DETERMINANT ANALYSIS OF CUSTOMERS SWITCHING BEHAVIOUR IN PRIVATE COMMERCIAL BANKING SECTOR OF ETHIOPIA

Abstract

The primary objective of this study is to identify the factors that influence customers switching and determine the most important and least important factor that influence customers switching behavior. This study investigates the five factors (Price, Reputation, Service Quality, Effective Advertising Competition, and Availability of ATM) of customer switching which effects retail banking operations in Ethiopia. To conduct the research, both quantitative and qualitative research methodologies are employed, as employing the mixed approach help to converge or confirm finding from different data sources. Due to the nature of the study, multiple regression and correlation analysis techniques applied. Total 345 responses was recorded and show that all considered factors have significant effect on customer switching, however, advertising competition and automated teller machine identified as most important and least important influential factors respectively on customer switching. In this competitive retail commercial private banking market of Ethiopia, customer switching is detrimental for every bank. Banking sector reforms and domestic private banks with vast range of banking products change the banking perspective in Ethiopia. This diversity could make a positive or negative impact on banks customers’ loyalty and switching.