Islamic Banking Services Research Articles

The Role of DART Key Building Blocks as Customer Co-Creation Determinants in Islamic Banking Services

Co-creation is a baseline for innovation strategies to increase market share and competitive advantage in the Islamic Banking industry. The purpose of this study is to examine the role of the DART (dialogue, access, risk and transparency) model as a determinant of co-creation activities in Islamic banking. It is the first empirical investigation that tests the DART model in this way. Using Partial Least Squares Structural Equation Modeling, this study analyzes the responses of 192 Islamic bank customers to test four proposed hypotheses. The research result confirms that the dialogue and transparency of the DART model positively support co-creation activities. Our study is based on data from Islamic Banking customers in Indonesia; therefore, it needs to be retested in a broader context. Since we distributed questionnaires among Islamic Banking customers, future studies could compare their responses with those of customers of conventional banks. Further studies are recommended to develop the DART model in other specific contexts. It is important for Islamic Banking managers in Indonesia to prioritize dialogue and information disclosure in serving customers while also allowing customers access to information to and delivering risk assessments honestly.

Exploring the Knowledge of Islamic Banking Among Libyan Bankers

Although it has been five years since the beginning of the conversion to the Islamic banking system (IBS) in Libya., the level of knowledge of Islamic banking (IB) products and services among bankers is yet to be investigated. The study uses a quantitative research design to address the issue. A total of 207 complete and valid questionnaires were collected from bankers in several Libyan commercial banks. Statistical Package for Social Sciences SPSS version 23.0 was employed to analyze the data. Findings showed that bankers have a basic to moderate level of knowledge of IB services and products. They were unaware of some important Islamic services and products such as Musharakah, Murabahah to the purchase ordered (MPO), current Islamic account and investment banking account. The findings also concluded that the bankers were only knowledgeable about concepts of Islamic principles such as the permissibility of selling and prohibition of riba. However, they were unaware of how riba is applied in the banking system. This study urges relevant Libyan stakeholders such as government and top bank management to develop intensive Islamic banking training programs. In order to increase the level of knowledge and awareness of bankers towards IB. This would help to facilitate the conversion to (IBS) in the country.

Knowledge of Islamic banking and bank customer satisfaction in Afghanistan: an exploratory analysis

Islamic banking and finance is one of the fastest growing sectors of the Afghan economy. Through the lens of the theory of reasoned action (TRA), we focus on customers' knowledge of Islamic banking and attitudes of Islamic bank customers towards Islamic banking products as well as the factors that determine Afghans' selection of Islamic banking versus conventional banking products in Kabul. We examine the products used by bank customers and their motivations for using Islamic products as an alternative to available conventional products. Islamic and conventional products were found to be both highly utilised by customers. Islamic product selection is influenced by religious beliefs and a greater perceived efficiency of Islamic banking services. These results are consistent with the TRA explanation of rational choice as applied to banking products operationalised through the obtainment of knowledge related to Islamic banking.

Knowledge of Islamic banking and bank customer satisfaction in Afghanistan: an exploratory analysis

Islamic banking and finance is one of the fastest growing sectors of the Afghan economy. Through the lens of the theory of reasoned action (TRA), we focus on customers' knowledge of Islamic banking and attitudes of Islamic bank customers towards Islamic banking products as well as the factors that determine Afghans' selection of Islamic banking versus conventional banking products in Kabul. We examine the products used by bank customers and their motivations for using Islamic products as an alternative to available conventional products. Islamic and conventional products were found to be both highly utilised by customers. Islamic product selection is influenced by religious beliefs and a greater perceived efficiency of Islamic banking services. These results are consistent with the TRA explanation of rational choice as applied to banking products operationalised through the obtainment of knowledge related to Islamic banking.

The need for islamic banking services in commercial banks of Uzbekistan and its positive impact on economic growth

The need for islamic banking services in commercial banks of Uzbekistan and its positive impact on economic growth

Measuring Customers Satisfaction of Islamic Banking Sector in Jordan

This study measured the satisfaction of customers with the quality of Jordanian Islamic banking services. This study investigated the effect of customer satisfaction factors (quality of services, trust, and institutional image and the confidence of customers) in Islamic banks on their satisfaction with their services. The sample size consisted of 186 clients of Jordanian Islamic banks. The paper used simple and multiple linear regression methods. The major findings revealed that there is a positive significant impact of elements (services quality, customer confidence, and institutional image) in customer satisfaction with their services. The sample of this paper does not cover the total number of customers of Islamic banks in Jordan and did not take into account all the factors that affect the satisfaction of customers. In the future, it could be a more comprehensive study done in Arab countries. This result is highly relevant with immediate practical implications. This study is intended to help Jordanian Islamic banks' management develop their marketing strategies. This is important for the survival of this type of bank.

