Islamic Banking Practitioners Research Articles

Hubungan Jangka Pendek dan Jangka Panjang antara Pembiayaan Perbankan Syariah dan GDP di Indonesia dengan menggunakan metode Vector Error Correction Model

This research analyzes the relationship between Islamic bank financing and economic growth as measured by Gross Domestic Product (GDP) using the Vector Error Correction Model (VECM) to explain the short-term and long-term relationship dynamics between these two variables. The results of this research found that there is a long-term negative relationship between Islamic bank financing and GDP. These findings indicate that, although Sharia financing is expected to support economic growth through Sharia-based financial principles, the reality shows that the direct effect on overall economic growth is more complex and not always unidirectional. Apart from that, this research also finds that in the short term, both sharia financing and GDP adjust back to long-term balance after experiencing deviations, which means a strong economic correction mechanism exists. The stable VAR stability test results validate the model's reliability in describing the accurate relationship between sharia financing and economic growth in Indonesia. These findings provide important insights for policymakers and Islamic banking practitioners in developing more effective strategies to encourage inclusive economic growth.

Effect of architecture and efficiency of mobile banking application on the intention to continue using Islamic bank: does data security matter?

PurposeThis study aims to examine the effect of application architecture and application efficiency on the intention to continue using Islamic bank with data security as a moderator. The investigation was situated within the framework of a hacker attack that compromised the security of customer data at one of Indonesia’s largest Islamic bank.Design/methodology/approachA survey questionnaire method was used, and the sample population comprised users of Islamic bank in Indonesia. The respondents were then selected purposively with the criteria of individuals who were using mobile banking services. Furthermore, data collection in this study was carried out by distributing questionnaires online. To validate the questionnaire, consultation and validation were conducted by engaging four experts and conducting a pilot study. Hypothesis testing was performed using the structural equation modeling method based on partial least squares.FindingsThe results of the partial least square structural model assessment showed that application efficiency and data security positively influenced the intention to continue using Islamic bank, while application architecture had no effect. Furthermore, data security could not moderate the relationship between application architecture and efficiency toward the intention to continue using Islamic bank.Practical implicationsThe results of this study suggested that Islamic banking practitioners must prioritize the enhancement of digital banking services, with a specific focus on improving application efficiency and ensuring robust data security. These two dimensions were critical determinants influencing the intention to continue using Islamic bank.Originality/valueThis study addressed the issue of data security as a moderator, particularly in the context of hacker attacks targeting a major Islamic bank in Indonesia. Furthermore, this current report expounded on the study conducted by Mir et al. (2022) by introducing novel dimensions to the e-service quality of internet banking.

Investigating the Determinants of Islamic Banks’ Financing Quality: A Regional Approach

The quality of Islamic banks’ financing is pivotal to determine the banking performance. When an Islamic bank has good quality of financing activities, the bank can generate more financial return due to less exposure to bad financing. This study aims to investigate the determinants of Islamic banks’ financing quality by considering the regional approach. The study utilized non-performing financing as the proxy of bank’s quality financing. The dependent variables consisted of inflation, financing growth, financing to deposit ratio, and asset. In addition, dummy variables were used to identify the period of the COVID-19 pandemic and the regional effect in Java and other regions outside Java. By adopting panel data analysis, this study observed 33 provinces in Indonesia from January 2004 to October 2021. The findings of the study revealed that the determinant of Islamic banks’ financing quality in consumption scheme was different from equity and investment schemes. Moreover, only Islamic banks’ financing quality in consumption scheme had exposure to inflation risk. Regional influence was present in all sorts of financing schemes at the time the COVID-19 pandemic significantly impacted financing quality in investment and consumption schemes. This study suggests that Islamic banking practitioners and financial authorities should understand the different behavior of each financing scheme in order to maintain Islamic banks’ financing quality.

