EFFECT OF SERVICE QUALITY ON CUSTOMER SATISFACTION: THE CASE OF COMMERCIAL BANK OF ETHIOPIA

Abstract

Nowadays the market of the services providing firms is highly competitive and the expectation of the customer is increasing. The firms are required to focus more on the services they provide to satisfy the customer in order to achieve the goal of an organization. The main purpose of this study is to investigate the effect of services quality on customer satisfaction in Commercial Bank of Ethiopia. The study was applied an explanatory research design. Convenience sampling technique was used in the study to take a sample from the infinite population. Total samples of 384 respondents who received a premium banking service were taken as a respondent. The relevant data was gathered using questionnaire which was designed based on the model of the five factors of service quality which is developed by Parasuraman (1998) and used binary logistic regression analysis. The findings of the study indicate that the SERVQUAL dimensions: Tangibility, Reliability, Responsiveness, Assurance and Empathy had a positive and significant effect on customer satisfaction in CBE. Moreover, It was found that customers were satisfied with responsiveness, assurance, reliability and empathy and while they are unsatisfied with tangibility. It was recommended that managers should improve the visually attractiveness of equipment and modernity of the physical facilities. Furthermore, the bank management should arrange training programs so as to enhance employee’s politeness and willingness, customer file documentation and delivery of prompt service. Finally, managers should measure customer’ satisfaction and service quality seasonally to keep the services corresponded with customers’ opinions.