DEVELOPING ISLAMIC FINANCIAL INCLUSION INDEX FOR ISLAMIC BANKS IN INDONESIA: A CROSS-PROVINCE ANALYSIS

This study measures Islamic financial inclusion index in Indonesia based on three dimensions, namely: the accessibility, the availability, and the usage of Islamic banking services. Additionally, it also measures the relationship between Islamic financial inclusion index and human development index. The study found that the level of Islamic financial inclusion in Indonesia is relatively low at a national level. DKI Jakarta is the most financially inclusive province in Indonesia, followed by East Java and Nanggroe Aceh Darussalam. In contrast, East Nusa Tenggara has the lowest average of Islamic financial inclusion index. The findings of the present study suggest that the policy makers and Islamic financial industry should play greater role in improving financial access to low-income segment especially in the Eastern part of Indonesia, such as East Nusa Tenggara and Papua provinces.
 

ANALISIS PENGETAHUAN DAN KRITERIA PEMILIHAN BANK SYARIAH

This study aims to analyze the selection criteria considered by students in choosing a Sharia bank; know the level of student knowledge of Islamic banking products; and analyzing consumer attitudes towards Islamic banks. The research subjects were students who used the services of Islamic banks or those who did not use Islamic banks in Jakarta. Data analysis methods are statistical descriptive and factor analysis. The analysis concluded that there were six factors that were considered by students in choosing a Sharia bank, including: perception and process, physical condition, price, human resources, relationships and location factors. Consumer perception is the most influential factor on consumer decisions in choosing a Sharia bank. In general, the majority of respondents have limited knowledge about Islamic banking. Religion is not the main reason for students to choose a Sharia bank. Students consider Sharia bank service friendliness more than other factors

Determinants of intention to use Islamic banking

PurposeThis paper aims to explore the determinants of intention to use Islamic banking and compare the consumer behavior of users and non-users of Islamic banking. This study incorporates the theory of planned behavior in Islamic banking perspective with an additional construct from technology acceptance model.Design/methodology/approachThe research is quantitative in nature, and survey questionnaire was used to get data from four cities of Pakistan. The study manages to get 300 questionnaires from which only 264 were usable for analysis. The structural equation modeling was used for testing the hypotheses.FindingsThe result shows that perceived behavior control and perceived usefulness are the most significant predictors of intention to use of Islamic banking among users and non-users. Attitude turns out to be a non-significant factor for non-users of Islamic banking. Subjective norm is also found to be non-significant with intention to use Islamic banking in both groups.Originality/valueThis study has theoretical as well as practical significance in the subject of consumer behavior in Islamic banking. Theoretically, it attempts to fill the gap caused by the scarcity of research in exploring the consumer behavior towards Islamic banking in Pakistan. This study provides insights into the consumer behavior of users and non-users of Islamic banking and thus presents a comparison. Practically, this study provides guidelines for Islamic banks in introduction, propagation and promotion of Islamic banking products and services to establish Islamic banking as a social norm.

The Roles of Lifestyle, Future Need and Customer Preferences in Customer’s Satisfaction on Islamic Banks Products and Services

This paper aims to address the relationship and the influence of lifestyle, future need, customer preferences toward customer’s satisfaction on Islamic banks products and services in northern region of Malaysia. This study used quantitative research method. Data were collected via questionnaires from 250 respondents from four different Islamic banks and data was analysed using SPSS v22 software. The study found that all the independent variables have positive significant relationship towards the satisfaction of Islamic banks’ services with the highest correlation is lifestyle and the lowest is future need factor. The study concluded that the lifestyle variable has the strongest influence to the dependent variable, followed by future need and customer preferences. This study provides a useful analysis to the policy makers in helping them to draft new policies and programmes relating to Islamic products and services which affects the masses. Besides, the result helps marketing team in Islamic banks to formulate strategies for future promotional activities. This paper empirically identified the relationship and the influence factors between lifestyle, future needs, customer preferences and the satisfaction among customers in using Islamic banks services.

