0210083

A RELATIONAL STUDY ON ORGANIZATIONAL COMMITMENT, CAREER

SATISFACTION, JOB INVOLVEMENT, JOB SECURITY, AND JOB SATISFACTION IN THE CONTEXT OF

SOCIAL INVESTMENT BANK LIMITED (SIBL)

by

Md. Nasirul Islam ID: 0210083

An Internship Report Presented in Partial Fulfillment of the Requirements for the Degree

Bachelor of Business Administration

INDEPENDENT UNIVERSITY, BANGLADESH

August 2006

A RELATIONAL STUDY ON ORGANIZATIONAL COMMITMENT, CAREER SATISFACTION, JOB INVOLVEMENT, JOB SECURITY, AND JOB

SATISFACTION IN THE CONTEXT OF SOCIAL INVESTMENT BANK LIMITED (SIBL)

by

Md. Nasirul Islam ID: 0210083

has been approved

August 2006

____________________

Mr. Rumman Hassan Lecturer

School of Business Independent University, Bangladesh

August 31, 2006

Mr. Rumman Hassan

Lecturer, School of Business

Independent University, Bangladesh

Subject: Submission of the internship report.

Dear Sir,

It is a great pleasure for me to submit the report on “A relational study on organizational

commitment, career satisfaction, job involvement, job security, and job satisfactions in the

context of Social Investment Bank Limited”. I am submitting this report as the part of my

internship (BBA-499) in SIBL. This report will help the organization to find out related factors

with employees job satisfaction.

This is the second time I have done a correlational study in a complete form and I have tried my

best to complete the study in proper way. It is true that it could have been done in better way if

there would not be the limitations.

I hope you will asses my report considering the limitations of the study. Your kind advice will

encourage me to do further research in future.

Sincerest gratitude for your illuminating guidance.

Sincerely yours,

Md. Nasirul Islam

ID # 0210083

Acknowledgement

Every comprehensive work such as constructing this type of research paper must owe credit

to multiple people and institution. In the preparation and finish this internship report, I

acknowledge IUB for offering internship program and for the encouragement and assistance

given by the institution. I am most grateful to the SIBL management to give me the opportunity

to complete my internship in their organization.

I would like to express my gratitude to my supervisor Mr. Rumman Hassan for providing me

detailed feedback and advice on this report. He always gave me his suggestions in making this

study as flawless as possible.

I also want to render my special thanks to Mr. Shahadat Ali, Manager and Vice President of

IDB Bdaban branch for providing all the support in the organization. Special thanks goes to all

the branch managers of Mirpur, Dhanmondi, Gulshan and the respondents, who spared their time

generously, and took the trouble of answering a detail Questionnaire and helped me to complete

my study.

i

Executive Summary The virtuality of banking industry and the performance of its employees are very important

for economy of any country as a whole. Job satisfaction among the employees in any industry is

crucial to improving employees’ performance and productivity that is essential for any

organization to be successful. Not only that, job satisfaction also reduces absenteeism and

turnover with in an organization. Along with job satisfaction, organizational commitment, job

involvement is considered as employees work attitude with in an organization and all are relative

concepts.

Organizational commitment is the employee’s identification with a particular organization

and his or her desire to maintain membership in the organization. Job involvement refers to the

extent to which a person is interested in and committed to his or her assigned tasks. Job

satisfaction is a general attitude toward one’s job or it is the difference between the amount of

rewards workers receive and the amount they believe they should receive. Important aspects of

job satisfaction may include- pay, one’s supervisors, the nature of tasks performed, an

employee’s co-workers or team, and the immediate working conditions. Job satisfaction also

depends on the employees’ level of satisfaction with their existing career and also the amount of

job security they have with in the organization. Where, career satisfaction is an intrinsic output

of career success that refers to the satisfaction with the present jobs and advancement potential at

the specific job; and job security is the employees expectation about continuity in a job situation.

This research intends to investigate the relationship of organizational commitment, career

satisfaction, job involvement, job security, and job satisfaction in the context of Social

ii

Investment Bank Limited (SIBL). It is a correlational study, which has measured the correlation

among the studied variables such as organizational commitment, career satisfaction, job

involvement, job security, and job satisfaction. The sample for this study was the current

employees of Social Investment Bank Limited. The sample size has covered with four branches

(Gulshan, Mirpur, Dhanmondi, and IDB Bhaban) and head office of SIBL. Printed

questionnaires were distributed among 100 respondents and all the questionnaires have been

collected and taken as the data for the research. The data has been analyzed with SPSS 11.0.

Correlation analysis, stepwise regression, entered regression, descriptive statistics were

performed to asses the hypothesis. In this study, the computed Alpha value for all the scales was

satisfactory, which proved that the items of questionnaires are appropriates with this study.

Therefore, taking four branches of SIBL and its head office as sample group, the current study

was meaningful to access the level of job satisfaction among the current employees of SIBL.

TABLE OF CONTENTS Page

Executive Summary i

1.0 Introduction 1

1.1 Statement of the problem 2

1.2 Purpose of the study 3

1.3 Significance of the study 4

1.4 Limitations of the study 5

1.5 Research Timeline 5

2.0 Review of related literature 6

2.1 Organizational Commitment 6

2.2 Career Satisfaction 7

2.3 Job Involvement 8

2.4 Job Security 9

2.5 Job Satisfaction 9

2.6 Organizational Commitment and Job Satisfaction relationship 11

2.7 Career Satisfaction and Job Satisfaction relationship 11

2.8 Job Involvement and Job Satisfaction relationship 11

2.9 Job Security and Job Satisfaction relationship 12

3.0 Research questions 13

4.0 Hypotheses 13

5.0 Development of conceptual framework 13

6.0 Operational definitions 14

7.0 Methodology 15

7.1 Research design 15

7.2 Research approach 15

7.3 Sampling method 16

7.4 Survey instrument 16

7.5 Pilot test questionnaire 18

7.6 Data collection procedure 18

7.7 Data analysis 18

8.0 Results 19

8.1 Reliability coefficients and descriptive statistics 19

8.2 Correlation Analysis 20

8.3 Regression Analysis 21

8.3.1 Stepwise Regression 21

8.3.2 Simultaneous Regression 22

9.0 Assessment of the research hypothesis 23

9.1 Hypothesis 1 23

9.2 Hypothesis 2 24

9.3 Hypothesis 3 25

9.4 Hypothesis 4 25

10.0 Discussions and Recommendations 26

11.0 Conclusion 27

References 29

Appendix 1 32

Appendix 2 45

Appendix 3 48

List of Tables

Page

1. Research Timeline 5

2. Operational Definitions of Measured Variables 14

3. Reliability Coefficients and Descriptive statistics of Organizational

Commitment, Career Satisfaction, Job Involvement, Job Security, and Job Satisfaction 19 4. Correlation Matrix for Organizational Commitment, Career Satisfaction, Job Involvement, Job Security, and Job Satisfaction 20 5. Stepwise Regression Job Satisfaction 22

6. Standardized (Simultaneous) Regression on Job Satisfaction 23

1.0 Introduction

Social Investment Bank Limited (SIBL) has started its journey as an Islamic bank in the year

1995. To ensure the banking facilities for all, it has already established 24 branches all over the

country. Though, most of the branches are situated in Dhaka city.

The main object of SIBL is to offer an interest free banking system in the financial market.

Apart from that, the bank started its operation in the country with a view to realizing the

following objectives-

To establish welfare oriented banking system;

To mobilize savings towards productive sectors;

To invest to those businesses sectors those are found legal from the religious point of view;

To extend banking services towards the poor, helpless and low-income group of people in the

society in order to uplift of their standard of living;

To contribute to establishment of a society by equitable distribution of wealth

To develop morals among the people and to establish the “shariah” in the field of trade and

commerce;

And;

To contribute towards establishment of an Islamic Economic System in the Country.

As a bank, SIBL maintains all types of deposit accounts for its customers, makes

investments, conducts foreign exchange business, and conduct social welfare activities. Few

offered deposit accounts are

Al Wadia Current Account;

Mudaraba Term Deposit Account (for 3 months/ 6 months/ 12 months/24 or 36 months);

Mudaraba Special Notice Account;

A Relational Study on Job Satisfaction in the context of SIBL 1

1.0 Introduction

Social Investment Bank Limited (SIBL) has started its journey as an Islamic bank in the year

1995. To ensure the banking facilities for all, it has already established 24 branches all over the

country. Though, most of the branches are situated in Dhaka city.

The main object of SIBL is to offer an interest free banking system in the financial market.

Apart from that, the bank started its operation in the country with a view to realizing the

following objectives-

To establish welfare oriented banking system;

To mobilize savings towards productive sectors;

To invest to those businesses sectors those are found legal from the religious point of view;

To extend banking services towards the poor, helpless and low-income group of people in the

society in order to uplift of their standard of living;

To contribute to establishment of a society by equitable distribution of wealth

To develop morals among the people and to establish the “shariah” in the field of trade and

commerce;

And;

To contribute towards establishment of an Islamic Economic System in the Country.

