Understanding Islamic Bank Selection of Customers: A Field Research from Turkish Participation Banks

Abstract

Bank customers have a selection behavior in their banking activities. It is important to understand the factors that the customers of Islamic Banks select the banks as their financial services providers. Such understanding has many micro and macro level advantages from policy making to marketing and forecasting.This paper tries to extract important components in Islamic bank selection of the bank customers in Turkey. Principle Component Analysis (PCA) is used in exploratory data analysis to 341 customer surveys that were obtained from the customers of participation banks in Turkey. We found that three latent variables are important for the Turkish Participation Bank customers in their bank selection. The customers care for i) Islamic Banking ii) Quality Banking and iii) Fast Banking. Our literature review on Islamic bank selection and our results suggest that providing Islamic Banking is a must while alone is not enough criteria for an Islamic Bank to be selected by customers.