Unveiling the Dynamics: How Banking Models and Service Quality Shape Bank Performance in Islamic and Conventional Sectors

Abstract

The objective of this study is to investigate the interplay between banking models, service quality, and bank performance, with a focus on comparing Islamic and conventional banks in Pakistan. A theoretical model is developed and tested in the banking industry of Pakistan. Using stratified sampling and a structured, self-administered questionnaire, data are collected from 1440 respondents. For data analysis, several statistical programs, such as Smart PLS, were utilized. The study's hypotheses were tested using methods including t-tests. The findings indicate a robust positive correlation between customer satisfaction and service quality within Pakistan's banking industry. However, the data reveal that customer satisfaction and service quality have an impact on the banks' overall performance. The findings have noteworthy implications for financial professionals, policymakers, and scholars. They suggest potential avenues for enhancing bank performance through improved service delivery and client interaction strategies. Financial institutions could focus on refining their service quality to better satisfy clients, potentially fostering long-term relationships and loyalty.