As a bank, SIBL maintains all types of deposit accounts for its customers, makes

investments, conducts foreign exchange business, and conduct social welfare activities. Few

offered deposit accounts are

Al Wadia Current Account;

Mudaraba Term Deposit Account (for 3 months/ 6 months/ 12 months/24 or 36 months);

Mudaraba Special Notice Account;


Mudaraba Hajj Savings Account;

Mudaraba Monthly Profit Deposit Scheme;

And so on.

A steady progress has been made with better services ensuring increased clients. The bank

has recently announced the month of June to July as “sheba mash” that brought in some

qualitative changes in the service concept of the bank. To ensuring better service the level of job

satisfaction among the employees with the organization is very important from both the

organization and personnel point of view. Day by day the level of employees’ expectation

regarding the job is also increasing. Therefore, the management of service organizations are

seeking the ways to understand the influential factor of employees’ job satisfaction. This study

will help the researchers to extend their understanding of the relationship among organizational

commitment, career satisfaction, job involvement, and job security with job satisfaction.

1.1 Statement of the problem

The researcher intends to investigate the relationship among organizational commitment,

career satisfaction, job involvement, and job security to job satisfaction within the context of

SIBL. Previous research conducted by Bigliardi, Petroni, and Dormio (2005) reveals that, there

is a relationship among organizational commitment, career satisfaction, and job involvement

with job satisfaction. However, that particular study did not consider job security as the

important factor. In the current study, the researcher has included the job security factor to

investigate employees’ job satisfaction. In the context of SIBL no published studies were carried

on this topic. This patronizes the current study to explore the relationship among organizational

commitment, career satisfaction, job involvement, and job security with job satisfaction.


The importance of job satisfaction is widely recognized in both the organizational and

personnel point of view. Job satisfaction plays a central role in the organization’s efficiency and

productivity because high level of job satisfaction increases task performance and reduces

absenteeism and turnover (McGue & Gianakis, 1997). The study of Hunt, Chonko, and Wood

(1985) indicates that high commitment among employees’ leads to lower turnover and higher

organizational performance. According to Davy, Kinicki, and Scheck (1997), job security

directly affects job satisfaction, organizational commitment, and withdrawal cognitions.

The research problem then is stated as follows: This study will investigate the relationship

among organizational commitment, career satisfaction, job involvement, and job security to job

satisfaction within the context of SIBL.

1.2 Purpose of the study

The purpose of this study is to present and test the model which will identify the relationship

among organizational commitment, career satisfaction, job involvement, and job security to job

satisfaction.

It is commonly known that there is a positive relationship between job satisfaction and job

performance. According to McGue and Gianakis (1997) low job satisfaction at the organization

level decreased task performance, increased absenteeism, job turnover, and deteriorating

organization morale. Organizations with satisfied employees tend to be more effective than

organizations with unsatisfied employees (Slocum & Woodman, 1995).

This study investigates and develops methods that will help service organization to increase

their employees’ level of job satisfaction and also contribute to the development of a conceptual

framework that integrates organizational commitment, career satisfaction, job involvement, job


security, and job satisfaction.

1.3 Significance of the study

Job satisfaction is an important component of employee performance and productivity. This

construct has received a great deal of interest in OB, management, total quality management, and

service industry management researches in recent years. The study will make the following

significant contribution to Social Investment Bank Limited and other banks in Bangladesh.

First, this study will help the researcher extend their understanding of the relationship

between organizational commitment, career satisfaction, job involvement, job security, and job

satisfaction. The result of this study will expose the importance and impact of their relationship

in SIBL.

Second, the present study will assist the SIBL management to enhance better understanding

about the existing employees’ level of job satisfaction. Therefore, from the company’s

perspective they would come up with new ways to satisfy the existing employees, for example

modifying the existing pay scale, adding new and value added employee welfare programs, and

recognizing the outstanding performances in an efficient way.

Third, besides job satisfaction the present study will help SIBL management better

understand about the existing employees’ level of organizational commitment, career

satisfaction, job involvement, job security with the SIBL.

Fourth, no such study was conducted to address this concern in the context of SIBL. The

study result will produce a methodology that can be imitated by other banks.

Finally, as the researcher is only considering bank, there is scope for further study in other

service organizations like: airline, hospitals, hotels, and telecommunication companies in

Bangladesh.


1.4 Limitation of the study

This present study is limited by number of factors. The sample population is limited in terms

of its range and composition. The study is limited to only those employees who were available at

the organization during the data collection period of this study. The convenience sampling

method has been used rather than other sampling procedures in order to simplify the research.

The researcher has limited resources to deal with because the researcher has limited access to the

related literature review due to lack of journals available on the measured variables as well as

limited access to the internet library. There may be some other factors, which can affect

employees’ job satisfaction, but the researcher did not consider them because of the simplicity of

the research.

1.5 Research Timeline Table 1

Research Timeline 2006 4th July Research proposal writing

2006 10th July Literature Review

2006 12th July Development of conceptual

frame work

2006 16th July Questionnaire design and

pilot testing

2006 1st August Process of data collection

2006 15th August Data analysis and

interpretation

2006 24th August Draft report submission

2006 31st August Final report submission


2.0 Literature Review

2.1 Organizational Commitment

Organizational commitment has long been studied in the management, organizational

theory, and socialization literature. Organizational commitment can be defined as the state in

which an employee identifies with a particular organization and its goals, and wishes to maintain

membership in the specific organization (Robbins, 1998; Greenberg & Baron, 1997). In other

wards in organizational context, it is the level of commitment that workers feel for their

organizations is closely linked to their attitudes and behavior within the workplace (Hislop,

2002).

According to Hunt et al. (1985) all firms and all functional areas with in a firm wants their

employees to be committed to their organization. From their point of view, organizational

commitment is an individual’s psychological bond to the job, the career, or the organization.

Employees with high level of organizational commitment feel positively about the organizations

they work for (Blau & Boal, 1987). That means, they identify with a particular organization and

wish to maintain membership in it.

Penley and Gould (1988) viewed organizational commitment as a kind of organizational

identification. According to them, organizational commitment can be instrumental or affective.

From instrumental perspective, an employee exchanges his or her contributions for the incentive

provided by the organization, where as affective commitment is characterized by the acceptance

of and identification with organizational goals. According to Reichers (1985) in organizational

context, commitment is the process of identification with the goals of an organization’s multiple

constituencies that may include top management, customers, unions and/or the public at large.


Newstrom and Davis (2000) viewed organizational commitment as the employees’ loyalty to

the organization that often reflects the employee’s belief in the mission and goals of the

organization, willingness to expand effort in their accomplishments, and intentions to continue

working there. Thus, strong organizational commitment is characterized by- strong belief in and

acceptance of the organizational goals and values, willingness to exert considerable effort on

behalf of the organization, and strong desire to maintain membership in the organization (Slocum

& Woodman, 1995; Steers & Black, 1994; Shafer, Park, & Liao, 2002).

Furthermore, Organizational Commitment is the employee’s identification with a particular

organization and his or her desire to maintain membership in the organization (Bigliard et al.,

2005) and this construct is used in this study to define Organizational Commitment.

2.2 Career Satisfaction

Career satisfaction is an intrinsic output of career success that refers to the satisfaction with

the present jobs and advancement potential at the specific job (Emmerik, Euwema, & Schouten,

2006). According to Bigliard et al. (2005) career satisfaction includes satisfaction with pay level,

promotion rate, status achieved and progresses in achieving career goals. Thus career satisfaction

is the achievement of one’s overall career goals that are experiences, positions or jobs that

workers would like to have in there path of careers (George & Jones, 1996).

The researcher has utilized the definition of Bigliard et al. (2005) for this study.


2.3 Job Involvement

Job involvement is a more recent addition to the OB literature. Job involvement is the degree

to which employees immerse themselves in their jobs, invest time and energy, and view work as

a central part of their overall lives (Newstrom & Davis, 2000). According to Sekaran (1989) job

involvement is the identification of an individual with the job and as a psychological self-

investment of the individual in the work as a means of seeking some expression of the self at

work that is related to the job characteristics of skill variety, task identity, task significance,

autonomy, and feedback from the work itself.

According to Steers and Black (1994) job involvement refers to the extent to which a person

is interested in and committed to his or her assigned tasks. Though, job involvement has been

defined and operationalized in a variety of ways across different studies; these include the view

that involvement refers to: an individual’s ego-involvement with work or psychological

identification with the job; the psychological importance of work or the centrality of work to the

individual; the importance of performance to an individual’s self image (Igbaria, Parasuraman, &

Badawy, 1994). Thus, job involved employees are likely to believe in the work ethic, to exhibit

high growth needs, and to enjoy participation in their tasks in the job (Newstrom & Davis, 2000).

Job involvement measures the degree to which a person identifies his or her job, actively

participates in it, and considers his or her performance important to self worth (Robbins, 1997).

According to Bigliard et al. (2005) job involvement is the extent to which the job situation is

central to employee’s self-identity and the degree to which an employee identifies with his or her

job. Employees with high level of job involvement, the job is important to his or her self-image

and individuals identify with and care about their jobs (Blau and Boal, 1987).

The researcher has utilized the definition of Bigliard et al. (2005) for this study.


2.4 Job Security

The importance of understanding job security’s role has increased with the emphasis over the

past decade on employee reactions to major organizational change. Job security or insecurity

reflects the degree to which employees perceive their job to be threatened and feel powerless to

do anything about it (Kinnunen, Mauno, Natti, & Happonen; 2000). In this multi dimensional

definition job insecurity is caused not only by the threat of job loss but also by the loss of any

dimension of the job.

