EFFECT OF SERVICE QUALITY ON CUSTOMER SATISFACTION (A CASE
OF DASHIN BANK IN ARBA MINCH SIKELA BRANCH)
SENOR ESSAY
BY
SAMRAWIT SERAWITU
ADVISOR
MOHAMMEDAREB S. (MBA)
SEP, 2021
ARBA MINCH, ETHIOPIA
EFFECT OF SERVICE QUALITY ON CUSTOMER SATISFACTION (A CASE
OF DASHIN BANK IN ARBA MINCH SIKELA BRANCH)
PREPARED BY: - SAMRAWIT SERAWITU
ADVISOR: - MOHAMMEDAREB S. (MBA)
A SENIOR ESSAY SUBMITED TO THE DEPARTMENT OF MANAGEMENT
IN PARTIAL FUILFUILMENT OF THE REQUIREMENT FOR BACHELOR
ART DEGREE IN MANAGEMENT
ARBA MINCH UNIVERSITY
COLLAGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF MANAGEMENT
SEP, 2021
ARBA MINCH, ETHIOPIA
DECLARATION
I hereby declare that this senor essay is my original work and has not been presented for a degree
in any other university, and all sources of material used for this paper have been duly
acknowledged.
Name: _____________________________
Signature__________________________
Date: _______________________
ARBA MINCH UNIVERSITY
COLLAGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF MANAGEMENT
ADVISORS’ RESEARCH SUBMISSION APPROVAL SHEET
This is to certify that the paper entitled “Effect of Service Quality on Customer Satisfaction (A
Case of Dashin Bank in Arba Minch Sikela Branch)” submitted in partial fulfillment of the
requirements for the bachelor art degree in Management, and has been carried out by Samrawit
Serawitu: Id. No.______________, under my supervision. Therefore, I recommend that the
student has fulfilled the requirements and hence hereby can submit the paper to the department for
defense.
_______________________
Name of Advisor
Signature
Date
ARBAMINCH UNIVERSITY
COLLAGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF MANAGEMENT
EXAMINERS’ RESEARCH APPROVAL SHEET
I, the undersigned to examine the final open defense by Samrawit Serawitu have read and evaluated
his senor essay entitled “Effect of Service Quality on Customer Satisfaction (A Case of Dashin
Bank in Arba Minch Sikela Branch” and examined the candidate’s oral presentation. This is,
therefore, to certify that the paper has been accepted in partial fulfillment of the requirement for
the bachelor art degree in management with _____________corrections.
Name of Examiner
Signature
Date
Acknowledgement
First and for most I would like to thank the almighty God for his limitless support all my life
through
my
life
and
the
accomplishment
of
this
research
paper.
Then
my
Special thanks goes to my advisor Mr. Mohammedarebs (MBA) for his suggestion comments and
pertinent advice in writing this research paper and for his commitment to devote his precious time
in reading the paper. Thanks a lot, of all customers of the Dashen bank Arba Minch Sikella branch
for their assistance in giving me all the necessary information and documents that have great
contribution for the preparation of this research paper.
i|Page
Acronyms
ATM:
Automatic Teller Machine
SERVPERF:
Service Performance
SPSS:
Statistical Package for Social Science
SC:
Sector
QSC:
Quality sector
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Table of Contents
CONTENT
PAGE
Acknowledgement ........................................................................................................................... i
Acronyms ........................................................................................................................................ ii
List of Tables ................................................................................................................................. vi
List of Figure................................................................................................................................. vii
ABSTRACT ................................................................................................................................. viii
CHAPTER ONE: INTRODUCTION ......................................................................................... 1
1.1.
Background of the Study .................................................................................................. 1
1.2.
Statement of the Problem ................................................................................................. 2
1.3.
Research Questions .......................................................................................................... 3
1.4.
Objectives of the Study .................................................................................................... 3
1.4.1.
General Objective ..................................................................................................... 3
1.4.2.
Specific Objective ..................................................................................................... 3
1.5.
Significance of the Study ................................................................................................. 4
1.6.
Scope of the Study............................................................................................................ 4
1.7.
Limitation of the Study .................................................................................................... 4
1.8.
Operational Definition...................................................................................................... 4
CHAPTER TWO: Literature Review ......................................................................................... 7
2.1.
Introduction .......................................................................................................................... 7
2.2.
Service Quality ................................................................................................................. 7
2.2.1.
Service Tangibility .................................................................................................... 8
2.2.2.
Service Empathy ....................................................................................................... 8
2.2.3.
Service Assurance ..................................................................................................... 8
2.2.4.
Service Responsiveness ............................................................................................ 9
2.2.5.
Service Reliability..................................................................................................... 9
2.3.
Customer satisfaction ..................................................................................................... 10
2.4.
Service Quality and Customer Satisfaction .................................................................... 10
2.4.1.
Service tangibility and customer satisfaction ......................................................... 10
2.4.2.
Service Empathy and customer satisfaction: .......................................................... 11
2.4.3.
Service Assurance and Customer Satisfaction ........................................................ 12
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2.4.4.
Service Responsiveness and Customer Satisfaction ............................................... 12
CHAPTER THREE: RESEARCH METHODOLOGY ......................................................... 15
3.1.
Introduction .................................................................................................................... 15
3.2.
Research Design ............................................................................................................. 15
3.3.
Sampling Design ............................................................................................................ 15
3.3.1.
Target Population .................................................................................................... 15
3.3.2.
Sampling Size ......................................................................................................... 15
3.3.3.
Sampling Techniques .............................................................................................. 16
3.4.
Types and source of data ................................................................................................ 16
3.5.
Method of Data Collection ............................................................................................. 16
3.6.
Data processing and Analysis ........................................................................................ 17
CHAPTER FOUR: RESULTS AND DISCUSSION ............................................................... 18
4.1.
Introduction ........................................................................................................................ 18
4.2.
Respondent’s profile ...................................................................................................... 18
4.3.
Descriptive Analysis of Service Quality Measurement ................................................. 20
4.3.1.
Tangibility ............................................................................................................... 20
4.3.2.
Reliability................................................................................................................ 21
4.3.3.
Responsiveness ....................................................................................................... 21
4.3.4.
Assurance ................................................................................................................ 22
4.3.5.
Empathy .................................................................................................................. 23
4.4.
Correlation between service quality and Customer satisfaction .................................... 24
4.5.
Regression Analysis ....................................................................................................... 25
4.5.1.
Effect of Tangibility on customer satisfaction ........................................................... 25
4.5.2.
Effect of Reliability on customer satisfaction ............................................................ 26
4.5.3.
Effect of Responsiveness on customer satisfaction .................................................... 27
4.5.4.
Effect of Assurance on customer satisfaction............................................................. 28
4.5.5.
Effect of Empathy on customer satisfaction ............................................................... 29
4.6.
Overall Regression and correlation Analyses ................................................................ 30
CHAPTER FIVE: Summary of Findings, Conclusion and Recommendations .................... 30
5.1.
Summary of Findings ..................................................................................................... 30
5.2.
Conclusion...................................................................................................................... 31
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5.3.
Recommendation ............................................................................................................ 32
Reference ......................................................................................................................................... I
Appendix ........................................................................................................................................ V
v|Page
List of Tables
TABLE
PAGE
Table 4.1: Gender Profile’s ........................................................................................................... 18
Table 4.2: Age profile’s ................................................................................................................ 19
Table 4.3: Educational profile’s .................................................................................................... 19
Table 4.4: Marital status profile’s ................................................................................................. 19
Table 4.5: Respondent’s opinion over Service Tangibility .......................................................... 20
Table 4.6: Respondent’s opinion over Service reliability............................................................. 21
Table 4.7: Respondent’s opinion over Service responsiveness .................................................... 21
Table 4.8: Respondent’s opinion over Service assurance ............................................................. 22
Table 4.9: Respondent’s opinion over Service empathy .............................................................. 23
Table 4.10: Correlation between Service Quality’s and Customer Satisfaction ........................... 25
Table 4.11: Model summary of Tangibility over customer satisfaction ....................................... 25
Table 4.12: Beta Coefficients for Tangibility ............................................................................... 26
Table 4.13: Model summary of reliability over customer satisfaction ......................................... 26
Table 4.14: Beta Coefficients for reliability ................................................................................. 27
Table 4.15: Model summary of Responsiveness over customer satisfaction ............................... 27
Table 4.16: Beta Coefficients for responsiveness ......................................................................... 28
Table 4.17: Model summary of Assurance over customer satisfaction ........................................ 28
Table 4.18: Beta Coefficients for assurance ................................................................................. 28
Table 4. 19: Model summary of Empathy over customer satisfaction ......................................... 29
Table 4.20: Beta Coefficients for empathy ................................................................................... 29
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List of Figure
Figure 1: SERVPERF-Customer satisfaction Model. ................................................................................. 14
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ABSTRACT
The objective of the study is to examine the service quality provided by Dashen Bank and its effect
on customer satisfaction using SERVPERF model. The research used explanatory research design
to describe the service quality dimensions and to understand the relationship between the
variables. In line with this, the study applied proportionate Convenience sampling technique to
choose 246 respondents from the population. Primary data is collected from the customers of the
banks using standard validated questionnaires. The questionnaire contained SERVPERF model
with a 22 performance statements and the degree of the customers’ agreement has been measured
using five Likers Scale methods. Quantitative research method is applied to analyze the data using
Statistical Package for Social Science (SPSS) software version 20 and the data is presented in
descriptive and inferential statistics. The correlation result of the study showed there is a positive
and significant relationship between service quality dimensions and customer satisfaction. The
regression analysis exhibited; the service quality dimensions have significant influence on
customer satisfaction except responsiveness. It also indicated that assurance is the dominant
service quality dimension that has a strong relation with customer satisfaction in Dashen Bank.
