Abdelrhman
Meero
College
of Business Administration, Kingdom University, Bahrain
E-mail:
ar.meero@ku.edu.bh
Nishad
Nawaz
College
of Business Administration, Kingdom University, Bahrain
E-mail: nishadnawaz@hotmail.com
Submission: 10/1/2019
Revision: 1/7/2020
Accept: 1/30/2020
ABSTRACT
The present study aim to investigate relationship between religion, higher profitability on investment, sharia board audit, services (faster/friendly), bank reputation, product and service quality and to know which variable more influence in selecting Islamic banks in GCC countries. The study adopted convenience sampling. 101 completed questionnaires were chosen for analysis. The study found that there is no relationship in between consumer preferences and higher profitability on investment, services (faster/friendly), bank reputation, but there is, however, a significant relation with regards to religion, sharia board audit and product and service quality and paper provide fresh insights to the Islamic banks and recommendations, study implications, future research possibilities also discussed.
Keywords: Customers’ preferences, Islamic banks, GCC countries, sharia board audit, product and service quality.
1.
INTRODUCTION
The core of Islamic
banking profession is based on the sharia compliance and the prohibition of
riba which is the interest based banking transactions (EROL;
KAYNAK, 1990). Islamic banking is
considered as a modern industry. The first professional appearance of Islamic
banks was conducted in 1963 by Dr. Ahmad El Naggar in Mit-Ghamr, Egypt (OKUMUS;
GUNEREN GENC, 2013). Despite this relative
recent appearance of Islamic banking, it is initially considered as old as
Islam itself which was appeared 1400 years ago.
During the last decades,
the growth of Islamic finance has been accelerated and the Islamic finance
assets have been grown from $ 1.75 trillion in 2012 to $ 2.44 trillion in 2017
and it is expected to reach $ 3.8 trillion in 2023 (ISLAMIC
FINANCIAL SERVICES BOARD, 2018) . Focusing more in GCC region, note that the market
share of GCC Islamic banking is 42% (ISLAMIC
FINANCIAL SERVICES BOARD, 2017). GCC Islamic banks assets kept a moderate growth
rate during 2017, Saudi Arabian Islamic banking assets grew at 2.7%, Kuwaiti
Islamic banks increased their assets by 3.6%, the Islamic banks assets growth
scored in Oman 15.6% , 7.4% in UAE, 6.9%
in Qatar.
Similarity of services
offered by the banks increase the competition in the banking sector. This sharp
competition motivate a research on the costumers decision of selecting a bank
for their banking services (ALMOSSAWI,
2001; ZAINOL;
SHAARI; ALI, 2009; ABDUH;
KASSIM; DAHARI, 2012; ASCARZA
et al., 2017). Looking for the
criteria affecting bank selection shall help banks to design an appropriate
marketing plan to attract new customers and to identify the suitable operational
plan to maintain and satisfy the existing customers. Focusing in this study on
the GCC region where more than 40% of Islamic assets are located shall give
more importance to the results and it would increase also the credibility of
the recommendations.
Therefore, we proposed a study of customers preferences in selecting Islamic banks in Gulf Cooperation Council (GCC) countries.
By having this background, the aim
of the study is to bring out the relationship between religion, higher
profitability on investment, sharia board audit, services (faster/friendly),
bank reputation, product and service quality and which reason behind selecting
Islamic banks by customers in GCC countries, in addition to know which of
reason is more significant on customer preferences.
2.
LITERATURE REVIEW
The
purpose of this part is to draw our literature review with regards to existing
customer preferences, religion, higher profitability
on investment, sharia board audit, services (faster/friendly), bank reputation
in Islamic banking system to be asked and discussed on the basis of our
findings of the study and the existing literature until February 2019 is
covered.
2.1.
