Satisfaction of Pakistan’s Islamic banking system during the COVID-19 pandemic Logistic model-based identification of the determinants to improve customer

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Majed Alharthi ◽  
Imran Hanif ◽  
Hafeez Ur Rehman ◽  
Hawazen Alamoudi
Keyword(s):  
Banking System ◽  
External Factors ◽  
Primary Data ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Internal Factors ◽  
Content Type ◽  
Islamic Bank ◽  
Strict Compliance ◽  
Internal And External Factors

Purpose This study aims to explore the potential determinants of customers’ satisfaction with the Islamic banking system and highlights the fact that both internal and external factors play key roles in customer satisfaction (CS) during the COVID-19 pandemic. Design/methodology/approach Primary data from six Islamic banks (Al Baraka Bank Ltd, BankIslami Pakistan Ltd, Burj Bank Ltd, Dubai Islamic Bank Ltd, Meezan Bank Ltd and MCB-Islamic Bank Ltd) were analysed using a binary logit method. Findings The results showed that internal factors such as hand sanitisation facilities, strict compliance with wearing a mask before entering the bank, the distance between customers and dealing officers, an organised network of branches (in terms of health safety protocols), the behaviour of dealing officers and extended banking hours contributed significantly to enhancing the satisfaction of Islamic banking customers during the pandemic in Pakistan. The results showed that high service charges on loans have a significant adverse impact on CS. Concerning external factors, the results showed that mass media platforms that can update customers about new services and customer transactions’ processing timing, the number of operational branches in the pandemic period, available parking space in front of a bank and recommendations from family and friends to open an account with a particular bank increase CS levels. Practical implications The study’s results will be helpful for the policymakers and practitioners to design such policies that can promote the Islamic banking system in developing countries such as Pakistan. Originality/value Under the pandemic situation, the present study highlights the internal and external determinants of Islamic banking customers’ satisfaction in Pakistan. The study provides a foundation for Islamic Banks to revise their policy frameworks and marketing strategies to attract customer interest and improve their satisfaction levels.

Determinants of Islamic Bank Profitability: Evidence from Indonesia

2020 ◽  
Vol 5 (1) ◽  
pp. 1-13
Author(s):  
Puji Sucia Sukmaningrum ◽  
Kashan Pirzada ◽  
Sylva Alif Rusmita ◽  
Fatin Fadhilah Hasib ◽  
Tika Widiastuti ◽  
...  
Keyword(s):  
Interest Rate ◽  
Quality Management ◽  
Banking Industry ◽  
External Factors ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Return On Assets ◽  
Internal Factors ◽  
Bank Profitability ◽  
Islamic Bank

Objective – Islamic Banks have a distinct advantage that is not only conduct a commercial operation, but to also conduct social operations. Therefore, Islamic Banks plays an important role in developing the Indonesian economy. The aim of this study is to investigate the impact of internal and external factors that affect the profitability of Islamic Banks in Indonesia. Methodology/Technique – The methodology of this research is multiple regression. The object of this research is the Islamic banking industry in Indonesia. Internal factors include size, liquidity, asset quality, management, and efficiency ratio. External factors include interest rate and inflation. Return on Assets is used to measure profitability. The monthly data is collected from the financial reports of Islamic Banks between 2011 to 2016. Findings – The findings show that size, liquidity, assets quality, management ratio, interest rate and inflation lead to a greater Return on Assets (profitability) in Islamic Banks in Indonesia. Efficiency however does not have a significant effect on profitability of Islamic Banks in Indonesia. Novelty – Based on the results of this research, it can be concluded that the Islamic banking industry can use those variables to improve the profitability of Islamic banks in the future. In addition, there are two variables that affect the profitability of Islamic banking industry. For the Islamic banking industry should anticipate the movement of inflation and interest to improve the profitability of Islamic banks. Type of Paper: Empirical paper. Keywords: Islamic Banks; Profitability; Internal Factors; External Factors; Indonesia. Reference to this paper should be made as follows: Sukmaningrum, P.S; Pirzada, K; Rusmita, S.A; Hasib, F.F; Widiastuti, T; Hendratmi, A. 2020. Determinants of Islamic Bank Profitability: Evidence from Indonesia, J. Fin. Bank. Review, 5 (1): pp. 01 – 13 https://doi.org/10.35609/jfbr.2020.5.1(1) JEL Classification: G21, G24.

