International Journal of Bank Marketing

The determinants of the choice of Islamic banks in Tunisia

Moez LTIFI Lubica Hikkerova Boualem ALIOUAT Jameleddine GHARBI
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Moez LTIFI Lubica Hikkerova Boualem ALIOUAT Jameleddine GHARBI , (2016),"The determinants of the choice of Islamic
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 The determinants of the choice of Islamic banks in Tunisia
Abstract
Purpose
This paper aims to determine the explanatory factors for the selection of Islamic banks and evaluate the
moderating role of demographic characteristics. This study seeks to better understand these determinants
in Tunisia, a country with a developing Islamic finance system and a culture different from those in other
Muslim countries studied in the literature.

Design/methodology/approach
We developed a two-sided approach: a quantitative survey and 12 semi-structured interviews based on
four customer segments identified by the quantitative study. For the survey, data were collected from
180 Islamic bank clients in Tunisia. The factors adopted for the selection of an Islamic bank are service
quality, trust, and compliance with Sharia (Islamic) law. We identified and measured the selection
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criteria using a factor analysis, regression analysis, and demographic characteristics analysis.

Findings
Customers consider several factors while choosing an Islamic bank: the quality of service offered by the
financial institutions, trust, and (especially) compliance with Sharia law. Moreover, gender and age
appear to be the only moderators between the selection of an Islamic bank and these determinants.

Theoretical implications
This study enriches the Islamic marketing literature on the service quality offered by Islamic financial
institutions, trust, and compliance with Sharia law. It leads to a better understanding of the role of these
factors in the selection of Islamic banks. It also evaluates the moderating roles of gender and age as
consumer behavior descriptors.

Practical implications
This study offers Islamic banks a better understanding of how Tunisian customers select financial
institutions. These banks must consider the different determinants of choice in order to create value for
consumers and prepare their marketing strategies. We identify four customer segments based on gender
and age by which the banks may improve their positioning and market share, thus contributing to the
development of Islamic financial institutions in Tunisia.

Originality/value
This is the first study of its kind in Tunisia, where the market share of Islamic finance remains low. The
study enriches the Islamic marketing literature on the quality of Islamic financial institutions’ service,
trust, and compliance with Sharia law. It also tests demographic characteristics as moderators. The
results and implications of this research can be applied to countries similar to Tunisia.
Keywords: Islamic bank, service quality, trust, consumer behavior, attitude, loyalty
Paper type: Research paper

1
 Introduction

Modern Islamic finance began with the 1975 establishment of the Islamic Development Bank

in Jeddah (Saudi Arabia) and the Dubai Islamic Bank, but its main growth is quite recent

(Shoaib, 2007). The growth of Islamic banks was particularly encouraged by successive

increases in oil prices (until 2014) and the need to recycle petrodollars (Siagh, 2012). In 2007,

Islamic banks achieved annual growth in assets of 27% against only 19% for conventional

banks (Kapur, 2008). This tendency continued after the financial crisis; global Islamic

banking assets witnessed a compound annual growth rate of around 17% from 2009 to 2013
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(World Islamic Banking Competitiveness Report 2014–15).

Today, Islamic banks and “windows” (a department of a conventional bank offering

Islamic financial services) are installed in many developed countries, such as the United

Kingdom and Singapore, as well as in Arab and Muslim countries. In 2014, there were more

than 400 Islamic banks in over 75 countries (The Banker, 2015). Islamic banks have existed

in Tunisia since the 1980s, coexisting with conventional banks. They seek to differentiate

themselves by offering Islamic banking products and services to their Muslim customers.

However, Islamic finance in Tunisia remains under-developed. Banking activities

consistent with Sharia law do not exceed 2.2% of the banks’ total assets (Euromoney, 2012).

This situation is not unique to Tunisia; other Muslim countries, such as Algeria, Egypt, and

Turkey, are in the same situation. Therefore, empirical studies in these countries are required

to better understand the development of Islamic finance, as the literature has focused on Gulf

Cooperation Council (GCC) countries, Iran, and Malaysia.

Many of the factors influencing the behavior of banking customers and that can

explain the different evolution of Islamic finance—such as political systems, lifestyles, and

cultures—have not been studied; for example, the Tunisian conservative–modern lifestyle is

quite different from lifestyles in other Middle Eastern countries.

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 Tunisia’s banking sector is fragmented, and competition in the retail market is low.

There are three major Islamic banks: El Baraka Bank, Noor Islamic Bank, and Zitouna Bank.

The current under-development of these banks is largely a product of the political situation

before the 2011 Jasmine Revolution. The current environment is more conducive to the

development of Islamic finance, and these banks intend to take advantage of the opportunities

in Tunisia.

To be competitive, Islamic banks must understand how customers choose their

financial institutions and how their preferences are formed. Understanding the needs and
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expectations of customers will allow banks to optimize their products and services and thus

establish and develop a strong relationship with them (Tsai et al., 2011).

The banking sector, a kind of service industry, is characterized by the coexistence of

Islamic banks and the Islamic windows of conventional banks. The service is characterized by

the attributes of intangibility, inseparability, heterogeneity, and perishability (Zeithaml et al.,

1985). Service providers must adapt their offerings in order to increase profitability, satisfy

customers, and develop a long-term relationship with them (McQuilken and Pont, 2005).

Therefore, Islamic banks must know how consumers evaluate their products and

services. As the banking sector in Tunisia is composed of several competing Islamic and

conventional banks (with Islamic windows), it is important to recognize the main

determinants that motivate customers to choose a particular bank (Bizri, 2014). This research

analyzes the main determinants influencing customer decisions in Tunisia and the potential

role of the moderator variables of demographic characteristics in the differentiated behavior

of potential clients through approaches that consider these variables as discriminatory

(Ladwein, 2003) and explanatory indicators of behavior (Hamouda et al., 2014).

