Customers’ Perceptions of Selection Criteria Used by Islamic Bank Customers in Sudan: The Importance of Shariah Compliance

Abstract

This paper attempts to investigate the importance of Shariah compliance compared to other criteria that influence the selection of Islamic banks in Sudan, a total Islamic banking system in which the “Islamic” variable is supposed to be constant. Primary data collected by self-administered questionnaires distributed to a sample of 393 respondents from bank locations in the capital of Khartoum state. The perceptions on the importance of choice criteria ranked by the respondents were analyzed using mean analysis and independent t-test. Exploratory factor analysis is employed to provide a more holistic view of the bank choice criteria. The customers of Sudanese Islamic banks prioritized Shariah compliance factors over another selection criterion. We conclude that although all banks work under the Islamic system, consumers were most concerned with the extent to which their bank services are adhering to Islamic principles. Other factors deemed important were “Experience and third-party influence”, followed by staff competency, convenience, service quality, bank reputation, and customer care. Most studies have focused on countries with mixed conventional and Islamic banking systems (Arab and other Muslim countries). This study aims to contribute to the development of a better understanding of the determinants of Islamic bank selection in Sudan, an Arab African country characterized by a strong Islamic culture and a total Islamic banking system.

Keywords: Bank customers; Selection criteria; Shariah compliance; Sudan

JEL Classification: G21, Z12