The Influence of Knowledge, Perceptions, and Preferences on Customer Behavior Through Religious as An Intervening Variable

This study analyzes the impact of knowledge, perceptions, and preferences on customer behavior through religiosity as an intervening variable at Bank Aceh Syariah Aceh Tamiang Regency. This study employs field research with a sample size of 96. The data analysis technique used is PLS-SEM version 3.0, which includes Outer Model, Inner Model, and Hypothesis Test analysis. The findings indicate that knowledge has a direct positive effect on customer behavior, and that knowledge through religiosity also has a positive and significant impact. Perception variables have a positive but insignificant effect on customer behavior, while religiosity has a positive and significant effect on perception. Preferences have a positive but insignificant effect on customer behavior, while religiosity has a negative and insignificant effect on preferences. Additionally, religiosity has a positive and significant effect on customer behavior at Bank Aceh Syariah Aceh Tamiang Regency. The implications of this research can serve as a reference for academic studies by government officials, Islamic banking practitioners, and the wider community to support scientific development, products, and technology in the future development of Islamic banks. Further research should consider additional and intervening variables for maximum results.

Intellectual capital disclosure (ICD) in Islamic banks: does the diversity of Shariah committee matters?

PurposeThis study aims to investigate the moderating effects of the Shariah committee (SC) on the extent of intellectual capital disclosure (ICD) of Islamic banks.Design/methodology/approachThis study provides evidence from an analysis of a sample of Islamic banks in multiple countries over a seven-year period (2012–2018). The extent of intellectual capital information was measured and regressed against several corporate governance attributes covering board and audit committee characteristics, gender diversity of SC members and moderating variables of the SC, while controlling for firm-specific variables. A checklist was developed to measure the extent of the ICD of Islamic banks on a rubric scale ranging from 0 to 3.FindingsThe results show that the size and gender diversity among SC significantly influence the ICD practices of Islamic banks. Apart from contributing to the literature, this study may serve as valuable input for Islamic banking practitioners including regulators and standard setters to empower women and use all their potential for better intellectual capital output.Practical implicationsThe paper highlights two main implications. Firstly, the regulator should look at the size and composition of the SC to enable a conducive environment for sound deliberation of Shariah matters. Secondly, the gender diversity among SC should be considered because women and man may have different approaches, and the best optimal combination of resources could enhance Islamic banks’ competitive advantage.Originality/valueThis study highlights the importance of gender diversity and size of SC in influencing the disclosure practices related to Shariah matters by the Islamic banks.

Training and Career Development: Why and When related to Job Satisfaction and its impact on Employee Performance

This study analyzes the main factors of employee performance, thereby finding a new model as a reference for Islamic banking practitioners in Indonesia. The aim of this research is to measure the effect of Training and Career Development on Job Satisfaction and its impact on Employee Performance. Quantitative research methods are used to analyze research variables consisting of Training, Career Development, Job Satisfaction and Employee Performance through questionnaires distributed to respondents who are the object of research. Research stages are carried out by distributing questionnaires through techniquespurposive sampling was carried out on the population at 7 Islamic banks in the DKI Jakarta area,To determine the object of research, then the questionnaire was distributed using the Google form. The collected questionnaires were then tabulated and processed with Amos 25.0 Structural Equation Modeling (SEM). Which resulted in training, career development and training having an influence on Job Satisfaction, although training turned out to have no significant effect on job satisfaction and also had an impact on Employee Performance.
 The results of this study serve as a reference for the directors of Islamic banking in improving employee and banking performance, so that they pay attention to career development and training factors without neglecting job satisfaction factors.
 