According to Davy et al. (1997) job security can be defined as one’s expectation about

continuity in a job situation. From their point of view, it includes concern over loss of desirable

job features such as lack of promotion opportunities, current working conditions, and long-term

career opportunities.

2.5 Job Satisfaction

Job satisfaction has been identified as the most intensely studied variable in organizational

research (McCue & Gianakis, 1997). Job satisfaction is the employees cognitive, affective, and

evaluative reactions toward their jobs (Greenberg & Baron, 1997). In other words, it is the

general attitude toward one’s job or the difference between the amount of rewards workers

receive and the amount they believe they should receive (Robbins, 1998). Thus, it is the overall

positive affect or feelings that individuals have toward their jobs (Arnold & Feldman, 1986).

According to McCue and Gianakis (1997) the elements of job satisfaction includes the actual

work and its outcomes, or the intrinsic job satisfaction; pay, benefits, and other rewards directly

associated with doing the work, or the extrinsic job satisfaction; and the environment in which

the work is done, including relation with coworkers organizational culture, the organization’s


policies and procedures, participation in decision making, involvement with the organization,

and job status.

Newstrom & Davis (2000) viewed job satisfaction as a set of favorable and unfavorable

feelings or emotions with which employees view their work. Important aspects of job satisfaction

may include- pay, one’s supervisors, the nature of tasks performed, an employee’s co-workers or

team, and the immediate working conditions (George & Jones, 1996; Smith, Roberts, & Hulin,

1976; Newstrom & Davis, 2000).

According to Slocum &Woodman (1995) overall job satisfaction is a collection of numerous

attitude toward various aspects of the job, represents a general attitude. Thus, when this attitude

is positive, employees are said to be satisfied and dissatisfied exists when the attitude is negative

(Moorhead & Griffin, 1989).

Streers and Black (1994) viewed job satisfaction as a pleasure or positive emotional state

resulting from the appraisal of one’s job or job experience. George and Jones (1996) supported

this statement and stated that job satisfaction is a collection of feelings and beliefs that

individuals have about their current jobs. It results from the perception that an employee’s job

actually provides what he or she values in the work situation (Streers & Black, 1994). Thus, job

satisfaction is an organizational work attitude composed of three components: feelings or the

affective component, beliefs or the cognitive component, and thoughts about how to behave or

the behavioral component (George & Jones, 1996).

The researcher has utilized the definition of McCue and Gianakis (1997) for this study.


2.6 Relationship between Organizational Commitment and Job Satisfaction

Job satisfaction is a positive function of organizational commitment. In organizational

context, high level of organizational commitment and job satisfaction both are as a positive work

attitude among the employees (Greenberg and Baron, 1997; George & Jones, 1996; Robbins,

1998; Slocum &Woodman, 1995). According to George and Jones (1996) both organizational

commitment and job satisfaction are employees work attitude composed of their feelings, beliefs,

and thoughts with the organization.

According to Hunt et al. (1985), high level of organizational commitment leads high levels

of job satisfaction and performance. Okpara (2006) also supported this statement and viewed that

job satisfaction is linked to organizational commitment that reduces turnover intentions and

absenteeism.

2.7 Relationship between Career Satisfaction and Job Satisfaction

Career satisfaction is believed to influence the employees’ level of job satisfaction with in an

organization. From Bigliard et al. (2005) point of view, job satisfaction has many dimensions

and one of them is career satisfaction. Based on this, Edem(1999) pointed out that, career

satisfaction influences numerous variables like job satisfaction and productivity.

2.8 Relationship between Job Involvement and Job Satisfaction

The subject of continued debate in the OB literature, the distinction and association between

job involvement and job satisfaction remains at the forefront of many academic and practitioner

oriented research activities. According to Sekaran (1989) job satisfaction is related to job

involvement. Both the variables- job involvement and job satisfaction is considered as the


indicator of quality of work life and they are relative concept (Igbaria, 1994; Sekaran, 1989).

According to Bigliardi et al. (2005) job satisfaction has three dimensions, and job

involvement is one of them. In organizational context, job involvement and job satisfaction are

considered as employee attitude in the work place and both are relative concept (Greenberg &

Baron, 1997; George & Jones, 1996; Robbins, 1998; Slocum &Woodman, 1995). According to

Newstrom and Davis (2000) high level of job involvement with high level of job satisfaction

improves organization’s overall performance and reduces absenteeism and turnover. Several job

satisfaction theories suggested that employees will be satisfied to the extent that they are highly

involved with their job with meaningful job tasks (Roberson, 1990).

2.8 Relationship between Job Security and Job Satisfaction

Job security has been included as a fact of job satisfaction in numerous studies (Greenhalgh

& Rosenblatt, 1984). According to Barnett and Brennan (1995) the perception of job security is

strongly associated with job satisfaction or dissatisfaction. Supporting this statement Davy et al.

(1997) presented a model that identified job security directly effects job satisfaction,

organizational commitment, and job involvement.

Lambert (1991) identified job security as an extrinsic comfort that has a positive relation

with job satisfaction. According to Moorhead and Griffin (1989) employees are motivated or

satisfied with their job by lots of different motivational tools including money, benefits, and also

including other things like job security. They mentioned the results of a particular study related

to job security conducted by other researchers and the results indicated that job security and job

satisfaction are related concepts and both are predictors of employees’ mental health.


3.0 Research questions

1. Is there a significant relation between organizational commitment and job satisfaction in

context of SIBL?

2. Is there a significant relation between career satisfaction and job satisfaction in context of

SIBL?

3. Is there any significant relation between job involvement and job satisfaction in context of

SIBL?

4. Is there any significant relation between job security and job satisfaction in context of SIBL?

4.0 Hypotheses

1. There is a significant relationship between organizational commitment and job satisfaction in

context of SIBL

2. There is a significant relationship between career satisfaction and job satisfaction in context of

SIBL.

3. There is a significant relationship between job involvement and job satisfaction in context of

SIBL.

4. There is a significant relationship between job security and job satisfaction in context of SIBL.

5.0 Development of conceptual framework

The researcher have developed a conceptual framework for this research based on the

research variables, such as organizational commitment, career satisfaction, job involvement, job

security, and job satisfaction. According to Ticehurst and Veal (2002), a conceptual framework

indicates how the researcher views the concept involved in a study especially the relationship


among concepts.

Figure1. Conceptual framework of research variables and their relationships

6.0 Operational Definitions

Summaries of the operational definitions of the measured variables that are used, listed

below in table 2.

Table2

Operational definitions of measured variables

Measured variable Operational definition

• Organizational Commitment has been operationally defined by Bigliard et al. (2005) • Career Satisfaction has been operationally defined by Bigliard et al. (2005) • Job Involvement has been operationally defined by Bigliard et al. (2005) • Job Security has been operationally defined by Romzek (1985) . •Job Satisfaction has been operationally defined by McCue and Gianakis (1997)

Organizational Commitment Career Satisfaction Job Involvement Job Security

Job Satisfaction


7.0 Methodology

7.1 Research design

In order to identify the research questions and to test its hypotheses, a relational research

design has been selected as appropriate for this study. The representation of the conceptual

framework (figure 1) depicted the pattern and structure of relationships among the set of

measured variables. The research questions and hypotheses clearly support this model. Hence,

the purpose of the study was to measure correlations among variables.

The present result will investigate the relationship among the factors, like career satisfaction,

organizational commitment, job involvement, job security, and job satisfaction, within the

context of Social Investment Bank Limited. Here career satisfaction, organizational commitment,

job involvement, and job security are being considered as independent variable and job

satisfaction is considered as dependent variable.

The present research has used a relational study to discover or establish the existence

relationship among the measured variables.

7.2 Research Approach

To analyze this research problem, the researcher has gathered information from the staffs of

SIBL who are working at the particular organization for at least one year. All the participants

were given a letter from the researcher explaining the context of the research focus. All

participations were voluntary. If the participants wanted to withdraw, they were free to do so at

any time without providing any reason.


7.3 Sampling Method

The sample of this research is formed by the employees of SIBL who are working in

organization for last 1 year. The researcher used a convenience sampling method to collect data

from the sample of this research. Malhotra (2003) categorize the convenience method a non-

probability sampling technique.

The convenience sample for this study is considered as the employees of SIBL who are

working with in the particular organization for at least one year. The sources to fill this sample

were the head office of the Bank and also different branches of the particular Bank working in

the country.

The sample size was 100 in this case. In the previous researches, which were conducted on

different professionals most of the times, the researchers had used a sample size of 200-300

(Souchon, Thirkell, & Too, 2000; Feick & Lee, 2001). In this research, the researcher has used a

sample size of 100 because of the time limitation and also for limited access over the bank.

7.4 Survey Instrument

To gather data for this study the researcher used questionnaire method because this method

was appropriate for this study because of some reason. The reasons were as follows:

The samples can fill up the questionnaire without any hesitation.

The sample size was 100 in this study. So, it was not possible to make a personal interview

with the large number of sample, as the time for this study was limited.

The researcher found that most of the previous research with large number of sample size

has done by questionnaire method.

