CHAPTER ONE

INTRODUCTION

1

CHAPTER 1

1. INTRODUCTION

There has been large scale growth in Islamic finance and banking in Muslim countries

around the world and especially in Pakistan, during the last twenty years. There main

objective has been the delivery of social and economic development through financial

services in line with Islamic teachings.This study looks into the degree of satisfaction of

Pakistani customers to measure the level of success achieved by Islamic Banks.

Islamic banks have grown dramatically in Pakistan over the years.This growth is

influenced by factors including the introduction of broad macro economic and structural

reforms in Islamic banking, the liberalization of capital movements, privatization, the

global integration of financial market and the introduction of innovative and new Islamic

products. Islamic finance is now reaching a new level of sophistication. However,it is the

customer’s satisfaction that can affect the performance of a bank and could be a major tool

for the judgement of the success. (Jarhi, Mabid Ali, Khurshid Ahmed (1981).

Islamic banking has come a long way in a relatively short time and has captured a

significant market share from its conventional rivals. Although most of the countries have

different Islamic background but they are the major players for revolutionised Islamic

financial institutions. The Islamic Banking concept began in Pakistan in the early 1950,

where the economists were very keen on the ideology of Islamic banking. Pakistan was the

first country to go through full Islamic financial system. The development of full Islamic

financial system was Pakistan, Iran and Sudan.

The customers of Islamic banks in Pakistan have mixed views about the success and

services provided due to a number of reasons e.g. after twenty years the picture changed

when leaders realized that Pakistan inherent by British Financial system that should not be

changed. Pakistan was trying to change too quickly. But unfortunately it was under the

power of British legacy, without its independence and freedom. The first phase of

economic reform tooks place in 1979 when zakat was first deducted from different

2

account holders at a certain percentage. This method was not effective, because it is not

Islamic that Zakat is distributed through banks. Another objection is that , it is debateable

whether the money deducted goes to deserving people, and whether it is effective or not

for alleviating poverty . (Aggarwal and Yousaf (2001);Kazarian 1999 and Ray 2002).

Pakistan was the first country that uses Hisbah, which controls the market which provides

municipal services and settles disputes. In the second phase of Islamic finance, the

Pakistan Government outlawed interest and introduced brotherly and godly ways for

generating profit. Ironically, foreign banking transaction is still working in western

systems. The government was trapped due to its beliefs and culture. This problem further

increased when IMF pressured Pakistan to privatize its banking system. Due to a system

that lacked planning, these matters got worse in 1992, when the Federal Shariah court

declared that interest based banking is not Islamic and would be banned. Finally, in 1998, a

decision took place to eliminate riba from its banking system. The Pakistan Banking model

teaches us that, interest free banking employ PLS as a source of earning , but it is not

functional that 90% of its transactions are locked by its markup. In this way it raises

question that the Islamic Banking system created many problems, and only businessmen

took new benefits from this model. Therefore this experiment did not achieve its result.

(Ahmed, Z., M. Iqbal and M. F. Khan (2001).

Since 1971, Islamic banks have continued to grow in size and number.The main mission of

these banks has been the achievement of social and economic development through the

delivery of financial services in line with the principles and teachings of Islam. To achieve

their mission, it is imperative for Islamic banks to continue to study the changing

behaviour, attitude and perceptions of their customers, especially in the retail sector which

constitutes the major portion of the banking business. Overlooking differences between

cultures has recently been shown to limit the ability of service multinationals to expand

their activities internationally (Kogut and Singh, 1988; Li and Guisinger, 1991, 1992).

Furer et al. (2002) argue that the importance and perception of service quality are highly

dependent on customers’ values and beliefs that might change from one culture to another.

This dependence has led to increased concern about the relationship between national

culture and service quality. Winsted (1997) developed behavioural-based service encounter

dimensions for the USA and Japan and identified cultural differences between Western and

Asian customers.

3

Customer satisfaction is the feeling or attitude of a consumer toward a product/service

after it has been used (Solomon, 1996; Wells and Prensky, 1996). A satisfied consumer

will repeat the purchase of the product and convey positive messages about it to others

(Dispensa, 1997). By contrast, dissatisfied consumers are more likely to switch to an

alternative product/ service the next time he/she recognizes the same need. Not only this,

but also his/her dissatisfaction will be reflected in a negative word of mouth which might

have a serious damaging effect on the business (Gulledge, 1996).

Banking is one of those industries in which consumer satisfaction has attracted the

attention of many researchers (for example, Anderson et al., 1993; Bedall and Power,

1995; Brenhardt et al., 1994; Dispensa, 1997; Holliday,1996; Wells and Prensky,

1996; White, 1994). One of the major reasons is that a fiercer level of competition is

becoming the most influential factor in determining the competitiveness of banks (Bartell,

1993; Haron et al., 1994).

Customer satisfaction is becoming so important to the extent that some banks consider it as

a chief element in their marketing strategies. The term "aftermarketing" has been widely

used to mean focusing attention and efforts on current customers in order to maximize their

satisfaction to secure their retention (Vavra, 1995).The issue of customer retention has

been the major concern of many banks. For example, Lloyds Bank (UK) conducted

research to identify the process leading from customer satisfaction to account closure and

to explore the determinant factors of dissatisfaction. The findings of the study helped

Lloyds to design and implement a new customer retention process (Waterhouse and

Morgan, 1994). Like Lloyds Bank, the National Bank of Middlebury (USA) also

developed a quality service program based on customer retention through service quality.

Similarly, the Royal Bank of Scotland uses customer satisfaction to help plot the course

toward its vision for the future. The bank is concerned about profitable customer behavior

in terms of the remaining with the bank, referring the bank to friends, and repurchasing

from the bank” (IJRDM, 1995b).

In this chapter the researcher provides a clear definition regarding the issues that should be

investigated in this study for achieved its aims and objectives. This study is about

4

‘customer awareness and satisfaction in Islamic Banking in Pakistan’. This research

achieve its aims through the following objectives.

Measuring the degree of customer satisfaction in Islamic Banking in Pakistan.

Investigating the reasons that why customers deals with Islamic Banks.

Measuring the customer awareness and perceptions for use of different Islamic

Banking products/services.

Reasons for dealing with both types of Banks

As it can be seen above, the reseacher aims to attempt to provide the assessment of degree

of customer satisfaction towards Pakistan Islamic Banking . Therefore, this study is

designed to identify the profile and banking habits of Islamic banking customers in

Pakistan as well as their awareness, usage, perceived importance and degree of satisfaction

with the current products and services offered by them in Islamic banking sector.

5

CHAPTER TWO

BACKGROUND

6

CHAPTER 22.1 BACKGROUND OF ISLAMIC BANKING IN

PAKISTAN

The Islamization of the banking and financial system of Pakistan was started in 1977-78.

Pakistan was among three countries in the world which had been trying to implement

interest free banking at a comprehensive/national level. But as it was a mammoth task, the

switchover plan was implemented in phases. The Islamization measures included the

elimination of interest from the operations of specialized financial institutions including

HBFC, ICP and NIT in July 1979 and that of the commercial banks during January 1981 to

June 1985. The legal framework of Pakistan's financial and corporate system was amended

on June 26, 1980 to permit issuance of a new interest-free instrument of corporate

financing named Participation Term Certificate (PTC). An Ordinance was announced to

allow the establishment of Mudaraba companies and floatation of Mudaraba certificates for

raising risk based capital. Amendments were also made in the Banking Companies

Ordinance, 1962 (The BCO, 1962) and related laws to include provision of bank finance

through PLS, mark-up in prices, leasing and hire purchase. (Abbas Mirakhor, 1987;

Frederick L, Pyor 1985).

Separate Interest-free counters started operating in all the nationalized commercial banks,

and one foreign bank (Bank of Oman) on January 1, 1981 to mobilize deposits on profit

and loss sharing basis. Regarding investment of these funds, bankers were instructed to

provide financial accommodation for Government commodity operations on the basis of

sale on deferred payment with a mark-up on purchase price. Export bills were to be

accommodated on exchange rate differential basis. In March, 1981 financing of import and

inland bills and that of the then Rice Export Corporation of Pakistan, Cotton Export

7

Corporation and the Trading Corporation of Pakistan were shifted to mark-up basis.

Simultaneously, necessary amendments were made in the related laws permitting the State

Bank to provide finance against Participation Term Certificates and also extend advances

against promissory notes supported by PTCs and Mudaraba Certificates. From July 1, 1982

banks were allowed to provide finance for meeting the working capital needs of trade and

industry on a selective basis under the technique of Musharaka. (St Louis, 1983).

As from April 1, 1985 all finances to all entities, including individuals, began to be made

in one of the specified interest-free modes. From July 1, 1985, all commercial banking in

Pak Rupees was made interest free. From that date, no bank in Pakistan was allowed to

accept any interest-bearing deposits and all existing deposits in a bank were treated to be

on the basis of profit and loss sharing. Deposits in current accounts continued to be

accepted but no interest or share in profit or loss was allowed to these accounts.

However, foreign currency deposits in Pakistan and on-lending of foreign loans continued

as before. The State Bank of Pakistan had specified 12 modes of non-interest financing

classified in three broad categories. However, in any particular case, the mode of financing

to be adopted was left to the mutual option of the banks and their clients. The procedure

adopted by banks in Pakistan since July 1 1985, based largely on ‘mark-up’ technique with

or without ‘buy-back arrangement’, was, however, declared un-Islamic by the Federal

Shariat Court (FSC) in November 1991. However, appeals were made in the Shariat

Appellate Bench (SAB) of the Supreme Court of Pakistan. The SAB delivered its judgment

on December 23, 1999 rejecting the appeals and directing that laws involving interest

would cease to have effect finally by June 30, 2001. In the judgment, the Court concluded

that the present financial system had to be subjected to radical changes to bring it into

conformity with the Shariah. It also directed the Government to set up, within specified

time frame, a Commission for Transformation of the financial system and two Task Forces

to plan and implement the process of the transformation. The Commission for

Transformation of Financial System (CTFS) was constituted in January 2000 in the State

Bank of Pakistan under the Chairmanship of Mr. I.A. Hanfi, a former Governor State Bank

of Pakistan. A Task Force was set up in the Ministry of Finance to suggest the ways to

eliminate interest from Government financial transactions. Another Task Force was set up

in the Ministry of Law to suggest amendments in legal framework to implement the

Court’s Judgment. The CTFS constituted a Committee for Development of Financial

8

Instruments and Standardized Documents in the State Bank to prepare model agreements

and financial instruments for new system. (Mr I.A. Hanfi, 2000).

The CTFS in its Report identified a number of prior actions, which were needed to be

taken to prepare the ground for transformation of the financial system. It also identified

major Shariah compliant modes of financing, their essentials, draft seminal law captioned

‘Islamization of Financial Transactions Ordinance, 2001’, model agreements for major

modes of financing, and guidelines for conversion of products and services of banks and

financial institutions. The Commission also dealt with major products of banks and

financial institutions, both for assets and liabilities side, e.g letters of credit or guarantee,

bills of exchange, term finance certificates (TFCs), State Bank's Refinance Schemes,

Credit Cards, Interbank transactions, underwriting, foreign currency forward cover and

various kinds of bank accounts. The Commission observed that all deposits, except current

accounts, would be accepted on Mudaraba principle. Current accounts would not carry any

return and the banks would be at liberty to levy service charge as a fee for their handling.

The Commission also approved the concept of Daily Product and Weightage System for

distribution of profit among various kinds of liabilities/deposits. (Houston 1999, Moshsin

S Khan, 1999).

According to the Commission, prior/preparatory works for introduction of Shariah

compliant financial system briefly included creating legal infrastructure conducive for

working of Islamic financial system, launching a massive education and training program

for bankers and their clients and an effective campaign through media for the general

public to create awareness about the Islamic financial system.

The Finance Minister of Pakistan in his budget speech for the Financial year 2002

declared the following:

The Government is committed to eliminate Riba and promote Islamic banking in the

country. For this purpose a number of steps are under way which are:

1. A legal framework is designed to encourage practice of Islamic banking by banks

and financial institutions as subsidiary operations of their main operations;

9

2. Consultations and exchanges are undertaken with brother Islamic countries and

renowned institutions of Islamic learning such as middle eastern countries and Al-

Azhar University of Egypt, to learn more about their experiences and practices;

3. Amendments in HBFC Act are being made in line with the directive of the

Supreme Court. With these changes, HBFC would be fully Shariah compliant

institution, which will play an effective role both in promotion of Islamic financing

method but also in the development of the important housing sector;

4. Shariah compliant modes of financing like Musharaka and Mudaraba will be

encouraged so that familiarity and use of such products is enhanced and their

adoption at a wider scale made possible.It is government’s intention to promote

Islamic banking in the country while keeping in view its linkages with the global

economy and existing commitments to local and foreign investors”.

