IDEAS home Printed from https://ideas.repec.org/a/sae/crmide/v10y2023i1p46-61.html
   My bibliography  Save this article

Determinants of Consumers’ Decision to Switch to Islamic Banking System: A Case Study of Oman

Author

Listed:
  • Kiran Faiza

Abstract

Islamic banking is becoming a major alternative to conventional banking in many parts of the world, including the Gulf region. Although one of the prevalent reasons includes religious inclination, the variety of products added by Islamic banks contributes to customers switching from conventional to Islamic banking. This study analyses the factors responsible for customers’ decision to switch to Islamic banking in Oman through a questionnaire survey from Omani nationals in Muscat, Salalah, and Sohar. The data analysis tool included Structural Equation Modelling (SEM) analysis using SPSS and AMOS software. Some of the variables incorporated in the study include physical quality, outcome quality, interaction quality, customer satisfaction, trust, price, religion, and social prestige, which are the dependent variables. The independent variable includes the decision to switch. These variables have been incorporated to evaluate their impact on customers’ decision-making to switch from conventional to Islamic banking. The results indicate that interaction quality significantly influences the switching decision, whereas physical environment and outcome quality could not influence the decision. Moreover, customer satisfaction and trust positively affect the decision. Religion significantly influences switching decisions, while the price and social prestige have no association with it. The findings suggest that religion is a strong determinant and positively impacts switching decisions. Additionally, the people of Oman consider the quality of service, customer service, and trust before switching decisions.

