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“Expectations of individuals regarding the Ijara Forward contract: the case of healthcare financing”

ARTICLE INFO Mustapha Ziky and Mohamed Tajeddine Elghabri (2022). Expectations of individuals regarding the Ijara Forward contract: the case of healthcare financing. Investment Management and Financial Innovations, 19(1), 1-13. doi:10.21511/imfi.19(1).2022.01 DOI http://dx.doi.org/10.21511/imfi.19(1).2022.01 RELEASED ON Tuesday, 04 January 2022 RECEIVED ON Monday, 15 November 2021 ACCEPTED ON Thursday, 16 December 2021


INTRODUCTION
The Moroccan health system, a key sector for every society, is significantly marked by insufficient and unsustainable financing (Adaskou et al., 2021). Furthermore, a large proportion of the Moroccan population has limited access to healthcare services (El Alami & Kherbach, 2008;Belmaati, 2015). In addition, the out-of-pocket expenditure as a percentage of current health expenditure (47%) is still significantly high (WHO, 2021). Despite the efforts made by the authorities, Moroccan individuals face multiple difficulties to finance their health needs.
The introduction of Islamic finance in Morocco can mobilize substantial funding and new financial products, offering more financial options to individuals who have difficulty accessing the traditional banking system. As such, Islamic banks are well placed to play a key role in financing health services through an appropriate financial instrument -Ijara Forward. It is relevant to study the expectations of individuals regarding the Ijara Forward contract in the case of healthcare financing.
It is important to point out that this study does not intend to find a solution to the problem of health financing but essentially aims to discuss the application of an Islamic financial product suitable for the financing of health expenditures. The Ijara Forward contract is a solution to the problem of liquidity availability and is not a structural source of health financing system such as universal health coverage.

LITERATURE REVIEW AND HYPOTHESES DEVELOPMENT
Ijara Forward, as a contract arising from Islamic jurisprudence, figures in the very old legal and Shariatic documentation. The lack of literature on this research topic is explained by the new and innovative nature of the Ijara Forward. From ancient Fiqh literature, authors have referred to Ijara Forward as a type of Ijara contract (Nawawi, 1991;Al-Minhaji, 1996;Ben Qudama, 1997;Ibn Najjar, 1999;Ibn Muflih, 2003). However, one scholar has a different vision and regards Ijara Forward as a type of Salam financing service (Al- Dasuki, 1910). Ijara Forward is also known as Ijarah Al-Mawsufah Fi Al-Dhimmah. It should be noted that this paper do not take a Shari'ah position on the Ijara Forward contract since the objective is only to discover the way in which it is currently applied in Islamic banks. A famous financial structuring based on the Ijara Forward will be presented in the following ( Figure 1).
Furthermore, healthcare costs are increasing. Individuals have less health insurance coverage. As a result, Islamic banks have developed an appropriate method of financing to help their clients overcome the financial barriers that deprive them of access to health services.
A customer who has no liquidity available to finance the service can benefit from this method of financing, since the bank buys, initially, the service described by the customer and resells it to him in exchange for payment in the future, as a lump-sum payment or in installments.
This mode, called Ijara Forward, can be applied to finance medical services. Generally, Ijara Forward's applicant is an indigent patient or a patient in temporary financial difficulty, who will be required to pay for health services in advance.
As such, the Islamic financial institution would be able to use Ijara Forward's formulas to finance health services for the benefit of its clients. The  formula, illustrated below, is widely applied in Islamic banks, such as the Islamic Bank of Abu Dhabi and the Arab Finance Bank (Nassar, 2015).
According to this formula, the client is requested to provide all the necessary elements for the subscription of the Ijara Forward contract (Quote with the name of the Islamic bank, bank statement, payslip, guarantees, etc.). In addition, the bank ensures that the quote describes fully the type of medical procedure and the date of the service.
Once the necessary documents have been gathered and the financial analysis is conducted, the bank begins its administrative process with the health service provider. This leads to the conclusion of an Ijara Forward contract. Thus, the bank and the service provider agree to provide the service in question to the third party (patient) under the contract concluded.
The contractors may agree on a time-limited option, allowing the Islamic bank to execute the option to unilaterally cancel the contract for an agreed period. The option clause allows the bank to exercise its right to end the contract before its execution, since it is a forward contract whose execution is staggered over time.
