Trust creates value, value creates loyalty: evidence from islamic digital banking

Abstract

This study examines the relationships among institutional trust, perceived value, and customer loyalty in Islamic digital banking while investigating the mediating role of perceived value. Design/methodology/approach. Data were collected from 167 Indonesian digital banking customers and analysed using Partial Least Squares Structural Equation Modelling (PLS-SEM). Institutional trust significantly enhances perceived value and customer loyalty, while perceived value positively influences loyalty and partially mediates the trust–loyalty relationship. The findings support the proposed Trust-to-Value Conversion Framework (TVCF), suggesting that institutional trust strengthens loyalty primarily by creating customer value. This study extends Commitment–Trust Theory by integrating Perceived Value Theory and proposing the TVCF as a conceptual framework explaining how institutional trust is translated into sustainable customer loyalty in Islamic digital banking.