RESEARCH “same principles as used by modern Islamic banks.

 

RESEARCH PROPOSAL

 

 

(FACTORS INFLUENCING CONSUMER FOR
THE SELECTION OF ISLAMIC

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

 

BANK IN PAKISTAN)

 

 

 

 

SUBMITTED TO:

 

 

Dr.
Khurshid Kiani

 

 

 

 

SUBMITTED BY:

 

 

Jahanzaib Ashiq Satti

 

(071517-11071)

 

 

MBA (1.5)

 

 

(2017-2018)

 

 

 

 

 

 

 

 

 

 

 

 

Quaid-e-Azam School Of Management
Sciences, Quaid-e-Azam University, Islamabad.

 

FACTORS INFLUENCING CONSUMER FOR
THE SELECTION OF ISLAMIC BANK IN

 

PAKISTAN

 

 

INTRODUCTION:

 

 

Islamic banking was originated in back seventh century, when Hazrat
Khadija, first wife of Our Prophet(S.A.W),was a merchant and our Prophet(S.A.W)
played a role of an agent for her business by using mostly the “same principles as used by modern Islamic banks. In
the middle ages, Muslim word relied on Islamic banking principles for trade and
business activity .This idea spread through out spain, the Mediterranean and
the Baltic states, arguably providing some of the basis for western banking
principle. In the era of 1960`s to 1970`s , Islamic banking again capture the
attention of modern word. In 1963,Egyptians formed Islamic bank in MitGhmar ,
to reduce risk they only approve 40% of the loan and as a result their default
ratio was zero. This experiment paved the path for future and know a days Egypt
is considered as pioneers in Islamic Banking along with Malaysia and Indonesia
.

 

In Pakistan, Islamic banking sector attracts the attention of customers,
as a result this sector is showing good results from the last few years.
Keeping in view, the interest of customers towards Islamic banking, every bank
wants to capture the customers of Islamic banking , for this they opened new
Islamic branches in different cities. In 2002, there was only one Islamic Bank
but due to increase in knowledge and awareness related to Islamic products
among customers , this number is now reached to 13 Islamic banks in Pakistan.

 

As there is tough competition related to Islamic banking in Pakistan and
every bank is trying to attract maximum customers by providing different
services and Islamic products. In this study, we want to see the factors that
influence customers towards selection of Islamic bank in twin cities (
Rawalpindi and Islamabad) of Pakistan.

 

Literature Review

 

 

Errol and EI-Bdour (1989) and Erol. Kayak and EI-bdour(1990) conducted
study in Jordan and it revealed that product and services helps in attracting
the customers towards Islamic banking rather than religious
perspective.Omer(1992) studu showed that customer prefer Islamic banking due to
religious attachment as they did not want to involve themselves in the element
of interest. Leeds (1992) study revealed that service quality and good
professional staff attitude plays a vital role in satisfying customer. It shows
that when bank provide good services to customers, it helps in creating good
customer relationship.

 

Haron et al. (1994) argues that 40% of the respondents choose Islamic
banking due to Islamic factor and same research was conducted in Jordan and 206
respondents participate in it and finding was that 70% respondents select
Islamic banks because of religion. Hegazy (1995) conducted research in Egypt
and found that customer use Islamic banking services due to Islamic laws but
still they compare the services of both type of banks and then choose a bank.
Lévesque and McDougall (1996) study focuses on service quality for selection.
Garrard and Cunningham (1997) conducted research in Singapore and found that
they are inspired by abidance of Sharraih.

 

Metawa and Almossawi (1998) found shariah principles as a primary factor
for selection of banks . Conclusion can be drawn from study conducted by Naser
et al. (1999) in Jordan that customer prefer both religious and economic
factors while selecting a bank. Studies of both the researchers Zeithmal et al
(2000) and Hanson stated service quality as an important factor for
establishing long term relationship that why customer prefer this factor. Study
conducted by Almossawi (2001) in Bahrain from students of different
universities that shows the results that they prefer accessible location, ATM,
staff behavior and reputation of bank while selecting bank.