ANALISIS KEPUTUSAN KONSUMEN DALAM MENGGUNAKAN JASA PERBANKAN SYARIAH

The aim of this article was to analyze the influence of office location, promotion, religiosity and rate of return on consumer decisions using Islamic banking services. This type of research is quantitative research. The study population is all consumers in Islamic banks located in Jakarta, while the study sample is consumers of Islamic banks taken randomly from several Islamic banks in Jakarta. The sampling technique uses accidental sampling. Retrieval of data uses a questionnaire. The analytical tool used is multiple linear regression analysis. The results showed that location, promotion, level of religiosity, and rate of return had a positive and significant effect on consumer decisions in choosing services at Islamic banks. The level of return is the variable that has the most influence for consumers to use Islamic banking services.

Islamic bank selection criteria in Nigeria: a model development

PurposeThe purpose of this study is to develop a model for the study of Islamic bank choice and to test the significant importance of the constructs that influence bank customers to choose Islamic bank in a pluralistic-secular nation.Design/methodology/approachTotal of 348 conventional and Islamic bank customers were sampled. Five-point Likert-type question containing 27 bank selection items was used in collecting primary data. Cronbach’s alpha, composite reliability and average variance extracted are used to test the reliability and validity of the instrument. Also various descriptive statistics, exploratory factor analysis and one sample T-test are equally used in analyzing the work.FindingsExploratory factor analysis identified four factors. They are Islamic ethics, convenience, Islamic bank services awareness and physical evidence. Furthermore, the factors that show significant importance in the choice of Islamic banking are Islamic ethics and Islamic bank services awareness. The result equally shows that people are aware of Islamic banking.Practical implicationsThis study provides insight on the factors that influence the selection of Islamic banking, an innovative banking concept. This study has obvious management and theory implications. Also, the study will assist the bank managers in developing effective marketing strategy to increase the market share.Originality/valueThis study reports Islamic banking selection criteria in a pluralistic-secular Nation. The study also developed a model that can be used in studying the choice of Islamic bank in special type of environment. Thus, Islamic banking is a new reality in the Nigerian financial scene.

Analisis Rasch Pada Atribut Perbankan Syariah: Studi pada Generasi Milenial

The presence of Islamic banking in Indonesia is one form of progress and development of the Islamic finance industry in Indonesia. However, for more than 20 years, Islamic banking has apparently not been able to grow optimally and experienced a slowdown in its growth. Islamic banks need to increase their market share and also need to identify which attributes are most considered by the potential customers, especially the millennials whose number is large. This study aims to find out which attributes are most considered in using Islamic banking services. This study uses primary data by distributing online questionnaires to 180 university students in Bandung, namely Unpad, ITB and UPI students. To analyze the data, Rasch analysis was used. The results of Rasch analysis show that cleanliness, friendliness, and Islamic principles turned out to be the most considered attributes in selecting Islamic banking in Indonesia. Given that these three attributes are the most considered, it is expected that Islamic banking strengthen these three aspects in order to increase the market of Islamic finance industry markets.

The Application of Variance-based Structural Equation Modeling for Predicting the Intermediation Margin of Islamic Banking Industry

The purpose of this paper is to predict the determinants of bank margins (bankspecific as well as macroeconomic condition) in Islamic banks by applying SEM-PLS. Data were collected through financial statements of 11 Islamic banks in Indonesia obtained in each website of bank, covering bank quarter observations for the period of 2013 to the second quarter of 2018. The results of this study indicate the specific factors of banks that have the greatest influence on NIM are liquidity variables. In contrast, macroeconomic factors (GDP and inflation) do not have a significant effect on Islamic bank NIMs, but specific bank and macroeconomic factors together affect Islamic bank NIMs. while the macroeconomic condition is not significant. In this study using the method of investigating the determinants of the margin of financial intermediation for Islamic banks operating in Indonesia by applying SEM-PLS. This finding improves our understanding on the usage of SEM-PLS to predict the margin intermediation of Islamic banks. This study provides a guidance and strategy for Islamic bank managers to manage their intermediation margin which can affect their customers interest to use Islamic banking services.

