Clients of conventional and Islamic banks in Bahrain: How they choose which bank to patronize

Abstract

Purpose

The purpose of this paper is to report a study into: the motives that dispose customers in Bahrain to choose a specific bank; the level of familiarity of customers with the most widely used services/products offered by Islamic banks; and the extent of use of those products.

Design/methodology/approach

This is the first study conducted in Bahrain to include three types of bank clients: those who bank with conventional banks, those who bank with Islamic banks, and who use both kinds of banks. The results are based on a response rate of 65.5 percent from 1,000 questionnaires distributed. Descriptive statistics and non‐parametric statistics (Mann‐Whitney and Kruskal‐Wallis tests) are reported, and factor analysis used to analyze the responses.

Findings

It is found that: Islamic religious belief and social responsibility are the two most important factors that determine bank selection. Cost benefit is the third most important factor considered in bank selection; clients of conventional and Islamic banks share a number of motives, but they differ significantly on a few motives in relation to bank selection; and clients of Islamic banks are more familiar with the products/services that conform to the sharia'a. Overall, for clients who bank exclusively with Islamic banks, and for those who bank in different kinds of banks, the most widely used product/service of Islamic banks is murabaha.

Practical implications

The most important practical implication is for banks, conventional and Islamic, when setting and implementing their marketing strategies, which should include an awareness campaign. The results also benefit banks operating in the countries of the Gulf Cooperation Council (GCC). This is because of the similarities of the countries in the GCC.

Originality/value

This paper is the first attempt to identify the motives and criteria for bank selection in Bahrain among clients of conventional banks, Islamic banks, and clients who bank with both types of banks. The study goes on to determine the extent of familiarity of clients of banks in Bahrain with the products/services that comply with Islamic sharia'a.

Citation

Al‐Ajmi, J., Abo Hussain, H. and Al‐Saleh, N. (2009), "Clients of conventional and Islamic banks in Bahrain: How they choose which bank to patronize", International Journal of Social Economics, Vol. 36 No. 11, pp. 1086-1112. https://doi.org/10.1108/03068290910992642