919517

research-article20202020
SGOXXX10.1177/2158244020919517SAGE OpenFida et al.

Original Research

SAGE Open

Impact of Service Quality on Customer

April-June 2020: 1­–10
© The Author(s) 2020
DOI: 10.1177/2158244020919517
https://doi.org/10.1177/2158244020919517

Loyalty and Customer Satisfaction in journals.sagepub.com/home/sgo

Islamic Banks in the Sultanate of Oman

Bashir Ahmad Fida1 , Umar Ahmed1, Yousuf Al-Balushi1,

and Dharmendra Singh1

Abstract
This study attempts to examine the impact of service quality on customer loyalty and customer satisfaction using the
SERVQUAL model for four main Islamic banks in the Sultanate of Oman. This is a quantitative nature of a study, which
involved a structured, self-administered questionnaire based on a convenience sampling method gathering data from 120
customers of Islamic banks in Oman. The study data were analyzed using SPSS, and the reliability coefficient (Cronbach’s
alpha) was established. The correlation analysis examined the significant relationships among the study variables. The impact
of service quality dimensions on customer satisfaction was captured through regression analysis. The key findings of the study
revealed that the respondents showed on average an “Agree” response in the five areas, namely, tangibles, responsiveness,
reliability, assurance, and empathy. The correlation results depicted a significant relationship between the three variables:
service quality, customer satisfaction, and customer loyalty. Similarly, regression results demonstrated that empathy and
responsiveness dimensions have a significant positive impact on customer satisfaction. It is, therefore, recommended that
banks should focus more on empathy and responsiveness considering the significant relationship of these two variables on
customer satisfaction. However, banks should not neglect the importance of other variables such as reliability, assurance, and
tangibles that are revealed as important by responses of the participants for the bank’s provisions.

Keywords
service quality, customer satisfaction, Islamic banks, Oman

Introduction other Islamic countries. Officially, the issuance of license to

The significance and the role of Islamic banking have been
gaining worldwide attention for the last two decades although
its financial strength is at initial stages as compared with the
conventional banking sector. According to the statistics pro-
vided by Islamic Financial Services Board (2018), Islamic
banking sector has already crossed US$1.5 trillion, and it is
further estimated that the size of Islamic assets in the bank-
ing industry will reach US$3.2 trillion at the end of 2020.
The Middle East, which is the center of Islamic banking, has
contributed 80% of the amount, whereas 20% is shared by
the rest of the world. Islamic banking growth outlook contin-
ues to be positive, growing 50% faster than the overall bank-
ing sector in several core markets. In Saudi Arabia, the
market share of Islamic banking assets is now more than
50%. In addition to the contribution of the Gulf Cooperation
Council to Islamic banking, several Arab markets have
launched Islamic banking services.
Islamic banking is a recent addition to the financial sector of
the Sultanate of Oman although it has existed for a long time in
launch Islamic banking was made in 2012 through Royal
Decree 69/2012 that paved the way toward the establishment of
Islamic banks and other financial institutions based on Islamic
law (Shariah). Islamic banks in Oman started operations in
2013 and few in 2014. As of the beginning of 2020, two full-
fledged Islamic banks and Islamic windows of a majority of
commercial banks have been operating in Oman since then.
The perceptions from the supporters of this banking con-
cept assert that Islamic banking will have a bright future and
rapid growth because of its uniqueness that emphasizes
interest-free, business partnership solely based on profit–loss
sharing and noncharging loan services, thereby making it
distinct from the conventional banking industry.
1
Modern College of Business & Science, Muscat, Oman
Corresponding Author:
Bashir Ahmad Fida, Modern College of Business & Science, PC 133,
Muscat, Oman.
Email: bashir@mcbs.edu.om

