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CHAPTER ONE
INTRODUCTION
1
CHAPTER 1
1. INTRODUCTION
There has been large scale growth in Islamic finance and banking in Muslim countries
around the world and especially in Pakistan, during the last twenty years. There main
objective has been the delivery of social and economic development through financial
services in line with Islamic teachings.This study looks into the degree of satisfaction of
Pakistani customers to measure the level of success achieved by Islamic Banks.
Islamic banks have grown dramatically in Pakistan over the years.This growth is
influenced by factors including the introduction of broad macro economic and structural
reforms in Islamic banking, the liberalization of capital movements, privatization, the
global integration of financial market and the introduction of innovative and new Islamic
products. Islamic finance is now reaching a new level of sophistication. However,it is the
customer’s satisfaction that can affect the performance of a bank and could be a major tool
for the judgement of the success. (Jarhi, Mabid Ali, Khurshid Ahmed (1981).
Islamic banking has come a long way in a relatively short time and has captured a
significant market share from its conventional rivals. Although most of the countries have
different Islamic background but they are the major players for revolutionised Islamic
financial institutions. The Islamic Banking concept began in Pakistan in the early 1950,
where the economists were very keen on the ideology of Islamic banking. Pakistan was the
first country to go through full Islamic financial system. The development of full Islamic
financial system was Pakistan, Iran and Sudan.
The customers of Islamic banks in Pakistan have mixed views about the success and
services provided due to a number of reasons e.g. after twenty years the picture changed
when leaders realized that Pakistan inherent by British Financial system that should not be
changed. Pakistan was trying to change too quickly. But unfortunately it was under the
power of British legacy, without its independence and freedom. The first phase of
economic reform tooks place in 1979 when zakat was first deducted from different
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account holders at a certain percentage. This method was not effective, because it is not
Islamic that Zakat is distributed through banks. Another objection is that , it is debateable
whether the money deducted goes to deserving people, and whether it is effective or not
for alleviating poverty . (Aggarwal and Yousaf (2001);Kazarian 1999 and Ray 2002).
Pakistan was the first country that uses Hisbah, which controls the market which provides
municipal services and settles disputes. In the second phase of Islamic finance, the
Pakistan Government outlawed interest and introduced brotherly and godly ways for
generating profit. Ironically, foreign banking transaction is still working in western
systems. The government was trapped due to its beliefs and culture. This problem further
increased when IMF pressured Pakistan to privatize its banking system. Due to a system
that lacked planning, these matters got worse in 1992, when the Federal Shariah court
declared that interest based banking is not Islamic and would be banned. Finally, in 1998, a
decision took place to eliminate riba from its banking system. The Pakistan Banking model
teaches us that, interest free banking employ PLS as a source of earning , but it is not
functional that 90% of its transactions are locked by its markup. In this way it raises
question that the Islamic Banking system created many problems, and only businessmen
took new benefits from this model. Therefore this experiment did not achieve its result.
(Ahmed, Z., M. Iqbal and M. F. Khan (2001).
Since 1971, Islamic banks have continued to grow in size and number.The main mission of
these banks has been the achievement of social and economic development through the
delivery of financial services in line with the principles and teachings of Islam. To achieve
their mission, it is imperative for Islamic banks to continue to study the changing
behaviour, attitude and perceptions of their customers, especially in the retail sector which
constitutes the major portion of the banking business. Overlooking differences between
cultures has recently been shown to limit the ability of service multinationals to expand
their activities internationally (Kogut and Singh, 1988; Li and Guisinger, 1991, 1992).
Furer et al. (2002) argue that the importance and perception of service quality are highly
dependent on customers’ values and beliefs that might change from one culture to another.
This dependence has led to increased concern about the relationship between national
culture and service quality. Winsted (1997) developed behavioural-based service encounter
dimensions for the USA and Japan and identified cultural differences between Western and
Asian customers.
3
Customer satisfaction is the feeling or attitude of a consumer toward a product/service
after it has been used (Solomon, 1996; Wells and Prensky, 1996). A satisfied consumer
will repeat the purchase of the product and convey positive messages about it to others
(Dispensa, 1997). By contrast, dissatisfied consumers are more likely to switch to an
alternative product/ service the next time he/she recognizes the same need. Not only this,
but also his/her dissatisfaction will be reflected in a negative word of mouth which might
have a serious damaging effect on the business (Gulledge, 1996).
Banking is one of those industries in which consumer satisfaction has attracted the
attention of many researchers (for example, Anderson et al., 1993; Bedall and Power,
1995; Brenhardt et al., 1994; Dispensa, 1997; Holliday,1996; Wells and Prensky,
1996; White, 1994). One of the major reasons is that a fiercer level of competition is
becoming the most influential factor in determining the competitiveness of banks (Bartell,
1993; Haron et al., 1994).
Customer satisfaction is becoming so important to the extent that some banks consider it as
a chief element in their marketing strategies. The term "aftermarketing" has been widely
used to mean focusing attention and efforts on current customers in order to maximize their
satisfaction to secure their retention (Vavra, 1995).The issue of customer retention has
been the major concern of many banks. For example, Lloyds Bank (UK) conducted
research to identify the process leading from customer satisfaction to account closure and
to explore the determinant factors of dissatisfaction. The findings of the study helped
Lloyds to design and implement a new customer retention process (Waterhouse and
Morgan, 1994). Like Lloyds Bank, the National Bank of Middlebury (USA) also
developed a quality service program based on customer retention through service quality.
Similarly, the Royal Bank of Scotland uses customer satisfaction to help plot the course
toward its vision for the future. The bank is concerned about profitable customer behavior
in terms of the remaining with the bank, referring the bank to friends, and repurchasing
from the bank” (IJRDM, 1995b).
In this chapter the researcher provides a clear definition regarding the issues that should be
investigated in this study for achieved its aims and objectives. This study is about
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‘customer awareness and satisfaction in Islamic Banking in Pakistan’. This research
achieve its aims through the following objectives.
Measuring the degree of customer satisfaction in Islamic Banking in Pakistan.
Investigating the reasons that why customers deals with Islamic Banks.
Measuring the customer awareness and perceptions for use of different Islamic
Banking products/services.
Reasons for dealing with both types of Banks
As it can be seen above, the reseacher aims to attempt to provide the assessment of degree
of customer satisfaction towards Pakistan Islamic Banking . Therefore, this study is
designed to identify the profile and banking habits of Islamic banking customers in
Pakistan as well as their awareness, usage, perceived importance and degree of satisfaction
with the current products and services offered by them in Islamic banking sector.
5
CHAPTER TWO
BACKGROUND
6
CHAPTER 22.1 BACKGROUND OF ISLAMIC BANKING IN
PAKISTAN
The Islamization of the banking and financial system of Pakistan was started in 1977-78.
Pakistan was among three countries in the world which had been trying to implement
interest free banking at a comprehensive/national level. But as it was a mammoth task, the
switchover plan was implemented in phases. The Islamization measures included the
elimination of interest from the operations of specialized financial institutions including
HBFC, ICP and NIT in July 1979 and that of the commercial banks during January 1981 to
June 1985. The legal framework of Pakistan's financial and corporate system was amended
on June 26, 1980 to permit issuance of a new interest-free instrument of corporate
financing named Participation Term Certificate (PTC). An Ordinance was announced to
allow the establishment of Mudaraba companies and floatation of Mudaraba certificates for
raising risk based capital. Amendments were also made in the Banking Companies
Ordinance, 1962 (The BCO, 1962) and related laws to include provision of bank finance
through PLS, mark-up in prices, leasing and hire purchase. (Abbas Mirakhor, 1987;
Frederick L, Pyor 1985).
Separate Interest-free counters started operating in all the nationalized commercial banks,
and one foreign bank (Bank of Oman) on January 1, 1981 to mobilize deposits on profit
and loss sharing basis. Regarding investment of these funds, bankers were instructed to
provide financial accommodation for Government commodity operations on the basis of
sale on deferred payment with a mark-up on purchase price. Export bills were to be
accommodated on exchange rate differential basis. In March, 1981 financing of import and
inland bills and that of the then Rice Export Corporation of Pakistan, Cotton Export
7
Corporation and the Trading Corporation of Pakistan were shifted to mark-up basis.
Simultaneously, necessary amendments were made in the related laws permitting the State
Bank to provide finance against Participation Term Certificates and also extend advances
against promissory notes supported by PTCs and Mudaraba Certificates. From July 1, 1982
banks were allowed to provide finance for meeting the working capital needs of trade and
industry on a selective basis under the technique of Musharaka. (St Louis, 1983).
As from April 1, 1985 all finances to all entities, including individuals, began to be made
in one of the specified interest-free modes. From July 1, 1985, all commercial banking in
Pak Rupees was made interest free. From that date, no bank in Pakistan was allowed to
accept any interest-bearing deposits and all existing deposits in a bank were treated to be
on the basis of profit and loss sharing. Deposits in current accounts continued to be
accepted but no interest or share in profit or loss was allowed to these accounts.
However, foreign currency deposits in Pakistan and on-lending of foreign loans continued
as before. The State Bank of Pakistan had specified 12 modes of non-interest financing
classified in three broad categories. However, in any particular case, the mode of financing
to be adopted was left to the mutual option of the banks and their clients. The procedure
adopted by banks in Pakistan since July 1 1985, based largely on ‘mark-up’ technique with
or without ‘buy-back arrangement’, was, however, declared un-Islamic by the Federal
Shariat Court (FSC) in November 1991. However, appeals were made in the Shariat
Appellate Bench (SAB) of the Supreme Court of Pakistan. The SAB delivered its judgment
on December 23, 1999 rejecting the appeals and directing that laws involving interest
would cease to have effect finally by June 30, 2001. In the judgment, the Court concluded
that the present financial system had to be subjected to radical changes to bring it into
conformity with the Shariah. It also directed the Government to set up, within specified
time frame, a Commission for Transformation of the financial system and two Task Forces
to plan and implement the process of the transformation. The Commission for
Transformation of Financial System (CTFS) was constituted in January 2000 in the State
Bank of Pakistan under the Chairmanship of Mr. I.A. Hanfi, a former Governor State Bank
of Pakistan. A Task Force was set up in the Ministry of Finance to suggest the ways to
eliminate interest from Government financial transactions. Another Task Force was set up
in the Ministry of Law to suggest amendments in legal framework to implement the
Court’s Judgment. The CTFS constituted a Committee for Development of Financial
8
Instruments and Standardized Documents in the State Bank to prepare model agreements
and financial instruments for new system. (Mr I.A. Hanfi, 2000).
The CTFS in its Report identified a number of prior actions, which were needed to be
taken to prepare the ground for transformation of the financial system. It also identified
major Shariah compliant modes of financing, their essentials, draft seminal law captioned
‘Islamization of Financial Transactions Ordinance, 2001’, model agreements for major
modes of financing, and guidelines for conversion of products and services of banks and
financial institutions. The Commission also dealt with major products of banks and
financial institutions, both for assets and liabilities side, e.g letters of credit or guarantee,
bills of exchange, term finance certificates (TFCs), State Bank's Refinance Schemes,
Credit Cards, Interbank transactions, underwriting, foreign currency forward cover and
various kinds of bank accounts. The Commission observed that all deposits, except current
accounts, would be accepted on Mudaraba principle. Current accounts would not carry any
return and the banks would be at liberty to levy service charge as a fee for their handling.
The Commission also approved the concept of Daily Product and Weightage System for
distribution of profit among various kinds of liabilities/deposits. (Houston 1999, Moshsin
S Khan, 1999).
According to the Commission, prior/preparatory works for introduction of Shariah
compliant financial system briefly included creating legal infrastructure conducive for
working of Islamic financial system, launching a massive education and training program
for bankers and their clients and an effective campaign through media for the general
public to create awareness about the Islamic financial system.
The Finance Minister of Pakistan in his budget speech for the Financial year 2002
declared the following:
The Government is committed to eliminate Riba and promote Islamic banking in the
country. For this purpose a number of steps are under way which are:
1. A legal framework is designed to encourage practice of Islamic banking by banks
and financial institutions as subsidiary operations of their main operations;
9
2. Consultations and exchanges are undertaken with brother Islamic countries and
renowned institutions of Islamic learning such as middle eastern countries and Al-
Azhar University of Egypt, to learn more about their experiences and practices;
3. Amendments in HBFC Act are being made in line with the directive of the
Supreme Court. With these changes, HBFC would be fully Shariah compliant
institution, which will play an effective role both in promotion of Islamic financing
method but also in the development of the important housing sector;
4. Shariah compliant modes of financing like Musharaka and Mudaraba will be
encouraged so that familiarity and use of such products is enhanced and their
adoption at a wider scale made possible.It is government’s intention to promote
Islamic banking in the country while keeping in view its linkages with the global
economy and existing commitments to local and foreign investors”.
