Customer Loyalty Toward Islamic and Conventional Banks; Mediator Role of Customer Satisfaction

Amin ur rahman, Muhammad Anwar


With the liberalization of economic sector of Pakistan and introduction of Islamic banking system, the industry become more competitive as the consumer have more choices and thus their preference changed toward banking. In this increasing high competitive industry, Bankers are more focus on customer loyalty to win market share and thus gain competitive advantages. The purpose of this paper to identify those core factor that influence customer loyalty in banking sector of Pakistan.

The paper examine three independent factors i.e. Bank services, Bank reputation and religious perspective along with a mediator factor which is customer satisfaction that ultimately results in gaining customer loyalty. This study was carried out by taking sample size of 260 participants and the structure questionnaire of 35 items is used to collect data and analysis was done using SPSS (edition 22) software. The Result of the study shows that there is positive relation among Bank services, Bank Image and religious Perspective on customer satisfaction which directly leading to customer loyalty. With the help of this study we found that Bank services is considered as a most prominent factor that leads to customer satisfaction and customer satisfaction leads to customer loyalty. This study is helpful for policy makers and bank managers to know customer satisfaction thus they can earn more customer loyalty.

Key words: Customer Loyalty, Customer Satisfaction, Bank services, Bank Image, Islamic bank

JEL Classification: G21

Full Text:



Abduh, M., & Alobaad, A. Factors Influence Customer Loyalty in Kuwait Islamic Banks: An Exploratory Study.

Afsar, B., Rehman, Z. U., Qureshi, J. A., & Shahjehan, A. (2010). Determinants of customer loyalty in the banking sector: The case of Pakistan. African Journal of Business Management, 4(6), 1040-1047

Akbar, M. M., & Parvez, N. (2009). Impact of service quality, trust, and customer satisfaction on customers’ loyalty. ABAC Journal, 29(1).

Almossawi M (2001). Bank selection criteria employed by college students in Bahrain: an empirical analysis. Int.J. Bank. Mark. 19(3): 115-125

Ali, M., & Sarkar, A. A. (1995). Islamic Banking: Principles and Operational Methodology. Thoughts on Economics, 5(3), 20-25.

Al-Rousan, M. R., & Mohamed, B. (2010). Customer loyalty and the impacts of service quality: The case of five star hotels in Jordan.International journal of human and social sciences,5(13), 886-892.

Ashraf, M. G. (2014). Include the Position of Islamic Banking, Service Quality, Satisfaction, Trust and Loyalty in the Context of an Integrated Model for Islamic Finance. European Journal of Business and Management, 6(17), 156-169.

Awan, G. A., & Azhar, M. (2014). Consumer Behavior towards Islamic Banking in Pakistan. European Journal of Accounting Auditing and Finance Research,2(9), 42-65

Bei, L. T., & Chiao, Y. C. (2001). An integrated model for the effects of perceived product perceived service quality, and perceived price fairness on customer satisfaction and loyalty. Journal of Consumer Satisfaction, Dissatisfaction and Complainning Behavior, 14, 125-14

Biel, A. L. (1992). How brand image drives brand equity. Journal of advertising research, 32(6), 6-12.

Bloemer, J., & De Ruyter, K. (1998). On the relationship between store image, store satisfaction and store loyalty. European Journal of marketing, 32(5/6), 499-513

Buttle, F. (1996). SERVQUAL: review, critique, research agenda. European Journal of marketing, 30(1), 8-32.

Bansal, H. S., & Taylor, S. F. (1999). The service provider switching model (spsm) a model of consumer switching behavior in the services industry.Journal of service Research, 2(2), 200-218

Chen, C. H., & Lee, H. Y. (2008). Empirical analysis of the customer loyalty problem in the international logistics market. WSEAS Transaction on Business Economics, 4(5), 113-123.

Clottey, T. A., Collier, D. A., & Stodnick, M. (2011). Drivers of customer loyalty in a retail store environment. Journal of Service Science (JSS),1(1), 35-48.

Davies, G., & Chun, R. (2002). Gaps between the internal and external perceptions of the corporate brand. Corporate Reputation Review, 5(2-3), 144-158.

Cronin Jr, J. J., & Taylor, S. A. (1992). Measuring service quality: a reexamination and extension. The journal of marketing, 55-68

Caruana, A. (2002). Service loyalty: the effects of service quality and the mediating role of customer satisfaction. European journal of marketing,36(7/8), 811-828.

Davies, G., & Chun, R. (2002). Gaps between the internal and external perceptions of the corporate brand. Corporate Reputation Review, 5(2-3), 144-158.

