The non-economic consequences of disclosure in Islamic banks

Abstract

Purpose: The purpose of this paper is to examine the effect of sharia, social and financial disclosure on stakeholders� loyalty towards Islamic banks (IBs). The paper also aims to examine the extent to which trust and satisfaction mediate this effect. Design/methodology/approach: It uses data collected from 600 respondents to survey questionnaires disseminated to stakeholders from 15 countries dealing with IBs. Structural equation modelling is adopted with a partial least square approach. Findings: The results indicate that there is a significant impact of disclosure on stakeholders� trust, satisfaction, and loyalty. The results also indicate that there is a partial mediating effect of trust and satisfaction in the relationship between disclosure and loyalty. This paper is one of the first studies examining the effect of disclosure on stakeholders� loyalty. The authors provide novel findings, which have theoretical and practical implications for disclosure in IBs and their relationship with stakeholders. Originality/value: The analysis offers a novel contribution to the Islamic banking literature by offering the first evidence on the impact of disclosure on stakeholders trust, satisfaction, and loyalty. 2018, Emerald Publishing Limited.