The House Building Finance Corporation had shifted its rent sharing operations to interest
based system in 1989. The Task Force of the M/O Law proposed amendments in the
HBFC Act to make it Shariah Compliant. Having vetted by the CTFS, the amended law
has been promulgated by the Government. Accordingly, the HBFC launched in 2001
Asaan Ghar Scheme in the light of amended Ordinance based on the Diminishing,
Musharakah concept. A Committee was constituted in the Institute of Chartered
Accountants, Pakistan (ICAP), where in the SBP was also represented, for development of
accounting and auditing standards for Islamic modes of financing. The Committee
reviewed the standards prepared by the Bahrain based. Accounting and Auditing
Organisation for Islamic Financial Institutions (AAOIFI) with a view to adapt them to our
circumstances and if considered necessary, to propose new accounting standards. (Zubair
Iqbal 2000, Iqbal Zaidi 2001).
It was decided in September 2001 that the shift to an interest free economy would be made
in a gradual and phased manner and without causing any disruptions. It was also agreed
that the State Bank of Pakistan would consider.
1. Setting up subsidiaries by the commercial banks for the purpose of conducting
Shariah compliant transactions;
10
2. Specifying branches by the commercial banks exclusively dealing in Islamic
products.
3. Setting up new full-fledged commercial banks to carry out exclusively banking
business based on proposed Islamic products.
Accordingly, the State Bank issued detailed criteria in December 2001 for establishment of
full-fledged Islamic commercial banks in the private sector. Al Meezan Investment Bank
received the first Islamic commercial banking license from SBP in January 2002 and the
Meezan Bank Limited (MBL) commenced full fledged commercial banking operation
from March 20, 2002. Further, all formalities relating to the acquisition of Societe
Generale, Pakistan by the MBL were completed, and by June, 2002 it had a network of 5
branches all over the country, three in Karachi, one in Islamabad and one in Lahore. The
MBL now maintains a long term rating of A+ and short term rating of A1+, assessed by
JCR VIS Credit Rating Co Ltd, signifying a consistent satisfactory performance. (Vahe
Petrossian, 2001, Sohrab Behdad 2001).
The Government as also the State Bank is mainly concerned with stability and efficiency
of the banking system and safeguarding the interests, particularly, of small depositors.
With this concern in mind it has been decided to operate Islamic banking side by side with
traditional banking. The approach is to institute best practice legal, regulatory and
accounting frameworks to support Islamic banks and investors alike. The year 2002-2003
witnessed strengthening measures taken in the areas of banking, non-bank financial
companies and the capital markets.
11
CHAPTER THREE
LITERATURE
REVIEW
12
CHAPTER 3
3. LITERATURE REVIEW
3.1 CUSTOMER SATISFACTION
The banking industry has become increasingly integrated in recent years. Liberalisation
and deregulation of the financial sector, coupled with rapid technological advancement and
improved communication systems, have contributed to the integration process. As a result,
banks are now faced with very high and intense competition. Studies by Parasuraman et.
al (1985), and Zeithmal et. al (1990), noted that the key strategy for the success and
survival of any business institution is the deliverance of quality services to customers.
Accordingly, Newman and Cowling (1996) believes that excellent service quality is vital to
business. profitability and survival. In this sense, Islamic banks are of no exception.
To satisfy customers, banks use various tools, ranging from reengineering all services to
focusing on some specific services (Motley, 1994). One of the areas which is growing and
believed to have a significant impact on customer satisfaction is telemarketing (Sion,
1994). White (1994) has examined the importance of telemarketing in satisfying customers
and concluded that “telephone banking could become a key aspect of customer
satisfaction”. In Singapore banks are continually involved in improving the core
technology that makes self-service banking products possible in order to achieve better
marketing, customer satisfaction and retention (Kass, 1992). The Co-operative Bank in the
UK has applied another strategy to satisfy its customers. The bank encouraged customers
to communicate directly with its account management center, rather than contacting the
branches, for any problem or complaint they might have. This strategy has helped Co-
operative bank to gain one of the highest customer satisfaction ratings (IJRDM, 1995a).
13
The above discussion highlights the importance of customer satisfaction which is thought
to be the cornerstone in constructing strategies of banks. In this respect, it is essential for a
present-day bank to switch from managing means to managing customers in order to
satisfy them with the whole services they offer. Therefore, it is important for banks to have
a system by which consumer satisfaction is continuously measured (Chakravarty et al.,
1996; Chitwood, 1996; Morrall, 1996; Noe, 1996; Romano and Sanfillipo, 1996).
Although Islamic banks’ principal activities are based on Islamic Law (Shari’ah), their
banking businesses are no different from other banks or financial institutions. Thus,
Islamic banks face competition not only from conventional banks, but from new market
entrants as well. One of the means for Islamic banks to cope with such strong competition
is by improving the ways products and services are offered to their customers. It is for this
reason that Othman and Owen (2001a) concluded that there exists a need for Islamic banks
to adopt service quality program. They further argued that service quality can be a
differentiating factor for Islamic banks to boost up their market shares and profit position.
3.1.1 IMPORTANCE OF SERVICE QUALITY
The importance of service quality and its role as the key factor in differentiating service
products and gaining competitive advantage have been documented in a number of studies
(see for example studies by Parasuraman et. al, 1985; Bolton and Drew, 1991; and
Cronin and Taylor, 1992). Even though there is an abundant of research investigating
service quality in the service industries, studies on this issue as related to Islamic banks are
scant.
Service quality has been viewed as a significant issue in the banking industry by Stafford
(1994).Since financial services are generally undifferentiated products, it becomes
imperative for banks to strive for improved service quality if they want to distinguish
themselves from the competition. Positive relationship between high levels of service
quality and improved financial performance has been established by Roth and Van der
Velde (1991) and Bennet (1992). Similarly, Bowen and Hedges(1999) documented that
improvement in quality of service is related to expansion of market share.
14
In the current marketing literature, much attention on the issue of service quality as related
to customers’ attitudes towards services has focused on the relationship between customer
expectations of a service and their perceptions of the quality of provision.This relationship
known as perceived service quality was first introduced by Gronroos (1982). Gronroos
suggested that the perceived quality of a given service is the result of an evaluation process
since consumer makes comparison between the services they expect with perceptions of
the services they receive. Hence, they concluded that the quality of service is dependent on
two variables: expected service and perceived service. Parasuraman et. Al (1985)
considered that a customer’s assessment of overall service quality depends on the gap
between the expected and perceived service. Thus, the key to managing perceived service
quality is to minimize this gap. Zeithaml (1988) defined perceived service quality as the
customers’ assessment of the overall excellence of the service. Bolton and Drew (1991)
described service quality as a form of attitude that results from the comparison of
expectations with performance. Berry et. al (1990) pointed out that since customers are the
“sole judge of service quality”, an organisation can build strong reputation for quality
service when it can constantly meet customer service expectations.
3.1.2 APPROACHES OF SERVICE QUALITY
Approaches to the measurement of service quality have typically been either a simple
comparison of mean scores, extensive and detailed statistical model or more recently
market research questionnaire. The current measurement of perceived service quality using
the latter approach can be traced to the research of Parasuraman et. al (1985).
Donthu and Yoo (1998) used Hofstede’s dimensions of culture and the dimensions of
service quality from the SERVQUAL scale to develop and test hypotheses relating the five
dimensions of culture with both a measure of the overall service quality expectation and
the five service quality dimensions. As an extension of the work of Donthu and Yoo, Furer
et al. (2002) mapped the relationship between the five dimensions of SERVQUAL and the
five dimensions of culture developed by Hofstede (1991). Their study also considered
contingency variables such as powerful or weak customers, male or female employees, and
frequent or infrequent service situations.
15
They also developed a Cultural Service Quality Index (CSQI) that evaluated the relative
importance of each SERVQUAL dimension as a function of the five cultural dimensions
and that could be used to segment multicultural markets and allocate resources across
cultural segments.
The SERVQUAL scale developed by (Parasuraman et al., 1985, 1988, 1991) has been
widely utilized in many banking institutions and for academics purpose (Babakus and
Boller, 1992; Carman, 1990; Crompton and Mackay, 1989; Cronin and Taylor, 1992;
Webster, 1989; Woodside et al., 1989). The popularity of SERVQUAL is due to a
number of advantages that it has been recognized for (Buttle, 1994).
For assessing different dimension of service quality SERVQUAL scale is acepted
as standard.
SERVQUAL scale shows a valid number of service quality.
This scale measurement is base on reliablity, means different reader interpret the
question similarity.
This model got limited number of items which is easily by customers and
employees quickly.
This scale procedure based on standardized analysis procedure with addition of
interpretation of result.
SERVQUAL model also consist of five dimensions. (Parasuraman et al., 1985, 1988,
1991).
1. Reliability. The first dimension has the ability to perform the service dependably
and accurately.
2. Responsiveness. This performance refers to willingness for helping customer and
provide prompt services.
3. Tangibles. The third dimension referes to the pshysical facilities, equipment and
appearence of personnel.
4. Assurance. The fourth dimension releates with employees knowledge, courtesy and
ability to convey trust and confidence.
5. Empathy. The last dimension refer to the level of caring and individual attention
provide customers.
16
Evaluation of service quality become difficult due to three characteristics that are inherent
in services , intangibility, heterogeneity and inseparability (Berry and Parasuraman,
1991). However, Parasuraman et all (1985) proposed a framework consisting of ten
determinants for service quality such as reliability, access, understanding the customer,
responsiveness, competence, courtesy, communication, credibility, security and tangible
consideration. Malhotra et al, (1994) used these dimensions for the evaluation of service
quality in developing countries. These service quality dimension related to certain
economic factors and socio-cultural factors. The service quality dimension are of
reliability, access and understanding the customer are relevant to conventional economic
development aspects such as levels of affluence, technology, education, competition and
communication infrastructure. The respon siveness dimension is attributed to socio cultural
influences concerning the value of time. (Hofstede 1980).
3.2 DIMENSIONS OF SERVICE QUALITY
The service quality dimensions are of competence, courtesy, communication and
credibility correlate significantly with two Hofstede’s cultural dimension: power distance
(the extent to which a society honors the unequal distribution of power in institutions and
organizations), and individualism (the extent to which a society has a tightly social
framework). Small power distance and individualism were found together with greater
national wealth, whereas high power distance and collectivism were found to be associated
low national wealth. Finallly service quality dimensions of security and tangibility are
linked with Maslow’s 1970 hierachy along which individual needs are arranged:
physiological needs, safety needs, [belongings and love, esteem needs, and self
actualization needs. Lower level needs are said for higher level needs and to direct
behaviour they are satisfied. While individual in developing countries should try to fully
satisfy the lower level needs such as (physiological and safety needs), individuals in
developed countries have been far away for fulfilling the criteria of those needs and
addressing higher order needs and emotions (King and Malhotra, 2004).
We briefly discuss the dimensions of service quality.
17
3.2.1 RELIABILITY
The ability to perform the service dependably and accurately is known as reliability.
According to Berry et al (1990), service reliability is the service “core” to more customer
and managers should use every oppurtunity to bulid “do it right first” attitude. Managers
are encouraged to include reliability issues in their mission statements, set reliability
standards, teach the importance of reliability in training programmes, appoint team to study
for improving reliability, measures error rate and reward error free services. The reliability
and consistency with which service is delivered can take into two ways. The first way is
that, emphasizing the technological superiority and dependability of the process by which
the service is produced a high tech approach. While technological drivers such as advance
in telecommunication, satellite, digital and web technology increases the tradability of
services (Braga, 1995) and expanding the globalization of services (Lovelock, 1999),
there still remain a great gap in technological sector in developed and developing countries
economy.
The second thing is that, the consistent and dependable performance of service quality
required high development. Social interaction and personnel connectivity based on good
judgmnet , especially taken decision in applying service quality in developing countries
(Shemwelll et all, 1998). While in developing countries for making the process to adopt
high technological changes and high touch approach is suitable for customers are more
familiar with human services also well aware of weak technological infrastructure in their
countries (Speece and Srijumpa, 2002).
Specifically, reliability of service quality can be better established if we give attention on
technology (high tech) in undeveloped countries and aslo pay attention on personnel (high
touch) in developing countries. Heskett et al (1990) diffrentiate between “merely goods”
services and “breakthrough” service. The “merely good” service focused on the acceptance
of defect free services due to cost consideration. While “breakthrough” service focused on
existing customer by setting new standards for consistenly meeting, needs and customer
expectattions. These defect free service can be implemented by using human, technical
and finacial resources and make more accessiable to developed countries. In general
quality service in developing countries pay more attention to “merely goods” while in
contrast other developing countries put more attentions towards “breakthrough” services.
