Demography The total population of Central Java Province were 29,659,176 persons in 1994 and

6 PART THREE : GENERAL DESCRIPTION OF RESPONDENTS AND RESEARCH AREAS.

3.1. Demography The total population of Central Java Province were 29,659,176 persons in 1994 and

became 30,385,445 persons in 1998, with the rate of population growth 0.6 percents annually. In the same period the total population of Yogyakarta Province were 3,124,286 persons and 3,237,628 persons, with the rate of population growth 0.89 percents per year. The large number of population in both provinces showing high potentiality for the development of Syariah Banks. The average level of education in the two provinces was still low. The number of population in Central Java finishing the primary school were 35.96 percents, while those finishing higher education were only 2.40 percents. In Yogyakarta this condition was a little bit better than Central Java. Those finishing primary school were 22.47 percents and 7.86 percents had finished higher education. 3.2. Socio Economic Condition The majority of population in Central Java worked in agricultural sector 43.9 . Trading sector occupied the second rank 12.29 and the third rank was industrial sector with 14.73 of the population. In Yogyakarta, agricultural sector was the dominant sector with 31.47 of the population, then followed by trading sector 24.95 and service sector 18.49 . In 1993, the regional gross domestic product PDRB in Central Java, based on constant price 1993, was Rp 33.98 trillions, and became Rp 43.12 trillions in 1997. The growth rate in this period was 6.0 percents per year. Meanwhile, in the same period the growth rate in Yogyakarta was 6.5 percents annually. Based on these growth rate, the prediction of PDRB of Central Java is about Rp 54.37 trillions and Yogyakarta is about Rp 6.83 trillions in 2001. In 19921993 the amount of saving of the society in Central Java was Rp 2.32 trillions and became Rp 6.03 trillions in 19971998, with the saving growth 19.08 percents yearly. It is predicted that the amount of saving in 2001 will be Rp 10.98 trillions. Meanwhile the saving growth rate in Yogyakarta was 18.86 percents per year, and the prediction of the amount of saving will be Rp 2.16 trillions in 2001. The details of the description of saving amount are shown in Table 3.1. 7 Table 3.1. Number of Saving in 19921993 and 19971998, Growth Rate and Saving Prediction in 2001 in Million rupiah S AVING N O C OUNTY M UNICIPALITY 19921993 19971998 A NNUAL G ROWTH S AVING P REDICTION 2001 1 Kab. Rembang 14.766 38.270 19,05 67.767 2 Kab. Jepara 22.343 102.085 30,39 254.012 3 Kab. Kudus 110.946 306.476 20,32 563.855 4 Kab. Demak 10.106 42.898 28,91 102.130 5 Kota Semarang 688.484 1.599.630 16,86 2.652.742 6 Kab. Kendal 20.944 86.554 28,38 202.779 7 Kota Pekalongan 110.580 237.908 15,32 376.746 8 Kota Tegal 124.037 301.025 17,73 512.429 9 Kab. Brebes 24.818 75.021 22,12 145.691 10 Kab. Boyolali 19.426 53.060 20,10 96.961 11 Kota Surakarta 356.898 922.070 18,98 1.629.655 12 Kota Magelang 118.867 297.730 18,36 516.511 13 Kab. Cilacap 86.123 255.403 21,74 490.332 Jawa Tengah 2.324.118 6.033.802 19,08 10.695.246 1 Kota Yogyakarta 332.166 900.618 19,95 1.638.521 2 Kab. Bantul 33.077 91.920 20,44 169.723 D I Yogyakarta 484.185 1.230.600 18,66 2.153.675 Source : KBI Semarang 1993, 1998 ; KBI Yogya 1993, 1998 3.3. Respondents’ Identity Based on their age group, most respondents 91 were more than 30 years of age. Only 9 percents of them less than 30 years. The age group between 31-40 years occupied 32.87 percents, between 41-50 years were 32.33 percents, and there were 26.87 percents above 50 years. This age composition were not the same for the two provinces, whereas the respondents from Yogyakarta were generally older than those from Central Java. See Table 3.2. Table 3.2. Distribution of Respondents Based on Their Age Group. AGE DISTRIBUTION N O C OUNTY M UNICIPALITY S . D . 