Perceptions and Predictions of Service Quality-Customer Satisfaction of Conventional and Islamic Banks in the GCC Region

Abstract

Abstract

Purpose - The purpose of this paper is to investigate differences in the perceived relationship of service quality (SERVQUAL)-customer satisfaction between conventional and Islamic banks in the Gulf Council of Arab Countries (GCC) region which appears to be lacking such an investigation.

Design/methodology/approach – The authors solicited survey responses from bank clients in all six countries of the region. They used data reliability tests followed by factor analysis to shortlist individual items of SERVQUAL to few manageable constructs. Nonparametric ranking tests were used to identify the importance constructs affecting customer satisfaction. A nonparametric multiple linear regression was employed to model causal effects.  

Findings - The results indicate that the two types of banks were associated with different SERVQUAL drivers as perceived by banks customers. Determinants, of overall satisfaction for the two types, also proved to be different.

Research limitations/implications – Despite the important contribution of the paper to a region lacking a SERVQUAL comparative study on conventional versus Islamic banking, a similar investigation, with additional variables and more responses, at the global level would provide a better understanding of the subject.

Practical implications – As firm value is associated with customer satisfaction, banks managers should, whether conventional or Islamic, pay attention to the details of each construct proved to be a predictor of customer satisfaction.

Originality/value – The value of this research is in the wider geographical region comprising the highest number of Islamic banks and conventional in operation. It is also one of the few studies employing nonparametric multiple linear regression to model causal relationship in this area of research.    

Keywords: SERVQUAL, customer satisfaction, Islamic banking, GCC, nonparametric regression.