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2 SAGE Open
Considering that Islamic banking is a new endeavor in the
country, questions were still proliferated about the extent of
service quality that will be extended by the banking sector
and how to gain customer loyalty and achieve customer sat-
isfaction with the needed quality service provision that the
clients demand or perceive from the industry? Moreover, the
quality service delivery of products and services in Islamic
banking is still in a developing stage as compared with con-
ventional banking. The objective of the study is to evaluate
the extent of service quality provided by Islamic banks to
customers and establish the linkage between service quality
to other variables such as customer loyalty and customer sat-
isfaction. This will help stakeholders to get insight into the
sector and improve the service quality provided by them to
potential customers. To the extent of our knowledge, this is
the first endeavor in this area to answers some of the above
questions.
Literature Review
This section overviews the existing literature, case studies,
and pieces of evidence about the elements of the SERVQUAL
model, namely, the dimension of service quality, customer
satisfaction, and customer loyalty.
Service Quality
The concept of service has been defined since the 1980s by
Churchill and Surprenant (1982) together with Parasuraman
et al. (1985), who popularized the customer satisfaction the-
ory through measuring the firm’s actual service delivery in
conformity with the expectations of customers, as defined by
the attainment of perceived quality, and that is meeting the
customers’ wants and needs beyond their aspirations. With
this premise, Parasuraman et al. (1988) later expanded the
concept of service into the five dimensions of service quality
that comprised tangibles, reliability, responsiveness, assur-
ance, and empathy. Further evaluation of the concept has
developed other dimensions of service quality as described
by Lehtinen and Lehtenin (1982) and Groonroos (1984),
where the former stressed that service quality might be
divided into three main dimensions, namely, the physical
quality, corporate quality, and interactive quality.
Furthermore, Groonroos (1982), explained that the concept
of service quality could be evaluated by corporate image,
functional quality of service encounter, and the technical
quality of the outcome. This had been earlier identified and
evaluated by Parasuraman et al. (1988) who introduced the
service quality model known as SERVQUAL, which was
first applied in the service industry specifically for
restaurants.
According to this model, service quality has been
described with the help of five quality dimensions. These
dimensions include five areas, namely, tangibles, reliability,
responsiveness, assurance, and empathy, even though
definitions relating to these variables have been modified by
different authors. The tangibles dimension of service quality
has been referred by Fitzsimmons and Fitzsimmons (2014)
as the tangibility of the provided services, and it includes the
firm’s materials and equipment and physical facilities, the
physical environmental conditions, materials used for com-
munication, and the like. Davis et al. (2003) have also
affirmed that the service quality has a significant impact on
higher education service providers as well.
However, the reliability dimension encompasses the
ability of the enterprise or the business to delivery what was
promised (Parasuraman et al., 1988). They added that reli-
ability had played a significant role in the functioning of
the traditional service operators as it consists of the follow-
ing: accuracy of billings, quotations, records, and commit-
ment to fulfill orders. Korda et al. (2010) have tested how
reliability could be applied in the banking sector of transi-
tion economies in Europe, considering the concept of
perceived quality and customer satisfaction, and results
showed that the perceived value has the potential to be a
mediating variable between perceived quality and customer
satisfaction.
Another dimension of service quality is responsiveness,
which usually measures the ability of the company or firm to
respond to customers with willingness and the promptness of
the service (Parasuraman et al., 1988). This definition has
been modified by Johnston (1997) to include the timely
delivery of services with speed to counter the problems of
long queues and waiting periods. Furthermore, in this dimen-
sion, the concept of how quick the workers should respond to
the customer’s needs and complaints is addressed. The fourth
dimension of service quality is empathy, which was defined
by Parasuraman et al. (1985) as the company’s ability
through its employees to provide due care to the customers
as well as address their individual and personal concerns and
understand their needs. These elements have been applied in
the study of Ananth et al. (2011), and findings showed a posi-
tive relationship to customer satisfaction as applied to banks
in the private sector. Johnston (1997) has also supported the