An Investigation Of Islamic Finance And Islamic Banking In Malaysia

İslami finans alanında dünyada lider ülkelerden olan Malezya’da İslami bankaların varlıkları yanı sıra sukuk ve diğer İslami fonlar İslami finansal sistemde önemli bir pay almaktadır. Ülkede, İslami finansal sistemin gelişimini sürekli kılmak adına Şeriat kuralları dikkate alınarak yeni İslami finansal enstrümanların geliştirilmesi konusunda önemli inovasyon çalışmaları yapılmaktadır. Ülkede İslami bankacılık uygulamalarının başlatıldığı 1983 yılından günümüze sektörde önemli ilerlemeler kaydedilmiştir. Günümüzde 65 milyar $’ı aşan sermayesi ile İslami bankacılık sektöründe Malezya, model bir ülke konumundadır. İslami bankacılık sisteminin ortaya çıkışında mudilerden gelen faizsiz hizmet alma talebi önemli bir motivasyon olmuştur. Bankacılıkta dual/ikili sistemin uygulandığı ülkede, yerli ve yabancı İslami bankaların yanı sıra konvansiyonel bankalar da faaliyette bulunmaktadır. Malezya’da Şeriat kurallarınca uygun görülen Mudaraba, Muşaraka, Murabaha, Selem, Vadîa gibi çok çeşitli İslami kontrat modelleri uygulanmaktadır. Öte yandan, 2002 yılında Şeriat hükümlerine uygun olarak Sukuk ihracına başlanmıştır. Malezya günümüzde sukuk ihracı konusunda dünyanın önde gelen ülkeleri arasında yer almaktadır. Ancak Malezya’da, İslami finans konusunda diğer ülkelere göre rekabetçi üstünlüğe karşın, uygulamada bazı güçlükler yaşanmaktadır. Bu çalışmanın amacı, Malezya’da İslami bankacılık ve İslami finans uygulamalarını incelemektir. Malezya’da İslami bankacılık ve İslami finans uygulamaları hakkında ayrıntılı bilgiler verildikten sonra bu ülkede İslami finansın geliştirilmesine yönelik öne çıkan politika önerileri üzerinde durulacaktır. Çalışma, Malezya’da finansal sistemin yapısı yanında İslami bankacılığın yapısı ve işleyişi, İslami finansal enstrümanlar, sukuk ve tekâfül uygulamaları ile İslami finans sistemin gelişmesine yönelik politika önerileri başlıklarından oluşmaktadır.

Analisis Faktor Persepsi Nasabah Bank Konvensional dan Switching Barriers Ke Bank Syariah

This research is to identify and analyze the factors of conventional bank customers' perception in Pondok Pesantren community in using Islamic banking services and identify and analyze switching barriers factors to become sharia bank customers for the Pondok Pesantren community. The paradigm in this research uses quantitative research with a CFA approach. The results showed that the factors that become conventional bank customers' perceptions in using Islamic banking for the Islamic boarding school community are comprised of three perceptions, namely customer perception variables consisting of a cognitive dimension, affective, and connectively. This means that respondents already have a dominant perception of the Islamic banking system. This is indicated by that they have an understanding and knowledge of the existence and sharia banking system in Indonesia, although some of them use conventional banking services. There are several factors causing switching barriers to become customers of Islamic banks in the Pondok Pesantren community, from the loading factor value it is known that the dimension of value congruency is the dominant dimension in forming switching barriers variables in conventional banks.

Analysis Of Banking Service Financial Technology (Fintech) Risk Management in Islamic Banks (Case Study at Bank Syariah X in Jakarta)

ThisresearchwasconductedatBankSyariahX.PrimarydataobtainedfromInterviews and Focus Group Discussion (FGD), was conducted by inviting several speakers to obtain information and discuss to obtain an explanation of how Financial Technology risk management in Banking services in Islamic Banks. Furthermore, the results of the Risk Management Analysis of Murabahah Financing at Syariah X Bank were found to be the factors that caused the occurrence of financing risks including HR (Human Resources) risk and operational risk. First, Liquidity Risk. Second, operational risk. Third, Legal Risk and Fourth, Reputation Risk. The findings indicate what factors occur and result in Risk in Financial Technology in Banking services and how to evaluate risk management in Syariah X Bank. Bank Syariah X implements several methods of Risk Management based on Bank Indonesia Regulation No. 13/23 / PBI / 2011 concerning the application of Risk Management. With such results, the author recommends that there is a need to prepare regulations relating to FinTech for more modern and safe Islamic banking services so that risks can be minimized and customers increase their understanding and knowledge for the convenience and security of transactions in Islamic banking. Furthermore, more rigorous and good steps need to be taken to manage risk-related problems in an effort to maintain the performance and performance of Islamic banks in maintaining their professionalism and improving their quality to be superior to other banks.