18
For providing reliable service quality it needs continuous improvent (Barry and
Parasuraman, 1991). In developing countries firm face continuous competition. The
argument by Zeithaml et all (1993) is that accessibility of alternative service providers
depends upon expectation levels. Another argument is that firms face percieve competitive
alternatives, the tolerance zone become narrower and level of adequate expectation become
higher. For managing customer higher expaectation and lower tolerance, firms adopt
techniques for continuous improvement in service quality. Specially, it is neccessary for
developing countries to utilise their resources for formulating and implementing strategies
concerning customer expectation, customer evaluation of the service process and customer
retention. Customer in developing countries have lower quality expectation as compared to
other developing countries due to not improvement in service quality. In developed
countries there is a need for continuous improving quality standard . However, firms in
developing countries donot focus customer centrality, that why service quality is not
improved. (Walker and Baker (2000).
3.2.1(a): ACCESS
Since production and consumption are two important factors for service quality that cannot
be seperated. Different researcher established between national wealth and the degree of
individualism maintained in a society. (Hofstede, 1991). Another argument is that national
wealth increases , member of society and access those resources that should be more
independent. These resources include both, non personal and personal means.The highly
advanced and reliable communication infrastructure in developing countries and in this
way create customer/supplier connection. Other possible alternatives non personal contact
modes such as telephone, facimile, electronic mail and telex , due to these it is easy to
contact with customer and not time consuming as well. Unfortunately, majority of
developing are lack of unreliable communication network, it is necessary that for
improving service quality the direct personal contact is relative importance between
customer and the service supplier. Hence, we can say that non personal contact (e.g.
telephone and electronic) is relatively more important in developed countries, whereas
personal contact is important for establishing and accessibility in developed countries.
(Steensma et al. (2000).
19
3.2.1(b) UNDERSTANDING THE CUSTOMERS
For service quality in business, strong customer releationship is very important due to their
lack of focus and objective measure for evaluation service quality.(Czepiel, 1990). There
are three basic level for releationship marketing. The first level based on financial
incentive, such as price discount, and retain old customer; the second level is about firms
provided financial and social benefit ,and learned about the wants and needs of customers
for releationship; third level is focus on releationship, and in addition include structural and
psychological bond with social and financial benefits. (Berry and Parasuraman, 1991;
Gwinner et al 1998). The other argument is given by Malhotra and Agarwal (2002) that
by adding strategy dimensions in customer releationship and value added to benefits
provided for both relationship partner in strategic alliances. For gaining higher level lof
releationship marketing is implemented in developing countries do not reach at the high
level. Because many customer have to gave information in brief for benefit they got from
services.Mass customization in developing economies is quite low. However we can say
that, firms in developing countries keep up their marketing edge and competency, also give
financial incentive and cut their prices as well , therfore in this they build strong customer
relationship. On the other hand in less developing countries , they do not provide incentive
and do not cut their prices as well. In developing countries all effort should be made, but
not concerning individual person life, but in developing countries they focus to make their
product for understanding the customer uses and benefits from services. (Pine, 1993;
Sheth et al. 2000).
3.3 RESPONSIVENESS
The second important determinants of service quality is responsiveness, it means that
performance refers to willingness for helping customer and provide prompt services.
Employer should be able to gave quick response to inquiries and complaints of customers.
Problem solving and quick response is very important part of service quality (Hart et al,
1990; Dabholkar et al, 1996; Swanson and Kelley, 2001). Customer of developing
countries place a higher value on time as compared to those of developing countries. (Lane
and Distefano, 1988). The marketing literature shows that there is a relationship between
time scarcity and consumers needs for good and services. Developing countries percieve
time is money and try to use it efficiently with a focus on present. On the other in less
20
developing countries they focus on past. Their goal is to achieve completion without
scheduling. So we can say that in developing countries, timely response to customer
established very well, but on the other hand in less developing countries they focus on
decision convenience, access convenience, transaction convenience and benefit
convenience. Therefore less developing countries donot response quick to customers, and
in this way they have lack of service quality. (Berry et al, 2002).
3.3.1 COMPETENCE
If the firm is competence in service and it can easily focus the customer centrality. In this
way they achieve their goals. Good communication of service quality can be achieved in
developing countries by focus the competence of the organization for services. According
to Hofstede (1991), developing countries characterized by collectivist culture. In these
collectivist societies the individual person skill is considered very important in service
organization as a whole. This is confirmed by Hofstede, 1991, who state that “An employer
never hires just a person, but rather a person who belongs to an in group”. Expertise and
skill reflected in organization. Other argument is that, competence and trust in developed
individual societies and focused on the individual reliability and dependability. (Conway
and Swift, 2000).
Other thing is that in less developing countries power is given to individual people and
they misuse it. Employees in different level of organization use unequal roles, power and
skills. Unfortunately high mangement is not in the accessible to customers. Therefore
customer deal with ordinary employee in organization as a whole. In developing countries ,
believing that people are equally important and have the same right and oppurtunities in
life , but unfornutanetly in less developing countries they donot care about equal
oppurtunities for their convenience. The focus in on individual than on roles for
interaction. In developed markets competence and achievement of individual employees is
relatively importance. We stated that in developed countries service firms focus on the
individual employee competency, in developing countries firm competency can be
centralized by organization. (Winsted, 1997a, b).
3.3.2 COURTESY
21
Customer satisfaction is largely dependent upon interaction of service provider, appearence
and behaviour of employees and working enviornment. Customer do not diffferniate
between the services and the service provider. For providing service quality, it is necessary
that firms care the value and norms of customers. The difference between the marketing
services in developed vs developing economies is due to courtesy. In individualist culture,
ther gave more importance to privacy, freedom and experience. (Hofstede, 1991). On the
other hand the important of collectivisit is that they included the social norms and beliefs
by the age group (Trandis, 1995). In developed countries , couurteous service and respect
individual privacy and rights, whereas in developing countries they consider social norms.
(Brett and Okumura, 1988).
3.3.3 COMMUNICATION
Service companies encourage word of mouth communication. In many situations customer
seek the opinions of other people for selecting a bank or car repair shop. On the other
hand, detailed information is provided for benefits of services to the customer in
developed countries due their level of education , thinking are suited for explaining the
benefit. In short, they have given a choices for purchasing. Customer in developing
countries. (Petty et al, 1983), other factors remain constant. In developing countries where
individualistic culture, communications are often not in practice (Mattila, 1999). On the
other hand customer in developing countries, instead to provide good information, often
happening to provide poor information to customer which restrict the complelete
information of services using central processing. Non business related informal
communications (or small talks) and quality of interaction form the basis of mutual
understanding and trust (Harris and Moran, 1990; Riddle, 1992; Winsted 1997a,b).
Consumer collect their evidence from the experience of satisfied customer, brand and
manufacture’s image and their releationship with people, family members , social group
and social class. We stated that communication in developed countries should provide
detailed and complex information, however, in developing communication is on basic
level. However communication in developed countries is for individual purpose, and in
developing countries communication should accepted by society. (Hofstede, 1980; De
Mooij, 1998).
22
3.3.4 CREDIBILITY
It is difficult for customer to evaluate the service quality due to intangible nature of
services and due to bulk consumption and production as well. The trustworthiness,
believability, and credibility of service supplier are very important for attracting customers.
Recently corporate credibility play very important role for changing habits and purchasing
wants of customers. (Lafferty et al, 2002; Goldsmith et al, 2000). Corporate credibility
form a positive corporate reputation. However, credibility issue is different according to
country level of economic development. (Gregory, 1991; Fombrun, 1996, Furrer et al,
2000). Due to self confidence and self responsibility, customer demanded that service
provider efficient and task oriented, therfore, in developed countries, they use statistical
data and performance of the company through the years for achieving customers.
On the other hand developing countries are based on collective societies where the
attention is placed due to organizational background, expertise, order, duty and security in
the society (Hofstede, 1980). Other argument is that, in developing countries due to large
power distance, weak customers with little self confidence are dependent upon the service
provider. Therfeore, service supplier in developing country is based on tradition and
importance of society , credibility and trustworthness of the firm. We stated that, in
developed countries credibility is purely based on standing performance, but in developing
countries they based on old traditions (Donthu and Yoo, 1998).
3.3.5 SECURITY
There is low reliability in developing countries, as a result they need high concern of
freedom, danger, risk or doubt include physical , financial as well as emotional security.
(Parasuraman et al, 1985). There are three types of needs such as need for security
(physical and financial), need for justice and need for self esteem. Customer need stability
and predictability of their safety and financial matter as well. There is also need of equally
power distribution, equal justice and finally there also a need for self-esteem, this is the
key for customer service quality (Schneider and Bowen, 1999).
23
Another argument is that in developing countries consumer are at low order need
(security), whereas in developed countries consumer are at high order need (self esteem),
therefore lower order need should not fullfilled in developing countries.For example, a
case study of US and Korean retail consumer, found that Korean respondent gave
reliability (security) the highest rating while US respondent gave lowest rating. However,
in developed countries, the stake holder are at emotional level therfore it is a very rare
chance for mishandling. Even if this happen, then management compensate it. As a result,
it is stated that, in developing countries, they gave more importance to emotional security,
whereas in developing countries instead of giving emotional security, they gave
importance to physical security and other needs. (Maslow, 1970; Kim and Jin, 2002).
3.4 TANGIBILITY
Tangibility means physical evidence services, consisting of physical facilities, appearence
of personnel, tools or equipments, physical presentation to customer for service quality
(Parasuraman et al., 1985). In developing countries customer beliefs on word mouth and
generally satisfied with acceptable performance and core benefit it promises by the offer.
In general, we can say that consumer in developing economies/ collectivist culture are
highly practice in their choice criteria due to personality factors and in return higher level
values, meanings, culture and philosphy of life (Trandis, 1995). The core benefits of
services provided to customer can never be subsitute by fancy facilities and tangibles. On
the other side, customer in developed countries are satisfied when service already offer to
them extended benefits with their old services. These benefits tend to be more tangibles
than the old services. In term of Maslows hierachy theory, developing countries , product
need is at lower level than developed countries, which are at higher level. Therefore,
service supplier in developing countries facing communication problem, for providing
service quality as per person, but a supplier in developed country doing extra efforts for
adding benefits to their lifestyle and status. Hence in developed countries ther gave great
importance to service quality whereas in developing they gave less importance to service
quality and gave attention towards core services (Bitner, 1992; Scheinder and Bowen,
1999).
According to Othman and Owen (2001a), SERVQUAL has proven to be the most popular
instrument for measuring service quality because it affords technology techniques for
24
measuring and managing service quality. However, since the Islamic banking industry
operates under different principles and cultures as compared to other service industries,
they argued that an additional dimension should be added to the SERVQUAL method.
Then they developed an instrument called CARTER to measure service quality in Islamic
banking. In addition to the existing five dimensions in SERVQUAL, CARTER
incorporates an extra dimension which is “Compliance with Islamic Law”. This dimension
includes such items as run on Islamic law and principles, no interest neither paid nor taken
on savings and loans, provision of Islamic products and services, provision of free interest
loans and provision of profit-sharing products (Othmanand Owen, 2001a).
Bearing in mind that there exists cultural differences between countries, regions, religions
or ethnic groups, it is imperative to build additional dimensions for service quality
especially in the Islamic banking industry. Both cultural and religious influences are not
defined by the SERVQUAL model. Taking this into consideration when adopting service
quality, Othman and Owen (2001a) developed an instrument called CARTER which is
based on 35 items. This is the first approach to add and mix customers’ religious beliefs
and cultural values with other quality dimensions.
CARTER’s six dimensions were conceptualised as a proposed framework for measuring
quality of services in Islamic banks by Othman and Owen (2001a).The authors defined
the six dimensions as follows:
D1: Compliance , which means the ability to comply with Islamic Law and operate under
the principles of Islamic banking and economy.
D2: Assurance is the knowledge and courtesy of employees and their ability to convey
trust and confidence. It also includes verbal and written communication between bank staff
and customers
D3: Reliability is the ability to performed the promised service, dependability and
accuracy.
D4: Tangibles means the appearance of physical facilities, equipment, personnel, and
communication materials.
D5: Empathy is caring, individualised attention which the Islamic bank provides for its
customers.
D6: Responsiveness is the willingness to help customer and provide prompt services.
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Islamic banks have been operating for about four decades alongside the traditional banks.
Like any other traditional commercial banks, they do mobilize deposits and produce loans.
But their forms of operation, based on Islamic Law (Shariah), are different from the other
conventional or commercial banks. Therefore, Islamic banking differs from conventional
banking in several ways, such as the prohibition of transactions based on interest rate and
the requirement that bank’s operations be carried out according to certain procedures
through the use of certain financial instruments. The definition of the Islamic bank is a
non-interest based financial institution which complies fully with Islamic Laws, and has
creative and progressive financial engineering to offer efficient and competitive banking,
investment, trade finance, commercial and real estate financing services.