concept by defining empathy as the employees’ willingness
to welcome customers and to take care of their specific
needs. The last dimension is the assurance dimension that
demonstrates to provide security and safety to the customers
so that it will lessen their state of worries and anxieties with
regard to the services provided to them. In other words, it is
the assurance or making sure that they will receive positive
benefits by availing the services based on what they desire
without negative implications.
Customer Satisfaction
The term customer satisfaction and its importance were
defined by Zeithami et al. (1996) as, to achieve continuous
success of companies in the long run, the need to emphasize
customer satisfaction is a key consideration. In other words,
Fida et al. 3
satisfaction can only be met when the performance generated
by companies exceeds customer expectations. In this con-
text, various authors and researchers have accentuated the
importance of customer satisfaction as well as dissatisfaction
as related to the company’s achievement of success and the
incurrence of failures in the aspect of meeting the expecta-
tions of both the customers and the company (Chidambaram
& Ramachandran, 2012; Kheng et al., 2010). Lau and
Cheung (2013) specifically explained that meeting the
expectations of the customers will not only provide customer
satisfaction but also develop customer loyalty that will then
lessen the cases of customer loss rates or improve the reten-
tion rate. Service quality delivery is considered an important
factor to consider in establishing customer satisfaction and
the relationship that will be developed between the company
and the customers (Amin & Isa, 2008).
Customer Loyalty
There are various definitions of customer loyalty, and one of
those refers to the behavior developed by the customer,
which is called repurchase behavior, thereby accounting for
all the experiences that customers have encountered through-
out the usage of the products and services from providers.
The use of loyalty strategy has proved to increase customer
retention level while reducing marketing costs (Stan et al.,
2013). Accordingly, in the study of Pasha and Waleed (2016),
findings revealed that perceived value, service quality, and
brand have a significant impact on customer quality in the
Pakistan banking sector. Many other studies have been
developed to determine the antecedents of customer loyalty
considering that customer loyalty may vary based on many
predictors. Yee et al. (2011) revealed that service quality,
customer satisfaction, and employee loyalty have a positive
influence on customer loyalty, especially in the high-contract
service industry. Moreover, Otaibi and Yasmeen (2014)
attempted to study perceived service quality and customer
satisfaction, which affect Saudi customer loyalty, and
reviewed relevant previous studies that investigated the rela-
tionships among the said three variables.
Service Quality and Customer Satisfaction
Many studies have established the relationship between ser-
vice quality and customer satisfaction. Companies and orga-
nizations strive hard to achieve high customer satisfaction,
especially those companies that consider a long-term rela-
tionship with customers as an asset. However, understanding
the service quality components remains to be a subject of
discussions and arguments. For instance, in the retail bank-
ing sector, customer satisfaction has become a key consider-
ation for successful business operations although
identification of service quality characteristics may not be
fully understood (Belás & Gabčová, 2016; Chavan & Ahmad,
2013). So, the model introduced by Parasuraman et al. (1982)
has been accepted by many authors to be a predictor variable
of customer satisfaction, which was utilized by the Herington
and Weaver (2009) study, where they established the rela-
tionship between service quality dimension and customer
satisfaction was regarded as a positive relationship. As a
result, perceived service quality has been widely considered
as an antecedent of customer satisfaction and previous stud-
ies have ascertained its relationship (Naik et al., 2010; Yee
et al., 2011).
However, there are still arguments and disagreements on
the causal relationship between the two variables as applied
in different settings. Three major possibilities had been
explored by Brady et al. (2002) regarding the relationship:
First, service quality is the antecedent of customer satisfac-
tion; second, customer satisfaction is the cause of service
quality (Bitner, 1990); and third, there is no significant rela-
tionship between service quality and customer satisfaction
(Dabbolkar, 1995). These three positions may have a varied
impact on the results of the study and other studies, although
in general consensus, many researchers have found the
relationship between the two variables where the service
quality served as an antecedent to customer loyalty in a
dominant position as applied to the service industry context
such as the banking sector (Akhtar et al., 2011; Cameran
