Abstract:
Service quality is determinant factors that enable banks to get superior advantage over their
competitors by increasing customer satisfaction and loyalty.The main objective of the study was
to investigate the influence of service quality on customer satisfaction and loyalty in seven
branches banks found under CBE, Jimma Town branches. Since, BANKSERV model was
especially developed to examine the services quality of banking sector; researchers selected this
model to extensively test retail banking industry. The current study measured customer services
quality and its relation with customer satisfaction and loyalty in the seven branches banks.
Descriptive method used as the research method of the study. The sample consists of 398
respondents selected based on convenience sampling procedure. The dimensions of the study
were tangibility, reliability, responsiveness, assurance, and empathy. Study data were collected
using structured questionnaire and the questionnaire consisted of 26 items categorized under
four dimensions of the BANKSERV model. Correlation and multiple regressions were used to
investigate the relationship between dependent and independent variables. The correlation
results indicate that there is a positive correlation between the dimensions of service quality and
customer satisfaction. The results of the regression test showed that offering quality service have
positive impact on overall customer satisfaction. The research findings also indicate offering
high quality service increase customer satisfaction, which in turn leads to high level of customer
commitment and loyalty