Their are certain reasons that islamic bank need to adopt service quality which are as
follows. First, Islamic banks’ products and services are perceived as of high quality by
customers because of the concept of doing work in Islam i.e. work is considered in Islam
as a type of worship. The Prophet (PBUH) said: “Whoever finds himself at nightfall tired
from his work, God will forgive his sins.” Also Abu Hurairah said that the Prophet
(PBUH) said: “Charity (sadaqah) is due upon every joint of a person on every day that the
sun rises. Administering justice between two people is an act of charity; and helping a man
concerning his riding beast by helping him on to it or lifting his luggage on to it, is an act
of charity; a good word is charity; and every step which you take to prayer is charity; and
removing that which is harmful from the road is charity” reported by Bukhari (Ahmed et
all., 2002).
The Prophet (PBUH) also said: “Allah loves to see one’s job done at the level of itqan”
(Sabeq, 1988). The word itqan means to arrange and dispose of things in a scientific and
artistic way in order to obtain the most perfect results or to do something in high quality
way with wisdom.
So a Muslim must please others and make sure that whatever he does, does not introduce
unbearable pain or suffering to the human in consideration. Secondly, adapting SQ in
Islamic banks has become important because of its apparent relationship to costs (Crosby,
1979), profitability (Buzzell and Gale, 1987; Rust and Zahorik, 1993; Zahorik and
Rust, 1992), customer satisfaction (Bolton and Drew, 1991; zset al., 1993), customer
26
retention (Reichheld and Sasser, 1990), and positive word of mouth. SQ is widely
regarded as a driver of corporate marketing and financial performance in banking. But
unfortunately this not succeeded in Islamic banking in developing countries. Its better they
adopt Carters six dimension, may in this way they achieve service quality. (Kwon and
Lee, 1994 and Wong and Perry, 1991).
CHAPTER FOUR
METHODOLOGY
27
CHAPTER 44.METHODOLOGY
4.1 RESEARCH METHODOLOGIES
For improving Islamic Banking business, the bank needs information about customer’s
requirement when selecting the bank. The Bank also needs to find out that whether the
customer is Muslim or Non Muslim and what kind of services is required by each of them.
No such literature is available on Pakistani Islamic banks.
The main aim of this research is to find out the degree of customer satisfaction on banking
practices for a selected sample of Islamic banking customers in Pakistan. The research is
based on the following questions.
Research Question 1: What kind of account do customers have?
Research Question 2: What are the factors that motivate customers to deal with a
Islamic Bank?
Research Question 3: What is the degree of customer satisfaction of Islamic
Banking in Pakistan?
Research Question 4: How many customers have awareness and perceptions of
different Islamic Banking products/services?
Research Question 5: What are the roles of Demographic factors such as age,
gender, education level and annual income, and what are the customer’s
expectations of their bank?
28
To find the answers to the above questions we measure the service quality in Islamic
banking practice in Pakistan.
4.1.1 QUESTIONNAIRE DESIGN AND DATA COLLECTION
A questionnaire was designed in English, with a set of questions that was generated from
literature. (Kamal Naser et all 1999). Closed loop questions are used in the study for
several reasons. One of them is aimed to test the models used in previous literature. Some
of the information collected by the questionnaires was factual, e.g. usage of services, types
of bank accounts, demographic etc.
The main purpose of questionnaires is to initiate communications, hence the questionnaires
wording itself is very important. A few things were kept in mind while designing the
questionnaires. Utmost importance was given to avoid the negative statements or double
barrelled statements, as they can cause a lot of confusion in respondents. The questions
included very few in numbers in technical terms. Every effort was made to decrease the
social bias and to avoid leading questions. Questions of personal details were used in the
end as per the literature used.
4.1.2 DATA COLLECTION
A total of 200 questionnaire was posted to different Islamic Banks, which was generated
from the literature. This procedure resulted in a sample of 100 completed questionnaire (50
% respondent rate).
The questionnaires were posted to different branches of Islamic Banks in Pakistan and
with the agreement of branch managers, they were placed on the cashier counters for the
respondents to be filled and returned back to the staff. All the completed questionnaires
were then collected from different branches after a few days. The reason that the
29
respondents were asked to self complete the questionnaires was because they are less likely
to feel pressurised to give socially desirable answers or to feel embarrassed about the
answers they provide. This was very important in this study as respondents were supposed
to give their personal details about their bank accounts and use of bank services. In this
way, the possibility of interviewer bias shaping the responses was ruled out. This method
also provided the respondents with enough time to answer the questions required.
4.1.3 DATA ANALYSIS
The analysis and interpretation of the respondents have been made by using statistical
techniques and procedures of the Statistical Package for the Social Sciences (SPSS), which
is discussed in detail in next chapter 5.
For conducting any type of research, methodology is based on well defined research and
scientific principles. These methodologies are considered to be based on clear rules and
procedures, on which research is based and against which claims for knowledge are
evaluated (Frankfort and Nachmias 2000). So far there is no perfect and universally
agreed methodology. This is because, there is still a great debate about the meaning of
science (Lee 2000). The rules and procedure for research is continuously changing and
scientists/researchers look for new methods and techniques of observation, persuation,
generalisation and analysis.
Kaplan (2001) suggested that for well developed research methodology, it is necessay to
understand the product and process of scientific enquiry. A methodology deals with a set
of rules for reasoning, whereby evaluation of fact can be used to draw an opinion whether
it is true or not. However a methodology must not fullfill all the other requirements, for
research procedures. This is also confirmed by Quinn (2001) who states that “ one must
regard all methodologies or structures as mere intellectual framework and be very
cautious about their overuse in detail”. Fudamentally, the real construction is based upon
how much determination is involved for methodology, for adopting proper research
strategy.
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4.2 EPISTEMOLOGICAL FOUNDATION
The term epistemology refers to beliefs about the way in which knowledge is constructed.
It is a question whether it is possible to identify and communicate the nature of knowledge
as being hard, real and capable of being transmitted in a tangible form. Thus, it does not
consider , knowledge as softer, more subjective, spiritual or even transcedental, based on
the experience and insight of unique and personal nature. The epistemological assumption
is that, these situations determine extreme position and the issue is that whether knowledge
is something that can be acquired, or something that is based on personal experienced
(Burrell and Morgan, 2001). The view is that knowledge is hard, objective and tangible.
The researcher suggest that for his research, he could have adopt the role of observer.
However, to find out whether knowledge is personal, subjective and unique in nature,
requires the researcher to be completely involved with their subjects.(Weick, 2002).
Positivism and interpretivism depend upon different assumptions about the nature of
knowledge and demand considerably different approaches to research. Positivist
epistemology tries to understand a social setting by identifying individual components of
existing research and then explaining the research in terms of construct, and releationship
between them. Therefore, this research is based on qualitative approach (Cavaye, 2000).
The interpretivist approach, however , aims at understanding a phenomenon from the
participants and their point of view, who are directly involved with the research.
Once the epistemological opinion of research has been established and the question that
needs to be addressed is clearly identified, it is necessary to decide what kind of data is to
be collected and examine how it should be analysed. Data may be qualitative, or
quantitative in nature, and often depends upon the epistemology and the way that it is
presented by the researcher. For example, data collected in the form of loosely structured
interviews is qualitative, whereas data collected in the form of exact measurement of
variables may be refered to as quantitative. Futhermore, Burrell and Morgan (1999) argue
that, quantitative and qualitative research methods are opposite to each other, because their
real assumption are seen as different. However, Gable (2000) and Remnyi Williams(2001)
disagree and argue that an alternative research method should be changed gradually at the
end.
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4.3 THE MIXED APPROACH
Remenyi et al (2001) argue that positivism and realism are not totally different in terms of
their impact on research, and in the generalisation of the findings. Both approaches need to
believe that the findings are valid and accepted as a valuable addition to the body of
knowledge. Ultimately, we can say that it is more useful to see the that two approaches as
complementary instead of two opposite extremes. (Remenyi et al., 2001).
The philosphical approach in this research is a balance between positivism and realism. In
this way they show how the research question came in to existence. Objectives identify the
empirical evidence undepinning the theoretical prepositions. Remenyi et al, (2001) suggest
that world is essentially non deterministic (in any absolute sense) and repeated positivist
research will produce different results; a balanced appproach is therefore more “realistic”.
4.4 VARIOUS METHODOLOGICAL CHOICES
For conducting any type of research, it is possible to follow three main alternatives, either
using the qualitative or quantitative approach or a combination of both. Tayler and Bogdan
(2002) explain clearly the importance of research methodology. They indicate that research
could be conducted by using either (or both) qualitative methodology or quantitative
methodology depending on the nature of research.
4.5 QUALITATIVE RESEARCH APPROACH
The Qualitative research approach means that it is not possible to assign meaning to a
phenomenon (or behaviour) without describing the context and undestanding the position
of people who are affected by them. Consequently, a qualitative investigation is interested
in getting new information and understanding the topic (CressWell.,1999). However,
qualitative research is not concerned with the measurement and judgment of the research,
but accquiring and proving the existing research through observation (Cresswell., 1999).
For achieving contextual understanding direct and in depth knowlege is necessary for
research. As a result, the qualitative research method releated with face to face contact ,
verbal data and observation were used . Qualitative data can also be collected in a number
32
of forms, which includes the collection of evidence through field notes and describe
observed events. Qualitative data can also be gathered from written documents and
archieves, with Miles (1999) identifying that qualitative data is “rich, full, holistic and real
whose validity is unimpeachable”.
Bouma and Atkinson’s, (2003) report explained that based on qualitative research the first
thing that need to be considered for qualitative research, to understand human behaviour.
The next aspects to cosider are physical setting , roles and values. Therfore the researcher
must operate in a setting where these variables exist. Qualitative research therefore
provides a systematic, empirical strategy for answering question about the people in their
own bounded social context with little human interference during the enquiry. In these
situations, people make sense of their experience and create reality (May T., 2002).
Secondly, some techniques associated with experimental or qualitative research often
influence the findings of study. The subject’s behaviour is affected and in this way it does
not allow the mesurement of variables that the researcher is interested in, this is due to the
case that some variables occur that are outside of the researche control. Finally , it is stated
that the researcher cannot understand human behaviour without understanding the
framework in which subjects interpret, thoughts, feeling and action.
Although qualitative research is used with quantitative strategy, due to some reasons faced
in conducting the interviews, combined approach strategy was not considered in this
research.
4.6 QUANTITATIVE RESEARCH APPROACH
Quantitative research typically based on logical and linear structure , in which hypothesis
take the form of expectations about casual links between the concept identified in
hypotheses. Thus, the decison is specified on the bases of hypothese that result in
acceptance, or rejection for underpinning theoretical proposition. Hence quantitative
research is based upon methodology, procedure and statistical measures of validity.
Quantitative research method rely upon the measurement and analysis of statistical data,
for examining the releationship between one set of data to another. For producing
quantifable conclusion variables are measured (Cresswell., 1999). Brannick (2000)
33
identifies a number of thinking by using quantitative research methods and argues those
who used this objective in a way for adopting following concepts:
4.6.1 CONCEPT AND THEIR MECHANISM FOR MEASUREMENT
In this argument, the concept of hypothesis is to be observed, so that they can be measured
and therefore either accepted or rejected. In social science research, quantitative data
collection often include with questionnaire, as a source for collecting data. However,
Remenye and Willams (2001 p. 131) suggest that quantitative data collection method may
sometimes less accurate or less sure as a measurement of what researcher actually want.
Thus, examining the validity for data i.e internal validity and reliability of research
approach is used.
4.6.2 CAUSALITY
Another argument is that quantitative research concerned with only establishing the casual
releationship between concepts. Techniques used to discover releationship include either
experimental or cross case analysis. The experimental approach is used for assignment
control and expeimental group. Whereas cross case analysis collect data at a single point in
time from multiple sources.
4.6.3 GENERALISATION
This is a process by applying the result of a study that how much researcher in confidence
in research. How researcher collect data from smaller group or collecting data subset of
population. In such a way, the knowledge is gained by total population by studying. By
representing sample of organisations, a quantitative survey approach is used for identify
relationship, which are common across organisation , and also provide gernal statement , or
theory about the topic being researched.
4.6.4 REPLICATION
34
Argument is that experiment performed under this condition should gave same result.
Therefore, replication means for checking researcher based and applicability of research
findings with other context.
4.6.5 INDIVIDUALISM
Quantitaive research instrument focus the indiviudual. For example a survey questionnaire
is given to individuals for getting their opinions. Their responses are totalled, but the
respondent often do not know each other.
The decision taking about research methodology for choosing is based upon a combination
of certain factors such as limitation on time, money and concern with accuracy and
validity. For find out the nature of project research, there is a need for accurate information
which address the set objectives, the research designs involve a quantitative research
method. The questionnaire and case study method is applied by the researcher to collect
data for meauring service quality of islamic banking.