Internet survey was not possible in this study, as the research has conducted in context of


Bangladesh.

A structured questionnaire used in this research to collect data from the respondents. The

questionnaire was divided into five sections. First section consists of questions on organizational

commitment, second section consists of questions on career satisfaction, third section consists of

question on job involvement, fourth section consists of question on job security and the last

section consists of the questions on job satisfaction. In most cases, questions has adapted from

previous empirical studies and modified to reflect the local situation.

All questions developed to know the employees level of job satisfaction regarding to the

specific organization. These questionnaires had five sections dealing with organizational

commitment, career satisfaction, job involvement, job security and job satisfaction.

Organizational commitment has measured by using 5 items (Section 1, Question 1-5)

developed by Bigliardi et al. (2005) and has reported the reliabilities of these items are above

0.70.

Career satisfaction has measured by using 5 items (section 2, Question 1-5) developed by

Bigliardi et al. (2005) and has reported the reliabilities of these items are above 0.93.

Job involvement has measured by using 5 items (Section 3, question 1-5) developed by

Frone, Russel, and Cooper (1995). This was used by Bigliardi et al. (2005) and has reported the

reliabilities of these items are above 0.80.

Job security has measured by using 2 items (Section 4) developed by Romzek (1985) and

has reported the reliabilities of these items are above 0.63.

Job satisfaction has measured by using 13 items (section 5, Question 1-13) developed by

Aranya and Ferris (1984) and modified by Gunz and Gunz (1994). This scale was used by

McCue and Gianakis (1997) and has reported the reliabilities of these items are above 0.80.


7.5 Pilot test questionnaire

A pilot test is conducted to detect weakness in design and instruments and to provide proxy

data for selection of probability sample (Cooper & Schindler 2003). According to Malhotra

(2003), pre-testing refers to the testing of the questionnaire on a small sample of respondents in

order to identify and eliminate potential problem. Here, the researcher intended to conduct a

pretest to evaluate the questionnaire for clarity, bias, ambiguous questions, and relevance to

organizational setting of SIBL. For this reason, the researcher distributed 6 questionnaires among

6 professionals of SIBL. Burns and Bush (1998) suggested that a pre-test of 5-10 representative

respondents is usually sufficient to identify problems with a questionnaire.

7.6 Data collection procedure

No published study has been conducted within the context of SIBL in Bangladesh still now.

So it was not be possible to get any secondary source of data, like magazine, article or journal.

Therefore, the researcher required primary data to investigate research problem. In order to

collect primary data, the researcher had conducted a questionnaire survey. This approach is

commonly used in this type of research (Kandampully & Suhartanto, 2000).

7.7 Data Analyses Procedure

The proposed study is a relational study. As a result after collecting the data a statistical tool

is used by the researcher to illustrate the degree to which one variable is related to another

variable. This statistical tool is known as correlation analysis. Here, the researcher used

correlation analysis to assess the existence of relationship between the studied dependent and

independent variables. The researcher also used stepwise regression to test the strength of


association between the studied variables. Besides that, the researcher calculated mean and

standard deviation of all the studied variables.

For this study, the Statistical Package of Social Science (SPSS) software version 11 has

utilized by the researcher as a statistical data analysis tool.

8.0 Results

8.1 Reliability Coefficient and Descriptive Statistics

The reliability coefficients, means and standard deviations of all the constructs in the current

study are displayed in Table 3. The coefficient alphas for the different constructs were computed

using the reliability procedure in SPSS (version 11.0). Nunnally (1978) suggested that for early

stages of any research the reliability of .50-.60 is sufficient. The reliabilities of all the constructs

in this study found to be above the standard set by Nunnally (1978).

Table 3 Reliability Coefficient and Descriptive Statistics of Organizational commitment, Career

Satisfaction, Job Involvement, Job Security, and Job Satisfaction

Scales number of items Alpha M SD

Organizational Commitment 5 .52 2.77 .68

Career Satisfaction 5 .65 2.95 .58

Job Involvement 5 .73 3.46 .63

Job Security 2 .59 3.08 1.12

Job Satisfaction 13 .81 3.06 .45

Note: n =100

Mean scores have been computed by equally weighting the mean scores of all the items. All

the studied variables have measured on five-point-scales. The mean score of organizational


commitment (2.77; sd = .68) for SIBL indicates that employees have low level of commitment to

the organization. The mean score of career satisfaction (2.95; sd = .58) indicates that, to some

extent employees are slightly dissatisfied with their career in SIBL. The mean score of job

involvement (3.46; sd = .63) for SIBL indicates that employees’ involvement with the job is

slightly satisfactory compared to the mean scores of other variables. The mean score of job

security (3.08; sd = 1.12) indicates that job security with the SIBL is impartial to the employees.

Finally, the mean score of job satisfaction (3.06; sd = .45) for SIBL indicates that employees’ are

to some extent quite satisfied with their jobs with the SIBL.

8.2 Correlation analysis

In order to examine the relationship between variables a correlation analysis was conducted

on all the variables. The bivariate correlation procedure was focused to a two tailed of statistical

significance at two different levels highly significant (p<.01) and significant (p<.05).

Table 4 Correlation Matrix for Organizational Commitment, Career Satisfaction, Job Involvement, Job

Security, and Job Satisfaction

ORG_COM CAR_SAT JOB_INV JOB_SEC JOB_SAT

ORG_COM - .03 .08 -.10 .11

CAR_SAT .31** .02 .50**

JOB_INV .003 .50**

JOB_SEC .10

JOB_SAT

Note: *p < .05, **p < .01.

The result of correlation analysis for all the variables is shown in Table 4. It examines the


correlations among, organizational commitment, career satisfaction, job involvement, job

security, and job satisfaction in context of SIBL

In context of SIBL, organizational commitment and job satisfaction (r = 0.11) are very

weakly related and their relationship is positive and statistically insignificant. Career satisfaction

and job satisfaction (r = 0.50, p<0.01) are moderately related, their relationship is positive, and

statistically significant. Job involvement and job satisfaction (r = 0.50, p<0.01) are also

moderately related, their relationship is positive and statistically significant. Finally, the

relationship between job security and job satisfaction (r =-0.10) is positive but very weak and

statistically insignificant.

The correlations among the independent variables are statistically insignificant except in the

case of career satisfaction and job involvement (r = 0.31, p<0.01). Career satisfaction and job

involvement are very weakly related; their relationship is positive and statistically significant.

8.4 Regression Analysis

Both stepwise and entered regression were conducted to asses the relationship between the

study variables.

8.4.1 Stepwise Regression

Stepwise regression was conducted to asses the relationship between organizational

commitment, career satisfaction, job involvement, job security, and job satisfaction in the context

of SIBL.


Table 5 Stepwise regression on Job Satisfaction

Variable B SE B β R2 ∆R

Step1

Job Involvement .355 .062 .501*** .251

Step2

Job Involvement .270 .060 .381*** .382 .131

Career Satisfaction .297 .065 .381***

Note: *p<.05, **p<.01, ***p<.001.

Table 5 depicts that in SIBL, job involvement (p<.001) and career satisfaction (p<.001),

were found to be statistically significantly related with job satisfaction. Organizational

commitment and job security is failed to enter into the regression equation, which indicates that

they are not significantly associated with job satisfaction. Significantly related two predictor

variables together explained 38% of the variance in job satisfaction. Job involvement and career

satisfaction individually explained about 25% and 13% of the job satisfaction, respectively.

8.4.2 Standardized (simultaneous) Regression

In order to identify the relationship among organizational commitment, career satisfaction,

job involvement, job security, and job satisfaction in context of SIBL, simultaneous regression

was also exercised.


Table 6 Standardized (simultaneous) Regression on Job Satisfaction

Variable B SE B β R2

Organizational Commitment 5.27 .053 .080 .398

Career Satisfaction .286 .065 .379***

Job Involvement .244 .060 .375***

Job Security 4.34 .032 .108

Note: *p<.05, **p<.01, ***p<.001

Table 6 also depicts that, only career satisfaction (p<.001) and job involvement (p<.001) in

context of SIBL were found to be statistically significantly related with job satisfaction.

Organizational commitment and job security is not significantly associated with job satisfaction

in context of SIBL. Significantly related two predictor variables together explain 39% of the

variance in job satisfaction.

9.0 Assessment of the research hypothesis:

9.1 Hypothesis 1:

There is a significant relationship between organizational commitment and job satisfaction

in context of SIBL.

The result of correlation analysis illustrates that the organizational commitment (r = .11) has

a positive and very weak relationship with job satisfaction in context of SIBL, but their relation

is statistically insignificant. Thus, the results of this correlation analysis do not support this

hypothesis.


The result of stepwise regression depicts that, organizational commitment has failed to enter

into the regression equation which indicates that it is not significantly associated with job

satisfaction in context of SIBL. Therefore, the result of stepwise regression has provided no

support for first hypothesis.

Theoretically it should support the hypothesis but may be the peculiarity of the responses of

the respondents created the unsupportive nature of the result of regression analysis. The result of

standardized regression also depicts that in SIBL, organizational commitment insignificantly

associated with job satisfaction. Therefore, the result does not support this hypothesis.

9.2 Hypothesis 2:

There is a significant relationship between career satisfaction and job satisfaction in context

of SIBL.