 Keywords:Training, Career Development, Job Satisfaction, Employee Performance

Revisiting the Conceptual and the Operational Frameworks for Sharı̄’ah Governance of the Islamic Banks

Islamic finance has been facing serious challenges both in terms of credibility as a divine and value-based system and sustainability. Many authors and research institutions have been indicating the issues and suggesting reforms for some years, but one major area that could not get due attention regarding the reform agenda is the Sharı̄’ah governance system and integrating the sustainability framework into the governance related regulations. Another staggering point is that Islamic finance is moving on the path of convergence with conventional finance. It requires well thought-out conceptual and operational frameworks of governance for Islamic Financial Institutions so that the requisite regulations could be introduced and effectively implemented to keep Islamic financial services distinct from conventional services. To suggest such frameworks, this qualitative study analyses the Sharı̄’ah Governance Framework introduced by the State Bank of Pakistan in 2015, and the governance related published material. It can be termed as a case study on Islamic banks’ Sharı̄’ah governance framework and is based on structured interviews with 32 research participants including banks’ Sharı̄’ah board members, Sharı̄’ah reviewers/auditors, experienced Islamic banking practitioners, and the researchers/academics. As a case study, it is based on five research questions and many sub-questions relating to the governance framework introduced by the State Bank of Pakistan in 2015 for Islamic banking institutions in Pakistan. Based on the findings of the study, it suggests the bases, processes, and measures for the Islamic banks and other financial institutions moving to Islamic social finance and integrating it to the sustainability framework. It assigns roles to the regulators, the banks’ Sharı̄’ah boards, BODs, and senior management, and the operations and audit staff. It could become a basis for reforms in the whole process of product development and implementation and conducting business by Islamic banking and finance institutions to realize the objectives of Islamic finance as a divine, just, and value-based system.

The Analysis of Determinant Factors Affecting The Job Performance of Islamic Bank Employees in Indonesia

Public sector challenges tend to be translated into more complex job demands which require individual innovation. To deal with the demands, many public organizations implement employee performance management. The current study analyzes the key determinants of employee performance to find a new model as a reference for Islamic banking practitioners, especially in Indonesia. Data were collected by using a questionnaire, developed with Google Forms and disseminated via online social media. It employed accidental sampling technique upon 7 Islamic banks in Indonesia, by distributing questionnaires that followed a six-point Likert scale. Questionnaires were distributed to 356 employees through representatives of Islamic Banks, WhatsApp Group and LinkedIn, by which 350 respondents submitted. Thereupon, the data were tested using Structural Equation Modeling (SEM) Amos 25.0, which resulted in the finding that Work Motivation did not affect Employee Performance, and training also did not affect Employee performance. However, training significantly and positively affected cohesion with the highest path, and cohesion also affected employee performance. This study found that the main effect of employee performance is cohesion, which affirmed the research results of Appelbaum et al. (2020), Williams et al. (2016), and Kearnes (2020). The weakness of this study lied in the sample population which might be inhomogeneous because the research subjects have different organizational cultures. The study results served as a reference model for Islamic Banking directors in improving employee and banking performance, so they concern on the training factor without ignorance over the cohesion factor.

Pengaruh Intellectual Capital terhadap Kinerja Keuangan Bank Umum Syariah

This study aimss to determine the influence of Intellectual Capital on financial performance (ROA) in the Sharia commercial banking sector in Indonesia. The Independent variables used in this studi are Intellectual capital with the value added human capital, value added capital employed, and structural capital value added, with the control variable for size and leverage. The data type used is secondary data. The results show that Intellectual capital haa a significant negative effect on return on assets. Human capital has a significant positive effect on return on assets, capital employed has a significant negative effect on return on assets, structural capital has a significant positive effect on return on assets, and size has no significant effect on return on assets, leverage has a significant positive effect on return on assets. This study may be useful as an input for Islamic banking practitioners in the management of Intellectual capital in Islamic commercial banks in Indonesia.

