An examination of the relationship between service quality perception and customer satisfaction: A SEM approach towards Malaysian Islamic banking

Abstract

Purpose

This study attempts to examine the relationship between service quality perception and customers' satisfaction in Malaysian Islamic banking using the SEM approach.

Design/methodology/approach

This model starts with SERVQUAL measurement scales consisting of six dimensional structures: tangibles, reliability, responsiveness, assurance, and empathy, and plus the compliance dimensions to measure Malaysian Islamic banking service quality. Respondents are the customers (Muslim and non‐Muslim) who visit the bank counters. They must have an account with one of the full‐fledged Islamic banking and dual‐banking systems.

Findings

The results showed that the proportion of Malaysian Muslims' awareness of the Islamic banking products and services were high compared to non‐Muslim customers. The majority of the Islamic banking customers were satisfied with the overall service quality provided by their banks. The findings suggest that the standard model of Islamic banking service quality dimensions should consist of the six dimensions and good determinants of satisfaction. The relationship between service quality and customer satisfaction was significant.

Research limitations/implications

Further research should be considered in order to gather more information regarding service quality and customer satisfaction dimensions in the context of Malaysian Islamic banking industry.

Practical implications

The six dimensions of SERVQUAL represent a valid instrument to measure service quality in Malaysian Islamic banking. Providing financial counseling to attract Muslim customers to use more Islamic banking products and services is critical, where 60 percent of the Malaysian population is Muslim. There is a potential target market for Islamic banking that needs be concerned.

Originality/value

This research is important in line with the obvious cross‐cultural and religious differences between these two key customer segments; Muslims and non‐Muslims. In the Malaysian context, there is a strategic dimension that needs to be understood.

Citation

Amin, M. and Isa, Z. (2008), "An examination of the relationship between service quality perception and customer satisfaction: A SEM approach towards Malaysian Islamic banking", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 1 No. 3, pp. 191-209. https://doi.org/10.1108/17538390810901131