et al., 2010).
Customer Satisfaction and Customer Loyalty
Evidence showed that there is a significant relationship
between customer satisfaction and customer loyalty
(Leninkumar, 2017). Customer loyalty is considered a result
of customer satisfaction, when customers who have good
experiences with the service of the company will continue to
deal with the company viewing it as less risky, thereby mak-
ing them loyal and rational in decision-making. In fact, many
authors have advocated that customer satisfaction is one of
the determinates of customer loyalty, especially in the ser-
vice industry (Belás & Gabčová, 2016; Coelho & Henseler,
2012). According to Munari et al. (2013), satisfaction and
loyalty are the components of ultimate loyalty, and satisfac-
tion is the starting point of loyalty.
Furthermore, it can be assumed that the relationship
between customer satisfaction and customer loyalty is non-
linear. Suggestions from Heskett et al. (2008) pointed out
the importance of firms to increase the level of customer
satisfaction if they want to sustain the level of customer
loyalty. As evident, previous studies have already con-
firmed the significant positive relationship between service
quality and customer loyalty by utilizing customer satisfac-
tion as the mediating variable (Chodzaza & Gombachika,
2013; Chu et al., 2012). Moreover, in the banking industry,
the same results have been identified: that customer satis-
faction mediates the relationship between service quality
and customer loyalty (Hassan et al., 2013; Lee &
Moghavvemi, 2015).
4 SAGE Open
Figure 1.  Conceptual framework of the impact of service quality on customer loyalty and customer satisfaction.
Framework of Analysis
Five dimensions of service quality and loyalty were dis-
cussed in the previous section. This section presents a dia-
grammatic illustration of the theoretical framework. The
conceptual framework (Figure 1) was developed following
various empirical and theoretical studies such as Agus et al.
(2007), Caruana (2002), and Khan and Fasih (2014). In a
diagrammatic format, it shows the predictor variable, the
five service quality dimensions, namely, tangibles, reliabil-
ity, responsiveness, assurance, and empathy, whereas the
customer satisfaction will serve as the mediating variable.
Customer loyalty will be the dependent variable. The rela-
tionships among customer satisfaction, customer loyalty,
and service quality dimensions will be examined by the
correlation analysis, and the impact of service quality on
customer satisfaction will be analyzed by the regression
analysis.
There is a significant positive relationship between cus-
tomer satisfaction and service quality (Muyeed, 2012;
Ndubisi & Wah, 2005). Similarly, service quality enhances
customer loyalty in a direct way where customer satisfaction
variable plays a mediating role (Kaura et al., 2015).
Research Method
A quantitative research approach was utilized in this study
with the well-structured survey questionnaire to test the
SERVQUAL model. The quantitative approach was applied
to assess the relationship between service quality, customer
satisfaction, and customer loyalty. It also measures the rela-
tionship between the service quality variables and customer
satisfaction through regression and correlation analyses.
Sampling Design and Sample Size
This study primarily utilized convenience sampling with 120
questionnaires and were distributed equally to the customers
of the four main Islamic banks in Oman, namely, Bank
Nizwa, Alizz Bank, Maisarah Islamic Banking Services, and
Al-Yusr Islamic Bank. The use of convenience was done
because of the accessibility of the respondents and the prox-
imity to the researcher.
Research Instrument
In this study, the survey questionnaire is divided into two
parts. Part 1 consists of the demographic profile of the
respondents such as respondents’ age, gender, monthly
income, level of qualification, and the present service offer-
ing by the respondent banks. However, Part 2 comprises the
customers’ perceptions on the extent of agreement in the
application of service quality dimensions, the level of agree-
ment on customer satisfaction, and customer loyalty of the
Islamic banking service providers in Oman. Five Likert-type
scales were utilized to address the questions in Part 2 to
determine the extent of responses with numerical equivalent
and interpretation (Jalagat et al., 2017): 1 = strongly dis-
agree, 2 = disagree, 3 = neutral, 4 = agree, and 5 = strongly
agree.
Data Analysis Method
The data collected from the sample were analyzed using
descriptive statistics, SPSS Version 22. The respondents’
profiles such as age, gender, monthly income, level of
qualification, and the present service offering by the
respondent banks were analyzed using the frequency and
other numerical descriptive statistics. In dealing with the
relationship between the three variables, namely, service
quality, customer loyalty, and customer satisfaction, the
correlation coefficient will be used. Finally, regression
analysis will be applied to determine the relationship