After concluding the contract with the health service provider, the banking institution enters into another Ijara Forward contract with its service-requesting client. Through this contract, the client will be allowed to benefit from the health services provided by the producer. In addition, the customer will honor its commitments to the bank through a staggered or deferred payment.
Abu Ghuddah (2008) was one of the first researchers to study Ijara Forward in a very particular way. He outlined the Shariah principles that must be observed in this contract. Furthermore, he showed the great importance of Ijara Forward in financing services such as health, education, pilgrimage, and housing.
According to Abu Ghuddah (2009), the Ijara Forward contract can be defined as the lessor's commitment to providing a well-described service, according to the standards required in Salam contract, whether the service relates to an object, such as the rental of a car with certain specifications, or human services, such as sewing or teaching.
Nassar (2009) has developed a comprehensive conceptual framework for the Ijara Forward contract in Islamic jurisprudence. He also attempted to clarify and resolve the dispute over the immediate payment of the rental price.
Kassmi (2009) pointed out that the Ijara may relate either to a particular asset or to an asset described by characteristics that the lessor undertakes to provide. The author states that Islamic financial institutions can finance health services through Ijara Forward, such as medication and the maintenance of medical equipment. Al-Jayousi and Al-Shatti (2014) argued that Islamic banks in Jordan can finance a variety of services, including health services. According to the authors, Ijara Forward meets the religious expectations of individuals regarding the suspicion of the Riba. In addition, they demonstrated that the Ijara Forward meets the financial requirements of individuals. In cases of financial difficulty, the Ijara Forward contract is a financial solution that provides a customer with a future service for deferred payment.
The purpose of this study is to identify the expectations of the Moroccan individuals regarding the Islamic financial product, Ijara Forward. The goal is to detect the main factors that can stimulate the potential demand for this financial product.
Two research hypotheses with sub-hypotheses were formulated as follows:

METHODOLOGY
The research model of this study is presented in Figure 2.
To achieve the objective of this study, it is ideal to conduct a census survey among the targeted population, but this task remains long and very costly. Therefore, it is essential to use a sampling survey. The use of a survey addressed to a sample of the Moroccan population will allow collecting quantitative data on the targeted population.
The survey was conducted in two regions of the Kingdom of Morocco: Marrakech-Safi and Rabat-Salé-Kenitra. Two hundred individuals were interviewed using convenience sampling. This choice is due to the absence of a sampling frame. This study uses a quantitative approach to study the validity of the research hypotheses. Therefore, a direct face-to-face questionnaire was selected as a survey method. This method has several advantages. The interviewee is strongly encouraged to respond seriously. Nonverbal signals, particularly facial expressions, can detect misunderstandings that require the investigator's intervention (Fenneteau, 2015). This type of survey allows direct contact with respondents in several locations (home, office, and public places). The face-to-face questionnaire allowed the researchers to collect information that was better in terms of quality and quantity. The disadvantage of this method is the obligation to travel to meet the interviewees, which is costly.
Regarding the typology of questions, closed-ended questions are chosen. These questions are formulated on a single-choice form (dichotomous or based on a Likert scale) and a multiple-choice form. The questionnaire comprises four main sections. The first section identifies the respondent's social determinants. The second axis examines the degree of satisfaction relating to medical coverage. The third axis studies the financing of health services and its difficulties. The fourth axis focuses on the expectations of individuals regarding the financing of health expenditure through the Ijara Forward contract.
Concerning the analysis of the collected data, this study uses univariate and bivariate analyses to detect possible relationships between the variables to be studied. Then, this paper presents an instrument to predict the demand for healthcare funding through Ijara Forward, developed from a set of explanatory factors that are considered relevant. The objective is to be able to estimate the probability that an individual will or will not apply for Ijara Forward, using the logistic regression model.
Logistic regression is a powerful multivariate analysis tool when the variable to be explained is binary. It allows the modeling of the relationships between the occurrence of any event and each of its associated explanatory factors (Aminot & Damon, 2002). Logistic regression is widely applied in epidemiology to detect factors that distinguish healthy people from people with disease. This tool is also used in marketing and finance to predict client behavior.