Customer
preferences
In Banking selection process banking
customers have different preferences. Several studies
these preferences and tried to identify customer preferences for selecting
their bank. From the old studies, (SIDDIQUE,
2012) found
that the key factor affecting the customer’s selection of a bank was the appropriate
location, quality of the services and the length of bank-customers
relationships. (BOYD, 1994b) found that bank reputation and the
interest on savings accounts are decisive criteria for Customers’ preferences
in selecting banks in the USA.
lee and Ullah (2011) confirmed the previous result and
gave more attention to the importance of Shari’a compliance in the selection of
Islamic bank by the customers in Pakistan. (ECHCHABI;
OLANIYI, 2012) found that the Islamic bank
customers preference are meanly the service quality and the religious
motivations in Malaysia. Similar results have been found by (BASHIR, 1999) in Kuwait, and (NASER JAMAL
AL-KHATIB, 1999) in Jordan. The availability of
various financial services and the high potential profitability are the most
important indicators of selecting bank services in Pakistan (AWAN;
BUKHARI, 2011). The literature review related to
these different indicators shall be discussed in the following paragraphs.
2.2.
Religion
The conventional banks operate under
the regulation and the supervision of the national supervisory bodies. The
Islamic banks is subject to the same regulations issued and imposed by the
national supervisory body but in addition to that they should operate under the
Islamic law or the Sharia. The Islamic banking system is based on the Sharia
law as mentioned. The Islamic rules on all the transactions are called Fiqh
al-Muamalat (MANSOUR et
al., 2010).
The two fundamental principles of
Islamic banking are the sharing of profit and loss and the prohibition of
dealing with riba (SAQIB;
FAROOQ; ZAFAR, 2016). Based on Islamic Sharia Islamic banks are not
allowed to interfere or to invest in transactions involved alcohol, gambling,
pork, and other forbidden items in GCC countries.(RAHMAN;
BUKAIR; BUKAIR, 2013).
Delener,
(1994) argued that the
decision-making process of an individual is significantly affected by his
religious believes. The results of the previous studies showed different degree
of influence of the religious dimension on the bank selection. In 1989, (EROL;
EL-BDOUR, 1989) found that the religious
motives are not included in the list of the most important factors attracting
customers to Islamic banks in Jordan. (HEGAZY,
1995) didn’t find the
religious believes in the list of banks selecting criteria in Egypt.
Naser et al. (1999) found that the religious reasons are the second
most important factor of selecting Islamic banks in Jordan. (AHMAD;
HARON, 2000) found that the religious
believes are not the only factor affecting the selection of the Islamic banks,
but they are from the important criteria to be considered in the selection
process.
Irwani (2007) pretend
that using religious motives to attract Islamic banks costumers is no longer
effective because customers are more interested in the quality and the
availability of the bank services. Haque et al., (2009) found that the religion perspective
is a major factor affecting the selection of Islamic banks. (AWAN;
BUKHARI, 2011) found similar results in Pakistan
where the customers give more value to the product features and to the quality
of services. These two factors have been considered as more important than
religious motives as major factors for making selection of Islamic banks.
Tameme and
Asutay (2012) found that the religious motives
have a significant effect on the decision of selecting the banking services
provider. Okumus and
Genc (2013) studied the bank selection and the
client satisfaction of Turkish Banks. The results of the study showed that the
religious motivation is the most important factor of bank selection criteria. Sori and Shah
(2015) studied the effect of religion on
the perception of service quality among Malay Muslims in Malaysia. The results
of this study showed that the religious motive (Sharia compliance) is the first
reason motivating Muslims for banking with Islamic banks.
Saqib et al.
(2016) found that religious motivation is
an important factor for Muslims in selecting their banks. In Tunisian banking
sector, Souiden and
Rani (2015) found that religious believe affects
significantly the bank selection decision in Tunisia. Usman (2015) found a significant effect of
religious motives on the selection of Islamic banks.
2.3.
Higher
profitability on investment
Looking for benefits and profits is
a legitimate objective for banks customers and investors. The core of Islamic
banking profession is based on the sharia compliance and articulated on two
pillars: the first one is the prohibition of earning interest and the second is
the profit and loss sharing mechanism. Erol and
Kaynak (1990) found that profitability is a key
indicator for selecting banks in Jordan and this factor is more important than
the religious beliefs. Naser et al. (1999) found that the Islamic banks
profitability is the third important factor attracting customers after the
confidentiality and the religious beliefs. Lee and Ullah
(2011) pretended that Islamic banks
customer might prefer these banks for their profitability.
