The deterioration of the climate, which can be traced to unsustainable practices, calls for the development and adoption of a more sustainable approach for the daily activities of humans. A sustainable approach is considered to be one involving practices that enhance the attainment of both the present needs of humanity as well as the needs of the future [1
]. This requires the development of a blueprint that ensures the attainment of these needs [2
]. At an organizational level, sustainability entails being cognizant of the needs of the organization’s stakeholders [3
], which encompasses consciousness of organization profitability, the planet, and people [4
In recent times, the need for sustainability has led to the development of various innovative sustainable business approaches [5
]. To be more precise, the issue of sustainability has been viewed from the social perspective [9
], the technological perspective [12
], and the organizational perspective [1
]. Furthermore, eight archetypes have been categorized into three sustainable dimensions: technological, social and organizational dimensions [15
]. Technological sustainability refers to the process of adopting innovative measures that efficiently utilize energy in the maximization of materials [15
]. Social sustainability focuses on striking a balance between the attainment of basic needs and not dilapidating the environment [10
].Organizational sustainability emphasizes the need for firms to be more concerned and committed to the future well-being of the organization’s environment while pursuing present goals [1
Sustainability can be seen as a strategy needed to steer values, which has also been considered to be the yearning of clients [17
]. Therefore, this calls for improvement in the sustainable performance of financial institutions. The quest for more sustainable approaches has led to the development of microfinance institutions established for the purpose of improving social performance (contrary to the conventional motives of most financial firms [18
]), which has been said to be a valuable mechanism in the attainment of social and financial performance [19
]. Furthermore, improving sustainable performance requires inculcating sustainability in the guidelines of financial firms both locally and internationally [20
]. In the international scene, the need for an improvement in sustainable performance has led to the development and adoption of a sustainable developmental goal (agenda 2030) by the member states of the United Nations [21
] that has the sole aim of attaining social and economic growth as well as ensuring global partnership. This has been supported by powerful regional financial regulatory bodies such as the European Investment Bank (EIB) through the establishment of the “sustainable awareness bond”, which is aimed at encouraging sustainable businesses and is in tune with the goals of agenda 2030.
The role of banks in the economy calls for a greater sustainable approach to be adopted by firms in the industry. Sustainable banking can be seen as a process of utilizing financial products and services in creating a prosperous environment [22
]. This approach has been said to be operational in very few banks [23
], despite the insistence from customers for more sustainable practices [25
In spite of the increase in the relationship between customers and their banks, which has made customer loyalty a top priority by the management of most banks [26
], there seems to be no visible study that explores a customer’s perspective on sustainable banking and its impact on bank loyalty. Studies in this field have been focused on either delineating an ideal sustainable approach for the industry [16
] or proposing sustainability as an ideal approach for enhancing performance in the banking industry [27
The primary aim of this study was centered on the role of sustainable banking in bank loyalty as well as the mediating effect of corporate image on the relationship between sustainable banking practices and bank loyalty. The focus of this research was on customers of the banking sector in North Cyprus. The need for an improvement in the practices of banks on the small Mediterranean island (North Cyprus in particular) was the impetus for this research, as previous studies on customers’ perceptions of the industry indicated the failure of firms of the industry to meet the expectations of customers through the services they offered [30
].This has been traced to the unethical practices of banks [31
], which were against the principles of sustainability. Therefore, an understanding of the customer’s perspective on sustainable banking—which is considered to emanate from the broader concept of ethical banking [32
]—and its relation to bank loyalty could serve as a blueprint in the eradication of unsustainable practices in the banking sector.
The items used in developing the research model for this study are seen in Figure 1
and were adopted from valid studies related to our interest. The questionnaire was made up of four sections: demography, sustainable banking, corporate image, and bank loyalty. The demography section was comprised of age, gender, marital status, and educational qualifications. Ten items were adopted in measuring sustainable banking practices [16
], five items were adopted in measuring corporate image [39
], and six items were adopted in measuring bank loyalty [39
We obtained 511 data from customers of banks in North Cyprus. With English and Turkish being the languages most spoken in the northern part of the Mediterranean island, the questionnaire items were developed in English and translated into Turkish using the back-to-back method [65
]. The Turkish version of the questionnaire was reviewed by three professors in the Department of Business Administration of Cyprus International University for its acceptability and adequacy. Furthermore, the questionnaire was distributed electronically via various social media platforms by appealing and explaining to respondents about the essence of the research.
Results from Table 1
indicate that there were more male (55.6%) respondents than female respondents (44.4%). Of the respondents, 28.6% were 18–25 years of age, 25.6% were 26–35 years of age, 24.3% were 36–45 years of age, and 21.5% were 46 and above. The questionnaire indicated that 51.9% of respondents were married, 48.1% were single, and 64.2% had at least a bachelor’s degree.
The analytical techniques adopted for this research included confirmatory factor analysis (CFA) and structural equation modeling (SEM). Initially, an exploratory factor analysis (EFA) was conducted and indicated some items with standardized loading <0.50 and cross-loading of variables. Such items were eliminated (i.e., sb1, sb2, sb3, sb4, sb5, sb6, sb7, bl1, and bl6).
