You are on page 1of 19

towards conventional banks.

Interest free loan,

Islamic Vs Conventional Banks
1

financial position of bank, Islamic teaching and Shariah, knowledge of Islam and religious environment are the factors that are motivating customers towards Islamic Banks. Findings showed that the customers of the both banks are satisfied with the facilities that are provided by the both banks but customers of conventional banks are more satisfied than the customers of Islamic bank.

Fawad Waheed

3

Student: Lahore Business School, the University of Lahore, Pakistan Tell:(92-321)9999807 fawadaw29@gmail.com
3

Yasir Hassan

Keywords: Islamic
Satisfactions, Shariah.

Banking,

Conventional Customer’s

1

Lecturer:Lahore Business School, the University of Lahore, Pakistan Tell: (92-333)4427552 Yasir.uol@hotmail.com
2

Banking, Motivational Factors,

INTRODUCTION
Kashif-ud-din
2

Dean: Lahore Business School, the University of Lahore, Pakistan kukhan@uol.edu.pk

I

n the current global environment the banks

are performing multiple functions to provide a variety of products and services and providing the latest facilities to their customers. In Pakistan, Islamic banks and conventional banks are facilitating their customers. Due to unstable

Abstract
This study examines the satisfactory level of the customers of Islamic banks and conventional banks in Pakistan means which bank’s customers are more satisfied by the facilities provided by the both banks. In this study, it is found that economic benefits, financial position of banks, latest facilities, and interest on deposits, strong global image and reputation are the factors that are motivating customers

policies and uncertainty, Pakistani banking sector has experienced very unstable

environment since 1950. In 1974 Pakistani banking sector dominated, nationalized bank showed very poor performance due to inferior products and services that resulted into the privatization of banking sector in 1992. In 2002 Meezan Islamic bank was registered as first full fledge Islamic bank by the state of Pakistan. In Pakistani banking sector Islamic banks are new

1

As Pakistan is a Muslim country and having the population of 96% of the Muslims. The main pillar of Islamic banking is the forbiddance of Riba ( interest). Thus. The entrance of the Islamic bank in the country affects the monitory system by adjusting the demand and supply forces for money. Riba and risk sharing practices. investment focus.entrant. Since 1990 the service industry in Pakistan and in the global environment particularly the banking sector are growing this creates a competitive environment in the country. The key difference is that Islamic Banking is based on Shariah foundation. By the other study.The principles that govern the differentiated as interest free banks and interest based banks. Islamic banks have different kinds of opportunities to meet the multiple challenges as strong reaction from public to meet their requirements. Islamic banks are insures more stable financial sector then the western classics the old and new testaments interest was evil. in Tunisia it is verified that Islamic banking system showed excellent performing sector by supporting financial sector. The foundation of Islamic bank is based on the Islamic faith and must stay within the limits of Islamic banking environment are based on common sense and basic rules and regulations. One must refrain from making a direct comparison conventional between banking Islamic (apple banking and to apple comparison). business approach. which lead to the significant difference in many part of the operations with as of the conventional. Islamic bank and conventional banks are also Conventional banks. This is because they are extremely different in many ways. These sort of simple rules are the base of a legion of religions in the world including Islam Even in non Muslim literature. transaction. Islamic banks and conventional banks both create competition among banks to satisfied customers and fulfill their expectations and long term benefits for the economy. The origin of Islamic banks as major players in the financial domain was in the early 1970’s. this require a complete and comparative study to check the performance of Islamic banks with the conventional banks regarding their facilities that they are providing to their customers and customers satisfaction. in the great 2 . all dealing. But the rules and regulations governing the Islamic banking system has been present in the world for more than centuries. product feature. The conventional banks and the Islamic banks are differentiated commonly on the basis of their goals. In Iran there is another study which shows mixed result both in favor of Islamic bank and in conventional banks that they both support and stabilized monitory system. Islamic bank follows the Shari law given by the Quran and Sunnah. responsibility are derived from the Shariah law.