Does intention influence the financial literacy of depositors of Islamic banking? A case of Malaysia

2020 ◽  
Vol 47 (5) ◽  
pp. 675-690
Author(s):  
Yuvaraj Ganesan ◽  
Anwar Bin Allah Pitchay ◽  
Mohd Aliff Mohd Nasser
Keyword(s):  
Peer Review ◽  
Structural Equation ◽  
Banking System ◽  
Cultural Bias ◽  
Basic Knowledge ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Financial Industry ◽  
Content Type ◽  
Islamic Bank

PurposeSince the establishment of Islamic banks in Malaysia since the 1980s, the banking system has undergone rampant development within the financial industry. It has resulted in a positive competitive challenge for the conventional banks and able to attract not just the Muslim customers, but also those non-Muslim customers. At the same time, understanding the customers' knowledge of Islamic banking products is an interesting issue to explore. This issue is raised because the Islamic bank products are often packaged using Arabic terms, even though it is marketed in non-Arabic countries like Malaysia. Therefore, this study aims to examine the factors that influence the intention of the Islamic banking customers as the result of relying on some information produced by Malaysian Islamic banks.Design/methodology/approachThis study is conducted using the existing underpinning theory of planned behaviour (TPB). A total of 300 questionnaires were analysed using the structural equation modelling (SEM).FindingsThe results indicated that perceived behavioural control, attitude and subjective norms of the Islamic banking depositors are positively influenced by the intention of the depositors to learn about Islamic banking.Research limitations/implicationsOne of the main issues faced in this study is the result cannot be generalised. It is not possible to know based on the collected data if the sample is representative, other than the fact that all of the respondents are Islamic bank depositors. Nevertheless, it can still be a catalyst for further research as a link to existing findings in the area. There might be a bias on the understanding of the respondents about Islamic banking. This is due to the fact that Malaysia is a multi-racial population. Malay people might have a better understanding and basic knowledge about Islamic banking than the Chinese, Indians and other races. This cultural bias could be overcome in future studies by identifying respondents who have experiences in dealing with Islamic banking.Originality/valueThis study provides interesting insights of the Malaysian banking industry in terms of the multi-racial customers' intention to learn about Islamic banking, which is scarcely discussed in the extant literature.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-01-2019-0011.

scholarly journals THE OBSTACLE FACTORS OF MUSHARAKAH AND MUDHARABAH APPLICATION IN PAKISTAN

2020 ◽  
Vol 17 (2) ◽  
Author(s):  
Muhammad Khan ◽  
◽  
Dodik Siswantoro ◽  
Abid Ur Rahman ◽  
◽  
...  
Keyword(s):  
Critical Analysis ◽  
Banking System ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Islamic Bank ◽  
Islamic Jurisprudence ◽  
Main Factors ◽  
Internal And External Factors ◽  
Regulatory Constraint

Islamic Banking is based on the Islamic financial system. It is a banking system whose fundamental rules and regulations are established on Shariah laws i.e., Islamic jurisprudence originated from the Quran and Sunnah of the Prophet Muhammad peace be upon him. Its functions must comply with Shariah rules and must not violate any Shariah principle. The Islamic finance system is based on Profit-loss sharing financing namely, Musharakah and Mudharabah but there are numerous issues and challenges faced by Islamic bank during the implementation of Musharakah and Mudharabah financing contracts. The various paper has been revealed some of the internal and external factors in this context, but the study is still unexplored in Pakistan. This paper aims to highlight those obstacles factors that affect the application of Musharakah and Mudharabah financing by Islamic Banks in Pakistan. This paper is based on the critical analysis of the related literature on the concepts of Profit-loss sharing based financing by Islamic Banks. The finding suggests 4 (four) main factors which hinder the application of Musharakah and Mudharabah by Islamic bank in Pakistan namely high risk, lack of awareness, Regulatory constraint and Low rate of return. Finally, this paper concludes by making recommendations that may be adopted by Islamic banks and regulators to facilitate the promotion of Musharakah and Mudharabah Financing.