The result of correlation analysis illustrates that the career satisfaction (r =0.50, p<.01) has

positive and moderate relationship with job satisfaction and their relation is statistically

significant. As a result, this correlation analysis has provided support for the 2nd hypothesis.

The result of stepwise regression depicts that in SIBL, the relationship between career

satisfaction (p<.001) and job satisfaction is statistically significant. This significant variable,

career satisfaction explains 13% of the job satisfaction. Therefore, the results of stepwise

regression also supported the 2nd hypothesis.

The result of standardized regression also depicts that in SIBL, career satisfaction (p<.001)

significantly associated with job satisfaction. Entire predictor variables explain 39% of the

variance in job satisfaction. So the result provides full support for hypothesis 2.


9.3 Hypothesis 3:

There is a significant relationship between job involvement and job satisfaction in context of

SIBL.

The result of correlation analysis illustrates that the job involvement (r = 0.50, p<0.01) has

positive and moderate relationship with job satisfaction and their relation is statistically

significant. As a result, this correlation analysis has provided support for 3rd hypothesis.

The result of stepwise regression depicts that in SIBL, the relationship between Job

involvement (p<.001) and job satisfaction is statistically significant. This significant variable, job

involvement explains 25% of the job satisfaction. Therefore, the results of stepwise regression

also supported the 3rd hypothesis.

The result of standardized regression depicts that in SIBL, job involvement (p<.001)

significantly associated with job satisfaction. Entire predictor variables explain 39% of the

variance in job satisfaction. So the result provides full support for hypothesis 3.

9.4 Hypothesis 4:

There is a significant relationship between job security and job satisfaction in context of

SIBL.

The result of correlation analysis illustrates that the job security (r = .10) has a positive and

very weak relationship with job satisfaction in context of SIBL, and their relation is statistically

insignificant. Thus, the result of this correlation analysis has provided no support for this

hypothesis.

The result of stepwise regression depicts that, job security has failed to enter into the

regression equation which indicates that job security is not significantly associated with job


satisfaction in context of SIBL. Therefore, the result of stepwise regression has provided no

support for 4th hypothesis.

Theoretically it should support the hypothesis but may be the peculiarity of the responses of

the respondents created the unsupportive nature of the result of regression analysis. The result of

standardized regression also depicts that, in SIBL, job security insignificantly associated with job

satisfaction. Therefore, the result does not support this hypothesis.

10.0 Discussions and Recommendations

After analyzing the study variables in context of SIBL, the following issues were found to be

recommended-

The mean scores of Job Satisfaction (3.06; sd = .45) for SIBL indicates that employees’ are

not dissatisfied with their jobs in the SIBL, at the same time it is true that they are satisfied also.

Because, few important elements in the job satisfaction scale has scored below the satisfied area

of the scale in context of SIBL. For example, the elements like- your pay, your career progress in

the organization, your opportunity to “make a difference” or to contribute to the overall success

of the organization, your organization’s system for recognizing and rewarding outstanding

performance, and the organization’s concern for its employees’ welfare has scored(less than 2.5)

the mean value of below satisfied area of the scale. However, these elements are very important

aspects of job satisfaction for any organization. Thus, SIBL management should take initiatives

to make their employees satisfied with-

- increasing the salary considering the existing market,

- ensuring opportunity for every employees to contribute to the overall success of the,

organization, with a meaningful job tasks,


- the existing system for recognizing and rewarding outstanding performance, should be

more efficient

- adding new and value added employee welfare programs.

From the result of regression it was found that in SIBL, job involvement and career

satisfaction are significantly related with the job satisfaction. Therefore, these issues should be

taken more care of. Although all the variables have impact on job satisfaction, these two

described variables have more importance in the context of SIBL. So to ensure satisfaction

among the employees with their banking career, SIBL management should better understand the

related issues in career satisfaction. They have to understand the employees overall career goals,

whether career satisfaction only means satisfaction with the employees position, compensation

they receive, advancement in the career or else.

Job involvement is a very important factor to the employees of SIBL, because it describes

very large part of job satisfaction among the studied variables in the context of SIBL. Moreover,

employees’ involvement with their job is also necessary from organizational point of view to

make the organization successful.

Beside the described issues, there are other factors that are related to job satisfaction. Thus,

the SIBL management should take those under consideration. For example, the level of job

stress, sense of competence among the employees, image of the organization also has an impact

on job satisfaction.

11.0 Conclusion

Organizations with satisfied employees tend to be more effective than organizations with

unsatisfied employees. In the context of service-oriented organization job satisfaction among the


employees is very important to ensure better customer service. Because, high level of job

satisfaction increases employees work involvement and task performance. Therefore, from this

study SIBL can get the indications on which of the issues they have to pay more attention to

make their employees satisfy, to make the organization more effective as a whole. Finally, this

research will encourage further study and useful guidelines for these types of researches.


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Appendix 1

Overview of Islamic Banking in Bangladesh

History

In August 1974, Bangladesh signed the Charter of Islamic Development Bank and

committed itself to reorganise its economic and financial system as per Islamic Shariah. In

January 1981, Late President Ziaur Rahman while addressing the 3rd Islamic Summit

Conference held at Makkah and Taif suggested, ''The Islamic countries should develop a separate

banking system of their own in order to facilitate their trade and commerce.''

This statement of Late President Ziaur Rahman indicated favourable attitude of the

Government of the People's Republic of Bangladesh towards establishing Islamic banks and

financial institutions in the country. Earlier in November 1980, Bangladesh Bank, the country's

Central Bank, sent a representative to study the working of several Islamic banks abroad.

In November 1982, a delegation of IDB visited Bangladesh and showed keen interest to

participate in establishing a joint venture Islamic bank in the private sector. They found a lot of

work had already been done and Islamic banking was in a ready form for immediate

introduction. Two professional bodies -Islamic Economics Research Bureau (IERB) and

Bangladesh Islamic Bankers' Association (BIBA) made significant contributions towards

introduction of Islamic banking in the country. They came forward to provide training on Islamic

banking to top bankers and economists to fill-up the vacuum of leadership for the future Islamic

banks in Bangladesh. They also held seminars, symposia and workshops on Islamic economics

and banking throughout the country to mobilize public opinion in favor of Islamic banking.

Their professional activities were reinforced by a number of Muslim entrepreneurs working

under the aegis of the then Muslim Businessmen Society (now reorganised as Industrialist &


Businessmen Association). The body concentrated mainly in mobilising equity capital for the

emerging Islamic bank. At last, the long drawn struggle to establish an Islamic bank in

Bangladesh became a reality and Islami Bank Bangladesh Limited was established in March

1983 in which 19 Bangladeshi national, 4 Bangladeshi institutions and 11 banks, financial

institutions and government bodies of the Middle East and Europe Including IDB and two

eminent personalities of the Kingdom of Saudi Arabia joined hands to make the dream a reality.

Later, other three Islamic Banks were established in the country.

Objectives of Islamic Banking Bangladesh Limited (IBBL)

The main object of the Islamic Banks in Bangladesh had been to offer an interest free

banking system in the financial market. Apart from that, the bank started its operation in the

country with a view to realizing the following objectives-

· To establish a partnership relationship with customers and to eliminate the idea of the debtor-

creditor relationship of traditional banks.

· To establish welfare oriented banking system;

· To mobilize savings towards productive sectors;

· To invest on profit and risk sharing basis;

· To invest to those businesses sectors those are found legal from the religious point of view.

· To accept deposits on profit and loss sharing basis.

· To create employment opportunities by investing savings towards prospective economic

sectors.

· To extend banking services towards the poor, helpless and low-income group of people in the

society in order to uplift of their standard of living.


· To contribute to establishment of a society by equitable distribution of wealth

· To establish justice in trade and commerce in the country;

· To develop morals among the people and to establish the “shariah” in the field of trade and

commerce;

And;

· To render services for the economic development of the nation.

· To contribute towards establishment of an Islamic Economic System in the Country.

Functions

- Maintain all types of deposit accounts,

- Make investment,

- Conduct foreign exchange business,

- Extend other banking services,

- Conduct social welfare activities.

Monetary Policy of Islamic Banking in Bangladesh

The central bank has the sole authority to issue currency and manage the liquidity of the

economy. Considering lack of Islamic financial markets and instruments or products in the

country, Bangladesh Bank had granted some preferential provisions for smooth development of

Islamic banking in Bangladesh. Among the preferential provisions, the following are important-

1. Islamic banks in Bangladesh have been allowed to maintain their Statutory Liquidity

Requirement (SLR) at 10% of the total deposit liabilities while it is 20% for the conventional

banks. This provision had facilitated the Islamic banks to hold more liquid funds for more


investment and thereby generate more profit.

2. Under indirect monetary policy regime, Islamic banks were allowed to fix up their profit-

sharing ratios and mark-ups independently commensurate with their own policy and banking

environment. This freedom in fixing PLS ratios and Mark-up rates had provided scope for the

Islamic banks to follow the Shariah principles independently for realizing goals of Islamic

Shariah.

Sources of Funds of Islamic Banks

Current Accounts

Islamic banks accept deposits from customers on current accounts as conventional banks do.

This account is also known as ‘Demand Deposit as the deposited amount is payable to customers

on demand without any notice. As banks use current account deposits on their own risk the

depositors of this type of account are not entitled to any share in the profit earned by the bank.