Amongst the transactions is "deal not unjustly. Interest is considered to be the price of credit. there is no reward for capital unless it is exposed to business risk. reflecting the opportunity cost of money. Consequently financial relationships in Islam have been participatory in nature. The first Islamic principle underlying for such kind of conventional banks in Pakistan. Thus in Islamic Banking. 3 . The original meaning of the Arabic word Shariah is 'the way to the source of life' and is now used to refer to legal system in keeping with the code of behavior called for by the Holly Qur'an (Koran). As no payment is allowed for labor.Islamic Law or the Shariah in all of its actions and deeds. Islamic law considers a loan to be given or taken. Thus. This study tries to explore the performance of Islamic banks and the conventional banks competitively by the facilities (Products and contradict the Islamic value (haram) On the other hand. more often that it leads to some kind of injustice.  The avoidance of economic activities involving oppression (zulm)  The avoidance of economic activities involving speculation (gharar). unless it is applied to work. and ye shall not be dealt with unjustly" [2:279] which explain why commercial banking in an Islamic framework is not based on the debtor-creditor relationship. This study is also important because the Islamic banks are growing in term of size and structure in rate of 114% per annum. financial intermediation in an Islamic framework has been developed on the basis of the above-mentioned principles. free of charge.  The introduction of an Islamic tax.  The discouragement of the production of goods and services which is applicable to both labor and capital. to meet any contingency. conventional banking is essentially based on the debtor-creditor Services) they are providing to their customer and satisfactory level of the customers. and between the borrowers and the bank on the other. It also tries to find the factors that are motivating customers to the Islamic banks and the factors that are motivating customers to the relationship between the depositors and the bank on one hand. The other principle pertaining to financial transactions in Islam is that there should not be any reward without taking a risk. This principle governing principles of an Islamic bank are  The absence of interest-based (riba) transactions. When money is lent out on the basis of interest. zakat. the creditor should not take advantage of the borrower.

confidence in bank and social and religious factors are playing a motivational role towards Islamic banks. the perspective of banks customers. Islamic banks showed excellent growth rate of 114% per annum and it has captured a reasonable market shares. Comparison of Lerner indices shows no significant difference between Islamic and conventional banks but Lerner indices even shows that Islamic banks have a lower market power than the conventional banks. There is an impact of demographic disparities on the bank selection criteria applied by diversify customer to Islamic bank in Bangladesh. To measure market power Lerner indices on a sample of banks from 17 countries in which Islamic and conventional banks coexist over the period of 2000 to 2007. Izah (2007) has conducted a research to examine the level of service quality in Malaysian commercial resulted a greater customer Satisfaction and reduced customer’s erosion (Leeds. 1992). 2009). Ismais. Now in Pakistan six full-fledged Islamic banks are working in different cities of the country and 13 conventional banks have started partial Islamic banking practices by starting a various number of branches exclusively engaged in Islamic banking practices (SBP. Hj. credit risk and profitability during the period 1992 to 2001. Islamic banks are endeavoring to capture the maximum numbers of customers to compete with the conventional banks by facilitating their customers a large number of products and services as an alternative for interest base products. 2006). quality of services. This study also examines customer’s expectations and perceptions of service quality provided by the commercial banks in Malaysia. This study determines the factors that influence the customers towards Islamic banks in Malaysia. Perception. In another study to measure market power of Islamic banks and conventional banks have been done. Banks are needed to better understand their customer and to continuously evaluate their service quality in order to maintain their market share ( Jabnoun and Hussein 2002 ). availability of services.LITERATURE REVIEW In Pakistan. Osman. This study is the comparison of interest base banks and interest free banks in Bahrain (Abdus Samad 2004). There is another research which proves that customers decision to save in Islamic banking are influenced by economic factors such as receiving the economic benefits. banking industry for 4 . (Rashid and Hassan 2009). It is a positive sign in the development and success in the economy. An increase in the service quality and professional behavior (Haque. To check the performance of interest free banks and interest base banks with respect to liquidity risk. Zaki. quick services. Banks are providing a large number of products and services and facing a tough competition to attract potential customers. (Weill 2009).

