factors that determine customer satisfaction level …ajbms.org/articlepdf/1ajbms2012262222.pdf ·...

www.ajbms.org Asian Journal of Business and Management Sciences

ISSN: 2047-2528 Vol. 2 No. 7 [01-13]

©Society for Business Research Promotion | 1

FACTORS THAT DETERMINE CUSTOMER SATISFACTION LEVEL IN BANKING INSTITUTIONS: Evidence from Ghanaian Banking Industry

Oduro Richard

Cape Coast Polytechnic

Department of Accountancy Studies

P.O. Box AD 50 Cape Coast

E-mail: [email protected]

ABSTRACT In the financial world, Investors always want to put their funds into investments that yields maximum returns. Thus, they seek avenues where

there exist effective and efficient management of resources including customers as this serves as indication for promise of future returns. This has created a source of concern for the researchers and thus, this study seeks to evaluate factors that determine customer satisfaction level of banking institutions operating in Ghana in terms of certain variables noted for quality service delivery. The main objective of this study is to assess the factors that underline customers’ satisfaction level of the banks operating in Ghana, in terms of service quality and customer satisfaction. The chi-square and factor analysis, were the main statistical tools used for the analysis. Sample sizes of 300 respondents were selected from three selected banks operating in Ghana. Analysis of the data reveals that the most important factor that influences customer choice of bank is the cost of service followed by easy access to loan facilities. The study found that three factors that influence consumer’s satisfaction level of the banks. That is, Customer Relation and Service, Staff Competency and Responsive and Convenient banking.

Keywords: Customer Satisfaction, Service quality, Bank, Factor Analysis.

1.0 BACKGROUND OF THE STUDY

1.1 Introduction

According to Tse and Wilton (1988) and Oliver (1999), customer satisfaction is defined as

an evaluation of the perceived discrepancy between prior expectations of the customer and

the actual performance of a product. It is how customer evaluates the ongoing performance of a product or service. According to Kim, Park and Jeong (2004) customer satisfaction is

customer’s reaction to the state of satisfaction, and customer’s judgment of satisfaction

level. Customer satisfaction is very important in today’s business world, the ability of a

service provider to create high degree of satisfaction is crucial for product differentiation

and developing strong relationship with customers. Customer satisfaction is an ambiguous

and abstract concept. Actual manifestation of the state of satisfaction will differ from one person to another, from one product/service to another. The state of satisfaction depends

on a number of factors which consolidate as psychological, economic and physical factors.

Banking in Ghana can be seen as an avenue which provides investors alternative investment avenues to invest their surplus fund and at the same time providing a platform for investors requiring funds for investment. It may be seen as one of the ancillary services that deal with money and other financial matters which facilitates business with regards to payments and acceptance of deposit. The Banks have the responsibility of mobilizing and prudently investing their capitals into viable ventures in order to make profit to sustain

[email protected]


ISSN: 2047-2528 Vol. 2 No. 7 [01-13]