Key Words: Tangibility, Reliability, Responsiveness, Assurance, Empathy, Customersatisfaction
viii | P a g e
CHAPTER ONE
1. INTRODUCTION
1.1.Background of the Study
Development of financial sector in a country plays a significant role in economic development
(Daniel & Harrington, 2007) because it promotes through capital accumulation and technological
advancement by boosting savings rate, optimizing the allocation of capital, mobilizing and pooling
savings, and facilitating and encouraging foreign capital inflows (Ibbotson, 2010; Ross, 1997).
The banking sector, as the main aspect of the financial sector, provides very important and
productive strategy to manipulate stable of that sector achieving financial inclusion, maintaining
favorable asset and balancing capital and liquidity level of the economy (Silva, 2009). Since
rational customers highly expect efficient services (Angelova & Zakari, 2011; Markos & Sridevi,
2010). Adhikari & Das (2016) explained that the importance of service quality has been gaining
momentum over the years as the improvement in service quality is likely to enhance the degree of
customer satisfaction, which, in turn, helps a bank to retain its existing customer base in a highly
competitive regime.
Satisfaction and service quality have certain things in common, but satisfaction generally is a
broader concept, whereas service quality focuses specifically on dimensions of service (Wilson et
al, 2008). Although it is stated that other factors such as price and product quality can affect
customer satisfaction, perceived service quality is a component of customer satisfaction (Zeithaml
et al, 2006). Regarding the relationship between customer satisfaction and service quality, some
researchers have found empirical supports for the view that service quality would be antecedent to
customer satisfaction (Fornell et al, 1996; Spreng and Macky, 1996); Therefore, customer
satisfaction came as a result of service quality. It has been proven from past researches on service
quality and customer satisfaction that customer satisfaction and service quality are related from
their definitions to their relationships with other aspects in business. Some authors have agreed to
the fact that service quality determines customer satisfaction. Parasuraman et al, (1985) in their
study proposed that when perceived service quality is high, then it will lead to increase in customer
satisfaction. Some other authors did comprehend with the idea brought up by Parasuraman (1995)
and they acknowledged that 'customer satisfaction is based upon the level of service quality that is
provided by the service providers' (Saravana and Rao, 2007; Lee et al, 2000). However, in
1|Page
Ethiopia, with the heavy competition among Dashen banks to attract and retain customers, they
introduce different strategies to maximize customer satisfaction which is Dashen banks are key
players in financial markets operations and act an significant role in keeping a country’s economy
operation smoothly (Khan & Fasih, 2014) through facilitating the depositing money, to taking
loans, exchange currencies and supporting other finance intermediately activities (Morawakage &
Kulathunga, 2013). In the competitive market, innovative strategies together with technology are
introduced by the banking sector in order to enhance their service quality which is important to
attract and retain rational customers, and finally improve their performance (Wasantha, Ali &
Goash, 2015) very important for banks’ performances. However, dearth of empirical evidence
related to the effect of service quality on customer satisfaction, particularly customers who have
bank accounts in private banks, averts the outline of new strategies to improve service quality to
maximize the customer satisfaction. Therefore, the study is attempted to explore the effect of
service quality on customer satisfaction of customers who have accounts in case of Dashen bank
Arba Minch branch. The study will help to bank managers to identify what kind of factors are
highly influence to improve customer satisfaction, their weaknesses and help to take remedial
measures to improve customer satisfaction which leads to improve the performance of banking
sectors.
1.2.Statement of the Problem
Various strategies are formulated to retain the customer and increasing the service quality level
has been considered key success factor. Service quality is particularly essential in the banking
services context because it provides high level of customer satisfaction and hence it becomes a key
to competitive advantage (Ahmossawi, 2001). At the present time, service quality has received
much attention because of its obvious relationship with costs, financial performance.
For this reason, organizations in the same market sector are forced to assess the quality of the
services that they provide in order to attract and retain their customers. Because of this satisfied
customer are a key to term business success Zeithaml et al, (1996). Currently most banks in
Ethiopia are negatively affected by the network failure and system interruption which result
delayed service delivery time, as a result customer are sometimes forced to stay long time in the
premises of the bank. According to Ayenew (2014) report, the performance of Dashin bank
improved over time. However, as preliminary survey there is a customer compliant in network
2|Page
failure, power interruption and low accessibility of ATM machine and other services. This might
effect on the customer satisfaction. Due to this, researcher interested to undertaking what is the
effect of service quality on customer satisfaction evidence from Dashin Bank Arba Minch Town.
Several studies have been done on service quality and customer satisfaction in industry, but only
few studies have been done on dashen bank. For instance (Fikadu, 2013) conducted research on
customer satisfaction and service quality. And he conducted his study through qualitative method,
the result indicates that dashen bank faces various problems especially regarding quality service
and he recommended in his paper to carry out research in similar area so as to generalize the issues
in dashen bank.So the researcher wanted to assess the impact of service quality on customer
satisfaction in the case of dashen bank.Thus this research aims to fill this gab examining effect
service quality on customer satisfaction dashen bank at Arba Minch town.
1.3. Research Questions
This study is designed to answer the following research questions:
1. What is the effect of service tangibility on customer satisfaction?
2. What is the effect of service reliability on customer satisfaction?
3. What is the effect of service responsiveness on customer satisfaction?
4. What is the effect of service assurance on customer satisfaction?
5. What is the effect of service empathy on customer satisfaction?
1.4.Objectives of the Study
1.4.1. General Objective
The general objective of the study is to examine the effect of service quality on customer
satisfaction evidence from Dashen bank Arba Minch Town.
1.4.2. Specific Objective
The specific objectives of the study are:
 To examine the effect of service tangibility on customer satisfaction.
 To examine the effect of service reliability on customer satisfaction.
 To examine the effect of service responsiveness on custom
 To examine the effect of service assurance on customer satisfaction.
 To examine the effect of service empathy on customer.
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1.5. Significance of the Study
The output of this research could result in impact of service quality on customer satisfaction in
case of Dashen bank Arba Minch town. Hopeful, the finding of this study was used the following
importance: First it helps the banks to understand the role of good customer service on customer
satisfaction. - It provides solution for bank industry service quality problems and it may give them
an idea of where they are currently in terms of their service quality and what they should do in the
future. - It initiates other interested researcher to undertake detailed study in this area. Generally,
the significance of this study is to know the level of satisfaction of the Bank’s customers on the
services provided by Dashen Bank. It was helped the management and employees of the bank to
have information on the perception of the customers regarding the service provided by the Bank
and take appropriate action in order to improve its service quality.
1.6. Scope of the Study
Geographical delimitation of the study consented in Dashen bank in Arba Minch branch. The
research was focus on the effect of service quality on customer satisfaction case of Dashen bank
Arab Minch branch. Methodological delimitation of the study was used explanatory study. The
research was used quantitative research approach because the researcher was gather data by
preparing questionnaires.
1.7. Limitation of the Study
It should be noted that, due to the scope of the study researcher examined only the service quality
as the cause of the study, but important factors are there to determine the customer satisfaction.
Therefore, it would be possible for future researcher to find out the factors of customer satisfaction
i.e., marketing mix activity, Brand image, and other marketing concept. Second this study was
used only quantitative data that might affect the outcomes; therefore, future researcher should
apply both qualitative and quantitative research. In addition, the generalizability of the study is
questionable, therefore, future study should examine from different sectors and industries.
1.8. Operational Definition
Tangibility
4|Page
The definition of tangibility is the appearance of physical facilities, equipment, personnel and
communication materials Santos (2002). Tangibility provides physical representations or images
of the service that customers, particularly new customers, was used to evaluate quality. Service
organizations often use tangibles to enhance their image, provide continuity and signal quality to
customers. In contrast, organizations that do not pay attention to tangibility dimensions of the
service strategy can confuse and even destroy a good strategy Wilson et al., (2008).
Reliability
The reliability dimension of service quality refers to the ability of service organizations to perform
the promised service dependably and accurately, and thus reflects the consistency and
dependability of an organization’s performance Rodriques, Bonar & Sacchi (2011). Wilson et al.
