What Drives Customer Loyalty in Islamic Banking? An Evidence from Pakistan

Abstract

This study investigates the role of customer intimacy, commitment, and trust in increasing their loyalty and mediating role across trust and customer loyalty nexus. A total of 500 questionnaires were disseminated but 404 of these were included for analysis (approx. 81% response rate). The hypotheses were tested through the structural equation modeling technique using smart PLS. The results indicate that trust has a significant nexus with commitment, customer intimacy, and loyalty. Both commitment and customer intimacy have a significant nexus with customer loyalty. The mediation analysis reveals that commitment and customer intimacy act as important mediating variables in the nexus. The research outcome supports the notion that as the level of trust increases the level of intimacy, commitment, and loyalty would tend to increase as well. The results further reveal that customers are devoted towards persistent and continuing association with Islamic banks. Commitment, trust, and customer intimacy prove to be the foundation factors for building and strengthening customer loyalty. It emerges, that in terms of hierarchy, the customer trust needs to be evolved at the initial level consistently followed by customers' intimacy, commitment, and loyalty.