EFFECT OF SERVICE QUALITY ON CUSTOMER SATISFACTION IN SELECTED BRANCHES OF COMMERCIAL BANK OF ETHIOPIA IN HOSSANA TOWN

Abstract

The purpose of the present study was to measure the effect of service quality on customer satisfaction in selected branches of the commercial Bank of Ethiopia, in Hossana town and also to measure the prevailing association between service quality and customer satisfaction. Samples of 397 customers were selected from three branches of Commercial bank, located in Hossana town. But out of the total 397 respondents, 354 (89%) were responded and included in the study analyses. Stratified and random sampling technique were undertaken in this study. Cross-sectional survey design was employed for this particular study and under cross-sectional design descriptive, quantitative and qualitative research approaches were carried out. The Service quality was measured using SERVPERF (Service Performance) scale. The questionnaire included 27 questions relating to the five dimensions (main independent variables) of service quality such as reliability, assurance, tangibility, empathy and responsiveness and three control variables. A strong correlations were found between four service quality dimensions (reliability, responsiveness, assurance and empathy) and customer satisfaction. Tangibility of service quality was negatively correlated with customer satisfaction. Ordered Logistic Regression analysis was employed in this study. The logistic regression analysis revealed that reliability, assurance, empathy and responsiveness, have positive and statistically significant predictors of customer satisfaction. But the study result shows that tangibility of service quality with the p- value of 0.151 has no statistically significant effect on satisfaction of customer.