Indonesian Islamic Banking Fintech Model Strategy: ANP Method

This study aims to analyze the problems, solutions, and strategies of making a fintech model in Indonesian Islamic banking. This study uses non-parametric non-Bayesian qualitative methods for decision-making with a general framework without making assumptions with the Analytical Networking Process (ANP) approach. The researcher selected 11 informants consisting of 2 fintech practitioners, 3 Islamic banking practitioners, one industry 4.0 academic and Islamic sharia banking, one person from the Financial Services Authority, two people from the National Sharia Board, and one from Bank Indonesia. And one person from KNEKS. This study indicates that the problems and solutions for developing the fintech model in Indonesian Islamic banking are divided into internal and external aspects. The main priority of the problem is internal problems, namely the lack of Islamic banking Human Resources who understand IT and Islamic finance. The priority solution is an internal priority, namely a Reliable IT System. The primary importance of the development strategy for forming a fintech model for Islamic banking in Indonesia is the synergy of Islamic banks and Fintech to develop a fintech model for Islamic banks. The theoretical contribution and the results of this study are a novelty in the strategy of Islamic banks in implementing and developing Fintech in Islamic banking. Practical Implication, The managerial implications for Islamic banking practitioners in Indonesia are more focused on procuring a reliable IT system and improving the Human Resources of Islamic banks in mastering IT and Islamic finance.

Pengaruh Profitabilitas dan Market Value Ratio terhadap Harga Saham Bank Umum Syariah

Puprose: The purpose of this study is to explore the relationship between Earnings Per Share, Price to Earnings Ratio and Price to Book Value Ratio on the share prices of Islamic commercial banks. Methodology: This research used quantitative methods to analyze financial data from Islamic commercial banks for the 2021 period. In this study used 4 sharia commercial banks as samples. The analysis was performed using panel data regression analysis using E-views software version 10.0. Results: The results of the study showed that increasing Earnings Per Share (EPS) had a positive effect on stock prices, while the Price to Earnings Ratio (PER) had no significant negative effect, and the Price to Book Value (PBV) had an effect positive but not significant. Meanwhile, simultaneously increasing EPS, PER, and PBV all had a significant effect on stock prices. Contribution: With this research, it is hoped that Islamic banking practitioners and sharia investors will analyse the financial performance of the enterprise before making an investment decision. This esearch also contributes to the development of literature on the factors that influence the share prices of Islamic commercial banks. Keywords: 1. Earning Per Share 2. Price to Earning Ratio 3. Price to Book Value 4. Stock Price

The Effect Of Cloud And Inbound Marketing On Purchase Decisions For Gold Savings

This study aims to show the effect of cloud and inbound marketing on purchase decisions for gold savings at Bank Syariah Indonesia (BSI). This study uses a quantitative approach. The population in this study was 1286 people with a sample of 305 people. Data were collected using a questionnaire. Data were analyzed using multiple linear regressions. This study indicates that cloud marketing does not affect purchase decisions for gold savings. However, inbound marketing significantly influences purchase decisions for gold savings. Cloud and inbound marketing simultaneously significantly influence purchase decisions for gold savings with a contribution of 57.4%, and other factors influence the rest. This study complements a new perspective on marketing in industry 4.0. Practically it can be used as a reference for BSI management in making marketing decisions to embrace customers to save gold. This study can be used as a reference for developing marketing strategies for Islamic banking products in the future. Islamic banking practitioners can adopt practically cloud and inbound marketing as a strategy to reach customer purchasing decisions.

Portraying ethical reasoning in Islamic banking: Addressing the role of work experience

AbstractThis study aims to examine the ethical dimensions of Islamic bankers, with a reference to the factors influencing decision‐making behavior related to ethical issues based on al‐Ghazali's ethical philosophy. The findings reveal the manner in which Islamic banking practitioners brace themselves into situations that warrant the use of reason in making decisions related to ethical issues, where desires tend to dominate human choices. While the guidance of divine knowledge has been found to be ineffective in decision‐making, the element of satanic force was found to significantly influence this process. The insignificant heterogeneous effect of work experience suggests that banking authorities should intensify the capacity building in the area of ethical teachings and the foundation of Islamic faith, regardless of the job tenure of employees. This study contributes to the growing literature on the ethical aspects in Islamic banking and organizational behavior by offering important implications for understanding and refining the ethical stance related to Islamic banking practices based on the Islamic perspective.

