The Impact of SERVQUAL Model and Subjective Norms on Customer’s Satisfaction and Customer Loyalty in Islamic Banks: A Cultural Context

Services are increasingly becoming a large portion of any organization and being considered as indispensable tool for revenue stream [1]. Service quality has been defined as the customer expectations and perception of actual service [2]. According to Grönroos [3] defined service quality as the outcome of the comparison that consumer make between their expectation and perception. In banking industry service quality plays a vital role in improving of customer satisfaction [4]. The findings of Teas [5] suggest that long-term relationship and customer satisfaction can build by providing high service quality to customers. In banking industry Thompson et al. [6] study explained that strong relationship between banks and customers builds customer loyalty which give competitive advantage to banks.


Introduction
Services are increasingly becoming a large portion of any organization and being considered as indispensable tool for revenue stream [1]. Service quality has been defined as the customer expectations and perception of actual service [2]. According to Grönroos [3] defined service quality as the outcome of the comparison that consumer make between their expectation and perception. In banking industry service quality plays a vital role in improving of customer satisfaction [4]. The findings of Teas [5] suggest that long-term relationship and customer satisfaction can build by providing high service quality to customers. In banking industry Thompson et al. [6] study explained that strong relationship between banks and customers builds customer loyalty which give competitive advantage to banks.
The practitioners believe that service quality can increase the performance of a firm [7][8][9][10]. Previous studies have suggested that service quality is positively associated with customer satisfaction in banking industry of Pakistan. Furthermore, considerable amount of work has been done in service industry in order to understand the dimensions of service quality and customer satisfaction [11][12][13]. Rapid rise in financial sectors has provided alternatives to customers. Service quality has played an important role in order to increase sales profit, market share, development of good image, and to provide competitive advantage. However the measurement of service quality has become the most difficult task for organization. Following above arguments this study is measure impact of service quality on customer satisfaction and loyalty in banking context of Palestine. Therefore, three objectives are as follows: 1. To examine the condition of service quality in Islamic Banks of Palestine.

2.
To analyze factors that led to customer satisfaction in Islamic Banks of Palestine.

3.
To find mediating role of customer satisfaction between SERVQUAL and customer loyalty.
Despite the existing literature on service quality, fewer studies have been conducted on service quality that examine the customer satisfaction and customer loyalty in Palestinian banking sector. To the best of researcher knowledge, up till now there is no such study that extended the SERVQUAL model with subjective norms. In this study, researcher used the modified model SERVQUAL and extended it with subjective norm in order to measure the customer satisfaction and customer loyalty of Palestinian Islamic banking customers. SERVQUAL model was developed and tested in western culture consequently it cannot measure the service quality issues faced by developing countries [14]. Subjective norm is the core factor of theory of reasoned action (TRA) and measure the cultural aspects. Thus, it is believed that to extend SERVQUAL model with subjective norm would be significant and provide a platform to discuss the service quality issues in Islamic banks of Palestine.

Service quality in banking
In last few decades, service quality has received a great attention from both academic and practitioners. Customer expectation's serves as a foundation of service quality. Additionally, it is assumed that high quality and performance exceeds expectation while low quality performance does not meet the expectation. In services marketing SEVEQUAL model has been used widely for measuring of service quality. Several researcher have been used SERVQUAL model for measuring of service quality in banking sector [15,16]. Like other models SERVQUAL model was also criticised. With passage of time SERVQUAL was extended by several researchers [17,18].

SERVQUAL
According to Zeithaml et al. [19] the measurement and achievement of service quality has been advantageous for the firm due to several reasons such as lower cost, customer loyalty and increased market share. Thus, for the measurement of service quality in Islamic banks of Palestine, this study have used the most popularised service quality model; SERVQUAL. The revolutionary SERVQUAL model was developed by Parasuraman et al. Initially the model was comprised with 10 dimensions, which further reduce to five dimensions. There are five core dimension of SERVQUAL model, namely tangibility, reliability, assurance, empathy and responsiveness. The key definition of these five dimensions as follows: Tangibility is seen as appearance of physical facilities, equipment, personnel, and communication material.
Reliability is defined as the ability to perform the promised service dependably and accurately.
Assurance is defined as the courtesy of employees and their ability to inspire trust and confidence.
Responsiveness is defined as employee willingness to guide customers and look fully engaged while service is performed.
1. Empathy is defined as employees pay full attention to customers during service delivery.
These five dimensions have been used to develop a service quality model named SERVQUAL. Although the SERVQUAL model has been criticised by several researcher but it is still widely used in service marketing. This scale has been extensively used by service marketing researchers in USA and European countries. In banking context Cai et al. [20] have employed SERVQUAL model to investigate service quality of Malaysian banks. Raajpoot has extended the SERVQUAL model in cultural context and incorporated three dimensions of SERVQUAL model named; tangibility, reliability, and assurance in newly developed PAKSERV model. Several studies has proved significant relationship of SERVQUAL relationship with customer satisfaction and customer loyalty. Keeping these contributions in mind the following hypothesis is proposed. H1: Tangibility is significantly influence on customer satisfaction. H2: Reliability is significantly influence on customer satisfaction. H3: Assurance is significantly influence on customer satisfaction.