Savings Accounts

Islamic banks accept saving deposits from customers under Al-Wadia and Al-Mudaraba

Sharia Principles.

The word “Al-Wadia” means ‘Trusteeship’. In this case banks act as trustee for its

customers. In Saving Accounts under the Al-Wadia principle the bank is given an authorization

by depositors to use the fund at the bank’s own risk. This type of deposit is almost similar to a

‘Current Account’ or Demand Deposit’ except that the bank guarantees its customer the full

return of the deposited fund with any profit voluntarily.


Under the Al-Mudaraba Shariah principle there are two different types of savings accounts,

such as

- Savings under profit and loss sharing agreement and

- Savings under Investment Account.

The word ‘Al-Mudaraba’ originates from the word ‘Mudarib’ and means ‘The Manager’ of

the fund. The bank in this case acts as a manager of customers’ funds. The depositors on the

other hand are known as ‘Sahib-Al-Mal’ meaning the owner of the fund. Deposits accepted on

savings under the Profit and Loss sharing agreement is invested by the bank on its own risk.

Customers give authorization to the bank to invest funds and share profit or loss on agreed

proportions. Account holders of this type of account are required to maintain a minimum balance

in the account.

Further to the above, Islamic banks accept deposits from customers under the Investment

Account on a Profit and Loss Sharing basis. The saving account of such a nature in an interest-

free banking system is also known as a participatory account or a Profit or Loss Sharing (PLS)

account. Depositors of this type of account receive share of profit to the agreed ratio from their

funds invested by the bank. The profit and loss sharing also depends on the total amount

deposited and the length of period the bank holds the money. Depositors of an Investment

Account are required to give prior notice to the bank if they withdraw their invested funds under

any special circumstance. In such a case no share of profit is given for the amount withdrawn.

Investment accounts are again subdivided into the following various categories-

Joint or General Investment Account

Under the ‘Joint or General Investment Account’ the bank pools together investment

deposits of different maturities which are not invested in any specified project but utilized for


different financing operations of the bank. Depositors of this type of account receive profits at

the end of the period, which is accounted and distributed on a pro rata basis.

Limited-Period Investment Deposit

The ‘Investment Deposits on Limited Period’ basis indicates a type of investment, where the

banks accept deposits from customers for a specified period of time. The bank refunds the money

to depositors after the time is expired. The profit generated from such funds is distributed at the

end of the financial year.

Unlimited-Period Investment Deposit

The bank also accepts deposits from its customers under an ‘Unlimited-Period Investment

Deposit’, where investment deposits are automatically renewable without specifying the period.

Depositors of this type of account may withdraw their funds within three months notice to the

bank. Profits are distributed to depositors at the end of the financial year.

Specified Investment Deposit

Some Islamic banks accept a ‘Specified Investment Deposit’, where the bank and the

customer agree to invest this fund to a specific project or trade. Profits accrued from this type of

investment are shared by the bank and the customer. The bank in this regard, works as an agent

for the customer, and may charge an agreed fee for the investment function or may share the

profit at an agreed proportion.

Saving Deposit as Quard E Hasan

Apart from the above Islamic banks accept savings from customers as Quard E hasan

(benevolent loan) from the customers. Depositors of this sort of savings deposits receive

financial or non-financial benefits from the bank.


Uses of Funds of Islamic Banks

Based on the theoretical viewpoint as discussed earlier two fundamental techniques or

modes of investment advocated by the Islamic Shariah Principle are;

Mudaraba (Capital Financing)

Capital Trust financing is a contract between at least two parties in which the bank as the

investor supplies the entire capital of the business forming a relationship between the supplier of

capital and the user of capital. These two parties work together and share profits and losses.

Under ‘Murabaha’ financing the investor is known as ‘Rab-Al-Mal’, which means the owner of

the property, and the entrepreneur is called ‘Mudarab’, meaning the manager of capital. When

the venture ends, the manager of capital i.e. the entrepreneur returns the entire capital to the

bank, along with an agreed proportion of profit. If there is any loss, it is born by the bank. The

main advantage with this type of partnership is that it combines the efforts of human beings and

their skills with the capital, which contribute greatly towards the development activities in a

society and also assists to solve unemployment problems by utilizing manpower resources in a

productive way.

Musharaka (Partnership)

The word ‘Musharaka’ means a profit sharing joint venture, designed to limited production

or commercial activities of long duration. In this case the bank and the customer contribute

capital jointly. They also contribute managerial expertise and other essential services at agreed

proportions. Profit or losses are shared according to the contract agreed upon. An individual

partner does not become liable for the losses caused by others.

In addition to the above two financial arrangements, Islamic Banks currently in existence are

also engaging in or actively considering several other financial practices usually acceptable in


Islamic Law. These are:

Murabaha (Cost plus profit)

The word ‘Murabaha’ means a cost-plus Profit contract. In this system of financing the bank

agrees to purchase for a client who will then reimburse the bank in a stated time period at an

agreed upon profit margin. The mark-up price that the bank and the buyer agree to is mainly

based on the market price of the commodity. Thus the bank earns a profit without bearing any

risk.

Ijara (Leasing)

The word ‘Ijara’ indicates leasing. The leasing purchase is another technique followed by

Islamic banks in financing customers. This system is almost similar to the leasing activity

provided in traditional banking. Leasing is a contract between the bank and the customer to use

particular assets. In this case the bank is called lessor and the customer is called lessee who

wants to use the assets and pays rent.

Quard E Hasan (Interest free loan)

“Quard E Hasan” means an interest-free loan given by the Islamic bank to the needy people

in a society. The practice of dealing with this sort of investment differs from bank to bank. Quard

E Hasan is normally given to needy students, small producers, farmers, entrepreneurs and

economically weaker sections of the society, who are not in a position to obtain loan or any

financial assistance from any other institutional sources. The main aim of this loan is to help

needy people in a society in order to, make them self-sufficient and to raise their income and

standards of living.


Constraints Faced by Islamic Banks in Bangladesh

Constraints faced by Islamic banks in Bangladesh are analyzed as below-

Problem with legal reserve requirement

Islamic banks in Bangladesh have to keep 10% of its total deposits as liquidity. Of this, 5%

is required to be kept in cash with Bangladesh Bank and the rest 5% is to be kept either in

approved securities or in cash (in case of problem with securities) with Bangladesh Bank. Legal

reserve requirement for conventional banks is 20%. They have to keep 5% in cash with

Bangladesh Bank and the rest 15% is invested in Bangladesh Bank approved securities.

Traditional banks can earn interest on their deposits with Bangladesh Bank but Islamic

banks can not since they cannot receive interest as earning. Compared to interest-based

traditional banking, Islamic banks, in this case, are in disadvantageous position. However, Islami

Bank Bangladesh Limited has been receiving interest against its deposit with Bangladesh Bank

and crediting it to its Sadaqa fund since 1993. It should be noted that the interest earning are not

considered as bank income and added to profit. The proceeds are spent on welfare activities.

Lack of opportunities for profitable use of surplus funds

Conventional banks can invest their excess liquid amount in approved securities and or in

other bank in crisis. Islamic banks cannot take this opportunity due to the existence of interest

element in the transaction process.

Apprehension of liquidity crisis and possibility of liquidity surplus

Islamic banks have to be more cautious and vigilant in managing their funds since it can not

resort to call money provision at times of fund shortages or crisis. As a result Islamic banks may

have always left with a sizeable amount of cash as liquidity surplus. Conventional banks can

borrow in the form of call money among themselves even at an exorbitant rate of interest.


Problems in capital market investment

Conventional banks can invest 30% of their total deposits in shares and securities. Islamic

banks have their problem in this case as they avoid any transaction based on interest. Following

examples may be cited for illustration-

(a) Islamic banks do not purchase shares of companies undertaking interest-based business;

(b) Shares of companies taking loan from commercial banks on interest are not also purchased

by Islamic banks; and,

(c) Islamic banks can not purchase shares of companies involved in businesses not approved by

Shariah.

The above restrictive environment in the capital market of Bangladesh has limited

substantially the investment opportunities for Islamic banks and hence the avenues of lawful

earning. In the absence of Islamic money and capital market these banks cannot obtain funds

from capital market at times of need.

Absence of inter-bank money market

In spite of five Islamic banks have been functioning in Bangladesh, inter-bank money

market within Islamic banks has not yet taken place. Besides, Islami Bank Bangladesh Limited,

there are other few Islamic banks working in the country now a days. Still these banks can take

initiative to form a money market among themselves. This may help minimising particularly the

call money problem they are suffering from beginnings.

Predominance of Murabaha financing

Predominance of Murabaha financing in the portfolio management of investment funds by

the present day Islamic banks of Bangladesh has been a hot agenda of debate. One study shows

that Islami Bank Bangladesh Limited, Al Arafah Bank and Social Investment Bank Limited have


used 54%, 76% and 65% respectively of their investment funds by resorting to Murabaha mode

(Hoque 1996, p.9). Murabaha though considered as a Shariah approved mode, the Islamic

economists have traditionally prescribed for its limited application. Due to legacy of traditional

banking, lack of appropriate legal protection and standard accounting practice in business,

Islamic banks in Bangladesh find Murabaha financing as suitable and Mudaraba and Musharaka

as extremely difficult to apply.

