Keywords : Full-Fledged Islamic Banks
Customer Patronization differences and its effect on Islamic Banking Profitability
Journal of Contemporary Issues in Business and Government,
2021, Volume 27, Issue 6, Pages 1081-1101
Introduction and Background: Financial intermediation is a proven function of the banking
sector which advocates its growth-promoting role. But Islamic banks cover an extra mile by
sharing risk and synchronizing the income of the rich and the poor. But to function smoothly, the
services sector like Islamic banks must ensure that their clients/customers are patronizing them
with a higher degree of engagement. A most important source of patronizing is the deposits that
customers are keeping in their accounts with Islamic banks. In terms of practice, there are two
types of patronizing customers.First,who places their deposits in the current account, and second
who places their deposits in the saving accounts.Both of them have different expectations from
the services extended by Islamic banks.
Objective: The objective set by this study is to empirically evaluate whether changes in the
current and saving account patronization have a role to play in Islamic banking profitability.And
to determine how banks need to manage their deposit structure in order to increase the odds of
Design/methodology/approach: This quantitative study is based on a deductive approach and
will collect the data from audited financial statements of Islamic banks for the time period from
2008 to 2018.
Findings: It is expected that this study will provide the breakdown of the share of current and
saving deposits for the Islamic banks, which provides the profit promoting and profit
undermining shares. This breakdown will be instrumental for the policymakers to lay down a
framework in managing the share of current and saving deposits in their favor.