30 31-40 41-50 50 T OTAL 1 Kab. Rembang 8 31 28 33 100 2 Kab. Jepara 11 32 35 22 100 3 Kab. Kudus 13 30 38 19 100 4 Kab. Demak 12 52 22 14 100 5 Kota Semarang 11 27 31 31 100 6 Kab. Kendal 10 36 34 20 100 7 Kota Pekalongan 10 34 31 25 100 8 Kota Tegal 9 30 37 24 100 9 Kab. Brebes 15 25 27 33 100 10 Kab. Boyolali 11 19 42 28 100 11 Kota Surakarta 7 32 30 31 100 12 Kota Magelang 3 25 27 45 100 13 Kab. Cilacap 6 49 31 14 100 Total Central Java 126 422 413 339 1300 Percentage 9,69 32,46 31,77 26,08 100,00 1. Kota Yogyakarta 4 25 37 34 100 2. Kab. Bantul 4 31 35 30 100 DI Yogyakarta 8 56 72 64 200 Percentage 4,00 28,00 36,00 32,00 100,00 Central Java and Yogyakarta 134 478 485 403 1500 Percentage 8,93 31,87 32,33 26,87 100,00 Sourcer: Primary Data , 2000 8 From their main occupation, 26.53 percents of the respondents worked as civil servants or government officials, then followed by self employed 23.53 and officials of private firms 16.80 . This composition also happened in Central Java Province. However, the composition of their main occupation in Yogyakarta is slightly different. The rank of their main occupation were civil servants 32.00 , self employed with help of other workers 20.00 , and self employed 16.00 . The details of this description can be seen in Table 3.3. Table 3.3. Distribution of Respondents Based on Their Main Occupation M AIN O CCUPATION N O C C C C OUNTY OUNTY OUNTY OUNTY M M M M UNICIPALITY UNICIPALITY UNICIPALITY UNICIPALITY s el f em pl oy ed s el f em pl oy ed wi thout ot her work ers s el f em pl oy ed wi th hel p ot her work ers Labor C ivi l se rva n ts milita ry p o lic e v ill age adm in is tr at or ret ired Ot hers T OTAL 1 Kab. Rembang 58 7 3 5 19 3 5 100 2 Kab. Jepara 11 1 19 31 30 1 4 3 100 3 Kab. Kudus 26 7 15 16 25 2 2 7 100 4 Kab. Demak 23 5 23 27 15 4 1 1 1 100 5 Kota Semarang 24 6 7 15 29 19 100 6 Kab. Kendal 18 7 11 30 18 3 11 1 1 100 7 Kota Pekalongan 13 7 28 18 17 2 7 8 100 8 Kota Tegal 32 2 18 22 18 4 4 100 9 Kab. Brebes 24 3 18 7 16 1 22 6 3 100 10 Kab. Boyolali 26 2 7 12 39 1 8 4 1 100 11 Kota Surakarta 22 2 14 19 40 2 1 100 12 Kota Magelang 31 3 10 18 26 3 9 100 13 Kab. Cilacap 13 20 10 9 42 6 100 Total Central Java 321 72 183 229 334 22 93 31 15 1300 Percentage 24,69 5,54 14,08 17,62 25,69 1,69 7,15 2,38 1,15 100 1. Kota Yogyakarta 9 6 22 13 35 12 3 100 2. Kab. Bantul 23 5 18 10 29 1 8 6 100 DI Yogyakarta 32 11 40 23 64 1 20 9 200 Percentage 16,00 5,50 20,00 11,50 32,00 0,50 10,00 0,00 4,50 100 Central Java and Yogyakarta 353 83 223 252 398 23 113 31 23 1500 Percentage 23,53 5,53 14,87 16,80 26,53 1,53 7,53 2,07 1,53 100 Sourcer: Primary Data , 2000 9 PART FOUR : POTENTIAL FACTORS AFFECTING THE DEVELOPMENT OF SYARIAH BANKING SYSTEM. 4.1. Perception to Interest Most respondents 48.47 stating that bank interest was prohibited Haram, about 20.47 stating that they accepted it Halal, and the rest 31.06 were still indecisive Subhat. The large proportion of indecisive group may be as result of the lack of Syariah Banks which operate around their home. This result led to the need for special attention to indecisive Subhat group, because this group would become prospective customers for syariah system when they received proper promotion about Syariah Banking system. Of course beside those who stated that bank interest as Haram. 4.2. Knowledge on Syariah Bank’s Products The knowledge of the society about Syariah Bank’s product were diverse among research areas. The Syariah Bank’s products had been well known in Brebes County 83 , Pekalongan Municipality 77 , and Cilacap County 78 . Meanwhile Demak County 46 and Magelang Municipality 51 were considered as in the stage of low or moderate knowledge about Syariah Bank’s products. This result was not so disappointing since the existence of Syariah Banks in the two provinces was very limited. Some cities which had Syariah Banks were Jepara, Semarang, Surakarta, Pekalongan, and Yogyakarta. 4.3. Logit Estimation Model In order to detect dominant factors affecting the people’s behavior toward Syariah Banks, namely in the willingness to save and the willingness to get financing, the Logit model could be used as the tool of analysis. Before executing the Logit estimation model, the raw scores of the willingness to save and the willingness to get financing should be converted into the binary score, i.e. score “1” for those who wanted to save or to get financing and score “0” for those who reject to save or to get financing from Syariah Banks. Firstly this research tested 25 factors covered demographic potency, economic potency, social