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Studies in Business and Economics PDF

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Added on  2021-08-19

Studies in Business and Economics PDF

   Added on 2021-08-19

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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  PDF_1



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
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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  PDF_3



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
Studies in Business and Economics  PDF_4

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