Loyalty formation and its impact on financial performance of Islamic banks – evidence from Indonesia

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ayu Fusva ◽  
David Dean ◽  
Dwi Suhartanto ◽  
Moch. Edman Syarief ◽  
Agus Zainul Arifin ◽  
...  
Keyword(s):  
Service Quality ◽  
Financial Performance ◽  
Perceived Value ◽  
Partial Least Square ◽  
Least Square ◽  
Islamic Banks ◽  
Financial Reports ◽  
Content Type ◽  
Islamic Bank ◽  
Business Operations

Purpose This paper aims to examine loyalty formation, including service quality, perceived value, image and satisfaction as determinants, and their effect on the financial performance of Islamic banks. Design/methodology/approach Data were collected from 280 Islamic bank clients in Indonesia and bank financial performance data from bank financial reports. Variance-based partial least square modelling was used to assess the relationships between loyalty, its determinants and their influence on bank financial performance. Findings This study finds that client loyalty towards Islamic banks is most influenced by perceived service quality and perceived value. Further, this study documents the importance of client loyalty in influencing bank financial performance and indirect effect of clients’ satisfaction on financial performance through the strengthening of client loyalty. Practical implications This study offers a path for the managers of Islamic banks to enhance financial performance by enhancing client loyalty. To develop client loyalty, this study suggests that Islamic banks should offer economical and service-derived benefits that are superior to those other banks offer. Further, Islamic banks need to ensure that their business operations are compatible with Islamic values. Originality/value This is an early empirical study attempting to examine the link between customer loyalty and its impact on Islamic bank financial performance.

The influence of e-customer satisfaction, e-trust and perceived value on consumer's repurchase intention in B2C e-commerce segment

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Miao Miao ◽  
Tariq Jalees ◽  
Syed Imran Zaman ◽  
Sherbaz Khan ◽  
Noor-ul-Ain Hanif ◽  
...  
Keyword(s):  
Customer Satisfaction ◽  
Service Quality ◽  
Perceived Value ◽  
Partial Least Square ◽  
Least Square ◽  
Mediation Effect ◽  
Equation Modeling ◽  
Repurchase Intention ◽  
Content Type ◽  
Online Experience

PurposeThis research study investigates the factors that influence e-customer satisfaction, e-trust, perceived value and consumers repurchase intention in the context of the B2C e-commerce segment. It investigates the mediation effect of e-customer satisfaction, e-trust and perceived value on repurchase intention. It also examines the moderating role of prior online experience.Design/methodology/approachBased on the adapted questionnaire, pre-recruited enumerators collected the data from five leading business universities of Karachi. They distributed 425 questionnaires and received 415 questionnaires. The study has used Partial Least Square-Structure Equation Modeling (PLS-SEM) technique for data analysis.FindingsWe have tested 20 hypotheses, of which our results do not support five, including two direct, two mediating. Our results support all the direct hypotheses except the following two: (1) delivery service affects e-satisfaction (2) customer services quality effect on trust. We did not find support for the following two mediating hypotheses (1) e-satisfaction mediates delivery services and repurchase intention, (2) service quality mediates customers' service quality and repurchase intention. Our results do not support one moderating relationship. Prior online experience moderates e-perceived value and repurchase intention.Research limitations/implicationsThis research provides valuable information to the online retailers of B2C e-commerce, which can help them make strategies based on their consumers' behavior and encourage them to make repeat purchases from online retailing stores. It allows future researchers to replicate the model in cross-cultural studies in different product categories.Originality/valueWe have examined the moderating effect of prior online experience between (e-satisfaction, e-trust and perceived value) on the repurchase intention.

scholarly journals Millennial loyalty towards artificial intelligence-enabled mobile banking. Evidence from Indonesian Islamic banks

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Dwi Suhartanto ◽  
Moch Edman Syarief ◽  
Ade Chandra Nugraha ◽  
Tintin Suhaeni ◽  
Ambia Masthura ◽  
...  
Keyword(s):  
Artificial Intelligence ◽  
Service Quality ◽  
Islamic Law ◽  
Partial Least Square ◽  
Least Square ◽  
Relative Advantage ◽  
Mobile Banking ◽  
Islamic Banks ◽  
Banking Services ◽  
Content Type