Subjective norms
Subjective norm is defined as individual perception that refer to group or individual in order to improve or disapprove the given behavior [21]. Subjective norm deals with the influence of social environment or social pressure towards individual behavioral intention. Subjective norm has seen as core factor that influence on customer purchase behavior [22]. According to Venkatesh and Davis [23] social influence or social pressure instigate individual to perform a behavior though the individual is not in favor of performing the behavior. Additionally, subjective norm measure the social influence on customer behavior that is made by under the expectation of family and friends.
Previous studies have shown different results in relationship of subjective norm as predictor of intention [24]. Author like Hyllegard et al. [25] asserted that subjective norms and awareness predict the loyalty intention towards a particular brand. Roca et al. [26] found that there is a significant relationship between subjective norms and perceived service quality. In another study by Parkinson et al. [27] indicated that subjective norm significantly relates with customer loyalty. Hence, the following hypothesis is proposed; H4: Subjective norm is significantly influence on customer satisfaction

Customer satisfaction
Satisfaction is attributed to a customer's feelings of happiness when his/her expectations met by the service provider. In service management literature customer satisfaction can be defined as being a summary of cognitive and affective reaction to a service incident or to a long-term service relationship [28]. According to Ueltschy et al. [29] customer satisfaction is the response of the customer who evaluate his or her prior expectations and actual performance of the product/service. Globally, customer satisfaction has been considered a powerful intangible asset for competitive advantage. In other words customer satisfaction or dissatisfaction in services marketing is result of the customer's expectation encounters with a service quality. The customer's life time loyalty with the service offered depends heavily on their satisfaction [30]. Service quality has been identified as key strategy for increased level of customer satisfaction. It is said that both customer satisfaction and service quality perception positively impact the repurchase intention of the customer [31]. Marković et al. clarified that service quality influence on customer satisfaction and customer loyalty. Thus, the following hypothesis is proposed H5: Customer satisfaction is significantly influence on customer loyalty

Customer loyalty
Service quality is an effective tool to keep customers loyal to the bank. According to Baumann et al. [32], loyalty is an attitude as well as specific behavior. Customer loyalty has been an important element to increase firm profitability. Customer loyalty has been defined as; "a deeply held commitment to re-buy or re-patronize a preferred product consistently in the future situational influences and marketing efforts that might cause switching behavior". Regardless of the service quality measurement, it is evident that service quality influences customers' perceived value, satisfaction, and loyalty. The behavioural loyalty reflects customer's positive response to purchase a particular product or service [33][34][35]. The customers who are loyal with banks spend much more than other customers. Several studies confirmed that loyalty in banking sector have attributed as function of customer satisfaction [36]. Thus, the following theoretical framework is proposed Theoretical framework as shown in Figure 1.

Methodology
The study has planned to examine service quality in Islamic banks of Palestine by extending SERVQUAL model with subjective norms and customer satisfaction. Bear in mind the criticism on SERVQUAL model, researcher used the three dimensions of SERVQUAL model as suggested by Raajpoot. A survey-based research design employed to achieve the objective of the study.

Instrument development
The survey had two parts. The first part comprised on dimensions of SERVQUAL model, subjective norm, customer satisfaction and customer loyalty. The three dimensions of SERVQUAL model had 9 items and adapted from previous developed scale by Parasuraman et al. [37]. The subjective norm consisted of 3 items adopted from previous study by Fauziah et al. Customer satisfaction consisted of 3 items adapted from Sayani [38]. Lastly, 3 items of customer loyalty adopted from Rahi et al. [39]. All the items anchored on a 7-point Likert scale "1=strongly disagree to 7 strongly agree)". The second part comprised of respondent demographics such as age, gender and education.

Survey design and sampling
The context of the study was Islamic Banks of Palestine. The survey was self-administered for collect the data of Islamic bank customers located in the city of Ramallah, Palestine. Before conducting the survey, researcher took the permission from manager to collect the data inside of bank. Convenience sampling method was used in this study. Convenience sampling defined as a process of data collection from population that is close at hand and easily accessible to researcher. According to Hair [40] illustrated that convenience sampling allows researcher to complete interviews or get responses in a cost effective way. Thus, for data collection researcher personally visited the Arab Islamic Bank and requested to Islamic Bank customers to fill the questionnaire. The required sample size was 500. A set of 600 structured questionnaires were distributed out of 500 useable responses were received from customers of Islamic Banks. Table 1 summarised the demographics of the sample selected to achieve the purpose of this study. Males were (52.4%) slightly more than females (47.6%). The age of the respondents 34.0% is for less than 20 years old, 36.4% that counts at age between 21 to 30 years, 19.2% for 31 to 40years and 10.4% respondents aged 41 to 50. Furthermore, Table  1 also depicted that education of the respondents 3.0% respondents were having high school education, 8.2% from those who has diploma, 11.6% respondents who has bachelor degree, 49.4% master level education while there were 27.85 respondents were with PhD degree.