The House Building Finance Corporation had shifted its rent sharing operations to interest

based system in 1989. The Task Force of the M/O Law proposed amendments in the

HBFC Act to make it Shariah Compliant. Having vetted by the CTFS, the amended law

has been promulgated by the Government. Accordingly, the HBFC launched in 2001

Asaan Ghar Scheme in the light of amended Ordinance based on the Diminishing,

Musharakah concept. A Committee was constituted in the Institute of Chartered

Accountants, Pakistan (ICAP), where in the SBP was also represented, for development of

accounting and auditing standards for Islamic modes of financing. The Committee

reviewed the standards prepared by the Bahrain based. Accounting and Auditing

Organisation for Islamic Financial Institutions (AAOIFI) with a view to adapt them to our

circumstances and if considered necessary, to propose new accounting standards. (Zubair

Iqbal 2000, Iqbal Zaidi 2001).

It was decided in September 2001 that the shift to an interest free economy would be made

in a gradual and phased manner and without causing any disruptions. It was also agreed

that the State Bank of Pakistan would consider.

1. Setting up subsidiaries by the commercial banks for the purpose of conducting

Shariah compliant transactions;

10

2. Specifying branches by the commercial banks exclusively dealing in Islamic

products.

3. Setting up new full-fledged commercial banks to carry out exclusively banking

business based on proposed Islamic products.

Accordingly, the State Bank issued detailed criteria in December 2001 for establishment of

full-fledged Islamic commercial banks in the private sector. Al Meezan Investment Bank

received the first Islamic commercial banking license from SBP in January 2002 and the

Meezan Bank Limited (MBL) commenced full fledged commercial banking operation

from March 20, 2002. Further, all formalities relating to the acquisition of Societe

Generale, Pakistan by the MBL were completed, and by June, 2002 it had a network of 5

branches all over the country, three in Karachi, one in Islamabad and one in Lahore. The

MBL now maintains a long term rating of A+ and short term rating of A1+, assessed by

JCR VIS Credit Rating Co Ltd, signifying a consistent satisfactory performance. (Vahe

Petrossian, 2001, Sohrab Behdad 2001).

The Government as also the State Bank is mainly concerned with stability and efficiency

of the banking system and safeguarding the interests, particularly, of small depositors.

With this concern in mind it has been decided to operate Islamic banking side by side with

traditional banking. The approach is to institute best practice legal, regulatory and

accounting frameworks to support Islamic banks and investors alike. The year 2002-2003

witnessed strengthening measures taken in the areas of banking, non-bank financial

companies and the capital markets.

11

CHAPTER THREE

LITERATURE

REVIEW

12

CHAPTER 3

3. LITERATURE REVIEW

3.1 CUSTOMER SATISFACTION

The banking industry has become increasingly integrated in recent years. Liberalisation

and deregulation of the financial sector, coupled with rapid technological advancement and

improved communication systems, have contributed to the integration process. As a result,

banks are now faced with very high and intense competition. Studies by Parasuraman et.

al (1985), and Zeithmal et. al (1990), noted that the key strategy for the success and

survival of any business institution is the deliverance of quality services to customers.

Accordingly, Newman and Cowling (1996) believes that excellent service quality is vital to

business. profitability and survival. In this sense, Islamic banks are of no exception.

To satisfy customers, banks use various tools, ranging from reengineering all services to

focusing on some specific services (Motley, 1994). One of the areas which is growing and

believed to have a significant impact on customer satisfaction is telemarketing (Sion,

1994). White (1994) has examined the importance of telemarketing in satisfying customers

and concluded that “telephone banking could become a key aspect of customer

satisfaction”. In Singapore banks are continually involved in improving the core

technology that makes self-service banking products possible in order to achieve better

marketing, customer satisfaction and retention (Kass, 1992). The Co-operative Bank in the

UK has applied another strategy to satisfy its customers. The bank encouraged customers

to communicate directly with its account management center, rather than contacting the

branches, for any problem or complaint they might have. This strategy has helped Co-

operative bank to gain one of the highest customer satisfaction ratings (IJRDM, 1995a).

13

The above discussion highlights the importance of customer satisfaction which is thought

to be the cornerstone in constructing strategies of banks. In this respect, it is essential for a

present-day bank to switch from managing means to managing customers in order to

satisfy them with the whole services they offer. Therefore, it is important for banks to have

a system by which consumer satisfaction is continuously measured (Chakravarty et al.,

1996; Chitwood, 1996; Morrall, 1996; Noe, 1996; Romano and Sanfillipo, 1996).

Although Islamic banks’ principal activities are based on Islamic Law (Shari’ah), their

banking businesses are no different from other banks or financial institutions. Thus,

Islamic banks face competition not only from conventional banks, but from new market

entrants as well. One of the means for Islamic banks to cope with such strong competition

is by improving the ways products and services are offered to their customers. It is for this

reason that Othman and Owen (2001a) concluded that there exists a need for Islamic banks

to adopt service quality program. They further argued that service quality can be a

differentiating factor for Islamic banks to boost up their market shares and profit position.

3.1.1 IMPORTANCE OF SERVICE QUALITY

The importance of service quality and its role as the key factor in differentiating service

products and gaining competitive advantage have been documented in a number of studies

(see for example studies by Parasuraman et. al, 1985; Bolton and Drew, 1991; and

Cronin and Taylor, 1992). Even though there is an abundant of research investigating

service quality in the service industries, studies on this issue as related to Islamic banks are

scant.

Service quality has been viewed as a significant issue in the banking industry by Stafford

(1994).Since financial services are generally undifferentiated products, it becomes

imperative for banks to strive for improved service quality if they want to distinguish

themselves from the competition. Positive relationship between high levels of service

quality and improved financial performance has been established by Roth and Van der

Velde (1991) and Bennet (1992). Similarly, Bowen and Hedges(1999) documented that

improvement in quality of service is related to expansion of market share.

14

In the current marketing literature, much attention on the issue of service quality as related

to customers’ attitudes towards services has focused on the relationship between customer

expectations of a service and their perceptions of the quality of provision.This relationship

known as perceived service quality was first introduced by Gronroos (1982). Gronroos

suggested that the perceived quality of a given service is the result of an evaluation process

since consumer makes comparison between the services they expect with perceptions of

the services they receive. Hence, they concluded that the quality of service is dependent on

two variables: expected service and perceived service. Parasuraman et. Al (1985)

considered that a customer’s assessment of overall service quality depends on the gap

between the expected and perceived service. Thus, the key to managing perceived service

quality is to minimize this gap. Zeithaml (1988) defined perceived service quality as the

customers’ assessment of the overall excellence of the service. Bolton and Drew (1991)

described service quality as a form of attitude that results from the comparison of

expectations with performance. Berry et. al (1990) pointed out that since customers are the

“sole judge of service quality”, an organisation can build strong reputation for quality

service when it can constantly meet customer service expectations.

3.1.2 APPROACHES OF SERVICE QUALITY

Approaches to the measurement of service quality have typically been either a simple

comparison of mean scores, extensive and detailed statistical model or more recently

market research questionnaire. The current measurement of perceived service quality using

the latter approach can be traced to the research of Parasuraman et. al (1985).

Donthu and Yoo (1998) used Hofstede’s dimensions of culture and the dimensions of

service quality from the SERVQUAL scale to develop and test hypotheses relating the five

dimensions of culture with both a measure of the overall service quality expectation and

the five service quality dimensions. As an extension of the work of Donthu and Yoo, Furer

et al. (2002) mapped the relationship between the five dimensions of SERVQUAL and the

five dimensions of culture developed by Hofstede (1991). Their study also considered

contingency variables such as powerful or weak customers, male or female employees, and

frequent or infrequent service situations.

15

They also developed a Cultural Service Quality Index (CSQI) that evaluated the relative

importance of each SERVQUAL dimension as a function of the five cultural dimensions

and that could be used to segment multicultural markets and allocate resources across

cultural segments.

The SERVQUAL scale developed by (Parasuraman et al., 1985, 1988, 1991) has been

widely utilized in many banking institutions and for academics purpose (Babakus and

Boller, 1992; Carman, 1990; Crompton and Mackay, 1989; Cronin and Taylor, 1992;

Webster, 1989; Woodside et al., 1989). The popularity of SERVQUAL is due to a

number of advantages that it has been recognized for (Buttle, 1994).

For assessing different dimension of service quality SERVQUAL scale is acepted

as standard.

SERVQUAL scale shows a valid number of service quality.

This scale measurement is base on reliablity, means different reader interpret the

question similarity.

This model got limited number of items which is easily by customers and

employees quickly.

This scale procedure based on standardized analysis procedure with addition of

interpretation of result.

SERVQUAL model also consist of five dimensions. (Parasuraman et al., 1985, 1988,

1991).

1. Reliability. The first dimension has the ability to perform the service dependably

and accurately.

2. Responsiveness. This performance refers to willingness for helping customer and

provide prompt services.

3. Tangibles. The third dimension referes to the pshysical facilities, equipment and

appearence of personnel.

4. Assurance. The fourth dimension releates with employees knowledge, courtesy and

ability to convey trust and confidence.

5. Empathy. The last dimension refer to the level of caring and individual attention

provide customers.

16

Evaluation of service quality become difficult due to three characteristics that are inherent

in services , intangibility, heterogeneity and inseparability (Berry and Parasuraman,

1991). However, Parasuraman et all (1985) proposed a framework consisting of ten

determinants for service quality such as reliability, access, understanding the customer,

responsiveness, competence, courtesy, communication, credibility, security and tangible

consideration. Malhotra et al, (1994) used these dimensions for the evaluation of service

quality in developing countries. These service quality dimension related to certain

economic factors and socio-cultural factors. The service quality dimension are of

reliability, access and understanding the customer are relevant to conventional economic

development aspects such as levels of affluence, technology, education, competition and

communication infrastructure. The respon siveness dimension is attributed to socio cultural

influences concerning the value of time. (Hofstede 1980).

3.2 DIMENSIONS OF SERVICE QUALITY

The service quality dimensions are of competence, courtesy, communication and

credibility correlate significantly with two Hofstede’s cultural dimension: power distance

(the extent to which a society honors the unequal distribution of power in institutions and

organizations), and individualism (the extent to which a society has a tightly social

framework). Small power distance and individualism were found together with greater

national wealth, whereas high power distance and collectivism were found to be associated

low national wealth. Finallly service quality dimensions of security and tangibility are

linked with Maslow’s 1970 hierachy along which individual needs are arranged:

physiological needs, safety needs, [belongings and love, esteem needs, and self

actualization needs. Lower level needs are said for higher level needs and to direct

behaviour they are satisfied. While individual in developing countries should try to fully

satisfy the lower level needs such as (physiological and safety needs), individuals in

developed countries have been far away for fulfilling the criteria of those needs and

addressing higher order needs and emotions (King and Malhotra, 2004).

We briefly discuss the dimensions of service quality.

17

3.2.1 RELIABILITY

The ability to perform the service dependably and accurately is known as reliability.

According to Berry et al (1990), service reliability is the service “core” to more customer

and managers should use every oppurtunity to bulid “do it right first” attitude. Managers

are encouraged to include reliability issues in their mission statements, set reliability

standards, teach the importance of reliability in training programmes, appoint team to study

for improving reliability, measures error rate and reward error free services. The reliability

and consistency with which service is delivered can take into two ways. The first way is

that, emphasizing the technological superiority and dependability of the process by which

the service is produced a high tech approach. While technological drivers such as advance

in telecommunication, satellite, digital and web technology increases the tradability of

services (Braga, 1995) and expanding the globalization of services (Lovelock, 1999),

there still remain a great gap in technological sector in developed and developing countries

economy.

The second thing is that, the consistent and dependable performance of service quality

required high development. Social interaction and personnel connectivity based on good

judgmnet , especially taken decision in applying service quality in developing countries

(Shemwelll et all, 1998). While in developing countries for making the process to adopt

high technological changes and high touch approach is suitable for customers are more

familiar with human services also well aware of weak technological infrastructure in their

countries (Speece and Srijumpa, 2002).

Specifically, reliability of service quality can be better established if we give attention on

technology (high tech) in undeveloped countries and aslo pay attention on personnel (high

touch) in developing countries. Heskett et al (1990) diffrentiate between “merely goods”

services and “breakthrough” service. The “merely good” service focused on the acceptance

of defect free services due to cost consideration. While “breakthrough” service focused on

existing customer by setting new standards for consistenly meeting, needs and customer

expectattions. These defect free service can be implemented by using human, technical

and finacial resources and make more accessiable to developed countries. In general

quality service in developing countries pay more attention to “merely goods” while in

contrast other developing countries put more attentions towards “breakthrough” services.