Mansour et al.
(2010) found that Islamic banks customer in
UK prefer the low cost as the first selection criteria for their banks. In
Pakistan, Awan and
Bukhari (2011) found that high potential
profitability is the second attractive motives for Islamic banks customers. For
Islamic banks customer in Indonesia, the profitability is not a decisive
criterion in the bank selection process Abduh et al. (2012). Same result has been found by Ascarza et al.
(2017) in Turkey and by Hegazy (1995) in Egypt and by Zainol et al.
(2009) in Malaysia as well. For Metawa;
Almossawi (1998) Islamic banks customer is looking
for the profitability as the second important factor of selecting banks after
the religious motives.
2.4.
Sharia Board
Audit
The sharia board, or
sometimes called Sharia Supervisory Board (SSB) is a crucial component of the
Islamic banking governance system. SSB is usually situated near the top
management level of the Islamic bank’s governing structure. The sharia board
has a broad latitude of responsibility which is meanly focused on the
verification of the sharia compliance of the bank operations and the sharia
compliance of the bank products and services.
Therefore, the Islamic
banks are more audited and controlled than conventional banks where SSB is
considered as sharia compliance auditor. Comparing to the conventional banks,
Islamic banks are characterized by the existence of the Shariah supervisory
board which the most important distinction between the two systems (FAROOK;
HASSAN; LANIS, 2011). Rahman
et al. (2013) that the existence of
strong Shariah Board role shall strengthen the credibility of Islamic banks in
front of their customers and investors. Does this role of Sharia Board affect
the customer’s bank selection decision.
Othman and Owen (2001) explained that the compliance of Islamic banking
products with Sharia rules shall affect positively the quality of these
products and services and leads to influence the costumer decision of bank
selection. This conclusion has been confirmed also by (RAMDHANI;
RAMDHANI; KURNIATI, 2011). As per the study of Rahman
et al. (2013), the costumers and the
investors prefer Islamic banks because their operations are in compliance with
the Shariah rules and principles. Lee
and Ullah (2011) and Okumus
and Genc (2013) explained that the
important effect of the sharia compliance and SSB audit in the process of bank
selection.
2.5.
Services
(Faster/Friendly)
The quality of the services offered
by the Islamic banks is important determinant for the bank selection, but the
quickness of offering the service is to be considered as decisive factor as
well. Boyd (1994b) found that the quick services
offered by the bank is a key factor for selecting the bank among the USA young
customers. Haron, Ahmad
and Planisek (1994) studied the preference of bank
customers in Malaysia and they found that Islamic and conventional banks
customers prefer banks that offer quick and efficient services.
Metawa and
Almossawi (1998) found that Islamic banks in Bahrain
should consider the quickness of the services offered to their customers to
attract new customers and preserve the relationship with the current customers.
Siddique (2012) studied the factors affecting the
bank selection process in Rajshahi City. He found that the junior customers
aged under 21 years prefer banks offering quick services. Mansour et al.
(2010) pretend that customers of Islamic
banks in UK give importance for the places where they have been served quickly
and efficiently. Almossawi (2001) found that new generation prefer
banks offering quick services and quick access to the services. Same result has
been found by Ahmad, Rustam
and Dent (2011) in International Islamic University
of Malaysia.
2.6.
Bank
reputation
Firm reputation is an important
factor which has been studied by several disciplines of social science like
economics, marketing, strategy, finance and banking Fombrun and
van Riel (1997).
This factor provides a competitive advantage which attracts costumers and
create more revenues Petticrew and
Roberts (2006). In banking sector, previous studies
found a positive impact of the bank reputation on the costumer decision of bank
selection (EROL; KAYNAK, 1990). Boyd (1994a) found
that young costumers aged under 21 are highly affected by the bank reputation
when they make their bank selection decision.