Measurement model
To examine the research model Partial Least Square (PLS) analysis technique was employed by using the SmartPLS3.0 software Ringle et al. [41]. In an effort to refine all structural equation models twostage analytical procedure was employed, where researcher tested the measurement model and structural model recommended by Hair Jr et al. [42]. Prior to structural modelling study has to assess the measurement model of latent construct for their dimensionality, validity, and reliability by going through the process named as confirmatory factor analysis. Cronbach's (α) and Composite Reliability are also tested as recommended by Henseler et al. [43]. Furthermore in order to check the validity of the constructs convergent and discriminant validity was also examined. Convergent validity of measurement model is usually ascertained by examining the factor loading, average variance extracted and compost reliability [44]. Figure 2 shows the results of factor loadings as recommended by Chin [45] threshold level of 0.6.  All the values were above than 0.6 that shows the convergent validity of the model.

Convergent validity
According to Fornell and Larcker [46] convergent validity is measured through estimation of average variance extracted (AVE) and it must be greater than 0.5. The average variance extracted depicts the amount of variance in the indicators accounted for latent construct. Furthermore, Table 2 depicted composite reliability (CR) degree where the construct indicator represent the latent construct, values exceeded 0.7 recommended by Hair et al. [47].

Discriminant validity
Discriminant validity is the degree where items differentiate among constructs and measures distinct concepts Fornell and Larcker. The discriminant validity of the instruments was examined by following   Fornell and Larcker. Table 3 showed that the square root of the AVE as showed in bold values on the diagonals were greater than the corresponding row and column values that indicates the measures were discriminant in this study.

Cross loading
Discriminant validity can be measured by examining the cross loading of the indicators Hair Jr, Hult, Ringle, and Sarstedt. It can be done by comparing an indicator's outer loadings on the associated constructs and it should be greater than all of its loading on the other constructs Rahi et al. Table 4 depicts that all the items measuring a particular constructs loaded higher on that construct and loaded lower on the other constructs that confirms the discriminant validity of the constructs.

Structural equation model
After achieving measurement model the hypothesis were tested by running a bootstrapping procedure with a resample of 1000, as suggested by Hair Jr et al. Table 5 shows the hypothesis results, it can be seen that all five hypotheses have significance relationship with their respective dependant variables. The relationship between tangibility to customer satisfaction is supported by H1: (β=0.89, t=3.154, p<0.001). Next to this the relationship between reliability to customer satisfaction is significant by H2: (β=0.127, t=3.635, p<0.001). The relationship of H3 showed that assurance is positively related to customer satisfaction by (β=03.87, t=7.525, p<0.001). Similarly, the relationship between subjective norms to customer satisfaction is supported by H4: (β=0.441, t=8.357, p<0.01). Finally, the results of H5 where customer satisfaction is supported by customer loyalty by (β=0.583, t=18.968 p<0.001). Thus, all hypotheses are significant. Furthermore, the effect size was also measured with R 2 . The R 2 for customer satisfaction was 0.704 and for customer loyalty 0.339, which is acceptable based on the cut-off suggested by Cohen [48].

Discussion
The service quality dimension proposed in this study found significant with respective endogenous variable. The result of reliability, tangibility and assurance is related to previous study conducted by Yalley     are considered as universal service quality dimension [49]. This study found that reliability, tangibility and assurance have significant relationship with customer satisfaction. As the purpose of this study was to integrate the SERVQUAL model with subjective norms, and findings revealed that subjective norm has significant relationship with customer satisfaction. In previous studies subjective norm has found influential factor in home financing for customer intention. The Palestine region is different to west thus, it is confirmed that subjective norm played important role in measuring of service quality in Islamic banks of Palestine. Lastly, the relationship between customer satisfaction and customer loyalty have found significant and results also supported by Kitapci et al. [50].

Conclusion
Several studies have been conducted to investigate the service quality issues in banking sector in different context. Therefore, current research has two major contributions. First, this study tested the universal SERVQUAL dimension named assurance, tangibility and reliability in Islamic banks of Palestine. Second, this study also extended the SERVQUAL dimension with subjective norm in ARAB region such as Palestine. The newly proposed model collectively impact on customer satisfaction with 70% variance and 33% variance on customer satisfaction to customer loyalty. Thus, this study confirmed a new model that reflects on Arab culture with addition of Palestine people subjective norms.

Limitations and Recommendations
SERVQUAL model has been extended by different researcher however, cultural aspects was ignored in most of these studies. Future research may conduct with addition of other cultural dimension such as image and perception. This study has collected the data from one Islamic bank of Palestine. In future researcher should increase the number of Islamic banks and the sample of respondent should represent a great diversity to investigate the possible difference of customer's behaviors.