(2008) state that reliability means that the organization delivers on its promises about service
delivery, service provision and problem resolution.
Responsiveness
Responsiveness is the willingness to help customers and to provide prompt service
Jema&Anastasidov(2009).This dimension emphasizes attentiveness and promptness in dealing
with customer requests, questions, complaints and problems. Responsiveness also captures the
notion of flexibility and the ability to customize the service to customer needs. The organization
must view the process of service delivery and the handling of requests from the customer’s point
of view rather than from the organization’s point of view Wilson et al. (2008).
Assurance
The assurance dimension of service quality addresses the competence of the organization, the
courtesy it extends to its customers and the security of its operations. Jamal and Anastasiadou
(2009) define assurance as employees‟ knowledge and courtesy, and the ability of the organization
and its employees to inspire trust and confidence. Wilson et al. (2008) warn that this dimension is
likely to be particularly important for services that customers perceive as high risk or for services
that customers feel uncertain about their ability to evaluate the outcomes.
Empathy
5|Page
Jamal and Anastasiadou (2009) define empathy as the caring and individualized attention that the
organization provides its customers. Bateson & Hoffman [10,11] explain that empathy is the ability
to experience another’s feelings as one’s own. According to Wilson et al. (2008), the essence of
empathy is conveying, through personalized or customized service, that the customers are unique
and special and that their needs are understood.
Customer satisfaction
Customer Satisfaction is a feeling that surfaces from an evaluation process, i.e., when the consumer
of a good or service compares what is received against what is expected from the utilization of that
good or service (Kotler et al., 2009).
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CHAPTER TWO
2. Literature Review
2.1.Introduction
The literature reviewed under this chapter includes theoretical frameworks, empirical evidences
and conceptual frameworks related to the variables of the study which are service quality and
customer satisfaction. Service, quality, customer and customer satisfaction are reviewed for their
definitions by various scholars. The concept of quality service and its relationship with customer
satisfaction is also highlighted in this chapter.
2.2. Service Quality
Service quality is defined as customer’s overall conception of the relative inferiority or greatness
of the organization and its service (Bitner&Hubbert, 1994; Keiningham et al., 1995). Klaus (1985)
explained that total net value of benefit perceived in the service encounter over what had been
expected. According to the Parasuraman, Zeithml, Valerie, Berry & Leonard (1985), service
quality adjusted using function of three characters which are consist with prepurchase of customer
expectations, perceived process quality and perceived output quality. Further, they defined service
quality as a gap between customer’s expectation of service and customer’s perception of the
service experience. In simply, service quality aim to meeting the requirements of the customer’s
expectation regularly (Lewis & Booms, 1983). Under customer expectation, customers think,
service provider should offer excellent and unbelievable service rather than they believe
(Parasuram, Zeithaml& Berry, 1988). That means customers always compare service quality of
the firm via expectation of the service and perception of the way the service has been performed
(Caruana, 2002; Gronroos, 1984; Lehtien&Lehtien, 1982; Lewis & Booms, 1983; Parasuraman at
al., 1985). Therefore, in order to maintain standard of service quality, customer’s behavioural
objectives are important (Bitner, 1990; Choi, Cho, Lee & Kim, 2004; Cronin and Taylor, 1992).
Interaction of customer’s behavioural objectives and service quality can be explained by the
‘Service Quality Theory’ (Oliver, 1980). According to Service Quality Theory introduced by
Oliver (1980), if performance of the service firm does not meet customer’s expectation, customers
will judge that firm has ‘low quality’ and also, if performance of that service firm exceeds the
expectation of the customers, customers will judge firm has ‘high quality’. Parasuraman et al.,
7|Page
(1991) developed service quality model including multi-dimensions to measure the service quality.
Service quality scale consist with very important criteria to measure the customer’s perception and
quality of the service (Parasuraman et al., 1988). Service quality model indicated five dimensions
to measure the service quality such as tangible, reliability, responsiveness, assurance and empathy
(Brensinger& Lambert, 1990; Carman, 1990; Crompton & Mackay, 1989).
2.2.1. Service Tangibility
The definition of tangibility is the appearance of physical facilities, equipment, personnel and
communication materials Santos (2002). Tangibility provides physical representations or images
of the service that customers, particularly new customers, will use to evaluate quality. Service
organizations often use tangibles to enhance their image, provide continuity and signal quality to
customers. In contrast, organizations that do not pay attention to tangibility dimensions of the
service strategy can confuse and even destroy a good strategy Wilson et al., (2008). Owing to the
intangible nature of services, it is often difficult for customers to understand and evaluate services
and, therefore, customers often rely on the tangible evidence that surrounds the service in forming
evaluations Jamal & Anastasiadou (2009). The tangibility dimension of Service quality compares
customer expectations to customer perceptions regarding the organization’s ability to manage its
tangibles. Comparing the perception scores to the expectation scores provides a numerical variable
that indicates the tangibles gap.
2.2.2. Service Empathy
Jamal and Anastasiadou (2009) define empathy as the caring and individualized attention that the
organization provides its customers. Bateson & Hoffman [10,11] explain that empathy is the ability
to experience another’s feelings as one’s own. According to Wilson et al. (2008), the essence of
empathy is conveying, through personalized or customized service, that the customers are unique
and special and that their needs are understood. Empathetic firms have not lost touch with what it
is like to be a customer of their own organization. As such, the organization understands
customers‟ needs and makes their services accessible to their customers. In contrast, organizations
that do not provide the requested individualized attention to their customers and offer, for example,
operating hours convenient for the organization and not its customers, fail to demonstrate
empathetic behavior.
2.2.3. Service Assurance
8|Page
The assurance dimension of service quality addresses the competence of the organization, the
courtesy it extends to its customers and the security of its operations. Jamal and Anastasiadou
(2009) define assurance as employees‟ knowledge and courtesy, and the ability of the organization
and its employees to inspire trust and confidence. Bateson & Hoffman add that competence
pertains to the organization’s knowledge and skills in performing the promised service and refers
to how the organization’s employees interact with the customer and the customer’s possessions.
Wilson et al. (2008) warn that this dimension is likely to be particularly important for services that
customers perceive as high risk or for services that customers feel uncertain about their ability to
evaluate the outcomes.
2.2.4. Service Responsiveness
Responsiveness is the willingness to help customers and to provide prompt service
Jema&Anastasidov (2009). This dimension emphasizes attentiveness and promptness in dealing
with customer requests, questions, complaints and problems. Responsiveness also captures the
notion of flexibility and the ability to customize the service to customer needs. The organization
must view the process of service delivery and the handling of requests from the customer’s point
of view rather than from the organization’s point of view Wilson et al. (2008). Responsiveness
reflects a service organization’s commitment to provide services in a timely manner. As such, the
responsiveness dimension concerns the willingness and readiness to provide a service.
Occasionally, customers may encounter a situation in which employees are engaged in their own
conversations with one another while ignoring the needs of the customer.
2.2.5. Service Reliability
The reliability dimension of service quality refers to the ability of service organizations to perform
the promised service dependably and accurately, and thus reflects the consistency and
dependability of an organization’s performance Rodriques, Bonar & Sacchi (2011). Wilson et al.
(2008) state that reliability means that the organization delivers on its promises about service
delivery, service provision and problem resolution. Even though unreliable service providers are
extremely frustrating for customers, a disturbing number of organizations still fail to keep their
promises regarding service delivery. In many instances, the customer is ready to spend money if
only the service provider will show up and conduct the transaction as promised Bateson &
9|Page
Hoffman (2011). Reliability is consistently the most important determinant of perceptions of
service quality Wilson, Zeithaml, Bitner & Gremler, (2008)
2.3.Customer satisfaction
Customer Satisfaction is a feeling that surfaces from an evaluation process, i.e., when the consumer
of a good or service compares what is received against what is expected from the utilization of that
good or service (Kotler et al., 2009).
2.4. Service Quality and Customer Satisfaction
2.4.1. Service tangibility and customer satisfaction
Tangibility and Customer Satisfaction: Tangible represent physical aspect of the services and all
tools and equipment used to provisions of services (Hennayake, 2017). According to Ladhari,
Ladhar& Morales (2011) idea of tangibles role in banking sector is a key tool to achieve customers’
attention. All the customers in both public and private sector visually attract to all technological
things provision by banking sectors because tangible and intangible service are equally important
to the success of the organization (Tax & Brown, 1998). Customers in the private sector banks
invest more trust with physical facilities & more attractive decors around the banks (Banerjee
&Sah, 2012). According to previous researchers public sector banks are lagging behind in use of
modern technology and techno survey staff than private sectors. This lack of modern technology
would cause to dissatisfaction of the customers (Virk &Mahal, 2012). However, as service quality
dimension tangible has higher explanatory power with customer satisfaction of both public and
private banks representing attractiveness of the physical aspects of the customers (Morawakage,
2013). If both public and private banks introduce modern furniture, equipment and machineries to
all branches it would cause to take more attention of the customers (Malik, 2011). In order to
achieve success banking sector banks should develop customer oriented services with attractive
transaction environment which leads to long term bonding with their customers (Banerjee &Sah,
2012). Modern looking equipment introduced by public banks ISSN: 2249-1058 Impact Factor:
6.559 20 International Journal of Marketing and Technology http://www.ijmra.us, Email:
editorijmie@gmail.com will help to enhance the capacity of the customers (Kamlani, 2016).
