Interdisciplinary Journal of Contemporary Research in ... - Webs

ijcrb.webs.com
INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS
crucial to realize greater profitability, larger market share and more returns on
investments etc. (Hackl & Westlund, 2000). Customer satisfaction is a multidimensional
construct that requires multi-item scale for its measurement. Researchers agree with the
multidimensional nature of customer satisfaction and measured it accordingly (Bitner &
Hubert, 1994; Shemwell et al., 1998; Sureshchander et al., 2002). It is reported that
Islamic banks have shown an excellent performance. They suggest that Islamic banks
should diversify their products/services according to principles of Sharia‘h (Ebrahim &
Joo, 2001). So it is concluded that superior delivery of services results into superior
profitability (Kotler, 2003). It is recommended that profit and loss sharing option is very
attractive for the bank. It helps the bank to reduce risk and monitoring costs (Ghannadian
& Goswami, 2004). Similarly, Islamic banks are providing better service quality as
compared to conventional banks in Pakistan according to customers‘ perception (Ahmad
et al., 2010). On the basis of existing literature it is hypothesized that there is positive
relationship between customer satisfaction and bank performance.
H1: There is a positive relationship between customer satisfaction and performance of
Islamic banks in Pakistan.
3. Methodology
This study investigates how customer satisfaction affects the performance of Islamic
banks in Pakistan. The data was collected from 864 respondents of 72 branches of six full
fledged Islamic banks operating in Pakistan. The researchers used simple random
sampling technique to gather data from respondents of 12 major cities of Pakistan.
Customer satisfaction was assessed by a modified version of research instrument
developed by Sureshchander et al. (2002). It contains 29 items to record respondents‘
feelings of satisfaction or dissatisfaction. Similarly, bank performance was documented
by a modified version of an eight-item research instrument used by Quinn & Rohrbaugh,
(1983). The responses were recorded regarding customer satisfaction and bank
performance by considering different aspects. Data was collected by self administrative
questionnaire through personal contact approach. Every respondent was asked to rank a
number of aspects regarding customer satisfaction and performance of Islamic banks in
Pakistan.
4. Results and Discussion
The study examines how customer satisfaction affects the performance banks in Pakistan.
by collecting data from 864 respondents of 72 branches of selected Islamic banks. The
responses were arranged and entered into SPSS 15.0 for data analysis. The relationship
between customer satisfaction and bank performance is assessed by Pearson‘ correlation
while the magnitude of the relationship was investigated by regression analysis. The
demographic profile of the respondents reveals that that male segment is greater than
female respondents. It is consistent with literature as men and women customers using
bank products/services could be differentiated due to social, cultural, and religious
factors. It is evident that male customers perform more banking activities than female
customers (Woldie & Adersua, 2004). Similarly, the most of the customers fall in the age
group of 25-34 years in case of IB and 18-24 year in case of CB. It is in line with
literature, it is reported that the most of the bank customers dealing with Islamic banks
fall in the group of 25-35 years besides education level and income group (Khan et al.,
2008). The relationship between customer satisfaction and bank performance is
presented in Table 1.
COPY RIGHT © 2011 Institute of Interdisciplinary Business Research 184
JANUARY 2011
VOL 2, NO 9