4.1. Measurement Validity
Values of standardized factor loading, Cronbach’s alpha, composite reliability, average variance extracted (AVE), and model fit indices were used to assess convergent validity. The overall model fit was assessed for both CFA and SEM using the comparative fit index (CFI), goodness of fit index (GFI), adjusted goodness of fit index (AGFI), normal fit index (NFI), chi-squared test with degrees of freedom (X2/df), root mean square error of approximation (RMSEA), and standard root mean square residual (SRMR).
The results in Table 2
show that the convergent validity for this study was acceptable. The measurement model fit indices (CFI = 0.989, GFI = 0.964, AGFI = 0.944, NFI = 0.981, X2
/df = 2.345, RMSEA = 0.051, and SRMR = 0.0444) were all in accordance with the recommended level [66
]. The standardized factor loading for all items were above the minimum recommended level of 0.6 [68
]. With 0.7 considered to be the minimum acceptable value [69
], the Cronbach’s alpha values for all constructs in this study were acceptable. Furthermore, a CR value of 0.9 for all constructs, which according to research should not be less than 0.7 [70
], is acceptable.
4.2. Discriminant Validity
We compared the AVE with the squared inter construct correlation (SCI), and with AVE > SCI [71
], this indicated the presence of discriminant validity, as seen in Table 3
4.3. Test of Hypotheses
According to the results as seen in Table 4
, sustainable banking practices positively affected corporate image (β
= 0.498, p
< 0.01) and bank loyalty (β
= 0.744, p
< 0.01), which supported hypotheses H1 and H2. Further results indicated a positive direct effect of corporate image on bank loyalty (β
= 0.112, p
< 0.01), which supported hypothesis H3. Furthermore, results from the mediation analysis conducted indicated that corporate image significantly mediated the relationship between sustainable banking practices and bank loyalty (β
= 0.055, p
< 0.01), which upheld hypothesis H4. Further findings indicated no significance for our control variables on the study variables.
There are several theoretical implications that can be derived from this study. Primarily, this study investigated customers’ perspectives on sustainable banking practices and their impact on bank loyalty, also exploring the mediating effect of corporate image on the relationship between sustainable banking practices and bank loyalty. This is necessary because, as stated earlier, in this emerging field of study the few empirical studies available viewed sustainable banking with regard to the most appropriate sustainable model that should be adopted [16
], as well as individuals’ perceptions of the importance and performance of sustainable practices on society [73
]. Therefore, viewing sustainable banking from the relationship marketing perspective adds substance to this emerging field of research.
This study indicates that sustainable banking practices had a positive impact on bank loyalty and on the corporate image of banks, implying that adopting sustainable banking practices sends a positive signal to the bank stakeholders regarding their position and what they represent in the corporate environment. This buttresses prior findings that stressed the relationship between the former and latter variables [74
Further findings from this study showed a positive effect of corporate image on bank loyalty. In other words, a positive perception from a bank’s customer enhanced the customer’s loyalty to that brand, which upholds the prior position that corporate image serves as an antecedent to bank loyalty [34
Corporate image had a mediating role in the relationship between sustainable banking practices and bank loyalty. This serves as an important finding of this research because, to the best of our knowledge, there seems to be no study that has been able to investigate the mediating effect of corporate image on the relationship between the two variables, despite previous findings indicating an indirect impact of corporate image on customer loyalty [75
With customer loyalty increasingly becoming a competitive factor in the acquisition of market shares, and with customers preferring that their banks adopt more ethical or sustainable approaches, an understanding of the various factors that are in tune with the customer’s view on sustainable practices likely serves as a competitive advantage for any bank that is focused on acquiring and consolidating loyalty through the values they offer to the market.
Applying the right sustainable approach requires banks to move from developing strategies for economic returns only, to adopting a strategic corporate sustainability management approach through redefining strategic processes, content, and context. This creates room for the integration of sustainable values for the banks and stakeholders at large [76
As a means of developing a more sustainable approach capable of winning bank loyalty, banks are advised to adopt approaches such as a cognitive mapping approach, which centers on gathering information from senior management or experts, which is instrumental in the development of an ideal framework or model [76
]. If properly adopted, these approaches will enable banks to gather sustainable information that can be used in making sustainability visible within the corporate strategy, including the development of financial products and services and in the adoption of digital processes and a stewardship role. These are congruent with the desires of modern-day customers.
To be more precise, and as stated earlier, after the indictment of banks in North Cyprus for unethical and unsustainable practices, adopting a sustainable approach should tend to serve as redemption from the negative perception of banks on the small island. This can definitely build a positive image for any bank committed to such an approach, which in the long run could be seen as a competitive advantage in the attainment of loyal customers in the industry.
As stated earlier, the essence of this study was aimed at viewing sustainable banking from the relationship marketing perspective by understanding the role of sustainable banking practices in bank loyalty. Just like all other research, there were some limitations that could be identified for this study. First, the study was conducted on bank customers in the northern part of Cyprus, which to an extent does not represent the general view of bank customers in the world. Therefore, exploring customers’ perspectives on sustainable banking practices and their impact on bank loyalty in a larger society, or in a comparative study between two or more countries, would tend to add more substance to this study.
This study combined the technological, social, and organizational dimensions of sustainability as factors for sustainable banking practices. Future research could explore other factors such as the economic dimension, which could also enrich this field of study. Furthermore, treating the three dimensions adopted for this study as separate variables may also give an in-depth view of which out of the three variables customers value the most, which could be useful to policy makers.