Abstract
Islamic banks have faced many challenges either from rivals or customers who look for better products and services. This study examined both the direct and mediating effects of selected variables influencing Islamic banks’ customer loyalty. The direct links were satisfaction, attitude towards Islamic banks, customer trust, and religious obligation to customer loyalty. On the other hand, the indirect links were through the mediators’ trust and attitude. A sample of 416 working Muslims in the UAE was collected and analysed. We used PLS-SEM techniques and the SmartPLS 3.0 software package to investigate customers’ loyalty towards Islamic banks. It was found that all the direct links were positive and significant, and were mediating relationships. This result implied that the respondent’s attitude toward Islamic banks and customer trust plays a significant role in understanding the relationship between customer satisfaction, religious obligation, and customer loyalty. In other words, both customer satisfaction and religious obligation indirectly created customer loyalty through the mediators. This study is one of the few studies that incorporate religious obligation as one of the determinants of customer loyalty.
Highlights
Financial intermediaries create a link between lenders and borrowers to mobilise funds [1]and savings into investments to maintain growth of the production process [2,3].Financial intermediaries involve both lenders and borrowers in trust and attitude to ensure the equal rights of each party [4,5]
An essential element of trust is satisfaction in a financial transaction, which leads to customer loyalty with Islamic banks [6,7]
The most crucial element of attitude is the religious belief in a financial transaction, which can reflect loyalty toward Islamic banks [8,9,10]
Summary
Financial intermediaries create a link between lenders and borrowers to mobilise funds [1]and savings into investments to maintain growth of the production process [2,3] Financial intermediaries involve both lenders and borrowers in trust and attitude to ensure the equal rights of each party [4,5]. An essential element of trust is satisfaction in a financial transaction, which leads to customer loyalty with Islamic banks [6,7]. Low levels of customer satisfaction as well as the lack of religious belief and trust may cause customers to be misled when they receive financial services from banks, which, in turn, ensure stiff competition to retain customers [9]. The total value of Islamic bank assets worldwide has been estimated at US$1.5 trillion in 2018, and it was estimated that it would reach 3.2 trillion by 2020 [12]
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