values, social system and preference aspects. Demographic potency was represented by age group, sex, and level of education. Economic potency was represented by family spending, job, and regional accessibility. Social value was measured by social status, religiosity, acceptance to new technology, social activities, family mobility, typology of the family, and marital status. Social system was measured by family norms, flexibility of religious rule compliance, flexibility to different culture, and information accessibility. People preference was measured by relative advantages, compatibility, comprehensiveness, and triability or observability. For selecting the dominant factors among 25 factors above, Wald coefficient would be adopted. Factors with high Wald coefficients, and those with the lowest Wald coefficient was considered as the weakest influencing factor. Then, to sharpen the analysis, the logit estimation would be split for two parts, one for productive sector businessmen and the other for consumptive sector households. 10 4.3.1. The willingness to save at Syariah Banks As a result of the Logit estimation there were 5 factors which had strong influence to the willingness to save. These factors were age group, acceptance to new technology, family mobility, flexibility of religious rule compliance, and comprehensiveness The age group factor had a positive value and significant at 96 α = 4 . This result gave description that in general the respondents of older age group were more willing to save to Syariah Banks. The acceptance to new technology factor had a positive value and significant at 96 α = 4 . This factor reflected the degree of social openness to new value or norms in the society. So, part of people who could accept new technology easily, would have bigger willingness to save at Syariah Banks. The family mobility factor had positive and significant at 99 α = 1 . It meant that the willingness to save at Syariah Banks was stronger from those with higher family mobility. This result was very reasonable because by mobility they had chance to find more information. The flexibility of religious rule compliance factor had a positive value. This meant that the willingness to save was bigger for those who firmly kept religious rule compliance. The comprehensiveness factor describing that respondents viewed Syariah Banks had comprehensive characteristics, they gave attentiveness not only for worldliness but also for heavenliness. This factor had a positive value, in other word the willingness to save at Syariah Banks was determined by people’s view about the comprehensiveness of Syariah Banks. 4.3.2. The willingness to get financing from Syariah Banks As a result of the Logit estimation there were 7 factors which had strong influence to the willingness to save. These factors were sex, agricultural sector, service sector, government sector, acceptance to new technology, social status, and flexibility to different culture. The willingness to get financing from Syariah Banks was stronger for men, for those who worked in agricultural sector, service sector, and government sector. Beside that, the willingness to get financing also bigger for those with acceptance to new technology, high social status and flexibility to different culture. 11 Table 4.1. Logit Estimation Model to the Willingness to Save at Syariah Banks N O F ACTOR B S.E W ALD S IG R 1 Sex 0,5562 0,2027 7,5275 0,0061 0,0719 2 Age -0,0552 0,1273 0,1878 0,6648 0,0000 3 Education 0,0794 0,1061 0,5599 0,4543 0,0000 4 Spending 0,0396 0,0931 0,1815 0,6301 0,0000 5 Agriculture 0,6270 0,3757 2,7846 0,0952 0,0271 6 Industry 0,0344 0,3145 0,0119 0,9130 0,0000 7 Trading 0,1043 0,2436 0,1833 0,6686 0,0000 8 Service 0,5268 0,2801 3,5388 0,0599 0,0379 9 Government 0,5112 0,2487 4,2274 0,0398 0,0456 10 Accesibility -0,1045 0,0959 1,1884 0,2757 0,0000 11 Social level 0,2088 0,0999 4,3708 0,0366 0,0471 12 Religiosity 0,0296 0,1303 0,0517 0,8201 0,0000 13 Acceptance to new technology 0,3096 0,1562 3,9256 0,0476 0,0424 14 Social Activity -0,0519 0,2024 0,0658 0,7975 0,0000 15 Mobility 0,1264 0,1022 1,5295 0,2162 0,0000 16 House typology -0,1083 0,1220 0,7880 0,3747 0,0000 17 Marital status 0,3826 0,3996 0,9169 0,3383 0,0000 18 Household norm -0,2685 