between the five service quality dimensions and customer
satisfaction.
Fida et al. 5
Table 1.  Age of Respondents.
Age Frequency Percent
Valid
  Below 20 years 1 0.8
  21–30 years 40 33.3
  31–40 years 58 48.3
  41–50 years 20 16.7
  Above 50 years 1 0.8
 Total 120 100.0
Research Validity and Reliability
To test the validity, the questionnaire was examined for con-
tent from a pool of experts to ascertain that all components
that should be measured will be considered, and pretesting
has been done to make sure that the questionnaire attends to
the degree of fairness and accuracy. While determining
whether the instrument is reliable, Cronbach’s alpha was
used to measure the total number of 38 items distributed to
service quality dimensions, customer satisfaction, and cus-
tomer loyalty, and the result shows .937, which is beyond the
.70, as the considered acceptable reliability (Nunnally, 1978).
Hence, the instrument is highly reliable.
Data Analysis and Interpretation
This section presents the data analysis and interpretation of
the data collected. It shows the statistical tools to be used
such as the frequencies and tables, weighted mean standard
deviation, correlation, and regression analyses.
Demographic Profile of the Respondents
Table 1 depicts the classification of respondents according to
age. Most of respondents or 48% (N = 58) belong to age
bracket 31 to 40 years, whereas 33% (N = 40) are aged 21 to
30 years. About 17% of the respondents are within 41 to 50
years of age, and the least is shared between ages below 20
years and above 50 years, with 0.8% each. This can be inter-
preted as Islamic banking has gained more interest in the age
group 31 to 40 years old. The data imply that more respon-
dents who participated in the survey are male with 70.8% (85
out of 120), whereas females comprised only 29.2% (35 out
of 120).
Table 2 shows the distribution of respondents in terms of
their monthly income. From the table, it is clearly revealed
that the highest percentage of respondents (37.5%) received
salaries between RO1,000 and RO1,499 and this is followed
by those respondents (30.8%) who are paid within RO500
and RO999. Very close to this rating are respondents who are
having RO1,500 and more as salaries at 28.3% and, finally,
only 3.3% responded that they receive only RO0 to RO499
monthly.
Table 2.  Monthly Income of Respondents.
Monthly income (RO) Frequency Percent
Valid
 0–499 4 3.3
 500–999 37 30.8
 1,000–1,499 45 37.5
  1,500 and above 34 28.3
 Total 120 100.0
Figure 2 reflects the services currently offered by the
respondent banks. Results displayed that banks are using
both online (36.7%) and mobile (36.7%) banking with the
same rating. This is followed by an automated teller machine
(ATM)/cash deposit machine (CDM) services with a 24.2%
rating, and finally, traditional banking with 2.5%. This can
be interpreted as the services of a bank are upgraded in line
with the advances of technology and provide the customers
with comfort and convenience.
Results from Table 3 indicate that the respondents mostly
agree that the respondent banks have enough tangibles as the
results are within 3.50 to 4.49 = agree interpretation, except
for statement number 5 that says “The bank has enough
availability for customer parking,” which has a “Neutral”
response, with a mean rating of only 3.10. Specifically, the
highest mean rating is 4.03, which means that the respondent
banks have enough tangibles, followed by 3.98 mean ratings
that the banks are equipped with good facilities, well
arranged, and spacious. There is also evidence of signage,
cleanliness, and the like (3.96), and pleasant and enough
lobby (3.84), whereas the parking space is not agreeable to
the respondents with “Neutral” responses. This may indicate
that the respondent banks have taken due consideration of
the physical requirements in serving their customers.
Table 4 displays the extent of application of service qual-
ity dimensions in terms of reliability. Generally, all responses
to these statements agree within (3.50–4.49) mean ratings.
First, respondents agreed that the bank is physically secured
with monitoring devices (3.95), followed by the response to
the statement that customers’ transactions and records are
kept with confidentiality (3.90). The bank staff is prompt in
service delivery (3.79) and service with accuracy (3.67).
Finally, the banks have observed and maintain an error-free
service to their customers (3.62). These results may imply
that the services provided by the respondent banks are reli-
able with good trust ratings. Furthermore, the banks have
also set the preference for security measures to ensure the
safety of the customers and their deposits.
Table 5 reflects the extent of responsiveness of the respon-
dent banks to its customers as a service quality dimension. In
general, all remarks are agreed to the five statements men-
tioned. Individually, topping the list is the statement, “The
staffs show a willingness to respond to customers’ needs”
(3.8167, mean rating), followed by the quick response to
6 SAGE Open

