ASSESSMENT OF SERVICE QUALITY AND ITS EFFECT ON CUSTOMER LOYALTY: THE CASE OF COMMERCIAL BANK OF ETHIOPIA WOLKITE BRANCH

Abstract

The main objective of this study was to find out the effect of service quality on customer loyalty mediated by customer satisfaction at Commercial Bank of Ethiopia. The study sought to identify the most important attributes in bank settings, which may be used to review the characteristics of the banks as experienced by customers. The study employed quantitative methods. A survey was conducted to collect data from customers using quantitative methods through questionnaire. Quantitative data was analyzed by going through the patterns and/or subheadings of the questionnaires while comparing with the objective using descriptive model. The target population for this study was customers who bank within wolkite branches Commercial Bank of Ethiopia (CBE). All the dimensions of service quality have a significant and positive effect on customer satisfaction. Only reliability and responsiveness have significant and positive effect on customer loyalty. When it comes to mediation, customer satisfaction partially mediates reliability and responsiveness to customer loyalty relationship. The findings indicate that overall respondents evaluate the bank positively, but still there are rooms for improvements. The results can be of much value to bank managers using these data to keep customers by making them loyal and satisfied in order to maintain their competitive advantage. From the findings of the study, a number of recommendations have been provided so that banks provide quality services and continually engage in improving bank services to attract customer and maintain customers and hence increase their bank’s profits