Customer perception regarding Sharī‘ah compliance of Islamic banking sector of Pakistan

Purpose - This paper aims to analyze the impact ofSharī‘ahcompliance perception on customer satisfaction in Islamic banking sector of Pakistan. Design/methodology/approach - Primary data were collected from 242 account holders of Islamic banks and Islamic banking branches of conventional commercial banks and analyzed by correlation and regression through self-administered questionnaires based on SERVQUAL model. Findings - Significant moderating effects ofSharī‘ahcompliance perception on the relation between service quality and customer satisfaction have been identified. Research limitations/implications - As a cross-sectional study with convenience sampling restricts generalizability and because financial benefits offered by banks were not included as a variable, the scope of this study is limited to service quality only. Future research may focus on the moderating effect of Sharī‘ah compliance perception through longitudinal study with larger sample size in a multi-cultural environment. Practical implications - Results of this paper recommend Islamic banks to focus on their core strength “Sharī‘ahcompliance” while developing their product/service and building marketing strategies. Moreover, assurance of high-quality services will sustain such strategies against competition with conventional banks. Social implications - Islamic banks must primarily develop their brand through extensive communication and public awareness programs regardingSharī‘ahcompliance standards in terms of products/services, policy/procedures, code of conduct andSharī‘ahboard. Originality/value - This research examines moderating role ofSharī‘ahcompliance perception between service quality and customer satisfaction in Islamic banking sector of an Islamic Republic with dual banking system. This interactive effect ofSharī‘ahcompliance perception has not been found as an overriding theme in any of the main stream journals/articles. Therefore, this study fills this gap.