Shari’ah Compliance Affecting Banking Behaviour

Shari’ah is a network of injunctions and rules of behaviour. Compliance is rewarded in this world and hereafter. Interest (riba), gambling and uncertainty lead to injustice and are therefore prohibited. To be ‘ethical’ is to stay clear of prohibited activities and instead do what is obligatory and recommended. Akhlaq39 or good character is the disposition to act in accordance with the dictates of the rational soul.

Compliance with Shari’ah is defined as the ability of the Islamic banks to follow Islamic law and operate under the principles of IB and economics. Compliance with Shari’ah, however, varies according to the level of religiosity of the banking users due to differences in Shari’ah interpretations, schools of thought, cultures and personal upbringing.

In the case of IB, religiosity is hypothesised to moderate consumer behaviour in financial transactions, which can be written as the following hypothesis:

H 24: Religiosity moderates overall customer satisfaction.

In other words, the level of religiosity will have a significant effect on the conduct of a Muslim’s economic activity within his economic system. This can be contemplated in the banking and financial systems within which a religious, committed individual conducts his banking and financial services. Thus, IB and finance, being part of a Muslim’s economic activities, is a Muslim’s link to Muamalat40, to Shari’ah, to Islam, and finally to Allah.

39 _{Good manners according to Islamic perspectives.}

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This is the foundation or the root of IB and finance. Within the Islamic scheme of life and the Shari’ah framework, Islam imposes its ‘ahkam’ (laws) representing norms or values to be followed by its believers. These laws or values are not man-made but are ordained by

Allah. These laws are derived from the sources of Shari’ah, the two primary sources being the Al-Qur’an and Al-Sunnah (Abdullah et al. 2004). The fundamentals of the Islamic principles differentiate the beliefs of Islam from all other religions. The differences in religiosity are shown by the following figure.

Figure 3-3: The Differences between the Western and Islamic Religiosity Index

A summary of the above could be described as saying that the religiosity index measurement for Christianity, Judaism and Islam developed by Allport (1967), Schwartz (1995) and Wan Ahmad et al. (2008) are similar, with some differences to cater for dissimilarities in the teachings and rules of the respective religions.

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However, this research will only focus on belief and religiosity commitment because of the difficulty in quantifying some of the Islamic religiosity as laid out in the religiosity guidelines such as ihsan and others.

In addition, the religiosity structure can take either a one-dimensional or a bi-dimensional view. The one-dimensional view will have a continuum of religiosity level. The bi- dimensional view will look at religiosity in two dimensions, as shown in Table 3-9. These views were adapted from the measurement of attitude structure in psychology (Maio and Haddock 2010, p. 34).

Table 3-9: Muslim Religiosity – Bi-dimensional

Agree on Commitment items Disagree on Commitment items

Agree on Faith items Pro-religious (Iman) Liberal (Fasiq) Disagree on Faith items Non-believer (Munafiq) Non-religious (Kafir)

In addition, the study also attempts to make product specific contextual contribution in understanding satisfaction for the Islamic and conventional credit card users. Empirical evidences in the literature revealed that there are significant differences between the CCC and ICC in terms of the selection factors.

Nevertheless, it is important to highlight that there is a gap in identifying if there is any differences between different groups of users which are based on their banking preferences or credit card preferences, as mentioned earlier in chapter one. Specifically, there are three different groups for the credit card users.

They are the ICC users representing Islamic banking credit card users, CCC users representing conventional banks credit card users and credit card users who have both the Islamic and conventional credit cards. Therefore, different credit card groups are hypothesised to moderate overall customer satisfaction.

H 25: Different credit card credit groups moderate overall customer satisfaction.

The findings will add to the knowledge on the differences of different credit card user groups to the marketing literature and the banking industry as a whole.

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3.5 CHAPTER SUMMARY

This chapter has outlined three objectives in understanding the roles of religion in customer satisfaction. The first objective of this chapter has been to define the scope of the study with regard to the impacts of religion towards consumer behaviour. This chapter has discussed the scope of the study in examining consumer behaviour instead of looking at it from macroeconomic aspects. A discussion then followed about the relationships between religion and consumer behaviour.

Secondly, the chapter aimed to review the literature in consumer behaviour on the concepts of religiosity. Empirical evidences from the literature were presented to determine the relationships between the three concepts with consumer behaviour. The literature shows that the most prominent concept in affecting consumer behaviour is religiosity.

Linked to the second objective, the third objective of this chapter has been to discuss the measurement of the religiosity concept from various perspectives. The literature found in the second objective supported that religiosity influences consumer behaviour to a varying degree depending on the individual’s own religiosity.

Highly devout individuals behaved differently compared to moderately and liberal individuals. Hence, researchers have tried to understand the mechanics of religiosity and consumer behaviour by measuring individual religiosity. The discussions on the concept of religiosity measurement from different perspectives and how religiosity should be measured according to an Islamic perspective were also presented. Religiosity can be measured from an Islamic perspective on the condition that specific guidelines must be adhered to.

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