Erol and
Kaynak (1990) studied the determinant factors of
selecting a bank in Jordan. The result of the study indicated the bank
reputation and image as an important factor to be considered by bank customers
in Jordan. The study has been done by Almossawi (2001) in Kingdom of Bahrain by having 1000
students aged between 19 and 24 years and found that bank reputation as the
most important factor of the bank selection criteria.
For Erol and
El-Bdour (1989) the quick and the efficiency of the service
and the reputation of the bank have a significant effect on the bank selection
decision. Gait and
Worthington (2008) found
that the Islamic bank reputation is a key factor of using Islamic banking
products. Okumus and
Genc (2013) found a significant effect of
Islamic bank reputation in Turkish customer decision of bank selection.
2.7.
Product and
service quality
Product and service quality have
been studied as part of the literature review related to the customer
preferences of selecting banks. Cronin and
Taylor (1992) describe the customer satisfaction
as the logic results for the service quality offered in the banks. Haron et al. (1994) found service quality is decisive
criterion for the selection process of Islamic and conventional banks customers
in Malaysia. Stafford (1996) argue that competing in the banking
sector is almost depend on the quality of the services offered. Levesque (1996) found that service quality is a very
important factor to attract customer in retail banking.
Naser et al.
(1999) found that service quality is a
significant factor affecting the satisfaction of the Islamic banks customer in
Jordan. Naser et al. (1999) found that the satisfaction of the
customers depends significantly the quality of the services offered. Gait and
Worthington (2008) identified the service quality as a
key factor of selecting the Islamic banks. Hossain and
Leo (2009) confirmed the effect of quality
services on the customer satisfaction in the retail banking sector in Qatar.
Ahmad et al.
(2011) found a positive significant
relationship between the service quality and customer satisfaction in Islamic
and non-Islamic retail bank in Pakistan. Ahmad et al. (2011) emphasized on the importance of the
service quality for selecting the Islamic banks in Pakistan. Echchabi and
Olaniyi (2012) pretend that the main factor
affecting the Islamic bank selection in Malaysia is the service quality. Saqib et al. (2016) found that service quality is
significantly related to the customer satisfaction in Islam banks in Pakistan.
Same result has been found by Zameer et al.
(2015) in Pakistan as well.
3.
RESEARCH METHODSS
3.1.
Hypotheses
development
By considering the above empirical
and theoretical arguments, here we have designed following hypothesis and
tested and proposed research framework (Figure 1).
·
H1 : There is a
positive relationship between religious and customers preferences
·
H2 : There is a
positive relationship between higher profitability on investment and customers
preferences
·
H3 : There is a
positive relationship between services (faster / friendly) and customers
preferences
·
H4 : There is a
positive relationship between sharia board audit & customers preferences
·
H5 :There is a
positive relationship between bank reputation and customers preferences
·
H6 :There is a
positive relationship between product & service quality and customers
preferences
In the study, we examine
relationship of religion, higher
profitability on investment, sharia board audit, services (faster/friendly), bank
reputation, product and service quality towards customer’s preferences in
selecting Islamic banks in GCC countries.
Secondly, we would like to identify
which variable is showing more significant towards selecting Islamic banks in
GCC countries.
3.2.
Data collection
and sample
The present study collected data
through well structure online questionnaire by help of google forms and the
questionnaire has been divided by four sections part A was designed to
collected personal data of the respondents (gender, nationality, age, marital
status and occupation), part B was concentrated on selection of the bank, who
influence to open account in the bank & reasons behind to deposit their
money at the Islamic bank. part C part includes product and service quality variables
and the final part D questionnaire collects the information customer
preferences.
There are total 21 variables were
involved in the study to know the customer preferences, 5 variables related to
the demographic information of the respondents, 3 variables for to know
knowledge level of customers, in the total 9 variables were just designed get
information regards to the product and services and remaining of the variables
measured the customers preferences, Furthermore, in order to get adequate
information, researchers approached personally contacted the respondents and
collected their opinion in this regard.