18

For providing reliable service quality it needs continuous improvent (Barry and

Parasuraman, 1991). In developing countries firm face continuous competition. The

argument by Zeithaml et all (1993) is that accessibility of alternative service providers

depends upon expectation levels. Another argument is that firms face percieve competitive

alternatives, the tolerance zone become narrower and level of adequate expectation become

higher. For managing customer higher expaectation and lower tolerance, firms adopt

techniques for continuous improvement in service quality. Specially, it is neccessary for

developing countries to utilise their resources for formulating and implementing strategies

concerning customer expectation, customer evaluation of the service process and customer

retention. Customer in developing countries have lower quality expectation as compared to

other developing countries due to not improvement in service quality. In developed

countries there is a need for continuous improving quality standard . However, firms in

developing countries donot focus customer centrality, that why service quality is not

improved. (Walker and Baker (2000).

3.2.1(a): ACCESS

Since production and consumption are two important factors for service quality that cannot

be seperated. Different researcher established between national wealth and the degree of

individualism maintained in a society. (Hofstede, 1991). Another argument is that national

wealth increases , member of society and access those resources that should be more

independent. These resources include both, non personal and personal means.The highly

advanced and reliable communication infrastructure in developing countries and in this

way create customer/supplier connection. Other possible alternatives non personal contact

modes such as telephone, facimile, electronic mail and telex , due to these it is easy to

contact with customer and not time consuming as well. Unfortunately, majority of

developing are lack of unreliable communication network, it is necessary that for

improving service quality the direct personal contact is relative importance between

customer and the service supplier. Hence, we can say that non personal contact (e.g.

telephone and electronic) is relatively more important in developed countries, whereas

personal contact is important for establishing and accessibility in developed countries.

(Steensma et al. (2000).

19

3.2.1(b) UNDERSTANDING THE CUSTOMERS

For service quality in business, strong customer releationship is very important due to their

lack of focus and objective measure for evaluation service quality.(Czepiel, 1990). There

are three basic level for releationship marketing. The first level based on financial

incentive, such as price discount, and retain old customer; the second level is about firms

provided financial and social benefit ,and learned about the wants and needs of customers

for releationship; third level is focus on releationship, and in addition include structural and

psychological bond with social and financial benefits. (Berry and Parasuraman, 1991;

Gwinner et al 1998). The other argument is given by Malhotra and Agarwal (2002) that

by adding strategy dimensions in customer releationship and value added to benefits

provided for both relationship partner in strategic alliances. For gaining higher level lof

releationship marketing is implemented in developing countries do not reach at the high

level. Because many customer have to gave information in brief for benefit they got from

services.Mass customization in developing economies is quite low. However we can say

that, firms in developing countries keep up their marketing edge and competency, also give

financial incentive and cut their prices as well , therfore in this they build strong customer

relationship. On the other hand in less developing countries , they do not provide incentive

and do not cut their prices as well. In developing countries all effort should be made, but

not concerning individual person life, but in developing countries they focus to make their

product for understanding the customer uses and benefits from services. (Pine, 1993;

Sheth et al. 2000).

3.3 RESPONSIVENESS

The second important determinants of service quality is responsiveness, it means that

performance refers to willingness for helping customer and provide prompt services.

Employer should be able to gave quick response to inquiries and complaints of customers.

Problem solving and quick response is very important part of service quality (Hart et al,

1990; Dabholkar et al, 1996; Swanson and Kelley, 2001). Customer of developing

countries place a higher value on time as compared to those of developing countries. (Lane

and Distefano, 1988). The marketing literature shows that there is a relationship between

time scarcity and consumers needs for good and services. Developing countries percieve

time is money and try to use it efficiently with a focus on present. On the other in less

20

developing countries they focus on past. Their goal is to achieve completion without

scheduling. So we can say that in developing countries, timely response to customer

established very well, but on the other hand in less developing countries they focus on

decision convenience, access convenience, transaction convenience and benefit

convenience. Therefore less developing countries donot response quick to customers, and

in this way they have lack of service quality. (Berry et al, 2002).

3.3.1 COMPETENCE

If the firm is competence in service and it can easily focus the customer centrality. In this

way they achieve their goals. Good communication of service quality can be achieved in

developing countries by focus the competence of the organization for services. According

to Hofstede (1991), developing countries characterized by collectivist culture. In these

collectivist societies the individual person skill is considered very important in service

organization as a whole. This is confirmed by Hofstede, 1991, who state that “An employer

never hires just a person, but rather a person who belongs to an in group”. Expertise and

skill reflected in organization. Other argument is that, competence and trust in developed

individual societies and focused on the individual reliability and dependability. (Conway

and Swift, 2000).

Other thing is that in less developing countries power is given to individual people and

they misuse it. Employees in different level of organization use unequal roles, power and

skills. Unfortunately high mangement is not in the accessible to customers. Therefore

customer deal with ordinary employee in organization as a whole. In developing countries ,

believing that people are equally important and have the same right and oppurtunities in

life , but unfornutanetly in less developing countries they donot care about equal

oppurtunities for their convenience. The focus in on individual than on roles for

interaction. In developed markets competence and achievement of individual employees is

relatively importance. We stated that in developed countries service firms focus on the

individual employee competency, in developing countries firm competency can be

centralized by organization. (Winsted, 1997a, b).

3.3.2 COURTESY

21

Customer satisfaction is largely dependent upon interaction of service provider, appearence

and behaviour of employees and working enviornment. Customer do not diffferniate

between the services and the service provider. For providing service quality, it is necessary

that firms care the value and norms of customers. The difference between the marketing

services in developed vs developing economies is due to courtesy. In individualist culture,

ther gave more importance to privacy, freedom and experience. (Hofstede, 1991). On the

other hand the important of collectivisit is that they included the social norms and beliefs

by the age group (Trandis, 1995). In developed countries , couurteous service and respect

individual privacy and rights, whereas in developing countries they consider social norms.

(Brett and Okumura, 1988).

3.3.3 COMMUNICATION

Service companies encourage word of mouth communication. In many situations customer

seek the opinions of other people for selecting a bank or car repair shop. On the other

hand, detailed information is provided for benefits of services to the customer in

developed countries due their level of education , thinking are suited for explaining the

benefit. In short, they have given a choices for purchasing. Customer in developing

countries. (Petty et al, 1983), other factors remain constant. In developing countries where

individualistic culture, communications are often not in practice (Mattila, 1999). On the

other hand customer in developing countries, instead to provide good information, often

happening to provide poor information to customer which restrict the complelete

information of services using central processing. Non business related informal

communications (or small talks) and quality of interaction form the basis of mutual

understanding and trust (Harris and Moran, 1990; Riddle, 1992; Winsted 1997a,b).

Consumer collect their evidence from the experience of satisfied customer, brand and

manufacture’s image and their releationship with people, family members , social group

and social class. We stated that communication in developed countries should provide

detailed and complex information, however, in developing communication is on basic

level. However communication in developed countries is for individual purpose, and in

developing countries communication should accepted by society. (Hofstede, 1980; De

Mooij, 1998).

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3.3.4 CREDIBILITY

It is difficult for customer to evaluate the service quality due to intangible nature of

services and due to bulk consumption and production as well. The trustworthiness,

believability, and credibility of service supplier are very important for attracting customers.

Recently corporate credibility play very important role for changing habits and purchasing

wants of customers. (Lafferty et al, 2002; Goldsmith et al, 2000). Corporate credibility

form a positive corporate reputation. However, credibility issue is different according to

country level of economic development. (Gregory, 1991; Fombrun, 1996, Furrer et al,

2000). Due to self confidence and self responsibility, customer demanded that service

provider efficient and task oriented, therfore, in developed countries, they use statistical

data and performance of the company through the years for achieving customers.

On the other hand developing countries are based on collective societies where the

attention is placed due to organizational background, expertise, order, duty and security in

the society (Hofstede, 1980). Other argument is that, in developing countries due to large

power distance, weak customers with little self confidence are dependent upon the service

provider. Therfeore, service supplier in developing country is based on tradition and

importance of society , credibility and trustworthness of the firm. We stated that, in

developed countries credibility is purely based on standing performance, but in developing

countries they based on old traditions (Donthu and Yoo, 1998).

3.3.5 SECURITY

There is low reliability in developing countries, as a result they need high concern of

freedom, danger, risk or doubt include physical , financial as well as emotional security.

(Parasuraman et al, 1985). There are three types of needs such as need for security

(physical and financial), need for justice and need for self esteem. Customer need stability

and predictability of their safety and financial matter as well. There is also need of equally

power distribution, equal justice and finally there also a need for self-esteem, this is the

key for customer service quality (Schneider and Bowen, 1999).

23

Another argument is that in developing countries consumer are at low order need

(security), whereas in developed countries consumer are at high order need (self esteem),

therefore lower order need should not fullfilled in developing countries.For example, a

case study of US and Korean retail consumer, found that Korean respondent gave

reliability (security) the highest rating while US respondent gave lowest rating. However,

in developed countries, the stake holder are at emotional level therfore it is a very rare

chance for mishandling. Even if this happen, then management compensate it. As a result,

it is stated that, in developing countries, they gave more importance to emotional security,

whereas in developing countries instead of giving emotional security, they gave

importance to physical security and other needs. (Maslow, 1970; Kim and Jin, 2002).

3.4 TANGIBILITY

Tangibility means physical evidence services, consisting of physical facilities, appearence

of personnel, tools or equipments, physical presentation to customer for service quality

(Parasuraman et al., 1985). In developing countries customer beliefs on word mouth and

generally satisfied with acceptable performance and core benefit it promises by the offer.

In general, we can say that consumer in developing economies/ collectivist culture are

highly practice in their choice criteria due to personality factors and in return higher level

values, meanings, culture and philosphy of life (Trandis, 1995). The core benefits of

services provided to customer can never be subsitute by fancy facilities and tangibles. On

the other side, customer in developed countries are satisfied when service already offer to

them extended benefits with their old services. These benefits tend to be more tangibles

than the old services. In term of Maslows hierachy theory, developing countries , product

need is at lower level than developed countries, which are at higher level. Therefore,

service supplier in developing countries facing communication problem, for providing

service quality as per person, but a supplier in developed country doing extra efforts for

adding benefits to their lifestyle and status. Hence in developed countries ther gave great

importance to service quality whereas in developing they gave less importance to service

quality and gave attention towards core services (Bitner, 1992; Scheinder and Bowen,

1999).

According to Othman and Owen (2001a), SERVQUAL has proven to be the most popular

instrument for measuring service quality because it affords technology techniques for

24

measuring and managing service quality. However, since the Islamic banking industry

operates under different principles and cultures as compared to other service industries,

they argued that an additional dimension should be added to the SERVQUAL method.

Then they developed an instrument called CARTER to measure service quality in Islamic

banking. In addition to the existing five dimensions in SERVQUAL, CARTER

incorporates an extra dimension which is “Compliance with Islamic Law”. This dimension

includes such items as run on Islamic law and principles, no interest neither paid nor taken

on savings and loans, provision of Islamic products and services, provision of free interest

loans and provision of profit-sharing products (Othmanand Owen, 2001a).

Bearing in mind that there exists cultural differences between countries, regions, religions

or ethnic groups, it is imperative to build additional dimensions for service quality

especially in the Islamic banking industry. Both cultural and religious influences are not

defined by the SERVQUAL model. Taking this into consideration when adopting service

quality, Othman and Owen (2001a) developed an instrument called CARTER which is

based on 35 items. This is the first approach to add and mix customers’ religious beliefs

and cultural values with other quality dimensions.

CARTER’s six dimensions were conceptualised as a proposed framework for measuring

quality of services in Islamic banks by Othman and Owen (2001a).The authors defined

the six dimensions as follows:

D1: Compliance , which means the ability to comply with Islamic Law and operate under

the principles of Islamic banking and economy.

D2: Assurance is the knowledge and courtesy of employees and their ability to convey

trust and confidence. It also includes verbal and written communication between bank staff

and customers

D3: Reliability is the ability to performed the promised service, dependability and

accuracy.

D4: Tangibles means the appearance of physical facilities, equipment, personnel, and

communication materials.

D5: Empathy is caring, individualised attention which the Islamic bank provides for its

customers.

D6: Responsiveness is the willingness to help customer and provide prompt services.

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Islamic banks have been operating for about four decades alongside the traditional banks.

Like any other traditional commercial banks, they do mobilize deposits and produce loans.

But their forms of operation, based on Islamic Law (Shariah), are different from the other

conventional or commercial banks. Therefore, Islamic banking differs from conventional

banking in several ways, such as the prohibition of transactions based on interest rate and

the requirement that bank’s operations be carried out according to certain procedures

through the use of certain financial instruments. The definition of the Islamic bank is a

non-interest based financial institution which complies fully with Islamic Laws, and has

creative and progressive financial engineering to offer efficient and competitive banking,

investment, trade finance, commercial and real estate financing services.

