THE IMPACT OF SERVICE QUALITY ON CUSTOMER SATISFACTION THE CASE OF COMMERCIAL BANK OF ETHIOPIA

Abstract

The government of Ethiopia has launched economic reforms, financial liberalization measures and restructuring of financial institutions with the aim of promoting a competitive environment and efficient banking services to the public. Commercial Bank of Ethiopia was incorporated as a share company on December 16, 1963 per proclamation number 207-1955 to take over the commercial banking activities of the former state Bank of Ethiopia. However, the performance of CBE in providing quality service is not in a position to meet the expectation of service users. There are repeated customer complains. Therefore, the major objective of this study is assessing the impact of service quality on customer satisfaction in five branches found under CBE, south Addis Ababa district. To attain this objective, questionnaire was designed categorized under five dimensions of the SERVEQUAL model. The sample consists of 400 respondents selected based on convenience sampling procedure. This study used quantitative research design and both primary and secondary data. The collected data was analyzed with the help of SPSS version 20.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. And also the highest correlation is between responsiveness and customer satisfaction followed by reliability. The finding of the analysis showed that, the performance of CBE 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 this, in order to improve performance of the bank, the researcher suggested that, the bank should prepare complaint handling mechanisms, relevant training for its front line employees.