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Students’ Preferences in Banking Selection – Islamic Perspective
Luna S. AlYafi AlZuhrilalyafi@ksu.edu.sa
King Saud UniversityCollege of Business AdministrationMarketing Department
Introduction
• The idea of Islamic banking system
• Definition of Islamic Banking
• Saudi Arabia Culture
• Banks of Kingdom of Saudi Arabia (KSA)
Problem Statement
• The aim of this research is to identify factors that student customers may consider when selecting a bank, and the relative importance they place on these factors.
Importance of the Study
• Size of the global Islamic banking industry
• Islamic banking in the Middle East
• The Islamic banking growth story continues to be positive, growing 50% faster than the overall banking sector
• “More than 75 countries and 430 Islamic institutes provide Islamic products”
• Selection criteria of Islamic banking among college students.
Literature Review
•Why Islamic banking.
• “Islamic banking is a form of modern banking based on Islamic legal concepts”
• Aim of Islamic Banking
• Based on According to
• Rational Choice Theory
• Schiffman & Kanuk (2009), identified four models of how and why the individual behave in a specific way
• The economic view
• The passive view
• The cognitive view
• The emotional view
Literature Review (Cont.)Factors customers may consider in selecting bank and their relative importance in different parts of the world Countries
FactorsNorth America Europe Middle East & Far East
More important factors
• Convenient location
• Reputation• Quick and efficient
• Service quality• Efficiency of service
delivery• Perceived
confidentiality
• Number of ATM• Convenient location of
ATM• Efficient service• Speed of transactions
Moderately important factor
• Length of bank• Customer relation• Service quality• Service charge
• Promotional activities• Reputation• Friendliness of
personnel
• Friendliness of personnel
• Confidentiality• Bank’s reputation and
imageLess important factors
• Interest offered on deposits
• Favorable experience
• Promotional activities
• Recommendation of friends
• Availability of parking spaces
• Lower service charge• Convenient location
• Recommendation of friends / relatives
• Opportunity of online banking
Source: Jahiruddin & Haque (2009)
Theoretical FrameworkCriteria in banking selection
Criteria Literature
Religious factors
Cost / benefit
(e.g. return on deposits, investments
, etc.)
Service delivery
(provision of fast & efficient service)
Size & Reputation
Staff factors
(competence &
courtesy of bank staff)
Convenience (location,
ample parking space, interior
comfort)
Confidentiality
Friends’ & relatives’ Influence
Mass media
advertising
Erol and El-Bdour (1969)
- + + + + + + + +
Erol et al. (1990) - + + + + + + + +
Haron et al. (1994) - + + + + + + + +
Kader (1993) + - + + n/a + n/a + +Kader (1995) + - + + n/a + n/a + +Gerrard & Cunningham (1997)
± + + + + + + + +
Metawa & Almossawi (1998)
+ + n/a n/a n/a + n/a + n/a
Naser et al (1999) + + + + + + + + n/a
Othman & Owen (2001)
- n/a n/a n/a n/a n/a n/a n/a -
Othman & Owen (2002)
+ + + + n/a + + n/a +
Ahmad and Haron (2002)
- + + + + + n/a n/a n/a
Omer (1992) + + n/a n/a n/a n/a n/a + n/aAbbas et al. (2003) ± + + n/a + + + + n/a
Note: + indicates a positive and important result, ± indicates an equivocal result, - indicates negative or no significant result and n/a indicates variable was not investigated / examined in the studySource: Marimuthu, Wai Jing, Phei Gie, Pey Mun, & Yew Ping, (2010)
Theoretical Framework (Cont.)
•Theory of Buyer Behavior
•Consumer and risk reduction
•Evaluation of brands
Personality Factors: Market Maven Other Factors
Personality Factors: Market Maven Other Factors
Criteria of Islamic Bank Selection
Criteria of Islamic Bank Selection
Social Factors: Family Social groups Reference groups Word of mouth Religiosity
Social Factors: Family Social groups Reference groups Word of mouth Religiosity
Theoretical Framework (Cont.)
• Social Factors• Influences of society, family and
reference group.
• Family,
• Social groups,
• Reference groups,
• Word of mouth
• Religiosity
• Personality Factors• Market Mavens: "Consumers who
collect information about the market, concerning products, places to shop, etc.., and in turn influence others”
• Other personal factors influences are the consumer internal preferences whether to engage; or not; in the relationship with the banks
Research Questions
• Is there a relationship between customers’ personality and Islamic bank selection?
• Do social factors influence the relationship between personality and Islamic bank selection?
Research Methodology
• Definition and Operationalization of Variables
• Personality Factors
• Social Factors
• Data Collection Method
• Sampling
• Data Collection Instrument
• Statistical Analysis Techniques
Research Methodology (Cont.)
• Data Collection Method• Survey, for both gender
• Sampling• KSU, CBA students
• Data Collection Instrument• Survey is divided into two parts
• Five-points Likert scales is used
• Statistical Analysis Techniques• Statistical Package for the Social Sciences version 19.0
(SPSS 19)
• Pilot study (n=66):
• Internal consistency was tested using the Cronbach’s alpha coefficient Cronbach's alpha was measured for all items
• Cronbach’s alpha = 0.93.
Limitations of the Study
• Surveying KSU, CBA students
• Students may change their answers, influenced by other students “Life is not what it's supposed to be. It's what it is”
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