Their are certain reasons that islamic bank need to adopt service quality which are as

follows. First, Islamic banks’ products and services are perceived as of high quality by

customers because of the concept of doing work in Islam i.e. work is considered in Islam

as a type of worship. The Prophet (PBUH) said: “Whoever finds himself at nightfall tired

from his work, God will forgive his sins.” Also Abu Hurairah said that the Prophet

(PBUH) said: “Charity (sadaqah) is due upon every joint of a person on every day that the

sun rises. Administering justice between two people is an act of charity; and helping a man

concerning his riding beast by helping him on to it or lifting his luggage on to it, is an act

of charity; a good word is charity; and every step which you take to prayer is charity; and

removing that which is harmful from the road is charity” reported by Bukhari (Ahmed et

all., 2002).

The Prophet (PBUH) also said: “Allah loves to see one’s job done at the level of itqan”

(Sabeq, 1988). The word itqan means to arrange and dispose of things in a scientific and

artistic way in order to obtain the most perfect results or to do something in high quality

way with wisdom.

So a Muslim must please others and make sure that whatever he does, does not introduce

unbearable pain or suffering to the human in consideration. Secondly, adapting SQ in

Islamic banks has become important because of its apparent relationship to costs (Crosby,

1979), profitability (Buzzell and Gale, 1987; Rust and Zahorik, 1993; Zahorik and

Rust, 1992), customer satisfaction (Bolton and Drew, 1991; zset al., 1993), customer

26

retention (Reichheld and Sasser, 1990), and positive word of mouth. SQ is widely

regarded as a driver of corporate marketing and financial performance in banking. But

unfortunately this not succeeded in Islamic banking in developing countries. Its better they

adopt Carters six dimension, may in this way they achieve service quality. (Kwon and

Lee, 1994 and Wong and Perry, 1991).

CHAPTER FOUR

METHODOLOGY

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CHAPTER 44.METHODOLOGY

4.1 RESEARCH METHODOLOGIES

For improving Islamic Banking business, the bank needs information about customer’s

requirement when selecting the bank. The Bank also needs to find out that whether the

customer is Muslim or Non Muslim and what kind of services is required by each of them.

No such literature is available on Pakistani Islamic banks.

The main aim of this research is to find out the degree of customer satisfaction on banking

practices for a selected sample of Islamic banking customers in Pakistan. The research is

based on the following questions.

Research Question 1: What kind of account do customers have?

Research Question 2: What are the factors that motivate customers to deal with a

Islamic Bank?

Research Question 3: What is the degree of customer satisfaction of Islamic

Banking in Pakistan?

Research Question 4: How many customers have awareness and perceptions of

different Islamic Banking products/services?

Research Question 5: What are the roles of Demographic factors such as age,

gender, education level and annual income, and what are the customer’s

expectations of their bank?

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To find the answers to the above questions we measure the service quality in Islamic

banking practice in Pakistan.

4.1.1 QUESTIONNAIRE DESIGN AND DATA COLLECTION

A questionnaire was designed in English, with a set of questions that was generated from

literature. (Kamal Naser et all 1999). Closed loop questions are used in the study for

several reasons. One of them is aimed to test the models used in previous literature. Some

of the information collected by the questionnaires was factual, e.g. usage of services, types

of bank accounts, demographic etc.

The main purpose of questionnaires is to initiate communications, hence the questionnaires

wording itself is very important. A few things were kept in mind while designing the

questionnaires. Utmost importance was given to avoid the negative statements or double

barrelled statements, as they can cause a lot of confusion in respondents. The questions

included very few in numbers in technical terms. Every effort was made to decrease the

social bias and to avoid leading questions. Questions of personal details were used in the

end as per the literature used.

4.1.2 DATA COLLECTION

A total of 200 questionnaire was posted to different Islamic Banks, which was generated

from the literature. This procedure resulted in a sample of 100 completed questionnaire (50

% respondent rate).

The questionnaires were posted to different branches of Islamic Banks in Pakistan and

with the agreement of branch managers, they were placed on the cashier counters for the

respondents to be filled and returned back to the staff. All the completed questionnaires

were then collected from different branches after a few days. The reason that the

29

respondents were asked to self complete the questionnaires was because they are less likely

to feel pressurised to give socially desirable answers or to feel embarrassed about the

answers they provide. This was very important in this study as respondents were supposed

to give their personal details about their bank accounts and use of bank services. In this

way, the possibility of interviewer bias shaping the responses was ruled out. This method

also provided the respondents with enough time to answer the questions required.

4.1.3 DATA ANALYSIS

The analysis and interpretation of the respondents have been made by using statistical

techniques and procedures of the Statistical Package for the Social Sciences (SPSS), which

is discussed in detail in next chapter 5.

For conducting any type of research, methodology is based on well defined research and

scientific principles. These methodologies are considered to be based on clear rules and

procedures, on which research is based and against which claims for knowledge are

evaluated (Frankfort and Nachmias 2000). So far there is no perfect and universally

agreed methodology. This is because, there is still a great debate about the meaning of

science (Lee 2000). The rules and procedure for research is continuously changing and

scientists/researchers look for new methods and techniques of observation, persuation,

generalisation and analysis.

Kaplan (2001) suggested that for well developed research methodology, it is necessay to

understand the product and process of scientific enquiry. A methodology deals with a set

of rules for reasoning, whereby evaluation of fact can be used to draw an opinion whether

it is true or not. However a methodology must not fullfill all the other requirements, for

research procedures. This is also confirmed by Quinn (2001) who states that “ one must

regard all methodologies or structures as mere intellectual framework and be very

cautious about their overuse in detail”. Fudamentally, the real construction is based upon

how much determination is involved for methodology, for adopting proper research

strategy.

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4.2 EPISTEMOLOGICAL FOUNDATION

The term epistemology refers to beliefs about the way in which knowledge is constructed.

It is a question whether it is possible to identify and communicate the nature of knowledge

as being hard, real and capable of being transmitted in a tangible form. Thus, it does not

consider , knowledge as softer, more subjective, spiritual or even transcedental, based on

the experience and insight of unique and personal nature. The epistemological assumption

is that, these situations determine extreme position and the issue is that whether knowledge

is something that can be acquired, or something that is based on personal experienced

(Burrell and Morgan, 2001). The view is that knowledge is hard, objective and tangible.

The researcher suggest that for his research, he could have adopt the role of observer.

However, to find out whether knowledge is personal, subjective and unique in nature,

requires the researcher to be completely involved with their subjects.(Weick, 2002).

Positivism and interpretivism depend upon different assumptions about the nature of

knowledge and demand considerably different approaches to research. Positivist

epistemology tries to understand a social setting by identifying individual components of

existing research and then explaining the research in terms of construct, and releationship

between them. Therefore, this research is based on qualitative approach (Cavaye, 2000).

The interpretivist approach, however , aims at understanding a phenomenon from the

participants and their point of view, who are directly involved with the research.

Once the epistemological opinion of research has been established and the question that

needs to be addressed is clearly identified, it is necessary to decide what kind of data is to

be collected and examine how it should be analysed. Data may be qualitative, or

quantitative in nature, and often depends upon the epistemology and the way that it is

presented by the researcher. For example, data collected in the form of loosely structured

interviews is qualitative, whereas data collected in the form of exact measurement of

variables may be refered to as quantitative. Futhermore, Burrell and Morgan (1999) argue

that, quantitative and qualitative research methods are opposite to each other, because their

real assumption are seen as different. However, Gable (2000) and Remnyi Williams(2001)

disagree and argue that an alternative research method should be changed gradually at the

end.

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4.3 THE MIXED APPROACH

Remenyi et al (2001) argue that positivism and realism are not totally different in terms of

their impact on research, and in the generalisation of the findings. Both approaches need to

believe that the findings are valid and accepted as a valuable addition to the body of

knowledge. Ultimately, we can say that it is more useful to see the that two approaches as

complementary instead of two opposite extremes. (Remenyi et al., 2001).

The philosphical approach in this research is a balance between positivism and realism. In

this way they show how the research question came in to existence. Objectives identify the

empirical evidence undepinning the theoretical prepositions. Remenyi et al, (2001) suggest

that world is essentially non deterministic (in any absolute sense) and repeated positivist

research will produce different results; a balanced appproach is therefore more “realistic”.

4.4 VARIOUS METHODOLOGICAL CHOICES

For conducting any type of research, it is possible to follow three main alternatives, either

using the qualitative or quantitative approach or a combination of both. Tayler and Bogdan

(2002) explain clearly the importance of research methodology. They indicate that research

could be conducted by using either (or both) qualitative methodology or quantitative

methodology depending on the nature of research.

4.5 QUALITATIVE RESEARCH APPROACH

The Qualitative research approach means that it is not possible to assign meaning to a

phenomenon (or behaviour) without describing the context and undestanding the position

of people who are affected by them. Consequently, a qualitative investigation is interested

in getting new information and understanding the topic (CressWell.,1999). However,

qualitative research is not concerned with the measurement and judgment of the research,

but accquiring and proving the existing research through observation (Cresswell., 1999).

For achieving contextual understanding direct and in depth knowlege is necessary for

research. As a result, the qualitative research method releated with face to face contact ,

verbal data and observation were used . Qualitative data can also be collected in a number

32

of forms, which includes the collection of evidence through field notes and describe

observed events. Qualitative data can also be gathered from written documents and

archieves, with Miles (1999) identifying that qualitative data is “rich, full, holistic and real

whose validity is unimpeachable”.

Bouma and Atkinson’s, (2003) report explained that based on qualitative research the first

thing that need to be considered for qualitative research, to understand human behaviour.

The next aspects to cosider are physical setting , roles and values. Therfore the researcher

must operate in a setting where these variables exist. Qualitative research therefore

provides a systematic, empirical strategy for answering question about the people in their

own bounded social context with little human interference during the enquiry. In these

situations, people make sense of their experience and create reality (May T., 2002).

Secondly, some techniques associated with experimental or qualitative research often

influence the findings of study. The subject’s behaviour is affected and in this way it does

not allow the mesurement of variables that the researcher is interested in, this is due to the

case that some variables occur that are outside of the researche control. Finally , it is stated

that the researcher cannot understand human behaviour without understanding the

framework in which subjects interpret, thoughts, feeling and action.

Although qualitative research is used with quantitative strategy, due to some reasons faced

in conducting the interviews, combined approach strategy was not considered in this

research.

4.6 QUANTITATIVE RESEARCH APPROACH

Quantitative research typically based on logical and linear structure , in which hypothesis

take the form of expectations about casual links between the concept identified in

hypotheses. Thus, the decison is specified on the bases of hypothese that result in

acceptance, or rejection for underpinning theoretical proposition. Hence quantitative

research is based upon methodology, procedure and statistical measures of validity.

Quantitative research method rely upon the measurement and analysis of statistical data,

for examining the releationship between one set of data to another. For producing

quantifable conclusion variables are measured (Cresswell., 1999). Brannick (2000)

33

identifies a number of thinking by using quantitative research methods and argues those

who used this objective in a way for adopting following concepts:

4.6.1 CONCEPT AND THEIR MECHANISM FOR MEASUREMENT

In this argument, the concept of hypothesis is to be observed, so that they can be measured

and therefore either accepted or rejected. In social science research, quantitative data

collection often include with questionnaire, as a source for collecting data. However,

Remenye and Willams (2001 p. 131) suggest that quantitative data collection method may

sometimes less accurate or less sure as a measurement of what researcher actually want.

Thus, examining the validity for data i.e internal validity and reliability of research

approach is used.

4.6.2 CAUSALITY

Another argument is that quantitative research concerned with only establishing the casual

releationship between concepts. Techniques used to discover releationship include either

experimental or cross case analysis. The experimental approach is used for assignment

control and expeimental group. Whereas cross case analysis collect data at a single point in

time from multiple sources.

4.6.3 GENERALISATION

This is a process by applying the result of a study that how much researcher in confidence

in research. How researcher collect data from smaller group or collecting data subset of

population. In such a way, the knowledge is gained by total population by studying. By

representing sample of organisations, a quantitative survey approach is used for identify

relationship, which are common across organisation , and also provide gernal statement , or

theory about the topic being researched.

4.6.4 REPLICATION

34

Argument is that experiment performed under this condition should gave same result.

Therefore, replication means for checking researcher based and applicability of research

findings with other context.

4.6.5 INDIVIDUALISM

Quantitaive research instrument focus the indiviudual. For example a survey questionnaire

is given to individuals for getting their opinions. Their responses are totalled, but the

respondent often do not know each other.

The decision taking about research methodology for choosing is based upon a combination

of certain factors such as limitation on time, money and concern with accuracy and

validity. For find out the nature of project research, there is a need for accurate information

which address the set objectives, the research designs involve a quantitative research

method. The questionnaire and case study method is applied by the researcher to collect

data for meauring service quality of islamic banking.

