policies
Policies are some recommended general policies which can be taken to solve the
problems of lack of PLS financing. These recommended policies could include: 1)
Directedmarketdrivenpolicy;2)FairTreatment;3)GradualandSustainable;4)Shariah
Compliant;and5)Professionalism.
h. DevelopmentStrategies
Development strategies are programs that can immediately be implemented to solve
the problems of lack of PLS financing for certain periods. These could include: 1) New
Image Program; 2) New Mapping of Market Segmentation; 3) Product Development
Program; 4) Service Improvement Program; and 5) Socialization and Communication
Program.
4.1.2 ConceptualFramework
Based on the previous problem identification, the conceptual framework of this study can
bereadinfigure4.1inappendix1.
[InsertFigure4.1]
4.1.3 ANPNetworkDesign
Therefore,theANPnetworkoftheaboveframeworkwillbeascanbeseeninfigure4.2in
theappendix.
[InsertFigure4.2]

4.2 PairwiseComparison

Themostknowledgeablerespondents(sevenIslamicbankersandsevenexperts)arechosen
tobetherespondentsofphase2tofilloutpairwisequestionnaires.Tosimplifytheoriginal
rather complicated pairwise questionnaires and to maintain consistency, modified pair
wise questionnaires are used as shown in figure 4.3 in appendix 1. Meanwhile, the
respondentsareequippedwithashowcarddescribingthescaleandtheANPnetwork.
[InsertFigure4.3]
Themodifiedpairwisequestionnairewillsignificantlyreducethetimerequiredforindepth
interviewswithrespondentsandwillprovideconsistentresults.Forexample,thetimetaken
tocompletetheentirepairwisequestionnaireofmorethan1,200questionswaslessthan
twohours.

27

4.3 SynthesisandAnalysis
Thedetailedsynthesisresultsofindividualrespondents(IslamicbankersandExperts)canbe
seen in Appendix 2, while overall and summary synthesis results (geometric means of 7
Islamicbankers,7Expertsand7Islamicbankers+7Experts)willbediscussedinthissection.
4.3.1 OverallResults
Thecompleteresultsofthesynthesisfromgeometricmeancanbereadintables4.14.3in
appendix 1. These results reflect statistically generated consensuses of Islamic bankers,
Experts,andallrespondents(7Expertsand7Islamicbankers).
[InsertTable4.1Table4.3]
Experts view that External and System are two most important aspects, but with very low
rater agreement (W
e
= 0.036). Meanwhile, Islamic bankers view that Internal is the most
importantaspect,withhighrateragreement(W
i
=0.39).Theoverallresults,whichresemble
Islamic bankers view, shows that the most important issues of low implementation of PLS
financing lies within Internal aspect of Islamic banking, followed by Existing System and
ExternalEnvironmentaspects(seefigure4.4),withlowrateragreement(W
t
=0.162).

Figure4.4PrioritiesofAspects
Experts and Islamic bankers agree that the most crucial Internal Problem is within Top
Management(Seefigure4.5topleft).However,theydonotagreeonthenextmostcrucial
InternalProblemswithlowrateragreement.ExpertsviewthatitiswithinHumanResources
(withlowrateragreement,W
e
=0.143),whileIslamicbankersviewthatitiswithinTechnical
(withverylowrateragreement,W
i
=0.02).Overall,thenextmostcrucialInternalProblems
areTechnicalandthenHumanResource(withverylowrateragreement,W
t
=0.061).
Furthermore, Islamic bankers believe that the problems of Top Management are Lack of
Understanding and Business Oriented (with W
i
= 0.149), while Experts believe that they
are Business Oriented and Lack of Commitment (with W
e
= 0.178). Overall, Business
OrientedstandsoutasthemostcrucialproblemofTopManagement,withW
t
=0.149(see
figure4.5topright).IslamicbankersdonotagreeonthemostcrucialproblemsofTechnical
(withverylowrateragreement,W
i
=0.004),whichturnsouttobeLessApplicableandNo
0 0.1 0.2 0.3 0.4 0.5 0.6
iBankers
Experts
Total
ASPECT
Wi=0.39
We=0.036
Wt=0.162
Internal
System
External
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
P1
P2
P3
P4
P5
P6
P7
GMEAN
ASPECT
Wi=0.39
Internal
System
External
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
E1
E2
E3
E4
E5
E6
E7
GMEAN
ASPECT
We=0.036
Internal
System
External
28

ManagementTools,whileExpertsdoagreeonthemostcrucialproblemsofTechnical(with
high rater agreement, W
e
= 0.516), which are Complicated and Higher Risk, and these
results are confirmed in overall, with rater agreement, W
t
= 0.121 (see figure 4.5 bottom
left).TheproblemsofHumanResourceviewedbyIslamicbankerareTargetOrientedand
Lack of Knowledge and Skill (with W
i
= 0.065), while viewed by Experts are Risk Averse
andEffortAverse(withW
e
=0.153).Overall,TargetOrientedandRiskAversestandout
as the most crucial problem of Human Resource, with W
t
= 0.014 (see figure 4.5 bottom
right).ThemoredetailedresultsofindividualIslamicbankersandindividualExpertscanbe
seeninAppendix2.

Figure4.5PrioritiesofInternalProblems
Experts and Islamic bankers do not agree on most crucial System Problem. Islamic bankers
believe it is within Conventional Domination, with very low rater agreement, W
i
= 0.061,
whileExpertsbelieveitiswithinUnsupportiveEnvironment,withverylowrateragreement,
W
e
= 0.082 (See figure 4.6 topleft). Overall, the most crucial System Problems are within
UnsupportiveEnvironmentandConventionalDominant(withverylowrateragreement,W
t

=0.066).
Furthermore, Islamic bankers and Experts agree that the most crucial problems of
Unsupportive Environment are Value System and Existing Culture, with low rater
agreement, W
t
= 0.121. Islamic bankers have very low rater agreement, W
i
= 0.055, while
Expertshavelowrateragreement,W
e
=0.22(seefigure4.6topright).Islamicbankersview
thatthemostcrucialproblemsofConventionalDominationareExistingEconomicSystem
andMindset(withW
i
=0.21),whileExpertsviewsarejusttheopposite(withW
e
=0.118),
so that in overall the most crucial problems of Conventional Domination are Existing
EconomicSystemandMindsetwithequalpriority,butwithverylowrateragreement,W
t

=0.156(seefigure4.6bottomleft).Meanwhile,IslamicBankersandExpertsagreethatthe
most crucial problem of Conventional Competition is Product and then Service and
Instrument.Inthiscase,IslamicbankershaveveryhighrateragreementW
i
=0.724,while
Experts have very low rater agreement W
e
= 0.073, so that overall rater agreement are
moderateatW
t
=0.313(seefigure4.6bottomright).Themoredetailedresultsofindividual
IslamicbankersandindividualExpertscanbeseeninAppendix2.
0 0.1 0.2 0.3 0.4 0.5
iBankers
Experts
Total
TopMgt
Technical
HResource
INTERNAL
PROBLEMS
Wi =0.02
We=0.143
Wt=0.061
0 0.1 0.2 0.3 0.4
iBankers
Experts
Total
LUnderstanding
LCommitment
BusinessOriented
AverseRisk
TOPMGT
Wi =0.149
We=0.178
Wt=0.06
0 0.1 0.2 0.3 0.4
iBankers
Experts
Total
NoMgtTools
LessApplicable
HigherRisk
Complicated
TECHNICAL
Wi=0.004
We=0.516
Wt=0.121
0 0.1 0.2 0.3 0.4
iBankers
Experts
Total
TargetOriented
RiskAverse
L.Know&Skill
EffortAverse
HUMAN
RESOURCE
Wi =0.065
We=0.153
Wt=0.014
29