Depression of Profit

Traditional banks can meet up loss arising from delay in repayment by the clients through

charging compound interest. Islamic banks cannot do that. What it does it realises

comprehension at the rate of profit. But the compensation so realised is not added to the profit

income rather credited to Sadaqa account i.e., amount meant for social welfare activities. This

depresses profits of Islamic banks. This may place Islamic banks relatively in weaker position in

terms of profitability compared to conventional banks.

Moreover, Islamic banks are to make a compulsory levy equivalent to 2.5% of its profit

earned each year and credited to Sadaqa account, which also depresses banks’ profitability. This

is unlikely the case with conventional banks.

Absence of Islamic insurance company

Banking and insurance have to go hand-by-hand in matters of trade and business in order to

protect investments of banks against unforeseen hazards and catastrophes. Unfortunately, Islamic

banks have to depend on interest-based insurance companies in the absence of Islamic insurance

companies.


Islamic Banks Working In the Country

Islamic Bank Bangladesh Limited (IBBL)

This bank is considered to be the first interest free bank in Southeast Asia. It was

incorporated on 13-03-1983 as a Public Company with limited liability under the companies Act

1913. The bank began operations on March 30, 1983.

IBBL is a joint venture multinational Bank with 63.92% of equity being contributed by the

Islamic Development Bank and Islamic financial institutions. The total number of branches as of

December 2001 stood at 121. The authorized capital of the bank is Tk. 500 million and

subscribed capital is Tk. 160 million.

Al-Baraka Bank Limited

It is considered as the second Islamic bank in Bangladesh, commenced banking business as a

scheduled bank on May 20, 1987. It is a joint venture enterprise of Al-Baraka Investment and

Development Company a renowned financial and business house of Saudi Arabia, Islamic

Development Bank, a group of eminent Bangladesh industrialists and the Government of

Bangladesh. The authorized capital of the bank is Tk 600 million and the paid up capital is Tk.

204.07 million. The Bank currently operates 34 branches throughout the country. Apart from

extending conventional commercial banking facilities to its customers, the bank has also given

substantial financial support to the development of industrial and real estate projects.

Al-Arafa Islami Bank Bangladesh Limited

Al-Arafa Islami Bank commenced its business as a scheduled bank on September 27, 1995.

The authorized capital of the bank is Tk. 1,000 million while its paid up capital is Tk. 101.20


million. The Bank follows the Shariah principles in investment and invests its funds under

Mudaraba, Musharaka, Bai-Muajjal, Bai-Salam, etc. Up to 2001, the Bank has been operating

its business through 40 branches all over the country.

Social Investment Bank Limited (SIBL)

It is another bank guided by the Islamic principles. It started its journey in November 1995.

Its authorized capital is Tk. 1,000 million and paid-up capital is Tk. 118.36 million. Up to July

2006, the Bank has been operating its business through 24 branches.

Other Banks, where Islamic Banking services are available-

# The Oriental Bank Limited

# Shajalal Islamic Bank

# EXIM Bank

# Prime Bank

# HSBC (Amanaha)

Islamic banking in Bangladesh can provide efficient banking services to the nation if they

are supported with appropriate banking laws, and regulations. This will help them introducing

PLS modes of operations, which are very much conducive to economic development. It would be

better if Islamic banks had the opportunity to work as a sole system in an economy. That would

provide Islamic banking system to fully utilize its potentials.


Appendix 2

Research Questionnaire

Organizational commitment Items

Section 1: Following are some items, which assess your opinion about your Organizational

commitment with the SIBL. Circle one number per statement using the following scale:

Strongly Disagree-1 Moderate Disagree-2 Uncertain-3 Moderate Agree -4

Strongly Agree-5

(Circle one number)

1. I am willing to put in a great deal of effort beyond

that normally expected in order to help my organization

be successful. 1 2 3 4 5

2. I feel very little loyal to my organization. 1 2 3 4 5

3. I find that my values and my organization values are

very similar. 1 2 3 4 5

4. I am proud to tell others that I am a part of my organization. 1 2 3 4 5

5. I find it difficult to agree with my organization’s

practices and policies. 1 2 3 4 5

Career Satisfaction Items

Section 2: Following are some items, which assess your opinion about your Career

Satisfaction with the SIBL. Circle one number per statement using the following scale:


Strongly Agree-5

(Circle one number)

6. I am satisfied with the success I have achieved in my

career. 1 2 3 4 5

7. I am satisfied with the progress I have made toward

meeting my goals for income. 1 2 3 4 5



meeting my overall career goals. 1 2 3 4 5


meeting my goals for advancement. 1 2 3 4 5


meeting my goals for the development of new skills. 1 2 3 4 5

Job Involvement Items

Section 3: Following are some items, which assess your opinion about your Job Involvement with

the SIBL. Circle one number per statement using the following scale:


Strongly Agree-5

(Circle one number)

11. The most important things that happen to me involve

my present job. 1 2 3 4 5

12. Most of my interests are centered around my job. 1 2 3 4 5

13. To me, my job is a very large part of who I am. 1 2 3 4 5

14. I am very much personally involved with my job. 1 2 3 4 5

15. My job is a very important part of my life. 1 2 3 4 5

Job Security Items

Section 3: Following are some items, which assess your opinion about your level of Job

Security with the SIBL. Circle one number per statement using the following scale:


Strongly Agree-5

(Circle one number)

16. I will lose my job or be laid off in the next year. 1 2 3 4 5

17. I am satisfied with the amount of job security I have. 1 2 3 4 5


Job Satisfaction Items

Section 3: Following are some items, which assess your opinion about your overall Job

Satisfaction with the SIBL. Circle one number per statement using the following scale:

Very Dissatisfied-1 Moderate Dissatisfied-2 Satisfied-3 Moderate Satisfied -4

Very Satisfied-5

(Circle one number)

18. Your job 1 2 3 4 5

19. Your pay 1 2 3 4 5

20. Your coworkers 1 2 3 4 5

21. The direction or advice you receive from others

in your organization 1 2 3 4 5

22. Your peers in your profession 1 2 3 4 5

23. Your career progress in the organization in this point 1 2 3 4 5

24. Your chances of getting ahead in the organization 1 2 3 4 5

25. Your opportunity to “make a difference” or to

contribute to the overall success of the organization 1 2 3 4 5

26. Your organization’s system for recognizing and

rewarding outstanding performance 1 2 3 4 5

27. The organization’s concern for its employees’ welfare 1 2 3 4 5

28. Your organization compared to others 1 2 3 4 5

29. Your organization’s overall efficiency in operation 1 2 3 4 5

30. The overall quality of your organization’s success 1 2 3 4 5


Appendix 3

SPSS Output

Reliability of Organizational Commitment ****** Method 1 (space saver) will be used for this analysis ****** _ R E L I A B I L I T Y A N A L Y S I S - S C A L E (A L P H A) Item-total Statistics Scale Scale Corrected Mean Variance Item- Alpha if Item if Item Total if Item Deleted Deleted Correlation Deleted Q1 11.2200 8.0723 .3229 .4366 Q2 10.6700 9.9607 .0400 .6007 Q3 11.3800 7.4703 .3970 .3841 Q4 11.4000 8.4040 .2705 .4700 Q5 10.6500 7.5429 .4266 .3683 Reliability Coefficients N of Cases = 100.0 N of Items = 5 Alpha = .5166

Reliability Career Satisfaction ****** Method 1 (space saver) will be used for this analysis ****** _ R E L I A B I L I T Y A N A L Y S I S - S C A L E (A L P H A) Item-total Statistics Scale Scale Corrected Mean Variance Item- Alpha if Item if Item Total if Item Deleted Deleted Correlation Deleted Q6 11.6700 4.7284 .6201 .4939 Q7 12.6500 5.4621 .5090 .5614 Q8 11.9500 6.2702 .3862 .6201 Q9 10.9800 6.6663 .2202 .6861 Q10 11.7500 5.6641 .3534 .6389


Reliability Coefficients N of Cases = 100.0 N of Items = 5 Alpha = .6590

Reliability of Job Involvement ****** Method 1 (space saver) will be used for this analysis ****** _ R E L I A B I L I T Y A N A L Y S I S - S C A L E (A L P H A) Item-total Statistics Scale Scale Corrected Mean Variance Item- Alpha if Item if Item Total if Item Deleted Deleted Correlation Deleted Q11 14.9300 6.2476 .4585 .7103 Q12 14.5100 6.7575 .4891 .6881 Q13 13.4500 6.5732 .6019 .6458 Q14 13.2800 7.0521 .4134 .7177 Q15 13.0300 7.5445 .5934 .6717 Reliability Coefficients N of Cases = 100.0 N of Items = 5 Alpha = .7324

Reliability of Job Security ****** Method 1 (space saver) will be used for this analysis ****** _ R E L I A B I L I T Y A N A L Y S I S - S C A L E (A L P H A) Item-total Statistics Scale Scale Corrected Mean Variance Item- Alpha if Item if Item Total if Item Deleted Deleted Correlation Deleted Q16 2.9700 1.8678 .4150 . Q17 3.1900 1.6706 .4150 .