Several innovative services such as IT base services, ATM services of banking sector can change
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market drastically and realize large customer centric (Bedi, 2010). So, this study assume; H5:
Tangible has a positive impact on customer satisfy
2.4.2. Service Empathy and customer satisfaction:
Empathy means taking care of the customers by giving individual attention to them (Blery et al.,
2009) and also empathy includes convenient & flexible working hours & location (Gupta &
Agarwal, 2013). Customers may remain unsatisfied with the service quality if gap is left in
empathy (Iglesias & Guillen, 2004).
highly satisfied with flexible service hours and personal attention to them regarding banking
activities (Mohammad, Muzaffar&Hussain, 2011). Especially, private banks customers prefer to
transact their banks due to this individualized attention to them (Adikari& Das, 2016). Moreover,
customers as human, prefer to get attention from others. Like that, customers in banking sector are
highly satisfied to take attention from employees because they can solve their all transaction and
other financial problem arises regarding banking sector discuss with bank employees
(Ragavan&Magen, 2013). Considering that situation, private banks provide more attention to
customers (Karim & Chowdhury, 2014; Ragavan&Magen, 2013). Customers of public banks are
highly dissatisfying due to inconvenient location operating hours & lack of individual attention
towards customers (Kamlani, 2016). Further, Kamlani (2016) understood that banks are able to
satisfy their customers if banks take action to improve empathy dimension. Nautiyal&Tanushree
(2014) supposed customer satisfaction of both public and private sector is influenced by factors
such as banks’ ability to handling problem & operating hours. And also Al-Marrie, Moneim,
Baheeg& Mohamed (2007) believed that customers contended and in the long run serves as an
important predictor in improving the financial performance of the organization. Hence, empathy
can be identified as mediator between service quality and customer satisfaction (Juneja, Ahamad&
Kumar, 2011; Karatepe, 2011). So, positive employees activities of the banking sectors highly
associated to increase customer satisfaction while negative association causes to dissatisfaction of
the customers (Bedi, 2010) Hence, many researcher empirically investigated the role of empathy
in service quality and its impact on customer satisfaction in both public and private banks
(Wieseke, Geigenmuller& Kraus, 2012).
11 | P a g e
2.4.3. Service Assurance and Customer Satisfaction
According to Sadek, Zainal, Taher&Yahya (2010) if increase assurance dimension of banking
industry through the polite and friendly staff, provisions of financial advice interior comfort, easy
to access account and knowledgeable and experienced management team cause to increase
satisfaction of customers. Further, Selvakumar (2015) supposed that assurance has least gap score
with customer satisfaction of both public and private banks due to both banks provide importance
to customers’ suggestions and views, secured transition, and accurate record maintains to their
customers. Proving this ideas Felix (2017) believed satisfaction of the customers in banking sectors
can increase with making feel and safe transaction with them. So, trustworthy behaviour of
employees and secured transaction of both public and private banks positively influence to
repurchase intension of customers (Arasli, Samadi&Katircioglu, 2005; Awour, 2014; Ndubisi,
2006; Ndubisi&Wah, 2005). Further, Banerjee &Sah (2012) stated that, customers in public banks
are perceive with assurance dimension because public sector banks are better to provide assurance
to customers. Further, customers are preferred to items of feel in safe transaction in case of public
sector banks compare with private sector banks. However, employees’ behaviour instil confidence
in customers and employees’ knowledge to answer customers’ problem provide higher satisfaction
of private banks than public banks (Banerjee &Sah, 2012; Kamalini, 2016). Further,
Ragavan&Mageh, (2013) explained, assurance as service quality dimension have impact on
customer satisfaction because customers of private banks are prefer security & employees’
eagerness to instil confidence while customers are dissatisfy if those item are lack with their banks.
Private banking sector also represent significance positive effect on customer satisfaction because
private banks always try to maintain highest level of satisfaction being courteous & polite with
customers (Adhikari& Das, 2016). Without having assurance of the banking sector nobody can
remain customers with them because customers stimulate will with assurance than other factors
(Kumbhar, 2011).
2.4.4. Service Responsiveness and Customer Satisfaction
Responsiveness is a firm’s willingness to assist its customers by providing fast and efficient
service performance (Gupta & Agarwal, 2013). Further, it is reached that willingness or readiness
of employees to provide the required customer service without any inconvenience at any time will
strongly influence the level of customer satisfaction (Parasuraman et al., 1988). Timely respondent
12 | P a g e
to the customers of both public and private banks help to enhance the positive thinking of the
customer’s mind (Osman, Ali, Zainudin, Owan, &Jusoff, 2013). To fulfil the customer wants and
help to customers filling the form act as an alarm of the banks (Armanu, Hadiwidjojo,
Misbach&Surachman, 2013). And also responsiveness factor such as promptness in service
delivery, willingness of employees to help customers, Banks’s performance, timely delivery of
bank statements have power to absorb dialectical customers towards both public and private
banking sectors (Karim & Chowdhury, 2014).
To help customers & provide prompt service than their public banks. Hence, service gap of public
banks is highest than private banks (Banerjee &Sah, 2012). Mengi, (2009) stated, because
employees of the public banks not provide services at prompt time, they can’t attract customers
well. Moreover, Felix (2017); Mehetap&Katicioglu (2005); Mulat (2017); Saghier& Nathan
(2013); Selverkumar (2015); Tufail et al. (2013) presented positive significance impact of
responsiveness dimension on customer satisfaction of both public and private banking sector.
Employees’ reaction towards customers of private banks provides high priority to attract customers
and increase the fund gaining highest profitability (Kumbhar, 2011). In the responsiveness
dimension it is conclude that customers in both public and private banking sector increase their
satisfaction when banks increase individual attention to the employees (Kumar, Kee&Manshor,
2009). Knowledge & helpfulness of the public banks employee would help to satisfaction of the
customers (Karim et al., 2014).
2.4.5. Service Reliability and Customer Satisfaction:
Reliability was determined by the accuracy of bank statements, on-time performance services,
service delivery and service provisions. So, reliability considered as most important factor in
convincing customers to retain in banking services (Yang & Fang, 2004). Nguyen &Leblance
(2001) consider reliability as reputation that can be the most reliable indicator of service quality
which could be related to customers past experience. So, if banks provide more reliable and
supportive services that fulfil the demand and expectation of customers, customer will be more
confidence to the banks (Mohammad, Muzaffar and Hussain, 2011). Banerjee &Sah (2012) stated
that private bank services gap is lowest in reliability.
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Dimensions and it may imply that customers feel these banks to be sincere & keep their promises.
According to Zeithml&Bitner (1990) service providers’ apologies start to wear thon when
company is careless in performing the services, when it makes frequent mistakes & when it is
casual about keeping it service promises. Hence, it is quintessential to provide excellence service
at the first time, exhibit sincere effort in solving problems & provide error free record & constantly
fulfil promises to prevent customers from defecting to other banks (Banerjee &Sah, 2012). Further,
Kamlani (2016) concluded that, reliability of both private banks and public banks represent
positive significance relationship implying customers, feel both public and private banks have
better ability to perform the promised services dependably and accurately. Reliability area such as
customer guidance & customer support, produce better path to stimulate customers towards
banking sector (Gupta & Agarwal, 2013). However, Hennayake (2017) said reliability is the most
influential factor than other factors to enhance the customer satisfaction of the public banks also.
The literature reveals an increased degree of positive relationship between reliability and customer
satisfaction where face to face dealing with customers and employees.
Conceptual Framework
Service Tangibility
Service Empathy
Service Assurance
Customer Satisfaction
Service responsiveness
Service reliability
Figure 1: SERVPERF-Customer satisfaction Model (Source: Parasuraman et al., 1988).
14 | P a g e
CHAPTER THREE
3. RESEARCH METHODOLOGY
3.1.Introduction
This chapter describes the methods and procedures that was followed in conducting the research.
It describes the research design, the target population, sample size, sampling procedure, research
instruments, data collection, data analysis techniques and ethical issues.