Despite the relative lack of cultural diversity in Tunisia, Tunisians’ choices vary

according to their values, beliefs, and perceptions (Jabnoun and Khalifa, 2005; Furrer et al.,

3
 2002). Lu and Chan (2012) argue that religious and cultural beliefs influence consumers’

investment decisions, but this is a general and vague conclusion. There is little differentiation

among the products offered by Islamic banks (Walker et al., 2008), yet these institutions must

develop a competitive advantage through the specificities of their products in order to acquire,

satisfy, and retain new customers (Sayani and Miniaoui, 2013; Iqbal and Mirakhor, 2007;

Lopez et al., 2007). Thus, it is worthwhile studying the more relevant explanatory factors in

the selection of financial institutions in each specific context because the results found in one

country are not transposable to another (Bizri, 2014).

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Most studies focus on countries with strong Islamic finance cultures—such as the

GCC countries, Iran, and Malaysia—and often on a specific population, such as students.

However, to our knowledge, no study has performed market research on Islamic financial

institutions in Tunisia. In addressing this gap, our research aims to contribute to the

development of a better understanding of the determinants of Islamic bank selection in a

North African context characterized by a strong potential for growth in this sector.

The objective of this research is to determine the explanatory factors in the selection of

Islamic banks and evaluate the moderating roles of gender and age. After reviewing the

literature on the determinants of the choice of Islamic banks, we describe our methodology.

We develop a two-sided approach—a quantitative survey and 12 semi-structured interviews

based on the four customer segments identified in the quantitative study. Then, we present the

results generated by the two approaches. Finally, we discuss the results, their managerial

implications for Islamic banks, and prospects for future research.

I. Conceptual framework and research hypotheses

The marketing exchange approach has evolved over the last few decades, while companies

have been changing their commercial methods. Traditional marketing focused on satisfying

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 the needs and desires of the customer and creating an orientation towards a product or brand

without considering the social relationships among the actors. From this perspective,

communication between companies and customers was almost non-existent; the latter were

regarded as complete strangers, and there was no interest in understanding the customer’s

personality because the role of customer relations was chiefly to respect the company’s

obligations in accordance with the terms of the exchange. This exchange, named

“transactional exchange” (Dwyer et al., 1987) or “restricted exchange,” is not sustainable, as

each transaction is regarded as unique and independent of all past and future transactions. The
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customer has no preference, consideration, or loyalty concerning the seller. Reciprocally, the

seller does not express any desire to know the preferences of the customers nor their

perceptions and opinions of the service or product. This highly restrictive vision of an

exchange was criticized for its limited ability to explain customer behavior. It has been

gradually replaced by a new line of research over the past few decades, both on the theoretical

and practical levels. It focuses on the concept of “relational exchange” and makes the

relationship between the partners the main object of analysis (Oliver, 1999).

This concept of relational exchange is characterized by its realistic aspect, based on

two basic hypotheses: the continuous temporal character of the exchange process and the

existence of a social link between the two parties in the exchange (i.e., company and

customer). Cooperation between partners contributes to the success of an exchange within a

relational context; this implies a certain level of knowledge and reciprocal understanding

between the two parties, which further suggests that the development of social links between

the actors helps the partnership endure (Morgan and Hunt, 1994).

A continued partnership between the two actors requires the reduction of uncertainty

between them, an increase in the frequency of exchanges, and a better flow of information,

allowing each party to gain more knowledge of the other’s expectations, which creates an

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 environment of shared trust and mutual commitment. It is within this framework that several

studies have been conducted, in various contexts and countries, to understand the acceptance

of Islamic financial products and services, as well as the factors that motivate customers to

become clients of an Islamic bank (Bizri, 2014; Sayani and Miniaoui, 2013; Jabnoun and

Khalifa, 2005; Furrer et al., 2002; Naser et al., 1999).

Given the increased competition in the banking sector, these studies provide very

useful implications concerning strategic choices, positioning, future investments,

segmentation, and other business decisions, especially in countries where the market share of
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Islamic finance remains low (Galal and Mouawad, 2009). It is necessary to identify the

explanatory factors and moderating variables driving customers to choose Islamic banks in

countries like Tunisia. As those living in different cultural contexts have varying sets of

expectations, selection criteria for Islamic banks—especially perceived service quality

(Raajpoot, 2004)—can change. Personal characteristics can also influence Islamic bank

selection (Sayani and Miniaoui, 2013).

I.1. The decision to choose an Islamic bank

Bank selection is a complex process. An individual or company must choose a bank a priori.

They will make a choice among a range of financial institutions. In this choice, several

explanatory factors come into play. We try to understand the process of Islamic bank selection

and the factors highlighted in the literature involving perceived quality of service, compliance

with Sharia law (Islamic jurisprudence), and trust in the Islamic financial institution.

I.1.1 Perception of service quality and culture

With the exponential growth of competition in the goods and services industries, especially in

the banking sector, quality of service has become a source of competitive advantage for

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 managers of financial institutions (Stafford, 1996; Holstius and Kaynak, 1995). Companies

try to convince their customers that they offer better service than their competitors (Chigamba

and Fatoki, 2011).

Parasuraman et al. (1985) defined service quality as “the degree and direction of the

discrepancy between the perceptions and expectations of customer service.” Quality of

service is expressed by the reversal paradigm developed by Oliver (1980) and enhanced by

Parasuraman et al. (1985). Their model identified 10 critical determinants of service quality,

which can be used to analyze the differences between customer expectations and perceptions
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of service. This model suggests that customers of Islamic banks will compare their

perceptions of the services delivered by these financial institutions to their expectations

gleaned from past experiences, including with conventional banks (Stafford, 1996).

