Direct Effect of Service Quality Dimensions on Customer Satisfaction and Customer Loyalty in Nigerian Islamic Bank

Due to the importance of Islamic finance to the Muslims world, recently Islamic Banking is formerly established in 2011 in Nigeria in order to join their counterpart in the Muslims world. Due to its new existence, there is very limited information on the customers’ perceptions towards the Islamic banks. Therefore, the objective of this study is to examines the direct effect of service quality dimensions on customer satisfaction and customer loyalty in Nigerian Islamic Bank. Primary data measuring service quality consisting of six dimensions: tangibility, reliability, responsiveness, assurance, empathy and compliance (24 items); customer satisfaction (4-items) and customer loyalty (4-items) were collected from 209 Nigerian students studying at Universiti Utara Malaysia. Data were analyzed using Structural Equation Modeling (SEM) using AMOS 16. Convergent validation was performed using Confirmatory Factor Analysis (CFA) and composite reliability. The finding of the study reveals that responsiveness is a significant predictor of customer staisfaction and assurance is significant predictor of customer loyalty. This implies that customers will be satisfied when the bank staff are responsive and provide fast banking service. Additionally, to maintain loyal customers Islamic banks should give assurance in terms of Islamic banking compliance.