0,1647 2,6576 0,1031 -0,0248 19 Flexibility to Cultural tolerance -0,2923 0,1755 2,7736 0,0958 -0,0269 20 Flexibility to Religion tolerance 0,0867 .0,1747 0,2462 0,6198 0,0000 21 Information access 0,0474 0,1427 0,1103 0,7398 0,0000 22 Relative advantages 0,3727 0,2655 1,9704 0,1604 0,0000 23 Compatibility 0,2657 0,3184 0,6964 0,4040 0,0000 24 Comprehensiveness 0,3207 0,2308 1,9308 0,1647 0,0000 25 Observability 0,1400 0,0866 2,6100 0,1062 0,0239 Constant -1,5599 1,3566 1,3222 0,2502 Table 4.2. . Logit Estimation Model to the Willingness to get financing at Syariah Banks N O F ACTORS B S.E W ALD S IG . R 1 Age 0,6332 0,3241 3,8160 0,0508 0,0999 2 Family typology -0,5297 0,2836 3,4898 0,0617 -0,0905 3 Flexibility to religious rule violation 0,8284 0,4099 4,0840 0,0433 0,1070 4 Comprehensiveness 1,0742 0,3814 7,9330 0,0049 0,1805 Constant -3,8911 1.9494 3,9841 0,0459 4.3.3. Productive sector In the productive sector there were four factors which had significant influence to the willingness to save at Syariah Banks, i.e. age group, family typology, flexibility to religious rule violation, and comprehensiveness. Factors influencing the willingness to get financing from Syariah Banks were social activities, family norms, flexibility to different culture, and flexibility to religious rule violation. 12 Table 4.3. Logit Estimation Model to the Willingness to Save at Syariah Banks for Productive Sector N O F ACTOR B S.E W ALD S IG . R 1 Social activities -0,7781 0,4128 3,5532 0,0594 -0,0771 2 Family norms -0,5187 0,3095 2,8092 0,0937 -0,0557 3 Flexibility to different Cultural -0,4208 0,3684 1,3048 0,2533 0,0000 4 Flexibility to religious rule violation 0,5480 0,3269 2,8111 0,0936 0,0557 Constant 5,4346 2,1738 6,2505 0,0124 Table 4.4. Logit Estimation Model to the Willingness to get financing at Syariah Banks for Productive Sector N O F ACTOR B S.E W ALD S IG . R 1 Sex 0,7936 0,2805 8,0043 0,0047 0,1084 2 Service 1,1363 0,4610 6,0765 0,0137 0,0893 3 Accessibility -0,4731 0,1647 8,2481 0,0041 -0,1106 4 Acceptance to new technology 0,7267 0,2388 9,2632 0,0023 0,1192 5 Social activity 0,7895 0,3188 6,1324 0,0133 0,0899 6 Family mobility 0,5898 0,1811 10,6020 0,0011 0,1297 7 Flexibility to religious rule violation 0,7048 0,3038 5,3820 0,0203 0,0813 8 Observability 0,5431 0,1188 20,8966 0,0000 0,1923 Constant -5,1998 1,5375 11,4372 0,0007 4.3.4. Consumptive sector In the consumptive sector there were six factors which had significant influence to the willingness to save at Syariah Banks, i.e. regional accessibility, acceptance to new technology, family mobility, flexibility to religious rule violation, and observabilitytriability. Factors influencing the willingness to get financing from Syariah Banks were acceptance to new technology and family mobility. Table 4.5. Logit Estimation Model to the Willingness to Save at Syariah Banks for Consumptive Sector N O F ACTOR B S.E W ALD S IG . R 1 Sex 0,7248 0,2040 12,6234 0,0004 0,1146 2 Occupation 0,4340 0,2718 2,5488 0,1104 0,0261 3 Government officer 0,3365 0,2051 2,6905 0,1009 0,0292 4 Acceptance to new technology 0,6820 0,1702 16,0533 0,0001 0,1319 5 Family mobility 0,2646 0,1138 5,4055 0,0201 0,0649 Constant -1,5496 0,4984 9,6666 0,0019 13 Table 4.6. Logit Estimation Model to the Willingness to Get Financing at Syariah Banks for Consumptive Sector S AVING IN S YARIAH B ANKING N O C OUNTY M UNICIPALITY N OT I NTERESTED D ON ’ T K NOW I NTERESTED H IGHLY INTEREST ED T OTAL 1 Kab. Rembang 2 27 46 25 100 2 Kab. Jepara 5 17 69 9 100 3 Kab. Kudus 4 18 69 9 100 4 Kab. Demak 25 34 40 1 100 5 Kota Semarang 14 26 57 3 100 6 Kab. Kendal 4 26 67 3 100 7 Kota Pekalongan 12 22 53 13 100 8 Kota Tegal 4 21 68 7 100 9 Kab. Brebes 3 13 66 18 100 10 Kab. Boyolali 5 35 58 2 100 11 Kota Surakarta 2 40 53 5 100 12 Kota Magelang 11 32 52 5 100 13 Kab. Cilacap 4 39 39 18 100 Central Java 95 350 737 118 1300 Percentage 7,31 26,92 56,69 9,08 100,00 1. Kota Yogyakarta 9 38 49 4 100 2. Kab. Bantul 2 33 58 7 100 DI Yogyakarta 11 71 107 11 200 Percentage 5,50 35,50 53,50 5,50 100,00 Central Java and DI Yogyakarta 106 421 844 129 1500 Percentage 7,07 28,07 56,27 8,60 100,00 Sourcer: Primary data , 2000 4.4. Preference to Syariah System 4.4.1. Preference to Relative Advantages of Syariah Banks.