Comparative study of service quality of selected banks from customers’ satisfaction perspective: (in case of banks in chiro town, Ethiopia)

Abstract

Banks play a very important role in the economic life of a nation. Although the banking industry is growing and offering various types of financial services to the public, their mere existence does not do any good unless they deliver a quality service. This study is set out to examine and compare the level of service quality performance of selected banks in Chiro Town from the customers’ satisfaction perspective. Four banks (CBE, CBO, AIB and OIB) found in Chiro Town included in the study. To attain the objectives, structured questionnaire was designed under five dimensions of SERVEQUAL model. The sample consists of 398 respondents’ selected based on non-probability convenience sampling with 98 % response rate. Quantitative means of data collection method is employed to collect the data through structured questionnaire. A descriptive statistical analysis (mean and standard deviation) was used to see the gap between customers’ expectations and their actual perceptions. A Pearson Correlation and linear regression analysis were also used to see the relationship between service quality and customer satisfaction. The collected data was analyzed with the help of SPSS version 20. Among the five dimensions of service quality responsiveness score highest gap, while empathy score the lowest gap. Among the four banks CBO score highest gap, while CBE score lowest gap. While ranking the five dimensions respondents rated Responsiveness as the most important service quality indicator, while assurance rated the least. The correlation results indicate that there is a positive and strong relationship between all service quality dimensions and customer satisfaction. The results of the regression test showed that offering quality service has positive and significant impact on overall customer satisfaction i.e. 55.3% of the variation in customer satisfaction is explained by service quality dimensions. The findings reveal that the performance of bank in providing quality service is not in a position to meet the expectation of the customer. Low service quality leads low customer satisfaction. Based on the findings of the study, the researcher suggested that, the bank should prepare complaint handling mechanisms, relevant training for its customer service officer, and need to become more responsive to their customers as well as increase their accessibility.