Figure 2.  Banking tools of current services.

Note. ATM = automated teller machine; CDM = cash deposit machine.

Table 3.  The Extent of Agreement in the Application of Service Quality Dimensions—Tangibles.

Tangibles M SD Interpretation
1. The bank is equipped with good facilities, a spacious building, and well 3.98 0.85 Agree
arranged
2. Adequate supplies such as bank statements, deposit and withdrawal slips, 4.03 0.78 Agree
and bank cards
3. Pleasant and sufficient lobby and waiting area for customers 3.84 0.95 Agree
4. Evidence of cleanliness and signage for instructions and directions for 3.96 0.73 Agree
easy processing to client’s request
5. The bank has enough availability for customer parking 3.10 1.19 Neutral

Table 4.  The Extent of Agreement in the Application of Service Quality Dimensions—Reliability.

Reliability M SD Interpretation
1. The bank staff delivers the service with promptness and as promised 3.79 0.77 Agree
2. The bank has maintained error-free and up-to-date records such as bills and 3.62 0.74 Agree
statements
3. The services of the bank are delivered with accuracy 3.68 0.80 Agree
4. The bank is physically secured with monitoring devices such as CCTV 3.95 0.78 Agree
cameras
5. The bank ensures customers’ transactions and records are kept with 3.90 0.88 Agree
confidentiality