Through logistic regression, a dichotomous variable Y can be modeled according to explanatory variables X k = x 1 , x 2 , x 3 , ..., x k, Y = Potential demand of Ijara Forward (variable to be explained).
It is a dichotomous variable whose possible value is 0 (No) or 1 (Yes). Y = 1 if an individual (ω) is "potential applicant for Ijara Forward" and Y = 0 if not. Y follows a Bernoulli distribution of parameters (π) with: It is noted that π is the probability that individual ω is an applint for Ijara Forward, with: where π varies in [0,1], and it depends on the values taken by the independent variables. The logistics model suggests expressing π as a function of X k .

Figure 2. Research model
To achieve the objective of developing an instrument to predict the demand for Ijara Forward, this study should follow the steps of modeling using logistic regression. First, construct the model using one of the statistical methods for selecting predictors. Then, test the overall significance of the model. After that, evaluate the quality adjustment. Finally, carry out the diagnosis. Figure 3 indicates that 62.5% of the respondents are male, while women represent 37.5%. In addition, the survey focused on the youth population. Individuals between 31 and 40 years of age are the highest proportion in the survey sample (47%), followed by the age group between 18 and 30 years (21.5%).

RESULTS
Concerning the education level of the respondents, it is noted that almost half of the interviewees (48%) have a higher level of education, while those with a primary and secondary level represent 27% and 17%, respectively. Eight percent of the respondents have not received an education. In terms of marital status, 59.5% of the survey sample are married people and 32% are single. The proportion of people who are divorced or widowed is relatively low and does not exceed 8.5% of all respondents.
Most respondents (43%) are self-employed. The civil servants and the employees constitute successively 20.5% and 24% of the survey sample. In addition, most of the interviewees have a monthly income between MAD 2,500 and MAD 4,000.
Furthermore, it is noted that 58.5% of respondents have health coverage. A total of 44.44% of them are covered by the AMO-CNOPS (compulsory health insurance for public sector), 32.48% are covered by AMO-CNSS (compulsory health insurance for private sector), and 20.51% are covered by RAMED (medical assistance to the economically worst off). A small number of respondents (2.56%) are covered by private health insurance.
The study also revealed that a minority of respondents used conventional bank loans to finance their healthcare expenses (4%). However, the majority of respondents (96%) do not use conventional loans to finance their healthcare expenses. Large percentages (87.5%) of them do not use traditional financing because of religious beliefs.
Furthermore, the survey reveals that 37.5% of respondents have not sought treatment in the last two years for financial reasons. The high cost of healthcare remains the most common reason, with 81.3% of responses, followed by other significant reasons such as income instability (56%), the limitations of the health coverage system (54.7%), and the inability to pay cash for healthcare (45.3%).
Concerning the Islamic banking section, more than three-quarters of respondents (77.5%) are aware of the existence of the Islamic banking industry. While Islamic banks are known to most interviewees, Ijara Forward remains less known.
In addition, the majority of respondents expressed interest in Islamic banking products in general (93.5%), and in Ijara Forward in particular (95.5%). Thus, 96% of individuals are interested in financing their healthcare expenses through the Ijara Forward product. In addition, 91.5% of respondents expressed their intention to contract the Ijara Forward product in the case of inability to pay cash for medical costs. Furthermore, 96% of respondents expect that Islamic banks can offer a price similar to the market price of the service in question. The remaining 4% believe that the Islamic bank will offer the service to the customer with a profit margin compared to the price offered by the supplier.
Concerning the financial cost of the Ijara Forward contract, 64% of Moroccan individuals expect a lower cost than a traditional bank loan, while   31.5% assume that the costs will be comparable. The remaining 4.5% of respondents expect that this product will be expensive compared to a conventional health loan. It should be noted that 45% of respondents are willing to pay a higher price for an Ijara Forward contract.
In addition, the respondents showed great interest in the financial benefits of Ijara Forward. More than 75% of the interviewees are satisfied and even convinced that the Islamic bank would honor its commitments if the service provider did not accomplish the required service promptly. In this case, the bank is obliged to find another service provider with the same specific requirements stated in the first contract. Thus, 94.5% of respondents are motivated by the possible free rescheduling of the remaining amounts in the case of temporary financial difficulties of the bank client, provided he has proven to be in good faith. However, in the event of unjustified late payment, the bank may impose penalties that are then given to charities. More than 60% of respondents believe that this procedure is fair.