Echchabi, A., & Nafiu Olaniyi, O. (2012). Malaysian consumers' preferences for Islamic banking attributes. International Journal of Social Economics, 39(11), 859-874.

F. and Sasser, W. E. (1996). Zero defections: Quality comes to service. Harvard Business Review, 68 (5), p. 105–111

Filip, A., & Anghel, L. D. (2009). Customer loyalty and its determinants in a banking services environment. Quality Management in Services, 6(26), 288-297.

Gotlieb, J. B., Grewal, D., & Brown, S. W. (1994). Consumer satisfaction and perceived quality: complementary or divergent constructs? Journal of applied psychology, 79(6), 875.

Hossain, M., & Leo, S. (2009). Customer perception on service quality in retail banking in Middle East: the case of Qatar. International Journal of Islamic and Middle Eastern Finance and Management, 2(4), 338-350.

Harwood, M. (2002). Branding on a Budget.Community Banker, 24-28

Hassan, A., Chachi, A., & AbdulLatiff, S. (2008). Islamic marketing ethics and its impact on customer satisfaction in the Islamic banking industry. Islamic Economics, 21(1).

Horstmann, R. (1998). Customer Satisfaction and Loyalty: an empirical assessment in the service industry. J. Appl. Manage. Entrepreneurship, 4, 39-54.

Huat, T. C., Chin, T. A., Rasli, A., Yusoff, R. M., & Tat, H. H. (2012). the effects of service quality, customer satisfaction on re-patronage intentions of a hotels existing customers.International Journal of Management and Administrative Sciences, 1(8), 1.

He, Y., & Song, H. (2009). A mediation model of tourists' repurchase intentions for packaged tour services. Journal of Travel Research, 47(3), 317-331.

Ismail, I., Haron, H., Nasir Ibrahim, D., & Mohd Isa, S. (2006). Service quality, client satisfaction and loyalty towards audit firms: Perceptions of Malaysian public listed companies. Managerial Auditing Journal, 21(7), 738-756

Jones, M. A., Mothersbaugh, D. L., & Beatty, S. E. (2000). Switching barriers and repurchase intentions in services. Journal of retailing, 76(2), 259-274.

Jamal, A., & Anastasiadou, K. (2009). Investigating the effects of service quality dimensions and expertise on loyalty. European Journal of Marketing, 43(3/4), 398-420.

Krishnamurthi, L., Mazumdar, T., & Raj, S. P. (1992). Asymmetric response to price in consumer brand choice and purchase quantity decisions. Journal of Consumer Research, 387-400.

Kheng, L. L., Mahamad, O., Ramayah, T., & Mosahab, R. (2010). The impact of service quality on customer loyalty: A study of banks in Penang, Malaysia. International Journal of Marketing Studies, 2(2), p57.

Kotler, P., & Armstrong, G. (2013). Principles of Marketing 15th Global Edition. Pearson.

Kotler, P. (2001). A framework for marketing management. Upper Saddle River, NJ: Prentice-Hall.

Koo, D. M. (2003). Inter-relationships among store images, store satisfaction, and store loyalty among Korea discount retail patrons. Asia Pacific Journal of Marketing and Logistics, 15(4), 42-71.

Kandampully, J., & Suhartanto, D. (2000). Customer loyalty in the hotel industry: the role of customer satisfaction and image. International journal of contemporary hospitality management, 12(6), 346-351

Lee, H., Lee, Y., & Yoo, D. (2000). The determinants of perceived service quality and its relationship with satisfaction. Journal of services marketing 14(3), 217-231.

Munusamy, J., Chelliah, S., & Mun, H. W. (2010). Service quality delivery and its impact on customer satisfaction in the banking sector in Malaysia. International Journal of Innovation, Management and Technology, 1(4), 398-404.

Metawa, S. A., & Almossawi, M. (1998). Banking behavior of Islamic bank customers: perspectives and implications. International Journal of Bank Marketing, 16(7), 299-313.

Miles, L. (1994). Called to Account. Marketing Business, (May), 16-19.

Mohsan, F., Nawaz, M. M., Khan, M. S., Shaukat, Z., & Aslam, N. (2011). Impact of customer satisfaction on customer loyalty and intentions to switch: Evidence from banking sector of Pakistan. International Journal of Business and Social Science, 2(16), 230-245

Ngui, C.Y.K. (2004), Malaysian Business, May 16, p. 40

Oliver, R. L. (1980). A cognitive model of the antecedents and consequences of satisfaction decisions. Journal of marketing research, 460-469.