Purpose This study aims to examine factors driving millennial loyalty towards artificial intelligence (AI)-enabled mobile banking services in Islamic banks. Design/methodology/approach This research collected the data from 204 millennial customers of Islamic banks in Aceh, Indonesia. Partial least square (PLS) was used to evaluate the effect of service factors (the need for service and service quality), technology-based factors (attitudes towards AI, relative advantage, security and trust) and religiosity on millennial loyalty towards AI-enabled mobile banking. Findings This inquiry reveals that service quality, attitude towards AI and trust are determinants important for millennial loyalty towards AI-enabled mobile banking. Further, this research notes the significant role of religiosity on millennial loyalty towards mobile banking services. Practical implications This study suggests Islamic banks focus on developing millennial trust and attitude towards AI to increase their loyalty towards AI-enabled mobile banking services. Further, Islamic banks operation that complies with Islamic law is strongly suggested to develop millennial loyalty. Originality/value To the best of the authors’ knowledge, this is the first study that tries to scrutinize loyalty towards AI-enabled mobile banking.

Predicting behavioural intention toward Islamic bank: a multi-group analysis approach

2019 ◽  
Vol 10 (4) ◽  
pp. 1091-1103 ◽  
Author(s):  
Dwi Suhartanto
Keyword(s):  
Group Analysis ◽  
Partial Least Square ◽  
Least Square ◽  
Behavioural Intention ◽  
Islamic Banks ◽  
Content Type ◽  
Islamic Bank ◽  
Bank Managers ◽  
The Impact ◽  
Practical Implications

PurposeThis study aims to examine behavioural intention towards Islamic bank including three determinants: religiosity, trust and image across customers and non-customers.Design/methodology/approachThis study uses 400 samples, consisting of customers and non-customers of Islamic banks collected from Bandung, Indonesia. Partial least square was applied to evaluate the association between religiosity, trust, image and behavioural intention.FindingsThis study reveals a direct effect of religiosity on behavioural intention and indirect effect through trust and image for both customers and non-customers of Islamic banks. Although the impact of religiosity on trust, image and behavioural intention is significant in both the customer and non-customer sample, the effect of religiosity on the customer is higher compared to that of non-customer.Practical implicationsThis study provides an opportunity for Islamic bank managers to increase the behavioural intention among the customer, as well as non-customer. To increase behavioural intention amongst customers and non-customers, Islamic bank managers need to keep the bank operation compliant with theSharialaw, maintain a good image and gain trust from both customers and non-customers.Originality/valueThis study is the first attempt to evaluate the behavioural intention towards Islamic bank across customers and non-customers.

Modified integrated Islamic CSRD index and financial performance of Malaysian Islamic banks

2020 ◽  
Vol 11 (8) ◽  
pp. 1599-1617
Author(s):  
Fatimah Noor Rashidah Mohd Sofian ◽  
Rusnah Muhamad
Keyword(s):  
Financial Performance ◽  
Stakeholder Theory ◽  
Partial Least Square ◽  
Least Square ◽  
Islamic Banks ◽  
Content Type ◽  
Partial Least Square Analysis ◽  
The Relationship ◽  
Purposive Sample ◽  
Practical Implications

Purpose The purpose of this paper is to examine the relationship between the modified integrated Islamic CSRD index (MIICSRDi) and financial performance of Malaysian Islamic banks as perceived by the stakeholders. Design/methodology/approach This paper used survey questionnaire with a purposive sample of 343 stakeholders of Malaysian Islamic banks. A theoretical framework was developed and tested by using partial least square analysis. Findings The findings reveal that there is a significant positive relationship between the MIICSRDi and financial performance as perceived by the stakeholders. Research limitations/implications There is a lack of empirical research proposing an Islamic CSRD framework that is suitable to be applied within the context of the Malaysian environment. Hence, this paper shows that MIICSRDi in line with the stakeholder theory, Shariah principles and ‘urf principle (customary practice) can be used by Malaysian Islamic banks to increase their performance. Practical implications MIICSRDi can be used as one of the strategies to improve the financial performance of Islamic banks. In fact, it can be instilled in the value-based intermediation introduced by Bank Negara Malaysia for the rebranding of Islamic banks. Originality/value The relationship between perceived MIICSRDi and perceived financial performance is explained in light of the stakeholder theory, Shariah principles (unity, equilibrium, free will, responsibility and tazkiyah) and ‘urf principle (customary practice).

