A Comparative Study of Service Quality Provision between Public/Government banks and Private Banks Case Study: Commercial Bank of Ethiopia, Dashen Bank Share Company, And Awash International Bank Share Company

Abstract

The banking industry in Ethiopia is now booming due to the liberalization policy, a total of nineteen banks are now licensed to give financial services in Ethiopia and the competition is becoming intensive so that banks are now trying to achieve competitive advantage by differentiating their service quality provision through implementing different strategies. In this study, an attempt was made to assess and compare the similarities and differences of private and public banks service quality provision as perceived by customers in terms of the tangibility, reliability, responsiveness, assurance and empathy service quality dimensions. Cross sectional in descriptive manner was employed to meet the objective of the research and data were collected using close ended questionnaires which incorporate demographic and service quality measurement dimensions adopted from SERQUAL model. A sample of 380 respondents was taken using systematic sampling technique from branches of Dashen Bank, Awash International Bank and Commercial Bank of Ethiopia found in Addis Ababa. The collected data from the customers was analyzed using descriptive and inferential statistical tools like Frequency, mean, T-test. The results of the study revealed that there is a significant service quality perception difference among customers of the each banks on the reliability, responsiveness, assurance and empathy service quality dimensions by which Dashen Bank and Awash international Bank is higher than the Commercial Bank of Ethiopia. However, with regard to tangibility there is no significant difference between the Private and Publically Owned banks. Therefore both banks have to understand the changing needs of customers, their aspirations and expectations to create value. The Banks should also have a strong customer relationship management and be able to understand the customers’ needs while interacting with them.