Figure4.6PrioritiesofSystemProblems
ExpertsandIslamicbankersagreeontwomostcrucialExternalProblems,whicharewithin
Authority and Customer, with moderate rater agreement, W
t
= 0.321. Islamic bankers
believe that Authority is the most crucial problem with high rater agreement, W
i
= 0.571,
whileExpertsbelievethatCustomeristhemostcrucialproblem,withlowrateragreement
W
e
=0.143(seefigure4.7topleft).
Furthermore,IslamicbankersviewontheproblemsofSocietyareLackofKnowledgeand
Lack of Perception with high rater agreement, W
i
= 0.52, while Experts view are Lack of
Trust and Lack of Knowledge with moderate rater agreement, W
e
= 0.31, so that overall
problems of Society are Lack of Knowledge and Lack of Perception with moderate rater
agreement W
t
= 0.289 (see figure 4.7 topright). Islamic bankers view on the problems of
Customer are Lack of Knowledge and Averse to Risk with high rater agreement, W
i
=
0.663, while Experts view are Lack of Knowledge and Floating Majority with moderate
rateragreement,W
e
=0.318,sothatoverallproblemsofCustomerareLackofKnowledge
and Floating Majority with high rater agreement W
t
= 0.464 (see figure 4.7 bottomleft).
Meanwhile, the problems of Authority agreed by Islamic bankers and Experts are Lack of
Commitment and Lack of Support with low rater agreement, W
t
= 0.088 (see figure 4.7
bottomright). Islamic bankers have very low rater agreement, W
i
= 0.069, while Experts
have low rater agreement, W
e
= 0.167. The more detailed results of individual Islamic
bankersandindividualExpertscanbeseeninAppendix2.

0 0.1 0.2 0.3 0.4 0.5

iBankers
Experts
Total
UnsupportiveEnv.
Conv.Dominant
Conv.Competition
SYSTEM
PROBLEMS
Wi =0.061
We=0.082
Wt=0.066
0 0.1 0.2 0.3 0.4
iBankers
Experts
Total
Value
Rule
InfraStructure
Culture
UNSUPPORTIVE
ENVIRONMENT
Wi=0.055
We=0.22
Wt=0.121
0 0.1 0.2 0.3 0.4
iBankers
Experts
Total
Thought
Social
Politics
Economy
CONV.
DOMINANT
Wi=0.21
We=0.118
Wt=0.156
0 0.1 0.2 0.3 0.4
iBankers
Experts
Total
Service
Product
Instrument
Institution
CONV.
COMPETITION
Wi =0.724
We=0.073
Wt=0.313
0 0.1 0.2 0.3 0.4 0.5
iBankers
Experts
Total
Society
Customer
Authority
EXTERNAL
PROBLEMS
Wi=0.571
We=0.143
Wt=0.321
0 0.1 0.2 0.3 0.4
iBankers
Experts
Total
L.ofTrust
LPerception
LKnowledge
Diversity
SOCIETY
Wi=0.52
We=0.31
Wt=0.289
30

Figure4.7PrioritiesofExternalProblems
Experts and Islamic bankers agree that the most urgent Internal Solution is within Top
Management(Seefigure4.8topleft).However,theydonotagreeonthenextmosturgent
InternalSolutionswithlowrateragreement.ExpertsviewthatitiswithinHumanResources
(withlowrateragreement,W
e
=0.143),whileIslamicbankersviewthatitiswithinTechnical
(withverylowrateragreement,W
i
=0.02).Overall,thenextmosturgentInternalSolutions
areTechnicalandthenHumanResource(withverylowrateragreement,W
t
=0.061).
Furthermore, the most urgent solution of Top Management agreed by Islamic bankers and
ExpertsisCommitmentwithmoderaterateragreement,W
t
=0.216,whileIslamicbankers
rater agreement is W
i
= 0.107 and Experts rater agreement is W
e
= 0.388 (see figure 4.8
topright).IslamicbankersviewonthemosturgentTechnicalsolutionisIT&SOPwithlow
rateragreement,W
i
=0.143,whileExpertsviewareSimplificationandIT&SOPwithlow
rater agreement, W
e
= 0.097, so that overall views on the most urgent Technical solutions
are IT&SOP and Simplification with very low rater agreement, W
t
= 0.017 see figure 4.8
bottomleft). Islamic bankers view on the most urgent solution of Human Resource is
HumanResourceImprovementwithlowrateragreement,W
i
=0.184,whileExpertsview
is Human Resource Incentive with very low rater agreement, W
e
= 0.015, so that overall
view on the most urgent solution of Human Resource is Human Resource Improvement
and Human Resource Incentive with very low rater agreement, W
t
= 0.073 (see figure 4.8
bottomright).ThemoredetailedresultsofindividualIslamicbankersandindividualExperts
canbeseeninAppendix2.

Figure4.8PrioritiesofInternalSolutions
0 0.1 0.2 0.3 0.4
iBankers
Experts
Total
LowDemand
L.Knowledge
FloatingMajority
AversetoRisk
CUSTOMER
Wi=0.663
We=0.318
Wt=0.464
0 0.1 0.2 0.3 0.4
iBankers
Experts
Total
L.Understanding
L.Support
L.Incentive
L.Commitment
AUTHORITY
Wi =0.069
We=0.167
Wt=0.088
0 0.1 0.2 0.3 0.4 0.5
iBankers
Experts
Total
S.TopMgt
S.Technical
S.HResource
INTERNAL
SOLUTIONS
Wi=0.02
We=0.143
Wt=0.061
0 0.1 0.2 0.3 0.4 0.5
iBankers
Experts
Total
Reward&Punish
I.Commitment
Fit&Proper
S. TOPMGT.
Wi=0.107
We=0.388
Wt =0.216
0 0.1 0.2 0.3 0.4 0.5
iBankers
Experts
Total
Simplification
IT&SOP
Innovation
S. TECHNICAL
Wi=0.143
We=0.097
Wt=0.017
0 0.1 0.2 0.3 0.4 0.5
iBankers
Experts
Total
Selection
HR.Incentive
HR.Improvement
S. HUMAN
RESOURCE
Wi=0.184
We=0.015
Wt=0.073
31

Experts and Islamic bankers do not agree on most urgent System Solution. Islamic bankers
believe it is within Conventional Domination, with very low rater agreement, W
i
= 0.061,
whileExpertsbelieveitiswithinUnsupportiveEnvironment,withverylowrateragreement,
W
e
=0.082(Seefigure4.9topleft).Overall,themostcrucialSystemProblemsaretiewithin
UnsupportiveEnvironmentandConventionalDominant(withverylowrateragreement,W
t

=0.066).
Furthermore, the most urgent solution of Unsupportive Environment agreed by Islamic
bankers and Experts is Supportive Law and Regulation with low rater agreement, W
t
=
0.116(Seefigure4.9topright).IslamicbankersandExpertsscorelowrateragreementofW
i

= 0.097 and W
e
= 0.143, respectively. The two most urgent solutions of Conventional
Domination agreed by Islamic bankers and Experts are Grand Strategy and
Union/Cooperation with high rater agreement, W
t
= 0.537 (see figure 4.9 bottomleft).
Islamic bankers and Experts score high rater agreement of W
i
= 0.45 and W
e
= 0.679,
respectively. Meanwhile, two most urgent solution of Conventional Competition agreed by
Islamic bankers and Experts is Improved Standard and Diversification with low rater
agreement, W
t
= 0.17 (See figure 4.9 bottomright). Islamic bankers and Experts score
moderate and low rater agreements of W
i
= 0.291 and W
e
= 0.082, respectively. The more
detailedresultsofindividualIslamicbankersandindividualExpertscanbeseeninAppendix
2.