The study adopted convenience
sampling, and this is a technique widely used in qualitative research and the
researchers made a plan to collect information from GCC countries and some of
them are not citizen of the GCC countries (expats). For the study we have
considered religion, higher profitability on investment, sharia board audit,
services (faster/friendly), bank reputation, product and service quality as a
independent variable and customer’s preferences as dependent variable.
The researchers circulated a
questionnaire, by taking advantage of researchers’ contacts, the questionnaire
was disseminated, and the 120 respondents filled the questionnaire, while 101
respondents filled the questionnaire with-out any mistakes, these has been
considered for the analysis. In addition, the researcher received the response
from the following countries, Bahrain, Saudi Arabia, Kuwait, United Arab
Emirates, Oman and Qatar and respondents list has been list in the Table 1.
Table 1 shows that from Bahrain 18 respondents, Saudi Arabia 17 respondents,
Oman 16 respondents, United Arab Emirates 17 respondents, Kuwait 18 respondents
and Qatar 15 respondents are involved in the study.
Table 1: Participated countries list in the present
study.
List of the countries participated in the study |
|
|
Responses
(in Numbers) |
Bahrain |
18 |
Saudi Arabia |
17 |
Oman |
16 |
United Arab Emirates |
17 |
Kuwait |
18 |
Qatar |
15 |
Total |
101 |
3.3.
Measures
The
study adopted a five-point Likert scale was used (1 -
strongly disagree to 5 - strongly agree), in order to measure customer
preference in selecting Islamic bank in GCC countries. Van alphen et al. (1994). The questionnaire items sources have been displayed
in the Table 2.
Table 2: Conceptual framework of constructs
No |
Constructs |
Variables References |
1 |
Various
reasons to select banks (religion, higher profitability on investment, sharia
board audit, services (faster/friendly), bank reputation) |
(BASHIR, 1999; DELENER, 1994; AMIN; ISA, 2008; AHMAD et al., 2011; HAQUE et al., 2009) |
2 |
Product
and service quality |
(AHMAD; HARON, 2000; AWAN; BUKHARI, 2011;PAUL; MITTAL; SRIVASTAV, 2016;AMIN; ISA; FONTAINE, 2013) |
3 |
Customers
satisfaction |
(AWAN; BUKHARI, 2011; NASER et al., 1999;OKUMUS; GENC, 2013). |
Source: Authors
representation based on above mentioned references.
3.4.
Statistical Techniques
Used
The present study aimed to bring out
the relationship between the customers preferences, reasons behind selecting
Islamic bank and their level of satisfaction towards the Islamic banks. The
data collected has been processed and analyzed by using descriptive statistics
such as percentage, means, standard deviation, scales for reliability, t test
and regression. For getting of the result, we have used the statistical package
for the social sciences, IBM SPSS, Version 25.
4.
RESULTS
The study tested Cronbach alpha on
the reasons behind dealing with Islamic bank, product and services, customers
preferences, which produced that they are positive and significantly associated
with each other. The reasons behind
dealing with Islamic bank are with 5 items (α = 0.82), product and
services quality with 9 items (α = 0.91) and customers preferences for
selecting Islamic bank with 4 items (α = 0.90) and this indicates that
there is reliability of data and we have tested the descriptive statistics on
collected data and in the first step of the analysis, we have analyzed the
demographic profiles, selection of the banks, influence behind to open account
and reasons behind handling with Islamic banking system. In the next step we
tested the hypothesis and calculated which variable is influencing more on
customer preferences on Islamic bank. Further, we have presented the results,
after that discussed the results and finally paper terminated with study
implications, limitations, and future research possibilities.