Several recent studies found that the perceived service quality of Islamic banks

significantly influenced customers’ decisions (Bizri, 2014). Moreover, in a comparative study

between Muslim and non-Muslim customers, Erol et al. (1990) showed that both types of

customers believed that the quality and rapidity of services were the most decisive factors in

the bank-selection process.

Gerrard and Cunningham (1997) interviewed undergraduates in Singapore to rank the

importance of various bank-selection factors, finding a general accord between Muslims and

non‐Muslims on the ratings of the criteria. Quality of service, the feeling of safety,

convenience, and promotional activities were the primary determinants of their choices.

Similarly, Dusuki and Abdullah (2007) confirmed that the quality of service,

conformity to Sharia law, and financial reputation were the determinants of Islamic bank

selection for Malaysian consumers. There are two practical implications of this paper. First,

Islamic banks must offer quality services while maintaining their Islamic reputation. Second,

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 Islamic banks should also develop good customer service policies to reap the potential of

Islamic finance.

Al-Tamimi et al. (2009) found that the most important bank-selection factor for

United Arab Emirates customers was the characteristics of bank products, followed by service

quality, and religious factors.

Moreover, Amin et al. (2009) established that banks should have a personality and

spirit of service. Islamic banks must attach great importance to the recruitment and training of

personnel who are in contact with clients to improve interpersonal communication and
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increase the bank’s effectiveness in achieving the objectives of Islamic banking.

In other countries, Hedayatnia and Eshghi (2011) and Ahmad et al. (2011)

investigated the factors determining bank selection. The former conducted a survey in Iran,

finding that the quality of service and innovation in banking services were the most important

factors for Iranian customers. Ahmad et al. (2011) interviewed 300 students at the

International Islamic University of Malaysia, finding that brand, ease of use, and quality of the

customer interaction were the fundamental drivers after religion. This study revealed the

relationship component in perceptions of bank service quality.

However, consumer expectations can vary across countries. For example, Kashif et al.

(2015) revealed that the reliability dimension is not relevant for customer satisfaction with

Malaysian Islamic banks. Though Tunisia is Muslim, its culture differs considerably from the

cultures in the Middle East and Malaysia, where most studies on Islamic banks have taken

place. Consequently, it is necessary to study the effect of perceived service quality on the

decision to select an Islamic bank. Thus, our first hypothesis is as follows:

H1. The perception of the service quality offered by an Islamic bank positively influences

the customer’s decision to become a client.

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 I.1.2. Trust

Trust is a central concept in marketing. Trust means willing to be vulnerable to the actions of

a third party. A consumer will not have confidence in a firm unless they perceive a high

probability that the company will provide a benefit in which they will share (Gambetta, 2000).

Trust is based on the perceived level of risk, uncertainty, and/or vulnerability (Jevons and

Gabbott, 2000).

The paradigm of relationship marketing has been widely used in service sector studies

(Sheth and Parvatiyar, 2002). Given the specificities of services, such as the intangibility of
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the offer, trust plays a key role in the relationship and interaction between sellers and buyers

(Palmatier et al., 2006). In the theory of social exchange, commitment and trust are key

elements in any exchange relationship. These two variables are mediators in the relationship

between social agents (Morgan and Hunt, 1994). Trust is among the most important factors in

purchase decisions and affects consumer behavior and preferences (Urban et al., 2000). The

marketing literature shows that customer perceptions of the firm are influenced by the level of

trust. Thus, the level of trust will influence their decision (Grewal et al., 1998).

Nasser et al. (1999) pointed out that, in Jordan, trust is a key factor in the choice of an

Islamic bank. In a more recent study, Ahmad et al. (2011) found that, even if religion is the

major driver in the choice of Islamic banking, brand reputation, and therefore trust, plays a

key role because the fundamental differences between Islamic and conventional banking are

poorly understood. Finally, Bizri (2014), who conducted a survey in the Lebanese banking

sector, observed that trust is a potential antecedent of dealing with an Islamic bank. Therefore,

trust should be a determinant in the selection of an Islamic financial institution in Tunisia.

Thus, our second hypothesis is as follows:

H2: The customer’s trust in an Islamic bank influences his/her decision to become a client.

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 I.1.3. Islamic banks’ compliance with Sharia law

Most of the literature has reported a positive relationship between the selection of Islamic

banks and religious preferences (Souiden and Rani, 2015; Al-Ajmi, 2009; Okumus, 2005;

Naser et al., 1999; Metawa and Almossawi, 1998), even if some have documented a negative

relationship between the two factors (Ahmad and Haron, 2002; Haron et al., 1994; Erol et al.,

1990) or no relationship (Gerrard and Cunningham, 1997).

When choosing a bank, Muslim clients generally base their decision on religious

grounds. These customers respect Sharia law, especially its basic principles against charging
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interest (Bizri, 2014).

Islamic financial institutions promise to follow the fiqh muamalat (Islamic rules on

transactions) and are required to separate the funds and activities of Islamic banking

transactions from the non-Islamic banking business (conventional banking). All Islamic banks

have set up Sharia Committees to guide them in Sharia matters and ensure that they function

in a manner consistent with Sharia law. Aside from this supervision, customers have no other

way to be sure that Islamic banks are keeping their promises and commitments.

Thus, trust is essential in order for customers to willingly engage in activities that

generate profits without interest. Trust influences customer intentions and therefore future

behavior (Gambetta, 2000).

Trust can be seen as a byproduct of religious and moral values that reinforce the

honesty and mutual respect between the two parties to the exchange (Gambetta, 2000).