Figure4.9PrioritiesofSystemSolutions
ExpertsandIslamicbankersagreeontwomosturgentExternalSolutions,whicharewithin
Authority and Customer, with moderate rater agreement, W
t
= 0.321. Islamic bankers
believe that Authority is the most crucial problem with high rater agreement, W
i
= 0.571,
whileExpertsbelievethatCustomeristhemostcrucialproblem,withlowrateragreement
W
e
=0.143(seefigure4.10topleft).
Furthermore, the most urgent solution of Society agreed by Islamic bankers and Experts is
Communication with low rater agreement, W
t
= 0.143 (See figure 4.10 topright). Islamic
bankersandExpertsscoremoderateandverylowrateragreementsofW
i
=0.388andW
e
=
0.02, respectively. The most urgent solution of Customer agreed by Islamic bankers and
ExpertsisCustomerEducationwithmoderaterateragreement,W
t
=0.356(Seefigure4.10
0 0.1 0.2 0.3 0.4 0.5
iBankers
Experts
Total
S.UnsupportiveEnv.
S.Conv.Dominant
S.Conv.Competition
SYSTEM
SOLUTIONS
Wi =0.061
We=0.082
Wt=0.066
0 0.1 0.2 0.3 0.4 0.5
iBankers
Experts
Total
Law/Regn
Infrastructure
Alt.IslamicSystem
S.UNS.
ENVIRONMENT
Wi =0.097
We=0.143
Wt=0.116
0 0.1 0.2 0.3 0.4 0.5
iBankers
Experts
Total
Union/Coop
G.Strategy
Econ.Strengthening
S.CONV.
DOMINANT
Wi=0.45
We=0.679
Wt=0.537
0 0.1 0.2 0.3 0.4 0.5
iBankers
Experts
Total
Incr.Share
ImproveStd.
Diversification
S.CONV.
COMPETITION
Wi=0.291
We=0.082
Wt=0.17
32

bottomleft).IslamicbankersandExpertsscoremoderateandhighrateragreementsofW
i
=
0.321 and W
e
= 0.551, respectively. Meanwhile two most urgent solution of Authority
agreed by Islamic bankers and Experts are Regulation and Commitment with low rater
agreement, W
t
= 0.096 (See figure 4.10 bottomright). These results in line with Experts
view (also with low rater agreement W
e
= 0.02), while Islamic bankers view are the
opposite,i.e.Commitmentfirst,andthenRegulation(withmoderaterateragreement,W
i

=0.25).ThemoredetailedresultsofindividualIslamicbankersandindividualExpertscanbe
seeninAppendix2.

Figure4.10PrioritiesofExternalSolutions
Experts and Islamic bankers agree on two most important Policies to be taken, which are
Fair Treatment and Professionalism, although with low rater agreement, W
t
= 0.099.
Islamic bankers have moderate rater agreement, W
i
= 0.177, while Experts have very low
rateragreementW
e
=0.081(seefigure4.11left).FurthermoreExpertsandIslamicbankers
agreeononemostimportantStrategiestobeadopted,whichisProductDevelopment(see
figure4.11right).ThenexttwomostimportantStrategiesaccordingtoIslamicbankersare
MarketMappingandServiceImprovement(withhighrateragreement,W
i
=0.441),while
accordingtoExpertsareNewImageandServiceImprovement(withW
e
=0.134).Overall,
the next two most important Strategies are Service Improvement and Market Mapping
(with W
t
= 0.194). The more detailed results of individual Islamic bankers and individual
ExpertscanbeseeninAppendix2.

Figure4.11PrioritiesofPoliciesandStrategies
4.3.2 SummaryResults
0 0.1 0.2 0.3 0.4 0.5
iBankers
Experts
Total
S.Society
S.Customer
S.Authority
EXTERNAL
SOLUTIONS
Wi =0.571
We=0.143
Wt=0.321
0 0.1 0.2 0.3 0.4 0.5
iBankers
Experts
Total
S.Education
Da'wah
Communication
S. SOCIETY
Wi=0.388
We=0.02
Wt=0.143
0 0.1 0.2 0.3 0.4 0.5
iBankers
Experts
Total
Promotion
Incentive
C.Education
S.CUSTOMER
Wi=0.321
We=0.551
Wt=0.356
0 0.1 0.2 0.3 0.4 0.5
iBankers
Experts
Total
Support
Regulation
E.Commitment
S.AUTHORITY
Wi =0.25
We=0.02
Wt=0.096
0 0.1 0.2 0.3
iBankers
Experts
Total
ShariahCompliance
Professionalism
Gradual&Sustain
FairTreatment
DirectedMktDriven
POLICIES
Wi=0.177
We=0.081
Wt=0.099
0 0.1 0.2 0.3
iBankers
Experts
Total
Sos.Comm.Program
ServiceImprove
ProductDev
NewImage
MktMapping
STRATEGIES
Wi =0.441
We=0.134
Wt=0.194
33

Table 4.4 in the appendix 1 shows the summary results of Kendalls coefficient of
concordance, which represent level of agreement (rater agreement) among respondents
divided into three groups, namely, Islamic bankers, Experts and Total (Islamic bankers and
Experts).
[InsertTable4.4]
Theresultsshowthatthelevelsofagreementamongrespondentsaregenerallylow.Islamic
bankers show slightly higher level of agreement than Experts. Moreover, the priority of
choices shows greater agreement among respondents, especially among Islamic bankers.
Furthermore, Islamic bankers agree the most in External Problems (0.571), External
Solutions (0.571), as well as in Strategies (0.441). In more detail, Islamic bankers agree the
most in Conventional Competition of System Problems (0.724) and Customer of External
Problems (0.663). Meanwhile, Experts agree the most in Conventional Domination of
SystemSolutions(0.679)andCustomerofExternalSolutions(0.551).Finally,allrespondents
agree the most in Conventional Domination of System Solutions (0.537) and Customer of
ExternalProblems(0.464).

Figure4.12PrioritiesofAspects
Overallgeometricmeanresultsofallrespondentsshowthatpriorityaspectstobehandled
are1)Internalaspects;2)Systemaspects;and3)Externalaspects(seefigure4.12).

Figure4.13PriorityProblemsofLowPLSFinancing
Summary results show that the most crucial and primary problems of low implementation
ofPLSfinancingare(seefigure4.13):1)Authority(External);2)TopManagement(Internal);
0.000 0.002 0.004 0.006 0.008 0.010 0.012
A
S
P
E
C
T
ASPECT
W=0.162
External
System
Internal
0.000
0.010
0.020
0.030
0.040
0.050
34

3) Customer (External); 4) Unsupportive Environment (System); and 5) Conventional
Domination(System).Itseemsthatrootcausesoftheproblemslieinpeoplewhoinvolvein
the implementation of PLS financing, including authority of Islamic banking, Islamic banks
topmanagementaswellascustomerofIslamicbanking.
Furthermore,themostcrucialandprimaryinternalproblemsoflowimplementationofPLS
financingare(seefigure4.14leftblue):a)toomuchemphasisonbusinessorprofitoriented
(topmanagement);b)toocomplicatedtostructureanddealwithPLSfinancing(technical);
c) lack of commitment to PLS financing (top management); d) risk averse and risk transfer
behavior (top management); and e) lack of IEF understanding (top management). It is
obviousthattherootcauseoftheinternalproblemsprevalentintopmanagement.
The most crucial and primary system problems of low implementation of PLS financing are
(see figure 4.14 centerred): a) existing value system (unsupportive environment); b)
product (conventional competition); c) existing economic system (conventional
domination); d) mind set (conventional domination); and e) existing culture (unsupportive
environment).Allelementsoftheexistingsystemcontributetothesystemproblems.
ThemostcrucialandprimaryexternalproblemsoflowimplementationofPLSfinancingare
(see figure 4.14 rightgreen): a) lack of knowledge (customer); b) lack of commitment
(authority); c) lack of support (authority); d) floating majority (customer); and e) lack of
understanding (authority). Elements of authority and customers mostly contribute to the
externalproblems.
Whenallproblems(internal,system,andexternal)arecombined,themostcrucialproblems
of low implementation of PLS are: a) lack of knowledge (customer external); b) lack of
commitment (authority external); c) existing value system (unsupportive environment
system);d)toomuchemphasisonbusinessorprofitoriented(topmanagementinternal);
ande)lackofsupport(authorityexternal).