Table 3: Respondents information
Variables |
Frequency |
Percentage |
Variables |
Frequency |
Percentage |
Gender |
|
|
Marital Status |
|
|
Male |
53 |
52.5 |
Single |
37 |
36.6 |
Female |
48 |
47.5 |
Married |
64 |
63.4 |
Nationality
|
|
|
Divorce |
00 |
00 |
GCC Citizen |
94 |
93.1 |
Occupation |
|
|
Non-GCC Citizen |
7 |
6.9 |
Government
Sector |
28 |
27.7 |
Age |
|
|
Private
Sector |
42 |
41.6 |
Below 19 |
00 |
00 |
Academic
Staff |
3 |
3.0 |
20-29 |
44 |
43.6 |
Students |
24 |
23.8 |
30-39 |
33 |
32.7 |
Others |
4 |
4.0 |
40-49 |
20 |
19.8 |
|
|
|
50-59 |
3 |
3.0 |
|
|
|
60 Above |
1 |
1.0 |
|
|
|
Source: Data collected through
questionnaire and own computation IBM SPSS, version 25.
In the present study, the
descriptive statistics displays that gender mean 1.48 and SD 0.50, and 52.50
percentage are male and 47.50 percentage are female. Regrading nationality mean
1.08 and SD 0.25, 93.10 percentage are GCC citizens and rest of the respondents
are Non-GCC citizens. About the age mean 2.85 and SD 0.91, 20-29 age between
43.60 percentage, 30-39 age 32.70 percentage, 40-49 age 19.80 percentage, 50-59
age 3 percentage and 60 above age 1 percentage.
Table 4: Customer selected bank
Variables |
Frequency |
Percentage |
Islamic bank |
67 |
66.3 |
Conventional Bank |
16 |
15.8 |
Both (Islamic bank &
Conventional Bank) |
18 |
17.8 |
Source: Data collected
through questionnaire and own computation IBM SPSS, version 25.
Table 4 results indicated that 66.30
percentage of the respondents are using Islamic bank, 15.80 percentage of the
respondents are using conventional bank and remaining of the respondents are
using both bank. In addition, the values of the mean 1.51 and SD 0.78.
Table 5: who most influence to open account in the
bank.
Variables |
Frequency |
Percentage |
Family |
19 |
18.8 |
Relatives |
2 |
2.0 |
Work Colleagues |
3 |
3.0 |
Social Media |
3 |
3.0 |
Self |
67 |
66.3 |
Friends |
1 |
1.0 |
Advertised by bank |
6 |
5.9 |
Source: Data collected
through questionnaire and own computation IBM SPSS, version 25.
Table 5 shows that who is the person
is influencing on them to open account in the banks, family members 18.80
percentage, relatives 2 percentage, work place colleagues 3 percentage, social
media 3 percentage, self has 66.30 percentage, friends have 1 percentage and
advertisements of the banks 5.90 percentage and descriptive statistics are as
follows mean 4.36 and SD 1.87.
Table 6: Customers’ reasons behind to deposit their
money in Islamic bank
Variables |
Frequency |
Percentage |
Religious |
45 |
44.6 |
Higher profitability on
investment |
3 |
3.0 |
Services (Faster/Friendly) |
11 |
10.9 |
Sharia Board Audit |
32 |
31.7 |
Bank reputation |
10 |
9.9 |
Availability of branches (In
different Locations / Timings) |
00 |
00 |
Source: Data collected
through questionnaire and own computation IBM SPSS, version 25.
In the matter of reasons behind
selecting Islamic bank, the respondents are presented their views in different,
44.60 percentage agreed that religion is play important role, 3 percentage
agreed that higher profitability on investment 3 percentage, services (faster/friendly)
10.90 percentage, sharia board audit has a 31.70 percentage and bank reputation
9.90 percentage, these values we can observed from Table 6 and the mean and SD
values as follows respectively, 2.59 and 1.54.
