THE EFFECT OF SERVICE QUALITY ON CUSTOMER SATISFACTION IN THE CASE COMMERCIAL BANK OF ETHIOPIA ADDIS ABABA BRANCH

Abstract

The aim of this study is to analyze customers' perception of service quality in Commercial Bank of Ethiopia (CBE), Addis Ababa Branch. Moreover, the study investigate the effect of quality on satisfaction by focusing on the relationship between service quality and customer satisfaction and how quality can be improved in the service at Commercial Bank of Ethiopia (CBE). A descriptive-co relational form of research design is used to conduct the study. The selection of primary studies is done by administering structured questionnaires 100 customers at CBE, Addis Ababa Branch. The research findings are analyzed using quantitative data analysis technique specifically correlation, multiple regression and beta coefficients to build the analysis and draw conclusions. Findings revealed that majority of customers (88.0 percent) are overall satisfied with the bank services and the way it is performed. The findings of the study also show that customers of the bank are satisfied by the five service quality dimensions. Specifically, customers are most satisfied with the reliability and assurance dimensions of service quality; however, customers are less satisfied with the tangibility dimension. The result confirmed that reliability, assurance and empathy are the dominant determinants of customer satisfaction. Results of the regression model also revealed that all the five service quality dimensions explained customer satisfaction by 90.7%, but the remaining 9.3% is explained by other unexplored independent variables. The SERVQUAL model is a good tool to measure service quality in CBE because all dimensions prove reliable for measurement of service quality and customer satisfaction. Specifically, the dimensions reliability, empathy, and assurance are very important in measuring service quality in CBE. General implication to management of CBE is that they should focus on all dimensions of service quality and make efforts to improve them in order to have better performance that would lead to higher perceived service quality and customer satisfaction.