| Abstract: | The banking sector plays a vigorous role in the development of one country’s economy. The growth of banking sector depends upon the services provided by them to the customers in various aspects. The growing trend of banking services is found significant saving culture promoted by banks in Ethiopia. Today, Ethiopia has a fairly developed banking system with different grades and services. The big challenge of banking industry is delivering satisfactory services for its customers with minimum cost that increase the benefits of company. This research tried to answer the questions what are the trends of bank growth and service delivery, level of customer satisfaction and impact of service quality on customer satisfaction. Thus the main objective of this study was to evaluate the service quality and its impact on customers’ satisfaction by Commercial Bank of Ethiopia. The study targeted to find out the relationship between service quality dimensions and customer satisfaction by using SERVQUAL model. The research was carried out mixed methods research that included the qualitative and quantitative research methods. The primary and secondary sources of data were collected through questionnaire, interview and written material revision. Out of the total population 304 respondents were selected as sample of the study. The collected data were analyzed by using SPSS Version 24 and presented by simple tabulations and figures. The results of trend analysis indicated that the number of branches, customer number, capital and reserve and Profit before Tax of CBE showing fast growth. The service delivery and technology used by CBE depicting fast growth and improvements towards customer satisfaction. However, trends of foreign currency indicated that there is severe shortage of foreign currency that dissatisfy the customers of CBE specifically business men that exacerbate the inflation in Ethiopia. The level of customers satisfaction result indicated that the customers were satisfied with all service quality dimensions (reliability, responsiveness, tangibility and assurance) except empathy. This result indicated that there is a gap of service quality and customer satisfaction that affect good relationship of customer and banks. The impacts of service quality and customers satisfaction was measured through statistical analysis. Thus the Pearson’s correlation result indicated that there is a positive and significant relationship between the service quality dimensions and customer satisfaction. The overall result from Regression model R2 value is 0.886 i.e. independent variable (service quality) accounted for 88.60% of the variance in customer satisfaction and the rest 11.4 percentages was other unexplored variables. Consequently the service quality has great impact on customers’ satisfaction. Since the empathy does not meet the interests’ of customers, it is suggested that better the CBE improve the services provided under empty dimensions of service quality and to fulfill the interest of the customers. Again the National Bank and CBE better to work seriously on solving the foreign currency shortage. |