4.7 SOURCES OF DATA
Required data and information is needed to conduct research can be either obtained
through previous data available from differnt resources rather than the research studied or
collected data for the purpose of research. In other words, primary and secondary dat is
used respectively, defined by Churchill (2001 p.115) as follows.
“Primary data: Information collected specifically for the purpose of the investigation at
hand. Secondary data: Information not gathered for the immediate study at hand but from
some other purposes”.
Such sources are common in any research process and must be well prepared for and the
researcher should aslo make sure that availability and subsequently the efficiency of data.
However, methods of data collection in research vary depending upon the type
investigation and information needed in certain time limit.
35
The main methods of data collection are;
1. Questionnaire;
2. Interviews;
3. Observations;
4. Case Study;
5. Focus Group;
In order to achieve the objectives of the research survey questionnaire and case study
method is used. The benefit and limitations of each method briefly discussed as follows.
4.7.1 SURVEY QUESTIONNAIRE
Survey questionnaire have become common research tools in the management resource
development profession, particulary in practice as a part of comprehensive and systematic
approach to identifying and analysing an organisation development needs (Rummler,
1999). They provide a cost effective and reliable for getting feedback that may be
qualitative as well as quantitative approach (Preskill, 2001 p 142). A survey questionnaire
can provide accurate and relevant data through thoughtful design, testing and detailed
administration. In addition, a survey code ethics is used thatt the data produced must be
presented in systematic manner, which represent the fact which they found. Survey data
not to be subject with manipulation, either statistically or in summary, so as to support or
prove only special interest views. Therefore, safeguards to “respondents anoymity must be
not only expressed but guaranteed and lot of effort maintained for overcome difficulties”
(Collis and Hussy, 2003).
Data collected in questionnaire survey may be both subjective and objective (Pennington,
2002 p. 15). For choosing proper structure for questionnaire it is very critical factor in
examining and obtaining favourable feedback. In paricular, each who is involved in the
36
process of analysing data that should be generated by a questionnaire survey gave value
information and apply weighted to the researcher opinion and more meaningful. In
addition, analysts result shows same body of information differently depending what each
person feels to be more, less or significant. However, for getting favorable response, it is
possible when both objective and subjective combined by using questionnaire as well for
analysis the data. There are many advantages in using survey questionnaire against other
types for gathering research method. It is flexible, economical and less time consuming,
completing questionnaire is simple and straight forward and does not require excessiver
time (Bell, 2002). They can be given to large population because they donot require any
individual geographical location to assemble in one primary place. For gathering feedback
without any unwanted involvement questionnaire is used rather to take individual
interviews, focus group, and sometime need one site observation, respondent need tension
free enviornment for their convience. In this way respondent feel free in answering the
question since there is no need to please the interviewers. For selecting data collection
method, one always remember in mind the enviornment in which question is asked is only
for the pupose of question (Birely, 2003). Finally the information provided by the
respondents is influenced to their desire for answer the questionnaire, validity and financial
consideration.
Researcher has shown that simplicity will positively affect and in return it increases overall
response accurately (Long, 2003). On the other hand survey questionnaire got some
disadvantages as well. They got generally low response rates, unreasonable, unsuitable for
respondent due to poor literacy rate, no oppurtunity to correct misunderstanding or to offer
explanations or help, no control over the order in which question are answered, incomplete
response, incomplete questionnaire and no oppurtunity to collect ratings on assessment
based on observation (Oppenheim, 1999). However, to overcome these issues the
researcher manage the questionnaire survey personally.
4.7.2 INTERVIEWS
Interview can define as “ a puposeful discussion between two or more people”(Khan and
Cannell 1999, cited in Saunders et al., 2000, p.242). Interview is one of the most
common tool is used for collecting data and helps to the researcher to gather reliable and
valid data that are relevant to the research objectives. Interview can also be used for getting
37
quick response for such abstract variables as people’s attitude and opinion, this will enable
the researcher to find out and describe the situation in different phenomena, or it can be
used for explanatory rearch as well. Explanatory or analytical research, according to
Saunders (2000), will enable the researcher to examine and explain relationship between
variables cause and effect.
Interview may be highly structured and formalized and it depends upon the situation of
respondents. It is also possible that, interviews can also be informal and unstructured.
Interviews may be categorised as follows.
4.7.2(1) STRUCTURED INTERVIEWS
To follow the same structure and sequence of the questions;
4.7.2(2) SEMI - STRUCTURED INTERVIEWS
Ask the same question but not necessary in the same sequence;
4.7.2(3) LOOSELY OR UNSTRUCTURED INTERVIEWS
It will depend upon the interview flow and response. No questionnaire or checklist is used;
a framework is established for selecting topic as a guidance for interviews.
This is very useful method for data collection. The interview allows the interviewer to pick
up on additional information; the tone in people voices and facial expression both provide
that information which is missed in questionnaire. Another advatage of interview is the
response rate. Interviews tend to produce higher response rate as few people refused to talk
with interviewer who is directly infront of them, on the other hand questionnaire may be
discard or ignore is easy (Polit and Hungler, 2001).
38
Especially semi – structured interviews consider very good method which make the
interviewer to giving his ideas, prompt response and investigate feelings , which
questionnaire never be done especially such as sensitive issues like critical financial
information of organisation.
4.7.3 OBSERVATIONS
Gill and Johnson (2002), suggest that observation could take place from an office which is
provided in the central site, where the day – to – day life which visit on site is onserved and
gave a base from which the researcher could walk around and chat with individuals.
Basically, it can be done better through organisation’s meetings. The observer should be
able to watch, record and analyse events of interest.
(Schutz, 1999; Blumer, 2000) argued that the criticism on observation without can lead
towards the worst kind of subjectivism, whether observer sumarrised those factors, which
leads to some degree removed by subsequent behaviour of individuals. Furthermore,
Schutz and Blumer stressed that this method got no limits, it is time consuming as well, and
also include interpretation, categorizing and analysing of data, therefore it is not
implemented.
4.7.4 CASE STUDIES
In research strategy case study is used which focus the dynamics present with single
settings. Yin (2000) define case study as “an empirical investigation into cotemporary
phenomenon operating in real life context”. It is valuable rather than not feasible and not
even ethically justifiable (Yin, 2000; Remenyi et al., 2001; Miles and Huberman, 1999).
A case study got quality for detailed examination of an event (or series of related events)
which the analyst beliefs on exhibits for the operation of some identified general
theoretical principle (Mitchell, 1999). Another important advatage of case study is that
material lies in the richness based their undestanding on reality. This means that it can
work as effective device. Zonabend (2000) stated that case study research is done by
giving special attention to complexities in observation, construction, and analysis of data
under study is done in such a way that it gave a larger view about the performance of the
case study.
39
Bell (2002) criticised very important issue,i.e for judging which merit of case study is
sufficient and appropriate for a teacher who works in similar situation to relate his decision
for how they described the case study. The reliability of case study is very important then
generalisbility. Although it is a good approach for depth study of research , but in case
study, the researcher does not control the situation. Case study does not require step – by –
step data analysis, and this allows various opinions for research data. It is true , opinions
could introduce bias, and affect the research outcome as well, therefore it is not considered.
In this research case study of Pakistan islamic banking, survey questionnaire is used to
find the data and SPSS is used for analysing the customer opinion of Islamic banking for
measuring service quality.
4.7.4(a) CASE STUDY DESIGN ACCEPTABILITY
Yin (2000) suggest that for measuring any research study validity should be confirmed by
passing certain design test which regards to various level of research. Yin (2000) gave four
design test:
1. Construct Validity: establishing correct operational measures for the concept being
studied;
2. Internal Validity: establishing a casual realtionship, whereby certain conditions are
shown to lead to other conditions, as distinguish from false realtionship;
3. External Validity: establishing the domain to which study finding’s can be
generalised;
4. Reliability: presented that the operations of study, such as the data collection
procedures can be repeated with the same result.
4.7.4(b) MULTIPLE CASE STUDIES
40
Case study may be single or multiple case designs. Multiple case study strenghten the
result by getting through pattern matching, thus increasing confidence in the udepinning
the theory. The use of multiple cases in study shows the exact idea of topic under
investigation and as reult it developed empirical evidence to support which shapen the
theory. The approach for case study involves in theory building and verification rather than
testing (Dilanthi Amaratunga (2001).
4.7.4(c) LIMITATIONS OF CASE STUDY RESEARCH
Case study research forms on the core of this resarch study. Case study methods has many
advantages but there are certain criticism.
In case study method criticism is that it suffers from a lack of rigour and excess of
judgment. The danger of ad hoc theorising and of neglecting to test data are great. The use
of subjective judgements during the data collection stages can construct invalid. According
to Bromley (1999) researcher usually impact on the internal validity of data. Another
suggestion by Becker (2000) and agrees that researcher may have feelings for the subjects
and conclusion are drawn from a lack of reliability. External validity is also difficult to
measure (Berger, 1999). It is difficult to generalise findings to different setting and context
are necessarily dependent.
The evidence from multiple case study is considered more compelling and studies
involving multiple cases are regarded more strength. Whether resulting theory is
generalisable is related to the complexity of external validity, i.e whether external
conditions are thought to produce much variations in the topic being studied. In the contect
of research the critical aspect of case study is that it provide a limited bases for the
traditional scientific generalisation. (Yin, 2000; Remenyi et al., 2001). Nowwithstanding
like all experimental observations, case study result can be formulated for theoretical
prepositions (analytical generalisation) but not to popualtion or universes (staistical
generalisation). Thus, the aim of case study is not persuade to global finding form a sample
to population, but rather to undestand and articulate patterns and linkages of theoretical
importance. Santos (1999) stated that, it is not possible to elaborate detail and direct
comparison of data.
41
According to Yin (2000), the quality of any given design can be judged according to the
following four previously mentioned tests: construct validity, internal validity, external
validity and reliability.
4.7.5 FOCUS GROUP
Although focus group is a good way of capturing the responses of participants with regards
to feelings, interactions, emotions, deeply hidden fears and desires, these are diffcult to
discovered through straight forward interviews (Filedings and Thomas , 2001; Wisker,
2004), they were not considered due to time consuming and difficulty in controlling the
discussion and focused on the topic been discussed, as well as the differences in the
cultural context and beliefs of the participants.
4.8 PRIMARY DATA
Primary data is the data collected for a specific purpose directly form its source. This
research method is generally prefer by the researcher because the research is projected
towards the specific objectives of the study and ensure that, all the issues of the research
topic are highlighted. The primary techniques of data collection will be mainly
questionnaires, interviews, observation, case study and focus group. Multi-methods
approach will give the advantage of facilitating combination to take place as it is the
mixture of Methodologies in the same research (Scandura and Williams 2000).
To collect primary data a case study and survey questionnaire is used and analyse the data
through SPSS for getting the opinion of customers in Islamic banking. Pakistan Islamic
banking is selected to collect primary data from questionnaire and annual finacial report as
well. The other primary data techniques are as follows.
4.9 SECONDARY DATA
The secondary data is the second hand information received by the researcher from
previous survey conducted by others. The main objective of using this type of data is that it
is less time consuming and thus economical. Referring to some published articles through
42
the internet about this subject was the source of secondary data used in order to understand
thoroughly the topic.
Through, the secondary data is preferred for instant availability, it has it own limitation,
like in appropriateness of questionnaire one would have used and data may not be accurate
and updated (Birley, 2003). The researched may need to exploit the data with a little bit of
imagination, creativity and compromise it to obtain satisfactory measures.
Secondary data include both quantitative and qualitative data, and they can be used both
descriptive and explanatory research. The data researcher use may be raw data, where there
has been little of any processing, or compiled data that have received some form of
selection or summarising (Kervin, 2000). According to Saunders (2003), within business
and management research such data is used mostly in case study and survey type research.
However, there is no reason not to include secondary data in experimental research.
Because of inadequate time, the research findings are mostly will be from background
information such as secondary data. As the secondary data collection processes dose not
always include about collecting and reproducing it in a similar form but rather in the
secondary data will address the research objectives and form the good reliable starting
point for the research (Bryman and Bell 2002).
To understand the role of Islamic banks and financial institutions in Pakistan for
measuring service quality of Islamic banks . To have a proper undestanding about the
impact and contribution of financial instruments in business and their risk management the
case study method is used to collect the secondary data that is described earlier. The
required information is extracted from the secondary sources such as financial institutions
reports, journals, articles and internet etc and analysis by SPSS for meauring the opnions
of Islamic Banking customer satisfaction. The other secondary data collection method are
briefly explain as below.
4.9.1 SAMPLING
Saunders (2003) describe that, sampling techniques provides multi method that enable
researcher to reduce their amount of data research that needs to collect a data from
43
subgroup rather than all possible cases or elements. Some research question required
sample data for collecting all information. However, if researcher want to be deep research,
then it will need to research with) and a group (sample) of employees and large
organization, by taking interviews, the researcher also select case study (sample managers
to interview. Techniques for selecting sample are very important. Accor ding to Saunders
(2003), the full sample is taken is called population. In sampling, the term ‘Population’ is
not in normal sense, as the full set of cases need not necessarily by people.