Establishing a relationship based on trust is not easy in complex societies, which is why

customers have doubts about Islamic banks. They want to ensure that the activities of the

Islamic financial institution comply with Sharia law, and that compliance must be satisfied

(Gambetta, 2000).

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 In fact, in the 1980s, some banks did not hesitate to use the “Islamic” label to do

business, increase sales, acquire new customers, and increase their profits, all without

complying with the principles of Sharia law. This situation crystallized doubts about the

overall banking sector (Bizri, 2014). In several Arab and Muslim countries such as Egypt,

Islamic banks invested 20% of their deposits in Murabaha contracts, and the remaining 80%

was invested in other banks that paid interest on these deposits (Mohieldin, 1997). The

prohibition of riba (interest) was clearly violated in pursuit of other goals. This violation

negatively affected customer perceptions; they were unable to distinguish between Islamic
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and conventional products. This violation and Sharia non-compliance have extended to the

Middle East and North Africa (Galal and Mouawad, 2009).

Recently, Bizri (2014) highlighted that this issue is still relevant, concluding that an

Islamic bank’s Sharia compliance positively affected the client’s intention to choose that

bank.

Therefore, it is necessary to study the relationship between customers’ perception of a

bank’s Sharia compliance and their wish to become a client of the institution. Accordingly,

our third hypothesis is as follows:

H3: The customer’s perception of a bank’s Sharia compliance influences his/her decision

to become a client.

II.2 Influence of demographic characteristics

Many social science disciplines, especially sociology, have contributed greatly to the

understanding of consumer behavior (Hamouda et al., 2014). Some studies seek to explain

social phenomena driven by specific social characteristics such as sex, age, profession, and

religious denomination (Ladwein, 2003). In our study, the power of the explanatory variables

may be moderated by consumer demographics such as age and gender. Moderator variables

11
 systematically vary the intensity, size, and shape of the direction of an explanatory variable’s

impact on a dependent variable (Sharma et al., 1981). It is thus necessary to test the impact of

the different demographic variables to better understand the determinants of Islamic bank

selection.

II.2.1 The moderating role of gender

All those involved in a firm’s marketing strategy must consider consumers according to their

gender (Popcorn and Marigold, 2000). Studies on the effects of gender on behavior began in
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the 1960s (Tissier-Desbordes and Kimmel, 2002). In market segmentation, gender is one of

the most commonly used criteria (Darley and Smith, 1995; Meyers-Levy and Sternthal, 1991).

Gender intervenes at all levels of the procurement process (Mitchell and Walsh, 2004;

Putrevu, 2001). As gender can moderate evaluative judgments (Holbrook, 1986), many

studies have shown that it has a significant moderating effect. We thus propose the following:

H4. Gender moderates the consumer’s perceptions of service quality/trust/compliance with

Sharia law and the consumer’s selection of an Islamic bank.

II.2.2. The moderating role of age

Differences in consumer age can influence attitudes and behaviors (Gretzel and Yoo, 2008;

Beatty and Smith, 1987; Klippel and Sweeney, 1974). For example, it has been observed that,

while young people willingly accept new information and communication technologies (ICT),

older people are more reluctant (Cheung and Thadani, 2012); they also become more cautious

and seek a higher level of certainty in their choices and decisions (Shanas, 1968). Moreover,

the source selection of personal and business information and ways of processing information

also change with age (Liao and Fu, 2012). We thus propose the following:

12
 H5. Age moderates the consumer’s perceptions of quality relationship/trust/compliance

with Sharia law and the consumer’s selection of an Islamic bank.

II.2.3. The moderating role of other demographic variables

Though most authors consider gender and age to be the main drivers of behavior, other

personal characteristics can influence Islamic bank selection (Sayani and Miniaoui, 2013),

such as income, occupation, marital status, education, and previous experience with Islamic

banks.
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Income and occupation may influence customers’ decisions. For example, poor and

low-income earners may see Islamic banking as a way to be included in the banking system

(Islamic Social Finance Report, 2014). They may also require basic services and have less of

an interest in the quality of bank services or prices than wealthier populations. Level of

education could also play a role. Finally, the extent of customers’ experience with Islamic

banks may also influence their decision making. We thus propose the following:

H6. Personal characteristics (i.e., revenue, occupation, marital status, education, and past

experiences with Islamic banks) influence customers’ selection of Islamic banks.

II. Research methodology and data

Our empirical analysis is based on a questionnaire survey conducted in the banking sector in

Tunisia. To minimize bias, we chose to administer our questionnaire to customers

immediately after their experience with banking services. We contacted customers leaving

branches of the major retail Bank in Tunisia. The convenience sampling method was used

(Zikmund, 2000). The survey was conducted in April and May of 2014. We followed the

recommendation in Hair et al. (2008) that the sample size be equal to at least five times the

number of items in the questionnaire. To collect our data, we distributed 250 questionnaires,

13
 of which 180 were usable when returned (a response rate of 72%). Seventy questionnaires

could not be used because of missing data. The questionnaire was presented in French.

Our questionnaire was divided into two parts. In the first, we asked respondents to

report their demographic characteristics such as gender, age, education, occupation, and the

number of years of experience with Islamic banks. In the second, the respondents rated the

importance of the factors influencing their selection of an Islamic bank. They assessed their

preferences for various determinants of their selection on a Likert scale of five items ranging

from 1 (“strongly disagree”) to 5 (“strongly agree”). We asked respondents to give their

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preferences in the following dimensions: (1) the perceived service quality of Islamic banking,

(2) trust in this type of bank, and (3) the compliance of their financial institution with Sharia

law (Islamic jurisprudence).

