Customer perception regarding Shari'ah compliance of Islamic banking sector of Pakistan
Purpose This paper aims to analyze the impact of Shari'ah compliance 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 of Shari'ah compliance 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 Shari'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 "Shari'ah compliance" 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 regarding Shari'ah compliance standards in terms of products/services, policy/procedures, code of conduct and Shari'ah board. Originality/value This research examines moderating role of Shari'ah compliance perception between service quality and customer satisfaction in Islamic banking sector of an Islamic Republic with dual banking system. This interactive effect of Shari'ah compliance perception has not been found as an overriding theme in any of the main stream journals/articles. Therefore, this study fills this gap.