Determinants of Corporate Engagement with Indonesian Islamic Banks a SmartPLS Study

This study explores the dynamics of decision-making among corporate clients engaging with Indonesia’s Islamic Bank, focusing on the substantial influence of these entities in expanding the market share for Islamic banks. The research aims to identify key factors shaping corporate decisions and formulate strategies to enhance corporate involvement in Islamic banking. Utilizing the SmartPLS methodology, the study examines variables influencing the decision criteria of Indonesian business clients opting for Islamic banking. A sample of 394 financial decision-makers (CEOs, CFOs, Heads of Finance, Vice Presidents of Finance, and GMs of Finance), comprising both Muslims and non-Muslims, was selected. Findings indicate a challenge in low knowledge among respondents, regardless of religious affiliation. Smart PLS analysis highlights service quality and compliance as pivotal factors influencing the reputation of Islamic banks. Reputation is identified as the sole factor directly impacting corporate decision-makers in transactions with these banks, with no positive impact observed from religion, knowledge, or corporate shareholders. The study concludes that strategic interventions by Islamic bank management are necessary. Targeted initiatives to improve compliance and service quality are essential to enhancing the overall reputation of Islamic banks in the Indonesian market.