To evaluate their responses. Al-Hawari and Ward. 1997. Information. having good understanding on Islamic principles and knowledge on islamic banking (Khoirunissa. A total of 400 questionnaires were distributed among respondents to collect information. The stratification has been done based on the nature of the bank for example Islamic banks and conventional banks. Meezan Islamic bank and Bank Islamic Pakistan limited were selected from the Islamic banks. To save in Islamic banks customers are influenced by religious factors such as obeying religious orders. 2006. From the conventional banks. The response rate that is reasonable for analysis of data. Among them 400 satisfactory level of the customers of both banks is high mean that there is a positive relationship between facilities provided by banks and customer satisfaction.online facilities. United bank limited and Allied bank limited were selected from the conventional banks. Bahia and Nantel. Sample of some bank’s customers is selected for this study by stratified random sampling technique. Bank Alfalah limited. Yavas et al. The population in this study consists of the all customers of the Islamic banks and the conventional banks that are operating in Lahore. (Levesque and McDougall. 2005. Questionnaires were completed and useable for data analysis.Arasli et al. 1996. those customers are selected who have fixed deposit account and saving account in the bank. questionnaires were completed and useable for data analysis. A personal contact approach is also used to collect the information from the respondent and the researchers explained the questionnaire and the objective of the study by telling its purpose. Six banks were selected for the survey in Lahore two of them were Islamic banks and the others were conventional banks. Six banks were selected for the survey in Lahore two of them were Islamic banks and the others were questionnaires were developed to record the responses. two different structured questionnaires were developed to record the responses. those customers are selected who have fixed deposit account and saving account in the bank. and easy reachable locations and healthy financial system. 2003). We used structured questionnaires in English to collect the data from customers of Islamic banks and conventional banks. From the conventional banks. 2000. To evaluate their responses. A personal contact approach is also used to collect the information from the respondent and the researchers explained the questionnaire and the objective of the study by telling its purpose. two different structured METHODOLOGY This study investigates the level of satisfaction of bank’s customers regarding facilities provided by the Islamic banks and the conventional banks in Lahore (Pakistan).. The respondents are selected from both banks. The respondents are selected from both banks. and MCB bank limited.. In this study it is find out that 5 .

conventional banks. It is also supposed that there are factors that are motivating customers towards Islamic banks.8% are female customers represented. In this study to determine the factors that are influencing customers towards conventional banks are supposed to be better products and services. and MCB bank limited. latest facilities. From the respondents 66% showed that they preferred conventional banks because they 6 . In case of conventional banks 82.1% are female customers.Businessmen give more preference towards conventional banks with 31. Demographics of the respondent reflect that the male customer is greater than the female customers. Customers who have the qualification of Masters are more inclined towards Islamic banks with 40. one Islamic bank manager and second conventional bank manager. Female customers are more incline towards Islamic banks.2% are male customer while 31. Meezan Islamic bank and Bank Islamic Pakistan limited were selected from the Islamic banks. financial position of banks. financial position of banks. Islamic teaching and Shariah. economic benefits and better facilities.4% and government employees give more preference towards Islamic banks with 43. 18 questions were asked in the questionnaires and they are ranked as: 1=strongly disagree to 5=strongly agree. Customer satisfaction is judged by the satisfactory level through the rank.9% while the graduate customers are more inclined towards conventional banks with 46.3%. United bank limited and Allied bank limited were selected from the conventional banks. Through the analysis of data it is proved that economic benefits.2%. interest on deposits. interest on deposits. financial position of bank. These motivating factors are selected after detailed interview of the two bank managers.9% are males and 17. strong global image and network reputation are the factors that are motivating customers towards conventional banks. FINDINGS \ RESULTS By using Descriptive statistic technique frequencies distributions are used to determine the demographics characteristics of the respondents and to examine the satisfaction of the customers of Islamic and conventional banks. knowledge on Islam and religious environment in the city.5%) are more inclined towards Islamic bank rather than the unmarried customers (45. In case of Islamic bank 68. Bank Alfalah limited. These factors are interest free loan.0 version used to interpret and evaluate the data.5). strong global image and reputation and economic benefits. Married customers (54. The SPSS 17. We used structured questionnaires in English to collect the data from customers of Islamic banks and conventional banks. financial position of bank. To evaluate the satisfactory level of the customer towards the facilities provided by the banks.