Reliability Coefficients N of Cases = 100.0 N of Items = 2 Alpha = .5859

Reliability of Job Satisfaction ****** Method 1 (space saver) will be used for this analysis ****** _ R E L I A B I L I T Y A N A L Y S I S - S C A L E (A L P H A) Item-total Statistics Scale Scale Corrected Mean Variance Item- Alpha if Item if Item Total if Item Deleted Deleted Correlation Deleted Q18 36.7900 27.3797 .5509 .7885 Q19 37.9600 29.6549 .4805 .7959 Q20 35.8300 29.7587 .4306 .7994 Q21 36.2600 30.5378 .4106 .8012 Q22 35.9700 29.7062 .4693 .7967 Q23 37.3800 27.3895 .6482 .7801 Q24 35.9900 32.2322 .1564 .8181 Q25 37.0600 28.7236 .4033 .8033 Q26 37.5300 27.2415 .5613 .7874 Q27 37.9900 29.1817 .4162 .8010 Q28 36.6400 29.5257 .4856 .7954 Q29 36.6900 28.7413 .4981 .7937 Q30 35.8700 31.8112 .2604 .8105 Reliability Coefficients N of Cases = 100.0 N of Items = 13 Alpha = .8108


Frequencies

Statistics

100 100 100 100 1001 1 1 1 1

2.7660 2.9500 3.4600 3.0800 3.0638.67990 .57586 .63277 1.11853 .44814

ValidMissing

N

MeanStd. Deviation


Frequency Table

ORG_COM

4 4.0 4.0 4.04 4.0 4.0 8.0

10 9.9 10.0 18.08 7.9 8.0 26.0

13 12.9 13.0 39.08 7.9 8.0 47.0

10 9.9 10.0 57.011 10.9 11.0 68.012 11.9 12.0 80.0

8 7.9 8.0 88.02 2.0 2.0 90.03 3.0 3.0 93.04 4.0 4.0 97.01 1.0 1.0 98.02 2.0 2.0 100.0

100 99.0 100.01 1.0

101 100.0

1.401.802.002.202.402.602.803.003.203.403.603.804.004.204.40Total

Valid

SystemMissingTotal

Frequency Percent Valid PercentCumulative

Percent


CAR_SAT

1 1.0 1.0 1.02 2.0 2.0 3.01 1.0 1.0 4.0

10 9.9 10.0 14.011 10.9 11.0 25.013 12.9 13.0 38.010 9.9 10.0 48.0

7 6.9 7.0 55.016 15.8 16.0 71.011 10.9 11.0 82.0

9 8.9 9.0 91.05 5.0 5.0 96.03 3.0 3.0 99.01 1.0 1.0 100.0

100 99.0 100.01 1.0

101 100.0

1.601.802.002.202.402.602.803.003.203.403.603.804.004.60Total

Valid

SystemMissingTotal


Percent

JOB_INV

1 1.0 1.0 1.01 1.0 1.0 2.01 1.0 1.0 3.03 3.0 3.0 6.04 4.0 4.0 10.0

10 9.9 10.0 20.010 9.9 10.0 30.0

8 7.9 8.0 38.014 13.9 14.0 52.014 13.9 14.0 66.011 10.9 11.0 77.0

8 7.9 8.0 85.03 3.0 3.0 88.07 6.9 7.0 95.03 3.0 3.0 98.01 1.0 1.0 99.01 1.0 1.0 100.0

100 99.0 100.01 1.0

101 100.0

1.802.002.202.402.602.803.003.203.403.603.804.004.204.404.604.805.00Total

Valid

SystemMissingTotal


Percent


JOB_SEC

9 8.9 9.0 9.04 4.0 4.0 13.07 6.9 7.0 20.0

18 17.8 18.0 38.020 19.8 20.0 58.012 11.9 12.0 70.016 15.8 16.0 86.0

4 4.0 4.0 90.010 9.9 10.0 100.0

100 99.0 100.01 1.0

101 100.0

1.001.502.002.503.003.504.004.505.00Total

Valid

SystemMissingTotal


Percent


JOB_SAT

1 1.0 1.0 1.01 1.0 1.0 2.01 1.0 1.0 3.01 1.0 1.0 4.01 1.0 1.0 5.02 2.0 2.0 7.02 2.0 2.0 9.04 4.0 4.0 13.05 5.0 5.0 18.05 5.0 5.0 23.06 5.9 6.0 29.05 5.0 5.0 34.09 8.9 9.0 43.04 4.0 4.0 47.05 5.0 5.0 52.08 7.9 8.0 60.07 6.9 7.0 67.07 6.9 7.0 74.06 5.9 6.0 80.05 5.0 5.0 85.04 4.0 4.0 89.03 3.0 3.0 92.03 3.0 3.0 95.02 2.0 2.0 97.01 1.0 1.0 98.01 1.0 1.0 99.01 1.0 1.0 100.0

100 99.0 100.01 1.0

101 100.0

1.922.002.152.232.312.382.462.542.622.692.772.852.923.003.083.153.233.313.383.463.543.623.693.854.004.084.38Total

Valid

SystemMissingTotal


Percent


Correlations Correlations

1 .030 .082 -.108 .110. .770 .418 .285 .275

100 100 100 100 100.030 1 .313** .017 .501**.770 . .002 .865 .000100 100 100 100 100.082 .313** 1 .003 .501**.418 .002 . .975 .000100 100 100 100 100

-.108 .017 .003 1 .108.285 .865 .975 . .287100 100 100 100 100.110 .501** .501** .108 1.275 .000 .000 .287 .100 100 100 100 100

Pearson CorrelationSig. (2-tailed)NPearson CorrelationSig. (2-tailed)NPearson CorrelationSig. (2-tailed)NPearson CorrelationSig. (2-tailed)NPearson CorrelationSig. (2-tailed)N

ORG_COM

CAR_SAT

JOB_INV

JOB_SEC

JOB_SAT


Correlation is significant at the 0.01 level (2-tailed).**.

Regression (stepwise)

Variables Entered/Removeda

JOB_INV .

Stepwise(Criteria:Probability-of-F-to-enter <=.050,Probability-of-F-to-remove >=.100).

CAR_SAT .

Stepwise(Criteria:Probability-of-F-to-enter <=.050,Probability-of-F-to-remove >=.100).

Model1

2

VariablesEntered

VariablesRemoved Method

Dependent Variable: JOB_SATa.


Model Summary

.501a .251 .243 .38983

.618b .382 .369 .35588

Model12

R R SquareAdjustedR Square

Std. Error ofthe Estimate

Predictors: (Constant), JOB_INVa.

Predictors: (Constant), JOB_INV, CAR_SATb.

ANOVAc

4.989 1 4.989 32.830 .000a

14.893 98 .15219.882 99

7.597 2 3.799 29.992 .000b

12.285 97 .12719.882 99

RegressionResidualTotalRegressionResidualTotal

Model1

2

Sum ofSquares df Mean Square F Sig.

Predictors: (Constant), JOB_INVa.

Predictors: (Constant), JOB_INV, CAR_SATb.

Dependent Variable: JOB_SATc.

Coefficientsa

1.836 .218 8.433 .000.355 .062 .501 5.730 .000

1.254 .237 5.297 .000.270 .060 .381 4.539 .000.297 .065 .381 4.538 .000

(Constant)JOB_INV(Constant)JOB_INVCAR_SAT

Model1

2

B Std. Error

UnstandardizedCoefficients

Beta

StandardizedCoefficients

t Sig.



Excluded Variablesc

.070a .793 .430 .080 .993

.381a 4.538 .000 .418 .902

.106a 1.215 .227 .122 1.000

.068b .850 .397 .086 .993

.100b 1.254 .213 .127 1.000

ORG_COMCAR_SATJOB_SECORG_COMJOB_SEC

Model1

2

Beta In t Sig.Partial

Correlation Tolerance

CollinearityStatistics

Predictors in the Model: (Constant), JOB_INVa.

Predictors in the Model: (Constant), JOB_INV, CAR_SATb.

Dependent Variable: JOB_SATc.

Regression (simultaneous)

Variables Entered/Removedb

JOB_SEC,JOB_INV,ORG_COM,CAR_SAT

a

. Enter

Model1

VariablesEntered

VariablesRemoved Method

All requested variables entered.a.

Dependent Variable: JOB_SATb.

Model Summary

.631a .398 .373 .35486Model1

R R SquareAdjustedR Square

Std. Error ofthe Estimate

Predictors: (Constant), JOB_SEC, JOB_INV,ORG_COM, CAR_SAT

a.


ANOVAb

7.920 4 1.980 15.723 .000a

11.963 95 .12619.882 99

RegressionResidualTotal

Model1

Sum ofSquares df Mean Square F Sig.

Predictors: (Constant), JOB_SEC, JOB_INV, ORG_COM, CAR_SATa.

Dependent Variable: JOB_SATb.

Coefficientsa

.994 .291 3.422 .0015.272E-02 .053 .080 .996 .322

.295 .065 .379 4.522 .000

.266 .060 .375 4.466 .0004.344E-02 .032 .108 1.354 .179

(Constant)ORG_COMCAR_SATJOB_INVJOB_SEC

Model1

B Std. Error

UnstandardizedCoefficients

Beta

StandardizedCoefficients

t Sig.