The presentation of our sample reveals a proportional male–female balance (48% and

52%, respectively); 41.66% of them are students; 18.88% are tradespeople; 23.33% are

employees; 11.11% are employers; and 5% are retired. We see that 50% of the sample are

aged between 25 and 44. Approximately 25.55% have less than one year of experience with

Islamic banks, 48.33% have one to five years of experience, and the rest have more than five

years of experience. Most respondents (83%) earn less than 700 dinars monthly (about €300).

Insert table I here.

We used Cronbach's alpha reliability coefficient as an indicator to measure the internal

consistency of the scale. Nunnally (1978) recommends an α greater than 0.7, but an α greater

than 0.6 is acceptable in exploratory research (Hair et al., 2008). We found an α of 0.83 for

the nine items, indicating strong consistency across the scales used in this investigation.

The data drawn from our survey were subjected to several statistical tests using SPSS

20.0 data analysis software. Factor analysis was performed to identify the factors affecting the

14
 decision to join Islamic banks in Tunisia. Regression analysis was performed to assess the

importance of these factors in predicting the individual’s selection of an Islamic bank.

Descriptive statistics regarding the determinants are presented in Table II.

Insert table II here.

The Sharia compliance variable is highly correlated with other variables. The variables are

clearly interrelated due to the religious aspect of Islamic banks. In particular, compliance with

Sharia law positively influences the level of customer trust but negatively impacts the quality
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of service. This may mean that, when customers choose to deal with Islamic banks, the prime

motivation is religious, making quality of service irrelevant.

We supplemented this quantitative analysis with a qualitative research approach. This

type of approach allows the researcher to understand how people interpret their experiences,

how they construct their worlds, and the meaning they attribute to their experiences. The

choice of this methodology is justified by its ability to generate comprehensive information

used to determine customer perceptions of the attributes of their preferences of Islamic banks

and thus confirm the findings of the quantitative approach (Merriam, 2009). Moreover, Falk

and Guenther (2007) showed that this combination of quantitative and qualitative methods

effectively validated the findings of both data sources.

We carried out 12 semi-structured interviews with respondents selected based on two

criteria, gender and age, corresponding to our hypotheses. Three men and three women under

35 years of age and three men and three women over 35 years of age were selected.

The interviews took place in May 2014 for an average period of one hour. At the

beginning of every interview, the interviewees were given a guarantee of confidentiality

concerning their identity and data. All interviews were recorded and reviewed several times

before being transcribed in full. Four areas were covered:

15
 - Level of familiarity with Islamic products,

- Reasons for becoming customers of Islamic banks,

- Reasons for continuing being customers of Islamic banks,

- Religiosity and attitudes toward Islamic banks.

III. Empirical results

III.1. Factor analysis

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We conducted a factor analysis to determine the factors that contributed most to a Tunisian

client’s selection of an Islamic bank. To check the adequacy of the sample, we used Bartlett’s

test of sphericity. A Kaiser–Mayer–Olkin (KMO) value greater than 0.5 indicates that the

factor analysis is appropriate. The Bartlett sphericity test is used to examine the correlation

between the sampled variables. In our study, this test shows a value of 0.86, which is clearly

above the threshold of 0.5. In addition, the Bartlett’s test of sphericity was obviously

significant (p-value < .01), indicating that the sample data were suitable for factor analysis.

A principal component analysis followed by varimax rotation was performed on the

variables in our study. The result generated three factors with coefficients greater than 1 (see

Table III). These three factors retain 68% of the initial information. Thus, factor analysis was

used to determine the dominant factors in Tunisian customers’ Islamic bank selection.

We note that compliance with Sharia law is the most important factor in the selection

of an Islamic bank in Tunisia, followed by quality of service and trust.

Insert table III here.

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 III.2. Regression analysis

Having used factor analysis to identify three factors determining the selection of an Islamic

bank in Tunisia, we are interested in the quantification of this influence. A regression analysis

measures the importance of each factor in predicting the dependent variable (the selection of

an Islamic bank). The model summary indicates that the adjusted R² is 0.75 (see Table IV),

which shows that the proposed model can predict 75% of the selection of an Islamic bank. In

addition, the F-test shows a significant value (see Table V). Therefore, we conclude that the

proposed global model has a very high predictive power.

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Insert table IV and V here.

A careful analysis of the coefficients identifies the factors significantly influencing the

decision to choose an Islamic bank in Tunisia. Through the regression analysis shown below,

we confirm that the three factors are statistically significant (3 p-values of the student test <

0.05) and explain the decision to select an Islamic bank.

Some variables have a stronger predictive power than others because their β

coefficients are larger. Therefore, hypotheses H1, H2, and H3 are confirmed: quality of

customer service, trust, and Sharia compliance influence the consumer’s choice. The

regression equation is as follows (with c representing the constant, and b1, b2, and b3

representing the β coefficients for the explanatory variables in the equation):

P = c + b1 Compliance with Sharia + b2 Quality of Customer Service + b3 Trust

P = 4.206 + 0.58 Compliance with Sharia + 0. 46 Quality of Customer Service + 0.39 Trust.

Multicollinearity among our three explanatory factors is low, with VIF indices below 2.

17
 III.3. Moderating role of demographic characteristics

Before verifying the assumption concerning the moderating role of gender in the relationship

between bank selection and quality of service/confidence/Sharia compliance, we must ensure

that the condition of variance homogeneity on different levels of the moderator variable is

properly respected (Caceres and Vanhamme, 2003). We verify this with the Levene test

(Carricano and Poujol, 2008). The p-values of this test are not significant (in Table VI, p-

value= 0.653/0.624/0.676). Thus, the homogeneity of variances is satisfied.