Predictors of Islamic bank adoption: Nigerian perspective

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Precious Chikezie Ezeh ◽  
Anayo Nkamnebe
Keyword(s):  
Social Influence ◽  
Emerging Market ◽  
Partial Least Square ◽  
Least Square ◽  
Government Support ◽  
Relative Advantage ◽  
Equation Modeling ◽  
Islamic Banks ◽  
Content Type ◽  
Islamic Bank

Purpose The 2008 financial crisis that hit conventional banks provides a market opportunity for special types of banks. Furthermore, given the current financial reform for financial inclusion and economic concern of the Nigerian Government, there is a need for research on the adoption of Islamic banks. Accordingly, the purpose of this study is to determine the predictors of Islamic bank adoption in Nigeria. Design/methodology/approach Data is collected from 385 Islamic bank customers in northern Nigeria and is analyzed using the partial least square structural equation modeling technique. Findings The result reveals that trust, social influence, knowledge and government support have a significant positive relationship with the adoption of Islamic banks, while relative advantage and compatibility do not. The model (trust, social influence, knowledge, government support, relative advantage and compatibility) explained 50% of the variance in the adoption of Islamic bank. Practical implications These findings are very important to scholars, the policymakers and Islamic bank operators in designing their marketing strategies. It shows that trust, social influence, government support and knowledge are predictors of Islamic bank adoption. Originality/value This study extended the diffusion of innovation (DOI) theory by combining relative advantage, compatibility with trust, social influence, knowledge and government support to the model. The developed model is validated for the study of Islamic bank adoption in an emerging market, Nigeria. Arguably, it is the only study that test effect sizes (f2) and predictive relevance (Q2) of extended DOI on Islamic banks.

scholarly journals INTELLECTUAL CAPITAL AND ISLAMIC SOSIAL REPORTING INDEX: THE CASE OF INDONESIAN ISLAMIC BANKING

2020 ◽  
Vol 8 (4) ◽  
pp. 728-736
Author(s):  
Risma Ayu Kinanti ◽  
Ririn Tri Ratnasari ◽  
Anidah Robani ◽  
Tika Widiastuti ◽  
Raditya Sukmana
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Partial Least Square ◽  
Least Square ◽  
Social Reporting ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Financial Reports ◽  
Banking Institutions ◽  
Positive Effect

Purpose of the study: This study aims to explain the effect of Islamic Banking Intellectual Capital and Islamic Social Reporting on the Islamic Financial Performance Index of Sharia Bank Indonesia. Methodology: The data obtained in this study consisted of a total of 368 from annual financial reports and sustainability reports that were officially published by each Islamic bank in Indonesia. The analytical method used in this study is the Partial Least Square (PLS) method which is processed with SmartPLS 3 software. Main Findings: There is an essential influence on the implementation of Islamic Banking Intellectual Capital and Islamic Social Reporting on Islamic Financial Performance in Islamic Banking in Indonesia. This finding also shows that intellectual capital and social reporting by Islamic banks have a significant positive effect on the financial performance of Islamic banks in Indonesia. Applications of this study: This research will help next researchers to develop research in the banking world and can be used by banking institutions to become scientific input. Besides, mobilizing and using intangible resources properly will improve the financial performance of an organization. Novelty / Originality of this study: The existence of Islamic Banking Intellectual Capital combined with Islamic Social Reporting can affect and improve the competitiveness of Islamic Banking in Indonesia. This study will be a complete research and provide clear information for practitioners and academics.

Millennial behavioural intention in Islamic banks: the role of social media influencers

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
David Dean ◽  
Dwi Suhartanto ◽  
Ferty Nadya Pujianti
Keyword(s):  
Social Media ◽  
Partial Least Square ◽  
Least Square ◽  
Behavioural Intention ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Behavioural Intentions ◽  
Islamic Bank