3.2. Research Design
This research used descriptive and explanatory research design. Descriptive research attempts to
describe systematically a situation, problem, phenomenon, service or program, or provides
information about an issue and explanatory research attempts to clarify why and how there is a
relationship between two or more aspects of a situation or phenomenon. Application of descriptive
study design is chosen as the researcher is interested in describing the existing service quality
dimensions that lead to customer satisfaction and explanatory study design is chosen as it helps
for explaining, understanding and controlling the relationship between variables. The researcher
used quantitative research method to analyze the data collected from the customers of the Bank
using SERVPERF model. The study is also cross-sectional that data have been collected from
customers at one point in time.
3.3. Sampling Design
3.3.1. Target Population
The target population for this study was used customers of branches of Dashen Bank found in Arba
Minch town in sekella branch total number of customers in the Dashen bank are unknown.
3.3.2. Sampling Size
For this research the target population was used cover only at Dashen bank in Arba Minch sekela
branch customer. Under this study out of total customer the researcher was taken sample size 246
customers select from total customer. The sample size for the study is determined using the formula
developed by Chocran (1977) formula as follow:
15 | P a g e
𝑧 2 (𝑝𝑞)
𝑛=
ⅇ2
n=
(1.96)2 x 0.8 x 0.2
(0.05)2
= 𝑛 = 246
Where,





n = sample size
p = proportion = 0.8
q = 1-p
e = margin of error
z = 95 % of confidence level
Therefore, the sample size selected from the Unknown population of customers is 246 customers.
3.3.3. Sampling Techniques
The researcher was used non probability sampling technique. Since to get a complete list of the
total population is difficult in this study the researchers was used conveyance sampling technique
because this method easy and manageable.
3.4. Types and source of data
The study was used primary data collected from the customers of Dashen Bank using
questionnaires. The questionnaires were distributed based on the sampling method to customers
of selected branches found in Arba Minch town sekela branch. Moreover, publications and reports
produced by the Bank have been used to conduct this research.
3.5. Method of Data Collection
The data was collected from primary data. The primary data was collected by questionnaires
distributed. Then, the coincidence selected customers filled the questionnaires during service hour
at the counter of the Bank to properly collect the questionnaires and increase the response rate.
Questionnaires were used close ended question form. Close ended one’s respondents was asked to
select their own response from list of provide question.
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3.6. Data processing and Analysis
The method of data analysis is descriptive analysis and inferential analysis. So, researcher was
used both descriptive and inferential analysis. Descriptive analysis was used to interpreted
demographic variables of the respondents and means scores of the service quality dimensions
namely tangibility, reliability, responsiveness, assurance and empathy.
Inferential analysis has been employed to find out the relationship between service quality
dimensions and customer satisfaction. The effect of service quality on customer satisfaction was
analyzed using correlation and regression analysis. Statistical Package for Social Science (SPSS)
software version 20.0 was employed to analyze and present the data through the statistical tools,
namely descriptive and inferential analysis.
17 | P a g e
CHAPTER FOUR
4. RESULTS AND DISCUSSION
4.1.Introduction
This chapter aimed to present the analytical results of the collected survey data with analytical
result which were tabulated in adequate Table format for easy understanding and referencing. Then
important interpretation and explanation with regard to the analysis is discussed. Firstly,
descriptive analysis would be presented to describe the demographic and characteristics of the
respondents of the survey. Lastly, Multiple Regression analytic methods were employed to study
the predictive capability of the conceptual model that intends to predict the effect of a set of
independent variables on a dependent variable. The collected data were presented and analyzed
using SPSS 20 software versions.
4.2. Respondent’s profile
Table 4.1: Gender Profile’s
Valid
Frequency
Percent
Valid Percent
Cumulative Percent
female
42
49.4
50.6
50.6
male
41
48.2
49.4
100.0
97.6
2.4
100.0
100.0
Total
System
83
Missing
2
Total
85
Source: Own survey, 2021
According to table 4.1 as depicted on the above table, 42 or 50.6% of the respondents are female
and 41 or 49.39% of the respondents are male. This implies that majority of the Bank’s customers
are female
Regarding age distribution, as indicated in the following table, 7or 8.4% of the respondents are
from 18 to 30 years, 25or 30% of the respondents are from 31 to 40 years, 33 or 39.7% of the
respondents are from 41 to 50 years and the remaining 18 or 21.6% of the respondents are above
50 years. This implies that 78% of the customers of the Bank are aged up to 50 years.
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Table 4.2: Age profile’s
Valid
Frequency
Percent
Valid Percent
Cumulative Percent
18-30
7
8.2
8.4
8.4
31-40
25
29.4
30.1
38.6
41-50
33
38.8
39.8
78.3
>50
18
21.2
21.7
100.0
Total
83
97.6
100.0
2
2.4
Missing System
Total
85
Source: Own survey, 2021
100.0
Table 4.3: Educational profile’s
Valid
Frequency Percent
Valid Percent Cumulative Percent
high school
1
1.2
1.2
1.2
diploma
6
7.1
7.2
8.4
degree
23
27.1
27.7
36.1
masters
53
62.4
63.9
100.0
97.6
2.4
100.0
100.0
Total
83
Missing System
2
Total
85
Source: Own survey, 2021
According to table 4.3 1 or 1.2% of the respondents are high school complete or below it; 6 or
7.2% of the respondents are diploma holders; 23 or 27.7% of the respondents are first degree
holders; 53 or 63.8% of the respondents are master’s degree (second degree) holders .
Table 4.4: Marital status profile’s
Valid
Frequency
Percent
Valid Percent Cumulative Percent
married
21
24.7
25.3
25.3
single
14
16.5
16.9
42.2
divorced 25
29.4
30.1
72.3
widowed 23
27.1
27.7
100.0
97.6
2.4
100.0
100.0
Total
Missing System
Total
83
2
85
19 | P a g e
According to table 4.4 With regard to marital status of respondents with the Bank, 21 or 25.3% of
the respondents were married; 14 or 16.8% of the respondents have single; 25 or 30.1 % of the
respondents are divorced; 23 or 27.7 % of the respondents are windowed.
4.3. Descriptive Analysis of Service Quality Measurement
This study used SERVPERF model to measure the customers‟ perception on the service provided
by Dashen Bank. The model contains 22 questions related to the five service quality dimensions
namely, tangibility, reliability, responsiveness, assurance and empathy. It used the five point Likert
scale to measure the performances of the service provided by the Bank. The results obtained from
the study are described in the following tables.
4.3.1. Tangibility
Table 4.5: Respondent’s opinion over Service Tangibility
Tangibility Measurements
N
Mean
Std. Deviation
Dashen Bank has modern looking equipment
83
3.84
1.302
the physical families at dashen bank are visually appealing
83
3.77
.831
Employees of Dashen bank are neat in their appearance
83
3.84
1.121
Materials associated with the service pamphlets are visually
83
appealing at dashen bank
3.78
.925
Valid N (listwise)
Source: Own survey, 2021
83
As depicted in table 4.5, “employees of Dashen Bank are neat in their appearance” has the highest
mean value of 3.84 and “Dashen Bank has modern looking equipment”, “Employees of dashen
bank are neat in their appearance” and “materials associated with the service are visually appealing
with mean value of 3.84, 3.84 and 3.78 respectively. The mean value of tangibility is 3.807. Quality
and present ability of materials associated with the service, like pamphlets, statements and different
formats show the concern of the Bank for quality and brand which is one way of attracting and
satisfying customers despite it needs further study. As observed from the table, “the physical
families at dashen bank are visually appealing” has the lowest mean value.
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4.3.2. Reliability
Table 4.6: Respondent’s opinion over Service reliability
Reliability Measurements
Mean
Std. Deviation
When Dashen bank promises to do something by a certain time
83
it does so
4.08
1.073
When a customer has a problem, Dashen Bank shows a sincere
83
interest in solving it
3.10
1.385
Dashen Bank performs the service right the first time
83
3.27
1.211
Dashen Bank provides the service at the time it promises to do
83
so
3.10
1.411
3.17
1.124
Dashen Bank insists on error free records
Source: Own survey, 2021
N
83
Accordingly, as observed on table 4.6, reliability has a mean value of 3.344 The highest value
under this service quality dimension goes to “When Dashen Bank promises to do something by a
certain time it does so” which is 4.08 followed by “Dashen Bank performs the service right the
first time” and “Dashen Bank insists on error free records” with mean value of 3.27 and 3.17
respectively. The lowest mean value belongs to “When a customer has a problem, Dashen Bank
shows a sincere interest in solving it”, 3.10 followed by “Dashen Bank provides the service at the
time it promises to do so” with mean value of 3.10. First impression plays vital role in customer
satisfaction. As sated here above, the mean value of “When a customer has a problem, Dashen
Bank shows a sincere interest in solving it” and “Dashen Bank provides the service at the time it
promises to do so” is lowest when compared to other statements. Therefore, it is a good indicator
to the Employees and Management of the Bank to locate the where about of the gap in satisfying
its customers and take the relevant action in order to fill the observed gap.