Absorptive capacity, cluster linkages, and innovation

2018 ◽  
Vol 29 (1) ◽  
pp. 121-148 ◽  
Author(s):  
Deepak Chandrashekar ◽  
Bala Subrahmanya Mungila Hillemane
Keyword(s):  
Absorptive Capacity ◽  
Sampling Technique ◽  
Positive Influence ◽  
External Factors ◽  
Innovation Performance ◽  
Primary Data ◽  
Internal Factors ◽  
Content Type ◽  
The One ◽  
Internal And External Factors

Purpose The purpose of this paper is to outline the key determinants of innovation performance of a firm in a cluster. This paper probes the role of absorptive capacity in furthering the cluster linkages and thereby enhancing the innovation performance of a firm. Design/methodology/approach This study adopts stratified random sampling technique to choose sample firms from the identified population of firms in a cluster. Further, it employs primary data collection method to collect data from sample firms through a semi-structured questionnaire based in-depth interviews with the top level management of sample firms. It uses multiple linear regression (MLR) techniques to ascertain the influence of absorptive capacity on degree of cluster linkages (both intra-cluster and extra-cluster linkages), and degree of cluster linkages (both intra-cluster and extra-cluster linkages) on innovation performance of a firm. Findings On the one hand, internal factors of absorptive capacity of a firm have a significant positive influence on the degrees of both intra-cluster linkages and extra-cluster linkages. On the other hand, external factors of absorptive capacity of a firm significantly impact the degree of intra-cluster linkages (DICL). But, they have no significant influence on the degree of extra-cluster linkages (DECL). Further, both the DICL and the DECL drive innovation performance of a firm in a cluster. Notably, subsidiaries of externally based firms exhibit superior innovation performance compared to those firms based in a cluster. Originality/value This paper contributes to the extant literature in two ways. First, it empirically validates the effect of absorptive capacity of a firm on its degree of cluster linkages (both intra-cluster and extra-cluster linkages) taking into account both internal and external factors of absorptive capacity. Second, it ascertains the influence of degree of cluster linkages (both intra-cluster and extra-cluster linkages) on the innovation performance of a firm in a cluster.

scholarly journals Customers’ perceptions of selection criteria used by Islamic bank customers in Sudan: The importance of Shariah compliance

2019 ◽  
Vol 1 (4) ◽  
pp. 20-32 ◽  
Author(s):  
Ilham Hassan Fathelrahman Mansour
Keyword(s):  
Banking System ◽  
Selection Criterion ◽  
Third Party ◽  
Primary Data ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Holistic View ◽  
Islamic Bank ◽  
Muslim Countries ◽  
Customer Care

This paper attempts to investigate the importance of Shariah compliance compared to other criteria that influence the selection of Islamic banks in Sudan, a total Islamic banking system in which the “Islamic” variable is supposed to be constant.  Primary data collected by self-administered questionnaires distributed to a sample of 393 respondents from bank locations in the capital of Khartoum state. The perceptions on the importance of choice criteria ranked by the respondents were analyzed using mean analysis and independent t-test. Exploratory factor analysis is employed to provide a more holistic view of the bank choice criteria. The customers of Sudanese Islamic banks prioritized Shariah compliance factors over another selection criterion. We conclude that although all banks work under the Islamic system, consumers were most concerned with the extent to which their bank services are adhering to Islamic principles. Other factors deemed important were “Experience and third-party influence”, followed by staff competency, convenience, service quality, bank reputation, and customer care. Most studies have focused on countries with mixed conventional and Islamic banking systems (Arab and other Muslim countries). This study aims to contribute to the development of a better understanding of the determinants of Islamic bank selection in Sudan, an Arab African country characterized by a strong Islamic culture and a total Islamic banking system.

Loyalty towards Islamic banking: service quality, emotional or religious driven?

2019 ◽  
Vol 11 (1) ◽  
pp. 66-80 ◽  
Author(s):  
Dwi Suhartanto ◽  
Christopher Gan ◽  
Ira Siti Sarah ◽  
Setiawan Setiawan
Keyword(s):  
Service Quality ◽  
Customer Loyalty ◽  
Structural Equation ◽  
Islamic Banking ◽  
Emotional Attachment ◽  
Islamic Banks ◽  
Content Type ◽  
Perceived Service Quality ◽  
Islamic Bank ◽  
Bank Managers

Purpose This paper aims to integrate and examine three loyalty routes (i.e. service quality, emotional attachment and religiosity) in developing customer loyalty towards Islamic banking. Design/methodology/approach Data were collected from 412 Islamic bank customers from Indonesia. Variance-based structural equation modelling was applied to evaluate the association between service quality, emotional attachment, religiosity and customer loyalty. Findings This study reveals that customer loyalty is more driven by emotional attachment and religiosity rather than by perceived service quality. Although not directly affecting customer loyalty, service quality strengthens customer satisfaction towards Islamic banks. Practical implications This study provides an opportunity for Islamic bank managers to increase their customer loyalty through the development of emotional attachment and religiosity. To improve customer loyalty, this study suggests that Islamic banks have to provide prompt, accurate and non-personal service. It is also important for Islamic bank managers to keep the bank operation compliant with the Sharia law. Originality/value This study is the first attempt to assess the three loyalty routes simultaneously in influencing customer loyalty.

