Indonesia Conference Directory

Indonesian Banking industry has evolved significantly as indicated by the increasing of the number of its customers as well as the growth of the public savings. Offering an excellent service experience that enable to satisfy and make loyal customers are key for survival of any Islamic banks. Although having satisfied and loyal customer is pivotal, at present lack of studies have paid attention to assess these topics in Islamic banking context. This study is conducted to evaluate the effect of service quality, economic, and image in determining customer satisfaction and loyalty towards Islamic Bank.The data for this study was collected through a questionnaire distributed to 280 customers of Islamic banks in two cities, Medan and Bandung. This study uses Structural Equation Model. The data analysis results shows that service quality (measured by assurance, empathy, and responsiveness) is an important determinant of customer satisfaction and loyalty. Similarly, economics and image factor is significantly impact on satisfaction but not significantly in loyalty. From managerial perspective, this study provides a guidance for Islamic bank managers that besides providing a high service quality, they need to be efficient as well as having a favorable image as important strategy for advancing their banks competitive advantage.