Why do Malaysian customers patronise Islamic banks

International Journal of Bank Marketing
Volume 25 Number 3 2007 pp. 142-160
Copyright © Emerald Group Publishing Limited ISSN 0265-2323


Why do Malaysian customers patronise Islamic banks

Islamic banking industry has been growing by 18% on average since the year 2000. The Malaysian government wants the Islamic banking industry to capture 20% of the banking sector by 2010. At the moment, Islamic deposits stand at %11.7 and financing stands at %12.1.
Islamic banks’ operations are similar to those of conventional banks, however they slightly differ: Islamic banks do not charge interest on business credits for example, but they demand a royalty fee in case that business turns out profitable. They also do not invest in industries such as gambling, tobacco, alcoholic beverage; neither do they take excessive risks in other businesses.
Studies show that the banks’ level of commitment to Islamic rules is not the only important factor in attracting customers. Cost and benefits, service delivery, size and reputation of the bank, convenience (location and ample parking), and friendliness of bank personnel seem to be at least as important as religious commitment. Therefore, the marketing strategy in Islamic Banking Industry would be wrong to solely focus on the ethical side of their businesses.

EMRE UNAL 106604190