4.3.3. Responsiveness
Table 4.7: Respondent’s opinion over Service responsiveness
Responsiveness Measurements
N
Mean
Std. Deviation
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Employees of Dashen Bank tell customers exactly when
83
services will be performed
3.60
.962
Employees of Dashen Bank give prompt service to customers 83
3.57
.814
Employees of Dashen Bank are always willing to help
83
customers
4.25
.641
Employees of Dashen Bank are never busy to respond to
83
customer requests
3.81
1.348
Valid N (listwise)
Source: Own survey, 2021
83
Accordingly, as observed on table 4.9 responsiveness has a mean value of 3.807 “Employees of
Dashen Bank are always willing to help customers” has the highest mean value from this
dimension which is 4.25 and “Employees of Dashen Bank give prompt service to customers” is
with the least mean value of 3.57. When responsiveness is compared with other service quality
dimensions, it shows a better mean value result next to assurance. It implies that the employees of
the Bank are willing and ready to serve customers of the Bank.
4.3.4. Assurance
Table 4.8: Respondent’s opinion over Service assurance
Responsiveness assurance
N
Mean
Std. Deviation
The behavior of employee in Dashen bank instill confidence in
83
customers
3.86
1.083
Customers of Dashen Bank feel safe in transactions
83
3.73
.626
Employees of Dashen Bank are consistently courteous with
83
customers
3.83
1.238
Employees of Dashen Bank have the knowledge to answer
83
customers questions
3.60
1.093
Source: Own survey, 2021
Accordingly, as observed on table 4.8, assurance has a mean value of 3.755 which is the highest
value from other service quality dimensions. The highest mean value from this dimension goes to
22 | P a g e
“the behavior of employees in Dashen Bank instill confidence in customers” with value of 3.86
followed by “Employees of Dashen Bank are consistently courteous with customers” with value
of 3.83 and “Customers of Dashen Bank feel safe in transactions” with value of 3.73. The lowest
value from this dimension is “employees of Dashen Bank have the knowledge to answer
customers' questions” which is 3.60
The level of confidence of customers plays a vital role in a competitive banking industry. The
behavior of employees of a bank is one of the major factors that instill confidence in customers.
“The behavior of employees in Dashen Bank instills confidence in customers” is a statement with
the highest mean value from the statements which witnessed that the Bank has employees whose
behavior is convenient to the customers of the Bank. So, the Bank should work hard for the
sustainability of such behavior.
4.3.5. Empathy
Table 4.9: Respondent’s opinion over Service empathy
Empathy Measurements
N
Mean
Std. Deviation
83
4.07
1.010
2.49
1.282
3.13
1.068
83
3.25
1.591
The employees of Dashen Bank understand the specific needs
83
of their customers
3.25
.909
Dashen Bank gives customers individual attention
Dashen Bank has operating hours convenient to all of its
83
customers
Dashen Bank has employees who give customers personal
83
attention
Dashen Bank assists customers' best interest at heart
Source: Own survey, 2021
Knowledge to answer customers' questions” is better when it is compared with other statements of
service quality dimensions other than assurance, the Bank should arrange training and experience
sharing session among employees to acquaint them with adequate knowledge to address the
concern of customers as it shows the lowest mean value from this service quality dimension. As
23 | P a g e
depicted under table 4.9 below, the mean value of empathy is 3.238. The highest mean value is
given ttnn Bank gives customers individual attention” followed by “The employees of Dashen
Bank understand the specific needs of their customers” and “The employees of Dashen Bank
understand the specific needs of their customers” with mean value of 4.07, 3.25 and 3.25
respectively. The lowest mean value is given to “Dashen Bank has employees who give customer’s
personal attention” followed by “Dashen Bank has operating hours convenient to all of its
customers”, 3.13 and 2.49 respectively. Customers need individual attention during their
interaction with service giving organizations. The more individual focus on the Bank has operating
hours convenient to all of its customers, the more possibility to make them loyal to that
organization. As observed from the above result, the respondents give relatively low value to the
statement that dictates the Bank has operating hours convenient to all of its customers. As such,
the Management and Employees of the Bank should give due consideration to address the concerns
of customers for operating hours convenient to all of its customers.
4.4. Correlation between service quality and Customer satisfaction
Correlation Analysis between Tangibility and Customer Satisfaction The result on the following
table showed that Tangibility (Sig=.827, r =.024.) are Tangibility not populace. Correlation
Analysis between Responsiveness and Customer Satisfaction The result on the above table shows
that Responsiveness (Sig=.038, r =-.228) are Responsiveness negative
and insignificantly
correlated with customer satisfaction in Dashen Bank S.C. Correlation Analysis between
Assurance
and Customer Satisfaction The result on the above table shows that Assurance
(Sig=.000, r=.515) Assurance are positively Assurance and significantly correlated with customer
satisfaction in Dashen Bank S.C.
Correlation Analysis between Empathy and Customer
Satisfaction The result on the above table shows that Empathy (Sig=.000. r=.518) Empathy are
positively and significantly correlated with customer satisfaction in Dashen Bank S.C.
Accordingly, we can conclude that there is a positive and significant correlation or relationship
between Assurance and customer satisfaction so that any improvement in one of the dimensions
will positively contribute to enhancing customer satisfaction. In addition, we can conclude that
“Empathy is positively and significantly correlated with customer satisfaction in Dashen Bank.
Other variables are i.e. (tangibility, reliability, responsiveness,) negative and insignificantly
correlated with customer satisfaction in Dashen Bank S.C.
24 | P a g e
Table 4.10: Correlation between Service Quality’s and Customer Satisfaction
MY
Pearson Correlation
MY
1
TAB1
Sig. (2-tailed)
N
Pearson Correlation
83
.024
1
REL
Sig. (2-tailed)
N
Pearson Correlation
.827
83
.169
83
.401**
1
RSP
Sig. (2-tailed)
N
Pearson Correlation
.126
83
-.228*
.000
83
-.196
83
.167
1
ASP
Sig. (2-tailed)
N
Pearson Correlation
.038
83
.515**
.076
83
.088
.131
83
.113
83
-.160
1
EMP
Sig. (2-tailed)
N
Pearson Correlation
.000
83
.518**
.427
83
.203
.311
83
.057
.147
83
-.290**
83
.844**
1
.000
83
.065
83
.606
83
.008
83
.000
83
83
Sig. (2-tailed)
N
Source: Own survey, 2021
TAB1
REL
RSP
ASP
EMP
N.B: TAB1-, REL-, REP, ASP-, EMP-, MY-.
4.5.Regression Analysis
4.5.1. Effect of Tangibility on customer satisfaction
Table 4.11: Model summary of Tangibility over customer satisfaction
Model
R
R Square Adjusted R Square
a
1
.024
.001
-.012
Source: Own survey, 2021
Std. Error of the Estimate
.83835
Accordingly, as observed on table 4.11 from the regression analysis, we can see that there is a
positive statistical relationship between tangibility (the independent variable) and customer
satisfaction (the dependent variable). The R square answers the question, “of all of the reasons
25 | P a g e
why the outcome variable can vary, what percent of those reasons can be accounted for by the
predictor(s) variables”. In this case, the coefficient of determination (R-square) indicates the
proportionate amount of variation in the response variable (customer satisfaction) explained by the
independent variable (tangibility) in the linear regression model. Thus, 0.1% (R2= 0.001) of the
variation on customer satisfaction is explained by tangibility.
The regression coefficient is the value that represents the rate of change of one variable (dependent
variable) as a function of changes in the other variable (indepent variable). It represents the mean
change in the response variable for one unit of change in the predictor variable while holding other
predictors in the model constant. This statistical control that regression provides is important
because it isolates the role of one variable from all of the others in the model.
From the following coefficient table, we find the B-value which measures how strongly each
independent variable influences the dependent variable. Thus, a unit increase in tangibility leads
to a 0.38 increase in customer satisfaction, other things remain constant. Therefore, the more the
Bank invests on its physical facilities, equipment, technology and appearance of its employees, the
more it satisfies its customers.
Table 4.12: Beta Coefficients for Tangibility
Model
(Constant)
TAB1
Source: Own survey,
1
Unstandardized Coefficients
Standardized Coefficients
B
3.703
.038
Beta
Std. Error
.647
.174
.024
Tangibility is a positive statistical relationship between reliability (the independent variable) and
customer satisfaction (the dependent variable). As observed from the following table, the
coefficient of determination (R-square) indicates 29% (R2= .029) of the variation on customer
satisfaction is explained by reliability.
4.5.2. Effect of Reliability on customer satisfaction
Table 4.13: Model summary of reliability over customer satisfaction
Model
R
R Square
Adjusted R Square
Std. Error of the Estimate
26 | P a g e
1
.169a
.029
Source: Own survey, 2021
.017
.82650
a. Predictors: (Constant), RSP
Accordingly, as observed on table 4.13 the following coefficient table, we find the B value which
measures how strongly reliability, the independent variable, influences the customer satisfaction,
the dependent variable. Thus, a unit increase in reliability leads to a .181 increase in customer
satisfaction, other things remain constant. Therefore, the Bank should work hard in keeping its
promises and accurately record its transactions which enable to build its reliability that in turn
leads to better customer satisfaction.