complaints with a mean rating of 3.8000. The staff also
maintain promptness in service delivery (3.7500) as well as
attend to customer complaints even after working hours
(3.7417). Last in the list is the timely delivery of customer
needs (3.6833). These findings show the responsiveness of
the respondent banks to customer needs on time, with
promptness and willingness to act for the benefits of the
customers.
Correlation and Regression Analysis
The statistical tools, namely, the correlation and regression
analyses, were utilized in this study to test the hypothetical
assumptions among the three variables: service quality, cus-
tomer satisfaction, and customer loyalty. Regression analysis,
however, was used to determine the relationship between ser-
vice quality dimensions and customer satisfaction. According
Fida et al. 7
Table 5.  The Extent of Agreement in the Application of Service Quality Dimensions—Responsiveness.
Responsiveness
1. The staff show a willingness to respond to customers’ needs
2. Quick response to complaints, if any
3. Timely delivery of the needed customer needs
4. The staff maintain the promptness of service delivery even during peak hours
5. The bank can attend to customer complaints even after working hours through
call center services
to Rumsey (2010) and as cited in the study by Jalagat et al.
(2017), the interpretation of correlation coefficient (r) mea-
sures the strength of the relationship between variables, where
the value of r is between +1 and −1. Accordingly, −1 sug-
gests a perfectly downhill negative relationship, whereas +1
is a perfectly uphill positive relationship; −.70 signifies a
strong downhill negative relationship, whereas +.70 is a
strong uphill positive relationship; −.50 means moderate
downhill negative relationship, and 0 means no linear rela-
tionship. However, regression analysis is tested at .05 level of
significance.
Table 6 depicts the correlation analysis between the three
variables. From the result, it is clearly shown that there is a
positive relationship between the variables, namely, service
quality, customer satisfaction, and customer loyalty, at p <
.01 level of significance. Specifically, there is a strong posi-
tive relationship between service quality and customer satis-
faction with r = .652 at p < .01, whereas there is a moderate
positive relationship between service quality and customer
loyalty (r = .488). However, between customer satisfaction
and customer loyalty, there is also a strong positive correla-
tion at r = .602. The findings reject the null hypothesis that
there is no relationship between these variables. This implies
that these three variables should be continuously emphasized
by the respondent banks in their operation because of their
significance to the possible growth of Islamic banking in the
country. These results were also consistent with previous
studies that affirmed the relationship between service quality
and customer satisfaction (Jalagat, et al, 2017; Parasuraman
et al., 1988). Moreover, it also agrees with the findings of the
study done by Hamzah et al. (2015) for Malaysia that service
quality has a direct and positive relationship with customer
satisfaction.
However, the relationship between customer satisfaction
and customer loyalty was also supported by many studies,
thereby demonstrating a positive relationship by considering
customer satisfaction as one of the most popular determi-
nants of customer loyalty (Flint et al., 2011; Tsai et al., 2010).
In fact, many studies have affirmed that customer satisfac-
tion is one of the important variables for customer loyalty
(Gillani & Awan, 2014; Hall, 2011).
In Table 7, the model summary of the regression analysis
shows r = .695 and r² = .483, and with a standard error of
0.40110. This entails that according to the r² value, about
M SD Interpretation
3.81 0.75 Agree
3.80 0.75 Agree
3.68 0.75 Agree
3.75 0.78 Agree
3.74 0.73 Agree
48.3% of the independent variables of service quality dimen-
sions explain the variation of the dependent variable, which
is customer satisfaction. This is considered moderate consid-
ering the relatively limited number of respondents in this
study. However, in determining the adequacy of the model,
the analysis of variance (ANOVA) results with a value F =
21.31 and significance at p < .010. Surprisingly, of all the
service quality dimension variables, only empathy and
responsiveness significantly related to customer satisfaction
with p < .010 and p < .10, respectively. This means that the
variables, namely, tangibles, reliability, and assurance, do
not significantly affect the provision of service quality as
applied to the respondent banks in this study. In order of
preference, empathy has the highest significance, followed
by responsiveness. This finding contradicts various studies
that concluded that empathy has the lowest significance to
customer satisfaction (Devi Juwaheer & Lee Ross, 2003;
Jonsson & Klefsjö, 2006).
However, in the study conducted by Siddiqui (2010) on
the banking industry in Bangladesh, the result is consistent
with the study where empathy has the highest correlation and
followed by responsiveness and assurance. This may indi-
cate that in service industries, empathy and responsiveness
are more important than other variables. In a study on the
Malaysian banking industry, empathy is also proven to have
the highest influence on customer satisfaction (Kheng et al.,
2010). Finally, Mengi (2009) also concluded that responsive-
ness is more significantly related to customer satisfaction. In
summary, although service quality significantly relates to
customer satisfaction, in this study, only two variables are
significant, which are empathy and responsiveness that vary
from other previous study findings.
Conclusion and Recommendation
This study investigated the impacts of service quality on cus-
tomer satisfaction and customer loyalty for selected main
Islamic banking institutions in Oman using the SERVQUAL
model. Based on the findings, it has been revealed that the
application of three important factors, the service quality,
customer satisfaction, and customer loyalty variables, sig-
nificantly relate to each other. The affirmation from previous
studies conducted on their relationship still holds, with
emphasis that as the service quality increased, the levels of
8 SAGE Open

Table 6.  Correlation Analysis of the Relationship of Variables: Service Quality, Customer Satisfaction, and Customer Loyalty.