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35

Figure4.14DetailedPriorityProblemsofLowPLSFinancing
The most urgent internal solutions of low implementation of PLS financing are (see figure
4.15 leftblue): a) management commitment to apply PLS financing as the main mode of
financing (top management); b) development of Information Technology and Standard
Operating Procedures in the extension of PLS financing (technical); c) Ameliorate human
resources knowledge and skills in Islamic banking and Shariah Law; (human resource); d)
Appropriate Fit and Proper Test for BOC or BOD candidates; (top management); and e)
Reward and Punishment mechanism to promote PLS financing (top management). It is
obviousthatthemosturgentinternalsolutionsshouldbestartedfromtopmanagement.
The most urgent system solutions of low implementation of PLS financing are (see figure
4.15 centerred): a) Protocol and grand strategy (conventional domination); b) Laws and
regulations (unsupportive environment); c) Improve standards to be comparable to their
conventional counterparts (conventional competition); d) Union and cooperation; and e)
alternativeIslamicsystem(unsupportiveenvironment).
The most urgent external solutions of low implementation of PLS financing are (see figure
4.15rightgreen):a)EducationofferedtocustomersandpotentialcustomersregardingPLS
financing (customer); b) Supportive regulations to foster IEFB and PLSbased financing
(authority); c) political commitment, political will and political courage to support the
development of IEFB and PLS financing (authority); d) a systematic and concerted national
promotionprogramtonurturePLSfinancing(customer);ande)governmentsupportofhard
and soft infrastructure in the development of IEFB and PLS financing (authority). The most
urgentexternalsolutionsshouldaddresstheauthority.

Figure4.15DetailedPrioritySolutionsofLowPLSFinancing
When all alternative solutions (internal, system, and external) are combined, the most
urgentsolutionstotheproblemsoflowimplementationofPLSare:a)Educationofferedto
customers and potential customers regarding PLS financing (customer external); b)
management commitment to apply PLS financing as the main mode of financing (top
managementinternal);c)Protocolandgrandstrategy(conventionaldominationsystem);
d) supportive regulations to foster IEFB and PLSbased financing (authority external); and
0.0000
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36

e) political commitment, political will and political courage to support the development of
IEFBandPLSfinancing(authorityexternal).
Finally,policiesandgrandstrategiesthatshouldbeimplementedtostimulatePLSfinancing
are(seefigure4.16):a)Productdevelopment(grandstrategies);b)Fairtreatment(policies);
c) Service improvement (grand strategies); d) Market mapping (grand strategies); and e)
Professionalism (policies). A combination of grand strategy and effective policies are
expectedtobeabletostimulatePLSfinancing.

Figure4.16PrioritiesofPoliciesandStrategiestoStimulatePLSFinancing

4.4 Analysis
The problem of low implementation of PLS financing in Islamic banking has been existed
since the early development of Islamic banking. This problem has notbeen givensufficient
attentionbyscholarsandpractitioners,aswellasbytheauthority.Consequently,customer
and the society at large do not aware of this problem, which can be a disadvantage to
macroeconomicsoundness.
Problems which have been persisted since previous study in Ascarya and Yumanita (2005
and 2006) are: a) lack of understanding or knowledge of the customer; and b) lack of
support from the government or authority. These are external factors which cannot be
controlled by Islamic bank. In general, the root causes have not been changed so much,
which have been still persisted in people who are involve in Islamic banking, namely, the
Islamic banker, the authority and the customer. However, the issues have been slightly
changedinpriority(seetable4.4).
Alternative solutions which have still been priorities are: a) education or socialization to
customer and society at large; and b) supportive regulations from the authority, although
therehavebeensomeimprovementsontheseissues.SomenewsupportiveActshavebeen
stipulated,suchasIslamicBankActno.21/2008in2008,SovereignSukukActno.19/2008in
2008,andTaxActno.42/2009in2009.Itseemsthatmoregenuinecommitmentsfromthe
authority and the management of Islamic bank are desperately needed to improve the
implementationofPLSfinancing.
0.000
0.005
0.010
0.015
0.020
0.025
0.030
0.035
37

Furthermore,strategywhichhasnotbeeneffectivelyimplementedandwhichhasstillbeen
a priority is product development. So far, there has not been significant improvement in
new products innovations based on PLS mode of finance. One emerging product based on
PLSmodeoffinanceishomefinancingusingmusharakahmutanaqisahcontract,whichhas
some resemblance with mortgage financing. Further strategies and policies are needed to
improvePLSfinancing.
Table4.4ComparisonofSummaryResults
ASPECTS PREVIOUSSTUDY(2009) CURRENTSTUDY
Problems
1. NoManagementTools(Technical
Internal)
2. LackofCommitment(Authority
External)
3. LackofTrust(SocietyExternal)
4. LackCommitment(TopManagement
Internal)
5. LackofKnowledge&Skill(Human
ResourceInternal)
1. Lackofknowledge(CustomerExternal)
2. Lackofcommitment(AuthorityExternal)
3. Valuesystem(UnsupportiveEnvironment
System)
4. Businessorprofitoriented(TopManagement
Internal)
5. Lackofsupport(AuthorityExternal)
Solutions
1. IT&SOP(TechnicalInternal)
2. Commitment(AuthorityExternal)
3. HR.Incentive(HumanResource
Internal)
4. InternalCommitment(Top
ManagementInternal)
5. Education(CustomerExternal)
1. EducationonPLSfinancing(CustomerExternal)
2. ManagementcommitmenttoapplyPLSfinancing
(TopManagementInternal)
3. Protocolandgrandstrategy(Conventional
DominationSystem)
4. Supportiveregulations(AuthorityExternal)
5. Politicalcommitment,politicalwillandpolitical
courage(AuthorityExternal)
Policies/
Strategies
1. ServiceImprovement(Strategies)
2. Socialization&Communication
Programs(Strategies)
3. Professionalism(Policies)
4. DirectedMarketDriven(Policies)
5. ShariahCompliance(Policies)
1. Productdevelopment(Strategies)
2. Fairtreatment(Policies)
3. Serviceimprovement(Strategies)
4. Marketmapping(Strategies)
5. Professionalism(Policies)

Therefore, the problem of low implementation of PLS financing in Indonesias Islamic

banking has not been resolved, yet, although some partial solutions have been emerged,
bothinternallyandexternally.Mainproblemshavealwaysbeeninthepeoplewhoinvolved
in Islamic banking. On the supply side, Islamic bankers should commit to implement PLS
financing through product development and service improvement, as well as
professionalism. On the demand side, education and socialization to customer and society
at large should be improved. On the authority side, the government should provide real
politicalcommitment,politicalwillandpoliticalcouragetohonestlydevelopIslamicbanking
andPLSfinancing.

5. CONCLUSIONANDRECOMMENDATION

5.1 Conclusion
38

The low implementation of PLS financing in Islamic banking has been a persistent global
phenomenon since theearly development of Islamic banking in early 1970s, and Indonesia
isnoexception.However,theimplementationofPLSfinancinginIndonesiahasbeenbetter
than those of other neighboring countries like Malaysia and Pakistan, or those of other
MiddleEastandNorthAfricacountries,exceptSudan.
ThedatashowsthattheimplementationofPLSfinancinginIndonesiaisamongthehighest
comparedtothatofIslamicbanksinothercountries.AttheendofOctober2010,theshare
of PLS financing (mudharabah and musharakah) in Indonesias Islamic banking reached
35.5%.Nevertheless,PLSfinancinghasneverbeenplacedasthemainanddominantmode
offinance.
The problem of low implementation of PLS financing in Islamic banking has not been given
sufficientattentionbypeoplewhodirectlyorindirectlyinvolveinit,suchasIslamicbankers,
scholars, the authority, as well as the customer and the society at large. Therefore, this
problem has persistently existed and stakeholders have unconsciously accepted as a given
condition.
The most crucial problems of low implementation of PLS are: a) lack of knowledge
(customerexternal);b)lackofcommitment(authorityexternal);c)existingvaluesystem
(unsupportiveenvironmentsystem);d)toomuchemphasisonbusinessorprofitoriented
(topmanagementinternal);ande)lackofsupport(authorityexternal).
The most urgent solutions to the problems of low implementation of PLS are:a)Education
offeredtocustomersandpotentialcustomersregardingPLSfinancing(customerexternal);
b) management commitment to apply PLS financing as the main mode of financing (top
managementinternal);c)Protocolandgrandstrategy(conventionaldominationsystem);
d) supportive regulations to foster IEFB and PLSbased financing (authority external); and
e) political commitment, political will and political courage to support the development of
IEFBandPLSfinancing(authorityexternal).
PoliciesandgrandstrategiesthatshouldbeimplementedtostimulatePLSfinancingare:a)
Product development (grand strategies); b) Fair treatment (policies); c) Service
improvement (grand strategies); d) Market mapping (grand strategies); and e)
Professionalism(policies).
The levels of agreements among respondents, reflected by Kendalls coefficient of
concordance W, are generally low, with Islamic bankers show higher rater agreement than
that of Experts. However, the priority of choices shows greater agreement among
respondents,especiallyamongIslamicbankers.

