Challenges of Implementing Total Quality Management in Addressing the Financing Risks Faced by Islamic Banks
DOI:
https://doi.org/10.70062/globalmanagement.v2i3.332Keywords:
Challenges, Financing Risks, Islamic Banks, Quality ManagementAbstract
The radical transformations toward business economies and knowledge-based information have become a focal point for writers and researchers, particularly in the fields of public administration and financial management. These changes have significantly affected the banking industry, especially with the liberalization of global markets for financial and banking organizations, along with the rapid technological advancements and information shifts. Such transformations have inevitably led to alterations in banking performance, with new methods being adopted to address emerging challenges in the banking sector. In this context, Total Quality Management (TQM) has emerged as a crucial concept with a clear impact on banking performance. Its significance is particularly evident within Islamic banks, as they play a vital role in the global banking system, operating under a set of unique principles and practices. The effectiveness of TQM in improving the operational efficiency and risk management strategies of these institutions cannot be overstated, as these banks consistently demonstrate financial sufficiency, often exceeding required ratios. However, despite their financial stability, Islamic banks face challenges in fully implementing the principles of TQM. This study seeks to explore how the requirements of TQM can help reduce financing risks in Islamic banks by enhancing service quality, improving customer satisfaction, and optimizing internal processes. By examining the relationship between TQM practices and risk management strategies, this research aims to offer insights into how Islamic banks can better navigate the complexities of modern financial landscapes while ensuring continued growth and stability. Through this study, the potential for TQM to serve as a strategic tool for reducing financing risks in Islamic banks will be assessed, contributing to a more sustainable and competitive banking environment.
References
Ahinful, A. A., Opoku Mensah, A., Koomson, S., Cobblah, C., Takyi, G., & Kwarteng, A. H., "Achieving banking industry innovation performance using total quality management: an empirical study," The TQM Journal, vol. 37, no. 5, pp. 1292-1319, 2025. [Online]. Available: https://doi.org/10.1108/TQM-10-2023-0327.
Ahmed, A. O., Abdalla, A. M., & Ali, A. M., "Investigating the impact of soft TQM practices on employees’ organizational commitment in governmental Sudanese petroleum organizations," International Journal of Quality & Reliability Management, ahead-of-print, 2025. [Online]. Available: https://doi.org/10.1108/IJQRM-04-2024-0113.
Aichouni, A. B. E., Silva, C., & Ferreira, L. M. D. F., "A Systematic Literature Review of the Integration of Total Quality Management and Industry 4.0: Enhancing Sustainability Performance Through Dynamic Capabilities," Sustainability, vol. 16, no. 20, pp. 9108, 2024. [Online]. Available: https://doi.org/10.3390/su16209108.
Alsaqer, S., Katar, I., & Abdelhadi, A., "The role of total quality management in enhancing customer satisfaction in Gulf Cooperation Council (GCC) countries," MethodsX, vol. 13, p. 102854, 2024. [Online]. Available: https://doi.org/10.1016/j.mex.2024.102854.
Alsoukini, F. A. M., Adedokun, M. W., & Berberoğlu, A., "Enhancing Sustainable Innovation Performance in the Banking Sector of Libya: The Impact of Artificial Intelligence Applications and Organizational Learning," Sustainability, vol. 17, no. 12, p. 5345, 2025. [Online]. Available: https://doi.org/10.3390/su17125345.
Andespa, R., Yeni, Y. H., Fernando, Y., & Sari, D. K., "A systematic review of customer Sharia compliance behaviour in Islamic banks: determinants and behavioural intention," Journal of Islamic Marketing, vol. 15, no. 4, pp. 1013-1034, 2024. [Online]. Available: https://doi.org/10.1108/JIMA-06-2023-0181.
Azhar Mohd Harif, M. A., Nawaz, M., & Hameed, W. U., "The role of open innovation, hotel service quality and marketing strategy in hotel business performance," Heliyon, vol. 8, no. 9, 2022. [Online]. Available: https://doi.org/10.1016/j.heliyon.2022.e10441.