KONFIGURASI POLITIK DALAM PEMBENTUKAN HUKUM PERBANKAN SYARI’AH

Sharia banking law was formed in the reform era through the procedure of making political decisions at the suggestion of the DPR RI. At the beginning of the reform order the legal product tended to be responsive. All the pillars of democracy can play a role. It's just that legal products that are born more serve international institutions or financiers because political configurations are more likely to be oligharkhi-cartels. The birth of this law is in line with the increasingly existence of Islamic banking in contributing and economic growth in Indonesia. As a political product, sharia banking law was born after a number of fundamental changes, especially changes in the construction of judicial authority carried out by the Supreme Court and the Judiciary under it. The birth of Islamic banking law follows a responsive legal character because this law embodies the needs of the community, guarantees business certainty and guarantees legal protection, gives space and movement to Islamic banking to develop and create innovations in Islamic banking products and services. In addition, this law is also the answer to the implementation of laws in accordance with Pancasila and has accommodated the needs of religious law. In the process of forming all stakeholders play an active role in either political parties or political forces, community organizations, government and society.

Understanding the role of social networking platforms in addressing the challenges of Islamic banks

PurposeCustomers are increasingly interested in reading discussions, experiences, recommendations and reviews on social media platforms related to services and products in which they are highly interested. The purpose of this paper is to find the availability of user-generated content (UGC) in the context of Islamic banks and how it can enhance the level of brand engagement and purchase intention of customers.Design/methodology/approachThe methodology for this research is designed by following the features of qualitative research methods and a social constructivism approach. Furthermore, non-directive and semi-structured in-depth interviews are constructed to accumulate research data from marketing teams and customers of Islamic banks. The respondents have been carefully chosen on the basis of purposive sampling and their level of awareness related to Islamic banks.FindingsIslamic banks are more frequently using traditional marketing tools that are unable to enhance levels of information among the targeted population and prove an expensive way of marketing. The findings reveal that Islamic banks lag behind in adopting the latest information exchanging technologies compared to conventional banking systems. A lack of skilled people, reputation and trust, lack of e-marketing strategy and lower levels of investment in social media platforms are major barriers to generate UGC, brand engagement and purchase intention among the targeted market of Islamic banks.Practical implicationsThe effective and competent use of various social networking platforms can enhance UGC related to Islamic banking products and services. UGC can generate interactive communication, services reviews, feedbacks, intention to purchase, social influence, social trust and positive customer perception among the targeted population of Islamic banks. The study has summarized and offered practical recommendations to show how Islamic banks can address challenges and enjoy a high level of profitability compared to conventional banking systems.Originality/valueThe present study uncovered the steps that must be taken by the top management of Islamic banks to enhance levels of awareness, online product reviews and recommendations, e-word of mouth and purchase intentions of the targeted market. The study enhanced understanding regarding how a higher level of investment in social networking platforms, safe and secure banking systems and skilled IT professionals can address the challenges of Islamic banks. Furthermore, these factors can create positive UGC, social influence, social brand engagement and purchase intention of customers in Islamic banks. These primary factors must be considered by Islamic banks to compete with conventional banking products and services.

Conceptualizing the Impact of Religiosity on the Preferences for Islamic Banking in Mirpur (Azad Jammu and Kashmir): An Empirical Analysis

Over the years, Islamic banking has emerged as a viable alternative to conventional banking, especially after the global financial crises of 2008. Despite the fact that the existing literature emphasizes on this significant shift in customers’ preferences in favor of Islamic banking, there are only a few studies that investigate the actual motives behind this shift. Hence, the key objective of this study is to identify the different factors that explain consumer preferences regarding Islamic banking services, specifically in Mirpur. Even more specifically, this study explores the role of religiosity in influencing consumers’ choice of Islamic banking in Mirpur. To test whether or not religiosity affects consumer preference for Islamic banking, the logistic regression technique has been used for the data analysis. The overall results reveal that besides the conventional variables, the religiosity level of customers, Shariah compliance of an Islamic bank, and knowledge of the respondent about prohibition of interest (Riba) in Islam have positive, and significant effects on consumers’ selection of Islamic banks. Based on these empirical findings, this study suggests that along with improving delivery and quality of services, Islamic banks should emphasize on Shariah compliance which provides a sustainable competitive advantage for Islamic banks over conventional banks.