The generated results reveal a significant relationship between bank selection and the quality
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of service/confidence/Sharia compliance only for women. The results of the adjusted R-

squared (Adj-R²) reveal that the percentage of the variance explained is greater among women

(Adj-R² = 11.7%; 10.5%; 13.6%) than among men (Adj-R2 = 1%, 3%, 0.7%, 1.8%).

Moreover, the regression coefficients are higher (beta = 0.357/0.327/0.367) and more

significant for women (p-values of the t-test < .01). For all regressions, VIF indices are below

2.

This leads us to conclude that it is actually the female clients who choose an Islamic

bank according to quality of service, trust, or Sharia compliance. Thus, H4 is confirmed:

gender moderates the perceived quality of service/trust/Sharia compliance in the selection of

an Islamic bank.

Insert table VI here.

For age, the homogeneity of variances is also respected because Levene’s test was not

significant (p-values = 0.493/0.471/0.493). To assess the moderating role of age on the

relationship between bank selection and quality of service/trust/Sharia compliance, it is

necessary to perform a multi-group analysis (see Table VII).

18
 The results establish that the relationship between bank selection and the quality of

service/confidence/Sharia compliance is significant for those under 35. The percentage of the

variance explained is greater among this group (Adj-R² = 13.4%; 12.3%; 14.5%), and the

regression coefficients are higher (beta = 0.378/0.356/0.389) and more significant (p-values of

the t-test < .01").

Therefore, we confirm a moderating effect of age on the relationship between

choosing an Islamic bank and the quality of service/confidence/Sharia compliance. Hence, H5

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is supported: consumer age moderates the perceived quality of service/trust/Sharia

compliance in Islamic bank selection.

Insert table VII here.

We tested the influence of the five other demographic characteristics: marital status, income,

occupational category, level of education, and number of years of experience with Islamic

banking. These demographic factors have no significant influence on the customer’s decision

to patronize an Islamic bank (thus, H6 is not supported); we cannot, then, differentiate clients

of Islamic banks on this basis. In particular, the extent of experience with Islamic banking

does not impact bank selection. Customers’ perceptions remain the same, and religiosity still

dominates over quality of service.

This study has validated the assumption concerning the moderating role of gender and

age in the relationship between bank selection and quality of service/confidence/Sharia

compliance. These results on gender and age enable us to define the four customer segments

described below; we will then examine their characteristics further through the semi-

structured interviews:

- women under 35 who are very sensitive to the three factors, particularly the religious

factor,

19
 - women over 35 who are sensitive to the religious factor but less so than women in

the first category,

- men under 35 who are rather sensitive to the three factors,

- men over 35 who are little affected by the three factors.

These interviews confirm the conclusions of our quantitative study and the finding of Metawa

and Almossawi (1998), Haque and Al (2009), Al-Ajmi et al. (2009), and Amin et al. (2009)

that the religious factor is the principal factor determining Islamic bank selection. However,

the interrogation of the four customer segments, described below, allows a better
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understanding of the reasons for their choices.

For the women under 35, the interviews show that those with a low income and who

are not students are the most sensitive to the religious aspect. They decided to open an

account with an Islamic bank because of a lack of choice. They chose the branch nearest to

their home or work without considering quality of service. This result corroborates Naser and

Al-Khatib (1999). They trust the Sharia board of their bank (which guarantees the conformity

of the products with Sharia law) without being concerned about its composition or seeking to

understand how the products work. Overall, they are satisfied with the banks’ quality of

service and their relationships with branch employees.

For the women over 35, the religious aspect also strongly features in their decision,

but, of the secondary reasons, the recommendations of a third party and social pressure are

strong. The recommendation aspect has already been highlighted by Amin et al. (2009).

Moreover, they expect long-term satisfaction. They are ready to accept worse short-term

quality of service while waiting for their bank to reach a critical size, particularly in terms of

the number of branches and ATMs in Tunisia. They show “true loyalty” (Sirdeshmukh et al.,

2002) to their bank because they foresee a long-term relationship and recommend their bank

to those close to them; they thus become prescriptors.

20
 The men under 35 are rather sensitive to the three factors. The quality of service is as

important as conformity with Sharia law. Another factor appears: the price of the services.

The offers from non-Islamic banks are perceived as relatively homogeneous in terms of

quality of service and price and appear better positioned than those of Islamic banks.

However, these elements do not appear sufficiently discriminating to influence their choices.

Thus, their satisfaction is rather average. On the other hand, some consumers recognize that,

if the quality of service became too poor and/or the prices too high compared with

conventional banks, they may leave Islamic banking.

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For the men over 35, the three factors hardly affect their choice, and the religious

aspect has much less importance. Confidence, safety, and the reliability of the services (more

generally, of the bank) counterbalance the religious factor. This is true even if these

consumers establish mental links between Sharia compliance and trust on the one hand and

Sharia compliance and the reliability of Islamic banks on the other. They think that the banks

that respect Sharia law are more reliable and less likely to go bankrupt, but they also remain

vigilant concerning Sharia conformity because they remember the “skids” of Islamic banks in

the past. Thus, they are interested in the reputation of the banks and the composition of the

Sharia board. Even if this population considers a long-term relationship, these men do not

speak positively about their bank. They have various levels of satisfaction. Their behavior

could be considered a form of “false loyalty” (Sirdeshmukh et al., 2002) because they are

loyal from a behavioral point of view but not attitudinally.

Concerning the religious aspect, the interviews established that the more the

respondent has religious aspirations, the more they adopt a positive attitude towards Islamic

banks and the greater his or her intention is to purchase its services. Thus, the religious aspect

influences the attitude and behavior of consumers simultaneously. It generates a “true

loyalty,” even if all “dimensions” of the religion do not act in the same way.