4.9.2 PILOT STUDY
The term pilot study is also used by two different ways in social science research. It can
also be called as feasibility studies which are small scale versions or trial run, done in
preparation for the major study. (Polit et al., 2001:467). Pilot study, other tool is also
known as the pre testing or trying out for particular research. (Baker 2000: 182-3). One
advantage of pilot study is that it shows you where your main research project could fail,
when research protocols may not be followed, or your research methods are inappropriate.
According to DeVaus (1993: 54) “do not take risk, pilot study first”. This is the main
reason for undertaking a pilot study, these studies can be based on quantitative/qualitative
methods and large scale studies might employ a number of pilot studies before the main
survey is conducted. Pilot studies may also try to identify potential practical problems in
conducting research. (Van Teijlingen et al. 2001).
44
CHAPTER FIVE
45
ANALYSIS AND
FINDINGS
CHAPTER 5
5. ANALYSIS AND FINDINGSIn this chapter we analyses the findings related to customer satisfaction with Islamic
Banking service in Pakistan. So therfore, the Islamic banks face various competitive
pressures from traditional commercial bank.The scope of competition has grown in recent
years includes every financial market , product and services. Due to highly competitive
enviornment, for clearly undestanding the behaviour, attitudes and perception of the
customer, it is necessary for Islamic Bank to implmented successful marketing strategy.
Customer analyses has always been a priority of Islamic Banking, especially during past
two decades. Islamic Banks belong to private sector organisations; therefore there top
mangement priorities are growth, productivity and measures the level of customer
satisfaction. Questionnnaire are formulated for measure the performance of customers
46
satisfaction. Different factors and influences create customer behaviour and it should be
dependen upon respondents reply.
Therefore, this mission could be achieved by identifying a complete profile of Islamic
Banking customers which includes their banking habits, attitudes, selection criteria,
awareness and usage of various Islamic banking products and their degree of satisfaction.
For undestanding these , researcher carry out his data analysis by descriptive statistics. The
strategy adopted by Islamic Bank for getting effective marketing plan is achieve due to
maintain up to date customer profile, that includes age, income , education level, gender
and other social demographic factors.
5.1 ANALYSIS OF ISLAMIC BANK
5.1.1 Personal Profile of RespondentsTable 5.1 present a back ground of respondents who pariticipating in this study.
FREQUENCY PERCENTAGEAGE
20 – 25 8 8.025 – 30 6 13.330 – 35 23 12.735 – 40 7 7.640 – 45 6 9.745 – 50 5 11.050 – 55 9 12.455 – 60 7 9.960 – 65 4 9.365 – 70 16 3.4
GENDERMale 80 53.3
47
Female 17 43.7EDUCATION LEVELNo formal qualification 17 12.0
GCSE/BTEC 14 16.0A Level/BTEC National 12 15.8
HND/Degree 13 19.2Professional Qualification 9 17.9
Higher 23 19.0ANNUAL INCOME( Rs)
Rs 0 – 100,000 7 8.2Rs 100,000 – 200,000 11 12.4Rs 200,000 – 300,000 12 14.0Rs 300,000 – 400,000 13 16.9Rs 400,000 – 500,000 23 27.3Rs 500,000 – 600,000 3 4.2Rs 600,000 – 700,000 4 5.6More than Rs 700,000 6 9.5
According to table 6.1, more than 74.7 % respondent between the age group of 25 and 55
years old. 53.0 % customers were male and 43.0% is female. Because, this is due to the
nature of muslims society where males do dealings with banking. Majority of customers
should be pakistani national and muslims. Half of the customer earned less than Rs
400,000 to 500,000, annually. Majority of customer got higher degree with 19.0 % having
al least master degree. This shows that two third of people are educated.
5.1.2 Reasons of Customer Dealing with both types of Banks
Table 5.2 present the reasons for dealing customer with both types of bank.
STRONGLY AGREE AGREE NO VIEW DISAGRE
E
STRONGLY
DISAGREEFreq % Freq % Freq % Freq % Freq %
The Islamic bank does not offer some of the products (facilities) offered by a commercial bank.
3 8 25 60 4 6 9 22 2 3
The Islamic bank does not offer
4 10.5 19 46 3 10.5 14 31
48
many of the products (facilities) offered by a commercial bank.Opening hours of Islamic bank are limited
3 9 23 50 6 11 13 27
Opening of two accounts gave me the oppurtunity to diversify my investment
9 22 24 55 3 7 8 18
Both types of bank have limited number of branches and opening two accounts gave access to more branches.
4 6 17 43 10 24.4 13 26.4
According to table 6.2 majority of customer using both types of banks, due the some
product offered by convential bank , because these products are not available through
islamic banks.Furthemore, 77 % of the respondent using both types of bank, because want
diversification in investment. Other reason for using both type of banking is that, 59 %
opening time of Islamic bank are limited. Other reason is that , many customers metioned
that both types of bank got limited number of branches and by opening two differnt bank
account it will gave flexibility with more choices of banks. 49 % respondent mentioned
this thing. This findings is very important for Islamic Banking in Pakistan. The Islamic
should be more flexible for overcome this issue , if they want to survive competitive in
market.
5.1.3 Customer Awareness and use of different Products/Services
offered by Islamic Bank.Whether or not customers were aware of Islamic banking products or services are presented
in table 5.3
NOT AWARE OF IT
AWARE AND DON’T USE OF
IT
AWARE AND USE OF IT
Freq % Freq % Freq %
49
Current Account 11 17.1 10 14.5 47 68.4Time Deposit Account 15 21.9 39 57.1 13 19.3Murabaha 27 39.1 33 41.9 14 18.4Mudaraba 26 31.3 36 46.7 15 19.4Musharka 24 35.3 34 50.0 9 13.2Ijara 31 37.9 29 42.1 11 19.0Ijara Waktina 29 40.2 33 49.6 9 10.1Musana 37 49.4 29 39.4 6 11.1Traveller’s Cheque 25 34.7 35 48.6 12 16.6Money Orders 30 31.6 32 43.1 16 17.1Overdraft 32 29.4 31 42.4 17 20.3Automated Self Servie 5 7.3 27 34.3 37 53.1Letters of credit 20 27.1 33 46.4 19 25.0Guarantees 24 29.1 30 41.1 17 27.2Specially ordered bank statement 5 11.1 21 32.7 39 47.4
According to above table 6.3, mostly customers are unaware of products /services by the
Islamic Bank e.g. Mudarba (31.3%), Musharka(35.3%), traveller cheque (34.7%), Ijara
(37.9%), money order (31.6%), Ijara waktina (40.2%), and Musana (49.4%). The lot of
respondents (87.4%) were aware automated self service, (53.1%) use it. Similarly, order
bank statement were known to mostly customers (80.1%), (47.4%) and they used them.
Customers (82.9%) are well aware of current account, (68.4%) of them have frequently use it
and were aware of automated self service round about (53.1%) of sample used. Mostly
produsts/services are known by customer but few of them use it.
5.1.4 Reasons that Motivate Customers to Deal with Islamic BankThere are different reason of customers to motivate to deal with islamic bank presented in
briefly in table 5.4.
VALUE STRONGLY AGREE AGREE NO VIEW DISAGREE
STRONGLY
DISAGREEFreq % Freq % Freq % Freq % Freq %
Religious reason only 63 71.6 18 22.3 2 2.5 2 1.5 - -
Profitability reasons 3 4.8 8 10.7 21 22.8 24 30.6 21 28.8Religious and profit reason 9 12.9 17 24.0 20 28.2 15 21.2 6 8.7
Advice from relatives 7 12.7 18 26.5 17 25.3 17 24.0 5.2 8.5
50
Advice from friends 18 24.2 9 12.3 20 28.3 15 21.7 5 7.9Bank location 13 17.3 25 35.3 15 21.7 7 11.3 3 5.7Low service charges 7 9.3 24 34.6 18 28.3 8 13.5 3 5.5
Bank confident 21 27.7 23 34.5 14 25.5 1 1.7 - -Bank effeciency in completing Trans 9 4.7 33 41.3 20 31.5 10 14.6 2 3.1
Wide range of facil offered by the bank 3 7.5 23 35.7 27 41.3 4 5.3 6 7.7
Quality advice offered by bank personnel
- - 21 29.7 39 53.1 7 11.5 4 5.2
Bank reputation 13 19.6 35 49.3 13 17.3 3 4.6 1 1.7Confidence in the bank’ Management 6 9.3 27 38.4 27 38.4 6 7.5 4 3.8
Confidence in bank’s board of directors
7 10.4 30 42.3 28 39.4 - - 2 2.9
Shariah Supervisory Committee 17 23.2 29 34.3 27 24.8 1 3.5 1 1.5
Social and friendly features of bank’s personnel
13 6.3 33 51.0 30 36.1 1 1.5 3 2.4
The Islamic bank offer the same facilities that offered by Comm bank but observes shariah principles
17 22.3 30 32.7 18 29.2 - - 7 1.5
According to table 5.4, the religious reason is the most important factor that motivates
respondent to deal with islamic bank. Majority of respondents (93.9%) are either agreed or
strongly agreed to deal with Islamic bank.The above findings shows that religious factors
is very important as compared to profitability motive. Most respondents (59.4%) disagree
or strongly disagree that profitability is important factor for choice of bank. Therefore, the
above each factor is considerd individually, respondents are not in clear, that why they deal
islamic bank either religious or profitability.Islamic bank reputation and image is second
important factor. Majority of customer agreed (49.3%) or strongly agreed (19.6% ) that
reputation is one key factor for selecting bank. The majority of customer (62.2%) strongly
agree that confidentially of Islamic bank is another important reason to deal with.
Confidence in Shariah Supervisory Committee was fourth important reason to deal with.
Most customer (57.5 %) agreed or strongly agreed with it. The fifth most important reason
is to deal with islamic bank is that Bank observes shariah principles when offering the
51
same facilities like conventional bank. Round about two-fifth of customer (55%) are
strongly agreed with it.
Other important reasons that motivates customer to deal with islamic bank i.e social and
friendly fetaures of islamic bank personnel (49.1%), efficient and quick services,
confidence on Islamic bank BOD, and bank location. Reasons like advice from relatives or
friends not likely to play a vital role to respondents in banking choice to deal with islamic
banks.
5.1.5 Degree of satisfaction of services offered by the Islamic BankTo find out the level of customer satisafaction or dissatisfaction , table 5.5 is presented
Strongly Agree Agree No View Disagree Strongly
Disagree
Freq % Freq % Freq % Freq % Freq %
Convient branch location
23 29.5 39 54.3 7 11.4 1 1.4 - -
Convient opening hours 8 8.7 33 45.5 19 25.5 9 11.9 1 1.4
52
Wide range of services 4 8.7 33 47.4 22 31.1 7 10.6 1 1.4
Easily undestood statement
13 16.3 41 60.3 15 19.6 2 1.9 1 1.4
Easy to get information 5 6.9 30 41.7 17 23.6 14 19.4 6 8.3
Confidence in Bank management.
11 17.9 31 39.8 29 36.3 1 3.4 3 1.4
The cost of the service offered by the bank.
9 10.9 30 43.7 26 33.4 3 2.6 4 4.6
Physical facilities 5 8.9 34 43.5 16 25.0 7 10.6 8 7.9
Parking facilities 1 1.8 11 15.6 19 24.0 23 27.6 19 25.8
Personal neat appearence. 3 4.9 43 57.9 20 28.1 3 3.7 2 3.2
Employees Skill and knowledge
6 6.3 43 60.1 23 31.3 - - 1 1.3
Employees willing to help
5 3.3 39 53.4 23 31.2 5 7.2 1 1.4
Individual attention 4 6.2 16 21.9 25 36.5 20 24.9 6 10.2
Understand specific needs 7 6.4 31 43.3 29 39.9 3 6.1 2 3.1
53
Promise fullfilled on time
6 6.2 30 42.9 31 41.7 4 3.3 2 2.3
Efficiency in services for completing transaction
2 3.1 31 43.4 22 31.1 9 14.2 5 7.9
Service at time 3 3.8 32 44.4 29 40.3 3 3.8 4 5.1
Accurate services 9 7.3 35 50.0 26 37.5 1 1.4 7 2.4
Service performance 4 3.1 35 50.0 27 34.7 5 5.3 4 6.1
Satisfaction level 17 21.1 30 39.1 23 26.2 5 6.3 3 4.4
Meet expectations 2 6.4 20 31.2 44 57.3 2 3.1 1 1.3
Excellent Service quality 8 10.0 37 47.5 21 28.2 6 8.3 1 4.2
Recommend to deal with Islamic Bank
14 17.7 26 33.2 33 42.3 2 3.3 7 1.4
Want to switch my account 9 22.1 13 18.3 22 23.3 21 27.1 8 6.7
Majority of customer (83.8%) are satisfied due to bank convients location. These findings
donot seem to be fit for deal with islamic bank. Due to convience is a reason for dealing
with bank. The second factor is that bank statement is easily undestandable, which shows
(76.6% ) of the customer were satisfied.