 

Study conducted by Ahmed and Haroon(2002) in Malaysia, they found
religious factor as a most powerful determinant.Sureshchander et.al (2003)
found that in Indian banking industry technological factors are more preferable
over human factors like quality service etc. Bley and Kuehn(2004) in UAE argued
that individual are motivated by religious values , not by financial knowledge
for the selection of Islamic bank. Flavian et al. (2005) concluded that bank
image is strong factor to hold market position and creating trust among
customers. Dusuki and Abdullah (2006) presented that in Malaysia, customers
service is considered as an important tool while selecting bank and they
believe that staff should be well educated and deal them with respect.

 

Al-Hawari and Ward (2006) found that aborigines consider financial
performance and service quality as an important tool for customer satisfaction.
Dusuki and Abdullah (2007) argued employee ability as an important factor, as
employee’s behavior help in attracting customer and change their decision for
selecting bank. Ahmad et al. (2008) concluded in Malaysia that people

 

Who are more inclined towards Islam select Islamic bank for their
transactions for deposit. Osman et al. (2009) found that despite of the fact
that customers are well informed that international banks are providing better
services but still they prefer Islamic banking due to religious factor.
Marimutho (2010) observed that there are other factors like staff quality etc. that
effect customer decision but religious values are still at the top.

 

Idris et al.(2011) analyzed that Islamic bank not only take favor from
religious aspect of customer but also provide quality products and services.
Alam et al. (2011) prevailed in Malaysia religion has a powerful impact in
directing the behavior of human being in social and personal aspect.

 

Rehman A. and M.S. Shabbir (2010) explored that religious factor impact
on customer decision and action , as it help in shaping attitudes , beliefs and
knowledge of people. Ahmed et al. (2010) analyzed that service quality is
important factor , that help customer in making decision for selecting Islamic
bank. Ali et al. (2011) identified factors that not only satisfy but also
attract customer which are: Service quality, Financial benefits , Customer
quality ,bank image and bank competitiveness and shows considerable
relationship between customer satisfaction and these factors.

 

According to Taimoor (2012) higher loyalty of customer arrives from high
level of satisfaction and creates positive perception, when customer is fully
sure that bank is purely working on Islamic rules it leads towards loyalty.
Imtiaz et al. (2013) argued that corporations are more inclined towards
conventional banking because of no risk factor and fix interest rate, while
individual consider Islamic banking ethical and prefer it due to religious
factor”. Ghafoor et al (2014) conducted
research in Multan and it shows positive relationship among all variables(
religious, service quality and bank image) and

 

Research Model Frame work

 

 

Figure 1: Model for criteria for selection of an Islamic
Bank.

 

 

Convenience

 

(Al-Ajmi, Al-Saleh, &
Hussain, 2009)

 

Quality of Service

 

(Al-Ajmi, Al-Saleh, &
Hussain, 2009)

 

Availability of ATM

(Ahmad,
Rustam, & Dent,

2011;
Cunningham &

Gerrard,
2001)

 

Religious Motives

 

(Awan
& Bukhari, 2011)

 

Privacy & Confidentiality

 

(Awan & Bukhari, 2011)

 

Bank Reputation & Image

 

(Gerrard & Cunningham,
1997)

 

Variety of financing options

 

(Awan & Bukhari, 2011)

 

High profit & Low service charges

 

(Awan & Bukhari, 2011)

 

Recommendations from

 

friends/family

 

(Awan & Bukhari, 2011)

 

Friendly & Responsive
attitude of

 

banking staff

 

(Awan & Bukhari, 2011)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Islamic
Bank

 

Selection

 

The
measures adapted were drawn from earlier relevant studies as stated in figure 1
and these measures are the criteria for the selection of an Islamic bank.

