Factors Affecting Customer Loyalty in Islamic Banking: Evidence from Malaysian Banks

This study attempted to determine the factors that affecting loyalty among the Islamic banking customers. Data for the research were collected through a survey of customers of 2 full fledge Islamic banks in Malaysia. The study was carried out by taking a sample of 250 respondents. Principle component analysis (PCA) was used to estimate the effect of the factors on customer loyalty. Descriptive statistics showed that in general, respondents displayed positive level of loyalty. The results of the PCA show that nine factors have significant positive influence on customer loyalty. Results of reliability test for each of the factors shown, the Cronbach alphas of the measures were all comfortably above the lower limit of acceptability that is a >.50. Hence, all the measures were highly reliable. The finding highlights the importance of the factors on customer loyalty. Managers of Islamic banks have to place prime the importance of customers by building these factors to enhance customer loyalty. By contributing to the body of knowledge in this area, this research adds significant value. Moreover, the study presents valuable information on the market behaviour of Islamic banking customers in Malaysia, which may be unfamiliar to many readers.