54
Due to bank employees required skill and knowledge to performing the services is good,
mostly customers (66.4 %) were satisfied. The fourth degree of customer satisfaction is due
to external appearence of bank’s personnel, (62.8%) customer were very satisfied with it.
Mostly customer (56.7%) seem very satisfied due to bank employees which always been
ready to help. This shows a good customer relationship.
Other six degrees with regard to customer satisfaction i.e islamic bank perform accurate
services, after considering that we can say customer are extremely satisfied with islamic
bank, but the overall service quality is fine. Due to convenient bank opening hours and as
well confidence in bank management, a lot of customer (54.2%) seem to be satisfied.
Other issues excluding parking facilities, showed more customer satisfaction than
dissatisfaction. With regarding to parking facilities (53.4%) were seem to be dissatisfied.
However, (40.4%) customer switch over to other accounts. Furthermore we elaborated that
four fifth (37.2%) customers of islamic bank donot gave any opnion regarding to their
satisfaction or dissatisfaction , which donot meet with their expectations.
CHAPTER SIX
55
DISCUSSION OF
FINDINGS
CHAPTER 6
6. DISCUSSION OF FINDINGS
This chapter is about dicussion on issues which are raised in this and in the light of
relevant literature, and findings of the researcher . Islamic Banking are asked about their
view, as well as they are satisfied for dealing with banks. For researcher findings,
comprehensive detail is provided in chapter five.
6.1 Comparitive Analysis
56
Many reseachers such as Shook and Hasan (1988), Erol and El-Bodour (1989), El-Bodour et
al. (1990), Sundin et al. (1994), and Naser et al. (1999), have done research for measuring
the attitudes and criteria that why the customers deal with specific bank. By using these three
author studies Erol and El-Bdour, 1989; Erol et al. 1990; and Nasir et al. 1999; the
researcher find out about the bank selection criteria that used by pakistani customers to deal
with islamic banks.
Other authors such as Leveque and McDougall (1996) and Nasir et al. (1999) studies shows
that customer overall satisfaction create great impact on bank selection criteria. There are
many factors which make customers to deal with specific banks, as evident by the following
authors studies. (Anderson et al., 1976; Tan and Chua; 1986; Laroche and Taylor, 1988;
Erol and El-Bdour. 1989; Denton and Chan, 1991; Erol et al., 1991; Kaynak et al.,
1999; Khazeh and Decker, 1992; Levesque and McDoughall, 1996; Nasir et al., 1999).
The banking selection literature shows different features such as location availability,
friends recommendation, reputation of bank, credit availability, competitive interest rates ,
friendliness of bank employees , low service charges, satisfactory banking hours, availability
of ATM, and special services etc. The importance that these factors varies with one country
to another with respect to age factors, gender, income , martial status, occupation and
cultural background of customers , whether they dealing with islamic or conventional (Nasir
et al., 1999).
From this study it is clear that majority of respondents of both bank have certain reasons to
deal with them. Futhermore, findings elaborated that, these certain fators donot play a single
role in customer selection. Customer satisfaction selection criteria is unique to deal with
Islamic bank. These selection citeria findings discuss seperately in next section.
Religious reason is unique criterial for customer to deal with islamic bank. However, three
quarter (71.6%) of customer are strongly agreed with it while less than one quarter (22.7%)
are agreed that is the main pupose to deal with islamic bank. It is very unique and
interesting , that only one of respondent (1.5% of sample) had no opinion with religious
motives and other who disagreed with it. Relating to this issue shows that this is not the case
some decades or two years ago. Furthemore, in this issue resarcher is not agree with the
57
reports by Erol and EI- Bdour 1989 as well as their previous findings given by El-Bdour,
1984). These two authors stated that “religious motivation did not appear to be the primary
criteria for selection of Islamic banking services” (p.33). However these authors find out
this would happen due to respondents misundestanding when they answering the question.
However, at the end of 1990 customers perception is totally changed , they consider
religious reason is very important to deal with Islamic bank. When Nasir et al., 1999 making
research on it and find out that 93.9% of respondent “agreed or strongly agreed that
religious reasons are very important”. Reseacher finding should be clear that, the main
purpose of customer to deal with islamic bank is religious reasons. The findings of Naser et
al., 1999 clearly explained that religious factor is very important during last years.
Furthemore, this evidence proves that religious reason is important that whty peole
depositing more in Islamic banks.
Researcher findings explain that profitability reason is not very important to deal with
Islamic bank, though its importance is for customers of conventional bank than islamic bank
, because of profit maximising nature of conventional bank. In contrast we stated that islamic
bank promotes banking on religious reasons by observing the Islamic shariah Principles.
However, findings explained that profitability is not important for islamic banking customer
due to the changed in their attitudes for dealing with Islamic Bank. Furthermore, researcher
findings is diasgree with the reports is given by El-Bdour 1984, and Erol and El-Bdour
(1989). Acording to these authors report , the perception of customer to deal with isalmic
bank is due to profitabiliy maximising behaviour. Furthermore, Naser et al.,(1999) make
this research to a similar task. But they reported that 42.3 % of respondent disagree or
strongly disagree with this reason of profitability, as compared to 27.2 % respondent agreed
or strongly agreed. These recent findings of researcher proves that customer seleted Islamic
bank due to religious reasons, not a motive of maximising their profit.
Further in the case of Islamic banks, religious and profitability reason is main selection
criteria of bank, by the customers. It is not suprising that mostly respondent (59.4%)
rejected profitability reasons to deal with islamic bank, which past authors consider main
purpose to deal with islamic bank. The rearcher findings agreed with Erol and E-Bdour
1989 statement they define as “ when religious and profitability reasons were combined it
did not seem to make any differnce tocustomer behaviour”. They explained that, their
58
findings by the “fact that their customer have been used to the conventional interest
banking enviornment, so they have become profit oriented csutomers”. However their
explanation donot seem convincing with the present findings of the rearcher, and argued
above, that customer is non profit oriented.
Another important factor is consider important in todays banking selection criteria such as
bank reputaion and image. However, for the islamic banking customers , they consider this
image and reputation as second important factor after religious reason for selecting bank.
With regarding to profit maximising nature of commercial bank, customer donot consider
this factor as compare to Islamic bank. Furthemore for considering to choosing the customer
to deal with conventional bank and Islamic bank , we measure this in terms of percentage,
for choosing particular factor, such as stated that (68.9%) of Islamic bank customer chose it
while 67.5% of conventional bank, customer chose it, as a result they shows similar choices
for both customer , but despite of the fact that respondents are 75 and 72 for the islamic and
conventional bank respectively. Nasir et al., 1999 also bring same research on choice of
customers for Islamic bank. They find out that 72 % of respondents are agreed or strongly
agreed with this reason. Many other researcher, studying both types also bring their research
in same field for customer selection (Anderson et al., 1976; Tan and Chua; 1986; Laroche
and Taylor, 1988; Erol and El-Bdour. 1989; Denton and Chan, 1991; Erol et al., 1991;
Kaynak et al., 1999; Khazeh and Decker, 1992; Levesque and McDoughall, 1996; Nasir
et al., 1999). However, we stated that bank reputation and image plays a very important role
for attracting customer to deal with certain bank. Another researcher Tiliakou (1999), bring
his research by studying two commercial bank in Greece, and reported that , three quarter of
customer deals with Euro commercial bank as compared to their National bank. This is
because due to negative image of customer self esteem needs.
The third important reason for customer to deal with bank is due to their old establishment
as compared with Islamic bank. Thats why commercial bank got priority due to their
establishment as compare with Islamic bank.. Hence it is possible that, commercial banks
customer donot give confidentially for granted, as on the other hand islamic bank focus more
as compared with conventional bank. Few researchers ealborated that pakistan customer
dealed with islamic bank due to three reasons, firstly efficient and fast services for
completing transaction, secondly bank’s reputation and image, and lastly confident to deal
with bank ( Erol and El-Bdour, 1989; Erol at al., 1990; Nasir et al., 1999). These findings
shows to the researcher that confidence in bank dealing is one of the most important reason
59
to deal with islamic bnak as compared with other two reasons, that could be discussed later
on. Nasir et al., 1999, findings prove that , (63%) of respondents are strongly agreed with
these reason.
For removing errors and Omissions of Islamic Principles, the practice and activities of
Islamic banking is not conflicting, with islamic ethics. It is necessary for Islamic Banks that
they establish a Religious Supervisory Committee (RSC) or the Shariah Supervisory Board
(SSC), consisting of Muslims law and principles advisors of Islamic commitee. Therfeore we
stated, that SSC is unique feature of Islamic bank and customer belief confidence on that
committe. Thats why confidence on SSC is main reason that motivate customer to deal with
Islamic banks. Nasir et al., 1999 also prove this and majority of respondents are agreed with
it.
Another reasons is that conventional banking offered same facilities like other Islamic banks
but they donot observe the Shariah principles. This is important factor due to religious
reasons. Customer attracting more to Islamic banking. That is why observing the Shariah is
the third unique feature of Islamic bank that not offered by conventional banks. Nasir et al.,
1999 reported that majority of customer strongly agreed with it. Another fourth important
unique factor for attracting the Islamic bank customers, is the confidence on Bank Board of
Directors. This is possible due to Bank’s reputation and image, and it creates positively
effect due to lot work of its Board of Directors. However, lot of customer (38.4%) donot
gave any opnion about this factor.
For selecting certain specific bank, social and friendly features of bank personnel, quick and
efficient services for completing transaction, bank location are also consider most important
factor for customer to deal with islamic or conventional banking. Bank location has been
shown as a special reason for selecting bank ( Anderson et al., 1976; Laroche and Taylor,
1988). Location is very important factor for banking customers under the age of 50 as
compared to other age groups. Majority of customers 68% is 50 years old as compared with
younger people. As concerning to provision of quick and efficient services is discussed
above, that is one of the reasons of Pakistan customer to deal with Islamic banking ( Erol
and El-Bdour, 1989; Erol at al., 1990; Nasir et al., 1999). The majority of our respondents
were male thats one of the most importannt factor (Kaynak et al., 1991).
Customers who got primary education they regarded, friendliness of bank employees, quick
and efficient service, bank locations (availability of credit) is most important factor, than
60
customers who got only primary education (Kaynak et al., 1991). The lot of customer
education level is high as well as in islamic and conventional banking.
Researchers findings shows that certain factors such as (advice from relatives/friends, quality
of services and other factors) donot like to be seem very important for customer selection.
Naser et al., 1999, explained that these factors are not important for customer satisfaction.
They stated that “advice from realtives (23 per cent)and from friends is (32 per cent) did not
appear to play a major role in banking choices of customers who used an islamic bank”.
Researcher findings strongly disagree with statement by Erol and El-Bdour (1989 p.33).
There results shows that “interpersonal contact and individual efforts played an important
role in terms of attracting individual to utilise banking services offered through islamic
banks”. Further they added that the people who are at same age group plays important role
for dealing with islamic bank, because they may be aware of these services that should be
use by their relatives and neighbours. Researcher finding and Nasir et al., 1999 findings
shows that people perception of islamic banking should be changed after sometime.
Researcher findings (in table 6.5) shows that majority respondents (83.8%) are satisfied
with bank convient location, easily understand bank statement is round about (77.6%),
employeed required skill and knowledge (66.4%), personal appearence of bank personnel
(62.8%). These percentage shows clearly that Islamic bank customer is more satisfied with
these features. Nasir et al., 1999, indicate that (59.3%) of customer were satisfied with
personal bank proficiency. For example if we consider the easily understandable bank
statement than proficiency of bank statement is quite high. Researcher findings also shows
that most of the customer are fully satisfied with employee required skill and knowedge but
disagree with the statement of Erol and El-Bdour (1989). Their statement is about that
majority of Islamic bank employees, have low efficiency and lack experience, and researcher
findings shown them, majority of employees working in Islamic bank is the former
employee of conventional banking (Iqbal and Mirakhor, 1987). Further we argued that
researcher finding prove that Islamic bank employees have required skill and knowledge
about islamic banking and in this way they improve their experience for performing services.
However, customer of Islamic bank were dissatisfied with parking facilities provided by
their bank and there are also some other factors that move their accounts somewhere else.
