Studies in Business and Economics no. 14(1)/2019 - 259 - DOI 10.2478/sbe-2019-0020 SBE no. 14(1) 2019 ASSESSING THE IMPACT OF SERVICE QUALITY DIMENSIONS ON CUSTOMER SATISFACTION IN COMMERCIAL BANKS OF MAURITIUS VENCATAYA Lomendra* PUDARUTH Sharmila* JUWAHEER Roubina TD* DIRPAL Ganess* SUMODHEE Nabeelah Meh Zabeen* *University of Mauritius Abstract: In today's hyper competitive banking arena, banking institutions are focusing on improving service quality. Providing excellent quality of service is important in creating and sustaining competitive advantage in the banking industry of Mauritius due to intense competition between local and international banks. Hence, the paper explores the impact of Service Quality (SQ) Dimensions on customer satisfaction. Using the SERVQUAL model, the paper seeks to examine the impacts of reliability, responsiveness, assurance, empathy and tangible aspects on customer satisfaction in banks of Mauritius. A sample of 200 banking customers was randomly selected and data were analyzed through SPSS version 22. The SERVQUAL model has been found as reliable factors and appropriate tool to measure, evaluate, support, and improve the quality of services in banking industry. Results indicated that all five service quality factors have significantly positively influenced customer satisfaction in banks. Regression analysis was also conducted and depicted that empathy is a significant predictor of customer satisfaction among the five SQ dimensions. Key words: Service Quality (SQ) Dimensions, SERVQUAL, Customer Satisfaction, Banking Industry, Mauritius 1. Introduction Due to intense competition, sophisticated nature of customers, flexible and unpredictable demand and similarity of services offered by banks, enhanced service quality to satisfy customers is regarded as the main concern to retain loyal customers
Studies in Business and Economics no. 14(1)/2019 - 260 - (Kheng et al., 2010). Thus, it is important that banks focus their endeavors to improve service quality and delight their customers (Radomir et al., 2010). There has been numerous studies explaining the impact of service quality dimensions on customer satisfaction (Ojo 2010, Arslan et al., 2014, Molaee et al.,2013). To the author's best knowledge, no study has yet analysed the impact of service quality dimensions on customer satisfaction in the boundary of a developing nation such as Mauritius. Hence, this paper seeks to understand in-depth the key dimensions and factors of service quality in the banks of Mauritius and how does the identified factors impact on customers’ satisfaction level of banking customers. The banks need to strive for constant progress in enhancing service quality and to do so, there is an urge to determine the predictive factors that affect quality of service for customers in banking institution. The significance of this paper is that it will provide insights to banks on the appropriate banking service that suit customer needs, determining the association between service quality dimensions and customer satisfaction levels in Mauritius. It will also help the management to identify areas of improvement and assist them to know how, when and where to put more resources so as to improve the service quality and thus being able to offer quality customer service, which is the major theme of this paper. 2. Literature review During past few decades the interest of academics and researchers has amplified to measure the link between service quality and customer satisfaction in the area of service settings such as the banking sector (Levesque and McDougall, 1996 ; Oliver and Swan, 1989 ; Cadotte et al., 1987 ; Swan and Trawick, 1980). Numerous researchers have further debated whether service quality is a cause of customer of satisfaction (Cronin and Taylor, 1992; Parasuraman et al., 1985), which helps to identify a link between both constructs. Overwhelming body of literatures have depicted that both concepts are distinct conceptually but are very closely related to each other (Parasuraman et al., 1994 ; Shemwell et al., 1998) ; where any increase in one (service quality) leads to an increase in another (satisfaction) (Sureshchandar et al., 2002). Along these lines, numerous researchers also found meaningful and strong relationship between service quality and customer satisfaction in banking institutions(Avkiran ,1994;Levesque and McDougall, 1996; Jamal, 2004 ; Al-Hawari and Ward, 2006 and Razak et al., 2007)and they all advocated that banks should focus on service quality as an input to customer satisfaction for long-term benefits and business success (Khurana, 2013). Likewise, Avkiran (1994) highlighted in his study that the banking industry forms a link between service quality and customer satisfaction and according to Wang et al. (2003). Banks have realized the importance of providing superior service quality to impact customer satisfaction level so as to successfully survive in today’s global and highly competitive environment. Furthermore, Levesque and McDougall (1996) investigated the impact of key service quality dimensions on customer satisfaction, using the SERVQUAL model in banking institutions and found a substantial impact of service problems on customer
