Academic journal article International Journal of Marketing Studies

The Corporate Reputation of Islamic Banks: A Measurement Scale

Academic journal article International Journal of Marketing Studies

The Corporate Reputation of Islamic Banks: A Measurement Scale

Article excerpt


During the last few years, the concept of corporate reputation has received considerable attention from marketing academics and practitioners alike. This is not surprising in view of the concept enormous practical implications. Suffice it to say, that the market value of a modern company lies mainly in its intangibles assets. Corporate reputation embodies all of the intangible capital that a company may have. The current study describes an attempt to develop and validate a scale to measure the corporate reputation of Islamic banks. The operational definition of the construct draws mainly on its attitudinal and perceptual nature. To tap into the different dimensions of the target domain, an initial item pool of 42 statements was developed following a comprehensive review of related literature. Successive stages of revision, editing, rewriting and face and content validity reduced the initial item pool to 29 statements. These were put to a convenient sample of 150 bank customers in the Kingdom of Bahrain. The resultant data set was factor analyzed. A Principal Component Analysis extraction method suggested a two factor solution. Between them,the two factors explained 55% of the total variance in the factor model. Items that loaded poorly on any of the two components were eliminated from the analysis. 17 items made up the final version of the scale. The Cronbach alpha coefficients revealed that the two subscales and the overall scale were reliable. The inter-item correlation coefficients, the variance extracted, the factor communalities, and the Cronbach alpha coefficients do all point to the validity of the construct: that all the items in the scale seem to measure an underlying theme, in this case the corporate reputation of Islamic banks.

Keywords: corporate reputation, Islamic banks, measurement scale, content validity, reliability, pool of items

1. Introduction

The emergence of Islamic banking on the world stage in the early 1970s of the last century represented something of a paradigm shift in international finance.Muslims, it was thought, would at last, have an Islamic financial system that appeals to their Islamic ideals, offers them free-interest finance, promotes social justice and welfare, and stresses social responsibility in commercial and business practices; a viable alternative to the debt-based mode of finance advocated by western financial institutions.

Soon after, Islamic financial institutions fanned out to all four comers of the world. Every Islamic country now has a considerable Islamic component in its banking sector. In some countries like Iran, Pakistan, and the Sudan, for instance, the whole financial sector is molded in the image of Islamic finance.More than that, conventional banks in non-Muslim countries like U.K., Germany, Switzerland and many more are also embracing the Islamic model of finance by adding the so-called 'Islamic windows' to their existing banking operations (Amboch, 2008; Eagle, 2006; Sharif, 2006; Ranzini, 2007).

As of now, there are more than 500 Islamic financial institutions operating worldwide with an asset value in excess of a trillion dollar (Etzod et al., 2011).

2. Research Objectives

The Islamic financial model appeared to be particularly relevant in the aftermath of the recent global financial meltdown. As the crisis unfolds, financial experts around the world started to have a second hard look at the model. After all, Islamic financial institutions appeared to be immune to the turbulences that the conventional financial system had endured (Al-Hamazani, 2008). As important western financial institutions collapsed one after the other during the turmoil, proponents of the Islamic model of finance including some western writers were actively promoting the model as an effective cure for the woes and sins of conventional finance.

Yet, despite its impressive expansion and growth, the industrystillaccounts for a mere one percent of the global financial market (Dawood, 2008). …

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