Variables Service quality Customer satisfaction Customer loyalty

Service quality
  Pearson correlation 1 .65** .48**
  Significance (two-tailed) .00 .00
 N 120 120 120
Customer satisfaction
  Pearson correlation .65** 1 .60**
  Significance (two-tailed) .00 .00
 N 120 120 120
Customer loyalty
  Pearson correlation .48** .60** 1
  Significance (two-tailed) .00 .00  
 N 120 120 120

**Correlation is significant at p < .01 (two-tailed).

Table 7.  Regression Analysis Between Service Quality Variables and Customer Satisfaction.

Model summary

Standard error of the

Model R R2 Adjusted R2 estimate
1 .695a .483 .461 .401

ANOVAb

Model Sum of squares df Mean square F Significance

1
 Regression 17.148 5 3.430 21.318 .00c
 Residual 18.341 114 0.161  
 Total 35.489 119  

Coefficientsd

Standardized
Unstandardized coefficients coefficients

Model B SE β t Significance
1
 (Constant) .868 0.295 2.942 .004
 Tangibles .020 0.063 .025 0.317 .752
 Reliability .054 0.081 .059 0.659 .511
 Responsiveness .263 0.093 .275 2.822 .006
 Assurance .071 0.097 .076 0.729 .468
 Empathy .367 0.082 .401 4.461 .000
a
Predictors: (constant), empathy, tangibles, reliability, responsiveness, assurance. b Dependent variable: customer satisfaction. c Predictors: (constant),
empathy, tangibles, reliability, responsiveness, assurance. d Dependent variable: customer satisfaction.

customer satisfaction and customer loyalty also increased
(Flint et al., 2011; Gillani & Awan, 2014; Hall, 2011; Mittal
& Kamakura, 2001; Tsai et al., 2010). The mean values from
the results described the level of service provided by the
respondent banks, which mostly solicited an agree response,
which means that the respondents are satisfied with the
current service provision. However, the outcome from
regression analysis divulges that empathy and responsive-
ness are the two variables that need preferable attention by
the respondent banks, whereas other variables may be given
second priority (Kheng et al., 2010; Mengi, 2009; Siddiqui,
2010). Although these variables are not significant in the
Fida et al. 9
study, it does not mean that the respondent banks should
neglect their importance as many other studies have con-
firmed their significance.
Based on the findings and conclusion of the study, the fol-
lowing recommendations can be presented.
The respondent banks should try to improve their current
services to at least a very satisfactory level considering that
the responses from customers posit only agree responses.
Considering the significant relationship between service
quality, customer satisfaction, and customer loyalty, more
emphasis on improvement will further enhance the custom-
ers’ favorable feedback.
The utmost priority of the respondent banks should rest
on empathy and responsiveness, considering the significant
relationship of these two variables on customer satisfaction.
However, they should not neglect the importance of other
variables such as reliability, assurance, and tangibles because
mean ratings suggest that the respondents agree on the bank’s
provision in these three dimensions.
The provision and availability and parking space have
been identified in this study as a problem. There is a need for
the respondent banks to consider this on an urgent basis as it
will also affect the service quality provided to the customers.
Likewise, continuous improvement is recommended for cur-
rent services particularly online and mobile banking services
to make them accessible and convenient for customers.
Considering that Islamic banking in Oman is relatively new
and future studies could be conducted considering benchmark-
ing wherever applicable to other service industries, a compari-
son of conventional banking and Islamic banking and applying
the SERVQUAL gap model for the industry is needed.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect
to the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, author-
ship, and/or publication of this article.
ORCID iD
Bashir Ahmad Fida https://orcid.org/0000-0003-1916-2854
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