Oliver, R.L. (1997). Loyalty and profit: long – term effects of satisfaction, satisfaction: A behavioural perspective on the Consumer, MC Graw – Hill Companies, Inc., New York, NY

Oliver, R. L. (1999). Whence consumer loyalty? The Journal of Marketing, 33-44.

Park, C. W., Jaworski, B. J., & Maclnnis, D. J. (1986). Strategic brand concept-image management. The Journal of Marketing, 135-145.

Patayawati, Zain, D., Setiawan, M., & Rahayu, M. (2013). Patient satisfaction, trust, and commitment: Mediator of service quality and its impact on loyalty (An empirical studi in Southeast Sulawesi public hospitals). IOSR Journal of Business and Management, 7(6), 1-14.

Pont, M., & McQuilken, L. (2005). An empirical investigation of customer satisfaction and loyalty across two divergent bank segments. Journal of Financial Services Marketing, 9(4), 344-359

Pritchard, M. P., & Howard, D. R. (1997). The loyal traveler: Examining a typology of service patronage. Journal of Travel Research, 35(4), 2-10.

Rizwan, M., Yaseen, G., Nawaz, A., & Hussain, L. (2014). Incorporating Attitude towards Islamic Banking in an integrated Service Quality, Satisfaction, Trust and Loyalty Model. International Journal of Accounting and Financial Reporting, 4(2), Pages-456.

Rizan, M. (2010). Analysis of service quality and customer satisfaction and its influence on customer loyalty. Oxford Business & Economics Conference

Al-Rousan, M. R., & Mohamed, B. (2010). Customer loyalty and the impacts of service quality: The case of five star hotels in Jordan. International journal of human and social sciences,5(13), 886-892.

Rust, R. T., Zahorik, A. J., & Keiningham, T. L. (1995). Return on quality (ROQ): Making service quality financially accountable. The Journal of Marketing, 58-70.

Rehman, M., & Afsar, B. (2012). Relationship Among Corporate Image, Intangible Perceived Quality, Choosing, Habit And Customer Loyalty.Management and Marketing Journal, 10(1), 183-197.

Rasheed, H. M. W., Khalid, J., Khizar, H. M. U., Sajid, M., Shahid, M. N., Ahmad, M., & Khan, W. A. (2015). Factors affecting Customer Loyalty in Banking Sector: A study on Banks in Bahawalpur (Pakistan). International Journal of Accounting and Financial Reporting, 5(1), 239-254.

Metawa, S. A., & Almossawi, M. (1998). Banking behavior of Islamic bank customers: perspectives and implications. International Journal of Bank Marketing, 16(7), 299-313

Sekaran, U. (2006). Research methods for business: A skill building approach. John Wiley & Sons.

Saifuddin, S. (2003), “Study: Islamic banking in Malaysia lacks major participation from Muslim”, Business Times, October 2, p. 1.

Siddiqi, K. O. (2011). Interrelations between service quality attributes, customer satisfaction and customer loyalty in the retail banking sector in Bangladesh.International Journal of Business and Management, 6(3), p12.

Tu, Y. T., Wang, C. M., & Chang, H. C. (2012). Corporate brand image and customer satisfaction on loyalty: An empirical study of Starbucks coffee in Taiwan. Journal of Social and Development Sciences, 3(1), 24-32

Tepeci, M. (1999). Increasing brand loyalty in the hospitality industry.International Journal of Contemporary Hospitality Management, 11(5), 223-230.

Vinhas Da Silva, R., & Faridah Syed Alwi, S. (2006). Cognitive, affective attributes and conative, behavioural responses in retail corporate branding.Journal of Product & Brand Management, 15(5), 293-305.

Wallin Andreassen, T., & Lindestad, B. (1998). Customer loyalty and complex services: The impact of corporate image on quality, customer satisfaction and loyalty for customers with varying degrees of service expertise. International Journal of Service Industry Management, 9(1), 7-23.

Wajdi Dusuki, A., & Irwani Abdullah, N. (2007). Why do Malaysian customers patronise Islamic banks?. International Journal of Bank Marketing, 25(3), 142-160.

Wong, A., & Sohal, A. (2003). Service quality and customer loyalty perspectives on two levels of retail relationships. Journal of services marketing, 17(5), 495-513.

Zeithaml, V., Bitner, M. J., & Gremler, D. D. (2002). Services marketing. 3rd.

Zeithaml, V. A., Berry, L. L., & Parasuraman, A. (1996). The behavioral consequences of service quality. the Journal of Marketing, 31-46..

Zeithaml, V. A., Bitner, M. J., & Gremler, D. D. (2006). Services marketing: Integrating customer focus across the firm.


  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.