5.2 Recommendation
PLS financing should become the main and dominant mode of finance in Islamic banking,
sinceitprovidesgreatermacroeconomicbenefitstotheeconomyandsocietyasawholein
termsofreducinginflation,stabilizingtheeconomy,catalyzingrealsectorgrowth,reducing
unemployment,promotingjusticeandequality,aswellasimprovingthewelfareofsociety
in general. Therefore, the authority (the Government and Bank Indonesia) should take this
problem seriously in order to optimize the benefits of PLSbased finance in the nationwide
financialsystem.ThisimpliesthatPLSbasedfinanceshouldnotonlybetheprinciplemode
39

of financing in Islamic banking, but also in the entire Islamic financial system and Islamic
monetarysystem.
The bottom line strategies to stimulate and improve the implementation of PLSbased
financearetocreatesupply,tocreatedemandandtogainsupport.Supplycanbecreated
bytheinnovationofcompetitivePLSbasedIslamicfinancialproductsandservices.Demand
can be created by effective education, socialization, communication, and marketing of
Islamic finance and banking. Moreover, supports could be obtained from real government
commitment and support in all areas/sectors, the implementation of PLSbased sovereign
sukuks,andtheimplementationofPLSbasedmonetaryinstruments.

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42

APPENDIX1

LackofPLS
Financing
Internal External
Customer
S y s t e m
Authority
B.O.C./B.O.D.
HumanResource
Technical
LackofUnderstanding
BusinessOriented
TargetOriented
LackofKnowledge&Skill
AversetoRisk
AversetoEffort
LessApplicable
HigherRisk
LackofKnowledge
LowDemand
LackofUnderstanding
LackofSupport
MoreComplicated
LackofIncentive
AversetoRisk
AversetoRisk
LackofCommitment
LackofCommitment
Commitment
Selection
Simplification
Commitment
Communication
Support
Education
Policies
Regulation Incentive
LackofManagementTools
DirectedMktDriven
FairTreatment
ShariahCompliance
Society
Diversity
Lack/LostofTrust
LackofPerception
Internal External S y s t e m
Solutions
FloatingMajority
Union&Cooperation
Protocol&GrandStrategy
Law&Regulation
Gradual&Sustainable
Professionalism
B.O.C./B.O.D. Society
Fit&Proper
Reward&Punishment
HumanResource
Improvement
Technical
Innovation
IT&SOP
Authority
Customer
Promotion
Dawah
Education
Incentive
Conv.Dominant
EconomicStrengthening
UnsupportiveEnvrnmnt
Infrastructure
AlternativeIslamicSystem
Conv.Competition
IncreaseShare
ImproveStandard
Diversification
LackofKnowledge
Conv.Dominant
UnsupportiveEnvrnmnt
Conv.Competition
Politics
Infrastructure
Institution
Service
Thought&Ideology
Economy
Rule
Product
Instrument
Social
Value
Culture
Strategies
NewImageProgram
ServiceImprovement
Program
NewMarketMapping
ProductDevelopment
Program
Socialization&
CommunicationProgram
43

Figure4.1ConceptualFramework

Figure4.2ANPNetwork

Figure4.3SamplesofSimplifiedPairwiseQuestionnaires

44

Table4.1OveralliBANKERSGeometricMeanResults
Name
Normalized
ByCluster
Limiting Name
Normalized
ByCluster
Limiting Name
Normalized
ByCluster
Limiting
ASPECT
Internal 0.52283 0.014865 System 0.29038 0.008256 External 0.1868 0.005311
INTERNALPROBLEMS SYSTEMPROBLEMS EXTERNALPROBLEMS
HResource 0.28146 0.032333 Conv.Competition 0.28356 0.032064 Authority 0.4376 0.049132
Technical 0.31976 0.036733 Conv.Dominant 0.4064 0.045954 Customer 0.39181 0.043991
TopMgt 0.39879 0.045812 UnsupportiveEnv. 0.31004 0.035058 Society 0.17058 0.019152
TOPMANAGEMENTPROBLEMS CONV.COMPETITIONPROBLEMS SOCIETYPROBLEMS
AverseRisk 0.19268 0.001069 Institution 0.0881 0.000342 Diversity 0.11902 0.000276
BusinessOriented 0.28803 0.001598 Instrument 0.25554 0.000992 LKnowledge 0.37732 0.000875
LCommitment 0.19737 0.001095 Product 0.40443 0.00157 LPerception 0.32773 0.00076
LUnderstanding 0.32192 0.001786 Service 0.25193 0.000978 L.ofTrust 0.17594 0.000408
HUMANRESOURCEPROBLEMS CONV.DOMINANTPROBLEMS AUTHORITYPROBLEMS
EffortAverse 0.22503 0.000881 Economy 0.33879 0.001885 L.Commitment 0.3446 0.00205
L.Know&Skill 0.27816 0.001089 Politics 0.19033 0.001059 L.Incentive 0.19818 0.001179
RiskAverse 0.19336 0.000757 Social 0.17416 0.000969 L.Support 0.24054 0.001431
TargetOriented 0.30345 0.001188 Thought 0.29673 0.001651 L.Understanding 0.21668 0.001289
TECHNICALPROBLEMS UNSUPPORTIVEENV.PROBLEMS CUSTOMERPROBLEMS
Complicated 0.23994 0.001067 Culture 0.25512 0.001083 AversetoRisk 0.22452 0.001196
HigherRisk 0.22689 0.001009 InfraStructure 0.19694 0.000836 FloatingMajority 0.21419 0.001141
LessApplicable 0.27614 0.001228 Rule 0.22968 0.000975 L.Knowledge 0.45485 0.002423
NoMgtTools 0.25703 0.001143 Value 0.31826 0.001351 LowDemand 0.10644 0.000567
INTERNALSOLUTION SYSTEMSOLUTIONS EXTERNALSOLUTIONS
S.HResource 0.27121 0.031156 S.Conv.Competition 0.28396 0.032109 S.Authority 0.42954 0.048227
S.Technical 0.32393 0.037212 S.Conv.Dominant 0.41525 0.046955 S.Customer 0.39409 0.044247
S.TopMgt 0.40486 0.04651 S.UnsupportiveEnv. 0.3008 0.034013 S.Society 0.17636 0.019801
TOPMANAGEMENTSOLUTIONS CONV.COMPETITIONSOLUTIONS SOCIETYSOLUTIONS
Fit&Proper 0.30984 0.001745 Diversification 0.30898 0.001201 Communication 0.51877 0.001244
I.Commitment 0.44158 0.002487 ImproveStd. 0.47312 0.001839 Da'wah 0.24562 0.000589
Reward&Punish 0.24858 0.0014 Incr.Share 0.21791 0.000847 S.Education 0.23561 0.000565
HUMANRESOURCESOLUTIONS CONV.DOMINANTSOLUTIONS AUTHORITYSOLUTIONS
HR.Improvement 0.46117 0.00174 Econ.Strengthening 0.1956 0.001112 E.Commitment 0.41308 0.002412
HR.Incentive 0.2987 0.001127 G.Strategy 0.55954 0.003181 Regulation 0.39082 0.002282
Selection 0.24013 0.000906 Union/Coop 0.24485 0.001392 Support 0.1961 0.001145
TECHNICALSOLUTIONS UNSUPPORTIVEENV.SOLUTIONS CUSTOMERSOLUTIONS
Innovation 0.27763 0.001251 Alt.IslamicSystem 0.2974 0.001225 C.Education 0.44588 0.002389
IT&SOP 0.46982 0.002117 Infrastructure 0.26973 0.001111 Incentive 0.18813 0.001008
Simplification 0.25255 0.001138 Law/Regn 0.43287 0.001783 Promotion 0.36599 0.001961
POLICIES STRATEGIES
DirectedMktDrvn 0.22178 0.023144 MktMapping 0.24371 0.025433
FairTreatment 0.23599 0.024627 NewImage 0.11094 0.011577
Gradual&Sustain 0.16219 0.016926 ProductDev 0.30511 0.031841
Professionalism 0.23442 0.024463 ServiceImprove 0.23662 0.024693
ShariahComplance 0.14563 0.015197 Sos.Comm.Prog. 0.10362 0.010814
45

