THE ROLE OF CUSTOMER SELECTION CRITERIA, BANKING OBJECTIVE, CSR AND SERVICE QUALITY IN ENHANCING POSITIVE CUSTOMER PERCEPTION: AN ISLAMIC BANKING PERSPECTIVE

Abstract

The study aims to develop a model to understand customer perceptions of Islamic banks concerning Corporate Social Responsibility (CSR) and service quality in South Africa. Notably, the correlations are identified between the following constructs: objectives of Islamic banking, customers' criteria when selecting an Islamic bank, CSR, and service quality. After that, the correlations between CSR and service quality are identified with customer perceptions measured by their satisfaction and loyalty. 163 respondents participated in this study and were selected based on purposive and snowball sampling techniques. The data was collected using an online survey, and the analysis was carried out using structural equation modeling. The results show that the objectives driving Islamic banking have a significant positive link with CSR and service quality. A customer's decision to select an Islamic bank is found to have a significant positive link with Islamic banking and CSR objectives. However, the relationship between a customer's decision to select an Islamic bank and service quality was insignificant. The results also show that CSR is a significant predictor of service quality. In addition, CSR and service quality – whether separately or in combination – were found to significantly predict customer perception, as measured by the customer's satisfaction and loyalty. Further, the results demonstrate the critical role of CSR and service quality at Islamic banks in meeting customer expectations. Finally, the results assist management at Islamic banks in designing policies supported by empirical evidence.