4.7 SOURCES OF DATA

Required data and information is needed to conduct research can be either obtained

through previous data available from differnt resources rather than the research studied or

collected data for the purpose of research. In other words, primary and secondary dat is

used respectively, defined by Churchill (2001 p.115) as follows.

“Primary data: Information collected specifically for the purpose of the investigation at

hand. Secondary data: Information not gathered for the immediate study at hand but from

some other purposes”.

Such sources are common in any research process and must be well prepared for and the

researcher should aslo make sure that availability and subsequently the efficiency of data.

However, methods of data collection in research vary depending upon the type

investigation and information needed in certain time limit.

35

The main methods of data collection are;

1. Questionnaire;

2. Interviews;

3. Observations;

4. Case Study;

5. Focus Group;

In order to achieve the objectives of the research survey questionnaire and case study

method is used. The benefit and limitations of each method briefly discussed as follows.

4.7.1 SURVEY QUESTIONNAIRE

Survey questionnaire have become common research tools in the management resource

development profession, particulary in practice as a part of comprehensive and systematic

approach to identifying and analysing an organisation development needs (Rummler,

1999). They provide a cost effective and reliable for getting feedback that may be

qualitative as well as quantitative approach (Preskill, 2001 p 142). A survey questionnaire

can provide accurate and relevant data through thoughtful design, testing and detailed

administration. In addition, a survey code ethics is used thatt the data produced must be

presented in systematic manner, which represent the fact which they found. Survey data

not to be subject with manipulation, either statistically or in summary, so as to support or

prove only special interest views. Therefore, safeguards to “respondents anoymity must be

not only expressed but guaranteed and lot of effort maintained for overcome difficulties”

(Collis and Hussy, 2003).

Data collected in questionnaire survey may be both subjective and objective (Pennington,

2002 p. 15). For choosing proper structure for questionnaire it is very critical factor in

examining and obtaining favourable feedback. In paricular, each who is involved in the

36

process of analysing data that should be generated by a questionnaire survey gave value

information and apply weighted to the researcher opinion and more meaningful. In

addition, analysts result shows same body of information differently depending what each

person feels to be more, less or significant. However, for getting favorable response, it is

possible when both objective and subjective combined by using questionnaire as well for

analysis the data. There are many advantages in using survey questionnaire against other

types for gathering research method. It is flexible, economical and less time consuming,

completing questionnaire is simple and straight forward and does not require excessiver

time (Bell, 2002). They can be given to large population because they donot require any

individual geographical location to assemble in one primary place. For gathering feedback

without any unwanted involvement questionnaire is used rather to take individual

interviews, focus group, and sometime need one site observation, respondent need tension

free enviornment for their convience. In this way respondent feel free in answering the

question since there is no need to please the interviewers. For selecting data collection

method, one always remember in mind the enviornment in which question is asked is only

for the pupose of question (Birely, 2003). Finally the information provided by the

respondents is influenced to their desire for answer the questionnaire, validity and financial

consideration.

Researcher has shown that simplicity will positively affect and in return it increases overall

response accurately (Long, 2003). On the other hand survey questionnaire got some

disadvantages as well. They got generally low response rates, unreasonable, unsuitable for

respondent due to poor literacy rate, no oppurtunity to correct misunderstanding or to offer

explanations or help, no control over the order in which question are answered, incomplete

response, incomplete questionnaire and no oppurtunity to collect ratings on assessment

based on observation (Oppenheim, 1999). However, to overcome these issues the

researcher manage the questionnaire survey personally.

4.7.2 INTERVIEWS

Interview can define as “ a puposeful discussion between two or more people”(Khan and

Cannell 1999, cited in Saunders et al., 2000, p.242). Interview is one of the most

common tool is used for collecting data and helps to the researcher to gather reliable and

valid data that are relevant to the research objectives. Interview can also be used for getting

37

quick response for such abstract variables as people’s attitude and opinion, this will enable

the researcher to find out and describe the situation in different phenomena, or it can be

used for explanatory rearch as well. Explanatory or analytical research, according to

Saunders (2000), will enable the researcher to examine and explain relationship between

variables cause and effect.

Interview may be highly structured and formalized and it depends upon the situation of

respondents. It is also possible that, interviews can also be informal and unstructured.

Interviews may be categorised as follows.

4.7.2(1) STRUCTURED INTERVIEWS

To follow the same structure and sequence of the questions;

4.7.2(2) SEMI - STRUCTURED INTERVIEWS

Ask the same question but not necessary in the same sequence;

4.7.2(3) LOOSELY OR UNSTRUCTURED INTERVIEWS

It will depend upon the interview flow and response. No questionnaire or checklist is used;

a framework is established for selecting topic as a guidance for interviews.

This is very useful method for data collection. The interview allows the interviewer to pick

up on additional information; the tone in people voices and facial expression both provide

that information which is missed in questionnaire. Another advatage of interview is the

response rate. Interviews tend to produce higher response rate as few people refused to talk

with interviewer who is directly infront of them, on the other hand questionnaire may be

discard or ignore is easy (Polit and Hungler, 2001).

38

Especially semi – structured interviews consider very good method which make the

interviewer to giving his ideas, prompt response and investigate feelings , which

questionnaire never be done especially such as sensitive issues like critical financial

information of organisation.

4.7.3 OBSERVATIONS

Gill and Johnson (2002), suggest that observation could take place from an office which is

provided in the central site, where the day – to – day life which visit on site is onserved and

gave a base from which the researcher could walk around and chat with individuals.

Basically, it can be done better through organisation’s meetings. The observer should be

able to watch, record and analyse events of interest.

(Schutz, 1999; Blumer, 2000) argued that the criticism on observation without can lead

towards the worst kind of subjectivism, whether observer sumarrised those factors, which

leads to some degree removed by subsequent behaviour of individuals. Furthermore,

Schutz and Blumer stressed that this method got no limits, it is time consuming as well, and

also include interpretation, categorizing and analysing of data, therefore it is not

implemented.

4.7.4 CASE STUDIES

In research strategy case study is used which focus the dynamics present with single

settings. Yin (2000) define case study as “an empirical investigation into cotemporary

phenomenon operating in real life context”. It is valuable rather than not feasible and not

even ethically justifiable (Yin, 2000; Remenyi et al., 2001; Miles and Huberman, 1999).

A case study got quality for detailed examination of an event (or series of related events)

which the analyst beliefs on exhibits for the operation of some identified general

theoretical principle (Mitchell, 1999). Another important advatage of case study is that

material lies in the richness based their undestanding on reality. This means that it can

work as effective device. Zonabend (2000) stated that case study research is done by

giving special attention to complexities in observation, construction, and analysis of data

under study is done in such a way that it gave a larger view about the performance of the

case study.

39

Bell (2002) criticised very important issue,i.e for judging which merit of case study is

sufficient and appropriate for a teacher who works in similar situation to relate his decision

for how they described the case study. The reliability of case study is very important then

generalisbility. Although it is a good approach for depth study of research , but in case

study, the researcher does not control the situation. Case study does not require step – by –

step data analysis, and this allows various opinions for research data. It is true , opinions

could introduce bias, and affect the research outcome as well, therefore it is not considered.

In this research case study of Pakistan islamic banking, survey questionnaire is used to

find the data and SPSS is used for analysing the customer opinion of Islamic banking for

measuring service quality.

4.7.4(a) CASE STUDY DESIGN ACCEPTABILITY

Yin (2000) suggest that for measuring any research study validity should be confirmed by

passing certain design test which regards to various level of research. Yin (2000) gave four

design test:

1. Construct Validity: establishing correct operational measures for the concept being

studied;

2. Internal Validity: establishing a casual realtionship, whereby certain conditions are

shown to lead to other conditions, as distinguish from false realtionship;

3. External Validity: establishing the domain to which study finding’s can be

generalised;

4. Reliability: presented that the operations of study, such as the data collection

procedures can be repeated with the same result.

4.7.4(b) MULTIPLE CASE STUDIES

40

Case study may be single or multiple case designs. Multiple case study strenghten the

result by getting through pattern matching, thus increasing confidence in the udepinning

the theory. The use of multiple cases in study shows the exact idea of topic under

investigation and as reult it developed empirical evidence to support which shapen the

theory. The approach for case study involves in theory building and verification rather than

testing (Dilanthi Amaratunga (2001).

4.7.4(c) LIMITATIONS OF CASE STUDY RESEARCH

Case study research forms on the core of this resarch study. Case study methods has many

advantages but there are certain criticism.

In case study method criticism is that it suffers from a lack of rigour and excess of

judgment. The danger of ad hoc theorising and of neglecting to test data are great. The use

of subjective judgements during the data collection stages can construct invalid. According

to Bromley (1999) researcher usually impact on the internal validity of data. Another

suggestion by Becker (2000) and agrees that researcher may have feelings for the subjects

and conclusion are drawn from a lack of reliability. External validity is also difficult to

measure (Berger, 1999). It is difficult to generalise findings to different setting and context

are necessarily dependent.

The evidence from multiple case study is considered more compelling and studies

involving multiple cases are regarded more strength. Whether resulting theory is

generalisable is related to the complexity of external validity, i.e whether external

conditions are thought to produce much variations in the topic being studied. In the contect

of research the critical aspect of case study is that it provide a limited bases for the

traditional scientific generalisation. (Yin, 2000; Remenyi et al., 2001). Nowwithstanding

like all experimental observations, case study result can be formulated for theoretical

prepositions (analytical generalisation) but not to popualtion or universes (staistical

generalisation). Thus, the aim of case study is not persuade to global finding form a sample

to population, but rather to undestand and articulate patterns and linkages of theoretical

importance. Santos (1999) stated that, it is not possible to elaborate detail and direct

comparison of data.

41

According to Yin (2000), the quality of any given design can be judged according to the

following four previously mentioned tests: construct validity, internal validity, external

validity and reliability.

4.7.5 FOCUS GROUP

Although focus group is a good way of capturing the responses of participants with regards

to feelings, interactions, emotions, deeply hidden fears and desires, these are diffcult to

discovered through straight forward interviews (Filedings and Thomas , 2001; Wisker,

2004), they were not considered due to time consuming and difficulty in controlling the

discussion and focused on the topic been discussed, as well as the differences in the

cultural context and beliefs of the participants.

4.8 PRIMARY DATA

Primary data is the data collected for a specific purpose directly form its source. This

research method is generally prefer by the researcher because the research is projected

towards the specific objectives of the study and ensure that, all the issues of the research

topic are highlighted. The primary techniques of data collection will be mainly

questionnaires, interviews, observation, case study and focus group. Multi-methods

approach will give the advantage of facilitating combination to take place as it is the

mixture of Methodologies in the same research (Scandura and Williams 2000).

To collect primary data a case study and survey questionnaire is used and analyse the data

through SPSS for getting the opinion of customers in Islamic banking. Pakistan Islamic

banking is selected to collect primary data from questionnaire and annual finacial report as

well. The other primary data techniques are as follows.

4.9 SECONDARY DATA

The secondary data is the second hand information received by the researcher from

previous survey conducted by others. The main objective of using this type of data is that it

is less time consuming and thus economical. Referring to some published articles through

42

the internet about this subject was the source of secondary data used in order to understand

thoroughly the topic.

Through, the secondary data is preferred for instant availability, it has it own limitation,

like in appropriateness of questionnaire one would have used and data may not be accurate

and updated (Birley, 2003). The researched may need to exploit the data with a little bit of

imagination, creativity and compromise it to obtain satisfactory measures.

Secondary data include both quantitative and qualitative data, and they can be used both

descriptive and explanatory research. The data researcher use may be raw data, where there

has been little of any processing, or compiled data that have received some form of

selection or summarising (Kervin, 2000). According to Saunders (2003), within business

and management research such data is used mostly in case study and survey type research.

However, there is no reason not to include secondary data in experimental research.

Because of inadequate time, the research findings are mostly will be from background

information such as secondary data. As the secondary data collection processes dose not

always include about collecting and reproducing it in a similar form but rather in the

secondary data will address the research objectives and form the good reliable starting

point for the research (Bryman and Bell 2002).

To understand the role of Islamic banks and financial institutions in Pakistan for

measuring service quality of Islamic banks . To have a proper undestanding about the

impact and contribution of financial instruments in business and their risk management the

case study method is used to collect the secondary data that is described earlier. The

required information is extracted from the secondary sources such as financial institutions

reports, journals, articles and internet etc and analysis by SPSS for meauring the opnions

of Islamic Banking customer satisfaction. The other secondary data collection method are

briefly explain as below.

4.9.1 SAMPLING

Saunders (2003) describe that, sampling techniques provides multi method that enable

researcher to reduce their amount of data research that needs to collect a data from

43

subgroup rather than all possible cases or elements. Some research question required

sample data for collecting all information. However, if researcher want to be deep research,

then it will need to research with) and a group (sample) of employees and large

organization, by taking interviews, the researcher also select case study (sample managers

to interview. Techniques for selecting sample are very important. Accor ding to Saunders

(2003), the full sample is taken is called population. In sampling, the term ‘Population’ is

not in normal sense, as the full set of cases need not necessarily by people.