Table4.2OverallEXPERTSGeometricMeanResults
Name
Normalized
ByCluster
Limiting Name
Normalized
ByCluster
Limiting Name
Normalized
ByCluster
Limiting
ASPECT
Internal 0.29692 0.008442 System 0.34999 0.009951 External 0.35309 0.010039
INTERNALPROBLEMS SYSTEMPROBLEMS EXTERNALPROBLEMS
HResource 0.3197 0.036167 Conv.Competition 0.31636 0.035919 Authority 0.39373 0.044713
Technical 0.29739 0.033643 Conv.Dominant 0.28307 0.032139 Customer 0.40565 0.046067
TopMgt 0.38291 0.043318 UnsupportiveEnv. 0.40057 0.04548 Society 0.20062 0.022783
TOPMANAGEMENTPROBLEMS CONV.COMPETITIONPROBLEMS SOCIETYPROBLEMS
AverseRisk 0.26864 0.001409 Institution 0.16142 0.000702 Diversity 0.12545 0.000346
BusinessOriented 0.29438 0.001544 Instrument 0.25592 0.001113 LKnowledge 0.25925 0.000715
LCommitment 0.27645 0.00145 Product 0.31892 0.001387 LPerception 0.25018 0.00069
LUnderstanding 0.16053 0.000842 Service 0.26374 0.001147 L.ofTrust 0.36512 0.001007
HUMANRESOURCEPROBLEMS CONV.DOMINANTPROBLEMS AUTHORITYPROBLEMS
EffortAverse 0.24817 0.001087 Economy 0.28854 0.001123 L.Commitment 0.30089 0.001629
L.Know&Skill 0.17785 0.000779 Politics 0.20349 0.000792 L.Incentive 0.15811 0.000856
RiskAverse 0.32717 0.001433 Social 0.18063 0.000703 L.Support 0.28814 0.00156
TargetOriented 0.2468 0.001081 Thought 0.32734 0.001274 L.Understanding 0.25286 0.001369
TECHNICALPROBLEMS UNSUPPORTIVEENV.PROBLEMS CUSTOMERPROBLEMS
Complicated 0.38856 0.001583 Culture 0.28763 0.001584 AversetoRisk 0.24727 0.001379
HigherRisk 0.2813 0.001146 InfraStructure 0.17323 0.000954 FloatingMajority 0.29855 0.001665
LessApplicable 0.10825 0.000441 Rule 0.16906 0.000931 L.Knowledge 0.33369 0.001861
NoMgtTools 0.22189 0.000904 Value 0.37007 0.002038 LowDemand 0.12049 0.000672
INTERNALSOLUTION SYSTEMSOLUTIONS EXTERNALSOLUTIONS
S.HResource 0.32097 0.036311 S.Conv.Competition 0.31265 0.035498 S.Authority 0.39304 0.044635
S.Technical 0.29624 0.033513 S.Conv.Dominant 0.2878 0.032677 S.Customer 0.41262 0.046858
S.TopMgt 0.38279 0.043304 S.UnsupportiveEnv. 0.39955 0.045364 S.Society 0.19434 0.02207
TOPMANAGEMENTSOLUTIONS CONV.COMPETITIONSOLUTIONS SOCIETYSOLUTIONS
Fit&Proper 0.22178 0.001163 Diversification 0.31317 0.001346 Communication 0.39469 0.001055
I.Commitment 0.52136 0.002734 ImproveStd. 0.42299 0.001818 Da'wah 0.32286 0.000863
Reward&Punish 0.25686 0.001347 Incr.Share 0.26384 0.001134 S.Education 0.28245 0.000755
HUMANRESOURCESOLUTIONS CONV.DOMINANTSOLUTIONS AUTHORITYSOLUTIONS
HR.Improvement 0.32932 0.001448 Econ.Strengthening 0.14004 0.000554 E.Commitment 0.3337 0.001804
HR.Incentive 0.37548 0.001651 G.Strategy 0.49671 0.001965 Regulation 0.38975 0.002107
Selection 0.2952 0.001298 Union/Coop 0.36325 0.001437 Support 0.27654 0.001495
TECHNICALSOLUTIONS UNSUPPORTIVEENV.SOLUTIONS CUSTOMERSOLUTIONS
Innovation 0.27667 0.001123 Alt.IslamicSystem 0.30007 0.001648 C.Education 0.52159 0.002959
IT&SOP 0.32299 0.001311 Infrastructure 0.24854 0.001365 Incentive 0.2593 0.001471
Simplification 0.40034 0.001625 Law/Regn 0.45138 0.002479 Promotion 0.21911 0.001243
POLICIES STRATEGIES
DirectedMktDrivn 0.16283 0.016993 MktMapping 0.19482 0.020331
FairTreatment 0.28759 0.030012 NewImage 0.22554 0.023537
Gradual&Sustain 0.17426 0.018185 ProductDev 0.25386 0.026492
Professionalism 0.19327 0.020169 ServiceImprove 0.20195 0.021075
ShariahComplance 0.18206 0.018999 Sos.Comm.Progm 0.12383 0.012923
46