By analyzing the survey results, it should be emphasized that the majority (77.3%) of respondents wish to ask for Ijara Forward knowing that, in the past, they have given up healthcare services because of their high cost. Moreover, it is noted that the proportion of people seeking Ijara Forward funding increases if the person has already given up seeking treatment because of high healthcare costs.
Thus, it is observed that 90.7% of individuals wish to obtain financing via Ijara Forward if necessary. Half of these potential clients have already given up seeking treatment because of their inability to pay cash for health services. Moreover, this inability has a positive impact on Ijara Forward's potential demand.
The survey also reveals that the proportion of potential people seeking Ijara Forward increases if a person perceives the formality of applying late penalties for charities as a fair disposition. Thus, the study indicates that a significant proportion of respondents, motivated by the possibility of free rescheduling of the remaining amounts in the case of financial difficulties, express a strong interest in soliciting financial support via Ijara Forward (97.2%). From the test of independence, it must be pointed out that there is an association between Ijara Forward's potential demand and the level of motivation for possible free rescheduling.
On the other hand, the investigation shows that the attractiveness of the procedure for replacing the original service supplier in the case of non-fulfillment of its obligations does not influence the potential demand for the Ijara Forward product.
In addition, the study reveals that people who have renounced the use of traditional bank loans for religious beliefs are the most likely to apply for healthcare financing through Ijara Forward. In total, it is observed that 82.3% of respondents want to contract Ijara Forward knowing that they have waived the bank loan because of their religious beliefs. In addition, a positive and statistically moderate association is observed between Ijara Forward's potential demand and religious belief. The higher the proportion of people who reject borrowing because of religious beliefs, the higher the proportion of people who would apply for financing through Ijara Forward. The study also demonstrates a positive association between refusing the traditional loans pending the establishment of Islamic banks in the country and Ijara Forward's potential demand.
Finally, it is noted that many individuals are willing to pay a higher price for an Ijara Forward contract. This represents 42.2% of all respondents. The majority of them do not use bank loans for religious beliefs. Thus, the higher the proportion of people who renounce bank borrowing for religious belief, the higher the proportion of people who are willing to pay a higher price for an Ijara Forward contract.
Before proceeding with the development of the prediction instrument, it is necessary to select a set of variables by performing bivariate analyses (Khan & Rebelo, 2019). The goal is to identify potential predictors and eliminate redundant variables or variables that are not related to the dependent variable (Bernard & Lapointe, 1998;Desjardins, 2007). After a test of independence, a selection of independent variables, associated with the dependent variable "potential demand for Ijara Forward", was made for the logistic regression.
First, the logistic regression model is made using a technique that automatically selects a subgroup of variables based on tests of significance. The model opted for the Forward stepwise selection method is based on the likelihood ratio test.
The result of the automatic selection resulted in three candidate variables to integrate the final model. The likelihood ratio test shows that the three explanatory variables contribute significantly to the model. Tests of dependence between the three explanatory variables reveal that the Resched variable has a strong relationship with the other two explanatory variables. RB and CostH are two independent variables. As a result, the progressive inclusion of the variables resulted in a final model that includes the most significant predictors, namely "RB and CostH" (Table 4).   Another measure often used to assess the goodness fit of a logistic regression model is the "Receiver Operating Characteristic" curve. Figure  4 illustrates the ROC curve. The area under the red curve is 0.93. This indicates that the model makes a strong distinction between the two categories that constitute the target variable (potential demand of Ijara Forward). In other words, the fit quality of the model is very good.
After following these steps, the predictive model of Ijara Forward's demand is as follows: ( ) In order to interpret the coefficients βi of the dichotomous explanatory variables of the model, the odds ratio must be calculated.
The model ( Figure 5) shows that people who refuse to take out traditional bank credit for religious beliefs (OR β1 = 54.315) and who have given up on medical care because of the high cost of health care service (OR β2 = 14.74) are more susceptible to adopt an Ijara Forward product to finance their health expenditures.

DISCUSSION
This study demonstrates that the Ijara Forward contract meets the financial expectations of Moroccan individuals regarding the financing of health expenditure. This partially confirms the first hypothesis of this study.