Results showed that the customers of both the banks either they are from Islamic banks or conventional banks are satisfied with the facilities provided by the banks but the customers of conventional banks are more satisfied than the customers of Islamic banks. respondents agreed that they have more faith on the conventional banks that their money is saved because conventional banks have more strong financial position.92. knowledge on Islam and religious environment in the city are the factors that are motivating customers towards Islamic banks. 90. 84. From the respondents 70. Islamic teaching and Shariah. while 87.7% from the Islamic banks or conventional banks 18 questions related to the facilities that are providing by the both banks were asked.2% agreed that the conventional banks provide better products and services.0% respondents agreed that conventional banks are providing better and latest facilities rather than other banks that are why I am saving in conventional bank. It is proved that there are factors that are motivating customers towards Islamic banks are interest free loan.1% respondents agreed that as a Muslim I prefer Islamic Bank and it does not oppose Islamic teachings.provide economic benefits in the form of profit and Interest.6% respondents said that conventional bank pay interest on deposit and charged interest on loan that’s why we preferred conventional banks. and 97. 78.9% respondents agreed that Islamic bank provides interest free loan and no interest pays on deposit that motivate me to save in Islamic bank. while 84. There are number are studies that reported the positive relationship between service quality and customer satisfaction. financial position of bank.1% respondents said that they receive economic benefits by saving in Islamic Bank in the form of profit sharing. Questions were ranked 1=strongly disagree to 5=strongly agree.8% respondents preferred conventional Banks because they have better Image and reputation rather than other banks. To judge the satisfaction of the customers mean that which bank’s customers are more satisfied either 7 .

366 393 . No.214 396 . also welcoming the foreign investors in the country.006 8 . Conventional banking agreement for long-term financing on mark-up basis. (real property loan) Whenever a contract is involved a guaranteed profit “RIBA” (interest) is surely involved. 392 p-value .002 396 398 394 .033 395 .651 397 .053 .069 394 . (discounted/free home decoration) The Government of Pakistan is privatizing the nationalized banks.000 398 . Islamic banking agreement to create registered mortgage loan. Islamic banking is efficient in the system of early recovery. Islamic banking is more efficient Conventional banking is more efficient Hiring of separate sales managers to manage real estate channel in branches Loyalty program for current customer’s base to generate positive word of mouth.000 397 .006 .092 394 .Empirical Results Association with Age Questions Islamic banking agreement for long-term financing on mark-up basis. Conventional banking is efficient in the system of early recovery. I am aware that giving/taking “RIBA” (interest) is forbidden in Islam.

Next question is about loyalty program for current customer’s base to generate positive word of mouth(Discounted/free home decoration).This table shows different research questions and their association with age. First question is about Islamic banking agreement for longterm financing on mark-up basis. Next question is about Conventional banking agreement for longterm financing on mark-up basis.05. Total respondents who answered this question were 397. Its result shows that Islamic banking agreement for long-term financing on mark-up basis is independent on age because P-value is greater than 0. Its result shows that hiring of separate sales managers to manage real estate channel in branches is independent on age because P-value is greater than 0. Total respondents who answered this question were 395. Next question is about I am aware that giving/taking “RIBA” (interest) is forbidden in Islam. also welcoming the foreign investors in the country is highly dependent on age because Pvalue is less than 0. (real property loan). Its result shows that whenever a contract is involved a guaranteed profit “RIBA” (interest) is surely involved is independent on age because P-value is greater than 0. Next question is about hiring of separate sales managers to manage real estate channel in branches. Total respondents who answered this question were 393.05.05.Next question is about the Government of Pakistan is privatizing the nationalized banks. Its result shows that aware that giving/taking “RIBA” (interest) is forbidden in Islam is highly dependent on age because P-value is less than 0. Total respondents who answered this question were 396. Total respondents who answered this question were 397. Its result shows that is independent on age because P-value is greater than 0.05.05. Total respondents who answered this question were 394.05. Its result shows that Conventional banking agreement for long-term financing on mark-up basis is highly dependent on age because P- value is less than 0. Total respondents who answered this question were 398. Next question is about Islamic banking agreement to create registered mortgage loan. Its result shows that Conventional banking is efficient in the system of early recovery is highly dependent on age because P-value is less than 0. Its result shows that loyalty program for current customer’s base to generate positive word of mouth(Discounted/free home decoration) is highly dependent on age because P-value is less than 0. 9 .05. Next question is about Islamic banking is efficient in the system of early recovery. Next question is about whenever a contract is involved a guaranteed profit “RIBA” (interest) is surely involved. Total respondents who answered this question were 398. Its result shows that Islamic banking is efficient in the system of early recovery is independent on age because Pvalue is greater than 0. Next question is about Conventional banking is efficient in the system of early recovery.05. Total respondents who answered this question were 394. Total respondents who answered this question were 392. Its result shows that the Government of Pakistan is privatizing the nationalized banks. also welcoming the foreign investors in the country.05.05.