Table4.3OveralliBANKERS+EXPERTSGeometricMeanResults
Name
Normalized
ByCluster
Limiting Name
Normalized
ByCluster
Limiting Name
Normalized
ByCluster
Limiting
ASPECT
Internal 0.40588 0.01154 System 0.3304 0.009394 External 0.26372 0.007498
INTERNALPROBLEMS SYSTEMPROBLEMS EXTERNALPROBLEMS
HResource 0.30043 0.03424 Conv.Competition 0.30005 0.034021 Authority 0.41574 0.046925
Technical 0.30842 0.035151 Conv.Dominant 0.34396 0.039 Customer 0.39889 0.045023
TopMgt 0.39115 0.04458 UnsupportiveEnv. 0.356 0.040365 Society 0.18537 0.020923
TOPMANAGEMENTPROBLEMS CONV.COMPETITIONPROBLEMS SOCIETYPROBLEMS
AverseRisk 0.23268 0.001256 Institution 0.12017 0.000495 Diversity 0.1251 0.000317
BusinessOriented 0.29659 0.001601 Instrument 0.25783 0.001062 LKnowledge 0.32123 0.000814
LCommitment 0.23935 0.001292 Product 0.36222 0.001492 LPerception 0.294 0.000745
LUnderstanding 0.23138 0.001249 Service 0.25977 0.00107 L.ofTrust 0.25967 0.000658
HUMANRESOURCEPROBLEMS CONV.DOMINANTPROBLEMS AUTHORITYPROBLEMS
EffortAverse 0.24071 0.000998 Economy 0.313 0.001478 L.Commitment 0.32313 0.001836
L.Know&Skill 0.23251 0.000964 Politics 0.19737 0.000932 L.Incentive 0.17793 0.001011
RiskAverse 0.25519 0.001058 Social 0.17726 0.000837 L.Support 0.26417 0.001501
TargetOriented 0.27159 0.001126 Thought 0.31237 0.001475 L.Understanding 0.23478 0.001334
TECHNICALPROBLEMS UNSUPPORTIVEENV.PROBLEMS CUSTOMERPROBLEMS
Complicated 0.31525 0.001342 Culture 0.27256 0.001332 AversetoRisk 0.23129 0.001261
HigherRisk 0.25957 0.001105 InfraStructure 0.18539 0.000906 FloatingMajority 0.25367 0.001383
LessApplicable 0.17876 0.000761 Rule 0.19767 0.000966 L.Knowledge 0.40114 0.002187
NoMgtTools 0.24642 0.001049 Value 0.34438 0.001683 LowDemand 0.1139 0.000621
INTERNALSOLUTION SYSTEMSOLUTIONS EXTERNALSOLUTIONS
S.HResource 0.29575 0.033707 S.Conv.Competition 0.29993 0.034008 S.Authority 0.41348 0.046669
S.Technical 0.31005 0.035337 S.Conv.Dominant 0.35055 0.039748 S.Customer 0.40462 0.045669
S.TopMgt 0.3942 0.044927 S.UnsupportiveEnv. 0.34951 0.03963 S.Society 0.18191 0.020532
TOPMANAGEMENTSOLUTIONS CONV.COMPETITIONSOLUTIONS SOCIETYSOLUTIONS
Fit&Proper 0.26397 0.001436 Diversification 0.31156 0.001283 Communication 0.45597 0.001134
I.Commitment 0.48235 0.002624 ImproveStd. 0.44779 0.001844 Da'wah 0.28388 0.000706
Reward&Punish 0.25368 0.00138 Incr.Share 0.24065 0.000991 S.Education 0.26015 0.000647
HUMANRESOURCESOLUTIONS CONV.DOMINANTSOLUTIONS AUTHORITYSOLUTIONS
HR.Improvement 0.39319 0.001605 Econ.Strengthening 0.16705 0.000804 E.Commitment 0.37392 0.002113
HR.Incentive 0.33782 0.001379 G.Strategy 0.53169 0.002559 Regulation 0.39179 0.002214
Selection 0.26899 0.001098 Union/Coop 0.30127 0.00145 Support 0.23429 0.001324
TECHNICALSOLUTIONS UNSUPPORTIVEENV.SOLUTIONS CUSTOMERSOLUTIONS
Innovation 0.28214 0.001207 Alt.IslamicSystem 0.29825 0.001431 C.Education 0.48897 0.002704
IT&SOP 0.39551 0.001692 Infrastructure 0.25969 0.001246 Incentive 0.22387 0.001238
Simplification 0.32235 0.001379 Law/Regn 0.44206 0.002121 Promotion 0.28716 0.001588
POLICIES STRATEGIES
DirectedMktDrivn 0.19133 0.019967 MktMapping 0.22065 0.023027
FairTreatment 0.26165 0.027305 NewImage 0.15908 0.016601
Gradual&Sustain 0.16897 0.017633 ProductDev 0.28297 0.02953
Professionalism 0.21406 0.022339 ServiceImprove 0.22318 0.023291
ShariahComplance 0.16399 0.017114 Sos.Comm.Progm 0.11412 0.011909
47

Table4.4KendallsCoefficientofConcordance(W)
Respondent Wi Respondent We Respondent Wt
ASPECT
IslamicBankers 0.390 Experts 0.036 Total 0.162

INTERNALPROBLEMS SYSTEMPROBLEMS EXTERNALPROBLEMS

IslamicBankers 0.020 IslamicBankers 0.061 IslamicBankers 0.571
Experts 0.143 Experts 0.082 Experts 0.143
Total 0.061 Total 0.066 Total 0.321
TOPMANAGEMENTPROBLEMS CONV.COMPETITIONPROBLEMS SOCIETYPROBLEMS
IslamicBankers 0.149 IslamicBankers 0.724 IslamicBankers 0.520
Experts 0.178 Experts 0.073 Experts 0.310
Total 0.060 Total 0.313 Total 0.289
HUMANRESOURCEPROBLEMS CONV.DOMINANTPROBLEMS AUTHORITYPROBLEMS
IslamicBankers 0.065 IslamicBankers 0.210 IslamicBankers 0.069
Experts 0.153 Experts 0.118 Experts 0.167
Total 0.014 Total 0.156 Total 0.088
TECHNICALPROBLEMS UNSUPPORTIVEENV.PROBLEMS CUSTOMERPROBLEMS
IslamicBankers 0.004 IslamicBankers 0.055 IslamicBankers 0.663
Experts 0.516 Experts 0.220 Experts 0.318
Total 0.121 Total 0.121 Total 0.464
INTERNALSOLUTION SYSTEMSOLUTIONS EXTERNALSOLUTIONS
IslamicBankers 0.020 IslamicBankers 0.061 IslamicBankers 0.571
Experts 0.143 Experts 0.082 Experts 0.143
Total 0.061 Total 0.066 Total 0.321
TOPMANAGEMENTSOLUTIONS CONV.COMPETITIONSOLUTIONS SOCIETYSOLUTIONS
IslamicBankers 0.107 IslamicBankers 0.291 IslamicBankers 0.388
Experts 0.388 Experts 0.082 Experts 0.020
Total 0.216 Total 0.170 Total 0.143
HUMANRESOURCESOLUTIONS CONV.DOMINANTSOLUTIONS AUTHORITYSOLUTIONS
IslamicBankers 0.184 IslamicBankers 0.450 IslamicBankers 0.250
Experts 0.015 Experts 0.679 Experts 0.020
Total 0.073 Total 0.537 Total 0.096
TECHNICALSOLUTIONS UNSUPPORTIVEENV.SOLUTIONS CUSTOMERSOLUTIONS
IslamicBankers 0.143 IslamicBankers 0.097 IslamicBankers 0.321
Experts 0.097 Experts 0.143 Experts 0.551
Total 0.017 Total 0.116 Total 0.356
POLICIES STRATEGIES
IslamicBankers 0.177 IslamicBankers 0.441
Experts 0.081 Experts 0.134
Total 0.099 Total 0.194

48

APPENDIX2

PRIORITIESofInternalProblems:

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
P1
P2
P3
P4
P5
P6
P7
GMEAN
INTERNAL
PROBLEMS
Wi=0.02
TopMgt
Technical
HResource
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
E1
E2
E3
E4
E5
E6
E7
GMEAN
INTERNAL
PROBLEMS
We=0.143
TopMgt
Technical
HResource
0 0.1 0.2 0.3 0.4 0.5
P1
P2
P3
P4
P5
P6
P7
GMEAN
TOP
MANAGEMENT
Wi=0.149
LUnderstanding
LCommitment
BusinessOriented
AverseRisk
0 0.1 0.2 0.3 0.4 0.5 0.6
E1
E2
E3
E4
E5
E6
E7
GMEAN
TOP
MANAGEMENT
We=0.178
LUnderstanding
LCommitment
BusinessOriented
AverseRisk
0 0.1 0.2 0.3 0.4 0.5
P1
P2
P3
P4
P5
P6
P7
GMEAN
TECHNICAL
Wi=0.004
NoMgtTools
LessApplicable
HigherRisk
Complicated
0 0.1 0.2 0.3 0.4 0.5 0.6
E1
E2
E3
E4
E5
E6
E7
GMEAN
TECHNICAL
We=0.516
NoMgtTools
LessApplicable
HigherRisk
Complicated
0 0.1 0.2 0.3 0.4 0.5 0.6
P1
P2
P3
P4
P5
P6
P7
GMEAN
HUMAN
RESOURCE
Wi=0.065
TargetOriented
RiskAverse
L.Know&Skill
EffortAverse
0 0.1 0.2 0.3 0.4 0.5 0.6
E1
E2
E3
E4
E5
E6
E7
GMEAN
HUMAN
RESOURCE
We=0.153
TargetOriented
RiskAverse
L.Know&Skill
EffortAverse
49

PRIORITIESofInternalSolutions:

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7

P1
P2
P3
P4
P5
P6
P7
GMEAN
INTERNAL
SOLUTIONS
Wi=0.02
S.TopMgt
S.Technical
S.HResource
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
E1
E2
E3
E4
E5
E6
E7
GMEAN
INTERNAL
SOLUTIONS
We=0.143
S.TopMgt
S.Technical
S.HResource
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
P1
P2
P3
P4
P5
P6
P7
GMEAN
S.TOP
MANAGEMENT
W=0.107
Reward&Punish
I.Commitment
Fit&Proper
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
E1
E2
E3
E4
E5
E6
E7
GMEAN
S.TOP
MANAGEMENT
W=0.388
Reward&Punish
I.Commitment
Fit&Proper
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
P1
P2
P3
P4
P5
P6
P7
GMEAN
S.TECHNICAL
Wi=0.143
Simplification
IT&SOP
Innovation
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
E1
E2
E3
E4
E5
E6
E7
GMEAN
S.TECHNICAL
We=0.097
Simplification
IT&SOP
Innovation
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
P1
P2
P3
P4
P5
P6
P7
GMEAN
S.HUMAN
RESOURCE
Wi=0.184
Selection
HR.Incentive
HR.Improvement
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
E1
E2
E3
E4
E5
E6
E7
GMEAN
S.HUMAN
RESOURCE
We=0.015
Selection
HR.Incentive
HR.Improvement
50