4.9.2 PILOT STUDY

The term pilot study is also used by two different ways in social science research. It can

also be called as feasibility studies which are small scale versions or trial run, done in

preparation for the major study. (Polit et al., 2001:467). Pilot study, other tool is also

known as the pre testing or trying out for particular research. (Baker 2000: 182-3). One

advantage of pilot study is that it shows you where your main research project could fail,

when research protocols may not be followed, or your research methods are inappropriate.

According to DeVaus (1993: 54) “do not take risk, pilot study first”. This is the main

reason for undertaking a pilot study, these studies can be based on quantitative/qualitative

methods and large scale studies might employ a number of pilot studies before the main

survey is conducted. Pilot studies may also try to identify potential practical problems in

conducting research. (Van Teijlingen et al. 2001).

44

CHAPTER FIVE

45

ANALYSIS AND

FINDINGS

CHAPTER 5

5. ANALYSIS AND FINDINGSIn this chapter we analyses the findings related to customer satisfaction with Islamic

Banking service in Pakistan. So therfore, the Islamic banks face various competitive

pressures from traditional commercial bank.The scope of competition has grown in recent

years includes every financial market , product and services. Due to highly competitive

enviornment, for clearly undestanding the behaviour, attitudes and perception of the

customer, it is necessary for Islamic Bank to implmented successful marketing strategy.

Customer analyses has always been a priority of Islamic Banking, especially during past

two decades. Islamic Banks belong to private sector organisations; therefore there top

mangement priorities are growth, productivity and measures the level of customer

satisfaction. Questionnnaire are formulated for measure the performance of customers

46

satisfaction. Different factors and influences create customer behaviour and it should be

dependen upon respondents reply.

Therefore, this mission could be achieved by identifying a complete profile of Islamic

Banking customers which includes their banking habits, attitudes, selection criteria,

awareness and usage of various Islamic banking products and their degree of satisfaction.

For undestanding these , researcher carry out his data analysis by descriptive statistics. The

strategy adopted by Islamic Bank for getting effective marketing plan is achieve due to

maintain up to date customer profile, that includes age, income , education level, gender

and other social demographic factors.

5.1 ANALYSIS OF ISLAMIC BANK

5.1.1 Personal Profile of RespondentsTable 5.1 present a back ground of respondents who pariticipating in this study.

FREQUENCY PERCENTAGEAGE

20 – 25 8 8.025 – 30 6 13.330 – 35 23 12.735 – 40 7 7.640 – 45 6 9.745 – 50 5 11.050 – 55 9 12.455 – 60 7 9.960 – 65 4 9.365 – 70 16 3.4

GENDERMale 80 53.3

47

Female 17 43.7EDUCATION LEVELNo formal qualification 17 12.0

GCSE/BTEC 14 16.0A Level/BTEC National 12 15.8

HND/Degree 13 19.2Professional Qualification 9 17.9

Higher 23 19.0ANNUAL INCOME( Rs)

Rs 0 – 100,000 7 8.2Rs 100,000 – 200,000 11 12.4Rs 200,000 – 300,000 12 14.0Rs 300,000 – 400,000 13 16.9Rs 400,000 – 500,000 23 27.3Rs 500,000 – 600,000 3 4.2Rs 600,000 – 700,000 4 5.6More than Rs 700,000 6 9.5

According to table 6.1, more than 74.7 % respondent between the age group of 25 and 55

years old. 53.0 % customers were male and 43.0% is female. Because, this is due to the

nature of muslims society where males do dealings with banking. Majority of customers

should be pakistani national and muslims. Half of the customer earned less than Rs

400,000 to 500,000, annually. Majority of customer got higher degree with 19.0 % having

al least master degree. This shows that two third of people are educated.

5.1.2 Reasons of Customer Dealing with both types of Banks

Table 5.2 present the reasons for dealing customer with both types of bank.

STRONGLY AGREE AGREE NO VIEW DISAGRE

E

STRONGLY

DISAGREEFreq % Freq % Freq % Freq % Freq %

The Islamic bank does not offer some of the products (facilities) offered by a commercial bank.

3 8 25 60 4 6 9 22 2 3

The Islamic bank does not offer

4 10.5 19 46 3 10.5 14 31

48

many of the products (facilities) offered by a commercial bank.Opening hours of Islamic bank are limited

3 9 23 50 6 11 13 27

Opening of two accounts gave me the oppurtunity to diversify my investment

9 22 24 55 3 7 8 18

Both types of bank have limited number of branches and opening two accounts gave access to more branches.

4 6 17 43 10 24.4 13 26.4

According to table 6.2 majority of customer using both types of banks, due the some

product offered by convential bank , because these products are not available through

islamic banks.Furthemore, 77 % of the respondent using both types of bank, because want

diversification in investment. Other reason for using both type of banking is that, 59 %

opening time of Islamic bank are limited. Other reason is that , many customers metioned

that both types of bank got limited number of branches and by opening two differnt bank

account it will gave flexibility with more choices of banks. 49 % respondent mentioned

this thing. This findings is very important for Islamic Banking in Pakistan. The Islamic

should be more flexible for overcome this issue , if they want to survive competitive in

market.

5.1.3 Customer Awareness and use of different Products/Services

offered by Islamic Bank.Whether or not customers were aware of Islamic banking products or services are presented

in table 5.3

NOT AWARE OF IT

AWARE AND DON’T USE OF

IT

AWARE AND USE OF IT

Freq % Freq % Freq %

49

Current Account 11 17.1 10 14.5 47 68.4Time Deposit Account 15 21.9 39 57.1 13 19.3Murabaha 27 39.1 33 41.9 14 18.4Mudaraba 26 31.3 36 46.7 15 19.4Musharka 24 35.3 34 50.0 9 13.2Ijara 31 37.9 29 42.1 11 19.0Ijara Waktina 29 40.2 33 49.6 9 10.1Musana 37 49.4 29 39.4 6 11.1Traveller’s Cheque 25 34.7 35 48.6 12 16.6Money Orders 30 31.6 32 43.1 16 17.1Overdraft 32 29.4 31 42.4 17 20.3Automated Self Servie 5 7.3 27 34.3 37 53.1Letters of credit 20 27.1 33 46.4 19 25.0Guarantees 24 29.1 30 41.1 17 27.2Specially ordered bank statement 5 11.1 21 32.7 39 47.4

According to above table 6.3, mostly customers are unaware of products /services by the

Islamic Bank e.g. Mudarba (31.3%), Musharka(35.3%), traveller cheque (34.7%), Ijara

(37.9%), money order (31.6%), Ijara waktina (40.2%), and Musana (49.4%). The lot of

respondents (87.4%) were aware automated self service, (53.1%) use it. Similarly, order

bank statement were known to mostly customers (80.1%), (47.4%) and they used them.

Customers (82.9%) are well aware of current account, (68.4%) of them have frequently use it

and were aware of automated self service round about (53.1%) of sample used. Mostly

produsts/services are known by customer but few of them use it.

5.1.4 Reasons that Motivate Customers to Deal with Islamic BankThere are different reason of customers to motivate to deal with islamic bank presented in

briefly in table 5.4.

VALUE STRONGLY AGREE AGREE NO VIEW DISAGREE

STRONGLY

DISAGREEFreq % Freq % Freq % Freq % Freq %

Religious reason only 63 71.6 18 22.3 2 2.5 2 1.5 - -

Profitability reasons 3 4.8 8 10.7 21 22.8 24 30.6 21 28.8Religious and profit reason 9 12.9 17 24.0 20 28.2 15 21.2 6 8.7

Advice from relatives 7 12.7 18 26.5 17 25.3 17 24.0 5.2 8.5

50

Advice from friends 18 24.2 9 12.3 20 28.3 15 21.7 5 7.9Bank location 13 17.3 25 35.3 15 21.7 7 11.3 3 5.7Low service charges 7 9.3 24 34.6 18 28.3 8 13.5 3 5.5

Bank confident 21 27.7 23 34.5 14 25.5 1 1.7 - -Bank effeciency in completing Trans 9 4.7 33 41.3 20 31.5 10 14.6 2 3.1

Wide range of facil offered by the bank 3 7.5 23 35.7 27 41.3 4 5.3 6 7.7

Quality advice offered by bank personnel

- - 21 29.7 39 53.1 7 11.5 4 5.2

Bank reputation 13 19.6 35 49.3 13 17.3 3 4.6 1 1.7Confidence in the bank’ Management 6 9.3 27 38.4 27 38.4 6 7.5 4 3.8

Confidence in bank’s board of directors

7 10.4 30 42.3 28 39.4 - - 2 2.9

Shariah Supervisory Committee 17 23.2 29 34.3 27 24.8 1 3.5 1 1.5

Social and friendly features of bank’s personnel

13 6.3 33 51.0 30 36.1 1 1.5 3 2.4

The Islamic bank offer the same facilities that offered by Comm bank but observes shariah principles

17 22.3 30 32.7 18 29.2 - - 7 1.5

According to table 5.4, the religious reason is the most important factor that motivates

respondent to deal with islamic bank. Majority of respondents (93.9%) are either agreed or

strongly agreed to deal with Islamic bank.The above findings shows that religious factors

is very important as compared to profitability motive. Most respondents (59.4%) disagree

or strongly disagree that profitability is important factor for choice of bank. Therefore, the

above each factor is considerd individually, respondents are not in clear, that why they deal

islamic bank either religious or profitability.Islamic bank reputation and image is second

important factor. Majority of customer agreed (49.3%) or strongly agreed (19.6% ) that

reputation is one key factor for selecting bank. The majority of customer (62.2%) strongly

agree that confidentially of Islamic bank is another important reason to deal with.

Confidence in Shariah Supervisory Committee was fourth important reason to deal with.

Most customer (57.5 %) agreed or strongly agreed with it. The fifth most important reason

is to deal with islamic bank is that Bank observes shariah principles when offering the

51

same facilities like conventional bank. Round about two-fifth of customer (55%) are

strongly agreed with it.

Other important reasons that motivates customer to deal with islamic bank i.e social and

friendly fetaures of islamic bank personnel (49.1%), efficient and quick services,

confidence on Islamic bank BOD, and bank location. Reasons like advice from relatives or

friends not likely to play a vital role to respondents in banking choice to deal with islamic

banks.

5.1.5 Degree of satisfaction of services offered by the Islamic BankTo find out the level of customer satisafaction or dissatisfaction , table 5.5 is presented

Strongly Agree Agree No View Disagree Strongly

Disagree

Freq % Freq % Freq % Freq % Freq %

Convient branch location

23 29.5 39 54.3 7 11.4 1 1.4 - -

Convient opening hours 8 8.7 33 45.5 19 25.5 9 11.9 1 1.4

52

Wide range of services 4 8.7 33 47.4 22 31.1 7 10.6 1 1.4

Easily undestood statement

13 16.3 41 60.3 15 19.6 2 1.9 1 1.4

Easy to get information 5 6.9 30 41.7 17 23.6 14 19.4 6 8.3

Confidence in Bank management.

11 17.9 31 39.8 29 36.3 1 3.4 3 1.4

The cost of the service offered by the bank.

9 10.9 30 43.7 26 33.4 3 2.6 4 4.6

Physical facilities 5 8.9 34 43.5 16 25.0 7 10.6 8 7.9

Parking facilities 1 1.8 11 15.6 19 24.0 23 27.6 19 25.8

Personal neat appearence. 3 4.9 43 57.9 20 28.1 3 3.7 2 3.2

Employees Skill and knowledge

6 6.3 43 60.1 23 31.3 - - 1 1.3

Employees willing to help

5 3.3 39 53.4 23 31.2 5 7.2 1 1.4

Individual attention 4 6.2 16 21.9 25 36.5 20 24.9 6 10.2

Understand specific needs 7 6.4 31 43.3 29 39.9 3 6.1 2 3.1

53

Promise fullfilled on time

6 6.2 30 42.9 31 41.7 4 3.3 2 2.3

Efficiency in services for completing transaction

2 3.1 31 43.4 22 31.1 9 14.2 5 7.9

Service at time 3 3.8 32 44.4 29 40.3 3 3.8 4 5.1

Accurate services 9 7.3 35 50.0 26 37.5 1 1.4 7 2.4

Service performance 4 3.1 35 50.0 27 34.7 5 5.3 4 6.1

Satisfaction level 17 21.1 30 39.1 23 26.2 5 6.3 3 4.4

Meet expectations 2 6.4 20 31.2 44 57.3 2 3.1 1 1.3

Excellent Service quality 8 10.0 37 47.5 21 28.2 6 8.3 1 4.2

Recommend to deal with Islamic Bank

14 17.7 26 33.2 33 42.3 2 3.3 7 1.4

Want to switch my account 9 22.1 13 18.3 22 23.3 21 27.1 8 6.7

Majority of customer (83.8%) are satisfied due to bank convients location. These findings

donot seem to be fit for deal with islamic bank. Due to convience is a reason for dealing

with bank. The second factor is that bank statement is easily undestandable, which shows

(76.6% ) of the customer were satisfied.