Suggested Citation

  • Kiran Faiza, 2023. "Determinants of Consumers’ Decision to Switch to Islamic Banking System: A Case Study of Oman," Contemporary Review of the Middle East, , vol. 10(1), pages 46-61, March.
    • Handle: RePEc:sae:crmide:v:10:y:2023:i:1:p:46-61
    DOI: 10.1177/23477989221143833
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/23477989221143833
    Download Restriction: no
    File URL: https://libkey.io/10.1177/23477989221143833?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Wang, Huanzhang & Kim, Kyung Hoon & Ko, Eunju & Liu, Honglei, 2016. "Relationship between service quality and customer equity in traditional markets," Journal of Business Research, Elsevier, vol. 69(9), pages 3827-3834.
    2. Markus Knell & Helmut Stix, 2015. "Trust in Banks during Normal and Crisis Times—Evidence from Survey Data," Economica, London School of Economics and Political Science, vol. 82, pages 995-1020, December.
    3. Carin Cruijsen & Maaike Diepstraten, 2017. "Banking Products: You Can Take Them with You, So Why Don’t You?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 52(1), pages 123-154, October.
    4. Lilian Consuelo Mustelier-Puig & Amna Anjum, 2018. "Interaction quality and satisfaction: An empirical study of international tourists when buying Shanghai tourist attraction services," Cogent Business & Management, Taylor & Francis Journals, vol. 5(1), pages 1470890-147, January.
    5. Haron, Razali & Abdul Subar, Noradilah & Ibrahim, Khairunisah, 2020. "Service quality of Islamic banks: satisfaction, loyalty and the mediating role of trust," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 28, pages 3-23.
    6. Vithya Leninkumar, 2017. "The Relationship between Customer Satisfaction and Customer Trust on Customer Loyalty," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(4), pages 450-465, April.
    7. repec:idn:jimfjn:v:2:y:2017:i:2:p:1-36 is not listed on IDEAS
    8. Benjamin T. Hazen & Diane A. Mollenkopf & Yacan Wang, 2017. "Remanufacturing for the Circular Economy: An Examination of Consumer Switching Behavior," Business Strategy and the Environment, Wiley Blackwell, vol. 26(4), pages 451-464, May.
    9. El-Adly, Mohammed Ismail, 2019. "Modelling the relationship between hotel perceived value, customer satisfaction, and customer loyalty," Journal of Retailing and Consumer Services, Elsevier, vol. 50(C), pages 322-332.
    10. Carin Cruijsen & Maaike Diepstraten, 2017. "Banking Products: You Can Take Them with You, So Why Don’t You?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 52(1), pages 123-154, October.
    11. Razali Haron & Noradilah Abdul Subar & Khairunisah Ibrahim, 2020. "Service quality of Islamic banks: satisfaction, loyalty and the mediating role of trust," Islamic Economic Studies, Emerald Group Publishing Limited, vol. 28(1), pages 3-23, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Diepstraten, Maaike & van der Cruijsen, Carin, 2019. "To stay or go? Consumer bank switching behaviour after government interventions," Journal of Banking & Finance, Elsevier, vol. 106(C), pages 16-33.
    2. Carin van der Cruijsen & Jakob de Haan & Ria Roerink, 2021. "Financial knowledge and trust in financial institutions," Journal of Consumer Affairs, Wiley Blackwell, vol. 55(2), pages 680-714, June.
    3. Ana Abras & Guilherme G. C. Mattos, 2021. "Get Them While They Are Young," Journal of Financial Services Research, Springer;Western Finance Association, vol. 59(1), pages 97-113, April.
    4. Mohamed Albaity & Mahfuzur Rahman, 2021. "Customer Loyalty towards Islamic Banks: The Mediating Role of Trust and Attitude," Sustainability, MDPI, vol. 13(19), pages 1-19, September.
    5. Rizaldi Yusfiarto & Septy Setia Nugraha & Galuh Tri Pambekti & Annes Nisrina Khoirunnisa, 2023. "Building loyalty in Islamic banking relationship: a multiple mediation approach empirically in Indonesia," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 28(2), pages 306-320, June.
    6. Papadopoulos, Alexandros & McGowan, Féidhlim & McGinnity, Frances & Timmons, Shane & Lunn, Pete, 2023. "Switching activity in retail financial markets in Ireland," Research Series, Economic and Social Research Institute (ESRI), number RS161.
    7. Ahmed Hassanein & Mohamed M. Mostafa, 2023. "Bibliometric network analysis of thirty years of islamic banking and finance scholarly research," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(3), pages 1961-1989, June.
    8. Sonja Fourie & Michael Goldman & Michael McCall, 2023. "Designing for loyalty programme effectiveness in the financial services industry," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 28(3), pages 502-525, September.
    9. D.F. Gerritsen & J.A. Bikker & M. Brandsen, 2017. "Bank switching and deposit rates: Evidence for crisis and non-crisis years," Working Papers 17-08, Utrecht School of Economics.
    10. Carbó-Valverde, Santiago & Cuadros-Solas, Pedro J. & Rodríguez-Fernández, Francisco, 2020. "Do bank bailouts have an impact on the underwriting business?," Journal of Financial Stability, Elsevier, vol. 49(C).
    11. Michiel Bijlsma & Carin van der Cruijsen & Nicole Jonker, 2020. "Consumer propensity to adopt PSD2 services: trust for sale?," Working Papers 671, DNB.
    12. Michiel Bijlsma & Carin Cruijsen & Nicole Jonker & Jelmer Reijerink, 2024. "What Triggers Consumer Adoption of Central Bank Digital Currency?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 65(1), pages 1-40, February.
    13. Beere, Brendan & Byrne, Shane & Kelly, Jane & Pratap Singh, Anuj, 2022. "The Great Account Migration: Lessons from Behavioural Economics," Financial Stability Notes 13/FS/22, Central Bank of Ireland.
    14. Arthur J. Lin & Hai-Yen Chang & Sun-Weng Huang & Gwo-Hshiung Tzeng, 2021. "Criteria affecting Taiwan wealth management banks in serving high-net-worth individuals during COVID-19: a DEMATEL approach," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 26(4), pages 274-294, December.
    15. Del Gaudio, Belinda L. & Salerno, Dario & Sampagnaro, Gabriele & Verdoliva, Vincenzo, 2022. "Misconduct risk in banking services: Does a propensity to be sanctioned exist?," International Review of Financial Analysis, Elsevier, vol. 81(C).
    16. Victor William Bwachele & Yee-Lee Chong & Gengeswari Krishnapillai, 2023. "Perceived service quality and student satisfaction in higher learning institutions in Tanzania," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-12, December.
    17. Wilko Bolt & Loretta J. Mester, 2017. "Introduction to Retail Payments: Mapping Out the Road Ahead," Journal of Financial Services Research, Springer;Western Finance Association, vol. 52(1), pages 1-3, October.
    18. Michiel Bijlsma & Carin van der Cruijsen & Nicole Jonker & Jelmer Reijerink, 2021. "What triggers consumer adoption of CBDC?," Working Papers 709, DNB.
    19. Hellwig, Michael & Laser, Falk Hendrik, 2019. "Bank mergers in the financial crisis: A competition policy perspective," ZEW Discussion Papers 19-047, ZEW - Leibniz Centre for European Economic Research.
    20. Dirk F. Gerritsen & Jacob A. Bikker, 2020. "Bank Switching and Interest Rates: Examining Annual Transfers Between Savings Accounts," Journal of Financial Services Research, Springer;Western Finance Association, vol. 57(1), pages 29-49, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:crmide:v:10:y:2023:i:1:p:46-61. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.