Table 7 : Validation of research hypotheses
Hypotheses |
Relationships |
t |
df |
Decision |
H1 |
There
is a positive relationship between religious and customers preferences |
1.90 |
68 |
* |
H2 |
There
is a positive relationship between higher profitability on investment and
customers preferences |
0.83 |
46 |
Not
Significant |
H3 |
There
is a positive relationship between services (faster / friendly) and customers
preferences |
0.75 |
53 |
Not
Significant |
H4 |
There
is a positive relationship between sharia board audit & customers
preferences |
1.71 |
54 |
* |
H5 |
There
is a positive relationship between bank
reputation and customers preferences |
0.57 |
50 |
Not
Significant |
H6 |
There
is a positive relationship between product
& service quality and customers preferences |
3.77 |
100 |
* |
Source:
Data collected through questionnaire and own computation IBM SPSS, version 25.
Note : * Indicates
significant as indicated by one tailed t statistics p > 0.05 level df :
degrees of freedom.
The study written the hypothesis on
factors of influencing of customers to select Islamic bank, to bring out the
first objective of the study, the relationship between religion, higher
profitability on investment, sharia board audit, services (faster/friendly),
bank reputation, product and service quality with customer’s preferences in
selecting Islamic banks in GCC countries, Therefore, we have examined this
through t test and results has been displayed in the Table 7. Which are not
significant, that variables are not considered for further analysis and those
have significant that only, we have considered for further analysis and
discussion has been carried for that variables only (significant variables).
In the next step we have analyzed
result, the results of that shown in the Table 7, as per the results there is
no relation between higher profitability on investment,
services (faster / friendly) and bank reputation with customers
preferences in selecting Islamic bank, but there is a significant
relation between the religion and sharia board
audit with customers preferences in selected Islamic
bank. On that basis we have designed the research framework it is shown in the
Figure 1 and to know the second objective, which variable is more influencing
on customers in selecting Islamic bank, we have tested the regression analysis
to know that variables and the results has been shown in the Table 8.
Figure 1:
Research framework for the present study
Table 8 : Summary of coefficient / Standardized
coefficient
Model |
Beta |
t |
Significance |
Constant |
|
4.67 |
0.001 |
Religion |
0.305 |
1.79 |
0.012 |
Sharia Board Audit |
0.216 |
1.61 |
0.004 |
Product and services |
0.514 N |
5.96 |
0.000 110 |
Source: Data collected
through questionnaire and own computation IBM SPSS, version 25.
Table 8 results explaining values of
standardized coefficient beta and presented all the values of coefficient
independent variables (religion, sharia board audit, product and service
quality) and dependent variables (customer’s preferences), we have tested the
regression analysis & values are presented in Table 8. For calculating
comparison, we have considered the beta values, we can observed that beta
values in the Table 8, from the Table 8 we have calculated the highest score
variable, after clear observation we found that product and services with beta
value is 0.514 with “t” 5.96, with compared to sharia board audit &
religion, at same way we have identified that religion had secured second place
by having beta value 0.305 with “t” 1.79 and finally sharia board audit scored
is beta 0.216 with “t” 1.61 and it is clearly that, which variable is more
weightage in selecting Islamic banks in GCC countries.
5.
DISCUSSION
The aim of study is to know the
relationship between the religion, higher profitability on investment, sharia
board audit, services (faster / friendly), bank reputation, product and service
quality, how theses factors are playing role in selecting banks in GCC
countries and adding to that, which variable is more weightage in the opinion
of the customers to select banks in the region.
The research explained their
demographic information male respondents are more than female, while compare
single, married are involved in the study. In nationality category most them
are citizen of GCC country and the rest of them are expats, in age area below
19 age are zero, 20 and 29 age between 44 respondents, and 30 and 39 age
between 33 respondents and rest of the people are fall under 40 and 49, 50 and
59 & 60 above, in next area of the study, occupation those who are working
in private sector are involved more than government and rest of them are
students and others.
