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Islamic banking and customer satisfaction in Pakistan: evidence from internal and external customers

Syed Tehseen Jawaid (Applied Economics Research Center Karachi Pakistan)
Aamir Hussain Siddiqui (Applied Economics Research Center Karachi Pakistan)
Rabia Kanwal (Applied Economics Research Center Karachi Pakistan)
Hareem Fatima (Applied Economics Research Center Karachi Pakistan)

Journal of Islamic Marketing

ISSN: 1759-0833

Article publication date: 15 October 2021

Issue publication date: 26 January 2023

1086

Abstract

Purpose

This study aims to find the determinants of internal and external customer satisfaction of Islamic banks of Pakistan through service quality indicators that are assurance, reliance, empathy, tangibility, responsiveness. Compliance has also been added as a determinant of customer satisfaction. In this study, customers are divided into two groups, internal customers are those who are an employee in the Islamic bank and also an account holder. While external customers are account holders only in Islamic banks of Pakistan.

Design/methodology/approach

In this study, a quantitative research approach is used for analyzing the behavior of internal and external customers of Islamic banks in Pakistan. The instrument which is used to analyze the study’s data, is a structured five-point Likert-scale questionnaire. The structural model was analyzed with the help of the partial least squares structural equation modeling approach.

Findings

This study concluded that internal customers of Islamic banking are well aware and have full information and their level of satisfaction is positive toward the bank’s services. While external customers feel satisfied while using the Islamic banking services in Pakistan. Service quality indicators are positively and significantly related to customer satisfaction in the external customer model. On the other hand, some of the indicators are not showing a significant impact on the internal customer multi-group analysis shows a difference of coefficients are insignificant between internal and external customers.

Practical implications

This study helps policymakers, to understand the behavior of internal and external customers of Islamic banking in Pakistan for creating favorable policies for an interest-free banking service.

Originality/value

This research study provides an analysis of the customer satisfaction of Islamic banks in Pakistan by dividing Islamic bank customers into two groups (internal and external customers). The purpose for dividing Islamic bank customers into two groups is that this study wants to highlight that external customer’s perception is the same as internal customers or not? Before this study, it is difficult to find single research on this topic, whereas only one study is find-out on the factors that affect internet banking adoption among internal and external customers.

Keywords

Acknowledgements

Authors would like to acknowledge the time and effort devoted by reviewers for improving the quality of the paper.

Funding: This work is supported by Applied Economics Research Centre (AERC), University of Karachi under AERC's internal core research project [AERC-CR-1-2019].

Citation

Jawaid, S.T., Siddiqui, A.H., Kanwal, R. and Fatima, H. (2023), "Islamic banking and customer satisfaction in Pakistan: evidence from internal and external customers", Journal of Islamic Marketing, Vol. 14 No. 2, pp. 435-464. https://doi.org/10.1108/JIMA-09-2020-0297

Publisher

:

Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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