Is Islamic bank profitability driven by same forces as conventional banks?

2016 ◽  
Vol 9 (1) ◽  
pp. 46-66 ◽  
Author(s):  
Hajer Zarrouk ◽  
Khoutem Ben Jedidia ◽  
Mouna Moualhi
Keyword(s):  
Dynamic Panel Data ◽  
Islamic Banking ◽  
Subprime Crisis ◽  
Islamic Banks ◽  
Mena Region ◽  
Bank Profitability ◽  
Content Type ◽  
Large Sample ◽  
Islamic Bank ◽  
Conventional Banks

Purpose The purpose of this paper is to ascertain whether Islamic bank profitability is driven by same forces as those driving conventional banking in the Middle East and North Africa (MENA) region. Distinguished by its principles in conformity with sharia, Islamic banking is different from conventional banking, which is likely to affect profitability. Design/methodology/approach The paper builds on a dynamic panel data model to identify the banks’ specific determinants and the macroeconomic factors influencing the profitability of a large sample of 51 Islamic banks operating in the MENA region from 1994 to 2012. The system-generalized method of moment estimators are applied. Findings The findings reveal that profitability is positively affected by banks’ cost-effectiveness, asset quality and level of capitalization. The results also indicate that non-financing activities allow Islamic banks to earn higher profits. Islamic banks perform better in environments where the gross domestic product and investment are high. There is evidence of several elements of similarities between determinants of the profitability for Islamic and conventional banks. The inflation rate, however, is negatively associated with Islamic bank profitability. Practical Implications The authors conclude that profitability determinants did not differ significantly between Islamic and conventional banks. Many factors are deemed the same in explaining the profitability of conventional as well as Islamic banks. The findings reported in the current paper might be of interest for policy makers. It is recommended to better implement non-financing activities to improve Islamic bank profitability. Originality/value Unlike the previous empirical research, this empirical investigation assesses the issue whether Islamic banks profitability is influenced by same factors as conventional model. It enriches the literature in this regard by considering the specificities of Islamic banking to identify the determinants of profitability. Moreover, this study considers a large sample (51 Islamic banks) through a different selection of countries/banks than previous studies. In addition, the period of study considers the subprime crisis insofar it ranges from 1994 to 2012. Hence, this broader study allows the authors to draw more consistent conclusions.

FAKTOR-FAKTOR YANG MEMPENGARUHI MINAT BERWIRAUSAHA MAHASISWA STAI MUHAMMADIYAH TULUNGAGUNG

2021 ◽  
Vol 5 (1) ◽  
Author(s):  
Mendah Nur Kumala ◽  
Mei Santi ◽  
Hasan Sultoni
Keyword(s):  
Family Environment ◽  
Sampling Technique ◽  
Self Esteem ◽  
External Factors ◽  
Test Reliability ◽  
Primary Data ◽  
Internal Factors ◽  
Surrounding Environment ◽  
Environment Education ◽  
Internal And External Factors

One alternative to reduce the unemployment rate in Indonesia is to foster entrepreneurship in college students because this is expected to be an educated young entrepreneur who is able to start his own business, and be able to open up jobs for others. The formulation of the problem include: what are internal factors (income, self-esteem, motivation) and whether external factors (family environment, surrounding environment, education, and opportunities) influence the interest in entrepreneurship of STAI Muhammadiyah Tulungagung students ?. This study aims to determine internal factors (income, self-esteem, motivation) and external factors (family environment, surrounding environment, education, and opportunities) affect the entrepreneurial interest of STAI Muhammadiyah Tulungagung students. The approach used is a quantitative approach to the type of associative research. The population and sample in this study were students of STAI Muhammadiyah Tulungagung which consisted of 50 students who had taken Entrepreneurship courses and students who had been entrepreneurs. Sampling using a purposive sampling technique. The data source is primary data. Data collection was carried out through questionnaires. The measurement uses a Likert scale. The next stage, the results of the questionnaire were analyzed with multiple linear regression which serves to prove the research hypothesis. The data that has met the validity test, reliability test, and the classic assumption test are processed to produce a regression equation. Based on the results of the study showed that internal and external factors partially had a positive and significant effect on the entrepreneurial interest of STAI Muhammadiyah Tulungagung students. With an adjusted R2 value of 0.407 so the magnitude of the influence of internal and external factors on entrepreneurial interest is 40.7% while the remaining 59.3% is influenced by other factors not examined in this study.Keywords: Factors, Interests, Entrepreneurship, STAI Muhammadiyah Tulungagung