396 . 397 .437 . (discounted/free home decoration) 396 .444 .605 Loyalty program for current customer’s base to generate positive word of mouth.078 Whenever a contract is involved a guaranteed profit “RIBA” (interest) is surely involved.082 Conventional banking agreement for long-term financing on mark-up basis. 398 .804 Islamic banking agreement to create registered mortgage loan. (real property loan) 395 . 400 . 394 .074 The Government of Pakistan is privatizing the nationalized banks.368 Islamic banking is more efficient Conventional banking is more efficient Hiring of separate sales managers to manage real estate channel in branches 398 400 396 .ASSOCIATION WITH GENDER Questions No. also welcoming the foreign investors in the country.419 10 . p-value Islamic banking agreement for long-term financing on mark-up basis.164 I am aware that giving/taking “RIBA” (interest) is forbidden in Islam. 396 .053 Conventional banking is efficient in the system of early recovery. 399 .123 Islamic banking is efficient in the system of early recovery.

also welcoming the foreign investors in the country is independent on gender because Pvalue is greater than 0. Next question is about Conventional banking agreement for long-term financing on mark-up basis.05. Its result shows that is independent on gender because P-value is greater than 0. Next question is about the Government of Pakistan is privatizing the nationalized banks. (real property loan). Next question is about Conventional banking is efficient in the system of early recovery. Its result shows that loyalty program for current customer’s base to generate positive word of mouth(Discounted/free home decoration) is independent on gender because P-value is greater than 0. Total respondents who answered this question were 397. Next question is about Islamic banking is efficient in the system of early recovery. Total respondents who answered this question were 395. Next question is about hiring of separate sales managers to manage real estate channel in branches. Its result shows that hiring of separate sales managers to manage real estate channel in branches is independent on gender because P-value is greater than 0.05. Its result shows that aware that giving/taking “RIBA” (interest) is forbidden in Islam is independent on gender because Pvalue is greater than 0. Its result shows that Islamic banking agreement for long-term financing on mark-up basis is independent on gender because P- value is greater than 0. Next question is about whenever a contract is involved a guaranteed profit “RIBA” (interest) is surely involved. Total respondents who answered this question were 398. Total respondents who answered this question were 396. Total respondents who answered this question were 394. Next question is about I am aware that giving/taking “RIBA” (interest) is forbidden in Islam. Total respondents who answered this question were 399. Total respondents who answered this question were 400. Its result shows that Islamic banking is efficient in the system of early recovery is independent on gender because P-value is greater than 0.05.05.05. Its result shows that whenever a contract is involved a guaranteed profit “RIBA” (interest) is surely involved is independent on gender because Pvalue is greater than 0. Total respondents who answered this question were 396.05. Its result shows that Conventional banking agreement for long-term financing on mark-up basis is independent on gender because P- value is greater than 0.05. also welcoming the foreign investors in the country.05. Total respondents who answered this question were 396.This table shows different research questions and their association with gender. Next question is about loyalty program for current customer’s base to generate positive word of mouth(Discounted/free home decoration). Its result shows that Conventional banking is efficient in the system of early recovery is independent on gender because P-value is greater than 0.05. 11 . Total respondents who answered this question were 400. Its result shows that the Government of Pakistan is privatizing the nationalized banks. First question is about Islamic banking agreement for long-term financing on mark-up basis. Next question is about Islamic banking agreement to create registered mortgage loan.05.

(real property loan) Whenever a contract is involved a guaranteed profit “RIBA” (interest) is surely involved. 397 .248 Islamic banking is more efficient Conventional banking is more efficient Hiring of separate sales managers to manage real estate channel in branches Loyalty program for current customer’s base to generate positive word of mouth.148 .018 12 .062 397 .617 The Government of Pakistan is privatizing the nationalized banks.545 . (discounted/free home decoration) 397 399 395 . also welcoming the foreign investors in the country.744 394 . 398 394 . Conventional banking is efficient in the system of early recovery.638 Islamic banking is efficient in the system of early recovery. Conventional banking agreement for long-term financing on mark-up basis. 393 p-value . No. I am aware that giving/taking “RIBA” (interest) is forbidden in Islam.Association with Marital Status Questions Islamic banking agreement for long-term financing on mark-up basis.936 395 .687 .007 Islamic banking agreement to create registered mortgage loan. 396 .239 396 .

