The non-economic consequences of disclosure in Islamic banks

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.