Development Maqashid Sharia Performance in Islamic Bank

Islamic banks differ from conventional banks both in philosophy and practice. Its implication is the measurement of performance with financial measures is inappropriate. Maqashid sharia as an alternative continues to develop, so that existing measurements have shortcomings. This study develops the existing measurement of maqashid sharia. The development was carried out in three stages, namely literacy studies, weighted scores, and semi structured interviews. Interviews were conducted with academics of ushul fiqh, Islamic economics, Islamic accounting and practitioners of Islamic banking. Maqashid Sharia Performance (MSP) as a measurement development compiles operational definitions into legal and social requirements. Legal requirements consist of 11 SSB Report indices, 7 product and activity indices, 4 document confirmation indices, 7 zakat indices, and 7 attestation of accounting indices. The social requirements consist of 11 daruriyat ratios, 4 hajiyat ratios, and 2 tahsiniyyat ratios. This research contributes to finding measurements of maqashid sharia that meet the aspects of form and substance and are comprehensive for all levels of daruriyat, hajiyyat, and tahsiniyyat. Keywords : maqashid sharia performance, legal requirement, social requirement, financial measurement, Islamic bank

Drawing ethical mentation in Islamic banks; addressing operational lines heterogeneity with special reference to Al-Ghazali’s ethical philosophy

PurposeThis study aims to examine the decision-making behaviour of Islamic banking practitioners of the United Arab Emirates with special reference to the operational line heterogeneity by employing factors that are religious in nature such as intellect, satanic force and divine knowledge as encapsulated in al-Ghazali’s ethical philosophy.Design/methodology/approachA total of 337 samples were collected from the Islamic banking practitioners in the United Arab Emirates using a purposive sampling technique, and the empirical analysis was conducted with the measures of model fit and bootstrapping technique using Partial least square Structural equation modelling and multi-group analysis.FindingsThe empirical findings reveal that the dedicated use of intellect in making decisions related to ethical issues where desires and emotions tend to overwhelm reason and human choices. While divine knowledge is found ineffective guidance of the intellect, the element of satanic force is found significantly impacting decision-making. As the lack of religious consciousness is evident among respondents, higher exposure to operational risk is expected. These findings were found identical across the Islamic banking practitioners in different lines of operations.Research limitations/implicationsThe span of the study is limited to a single country. Future studies are recommended to replicate the study to more markets where the share of Islamic finance is significant.Practical implicationsFindings of the study highly suggest respective authorities of Islamic financial institutions to intensify the capacity-building programs on the foundation of faith which includes Islamic thought and worldview, to enhance the corporate ethical decision-making. Moreover, equal importance should be given to all the banking practitioners regardless of line of business operations.Originality/valueWith undue emphasis is given to the juristic (fiqh) aspects of Shariah compliance in the Islamic banking and finance industry, less has been attempted to explore its ethical dimension (akhlaq) in the compliance parameters that leave a relatively large gap to address prevailing unethical practices in Islamic finance institutions. Findings from this study can be useful as a warning to the Islamic banking firms to enhance the sense of God-fearing and improve existing measures in the organisation in mitigating operational risks that may arise from people or system and consequently ensure the smooth governance of the Islamic banks.