Total respondents who answered this question were 398. Its result shows that whenever a contract is involved a guaranteed profit “RIBA” (interest) is surely involved is independent on marital Status because P-value is greater than 0.05. Next question is about Conventional banking agreement for long-term financing on mark-up basis. Total respondents who answered this question were 399. Next question is about the Government of Pakistan is privatizing the nationalized banks. Its result shows that loyalty program for current customer’s base to generate positive word of mouth(Discounted/free home decoration) is independent on marital Status because P-value is greater than 0. 13 . Its result shows that hiring of separate sales managers to manage real estate channel in branches is independent on marital Status because P-value is greater than 0. Next question is about loyalty program for current customer’s base to generate positive word of mouth(Discounted/free home decoration).05. also welcoming the foreign investors in the country. Next question is about whenever a contract is involved a guaranteed profit “RIBA” (interest) is surely involved. Its result shows that the Government of Pakistan is privatizing the nationalized banks. First question is about Islamic banking agreement for long-term financing on mark-up basis. (real property loan). Next question is about I am aware that giving/taking “RIBA” (interest) is forbidden in Islam.05. Its result shows that Conventional banking agreement for long-term financing on mark-up basis is highly dependent on marital Status because P-value is less than 0.05.05. also welcoming the foreign investors in the country is independent on marital Status because P-value is greater than 0. Total respondents who answered this question were 397. Next question is about Islamic banking agreement to create registered mortgage loan.05. Total respondents who answered this question were 395. Total respondents who answered this question were 394. Total respondents who answered this question were 394. Next question is about hiring of separate sales managers to manage real estate channel in branches. Next question is about Islamic banking is efficient in the system of early recovery.05. Its result shows that aware that giving/taking “RIBA” (interest) is forbidden in Islam is independent on marital Status because P-value is greater than 0. Its result shows that Islamic banking agreement for long-term financing on mark-up basis is independent on marital Status because P-value is greater than 0. Total respondents who answered this question were 397.This table shows different research questions and their association with Marital Status. Total respondents who answered this question were 397.05. Total respondents who answered this question were 393. Its result shows that Islamic banking is efficient in the system of early recovery is independent on marital Status because P-value is greater than 0. Its result shows that Conventional banking is efficient in the system of early recovery is independent on marital Status because P-value is greater than 0. Total respondents who answered this question were 396.05. Its result shows that is dependent on marital Status because P-value is greater than 0.05. Next question is about Conventional banking is efficient in the system of early recovery.

No. 394 394 395 395 398 398 396 396 Islamic banking is efficient in the system of early recovery. also welcoming the foreign investors in the country. Conventional banking is efficient in the system of early recovery. 399 400 399 400 Islamic banking is more efficient Conventional banking is more efficient Hiring of separate sales managers to manage real estate channel in branches Loyalty program for current customer’s base to generate positive word of mouth. I am aware that giving/taking “RIBA” (interest) is forbidden in Islam. Islamic banking agreement to create registered mortgage loan. 396 398 400 396 398 400 396 396 396 396 14 . (real property loan) Whenever a contract is involved a guaranteed profit “RIBA” (interest) is surely involved. Conventional banking agreement for long-term financing on mark-up basis. (discounted/free home decoration) The Government of Pakistan is privatizing the nationalized banks.Association with Profession Questions Islamic banking agreement for long-term financing on mark-up basis. No.