21
 The fear of divine punishment weighs more on the attitude, whereas religious beliefs

influence the purchase intention. These exploratory results are in conformity with those of

Souiden and Rani (2015), who studied the influence of religiosity on purchase intentions

toward Islamic banks in Tunisia.

Some interviewees expressed a certain degree of skepticism about the “Islamization”

of banking services, perhaps due to the customer’s lack of knowledge about the services

offered by Islamic banks. Indeed, since these banks offer products similar to those of

conventional banks, consumers can believe that Islamic banks are a lure, an imitation of
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conventional banks designed to attract people who want to manage their money and their

investments according to the precepts of their religion.

IV. Discussion and conclusion

Our research had two main objectives. First, we identified the determinants of selecting an

Islamic financial institution in Tunisia. Furthermore, we assessed the moderating role of

gender and age on the choice.

In this section, we present the main results of our study by comparing them with those

in the literature. Our study highlights the role of explanatory factors such as perceptions of

service quality, trust, and Sharia compliance in an individual’s decision to choose an Islamic

bank in Tunisia. The importance of these factors varies from one client to another. Since

customers of Islamic banks rank the attributes associated with Sharia compliance as the first

priority, we conclude that they are most concerned with the religious aspects of the financial

institution. Second is the perceived quality of service and, finally, trust in the banks. However,

trust is strongly correlated with Sharia compliance, which probably explains its final position.

This is consistent with the literature, which suggests that consumers’ trust depends on their

level of perceived risk, particularly regarding the financial sector (Rousseau et al., 1998). In

22
 marketing, trust is related to the willingness of consumers to do business (Doney and Cannon,

1997). Therefore, it is essential that Islamic financial institutions promote a good image of

reliability and honesty in order to attract customers. They must also improve their

communication in order to develop customer confidence. Communication positively affects

the initial trust of customers and their readiness to trust others (Chen and Barnes, 2007). This

should not be limited to creating initial trust but should also develop processes, means,

techniques, and standards aimed at fostering sustainable improvements in relational

interactions (Palmatier, 2008). Therefore, Islamic banks in Tunisia need to adopt ways to
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encourage effective communication in order to promote customer confidence.

Concerning the quality of service offered by Islamic banks, we notice that service

delivery is a bit tricky. Most consumers are influenced by this factor, confirming the results

found by Sayani and Miniaoui (2013) and Bizri (2014). Even if this element is not globally

discriminant in an individual’s choice, the perceived service quality in Islamic banks is lower

than in conventional banks for some customers. Moreover, they may leave Islamic banking

altogether if the service quality becomes too inadequate. Customers attach great importance to

the various attributes of service quality, such as the availability of services, the skills of

employees in contact with clients, the time required for funding approval, the personalization

of contacts, and the transaction speed of financial transactions. This is consistent with the

literature, which suggests that a banking organization can differentiate itself from its

competitors by offering high-quality services (Sayani and Miniaoui, 2013; Angur et al.,

1999). This distinction may help increase the banks’ profits, improve customer loyalty

(Bennett and Higgins, 1988), and increase its market share (Bowen and Hedges, 1993). In

conclusion, these results show that service quality is a key factor for success in Tunisia.

Customers are able to distinguish service quality among banks. Therefore, Islamic financial

institutions should focus on the quality of service as a basic strategy and competitive weapon.

23
 This will help them distinguish themselves from their competitors and improve their position

in the market and in consumers’ perceptions (Chaoprasert and Elsey, 2004).

Our results revealed a moderating effect of gender and age between the choice of an

Islamic bank and these determinants (i.e., quality of service, trust, and compliance with Sharia

law). The other personal characteristics (i.e., income, occupation, marital status, education,

and experience with Islamic bank) are not distinguishing factors. Women are more sensitive

to the choice of Islamic bank than men. Service quality, trust, and Sharia compliance had a

greater influence on women’s choice of Islamic bank. Islamic financial institutions should
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thus adopt gender as a main criterion of client segmentation and classification. Our results are

consistent with the results of other studies indicating that women are more likely to comply

(Sistrunk and McDavid, 1971) and are thus more impressionable than men (Hamouda et al.,

2014; Aronson, 2003).

The generated results confirmed H5—that the consumer’s age exerts a moderating

effect on the relationship between the choice of an Islamic bank and quality of

service/confidence/Sharia compliance. Our results are consistent with prior research showing

dissimilarities among age groups (Hamouda et al., 2014). In our case, younger consumers

tend to be more influenced than older consumers. This is confirmed by comparative studies

between older and younger consumers (Patterson, 2007). Thus, it appears that women and

young consumers under 35 years old are the two categories most prone to be influenced to

select an Islamic bank.

Our paper provides important theoretical and managerial contributions. On the

theoretical level, this work enriches the marketing literature on how the perceived quality of

service, trust, and compliance with Sharia law affect the selection of Islamic banks in Tunisia,

where Islamic finance is emerging and the culture differs from the cultures of other Muslim

countries studied in the literature, such as GCC or Malaysia. It is also the first paper to deal

24
 with the moderating role of gender and age between the choice of an Islamic bank and its

determinants.

The contributions of our work are interesting not only for researchers but also for

managers and practitioners. In practical terms, this research allows managers and leaders of

Islamic banking institutions to consider the quality of service offered to customers, trust, and

Sharia compliance, factors that explain a large part of a customer’s bank selection.

Additionally, our paper provides managers and leaders of Islamic banks a better

understanding of how to achieve competitive advantage and create value for consumers
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through the improvement of these factors. Moreover, we identified four main customer

segments with different expectations, for which Islamic banks can develop specific product

and communication strategies.