Badwan, N., "Compliance of Sharia Audit in Islamic Banks and Islamic Financial Institutions in Palestine: A Literature Review," Journal of Islamic Economics and Finance Studies, vol. 5, no. 1, pp. 42-66, 2024. [Online]. Available: https://doi.org/10.47700/jiefes.v5i1.7712.
Bashar, A., Sakib, M. N., Rahman, M. M., Tabassum, F., & Sabah, S., "The Role of Top Management Commitment, Employee Involvement, and Training and Development on Employee Performance: Evidence from the Banking Sector of an Emerging Economy," Quality Management Journal, vol. 31, no. 1, pp. 58-74, 2024. [Online]. Available: https://doi.org/10.1080/10686967.2023.2285041.
Butt, U., & Chamberlain, T., "Performance of Islamic Banks During the COVID-19 Pandemic: An Empirical Analysis and Comparison with Conventional Banking," Journal of Risk and Financial Management, vol. 18, no. 6, p. 308, 2025. [Online]. Available: https://doi.org/10.3390/jrfm18060308.
Casteleiro, C., & Mendes, L., "Exploring the influence of quality management systems in work engagement and psychological empowerment in private institutions of social solidarity," Total Quality Management & Business Excellence, vol. 33, no. 3-4, pp. 243-277, 2022. [Online]. Available: https://doi.org/10.1080/14783363.2020.1832460.
Elmobark, N., El-ghareeb, H., & Elhishi, S., "Measuring and Evaluating Frameworks for IT Service Quality in the IT Industry: A Comparative Study," 2023 International Conference on Artificial Intelligence Science and Applications in Industry and Society (CAISAIS), 2023.
Eze, N. D., Mateus, C., & Cravo Oliveira Hashiguchi, T., "Telemedicine in the OECD: an umbrella review of clinical and cost-effectiveness, patient experience and implementation," PLoS One, vol. 15, no. 8, e0237585, 2020. [Online]. Available: https://doi.org/10.1371/journal.pone.0237585.
Faizi, F., "How are Islamic banking products developed? Evidence from emerging country," Cogent Economics & Finance, vol. 12, no. 1, p. 2378961, 2024. [Online]. Available: https://doi.org/10.1080/23322039.2024.2378961.
Grigg, N. P., "Redefining quality in terms of value, risk and cost: a literature review," International Journal of Quality & Reliability Management, vol. 38, no. 5, pp. 1065-1089, 2021. [Online]. Available: https://doi.org/10.1108/IJQRM-06-2020-0209.
Haron, R., Abdul Subar, N., & Ibrahim, K., "Service quality of Islamic banks: satisfaction, loyalty and the mediating role of trust," Islamic Economic Studies, vol. 28, no. 1, pp. 3-23, 2020. [Online]. Available: https://doi.org/10.1108/IES-12-2019-0041.
Hespe, C. M., Giskes, K., Harris, M. F., & Peiris, D., "Findings and lessons learnt implementing a cardiovascular disease quality improvement program in Australian primary care: a mixed method evaluation," BMC Health Services Research, vol. 22, no. 1, p. 108, 2022. [Online]. Available: https://doi.org/10.1186/s12913-021-07310-6.
Ikra, S. S., Rahman, M. A., Wanke, P., & Azad, M. A. K., "Islamic banking efficiency literature (2000–2020): a bibliometric analysis and research front mapping," International Journal of Islamic and Middle Eastern Finance and Management, vol. 14, no. 5, pp. 1043-1060, 2021. [Online]. Available: https://doi.org/10.1108/IMEFM-05-2020-0226.
Jarbou, S. I., Irimia-Diéguez, A., & Prieto-Rodríguez, M., "Financial performance of Islamic and conventional banks in MENA region: a GLS approach," Journal of Islamic Accounting and Business Research, ahead-of-print, 2024. [Online]. Available: https://doi.org/10.1108/JIABR-11-2023-0380.