 

Hypothesis

 

 

Based on the above model the following
hypotheses will be made:

 

 

H1

Convenience
effects consumers’ selection of an Islamic bank

 

 

H2

Quality
of service effects consumers’ selection of an Islamic bank

 

 

H3

Religious
motives effects consumers’ selection of an Islamic bank

 

 

H4

Availability
of ATM effects consumers’ selection of an Islamic bank

 

 

H5

Privacy
& Confidentiality effects consumers’ selection of an Islamic bank

 

 

H6

Bank
reputation & Image effects consumers’ selection of an Islamic bank

 

 

H7

Variety
in financing options effects consumers’ selection of an Islamic bank

 

 

H8

High
profit & Low service charges effects consumers’ selection of an Islamic
bank

 

 

H9

Recommendations
from friends/family effects consumers’ selection of an Islamic bank

 

 

H10

Friendly
& Responsive attitude of banking staff effects consumers’ selection of an
Islamic bank

 

 

 

Methodology

 

 

Sample of Research

 

 

A survey will be conducted and data will be
gathered with the help of questionnaire taken from previous study, from 150
consumers on random bases. Data will be gathered from customers of 8 Banks in
Islamabad and Rawalpindi which includes Burj Bank, Dubai Islamic Bank, ,
Askari-Islamic, Bank AlHabib-Islamic, Alfalah-Islamic, Bank Islami, Meezan Bank
and UBL-Ameen.

 

Technique and tools

 

 

As it is quantitative study so responses of questionnaires will be
converted in to numeric digits with a liked scale of 1-5 with the help of SPSS
and One sample t-test will be used to investigate the all propositions and the
objective of the paper.

 

Expected Results

 

 

I believe that religious factor along with quality of service and
Dealing with customer will be the most influential factors among other
variables.

 

REFERENCES

 

 

Agha Tahir Ijaz and Asghar Ali (2013).Assessing Service Attitude:
Service Quality Measures Taken by Islamic Banks in Pakistan. IOSR Journal of
Business and Management, Vol 8, pp61-68.

 

Ahmad WMw, Rahman AA, Ali NA, Semen AC(2006), Choice of financing
amongst Malays between religiousity and perception mortagage borrower behavior.
J. Real Estate Res.,25(1).

 

Ahmad, A., Rehman, u.k., Saif, I., & Safwan, N., (2010).An empirical
investigation of Islamic banking in Pakistan based on perception of service
quality. African Journal of Business Management,4(6),1185-1193

 

Ahmad, N. & Haron, S. (2002).Perceptions of Malaysian corporate
customers towards Islamic banking products and services, International Journal
of Islamic Financial Services, International Journal of Islamic Financial
Services, 2(4),pp. 13-29

 

Ahmad, W., A.Rahman, N.A.Ali and A.C Seman, 2008.Religiosity and Banking
Selection Criteria among Malaysia in Lembah Klang, Journal of Syariah, 16 (2)

 

Ahmed et al. (2010), ‘An Analysis of Function Performed be Islamic Bank:
A Case of Pakistan”, European Journal of Social Sciences, Volume 17,No. 1.

 

Akram et al. (2011), ‘Prospects of Islamic Banking : Reflection from
Pakistan :Australian Journal of Business and Management Research ,Vol 1 ,No.2.

 

Al-Ajmi, J., Hussain, H.A & Al-Saleh, N.(2009).Clients of
conventional and Islamic banks in Bahrain. How they choose which bank to
patronize. Inter. J. Soc. Eco., 36(11): 1086-1123

 

 

 

 

 

Alam, S.S., R. Mohd and B. Hisham,(2011).Is Religiosity an Important
Determinant on Muslim Consumer Behaviour in Malaysia? Journal of Islamic
marketing, 2(1):83-96

 

Al-Hawari M., & Ward T.,(2006). The effect of automated service
quality on Australian banks financial performance and the mediating role of
customer satisfaction, Marketing Intelligence & Planning, Vol.24 Issue :2,
pp.127-147.

 

Ali Raza ,Urooj Saddique, Umar Farooq, Saqib Awan ,Atif Amin (2012),
Customers Satisfaction towards Islamic Banking: Pakistan Perspective. Arabian
Journal of Business and Management Review, Vol 1, No.6.