Its result shows that loyalty program for current customer’s base to generate positive word of mouth(Discounted/free home decoration) is highly dependent on profession because Pvalue is less than 0. Its result shows that Conventional banking agreement for long-term financing on mark-up basis is highly dependent on profession because P-value is less than 0. Total respondents who answered this question were 400. Next question is about hiring of separate sales managers to manage real estate channel in branches. Next question is about I am aware that giving/taking “RIBA” (interest) is forbidden in Islam. 15 .05.05. Next question is about Conventional banking agreement for longterm financing on mark-up basis.05.05. also welcoming the foreign investors in the country. Total respondents who answered this question were 395. Its result shows that is independent on profession because P-value is greater than 0.05. Total respondents who answered this question were 399.05. Total respondents who answered this question were 396.05. Next question is about Conventional banking is efficient in the system of early recovery.05. Total respondents who answered this question were 400. Its result shows that Islamic banking agreement for long-term financing on mark-up basis is dependent on profession because P- value is less than 0. (real property loan). Next question is about the Government of Pakistan is privatizing the nationalized banks. First question is about Islamic banking agreement for long-term financing on mark-up basis. Its result shows that Conventional banking is efficient in the system of early recovery is highly dependent on profession because P-value is less than 0. Total respondents who answered this question were 398. Total respondents who answered this question were 397. Its result shows that aware that giving/taking “RIBA” (interest) is forbidden in Islam is highly dependent on profession because P-value is less than 0. Next question is about whenever a contract is involved a guaranteed profit “RIBA” (interest) is surely involved. Total respondents who answered this question were 398. also welcoming the foreign investors in the country is highly dependent on profession because P-value is less than 0.This table shows different research questions and their association with profession.05. Its result shows that whenever a contract is involved a guaranteed profit “RIBA” (interest) is surely involved is dependent on profession because P-value is less than 0. Next question is about loyalty program for current customer’s base to generate positive word of mouth(Discounted/free home decoration). Next question is about Islamic banking agreement to create registered mortgage loan. Next question is about Islamic banking is efficient in the system of early recovery. Total respondents who answered this question were 394. Its result shows that hiring of separate sales managers to manage real estate channel in branches is independent on profession because P-value is greater than 0. Its result shows that the Government of Pakistan is privatizing the nationalized banks. Its result shows that Islamic banking is efficient in the system of early recovery is independent on profession because P-value is greater than 0.05. Total respondents who answered this question were 396.

163 . I am aware that giving/taking “RIBA” (interest) is forbidden in Islam. Conventional banking is efficient in the system of early recovery. also welcoming the foreign investors in the country. Islamic banking agreement to create registered mortgage loan. (discounted/free home decoration) The Government of Pakistan is privatizing the nationalized banks. Conventional banking agreement for long-term financing on mark-up basis. Islamic banking is more efficient Conventional banking is more efficient Hiring of separate sales managers to manage real estate channel in branches Loyalty program for current customer’s base to generate positive word of mouth.393 . Islamic banking is efficient in the system of early recovery. No. 394 p-value .004 .055 394 .007 395 .003 .312 .ASSOCIATION WITH QUALIFICATION Questions Islamic banking agreement for long-term financing on mark-up basis.143 398 .006 16 .231 398 . (real property loan) Whenever a contract is involved a guaranteed profit “RIBA” (interest) is surely involved.141 399 400 396 398 400 396 .033 395 .

Next question is about Islamic banking is efficient in the system of early recovery. Its result shows that Conventional banking agreement for long-term financing on mark-up basis is highly dependent on qualification because P-value is less than 0. Next question is about I am aware that giving/taking “RIBA” (interest) is forbidden in Islam. Total respondents who answered this question were 397. Total respondents who answered this question were 394. Total respondents who answered this question were 397. Its result shows that Islamic banking is efficient in the system of early recovery is independent on qualification because P-value is greater than 0.05. (real property loan). Total respondents who answered this question were 398. Total respondents who answered this question were 394.05. Total respondents who answered this question were 398.05. Next question is about Conventional banking agreement for long-term financing on mark-up basis. Its result shows that loyalty program for current customer’s base to generate positive word of mouth(Discounted/free home decoration) is highly dependent on qualification because Pvalue is less than 0.05.05. Its result shows that Islamic banking agreement for long-term financing on mark-up basis is independent on qualification because P-value is greater than 0. Total respondents who answered this question were 396. Its result shows that whenever a contract is involved a guaranteed profit “RIBA” (interest) is surely involved is independent on qualification because P-value is greater than 0.05.05. Total respondents who answered this question were 393. also welcoming the foreign investors in the country. Next question is about Conventional banking is efficient in the system of early recovery. also welcoming the foreign investors in the country is highly dependent on qualification because P-value is less than 0.This table shows different research questions and their association with Qualification. 17 . Its result shows that Conventional banking is efficient in the system of early recovery is highly dependent on qualification because P-value is less than 0. Next question is about whenever a contract is involved a guaranteed profit “RIBA” (interest) is surely involved. Next question is about loyalty program for current customer’s base to generate positive word of mouth(Discounted/free home decoration).05. Total respondents who answered this question were 392. Next question is about the Government of Pakistan is privatizing the nationalized banks. Its result shows that aware that giving/taking “RIBA” (interest) is forbidden in Islam is highly dependent on qualification because P-value is less than 0. First question is about Islamic banking agreement for long-term financing on mark-up basis. Its result shows that the Government of Pakistan is privatizing the nationalized banks. Next question is about hiring of separate sales managers to manage real estate channel in branches.05. Its result shows that is independent on qualification because P-value is greater than 0. Next question is about Islamic banking agreement to create registered mortgage loan.05. Its result shows that hiring of separate sales managers to manage real estate channel in branches is independent on qualification because P-value is greater than 0. Total respondents who answered this question were 395.