Reputation and cost benefits for attitude and adoption intention among potential customers using theory of planned behavior: an empirical evidence from Pakistan

PurposeThe purpose of this study is to examine the determinants of attitude and adoption intention of Islamic banking among the potential customers in Pakistan. The conceptual framework is investigating the influence of salient beliefs (consisting of personal factors and external factors) and theory of planned behavior (TPB) construct, i.e. attitude and social influence on Islamic banking adoption intentions.Design/methodology/approachTo realize the objective of the research, 500 questionnaires were distributed among the potential customers of Islamic banking in Pakistan. A purposive sampling technique was used; 375 questionnaires were returned, whereas only 300 were used for analysis. To test the model, structural equation modeling was conducted by using an algorithm and bootstrapping techniques, and the most important factor is identified through the importance performance map analysis model.FindingsThe findings of the research revealed that the attitude has immense importance. It is a strong determinant of Islamic banking adoption intention among potential customers. Second, it is fully mediating the relation of cost benefits, reputation and support for business and the adoption intentions of Islamic banking. However, attitude is partially mediating the relation of religious obligations, social influence and the criterion variable.Research limitations/implicationsThis research is articulating literature by incorporating external and personal factors along with TPB’s constructs, i.e. attitude and social influence and tested the attitude as an intervening variable to explain the relation with adoption intention of Islamic banking. The unfolding results spring up a broad spectrum to policymakers and practitioners of Islamic banking by suggesting the push and pull strategies.Originality/valueNumerous studies conducted to find the influencing factors of adoption intention of Islamic banking, but this research is identifying the determinant of attitude along with adoption intentions. This research is contributing to the existing research by taking reputation (brand image), cost benefits and government support along with religiosity, which is an important factor but is ignored in previous research. Theoretically, this research is contributing to the TPB by giving a scenario of salient beliefs along with attitude and social influence because beliefs play an important role in building the adoption intention of the subject.

SME Financing: A UAE Entrepreneur Perspective

This research is an investigation into the motivating factors driving choice of bank for SME entrepreneurs in the United Arab Emirates (UAE). The study aims to highlight the challenges and suggest solutions in addressing the credit gap between the cash flow needs of SME entrepreneurs and the finance policies of UAE banks. The data collected was generated from a sample of SME owner-managers in three emirates: Abu Dhabi, Dubai and Sharjah. A structured research questionnaire was distributed and the convenience sampling method resulted in 380 completed responses. These were analyzed using appropriate statistical tools. The results of the study will enable banks to better understand and analyze the key determinants that impact the SME entrepreneurs’ attitude in bank selection and the products and services this particular group values. Research findings are also envisaged to be of particular interest to scholars and practitioners of Islamic Banking specifically, inspiring further studies across the MENA region.

Developing and validating the components of Maqasid al-Shari’ah-based performance measurement model for Islamic banks

PurposeThe purpose of this paper is to develop and subsequently validate a Maqasid al-Shari’ah-based performance evaluation model for Islamic banks.Design/methodology/approachInitially, a comprehensive review of the existing and relevant literature is carried out and a prototype evaluation model has been developed. This has been augmented and refined through in-depth interviews of Shari’ah scholars and banking experts. Afterwards, the modified model has been validated by taking inputs from academics and Islamic banking practitioners through a focus group discussion.FindingsThe major outcome of the present work is a Maqasid al-Shari’ah-based performance evaluation model for Islamic banks. At the inception of the work, the Maqasid frameworks of Imam al-Ghazali and Abu Zahrah were combined. The combined model incorporates various dimensions, elements and the corresponding measures of three components, namely, justice, education and maslahah.Research limitations/implicationsNot being able to test the model statistically or empirically can be considered as a limitation.Practical implicationsThe comprehensive theoretical framework of the developed model addresses all aspects of human well-being. Thus, if implemented the model will ensure welfare for all the stakeholders. It will also encourage the regulators to introduce new reporting standards which will be more reflective of Maqasid al-Shari’ah.Social implicationsFulfilling Maqasid will create a positive brand image for Islamic banks, which will attract more customers both Muslims and non-Muslims. Thus, this will create a wider scope for earning more revenues.Originality/valueThere has been concern that Islamic banks are converging towards conventional banking systems and the same performance measure instrument is being used to evaluate the performance of both Islamic and conventional banks. The present work has developed a Maqasid al-Shari’ah-based performance evaluation model for Islamic banks.