Our results also indicate that Islamic banks should allocate more resources to educate

future customers about their products and services as well as their current clients and branch

employees. The interviews highlighted that customers who are more familiar with products

and services that comply with Sharia law tend to patronize Islamic banks.

In spite of its theoretical and practical contributions, this paper has limitations that

must be overcome in future research. Some limitations should be considered with caution,

particularly regarding the generalization of the empirical results, as well as in the data

collection method, which was largely exploratory and conducted in one specific area. It would

be interesting to replicate this research in a wide variety of banks over several geographic

areas to allow better generalization of the results and compare them between banks and

countries where the development of Islamic finance is emerging.

The major limitation of this paper is the relatively small size of the convenience

sample. The results may not be representative of the entire population. It would be interesting

to conduct the study with a representative sample size in order to consolidate these results.

25
 Another limitation is the need to use determinants of the choice of Islamic banks

developed in contexts different from that of Tunisia. One way could be to conduct a

qualitative study to identify potential explanatory factors for the selection of Islamic financial

institutions in the Tunisian context. For further research, we propose to integrate other

explanatory variables on the same model, such as perceived credibility, future purchase

intention, and commitment to Islamic banks.

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26
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 Table I: Respondents’ characteristics

Profile Number Percentage

Gender :
Male 86 (47.77%)
Female 94 (52.23%)
Total 180 (100%)
Occupational category:
Student 75 (41.66%)
Self-employed 34 (18.88%)
Employees 42 (23.33%)
Employers 20 (11.11%)
Retired 9 (5%)
Total 180 (100%)
Level of education:
Less than undergraduate 16 (8.88%)
Undergraduate 135 (75%)
Postgraduate 23 (12.77%)
PhD 6 (3.33%)
Total 180 (100%)
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Age :
Less than 25 years 39 (21.66%)
Between 25 and 34 years 54 (30%)
Between 35 and 44 years 36 (20%)
Between 45 and 55 years 29 (16.11%)
More than 55 years 22 (12.22%)
Total 180 (100%)
Marital status:
Single 99 (55%)
Married 74 (41.11%)
Divorced 7 (3.88%)
Total 180 (100%)
Monthly income:
Less than 200 dinars 82 (45.55%)
Between 200 and 500 dinars 43 (23.88%)
Between 501 and 700 dinars 26 (14.44%)
More than 700 dinars 29 (16.11%)
Total 180 (100%)
Experience with Islamic banking:
Less than 1 year 46 (25.55%)
Between1 year and 5 years 87 (48.33%)
More than 5 years 47 (26.11%)
Total 180 (100%)

Table II: Descriptive statistics

Mean SD
Quality of service 9.33 0.98
Trust 9.28 0.87
Compliance with Sharia law 9.31 0.97

Table III: Total variance explained (Rotation sums of squared loadings)

Component Total % of variance Cumulative %
1 (compliance with Sharia law) 6.21 38.52 38.52
2 (quality) 4.73 18.37 56.90
3 (trust) 2.51 11.26 68.17

Table IV: Regression analysis

Model R R2 Adjusted R² SE of the estimate
a
1 0.86 0.76 0.75 0.74
a
predictor (constant) perceived quality of service, trust, and compliance with Sharia law

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 Table V: Analysis of variance
Model Sum of squares Mean square F Sig
1 Regression 260.42 26.04 49.23 0.00a
Residual 106.13 0.62
Total 366.56
a
Dependent variable: Islamic bank selection

Table VI: Analytical results of two subgroups (men/women): Relationship of bank

selection and quality of service/confidence/compliance with Sharia law
Subgroup Regression Equation Adj-R² Beta Student’s Levene’s
t-Test Test

Subgroup1 : Quality of customer service = 0.156 + 0.098 bank 0.013 0.029 0.243 F =0.093
selection (0.724) (0.653)
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Men (N=86)
Trust = 0.135 + 0.074 bank selection 0.007 0.021 0.223 F =0.076
(0.712) (0.624)
Compliance with Sharia law= 0.187 + 0.118 bank 0.018 0.037 0.263 F =0.106
selection (0.762) (0.676)
Subgroup 2: Quality of service = 0.196 + 0.099 bank selection 0.117 0.357 3.789 F =0.093
(0.000) (0.653)
Women 0.105 0.327 3.754 F =0.076
Trust = 0.192 + 0.104 bank selection
(N=94) (0.000) (0.624)
Compliance with Sharia law= 0.206 + 0.145 bank 0.136 0.367 3.796 F =0.106
selection (0.000) (0.676)

Table VII: Analytical results of two sub-groups ("34 or younger"/over 35 years): The
relationship between bank selection and quality of service/confidence/compliance with
Sharia law
Subgroup Regression Equation Adj-R² Beta Student’s Levene’s
t-Test Test

Subgroup1 : Quality of customer service = 0.240 + 0.387 bank 0.134 0.378 4.213 F =0.583
34 years or selection (0.000) p = 0.493
younger Confidence = 0.224 + 0.364 bank selection 0.123 0.356 4.124 F =0.563
(N=93) (0.000) p = 0.471
Compliance with Sharia law= 0.273 + 0.397 bank 0.145 0.389 4.256 F =0.603
selection (0.000) p = 0.493
Subgroup 2: Quality of Customer service = 0.316 + 0.043 bank 0.024 0.067 0.321 F =0.583
More than 35 selection (0.865) p = 0.493
years Confidence = 0.302 + 0.041 bank selection 0.005 0.036 0.312 F =0.563
(N=87) (0.824) p = 0.471
Compliance with Sharia law= 0.321 + 0.54 bank of 0.026 0.075 0.346 F =0.603
selection (0.872) p = 0.493

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