The consumers’ commitment and materialism on Islamic banking: the role of religiosity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Junaidi Junaidi ◽  
Ready Wicaksono ◽  
Hamka Hamka
Keyword(s):  
Structural Equation ◽  
Survey Study ◽  
Equation Modeling ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Positive Effects ◽  
Islamic Bank ◽  
Muslim People ◽  
The Impact

Purpose This paper aims to investigate whether and how religiosity (e.g. extrinsic and intrinsic) influences the mediator variables (consumers’ commitment and materialism) in the Islamic bank consumers context. It also examines how the mediators should be influence consumers’ preferences. Design/methodology/approach In total, 658 Muslim people and Islamic bank consumers were recruited for a survey study and structural equation modeling was used to test the research hypotheses. Findings The empirical results indicate that religiosity (e.g. extrinsic and intrinsic) has significant and positive effects on consumers’ commitment and materialism, whereas intrinsic religiosity has no significant effect on consumers’ commitment which subsequently influences consumers’ preference. Furthermore, mediator variables (e.g. consumers’ commitment and consumers’ materialism) have partial mediators between religiosity and consumers’ preferences. Research limitations/implications The current study was limited to Indonesian Muslim people; there is a future need to study consumers’ attitudes and engagement in religious products and services (e.g. Islamic brands). It is can help practitioners, regulators and researchers to observe the dynamic behavior to elaborate on the impact of religion and Islamic products on consumers’ preference. Practical implications The bank managers and regulators should enhance the information of products and services Islamic banks and the difference principle between conventional banks. Moreover, enlighten the consumers about the principle operation of Islamic banks from the perspective of marketing and religiosity. Originality/value This study contributes to consumers’ behavior literature and, specifically, for the decision-making process through developing and testing a model of religious determinants toward Islamic bank products, as well as offers new insights into the determinants of religion and consumers’ decision process toward Islamic banking.

Empirical evaluation of structure-conduct-performance paradigm as applied to the Iranian Islamic banking system

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mahdi Ghaemi Asl ◽  
Muhammad Mahdi Rashidi ◽  
Alireza Ghorbani
Keyword(s):  
Market Structure ◽  
Market Share ◽  
Balance Sheet ◽  
Empirical Evaluation ◽  
Banking System ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Simple Regression Model ◽  
The Impact

Purpose This paper aims to investigate the impact of market structure and market share on the performance of the Islamic banks operating in the Iranian banking system based on the structure-conduct-performance (SCP) paradigm. Design/methodology/approach The Iranian Islamic banking system’s market structure is evaluated by using the econometrics method to test the validity of the traditional SCP paradigm. For this purpose, the authors estimate a simple regression model that is consisted of several independent variables, such as the market share, bank size, real gross domestic product, liquidity and Herfindahl-Hirschman index as a proxy variable for concentration and one dependent variable, namely, the profit as a proxy for performance. The panel data includes a data sample of 22 Islamic banks operating from 2006 to 2019. Data are extracted from the balance sheet of Islamic banks and the time-series database of the Central Bank of Iran and World Bank. Findings The study’s findings indicate that both concentration and market share have a positive impact on the performance of banks in the Iranian Islamic banking system. This result is contradicted with both traditional SCP and efficient structure hypotheses; however, it confirms the existence of oligopoly or cartel in the Iranian Islamic banking system that few banks try to gain the highest share of profit and maintain their market share by colluding with each other. This result is in contradiction with other research studies about the market structure in the Iranian banking system that claimed that banks in Iran operate under monopolistic competition. In addition, it shows that the privatization of some banks in Iran does not improve and help competition in the Iranian banking system. Originality/value This paper is a pioneer empirical study analyzing the market structure, concentration and collusion based on the SCP paradigm in Iranian Islamic banking. The results of the study support the existence of collusive behavior among the Islamic bank in Iran that is not aligned with Sharia. This study clearly shows the difference between ideal Islamic banking and Islamic banking in practice in Islamic countries. This clearly indicates that only prohibiting some operations like receiving interest, gambling and bearing excessive risk is not enough. In fact, the Islamic banking system should be based on the Sharia rule in all aspects and much more modification and study have to be done to achieve an appropriate Islamic banking system. These possible modifications to overcome the issues of cartel-like market structure and collusive behavior in the Iranian Islamic banking system include making the Iranian banking system more transparent, letting foreign banks enter the Iranian banking system and minimizing the government intervention in the Iranian banking system.

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