PRIORITIESofSystemProblems:

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
P1
P2
P3
P4
P5
P6
P7
GMEAN
SYSTEM
PROBLEMS
Wi=0.061
UnsupportiveEnv.
Conv.Dominant
Conv.Competition
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
E1
E2
E3
E4
E5
E6
E7
GMEAN
SYSTEM
PROBLEMS
We=0.082
UnsupportiveEnv.
Conv.Dominant
Conv.Competition
0 0.1 0.2 0.3 0.4 0.5
P1
P2
P3
P4
P5
P6
P7
GMEAN
UNSUPPORTIVE
ENVIRONMENT
Wi=0.055
Value
Rule
InfraStructure
Culture
0 0.1 0.2 0.3 0.4 0.5 0.6
E1
E2
E3
E4
E5
E6
E7
GMEAN
UNSUPPORTIVE
ENVIRONMENT
We=0.22
Value
Rule
InfraStructure
Culture
0 0.1 0.2 0.3 0.4 0.5
P1
P2
P3
P4
P5
P6
P7
GMEAN
CONV.
DOMINANT
Wi=0.21
Thought
Social
Politics
Economy
0 0.1 0.2 0.3 0.4 0.5 0.6
E1
E2
E3
E4
E5
E6
E7
GMEAN
CONV.
DOMINANT
We=0.118
Thought
Social
Politics
Economy
0 0.1 0.2 0.3 0.4 0.5
P1
P2
P3
P4
P5
P6
P7
GMEAN
CONV.
COMPETITION
Wi=0.724
Service
Product
Instrument
Institution
0 0.1 0.2 0.3 0.4 0.5 0.6
E1
E2
E3
E4
E5
E6
E7
GMEAN
CONV.
COMPETITION
We=0.073
Service
Product
Instrument
Institution
51

PRIORITIESofSystemSolutions:

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
P1
P2
P3
P4
P5
P6
P7
GMEAN
SYSTEM
SOLUTIONS
Wi=0.061
S.UnsupportiveEnv.
S.Conv.Dominant
S.Conv.Competition
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
E1
E2
E3
E4
E5
E6
E7
GMEAN
SYSTEM
SOLUTIONS
We=0.082
S.UnsupportiveEnv.
S.Conv.Dominant
S.Conv.Competition
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
P1
P2
P3
P4
P5
P6
P7
GMEAN
S.UNS.
ENVIRONMENT
Wi=0.097
Law/Regn
Infrastructure
Alt.IslamicSystem
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
E1
E2
E3
E4
E5
E6
E7
GMEAN
S.UNS.
ENVIRONMENT
We=0.143
Law/Regn
Infrastructure
Alt.IslamicSystem
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
P1
P2
P3
P4
P5
P6
P7
GMEAN
S.CONV
DOMINANT
Wi=0.45
Union/Coop
G.Strategy
Econ.Strengthening
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
E1
E2
E3
E4
E5
E6
E7
GMEAN
S.CONV
DOMINANT
We=0.679
Union/Coop
G.Strategy
Econ.Strengthening
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
P1
P2
P3
P4
P5
P6
P7
GMEAN
S.CONV
COMPETITION
Wi=0.291
Incr.Share
ImproveStd.
Diversification
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
E1
E2
E3
E4
E5
E6
E7
GMEAN
S.CONV
COMPETITION
We=0.082
Incr.Share
ImproveStd.
Diversification
52

PRIORITIESofExternalProblems:

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
P1
P2
P3
P4
P5
P6
P7
GMEAN
EXTERNAL
PROBLEMS
Wi=0.571
Society
Customer
Authority
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
E1
E2
E3
E4
E5
E6
E7
GMEAN
EXTERNAL
PROBLEMS
We=0.143
Society
Customer
Authority
0 0.1 0.2 0.3 0.4 0.5
P1
P2
P3
P4
P5
P6
P7
GMEAN
SOCIETY
Wi=0.52
L.ofTrust
LPerception
LKnowledge
Diversity
0 0.1 0.2 0.3 0.4 0.5 0.6
E1
E2
E3
E4
E5
E6
E7
GMEAN
SOCIETY
We=0.31
L.ofTrust
LPerception
LKnowledge
Diversity
0 0.1 0.2 0.3 0.4 0.5
P1
P2
P3
P4
P5
P6
P7
GMEAN
CUSTOMER
Wi=0.663
LowDemand
L.Knowledge
FloatingMajority
AversetoRisk
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
E1
E2
E3
E4
E5
E6
E7
GMEAN
CUSTOMER
We=0.318
LowDemand
L.Knowledge
FloatingMajority
AversetoRisk
0 0.1 0.2 0.3 0.4 0.5
P1
P2
P3
P4
P5
P6
P7
GMEAN
AUTHORITY
Wi=0.069
L.Understanding
L.Support
L.Incentive
L.Commitment
0 0.1 0.2 0.3 0.4 0.5 0.6
E1
E2
E3
E4
E5
E6
E7
GMEAN
AUTHORITY
We=0.167
L.Understanding
L.Support
L.Incentive
L.Commitment
53

PRIORITIESofExternalSolutions:

0 0.2 0.4 0.6 0.8
P1
P2
P3
P4
P5
P6
P7
GMEAN
EXTERNAL
SOLUTIONS
Wi=0.571
S.Society
S.Customer
S.Authority
0 0.2 0.4 0.6 0.8
E1
E2
E3
E4
E5
E6
E7
GMEAN
EXTERNAL
SOLUTIONS
We=0.143
S.Society
S.Customer
S.Authority
0 0.1 0.2 0.3 0.4 0.5 0.6
P1
P2
P3
P4
P5
P6
P7
GMEAN
S.SOCIETY
Wi=0.388
S.Education
Da'wah
Communication
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
E1
E2
E3
E4
E5
E6
E7
GMEAN
S.SOCIETY
We=0.02
S.Education
Da'wah
Communication
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
P1
P2
P3
P4
P5
P6
P7
GMEAN
S.CUSTOMER
Wi=0.321
Promotion
Incentive
C.Education
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
E1
E2
E3
E4
E5
E6
E7
GMEAN
S.CUSTOMER
We=0.551
Promotion
Incentive
C.Education
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
P1
P2
P3
P4
P5
P6
P7
GMEAN
S.AUTHORITY
Wi=0.25
Support
Regulation
E.Commitment
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
E1
E2
E3
E4
E5
E6
E7
GMEAN
S.AUTHORITY
We=0.02
Support
Regulation
E.Commitment
54

PRIORITIESofPoliciesandStrategies:

0 0.1 0.2 0.3 0.4

P1
P2
P3
P4
P5
P6
P7
GMEAN
POLICIES
Wi=0.177
ShariahCompliance
Professionalism
Gradual&Sustain
FairTreatment
DirectedMktDriven
0 0.1 0.2 0.3 0.4
E1
E2
E3
E4
E5
E6
E7
GMEAN
POLICIES
We=0.081
ShariahCompliance
Professionalism
Gradual&Sustain
FairTreatment
DirectedMktDriven
0 0.1 0.2 0.3 0.4
P1
P2
P3
P4
P5
P6
P7
GMEAN
STRATEGIES
Wi=0.441
Sos.Comm.Program
ServiceImprove
ProductDev
NewImage
MktMapping
0 0.1 0.2 0.3 0.4
E1
E2
E3
E4
E5
E6
E7
GMEAN
STRATEGIES
We=0.134
Sos.Comm.Program
ServiceImprove
ProductDev
NewImage
MktMapping