interest on deposits. Bank managers should take quality initiatives to 18 . Through the analysis of data it is proved that economic benefits. financial position of bank. It is proved that factors which motivating customers towards Islamic banks were: interest free loan. In this study it is find out that satisfactory level of the customers of both banks is high mean that there is a positive relationship between facilities provided by banks and customer satisfaction. knowledge on Islam and religious environment in the city were the factors which motivating customers towards Islamic banks. It helps to enhance the understanding of bank customers about service quality regarding Islamic and conventional banks in Pakistan. strong global image and network reputation were the factors that were motivating customers towards conventional banks. The result of this study showed that the customers of both the banks either they were from Islamic banks or conventional banks were satisfied with the facilities provided by the banks but the customers of conventional banks were more satisfied than the customers of Islamic banks. Islamic teaching and Shariah. Bankers can attract more customers by launching effective marketing campaigns to enhance awareness towards quality of their services.CONCLUSIONS AND RECOMMENDATIONS improve their products by considering demographic characteristics of the customers. financial position of banks.

Katircioglu..(2006). 491. Khan. I. (2000). (2005). (1997). 10. Yavas. “Performance of interest-free Islamic banks vis-a-vis interestbased conventional banks of Bahrain”Journal of Economics and Management 12. Jamil Osmanand Ahmad Zaki Hj Ismail (2009) “Factor Influences Selection of Islamic Banking: A Study on Malaysian Customer Preferences.N. (2008)“Banking behavior of Islamic bank customer in Bangladesh” Journal of Islamic Economics.S..” International Journal of Bank Marketing. M. (1992). “Mystery Shopping’ Offers Clues to Quality Service”. “A comparison of service quality in the banking industry”: Some evidence from Turkish. T. & Smadi S. Z.4 October 2007 Pp.G. 4.. D. Arasli. 2009 ISSN 1546-9239. “Service quality in the banking sector in an emerging economy: a consumer survey”.REFERENCES 1. 145 – 168. & McDougall. H... Banking and Finance. 8. 159-194.. U.Speaking areas in Cyprus. 6.and Greek. Marketing Intelligence & Planning” 24 (2). 2. 15 (6). 217–223. 3 No. 4.. & Nantel J. B. 24 (11). H. 9.2 (2004): Ahasanul Haque. Bank Marketing.“Determinants of customer satisfaction in retail banking. 23 (7).M. Abdus Samad(2004). Bahia k. Bigin. No. 12–20. Laurent Weill February 2009 Leeds. S. M. 7. 5. (1996). 11. T. 24-27. “A Reliable and Valid Measurement Scale for the Perceived Service Quality of Banks” The International Journal of Bank Marketing.” American Journal of Applied Sciences 6 (5): 922-928.327-336. K. Delta Khoirunissa (2003). Izah Mohd Tahirand Nor Mazlina Abu Bakar(2007)“Service Quality Gap and Customers’ Satisfactions of Commercial Banks in Malaysia International Review of Business Research Papers” Vol. A.. M. Iqtisad Journal of Islamic Economics” Vol. 19 . & Ward. International Journal of Bank Marketing. 508-526. International Journal of Banking Marketing. 14 (7). 127-147. & Shahid. & Shenwell. Hassan.. 2. “Consumers preference toward Islamic banking(Case study in bank muamalat Indonesia and bank BNI syariah). Rajab 1424 H/September 2003 pp. Al-Hawari. Levesque. no. 3.T. “The effect of automated service quality on Australian banks’ financial performance and the mediating role of customer satisfaction.