The Effect of Service Quality on Customer Satisfaction: The Case of Commercial Bank of Ethiopia at west Addis district selected Merkato branches.

Abstract

As the significant increasing of service sector in the economy, there is a tight competition in thearea. Banking industry also one of the most dominant service sector in Ethiopia; and there is atight competition within this sector. So the main objective of this study was to assess the overall level of service quality and customer satisfaction in CBE west district selected markatobranchesand to investigate the effect of service quality dimensions on customer satisfaction under the study area. As the significant increasing of service sector in the economy, there is a tight competition in the area. Banking industry also one of the most dominant service sector in Ethiopia; so, they tend to continually found a strategy that enabling them to be competent in this tight competition. This strategy often focuses on the area of improving service quality to increase customer satisfaction to be strongly compete and pooling more customers. Because, service quality is relevant to keep up their competitive advantage and improve customer satisfaction. A conceptual model of service quality dimensions was developed. Data for this study was collected in CBE west district selected markato branches, which is situated in A.A, Ethiopia. This study was used both primary and secondary data was employed. A total of 349 respondents taken as a sample customer of the banks were chosen and the questionnaires were distributed to customers of the Banks during office hours of the week. The collected data was analyzed with the help of SPSS version 20. Correlation and multiple regressions were used to investigate the relationship between dependent and independent variables. The findings of the study show that service quality of customer satisfaction is below average, and customers are not satisfied with the service. Based on the finding all service quality dimensions have significant effect on service quality and customer satisfaction. The study concluded that over all service quality of banks is not good and customers are not satisfied with the services of the organization. So, the bank needs to improve the quality of service to satisfy and attract the unsatisfied customers. The researcher recommended that banks should work hard on all these service quality dimensions to improve its service quality and customer satisfaction of the banks. And also emergence of new forms of banking channels such as Internet banking, Automated Teller Machines (ATM),phone banking and also maturing financial market and global competition have forced bankers to explore the importance of customer loyalty.Therefore,studies need to focus on the changing role of the banking system and its dynamic financial market.