Lameijer, B. A., Boer, H., Antony, J., & Does, R. J. M. M., "Continuous improvement implementation models: a reconciliation and holistic metamodel," Production Planning & Control, vol. 34, no. 11, pp. 1062-1081, 2023. [Online]. Available: https://doi.org/10.1080/09537287.2021.1974114.
Lepistö, K., Saunila, M., & Ukko, J., "Enhancing customer satisfaction, personnel satisfaction and company reputation with total quality management: combining traditional and new views," Benchmarking: An International Journal, vol. 31, no. 1, pp. 75-97, 2024. [Online]. Available: https://doi.org/10.1108/BIJ-12-2021-0749.
Loving, V. A., "Collaborative interdepartmental teams: benefits, challenges, alternatives, and the ingredients for team success," Clinical Imaging, vol. 69, pp. 301-304, 2021. [Online]. Available: https://doi.org/10.1016/j.clinimag.2020.10.003.
Novikov, V., Britikova, E., Yarushkina, E., & Kovalenko, L., "Islamic Banking in the Global Financial System: Current Situation and Global Environment," Proceedings of the 5th International Conference on Economics, Management, Law and Education (EMLE 2019), 2020.
Nugroho, E. R., "Implementation Of Sharia-Compliance In Islamic Bank Product Innovations," Prophetic Law Review, vol. 3, no. 2, pp. 173-197, 2021. [Online]. Available: https://doi.org/10.20885/PLR.vol3.iss2.art4.
Pawanr, S., Sarmah, P., & Gupta, K., "TQM implementation for enhancement of product and service quality: a review on developments and latest trends," Journal of Applied Research in Technology & Engineering, vol. 6, no. 1, pp. 63-72, 2025. [Online]. Available: https://doi.org/10.4995/jarte.2025.22257.
Permana, A., Purba, H. H., & Rizkiyah, N. D., "A systematic literature review of Total Quality Management (TQM) implementation in the organization," International Journal of Production Management and Engineering, vol. 9, no. 1, pp. 25-36, 2021. [Online]. Available: https://doi.org/10.4995/ijpme.2021.13765.
Rahnuma, N., "Evolution of quality culture in an HEI: critical insights from university staff in Bangladesh," Educational Assessment, Evaluation and Accountability, vol. 32, no. 1, pp. 53-81, 2020. [Online]. Available: https://doi.org/10.1007/s11092-019-09313-8.
Reza, J. R. D., García Alcaraz, J. L., Ramírez, C. S., López, J. A. G., Vargas, A. R., & Rodríguez Álvarez, J. L., "Achieving strategic goals by continuous improvement and lean manufacturing implementation: A structural equation model -system dynamics approach," Sustainable Futures, vol. 9, p. 100551, 2025. [Online]. Available: https://doi.org/10.1016/j.sftr.2025.100551.
Rozie, V., Sardiana, A., & Puspita, P., "A short review of customer satisfaction on mobile banking service quality of Islamic banks," Paradigma, vol. 20, no. 1, pp. 74-84, 2023. [Online]. Available: https://doi.org/10.33558/paradigma.v20i1.5934.
Scott, J., "Digital Transformation in Islamic Finance: Trends, Challenges, and Opportunities," International Journal for Science Review, vol. 1, no. 1, pp. 25-32, 2024. [Online]. Available: https://doi.org/10.71364/ijfsr.v1i1.4.
Testa, M., D'Amato, A., Singh, G., & Festa, G., "Innovative profiles of TQM in banking management. The relationship between employee training and risk mitigation," The TQM Journal, vol. 36, no. 3, pp. 940-957, 2024. [Online]. Available: https://doi.org/10.1108/TQM-01-2022-0043.
Walters Glombik, J., "The impact of organizational growth on employees' personal initiative and commitment," Journal of Applied Leadership and Management, vol. 8, pp. 90-114, 2020. [Online]. Available: https://www.journal-alm.org/article/view/21243.
Waqanimaravu, M., & Arasanmi, C. N., "Employee training and service quality in the hospitality industry," Journal of Foodservice Business Research, vol. 23, no. 3, pp. 216-227, 2020. [Online]. Available: https://doi.org/10.1080/15378020.2020.1724850.
