Effects of service quality on customer satisfaction In selected Private Banks in Jimma Town

Abstract

Customer satisfaction is defined as the customer’s subjective evaluation of a consumption experience, based on some relationship between the customer’s perceptions and objective attributes of the product. Service quality has been defined as a degree and direction of discrepancy between customers' service perception and expectations. The main purpose of the study is to examine the effect of customer service quality on customer satisfaction on selected private banks in Jimma Town. The study also examines empirically the determinants of service quality in selected private banks in Jimma Town. Five dimensions in service quality such as tangibility, reliability, responsiveness, assurance and empathy are considered as the base for this study. From the total 10 private commercial banks which are operating in Jimma town, six private commercial banks were selected for the study by using purposive sampling those are Dashen bank, Awash bank, Bank of Abyssinia, Wegagen bank ,and Nib bank . To achieve the objectives of this study, data was collected through questionnaire from a sample of 398 bank customer. These respondents were selected using Convienenc sampling method. The data collected from the questionnaire were analyzed using Statistical tools such as mean, standard deviation, correlation, and multiple regression analysis. The results of this study indicate that, the five service quality dimensions (tangibility, reliability, responsiveness, assurance and empathy) have positive and significant relationship with customer satisfaction. The finding of this study also indicates that customers were most satisfied with the Tangibility dimensions of service quality. On the contrary, customers were less satisfied with reliability and empathy dimensions of service quality. The correlation results indicate that there is a positive correlation between the dimensions of service quality and customer satisfaction. Furthermore, the multiple regression analysis, a technique of multivariate analysis, adopted to determine the importance of the perceived service quality factors. The results of the regression test showed that offering quality service have positive impact on overall customer satisfaction. That is, service quality dimensions are crucial for customer satisfaction in banking sector in Jimma Town. Based on the findings of the study, the customers of private banks in Jimma Town were found less satisfied in terms of the empathy dimensions. One way of addressing this could be by treating customer with great respect, giving individual attention to customers, serving customers based on their specific needs and treating customers in a friendly manner. This is to say, the bank management should focus on this factor to maximize customer satisfaction.