Salesforce product knowledge in Islamic financial institutions; development and validation of measurement scale

PurposeThe purpose of the study is to develop and validate scale to measure the “product knowledge of salesforce in Islamic financial institutions”.Design/methodology/approachA total of 371 responses were collected from the salesforce of Islamic financial institutions in the United Arab Emirates. Study adopted both exploratory and confirmatory approach with fundamental principles of Islamic finance. Content validity test and factor analysis are employed to refine measurement items and define as well as validate the scale, respectively.FindingsTotal three dimensions were extracted, i.e. “System”, “Features” and “Contracts” through “exploratory factor analysis” (EFA), and evidence of validation of measurement scale/construct was reported through “confirmatory factor analysis” (CFA).Research limitations/implicationsThe span of the study is limited to a single country. Future studies are suggested to employ the newly developed scale/construct in the research frameworks and obtain the overall model fit.Practical implicationsThe scope of developed and validated measurement scale is broad and can be applied in any kind of Islamic financial institutions in which the study requires capturing product knowledge of salesforce with special reference to peculiar characteristics of Islamic financial institutions.Originality/valueWhile there is ample literature addressing the issues of competence and need for capacity building among Islamic banking practitioners in general, little has been explored with special reference to the salesforce, their degree of knowledge about the product they offer to the customers and a scale to measure their knowledge that envelopes the specific features of Islamic finance. These gaps serve as justification for undertaking this study.

Reconciling selection criteria of Islamic banking services: a survey on perception of Islamic bankers, institutional clients and retail customers in UAE

PurposeThis paper aims to investigate the differences in patronage factors influencing “retail customers” and “institutional clients” to bank Islamically and to identify the reasons bankers perceive that their customers’ bank with them in the United Arab Emirates (UAE).Design/methodology/approachA total of 237; 416; and 70 balanced responses were collected from Islamic bankers, retail customers and institutional clients of UAE, respectively. Weighted average scores were computed for ranking the selection criteria factors across the data set and paired comparison analysis was conducted to analyse the variation of selection criteria between the data sets.FindingsEmpirical results indicate that Islamic banking practitioners maintain an identical perception with retail customers in relation to the selection criteria of Islamic banking products and services, with the “Sharīʿah-compliance” factor dominating other factors under examination. With respect to the perception regarding institutional/corporate clients, Islamic bankers exhibited a divergent perception in connection with selection criteria of Islamic banking products and services and the factor “cost and affordability” and “rates and return” are prioritized above factor “Sharīʿah-compliance”.Research limitations/implicationsThe scope of the study is limited to a single country. Hence, the finding of this study cannot be generalized to the other regions. Although the study covers a considerable sample from each segment, still there is an avenue for improvement by covering more respondents into the survey. Consequently, the results of this study should be read with these limitations. Further, analysis of the variation among intra divisions of each segment such as Muslim and non-Muslim with respect to retail customers; the different level of management at the banks and focusing the specific sector of the industry is beyond the scope of this study. These directions provide avenues for future research.Practical implicationsThe study provides useful insights for bankers to revisit their marketing strategies to attract and retain more clients. Hence, the findings also suggest policy recommendations for nascent Islamic banking markets to move to the next stages of maturity. The findings of this study have implications for firms’ strategic directions and future investments of organizations, especially when the competition in the industry is intense. Future studies are recommended in other countries where the Islamic financial market share is significant.Originality/valueWhile ample perception studies have carried out in the Islamic banking industry of the UAE, studies that focus on institutional clients, especially with reference to the factors that determine the selection criteria; studies examining banker’s perception towards Islamic banks and their clients (retail and institutional); studies that reconcile the perception of bankers and customers (retail and institutional) are all inadequately covered in existing literatures. This study attempts to fill some of these significant gaps.