Studies in Business and Economics no. 14(1)/2019 - 261 - satisfaction and their intentions to switch. The SERVQUAL model was originally introduced by Parasuraman et al. (1985) and developed for the service sectors (Van Iwaarden et al., 2003) which is put into practice by many researchers to test service quality and identify its impact on customer satisfaction. The pioneer study of Parasuraman et al., (1988) introduced ten SQ Dimensions, and researchers such as Oppewal and Vriens (2000) empirically investigated the relationship between service quality and customer satisfaction by using the original SERVQUAL instrument with 10 dimensions. However, later on, some of the dimensions were found to be interrelated factors by researchers such as Parasuraman et al. (1985) and Berry et al. (1985). Conceptually, five SQ Dimensions are mostly used to assess quality of service namely : Tangibility: consist of physical appearances and facilities, staff appearance and equipments. Reliability: ability of delivering the services as promised with consistency and accuracy. Responsiveness: staff willing to help, guide, provide punctual and quick services to customers. Assurance: Employee's knowledge, politeness and ability to inspire trust. Empathy: caring and personal attentions provided by the company to the customers. Consequently, as replacement for SERVQUAL, Brown et al. (1993) and Carman (1990) introduced the SERVPERF model to assess quality of service in the banking sector, but according to various studies, its reliability was questionable. Customer satisfaction and perceived service quality are seen to be different construct, and as stated by Parasuraman et al. (1994), "the former is an evaluation based on a specific transaction while the latter is a general assessment developed over a period of time". Moreover, in a study by Avkiran (1994), it was depicted that the BANKSERV model comprising of only four dimensions pertaining to staff conduct, credibility, communication and customer accessibility was developed to measure service quality in retail banking in Australia. However, the SERVQUAL model is mostly used and has proven to be more applicable to assess service quality in the banking sector. Along these lines, Angur et al. (1999) tested the SERVQUAL model and the study aim was to measure the SQ dimensions perceived by customers in the retail banking industry in India, where the data indicated that responsiveness and reliability were the most important dimensions, and assurance appeared to be the least important. Lau et al. (2013) study was based on SERVQUAL model that identified the influence of the five dimensions in banking service environments on customer satisfaction. Voluminous studies were conducted wherein the SQ dimensions were tested in and found to be significant predictors of customer satisfaction in retail banking (Levesque and McDougall, 1996 ; Krepapa et al., 2003 ; McDougall and Levesque, 2000 ; Ndubisi and Wah, 2005). Both Angur et al. (1999) and Lau et al. (2013) promulgated in their studies that SERVQUAL is indeed the best model and the most appropriate assessment tool to measure service quality in the retail banking industry. Nevertheless, only few studies have investigated the relationship between each of the five SERVQUAL dimensions and customer satisfaction in the banking sector, which have reported some mixed results based on numerous studies (Johnston, 1997 ; Lassar et al., 2000 ; Zhou, 2004 ; Arasli et al., 2005). For instance, the study of Zeithaml et al. (2006)
Studies in Business and Economics no. 14(1)/2019 - 262 - and Berry et al. (1985) shows that "reliability" has constantly proven to be the most important service dimension among the five SQ Dimensions to impact on the customer satisfaction level. Researchers like Arasli et al. (2005) pointed up that assurance, reliability, empathy and tangibles dimensions of service quality were better predictors of customer satisfaction in the Cyprus banking sector, whereas Yavas et al. (1997) found tangibles, empathy and responsiveness to be the most important predictors of customer satisfaction among bank customer in Turkey. Additional support comes from Zhou (2004), who reported that reliability and assurance were important predictors of satisfaction for bank customer in China and the study of Jamal and Naser (2002) proved that reliability, tangibility and empathy are positively related with customer satisfaction. SERVQUAL is a well-known research instrument for evaluating service quality in banking industry and the model perfectly covers the dimensions that are considered by a customer in evaluating quality of service in a bank. Voluminous studies have utilized SERVQUAL for evaluating service quality in the banking industry (Arasli et al. 2005 ; Zhou 2004). However, so far, there are insufficient studies which have assessed the link between SQ Dimensions and Customer Satisfaction and no study has yet assessed the impact of SQ dimensions for improving customer Satisfaction for retail banking. Hence, this will form the conceptual framework of this paper, by using the five dimensions of SERVQUAL provided by Parasuraman et al., (1988) to assess the impact of each of the service quality dimensions (Tangibility, Reliability, Responsiveness, Assurance and Empathy) on customer satisfaction in retail banking sector of Mauritius, which is a framework also adopted in the empirical study of Lau et al. (2013) ; and Tariq et al. (2013). Thus, the following hypotheses as shown in Fig 1 are developed to test the impact of each SQ dimensions on customer satisfaction in retail banking sector of Mauritius. Fig.1 Research Framework
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Marketing Researchlg...
|11
|2613
|87
Information about Academic Essayslg...
|26
|3021
|474
Service Quality in the Banking Sectorlg...
|31
|10264
|124
Importance of Service Quality in Business: A Literature Reviewlg...
|10
|2554
|76
Quality and Customer Services Research Paper 2022lg...
|11
|2208
|28
IMPACT OF SERVICE QUALITY ON CUSTOMER LOYALTY IN BAKING INDUSTRYlg...