54

Due to bank employees required skill and knowledge to performing the services is good,

mostly customers (66.4 %) were satisfied. The fourth degree of customer satisfaction is due

to external appearence of bank’s personnel, (62.8%) customer were very satisfied with it.

Mostly customer (56.7%) seem very satisfied due to bank employees which always been

ready to help. This shows a good customer relationship.

Other six degrees with regard to customer satisfaction i.e islamic bank perform accurate

services, after considering that we can say customer are extremely satisfied with islamic

bank, but the overall service quality is fine. Due to convenient bank opening hours and as

well confidence in bank management, a lot of customer (54.2%) seem to be satisfied.

Other issues excluding parking facilities, showed more customer satisfaction than

dissatisfaction. With regarding to parking facilities (53.4%) were seem to be dissatisfied.

However, (40.4%) customer switch over to other accounts. Furthermore we elaborated that

four fifth (37.2%) customers of islamic bank donot gave any opnion regarding to their

satisfaction or dissatisfaction , which donot meet with their expectations.

CHAPTER SIX

55

DISCUSSION OF

FINDINGS

CHAPTER 6

6. DISCUSSION OF FINDINGS

This chapter is about dicussion on issues which are raised in this and in the light of

relevant literature, and findings of the researcher . Islamic Banking are asked about their

view, as well as they are satisfied for dealing with banks. For researcher findings,

comprehensive detail is provided in chapter five.

6.1 Comparitive Analysis

56

Many reseachers such as Shook and Hasan (1988), Erol and El-Bodour (1989), El-Bodour et

al. (1990), Sundin et al. (1994), and Naser et al. (1999), have done research for measuring

the attitudes and criteria that why the customers deal with specific bank. By using these three

author studies Erol and El-Bdour, 1989; Erol et al. 1990; and Nasir et al. 1999; the

researcher find out about the bank selection criteria that used by pakistani customers to deal

with islamic banks.

Other authors such as Leveque and McDougall (1996) and Nasir et al. (1999) studies shows

that customer overall satisfaction create great impact on bank selection criteria. There are

many factors which make customers to deal with specific banks, as evident by the following

authors studies. (Anderson et al., 1976; Tan and Chua; 1986; Laroche and Taylor, 1988;

Erol and El-Bdour. 1989; Denton and Chan, 1991; Erol et al., 1991; Kaynak et al.,

1999; Khazeh and Decker, 1992; Levesque and McDoughall, 1996; Nasir et al., 1999).

The banking selection literature shows different features such as location availability,

friends recommendation, reputation of bank, credit availability, competitive interest rates ,

friendliness of bank employees , low service charges, satisfactory banking hours, availability

of ATM, and special services etc. The importance that these factors varies with one country

to another with respect to age factors, gender, income , martial status, occupation and

cultural background of customers , whether they dealing with islamic or conventional (Nasir

et al., 1999).

From this study it is clear that majority of respondents of both bank have certain reasons to

deal with them. Futhermore, findings elaborated that, these certain fators donot play a single

role in customer selection. Customer satisfaction selection criteria is unique to deal with

Islamic bank. These selection citeria findings discuss seperately in next section.

Religious reason is unique criterial for customer to deal with islamic bank. However, three

quarter (71.6%) of customer are strongly agreed with it while less than one quarter (22.7%)

are agreed that is the main pupose to deal with islamic bank. It is very unique and

interesting , that only one of respondent (1.5% of sample) had no opinion with religious

motives and other who disagreed with it. Relating to this issue shows that this is not the case

some decades or two years ago. Furthemore, in this issue resarcher is not agree with the

57

reports by Erol and EI- Bdour 1989 as well as their previous findings given by El-Bdour,

1984). These two authors stated that “religious motivation did not appear to be the primary

criteria for selection of Islamic banking services” (p.33). However these authors find out

this would happen due to respondents misundestanding when they answering the question.

However, at the end of 1990 customers perception is totally changed , they consider

religious reason is very important to deal with Islamic bank. When Nasir et al., 1999 making

research on it and find out that 93.9% of respondent “agreed or strongly agreed that

religious reasons are very important”. Reseacher finding should be clear that, the main

purpose of customer to deal with islamic bank is religious reasons. The findings of Naser et

al., 1999 clearly explained that religious factor is very important during last years.

Furthemore, this evidence proves that religious reason is important that whty peole

depositing more in Islamic banks.

Researcher findings explain that profitability reason is not very important to deal with

Islamic bank, though its importance is for customers of conventional bank than islamic bank

, because of profit maximising nature of conventional bank. In contrast we stated that islamic

bank promotes banking on religious reasons by observing the Islamic shariah Principles.

However, findings explained that profitability is not important for islamic banking customer

due to the changed in their attitudes for dealing with Islamic Bank. Furthermore, researcher

findings is diasgree with the reports is given by El-Bdour 1984, and Erol and El-Bdour

(1989). Acording to these authors report , the perception of customer to deal with isalmic

bank is due to profitabiliy maximising behaviour. Furthermore, Naser et al.,(1999) make

this research to a similar task. But they reported that 42.3 % of respondent disagree or

strongly disagree with this reason of profitability, as compared to 27.2 % respondent agreed

or strongly agreed. These recent findings of researcher proves that customer seleted Islamic

bank due to religious reasons, not a motive of maximising their profit.

Further in the case of Islamic banks, religious and profitability reason is main selection

criteria of bank, by the customers. It is not suprising that mostly respondent (59.4%)

rejected profitability reasons to deal with islamic bank, which past authors consider main

purpose to deal with islamic bank. The rearcher findings agreed with Erol and E-Bdour

1989 statement they define as “ when religious and profitability reasons were combined it

did not seem to make any differnce tocustomer behaviour”. They explained that, their

58

findings by the “fact that their customer have been used to the conventional interest

banking enviornment, so they have become profit oriented csutomers”. However their

explanation donot seem convincing with the present findings of the rearcher, and argued

above, that customer is non profit oriented.

Another important factor is consider important in todays banking selection criteria such as

bank reputaion and image. However, for the islamic banking customers , they consider this

image and reputation as second important factor after religious reason for selecting bank.

With regarding to profit maximising nature of commercial bank, customer donot consider

this factor as compare to Islamic bank. Furthemore for considering to choosing the customer

to deal with conventional bank and Islamic bank , we measure this in terms of percentage,

for choosing particular factor, such as stated that (68.9%) of Islamic bank customer chose it

while 67.5% of conventional bank, customer chose it, as a result they shows similar choices

for both customer , but despite of the fact that respondents are 75 and 72 for the islamic and

conventional bank respectively. Nasir et al., 1999 also bring same research on choice of

customers for Islamic bank. They find out that 72 % of respondents are agreed or strongly

agreed with this reason. Many other researcher, studying both types also bring their research

in same field for customer selection (Anderson et al., 1976; Tan and Chua; 1986; Laroche

and Taylor, 1988; Erol and El-Bdour. 1989; Denton and Chan, 1991; Erol et al., 1991;

Kaynak et al., 1999; Khazeh and Decker, 1992; Levesque and McDoughall, 1996; Nasir

et al., 1999). However, we stated that bank reputation and image plays a very important role

for attracting customer to deal with certain bank. Another researcher Tiliakou (1999), bring

his research by studying two commercial bank in Greece, and reported that , three quarter of

customer deals with Euro commercial bank as compared to their National bank. This is

because due to negative image of customer self esteem needs.

The third important reason for customer to deal with bank is due to their old establishment

as compared with Islamic bank. Thats why commercial bank got priority due to their

establishment as compare with Islamic bank.. Hence it is possible that, commercial banks

customer donot give confidentially for granted, as on the other hand islamic bank focus more

as compared with conventional bank. Few researchers ealborated that pakistan customer

dealed with islamic bank due to three reasons, firstly efficient and fast services for

completing transaction, secondly bank’s reputation and image, and lastly confident to deal

with bank ( Erol and El-Bdour, 1989; Erol at al., 1990; Nasir et al., 1999). These findings

shows to the researcher that confidence in bank dealing is one of the most important reason

59

to deal with islamic bnak as compared with other two reasons, that could be discussed later

on. Nasir et al., 1999, findings prove that , (63%) of respondents are strongly agreed with

these reason.

For removing errors and Omissions of Islamic Principles, the practice and activities of

Islamic banking is not conflicting, with islamic ethics. It is necessary for Islamic Banks that

they establish a Religious Supervisory Committee (RSC) or the Shariah Supervisory Board

(SSC), consisting of Muslims law and principles advisors of Islamic commitee. Therfeore we

stated, that SSC is unique feature of Islamic bank and customer belief confidence on that

committe. Thats why confidence on SSC is main reason that motivate customer to deal with

Islamic banks. Nasir et al., 1999 also prove this and majority of respondents are agreed with

it.

Another reasons is that conventional banking offered same facilities like other Islamic banks

but they donot observe the Shariah principles. This is important factor due to religious

reasons. Customer attracting more to Islamic banking. That is why observing the Shariah is

the third unique feature of Islamic bank that not offered by conventional banks. Nasir et al.,

1999 reported that majority of customer strongly agreed with it. Another fourth important

unique factor for attracting the Islamic bank customers, is the confidence on Bank Board of

Directors. This is possible due to Bank’s reputation and image, and it creates positively

effect due to lot work of its Board of Directors. However, lot of customer (38.4%) donot

gave any opnion about this factor.

For selecting certain specific bank, social and friendly features of bank personnel, quick and

efficient services for completing transaction, bank location are also consider most important

factor for customer to deal with islamic or conventional banking. Bank location has been

shown as a special reason for selecting bank ( Anderson et al., 1976; Laroche and Taylor,

1988). Location is very important factor for banking customers under the age of 50 as

compared to other age groups. Majority of customers 68% is 50 years old as compared with

younger people. As concerning to provision of quick and efficient services is discussed

above, that is one of the reasons of Pakistan customer to deal with Islamic banking ( Erol

and El-Bdour, 1989; Erol at al., 1990; Nasir et al., 1999). The majority of our respondents

were male thats one of the most importannt factor (Kaynak et al., 1991).

Customers who got primary education they regarded, friendliness of bank employees, quick

and efficient service, bank locations (availability of credit) is most important factor, than

60

customers who got only primary education (Kaynak et al., 1991). The lot of customer

education level is high as well as in islamic and conventional banking.

Researchers findings shows that certain factors such as (advice from relatives/friends, quality

of services and other factors) donot like to be seem very important for customer selection.

Naser et al., 1999, explained that these factors are not important for customer satisfaction.

They stated that “advice from realtives (23 per cent)and from friends is (32 per cent) did not

appear to play a major role in banking choices of customers who used an islamic bank”.

Researcher findings strongly disagree with statement by Erol and El-Bdour (1989 p.33).

There results shows that “interpersonal contact and individual efforts played an important

role in terms of attracting individual to utilise banking services offered through islamic

banks”. Further they added that the people who are at same age group plays important role

for dealing with islamic bank, because they may be aware of these services that should be

use by their relatives and neighbours. Researcher finding and Nasir et al., 1999 findings

shows that people perception of islamic banking should be changed after sometime.

Researcher findings (in table 6.5) shows that majority respondents (83.8%) are satisfied

with bank convient location, easily understand bank statement is round about (77.6%),

employeed required skill and knowledge (66.4%), personal appearence of bank personnel

(62.8%). These percentage shows clearly that Islamic bank customer is more satisfied with

these features. Nasir et al., 1999, indicate that (59.3%) of customer were satisfied with

personal bank proficiency. For example if we consider the easily understandable bank

statement than proficiency of bank statement is quite high. Researcher findings also shows

that most of the customer are fully satisfied with employee required skill and knowedge but

disagree with the statement of Erol and El-Bdour (1989). Their statement is about that

majority of Islamic bank employees, have low efficiency and lack experience, and researcher

findings shown them, majority of employees working in Islamic bank is the former

employee of conventional banking (Iqbal and Mirakhor, 1987). Further we argued that

researcher finding prove that Islamic bank employees have required skill and knowledge

about islamic banking and in this way they improve their experience for performing services.

However, customer of Islamic bank were dissatisfied with parking facilities provided by

their bank and there are also some other factors that move their accounts somewhere else.