Table 4.14: Beta Coefficients for reliability
Model
Unstandardized
Coefficients
B
Std. Error
(Constant) 3.244
.398
1
REL
.181
.117
Source: Own survey, 2021
Standardized
Coefficients
Beta
.169
t
Sig.
8.143
1.546
.000
.126
a. Dependent Variable: MY
Accordingly, as observed on table 4.14 we can see that there is a positive statistical relationship
between the independent variable-responsiveness and the dependent variable-customer
satisfaction. The coefficient of determination (R-square) indicates 5.2% (R2= .052) of the variation
on customer satisfaction is explained by responsiveness.
4.5.3. Effect of Responsiveness on customer satisfaction
Table 4.15: Model summary of Responsiveness over customer satisfaction
Model
R
R Square
1
.228a
.052
Source: Own survey, 2021
Adjusted R Square
Std. Error of the Estimate
.040
.81653
Accordingly, as observed on table 4.16 we find the B value which measures how strongly
responsiveness, the independent variable, influences the customer satisfaction, the dependent
variable. Accordingly, a unit increase in responsiveness leads to a- .355 increase in customer
satisfaction, other things remain constant.
27 | P a g e
Table 4.16: Beta Coefficients for responsiveness
Model
Unstandardized
Coefficients
B
Std. Error
(Constant) 5.143
.623
1
RSP
-.355
.168
Source: Own survey, 2021
Standardized
Coefficients
Beta
-.228
t
Sig.
8.250
-2.107
.000
.038
a. Dependent Variable: MY
4.5.4. Effect of Assurance on customer satisfaction
From table 4.17 we can infer that there is a positive statistical relationship between the independent
variable-assurance and the dependent variable-customer satisfaction. The coefficient of
determination (R-square) indicates 26.5% (R2=.265) of the variation on customer satisfaction is
explained by assurance.
Table 4.17: Model summary of Assurance over customer satisfaction
Model
R
1
.515a
Source: Own survey, 2021
R Square
Adjusted R Square
Std. Error
Estimate
.265
.256
.71890
of
the
On table 4.18 we find the B value which measures how strongly assurance, the independent
variable, influences the customer satisfaction, the dependent variable. Accordingly, a unit increase
in assurance leads to a .744 increase in customer satisfaction, other things remain constant.
Therefore, if the Bank invests more in building the behavior of its employees to be courteous and
customer centric as well as in acquainting adequate knowledge to handle customers‟ request
properly, then it leads to better customer satisfaction than other service quality dimensions.
Table 4.18: Beta Coefficients for assurance
Model
Unstandardized Coefficients
1
B
1.109
(Constant)
Std. Error
.512
Standardized
Coefficients
Beta
t
Sig.
2.166
.033
28 | P a g e
ASP
.744
Source: Own survey, 2021
.138
.515
5.405
.000
From table 4.18 we can infer that there is a positive statistical relationship between the independent
variable-empathy and the dependent variable-customer satisfaction. The coefficient of
determination (R-square) indicates 26.9% (R2=.269) of the variation on customer satisfaction is
explained by empathy.
4.5.5. Effect of Empathy on customer satisfaction
Table 4. 19: Model summary of Empathy over customer satisfaction
Model
R
R Square
1
.518a
.269
Source: Own survey, 2021
Adjusted R Square
Std. Error of the Estimate
.260
.71708
From table 4.19 we can infer how strongly the independent variable - empathy influences the
dependent variable - customer satisfaction. Accordingly, a unit increase in empathy leads to a .547
increase in customer satisfaction, other things remain constant. Therefore, if the Bank arranges a
convenient working hours to all customers and convince its employees to give individual and
personal attention to the customers in order to meet their specific requests, the customer
satisfaction level will increase.
Table 4.20: Beta Coefficients for empathy
Model
Unstandardized Coefficients Standardized Coefficients t
B
(Constant) 2.018
1
EMP
.547
Source: Own survey, 2021
Std. Error
.344
.100
Sig.
Beta
.518
5.872 .000
5.457 .000
As stated here above, assurance is the most influential service quality dimension in customer
satisfaction. The second service quality dimension which has the highest effect in customer
satisfaction is empathy, reliability and responsiveness have equal impact in customer satisfaction
and tangibility is the last service quality dimension that has relatively least effect on customer
satisfaction.
29 | P a g e
4.6.Overall Regression and correlation Analyses
The result of this study exhibited that all service quality dimensions (tangibility, reliability,
responsiveness, assurance and empathy) have positive and significant correlation with customer
satisfaction in Dashen Bank. The highest correlation is between assurance and customer
satisfaction followed by empathy and customer satisfaction and the least correlation is between
tangibility and customer satisfaction followed by responsiveness and customer satisfaction.
Moreover, the service quality dimensions have statistically significant effect on customer
satisfaction except responsiveness which has no significant effect despite it has positive
relationship with customer satisfaction. The study also indicated that assurance is the most
dominant service quality dimension on customer satisfaction.
The finding of the research made by Tizazu (2013) titled the effect of customer service quality on
customer satisfaction on private banks indicated that customers were most satisfied with assurance
(similar to the result of this study) followed by tangibility. There were a positive and significant
correlation between the four service quality dimensions (tangibility, reliability, assurance and
empathy) and customer satisfaction. But, responsiveness showed negative and insignificant
correlation with customer service. It also indicated that all service quality dimensions have positive
and significant effect on customer satisfaction except responsiveness alike the result obtained from
this study.
The research made by Saghier and Nathan (2013) on service quality dimensions and customers‟
satisfaction of banks in Egypt depicted that customer service was significantly affected by the four
service quality dimensions; reliability, responsiveness, assurance and empathy. But, tangibility did
not have significant impact on service quality. Customers‟ perception was highest in reliability.
To conclude, as observed from the above studies, most of the service quality dimensions have
positive and nagetive significant correlation with customer satisfaction. However, the dominant
service quality dimension differs from study to study.
CHAPTER FIVE
5. Summary of Findings, Conclusion and Recommendations
5.1.Summary of Findings
30 | P a g e
This project paper is conducted on the effect of service quality on customer satisfaction in the case
of Dashen Bank S.C. It is undertaken to know the relationship between service quality dimensions
and customer satisfaction, the effect of service quality on customer satisfaction and to identify the
dominant service quality dimension that has a strong relation with customer satisfaction in Dashen
Bank S.C. The study used SERVPERF model with self-administered questionnaire that contained
22 performance statements related to the five service quality dimensions. The data is analyzed
using Statistical Package for Social Science (SPSS) software version 20 through descriptive and
inferential statistics.
In order to undertake the study, 246 questionnaires were distributed and 83 has been duly filled
and returned. The demographic data showed that 49.4% of the respondents are female. Regarding
the age of the respondents, 48.2% are male which showed that majority of the customers of the
Bank are young sters. The reaming is 2.4 are missing value. Education level 1.2% of the
respondents are high school complete or below it; 6 or 7.2% of the respondents are diploma
holders; 23 or 27.7% of the respondents are first degree holders; 53 or 63.8% of the respondents
are master’s degree (second degree) holders.
The mean result indicated that the customers of the Bank are satisfied with assurance followed by
responsiveness and empathy. The mean result for tangibility and reliability is relatively lower.
The Pearson’s correlation coefficient is used to know the relationship between service quality
dimensions and customer satisfaction and the result showed that there is a positive and significant
relationship between them. It also showed that assurance has the highest relationship with
customer satisfaction.
The regression analysis indicated that the service quality dimensions have statistically significant
effect on customer satisfaction except responsiveness which has a positive relationship with
insignificant effect. Among the service quality dimensions, assurance is found as the most
influential dimension of customer satisfaction as observed from the result of the analysis
5.2. Conclusion
Regarding age distribution, 7or 8.4% of the respondents are from 18 to 30 years, 25or 30% of the
respondents are from 31 to 40 years, 33 or 39.7% of the respondents are from 41 to 50 years and
the remaining 18 or 21.6% of the respondents are above 50 years. This implies that 78% of the
31 | P a g e
customers of the Bank are aged up to 50 years. With regard to length of relationship of respondents
with the Bank, 5 or 6% of the respondents have less than 1 year relationship; 11 or 13.2% of the
respondents have 1 to 5 years relationship; 7 or 8.4 % of the respondents have 5 to 10 years
relationship; 27 or 32.5% of the respondents have 10 to 15 years relationship and 33 or 39.7 % of
the respondents have above 15 years relationship. Majority of the respondents have above 15 years
relationship with the Bank. Tangibility scored the lowest result from service quality dimensions.
