Factors Influencing Muslims to Choose Hibah: Empirical investigation using Logit Approach

When a Muslimdies, there are four main things should be settled upon his death: funeral expenses, debt settlement, will and faraid. Upon settling funeral and debt of the dead, estate management is one of the obligations required to be carried out by the heir using faraid. Nevertheless, based on the recent statistics issued by Amanah Raya Berhad, there are more than RM60 billions worth of properties of the deceased’s in Malaysia have been frozen from being distributed to the respective heirs. Unfortunately, 95% of the properties belong to Muslims. Among reasons of the undistributed properties are due to unawareness of the heirs, cost of property claims and law restriction. If this situation continuously happens, there will be a waste of capital in economy. To avoid this problem, hibah (inter vivos) and will were suggested to be used as tools to avoid problems in distributing the wealth and properties to the heirs. However, there are limitations in the use of these tools. Hence, the purpose of this research is to investigate behaviour of Malaysian Muslims in managing their estate specifically on Hibah and further to determine the factors that influence Muslim to choose Hibah. This is an empirical study which employed Logit Model analysis of data collected from survey to Muslim in Malaysia. This study manages to collect 406 questionnaires and based on the result it shows that income and knowledge are significant in explaining the Muslim behaviour to choose Hibah. This imply that Muslim would more likely to choose Hibah as to their estate planning if they have more income and knowledge about Hibah; either basic or technical knowledge.