These areas should be addressed seriously by islamic bank, other wise they lose their
customers. The other three aspects which shows customer satisfaction is proficiency of bank
61
personal, bank management, and efficiency for completing transaction all these have been
proved by Nasir et al., 1999, it is very important factor for customer ssatisfaction. But
unfortunately these percentage of high satisfaction level is low in Islamic banking.
Researcher findings also prove by Nasir et al.,(1999) about the confidence on bank’s
management was same to the findings of present study. Furthermore, researcher findings is
not agreed with other authors statement of bank opening hours. After all this discussion we
can say that customer is well aware of Islamic banking products/services. However, most of
them do not use it. For example, 60% of customer was aware of current accounts and used
this service. Here at this point researcher findings would agree with Naser et al.,1999
findings.Researcher findings shows that majority of respondent of our customers were
unaware of islamic banking products such as Murabaha, Mudarba, Musharka, Ijara ,Ijara
Waktina, Musana, all which creates unique in Islamic banking products (also mixed bank),
most of them are aware but they do not even invested. Naser et al., 1999 bring same research
to the above task, and stated that “ It is also clear that a sizeable number of respondents
mentioned that they were aware of specific Islamic terms of Murabaha, Mudaraba and
Musharaka, but they do not using these specific types of Islamic Banking”. Another major
important factor is that friends and realtives work in a bank to attract customers. But in
different areas customers give no opnion about the question they asked whether they are
agree or disagree with them.
6.1.1 ISSUES IN AIMS AND OBJECTIVES
Researcher addressed number of issues relating to find out the degree of customer
satisfaction and dissatisfaction of Islamic bank in previous chapters. For overcome these
issues, which are raised in this work they need a vast range of literature review for cleared
objective to achieves.
The main objective of the research is measure the degree of satisfaction towards the Islamic
banks in Pakistan. Various issues require attention for achieving the success required by
reasearcher. The scope of study is very vast, it is a fact that conventional banks got lot of
expertise, experience which achieves through years. But on the other hand, Islamic banking
consider as a new innovation in most countries including Islamic world. Therfore Islamic
banking require lot of in depth research and vast investigation, in the light of poor literature
62
of islamic banking, as a whole to improve customer satisfaction. The criticle point of this
research is that , study is based on future investigation. These findings clearly shows that
religious reason is the main important factor for consumer attitude to deal with Islamic bank
but after some time it is consider unimportant due to change in consumer habits.
The different objectives establish for this study are achieved e.g to measure the degree of
customer satisfaction with Islamic banks in Pakistan, based on the customers response rate.
This discussion also proves that for measuring the satisfaction level of customers that should
be agreed or disagreed, is given by the arguments that are in the literature review. The
researcher findings also highlighted that there are some defects in our findings which are not
even matched with previous authors reports.
Factors which discussed previously shows that they motivate customer to deal with islamic
banking. The main key factor of islamic banking for dealing is religious reasons which
shows that , there is need of more development in these factors that should take time.
Researcher findings also indicated that different cutomer have different priorities for
selecting bank convential as well as Islamic banking. Further, we argued that respondent
attitudes of selection is our second objective, for finding out that customer utilise all factors
is successfully achieved.
Other findings shows that most of Islamic banking customers were not well aware of many
islamic banking products/services that offered by bank. This should be further explains that
most customers are well aware of products but they donot used it. This is necessary for
Islamic banks that they practices to arrange advertisement and campaigns for educating
customers.
Researcher findings of study shows that customer gave more attention and gave priority to
these factors for selecting bank, above and previous discussion in other chapters gave a
comparision for measure a degree of customer satisfaction in Islamic bank. So, futhermore,
we argued that our fourth objective, for measuring the degree of customer satisfaction in
Islamic bank, and the fifth objective for finding those reasons, customer consider on prior
basis for selecting bank is being achieved.
Futhermore, the aims and objectives of this study have been achieved for this important
research.
63
6.1.2 INFLUENCES
The resources and issues which are raised in the literature of Islamic banking is limited.
Despite of this the available resources is successfully used for briniging this research. The
other authors like El-Bdour, Erol, Nasir and their colleaques give comprehensive sources for
discussing, comparing and contrasting of this present research. For extending the scope of
study, the main purpose of study is achieved by reviewing the literature of customer
satisfaction. Researcher hope these findings bring very valuable addition in existing
literature of customer satisfaction in Islamic banks.
6.1.3 ANALYSIS
The analysis is provided by the researcher is consider as a very important, the basis, or
material should be achieved in depth research for dealing with these issues.
The analysis given by the researcher is not perfect, there are certain gaps regarding to
academic and professional research in this study. For example, time limitation is very
important for this study. Projects thinking , formulating aims and objectives, hypothesis and
question, wide range of reviewing literature, formulate research instruments, field work,
analysis result and finally writing of dissertation is done in very short time. This happened
due to find out the assumption and limitation of existing literature for adding valuable
research and aaditional knowledge to the present research. Due to time constraints, it is not
possible to use more than one research instrument ,and itis true it is not feasible for
researcher to carried out his field survey, and taking interviews of bank officials, customers
and employees in the country. However, it is necessary that , for carried out research for this
kind of project, required long period of time, and also allow u to implemented more than one
research instruments. Triangulation, use of multiple methods is also used in depth to clearly
undestand the research project. (Denzin and Lincoln, 1998).
6.1.4 LEARNING FROM THIS RESEARCH
For beginning this project, several issues have been learned from it. Firstly, we considered
findings are very important in this kind of research. Due to limited published material is
available about customer selection and satisfaction of Islamic banking products and facilities
offered by them is also a issue.
64
Other issue is that, for carrying out this kind of research , it requires more than one researh
tools, to clearly undestand the full picture about the research topic and also require lot of
knowledege and awareness of Islamic banking produts and services required among the
customers. Other issue is that customer donot deal with Islamic bank due to profitability
reasons, they selected the islamic banks due to religious reason, which is more unique in this
sector.
Islamic Banks Management and Board of Directors also play very important role to meet the
difficulties and limitations for experience to grow the performance and the other cause is that
Islamic awakening of Muslim countries among other countries of the world is also
experienced. Lastly we learned from this research there is difficult to turn up to this issue for
changing anything in Islamic bank seperately.
65
CHAPTER SEVEN
CONCLUSION AND
RECOMMENDATION
CHAPTER 7
7. CONCLUSION AND RECOMMENDATION FOR
FURTHER RESEARCH
These recommendations and conclusion is based on the findings of this research in
previous discussions.
7.1 CONCLUSION
66
After all we conclude that, religious factors is very important as compared to profitablility
factor, that makes customer to deal with Islamic banks.
Many several reason and findings relates with customer to deal with specific bank, we
concluded that, customers priorities bases is differed with different banks.
In case of Islamic banks the other important factors which makes customer to deal with
include following: bank reputation and image (68.9%), Islamic bank confidentially
(62.2%), confidence in Shariah Supervisory Committee (57.5%), Isalmic bank offer the
same facilities like conventional bank but also follow Shariah principles (55.0%), social
and friendly features of Islamic bank personnel (57.3%), and location, provision of quick
and efficeint in dealing transaction, and confidence in Board of Directors (52.7%),
followed by confidence in management (47.7%). So we conclude that top eight factors for
selecting criteria, in desending order. Overall we conclude that, the satisfaction rate of
Islamic bank customers is high. Quality services of islamic bank customers (45.2%), is fine
that motivates the Islamic banking customer.
For finding out the degree of satisfaction or dissatisfaction among the Islamic banks, we
concluded that customer perception varies in degree of satisfaction. Lot of customer
dealing with islamic banks seems to be satisfied or very satisfied with it. Location is not
the the top priority factor that considered by customer to deal with Islamic Bank, futher
we elaborated that, convience of customer is a satisfaction issue as compared with location
for selecting Islamic bank. As concerning with other issues of customer satisfaction,
customers got different opnions towards their bank.
Hence, the main satisfaction of Islamic Bank can be summarised are followed in
descending order.
Provision of easily understand bank statement (76.6%), employees got required skills and
knowledge for perform the service (66.4%), bank personnel neat appearence (62.8%),
employees are willing to help (56.7%), bank performs service accurately (57.3%),
customer are extremely satisfied, confidence in bank mangement (57.7%), Islamic bank
offer wide range of services (56.1%). Here we conclude that, Islamic bank customers in
terms of percentages, is extremely satisfied.
67
After all we concluded that the products/services offered by Islamic Bank are not well
known by customers. Islamic banking products/services like, Musana, Mudarbaha,
Murabaha, Ijara and many other, are daily acceptable products/services that are practice by
most of Islamic bank, except the mixed bank where they provided. Futhermore , we
concluded that, most of these product/services offerd by islamic bank customers is well
aware but they donot prefer to use. However, relatives /friends who works in banks is not
count towards important issue of customer satisfaction and dissatisfaction of Islamic
Banks.
7.2 RECOMMENDATIONS
Researcher finding in Chapter 5 , about Islamic Bank explained resources of Islamic Bank,
where they can improve their banking practices, and processes and attract majority of
customer by consider other sources , on the other hand if these sources are not improved,
customer rate to dealing with convential banking increases. Islamic Banking in Pakistan
and any where in Muslim World, has got competitive advantage as compared to
conventional banking, by offering services under the observation of Shariah principles.
68
Therefore , religious people gave more preference to deal with Islamic banking process. So
researcher suggested that:
1. Islamic Bank gave more priority to advertising and promotes islamic banking
products/services offered to customer. Futhermore, Islamic banking products/services
provide assuranc ebout quality services and competence.
2. By improving the service quality advice to customers.
3. Fully training provided to banking employees, for improving service quality process
for building customer relationship.
4. More parking facilities providedby Islamic Bank for easy access of customer.
5. More attention provided individually to Islamic Banking customers. Banking
management take prior action for educating and training of staff members to pay much
attention towards individual customer.
6. Islamic Banking Management identify the reasons for customer switch over to other
accounts.
7. Islamic Banking Management work hard to fullfilled the customers expectations.
8. Islamic Banking provides adequate banking hours for attracting customer from
business community as well as regular user.
9. Islamic Banking promoting their products/services by not promoting existing
commercial banking products, but bring a innovation in their product/services for
attracting customers, that make them unique that is not available in market.
69
APPENDIX
APPENDIX
1). AGE: ………….
2). GENDER: M/F
70
3) EDUCATION: …………………………………………………………….
4) ANNUAL INCOME: ……………………………………………………..
5) Customer awareness and use of different products and services offered by Islamic
banks.
Not aware of itAware and don't
use itAware and use it
Current account
Time deposit account
Murabaha
Mudaraba
Musharaka
Ijara
Ijara Waktina
Musana
Traveller Cheque
Money order
Overdraft
Computerised Machine
Points (ATM).
Letter of credit
Computerized Statement
6) If you have an account with an Islamic Bank, then please read each statements
below and tick the box which best indicates hoe strongly do you agree or disagreewith
it.
Strongly
Agree Agree No
View
Disagree Strongly
Disagree
71
Religious reasons
only.
Profitability reasons
(high return on
investment) only
Religious and
profitability
reasons
Advice from
Relatives.
Advice from friends.
Bank Location.
Low Service Charges.
Bank Confidentially.
Bank Effectiveness in
Completing
transaction.
Wide range of
facilities offered by
the bank.
Quality advice offered
by the bank personnel.
Bank reputation.
Confidence in the
Bank board of
Directors.
Confidence in Bank
Shariah Supervisory
committee.
72
Social and friendly
feature of Bank
Personnel.
The Islamic bank
offers the same
facilities as offered by
a commercial bank but
Islamic bank also
observes Sharia'h
Principles.
7) Please indicate the extent to which you agree or disagree with each of the following
statements.
Strongly
Agree Agree No View
Disagree Strongly
Disagree
73
The Islamic bank
does not offer some of
the products
(facilities) offered by
a Commercial bank.
The Islamic bank
does not offer many
of the products
(facilities) offered by
a Commercial bank.
Opening hours of
Islamic Bank Limited.
Opening of two
accounts gave me the
oppurtunity to diversify
my investment.
Both types of banks
have a limited number
of branches and
opening two accounts
gives access to more
Branches.
8) If you have an account with an Islamic Bank, then please read each statements
below and tick the box which best indicates hoe strongly do you agree or disagree
with it.
Strongly
Agree
Agree No View Disagree
Strongly
74
Disagree
Convient branch
location
Convient opening
hours
Wide range of
services
Easily
undestood
statement
Easy to get
information
Confidence in
Bank
management.
The cost of the
service offered
by the bank.
Physical
facilities
Parking
facilities
Personal neat
appearence.
Employees
Skill and
knowledge
Employees
willing to help
Individual
attention
75
Understand
specific needs
Promise
fullfilled on
time
Efficiency in
services for
completing
transaction
Service at time
Accurate
services
Service
performance
Satisfaction
level
Meet
expectations
Excellent Service
quality
Recommend to
deal with Islamic
Bank
Want to switch
my account
76
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