 

Almossaive, M.(2001). Bank selection criteria employed by college
students in Bahrain: an empirical analysis, International Journal of Bank
Marketing, 19 (3), pp.115-25.

 

Amin, M. & Isa, Z. (2008). An examination of the relationship
between service quality perception and customer satisfaction: A SEM approach
towards Malaysia Islamic banking.International Journal of Islamic and Middle
Eastern Finance and Management. 1(3). 191-209.

 

Azeemi, S.M., Baig, M.H., Ali, S.K., Raja, A.A. (2004) A Thesis on
Society Behavior Towards Shariah-based Financial System. MBA thesis, Iqra
University, Karachi, Pakistan.

 

Bley, J. and K. Kuehn, 2004. Conventional Versus Islamic Finance;
Student Knowledge and Perception in the United Arab Emirates. International
Journal of Islamic Finance Services, pp; 5

 

 

 

 

 

Curry, A., & Penman, S. (2004). The relative importance of
technology in enhancing customer relationship in banking-a Scottish
perspective, Managing Service Quality, 14(4), 331-341. Dusuki AW, Abdullah NI
(2006).Why do Malaysian customers patronise Islamic banks. Inter. J.

 

Bank. Mark, 25(3):142-160

 

 

Dusuki, A.W. & Abdullah ,
N.I.(2007).Why do Malaysian customers patronise Islamic banks?

 

 

International Journal of Bank
Marketing, 25(3), pp.142-60

 

 

Erol and R. El-Bdour, 1990. Conventional and Islamic Bank: Patronage
Behavior of Jordanian Customers. International Journal of Bank Marketing, 8
(5).

 

Erol C, El-Bdour R (1989). Attitude, behaviors and patronage factors of
bank customers towards Islamic banks. Int. J. Bank. Mark. , 7(6):31-7.

 

Gait A, Worthington A (2008).Int.
J. Soc. Econ., 35(11):783-808.

 

 

Gerrard, P, & Cunningham, J,B., (1997). Islamic banking: a study in
Singapore, International Journal of Bank Marketing, 15(6), 204-216

 

Hanson, W. (2000).Principles of
internet marketing, Cincinnati, Ohio: South-Western.

 

 

Haque A, Osman J, Ismail AZH (2009). Factor influences selection of
Islamic banking .A study on Malaysian customer preferences. Amer. J. Appl.
Sci., 6(5):922-928.

 

Haron , S., Ahmad, N., &Planisek, S.(1994).Bank patronage factors of
Muslim and non-Muslim customers. International Journal of Bank Marketing,12(1),
32-40

 

 

 

 

 

 

 

Hegazy, I. 1995. An empirical comparative study
between Islamic and commercial banks selection criteria in Egypt. International
Journal of Islamic Financial Services.2 (4).3-11.

 

Idris AR, Naziman KNM, Januri SS, Asari FFAH,
Muhammad N, Sabri SM, Jusoff K (2011).Religious value as the main influencing
factor to customers patronizing Islamic bank. World Appl. Sci. J., Vol.12.

 

Imtiaz. N, Murtaza .A, Abaas.M.A ,Khizer Hayat
(2013) VOL.1 NO 2,educational research internatonal

 

Leeds, B. (1992).Mystery shopping offers clues to
quality service. Bank Marketing, 24(11), 24-27 Levesque. T., & McDougall,
H.G. (1996). Determinants of customer satisfaction in retail banking,

 

International Journal of Bank
Marketing 14(7), 12-20.

 

 

Marimuthu M, Jing Cw ,Gie LP , Mun LP, Ping TY
(2010).Islamic banking selection criteria and implications. Global J Hum. Soc.
Sci., 10 (4).

 

Metawa, S.A. and Almossawi, M.
(1998). banking behavior of Islamic bank customers:

 

perspectives and implications.
International Journal of Bank Marketing, 16, (7), 299-313.

 

 

Mirr, S. (2011).Customer Satisfaction Measurement
For the State –Owned Banks in the Developing Countries- The Case Of Bangladesh.
Journal of Business and Policy Research, 153-172.