It is the appearance of physical facilities, equipment, personnel and written materials. The quality
and appearance of the physical facilities and written materials of the Bank are not up to the standard
of the customers' expectation. On the other hand, neatness and appearance of employees has got
the highest score. This implies that the employees are well dressed and presentable that has to be
continued. Reliability is the ability to perform services dependably and accurately in a consistent
manner. Customers prefer reliable bank that keeps its promise in order to undertake their
transactions and save their money. However, the result showed that reliability of Dashen Bank is
not up to the expectation of the customers of the Bank. The main reason is that the result obtained
from bank performs the service right the first time and the bank keeps its promise in providing the
service is low.
Responsiveness scored a better mean value result next to assurance. It implies that the employees
of the Bank are willing and ready to serve the Bank's customers. So, it should be continued in order
to provide better quality service and maintain the customers‟ satisfaction. Assurance has a mean
value of 3.755 which is the highest value from other service quality dimensions. It indicated that
the Bank has courteous and knowledgeable employees that instill confident in customers.
Empathy involves caring and individual attention while the company provides its services for the
customers. Customers become loyal to their bank when they get respect and individual attention
which is one of the main parts of quality service. In this regard, the result of the study indicated
that the Bank is not giving individual attention to its customers as expected. The study revealed
that the variation on customer satisfaction is explained by the independent variables which are
tangibility, reliability, responsiveness, assurance and empathy. Therefore, the Bank should give
due attention on the components of these service quality dimensions especially on those which
showed less result and exert maximum effort to improve them.
5.3.Recommendation
32 | P a g e
Banking sector shows remarkable progress accompanied with stiff competition in the last two
decades in the country. These days, most of the banks are adopting technological advancements
that enable them to provide similar service to their customers. As such, there is no major difference
among banks in the country with regard to their products and services. The major factor that
differentiates one bank from the other is the quality of the service that the bank provides to its
customers. Therefore, Dashen Bank has to work hard to provide efficient and effective service to
satisfy its customers and get remarkable market share in the industry. For this, the researcher
recommended the following points.
 .8.2% of the sample respondents are with age of below thirty years. The Management of
the Bank has to design a strategy to provide convenient and attractive products and
services to this group of customers as it enables the Bank to have loyal customers for
relatively long period of time.
 The respondent has up to five year’s relationship with the Bank. It is registered as a result
of aggressively expanding branches for the last four years. Therefore, the Bank has to
continue expanding customer base by opening new branches or using agent banking
targeting the unbanked society. Besides, the Management and employees should work
hard to retain the existing customers and make them loyal to the Bank.

The more the physical facilities and personnel of the Bank are presentable, the more the
ability of the Bank to build its images and attract more customers. Therefore, the Bank has
to investigate its weaknesses with regard to quality and physical appearance of equipment,
furniture, formats and advertisement materials in order to make them appealing to the
customers. Moreover, as first impression has vital role in attracting and retaining
customers, the Bank should identify the gap in providing right service in the first time and
correct its weakness. In addition, the Bank should also keep and discharge promises given
to its customers.
 Most of the service quality dimensions' elements are related to employee’s behavior. The
behavior of Dashen Banks' employees is relatively up to the expectation of the
respondents. Therefore, the Bank should reward and satisfy its employees for sustaining
the existing behavior and also acquaint them with adequate knowledge and skill through
continuous training and development. It will help the Bank to retain the existing employees
and to attract new professionals which have better skill and knowledge from the market.
33 | P a g e
 The value of customers to the Bank is different depending on the type of customers. Hence,
the Bank should segment its customers according to their type, nature and capacity.
Moreover, the Bank should provide convenient service and service channels to the
customers according to their needs and preferences. Those customers who have less value
and frequent number of transactions can be entertained using ATM, Internet and Mobile
Banking. On the other hand, those customers who have huge value and other nature of
transactions like import export and credit facility can be entertained at branches. This helps
the Bank to provide individual attention and satisfy its customers.

The study revealed that the variation on customer satisfaction is explained by the
independent variables which are tangibility, reliability, responsiveness, assurance and
empathy. Therefore, the Bank should give due attention on the components of these
service quality dimensions especially on those which showed less result and exert
maximum effort to improve them. Moreover, assessing the service quality of the Bank on
continuous basis will help to persistently improve the quality of the service and maintain
the level of customer satisfaction one step ahead.
34 | P a g e
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Appendix
Questionnaire to be filled by customer of Dashen bank
Dear respondent
This questionnaire prepared for the purpose of studying determinants of effect of service quality
on customer satisfaction case of Dashen bank. The outcome the study will be used in order to
suggest possible solution for problems identified while conducting the study. Therefore, I kindly
request you cooperation, I inform you that the information you provide will be consumed only for
academic purpose.
General instruction
 There is no need of mentioning your name.
 Choose, and put (x) mark for your answer in multiple choice questions.
 For the question that need explanation use the space provided.
Dear Respondents,
My name is Samrawit. I am a graduate student at Arba Minch University College of Business and
Economics in the field of Management. I am conducting a research on “The Effect of Service Q
S.C.‟‟ in partial fulfillment of my study.
I kindly request you to spend some minutes of your time in filling the questionnaire. I would like
to assure you that any information which you provide will be kept confidential. Your genuine
response is highly appreciated for the outcome of the project.
Thank you for your kind cooperation in filling the questionnaire.
Part-1: General information Direction:
Please put a check mark (√) on the appropriate box.
1.
Gender:

Female
2. Age (years): 18-30

Male
31-40

41-50


above 50 
3. Educational Level: High school  Diploma  Degree  Masters  Above Masters

4. Length of Relationship with the Bank: Less than 1 year 
1 – 5 years  5 – 10 years 
10 - 15 years  above 15 years 
V|Page

5.Marital status : married
single 
divorced  windowed 
The Effect of Service Quality on Customer Satisfaction: The case of Dashen Bank
Part II: Survey on Service Quality Items
Direction:
This part of the questionnaire intends to find your perception towards the
service quality of Dashen Bank S.C. Please circle the number which reflects your
perception. 1=Strongly Disagree, 2=Disagree, 3=Neutral, 4=Agree, 5=Strongly Agree.
S.
No.
I
Strongly
Statement
Strongly
Disagree
Neutral
Agree
2
3
4
5
2
3
4
5
1
2
3
4
5
or 1
2
3
4
5
Disagree
Agree
Tangibility
Dashen Bank has
1
modern
looking 1
equipment.
The
physical
facilities
2
atDashen
are
Bank 1
visually
appealing.
Employees
3
of
Dashen Bank are
neat
in
their
appearance.
Materials
associated
the
4
with
service
(pamphlets
statements)
are
visually appealing
at Dashen Bank.
II
Reliability
VI | P a g e
When
Dashen
Bank promises to
5
do something by a 1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
service at the time 1
2
3
4
5
2
3
4
5
2
3
4
5
certain time, it
does so.
When a customer
has a problem,
6
Dashen
Bank
shows
a sincere interest
in solving it.
Dashen
7
Bank
performs
the
service right the
first time.
Dashen
Bank
provides
8
the
it
promises to do so.
Dashen
9
Bank
insists on error 1
free records.
III
Responsiveness
Employees
of
Dashen Bank tell
10
customers exactly
when
services
will
1
be
performed.
VII | P a g e
Employees
11
of
Dashen Bank give
prompt service to
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
customers.
Employees
12
of
Dashen Bank are
always willing to
help customers.
Employees
of
Dashen Bank are
13
never
busy
to
respond
to
customers'
requests.
S.
No.
IV
Strongly
Statement
Strongly
Disagree
Neutral
Agree
1
2
3
4
5
1
2
3
4
5
Dashen Bank 1
2
3
4
5
Disagree
Agree
Assurance
The behaviour
of employees
14
in
Bank
Dashen
instil
confidence in
customers.
Customers of
15
Dashen Bank
feel
safe
in
transactions.
Employees of
16
are
VIII | P a g e
consistently
courteous with
customers.
Employees of
Dashen Bank
have
17
the
knowledge to 1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
answer
customers'
questions.
V
Empathy
Dashen Bank
gives
18
customers
individual
attention.
Dashen Bank
has operating
19
hours
convenient to
all
of
its customers.
Dashen Bank
has employees
20
who
give
customers
personal
attention.
Dashen Bank
21
assists
customers' best
IX | P a g e
interest
at
heart.
The employees
of
Dashen
Bank
22
understand the 1
2
3
4
5
specific needs
of
their
customers.
Part III: Level of Customer Satisfaction
Direction: The following statement describes your feeling about Dashen Bank S.C. Please
respond by circling only the number that reflects your own perception best.
23. My feeling about Dashen Bank service delivery can be best described as:
1
=
Highly
2 = Dissatisfied
Dissatisfied
4
=
Satisfied
5 = Highly Satisfied
3 = Neutral
Thank you so much for taking your time to fill this Questionnaire!!!.
rences
X|Page