In the matter of customers selection
of the bank most of the customers are showing much interest in Islamic bank and
some of them are chosen the Conventional bank and rest of the people
maintaining the both banks accounts for their money transactions. As same the
findings of Lee and Ullah (2011) in Pakistan and Echchabi and Olaniyi (2012) in Malaysia. In another part of the study how is
the influencer to open an account in the Bank, in that most of them
self-motivated to open an account and second place goes to the family members
influence to open account and rest of the items such as relatives, colleagues,
social media, friends and advertisement by bank are not much influenced in
account opening in the bank, likewise, the customers are depositing their money
in Islamic banks on the basis of various reasons, the study found that religion
is playing very important role. There are similar studies has been in Malaysia (AHMAD; HARON, 2000; IRWANI, 2007; RAMDHANI et al., 2011) in Indonesia. The faster / friendly services are
in third and rest of the reasons are influencing in small number, another
feature of the influencing factor, branches in different locations with
different timings not showing any influence.
After that the study like to know
the relationship between the religion, higher profitability on investment,
sharia board audit, services (faster/friendly), bank reputation, product and
service quality with customers preferences, therefore, we have tested the t
test, the results shown in the Table 7 and the hypothesis are placed to know
the significant, in that H2, H3 & H5 are not presented quite good values,
which we can considered as significant, its implies that higher profitability
on investment, services like faster and friendly, bank reputation are not shown
any relationship.
However some of the studies found
higher profitability on investment, services like faster & friendly and
bank reputation positive influences as per the location Ascarza et al. (2017), Zainol et al. (2009) and Saqib et al. (2016). The values of religious and sharia board audit
are positive and shown good influent in selecting of Islamic banks in the
region. In another factor of our study,
the product & service quality also shows much influence in selecting
Islamic banks in GCC countries opted by customers. The sharia board audit
influence more the customers, while selecting of the bank Tameme and Asutay (2012) and Mohamad et al. (2015).
The study found that there is good
influence of product and service quality on customers preferences, in that
product category has much influent towards Islamic banks, they are offering
more benefits than Conventional banks, they are displays of products on the
leaflet /brochures / website, this will all help customers to understand better
about the products of the Islamic banks. Customers are very convinced on the
products, features, benefits offering by the Islamic banks, therefore, they are
very much attracted, and they do not have any doubts on Islamic banks products.
Moreover, the customers are very
much happy about the operation time, services, front-desk, e-banking and SMS
services. Customers are satisfied with profit rate offered by the bank, getting
prompt services at any time, assurance on shariah compliance products, terms
and conditions set Islamic banks, all these all acceptable. Overall customers
of Islamic banks are very happy in the region. Another work of Metawa and Almossawi (1998) in Bahrain, Bashir (1999) from Kuwait stated the same.
The study findings are suggested
following recommendations for the Islamic banks in GCC countries.
Islamic banks have to have
concentrate on to open new ATMs centers and branches in various locations and
need to open branches in regionally & internationally as well to avoid
inconvenience of the customers.
Islamic banks required to increase
their high profitability, this will be attract more customers and very helpful
to enhance bank reputation in nationally, regionally & internationally.
6.
CONCLUSION.
The study implications for academic and practice, first, the paper offers a better understanding between the consumer preferences and religion, higher profitability on investment, sharia board audit, services (faster/friendly), bank reputation, product and service quality and relations to each other. More precisely, the paper offered points (i.e religion, sharia board audit & product and service quality) to the organizations, by use of this, organizations can offer more research activities, on the other hand, might analyze their present situation.
In the part of any research, this study has limitations, the present study has his scope is limited to cover only selected Islamic banks in GCC countries of surveyed Islamic banks willing to participate in the study by covering reasons behind selecting Islamic bank, product and services and customers preferences.
The study can be extended by having large number of sample size in GCC countries, the finding would be more meaningful. It is opportunity to study individual country by having good number of sample size. The study can be done cross country and individual comparisons of banks, product and services comparison in order to know more similarities / differences / strengths & weakness. It is possible to have more variables, same sample size and same countries the study can be done or else increasing sample size and adding variables also possible to have the same.
The results of the study show that the religion and the sharia board audit are the most important reasons behind the selection of Islamic banking services. The recent development in the financial technology sector and the forced liberalization of the financial services could create difficulties in verifying the effect of these factors in selecting the banking services. This would favorize an extension of the study to examine the effect of FinTech on the nature of Islamic banking services and the competitive advantages of Islamic banks.
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