These areas should be addressed seriously by islamic bank, other wise they lose their

customers. The other three aspects which shows customer satisfaction is proficiency of bank

61

personal, bank management, and efficiency for completing transaction all these have been

proved by Nasir et al., 1999, it is very important factor for customer ssatisfaction. But

unfortunately these percentage of high satisfaction level is low in Islamic banking.

Researcher findings also prove by Nasir et al.,(1999) about the confidence on bank’s

management was same to the findings of present study. Furthermore, researcher findings is

not agreed with other authors statement of bank opening hours. After all this discussion we

can say that customer is well aware of Islamic banking products/services. However, most of

them do not use it. For example, 60% of customer was aware of current accounts and used

this service. Here at this point researcher findings would agree with Naser et al.,1999

findings.Researcher findings shows that majority of respondent of our customers were

unaware of islamic banking products such as Murabaha, Mudarba, Musharka, Ijara ,Ijara

Waktina, Musana, all which creates unique in Islamic banking products (also mixed bank),

most of them are aware but they do not even invested. Naser et al., 1999 bring same research

to the above task, and stated that “ It is also clear that a sizeable number of respondents

mentioned that they were aware of specific Islamic terms of Murabaha, Mudaraba and

Musharaka, but they do not using these specific types of Islamic Banking”. Another major

important factor is that friends and realtives work in a bank to attract customers. But in

different areas customers give no opnion about the question they asked whether they are

agree or disagree with them.

6.1.1 ISSUES IN AIMS AND OBJECTIVES

Researcher addressed number of issues relating to find out the degree of customer

satisfaction and dissatisfaction of Islamic bank in previous chapters. For overcome these

issues, which are raised in this work they need a vast range of literature review for cleared

objective to achieves.

The main objective of the research is measure the degree of satisfaction towards the Islamic

banks in Pakistan. Various issues require attention for achieving the success required by

reasearcher. The scope of study is very vast, it is a fact that conventional banks got lot of

expertise, experience which achieves through years. But on the other hand, Islamic banking

consider as a new innovation in most countries including Islamic world. Therfore Islamic

banking require lot of in depth research and vast investigation, in the light of poor literature

62

of islamic banking, as a whole to improve customer satisfaction. The criticle point of this

research is that , study is based on future investigation. These findings clearly shows that

religious reason is the main important factor for consumer attitude to deal with Islamic bank

but after some time it is consider unimportant due to change in consumer habits.

The different objectives establish for this study are achieved e.g to measure the degree of

customer satisfaction with Islamic banks in Pakistan, based on the customers response rate.

This discussion also proves that for measuring the satisfaction level of customers that should

be agreed or disagreed, is given by the arguments that are in the literature review. The

researcher findings also highlighted that there are some defects in our findings which are not

even matched with previous authors reports.

Factors which discussed previously shows that they motivate customer to deal with islamic

banking. The main key factor of islamic banking for dealing is religious reasons which

shows that , there is need of more development in these factors that should take time.

Researcher findings also indicated that different cutomer have different priorities for

selecting bank convential as well as Islamic banking. Further, we argued that respondent

attitudes of selection is our second objective, for finding out that customer utilise all factors

is successfully achieved.

Other findings shows that most of Islamic banking customers were not well aware of many

islamic banking products/services that offered by bank. This should be further explains that

most customers are well aware of products but they donot used it. This is necessary for

Islamic banks that they practices to arrange advertisement and campaigns for educating

customers.

Researcher findings of study shows that customer gave more attention and gave priority to

these factors for selecting bank, above and previous discussion in other chapters gave a

comparision for measure a degree of customer satisfaction in Islamic bank. So, futhermore,

we argued that our fourth objective, for measuring the degree of customer satisfaction in

Islamic bank, and the fifth objective for finding those reasons, customer consider on prior

basis for selecting bank is being achieved.

Futhermore, the aims and objectives of this study have been achieved for this important

research.

63

6.1.2 INFLUENCES

The resources and issues which are raised in the literature of Islamic banking is limited.

Despite of this the available resources is successfully used for briniging this research. The

other authors like El-Bdour, Erol, Nasir and their colleaques give comprehensive sources for

discussing, comparing and contrasting of this present research. For extending the scope of

study, the main purpose of study is achieved by reviewing the literature of customer

satisfaction. Researcher hope these findings bring very valuable addition in existing

literature of customer satisfaction in Islamic banks.

6.1.3 ANALYSIS

The analysis is provided by the researcher is consider as a very important, the basis, or

material should be achieved in depth research for dealing with these issues.

The analysis given by the researcher is not perfect, there are certain gaps regarding to

academic and professional research in this study. For example, time limitation is very

important for this study. Projects thinking , formulating aims and objectives, hypothesis and

question, wide range of reviewing literature, formulate research instruments, field work,

analysis result and finally writing of dissertation is done in very short time. This happened

due to find out the assumption and limitation of existing literature for adding valuable

research and aaditional knowledge to the present research. Due to time constraints, it is not

possible to use more than one research instrument ,and itis true it is not feasible for

researcher to carried out his field survey, and taking interviews of bank officials, customers

and employees in the country. However, it is necessary that , for carried out research for this

kind of project, required long period of time, and also allow u to implemented more than one

research instruments. Triangulation, use of multiple methods is also used in depth to clearly

undestand the research project. (Denzin and Lincoln, 1998).

6.1.4 LEARNING FROM THIS RESEARCH

For beginning this project, several issues have been learned from it. Firstly, we considered

findings are very important in this kind of research. Due to limited published material is

available about customer selection and satisfaction of Islamic banking products and facilities

offered by them is also a issue.

64

Other issue is that, for carrying out this kind of research , it requires more than one researh

tools, to clearly undestand the full picture about the research topic and also require lot of

knowledege and awareness of Islamic banking produts and services required among the

customers. Other issue is that customer donot deal with Islamic bank due to profitability

reasons, they selected the islamic banks due to religious reason, which is more unique in this

sector.

Islamic Banks Management and Board of Directors also play very important role to meet the

difficulties and limitations for experience to grow the performance and the other cause is that

Islamic awakening of Muslim countries among other countries of the world is also

experienced. Lastly we learned from this research there is difficult to turn up to this issue for

changing anything in Islamic bank seperately.

65

CHAPTER SEVEN

CONCLUSION AND

RECOMMENDATION

CHAPTER 7

7. CONCLUSION AND RECOMMENDATION FOR

FURTHER RESEARCH

These recommendations and conclusion is based on the findings of this research in

previous discussions.

7.1 CONCLUSION

66

After all we conclude that, religious factors is very important as compared to profitablility

factor, that makes customer to deal with Islamic banks.

Many several reason and findings relates with customer to deal with specific bank, we

concluded that, customers priorities bases is differed with different banks.

In case of Islamic banks the other important factors which makes customer to deal with

include following: bank reputation and image (68.9%), Islamic bank confidentially

(62.2%), confidence in Shariah Supervisory Committee (57.5%), Isalmic bank offer the

same facilities like conventional bank but also follow Shariah principles (55.0%), social

and friendly features of Islamic bank personnel (57.3%), and location, provision of quick

and efficeint in dealing transaction, and confidence in Board of Directors (52.7%),

followed by confidence in management (47.7%). So we conclude that top eight factors for

selecting criteria, in desending order. Overall we conclude that, the satisfaction rate of

Islamic bank customers is high. Quality services of islamic bank customers (45.2%), is fine

that motivates the Islamic banking customer.

For finding out the degree of satisfaction or dissatisfaction among the Islamic banks, we

concluded that customer perception varies in degree of satisfaction. Lot of customer

dealing with islamic banks seems to be satisfied or very satisfied with it. Location is not

the the top priority factor that considered by customer to deal with Islamic Bank, futher

we elaborated that, convience of customer is a satisfaction issue as compared with location

for selecting Islamic bank. As concerning with other issues of customer satisfaction,

customers got different opnions towards their bank.

Hence, the main satisfaction of Islamic Bank can be summarised are followed in

descending order.

Provision of easily understand bank statement (76.6%), employees got required skills and

knowledge for perform the service (66.4%), bank personnel neat appearence (62.8%),

employees are willing to help (56.7%), bank performs service accurately (57.3%),

customer are extremely satisfied, confidence in bank mangement (57.7%), Islamic bank

offer wide range of services (56.1%). Here we conclude that, Islamic bank customers in

terms of percentages, is extremely satisfied.

67

After all we concluded that the products/services offered by Islamic Bank are not well

known by customers. Islamic banking products/services like, Musana, Mudarbaha,

Murabaha, Ijara and many other, are daily acceptable products/services that are practice by

most of Islamic bank, except the mixed bank where they provided. Futhermore , we

concluded that, most of these product/services offerd by islamic bank customers is well

aware but they donot prefer to use. However, relatives /friends who works in banks is not

count towards important issue of customer satisfaction and dissatisfaction of Islamic

Banks.

7.2 RECOMMENDATIONS

Researcher finding in Chapter 5 , about Islamic Bank explained resources of Islamic Bank,

where they can improve their banking practices, and processes and attract majority of

customer by consider other sources , on the other hand if these sources are not improved,

customer rate to dealing with convential banking increases. Islamic Banking in Pakistan

and any where in Muslim World, has got competitive advantage as compared to

conventional banking, by offering services under the observation of Shariah principles.

68

Therefore , religious people gave more preference to deal with Islamic banking process. So

researcher suggested that:

1. Islamic Bank gave more priority to advertising and promotes islamic banking

products/services offered to customer. Futhermore, Islamic banking products/services

provide assuranc ebout quality services and competence.

2. By improving the service quality advice to customers.

3. Fully training provided to banking employees, for improving service quality process

for building customer relationship.

4. More parking facilities providedby Islamic Bank for easy access of customer.

5. More attention provided individually to Islamic Banking customers. Banking

management take prior action for educating and training of staff members to pay much

attention towards individual customer.

6. Islamic Banking Management identify the reasons for customer switch over to other

accounts.

7. Islamic Banking Management work hard to fullfilled the customers expectations.

8. Islamic Banking provides adequate banking hours for attracting customer from

business community as well as regular user.

9. Islamic Banking promoting their products/services by not promoting existing

commercial banking products, but bring a innovation in their product/services for

attracting customers, that make them unique that is not available in market.

69

APPENDIX

APPENDIX

1). AGE: ………….

2). GENDER: M/F

70

3) EDUCATION: …………………………………………………………….

4) ANNUAL INCOME: ……………………………………………………..

5) Customer awareness and use of different products and services offered by Islamic

banks.

Not aware of itAware and don't

use itAware and use it

Current account

Time deposit account

Murabaha

Mudaraba

Musharaka

Ijara

Ijara Waktina

Musana

Traveller Cheque

Money order

Overdraft

Computerised Machine

Points (ATM).

Letter of credit

Computerized Statement

6) If you have an account with an Islamic Bank, then please read each statements

below and tick the box which best indicates hoe strongly do you agree or disagreewith

it.

Strongly

Agree Agree No

View

Disagree Strongly

Disagree

71

Religious reasons

only.

Profitability reasons

(high return on

investment) only

Religious and

profitability

reasons

Advice from

Relatives.

Advice from friends.

Bank Location.

Low Service Charges.

Bank Confidentially.

Bank Effectiveness in

Completing

transaction.

Wide range of

facilities offered by

the bank.

Quality advice offered

by the bank personnel.

Bank reputation.

Confidence in the

Bank board of

Directors.

Confidence in Bank

Shariah Supervisory

committee.

72

Social and friendly

feature of Bank

Personnel.

The Islamic bank

offers the same

facilities as offered by

a commercial bank but

Islamic bank also

observes Sharia'h

Principles.

7) Please indicate the extent to which you agree or disagree with each of the following

statements.

Strongly

Agree Agree No View

Disagree Strongly

Disagree

73

The Islamic bank

does not offer some of

the products

(facilities) offered by

a Commercial bank.

The Islamic bank

does not offer many

of the products

(facilities) offered by

a Commercial bank.

Opening hours of

Islamic Bank Limited.

Opening of two

accounts gave me the

oppurtunity to diversify

my investment.

Both types of banks

have a limited number

of branches and

opening two accounts

gives access to more

Branches.

8) If you have an account with an Islamic Bank, then please read each statements

below and tick the box which best indicates hoe strongly do you agree or disagree

with it.

Strongly

Agree

Agree No View Disagree

Strongly

74

Disagree

Convient branch

location

Convient opening

hours

Wide range of

services

Easily

undestood

statement

Easy to get

information

Confidence in

Bank

management.

The cost of the

service offered

by the bank.

Physical

facilities

Parking

facilities

Personal neat

appearence.

Employees

Skill and

knowledge

Employees

willing to help

Individual

attention

75

Understand

specific needs

Promise

fullfilled on

time

Efficiency in

services for

completing

transaction

Service at time

Accurate

services

Service

performance

Satisfaction

level

Meet

expectations

Excellent Service

quality

Recommend to

deal with Islamic

Bank

Want to switch

my account

76

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