Purpose This study aims to examine the role of social media influencers (SMI) in millennial behavioural intentions towards Islamic banks, from the perspective of both bank clients and non-clients. Design/methodology/approach Of the 484 Indonesian millennials in the sample, 278 were clients and 206 non-clients of Islamic banks. Factor analysis was used to examine the SMI dimension in the Islamic banking context. This study then used the partial least square to evaluate the proposed model and test the relationships between SMI, bank image, trust and behavioural intention. Findings Three SMI dimensions were confirmed, i.e. expertise, celebrity and similarity. For bank clients, the findings show that SMI has a significant influence on behavioural intention and reinforces bank image and trust. For non-clients, SMI does not have a significant impact on behavioural intentions but significantly strengthens bank image and trust. Practical implications Islamic bank managers can take benefit of this study findings by learning to foster the behavioural intentions of their millennial clients and non-clients using SMIs. Further, choosing the right SMIs for their Islamic bank is an important activity, and if they want to make a positive impact on existing and potential millennial clients, they need to choose popular millennials who are knowledgeable about the Islamic value compliance of Islamic banking services. Originality/value This study is an early study to explore SMI’s role in influencing the behavioural intentions of millennials towards Islamic banks.

scholarly journals Sustainable Business of Islamic Bank Through on the Islamic Corporate Governance and Islamic Financial Performance

2017 ◽  
Vol 2 (2) ◽  
pp. 15-20
Author(s):  
Indra Siswanti ◽  
Ubud Salim ◽  
Eko Ganis Sukoharsono ◽  
Siti Aisjah
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Jel Classification ◽  
Partial Least Square ◽  
Least Square ◽  
Islamic Banks ◽  
Sustainable Business ◽  
Islamic Bank ◽  
Independent Variable ◽  
Positive Effect

Objective - The objective of the study is to analyze the application of Islamic Corporate Governance (ICG) on Sustainable Business, focusing on Islamic Financial Performance as a mediating variable in Islamic Banks in Indonesia. Methodology/Technique - The population and sample in the study consists of 9 Islamic Banks. The study uses partial least square (PLS), and the data is collected from public reports for the period between 2010 and 2015. The variables of the study are: Islamic Corporate Governance as an independent variable, Sustainable Business as the dependent variable and Financial Performance as a mediating variable. Findings - The study shows that Islamic Corporate Governance (ICG) has a positive significant effect on Islamic Financial Performance, Islamic Corporate Governance (ICG) has no effect on Sustainable Business, and Islamic Financial Performance has a positive effect on Sustainable Business. The findings also show that Islamic Financial Performance can have an indirect impact to mediating the effect of Islamic Corporate Governance on Sustainable Business Islamic Bank. Novelty - Using Murabahah ratio to measure Islamic Financial Performance. Type of Paper: Empirical Keywords: Islamic Corporate Governance; Islamic Financial Performance; Sustainable Business. JEL Classification: G21, L22, M41.

scholarly journals The antecedents of Muslim customers’ intention to invest in an Islamic bank’s term deposits: evidence from a Muslim majority country

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sri Rahayu Hijrah Hati ◽  
Sigit Sulistiyo Wibowo ◽  
Anya Safira
Keyword(s):  
Perceived Risk ◽  
Online Survey ◽  
Perceived Value ◽  
Perceived Quality ◽  
Equation Modeling ◽  
Product Knowledge ◽  
Islamic Banks ◽  
Content Type ◽  
Islamic Bank

Purpose The purpose of this study is to examine the impacts of product knowledge, perceived quality, perceived risk and perceived value on customers’ intention to invest in Islamic Banks. This study specifically examines an Islamic bank’s term deposits. Design/methodology/approach Structural equation modeling was used to analyze the data collected from 217 customers of an Islamic bank in Indonesia using an online survey. Findings This study highlights the central and dual roles of perceived risk as both the independent and the intervening variable that mediates the relationship between product knowledge and Muslim customer intention to invest in an Islamic bank’s term deposits. Research limitations/implications This study only investigates term deposits as one type of investment in Islamic banks. This study contributes to the literature by examining the role of product knowledge, perceived quality, perceived risk and perceived value on Muslim customer intention to invest in Islamic term deposits. Practical implications The results of this study highlight the requirement for Islamic banks to educate customers to improve the depositors’ product knowledge because Muslim customers’ risk and value perception and intention are strongly influenced by product knowledge. Originality/value The investigation of perceived risk is particularly relevant for Islamic financial products because of the inherent nature of risk sharing in Islamic finance. This study investigates the role of product knowledge in influencing the Muslim customers’ perception of risk, quality, value and their intention to invest in Islamic bank term deposits. Ideally, the profit loss sharing concept (PLS) should be applied; however, in this context, revenue sharing is applied because of Indonesia’s central bank regulation.

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.

Sign in / Sign up

Export Citation Format

Share Document