 

Naeem, H., Akram, A., & Saif, M.I.,
(2009).Service Quality and its impact on Customer Satisfaction: An Empirical
Evidence from the Pakistani Banking Sector. International Business &
Economics Research Journal, 8(12) ,99-104.

 

Naser, K., Jamal, A. &Al-Khatib, L.(1999). Islamic
banking: a study of customer satisfaction and preferences in Jordan.
International Journal of Bank Marketing, 1793), 135-150.

 

Omer, H. (1992).The implication of Islamic beliefs
and practice on Islamic financial institutions in the UK, Phd dissertation,
Loughborough University, Loughborough.

 

Osman I, Ali H, Zainuddin A, Rashid WEW, Jusoff K
(2009).Customers satisfaction in Malaysian Islamic banking. Int. J. Econ.
Finance, 1(1).

 

Rahim Mosahab, P.C.
(2010).Service Quality, Customer Satisfaction and Loyalty: A Test of.

 

 

International Business Research.

 

 

Rehman, A. and M.S. Shabbir ,(2010).The
Relationship Between Religiosity And New Product Adoption. of Islamic
Marketing,1(1):63-69

 

SBP, Islamic banking Bulletin
Vol. IV No.2, 2009.

 

 

Shabbir, M.F., Aslam, D.H.,Capusneanu, S., Barbu ,
C.M., & Tanveer, M.A, (2012) Perceived Service Quality of Islamic and Non
Islamic Banks Operating in Pakistan. American Journal of Scientific Research
(51), 27-36.

 

Sureshchander GS, Chandrasekharan R, Anantharaman R
(2003). Customer perception of service quality in the banking sector of a
developing economy: A critical analysis, Inter. J. Bank Mark, 21:233-242.

 

 

 

Taimoor H.(2012). Measuring
Customers Loyalty of Islamic banking in Bahawalpur Region.

 

 

International Journal of Learning
& Development. Vol (2), No (2), pp2164- 4063.

 

 

Tan, T.H. (2009). A study of Islamic banking
customer satisfaction in Malaysia, Published master dissertation. University
Utara Malaysia.

 

Urban JD , Pratt D (2000).Perception of banking
services in the wake of banking mergers: an empirical study. J. Serv. Mark.
14(2):118-131.

 

Vitell, S.J. and J.G.P.Paolollo , (2003).Consumer
Ethics: The Role of Religiosity. Journal of Business Ethics, 46(2):151-162.

 

Wang Y, Lo H, Hui YV (2003).The antecedents of
service quality and product quality and their influences on bank reputation:
evidence from banking industry in China. Manag Serv. Qualit., 13(1):72-83

 

Zeithmal VA, Parasuraman A, Malhotra A (2000).
Service quality delivery through websites:a critical review of extant
knowledge. J. Acad Mark Sci, 30(4):362-375.

 

Zeithml , V.A. (2000). Service
Quality, profitability and the Economic Worth of customers:

 

what we know and what we need to
learn. Journal of the academy of marketing science,

 

.28(1), 67-85

 

 

Al-Ajmi, J., Al-Saleh, N., & Hussain, H. A.
(2009). Clients of conventional and Islamic banks in Bahrain: How they choose
which bank to patronize. International
Journal of Social Economics, 36(11), 1086-1112.

 

 

 

Ahmad, K., Dent, M. M., &
Rustam, G. A. (2011). Brand preference in Islamic banking.

 

Journal of Islamic Marketing, 2(1), 74-82.

 

 

Awan, H. M., & Bukhari, K. S.
(2011). Customer’s criteria for selecting an Islamic bank:

 

evidence from Pakistan. Journal of Islamic Marketing, 2(1), 14-27.

 

 

Gerrard,   P.,   Cunningham,   J.   B.   (1997).   Islamic   banking:   a   study   in   Singapore.

 

International Journal of Bank Marketing, 15(6), 204-216.

x

Hi!
I'm Brent!

Would you like to get a custom essay? How about receiving a customized one?

Check it out