This ability of the Ijara Forward contract to meet people's expectations is explained by several facts. High cost of the healthcare service First, the high cost of healthcare services and the inability to pay for them in cash are two phenomena that prevent a large proportion of individuals from accessing health services. In addition, the study affirms that these two phenomena influence the potential demand for the Ijara Forward to finance health expenditure (H 1a and H 1b ). This result is in accordance with the findings of Al-Jayousi and Al-Shatti (2014). Indeed, these authors consider Ijara Forward as a real solution to reduce the individual's monthly financial burden and to solve the problem of inability to pay cash for health expenses.
Secondly, the financial characteristics of the Ijara Forward contract are in line with the financial expectations of Moroccan individuals. A customer in financial difficulty can benefit from a free rescheduling of the remaining amounts due. Moreover, even if the bank penalizes financially a recalcitrant customer, it distributes these funds for charitable purposes. However, currently, this feature is not applied by Moroccan Islamic banks. Moreover, the bank is always committed to providing the service even if the original supplier fails to meet its commitments. This study reveals that these formalities attract individuals and influence Ijara Forward's potential demand (H 1c and H 1d ), except for the last formality concerning the bank's commitment to providing the service in the case of the original supplier failing to honor its commitments, which does not have a significant influence on the potential demand for the Ijara Forward contract H 1e .
These results partially confirm the results obtained by Al-Jayousi and Al-Shatti (2014). These authors have shown that, in the event of justified financial difficulties, an Islamic bank provides its client with great financial flexibility by spreading payment deadlines free of charge. This option is available in Moroccan Islamic banks, but under specific conditions.
The results also show that the Ijara Forward contract meets the religious expectations of Moroccan individuals regarding the financing of health services. In light of this result, the second hypothesis is confirmed. This is explained by the influence of religious belief and the pending establishment of Islamic banks on Ijara Forward's potential demand (H 2a and H 2b ). The Ijara Forward contract is clearly a financial alternative in harmony with the religious conviction of Moroccan individuals.
Furthermore, a large proportion of individuals are willing to pay a higher price for an Ijara Forward contract. This behavior is explained by their desire to respect the precepts of the Shariah (H 1c ). These results reaffirm those obtained by Al-Jayousi and Al-Shatti (2014) and Nassar (2015). According to them, the Ijara Forward meets the religious beliefs of people rejecting usury.
The study also attempts to partially explain, or even predict, the demand for Ijara Forward through logistic regression. The model derived from this paper's analysis predicts Ijara Forward's demand via two predictors: religious belief and the high cost of healthcare service. In other words, if a person did not use conventional loans for religious beliefs and renounced healthcare because of its high cost, they would be willing to adopt the Ijara Forward contract. In sum, the Ijara Forward contract meets the financial and religious expectations of Moroccan individuals.

CONCLUSION
This paper aims to detect the expectations of Moroccan individuals regarding the Islamic financial product Ijara Forward. The objective of this study is to answer two fundamental questions. The first question is whether the Ijara Forward contract, designed to finance healthcare expenditures, can meet financial expectations of Moroccan individuals. The second one is to determine whether the Ijara Forward contract can be a financial alternative in harmony with the religious beliefs of Moroccan individuals.
Indeed, the study reveals that the Ijara Forward contract meets the financial expectations of Moroccan individuals. This is confirmed by several facts. First, the high cost of healthcare services and the inability to pay it in cash influence Ijara Forward's potential demand. Second, the financial characteristics of the Ijara Forward contract (the possibility of free rescheduling and penalties being paid to charities) match the financial expectations of Moroccan individuals and influence the potential demand for this contract.
The study also found that the Ijara Forward contract is a financial alternative in harmony with the religious beliefs of Moroccan individuals. This is confirmed by the association between the non-use of classic loans for religious beliefs and Ijara Forward's potential demand, on the one hand, and between the pending establishment of Islamic banks and Ijara Forward's potential demand, on the other hand.
Another result mentioned in this study indicates that many Moroccan individuals are willing to pay a higher price for an Ijara Forward contract. This behavior is justified by their rejection of usury.
These results are supported by multivariate analysis using logistic regression. Indeed, the predictive model resulting from logistic regression proves that religious belief and high healthcare costs are the factors associated with Ijara Forward's potential demand.