their businesses, fulfill their social responsibility, increase and protect the shareholders’ interest and above all meet their customers’ expectation. The Banking system in Ghana was designed to provide simple, quick, easily accessible and flexible financial solution to meet the needs of the Investors and borrowers in the Ghanaian economy. Commercial Banks were expected to play general roles of providing institutionalized banking for the Ghanaian in all sectors in the economy. 1.2 Statement of the Problem To survive and succeed in business in the modern world it is necessary to seek and retain loyal customers for the product or services provided by the business. However, most businesses especially banking institutions operating in the Ghanaian banking industry tend to focus much on seeking and getting customers rather than retaining the customers. The inability of these banking institutions to retain their customers can be attributed to the fact that, customers’ expectations are rarely identified and the few that are identified are not adequately satisfied in terms of quality customer services. Also, the pressure putting on banks by the government has compel most banking institutions to raise the cost of their services to such a level that, customers finds it extremely difficult to appreciate the services provided by the banks. This indeed makes the banks to focus on survival in the banking environment rather than meeting customers’ need. However, with the emergence of new banking institutions into the banking industry focus still remain on survival but this time in a different dimension ‘ focusing on customers’ needs’. Consumer research has devoted little attention to factors that determine the satisfaction level of clients of the various banking institutions. Conversely, only a few published academic researchers were focused on comparative studies. This has created a source of concern for the researcher and thus, this study seeks to evaluate customer satisfaction level of performance of selected banks operating in Ghana in terms of certain variables noted for quality service delivery and make the necessary recommendation. 2.0 REVIEW OF RELEVANT LITERATURE A number of researchers have tested the relationship existing between customer expectation, perceived service quality and customers satisfaction and found out that, there is a strong positive correlation. (Zeithaml, et al, 1988, Parasuraman et al, 1985; 1988; ). Thus increase in service quality of the banks can satisfy and develop attitudinal loyalty of customers which ultimately retains valued customers (Nadiri, et al 2009). Also the higher the level of perceived service quality of customer, the higher the customer satisfaction. When perceived service quality is less than expected service quality customer will be dissatisfied (Jain and Gupta, 2004). Previous researchers have found that satisfaction of the customers can help the brands to build long and profitable relationships with their customers (Eshghi, Haughton and Topi, 2007). Though it is costly to generate satisfied and loyal customers but that would prove profitable in a long run for a firm (Anderson, Fornell and Mazvancheryl, 2004). Therefore a firm should concentrate on the improvement of service quality and charge fair price in order to satisfy their customers which would ultimately help the firm to retain its customers (Gustafsson, Johnson and Roos, 2005). Customer satisfaction can be determined by either subjective factors (e.g. customer needs, emotions) or objective factors (e. g. product and service features). Applying to the banking industry, there have been numerous studies that examine attributes that clients expect regarding customer satisfaction. Atkinson (1988) found out that cleanliness, security, value for money and courtesy of staff determine customer satisfaction. Knutson (1988) revealed that conducive atmosphere and comfort, convenience of location, prompt service, safety and security, and friendliness of employees are important. Barsky and Labagh (1992) stated that employee attitude are likely to influence customers' satisfaction. A study conducted by Akan (1995) showed that the main determinants of customer satisfaction are the behaviour of employees, cleanliness and timeliness. Choi and Chu (2001) concluded that staff quality, product qualities and value are the top three factors that determine customer' satisfaction.


ISSN: 2047-2528 Vol. 2 No. 7 [01-13]


3.0 OBJECTIVES OF THE STUDY The main objective of this study is to assess the factors that underline customers’ satisfaction level of the performance of the banks operating in Ghana, in terms of service quality and customer satisfaction. The following sub objectives were also considered;

To determine whether factors, such as gender, occupational status and level of education influence customers’ preference of banks in Ghana.

To identify the minimum number of factors that significantly influences customer satisfaction level of performance of banks in Ghana.

To rate the bank performance in terms of the identified factors.

4.0 HYPOTHESES The study is premised on the following null hypothesis; H0: There is no association between services quality attributes and banks selected by

customers.

5.0 DATA AND METHODS A cross sectional survey method was used for the study. By purposive sampling, the three banking institutions were selected for the study. For the purpose of confidentiality, the names of the selected banks will not be disclosed. The first bank, Bank A, was selected because it has won the Chartered Institute of Marketing Ghana Award as the overall best bank in recent years. The second bank, Bank B, has consecutively won the National Banking award for the Best Customer Service category twice within the same period. And the third bank, Bank C, was selected on the basis that, it has the highest number of networked branches. A sample of 100 customers was drawn from each of the three banks. Ten variables which measures the customer satisfaction level were selected from the classification of variables as outlined by Wilson et al (1992): these include – Product/Service Range; – Affordability of price product/Service; – Courtesy of Staff, – Knowledgeable staff; – Responsive to Customer Complaints; – Slow to customer complaints; – Product/Service Innovation; – Access to loan facilities; – Convenience Bank Product/Service and – Promptness of Service Provision. The main instrument of data collection was questionnaire. To ensure accuracy of responses, the research instrument was self-administered by the researchers to the subjects of the study at the premises of the respective banks. During the administration of the research instrument, quota sampling was use in the selection of the research objects. The analysis of the data gathered from this research is in two parts. The first part, which is the preliminary analysis made use of descriptive statistics tools such as charts and cross - tabulation. Linear correlation analysis was also performed as part of the preliminary analysis to observe the co - linearity among the selected variables. This forms the basis of the factor analysis. The research hypothesis was tested using the chi-squared test. The second part, which is the further analysis made an extensive use of factor analysis. The method of extraction of factors was the Principal Component Analysis. 6.0 RESULTS AND FINDINGS 6.1 Preliminary Analysis This section reports the descriptive analysis of the data collected from the customers of the selected banking institutions.

6.1.1 Demographic Profile of respondents Even though a Quota sample of 100 respondents were selected from each bank but the makeup of the respondent was made as random as possible.


ISSN: 2047-2528 Vol. 2 No. 7 [01-13]


Out of the 300 respondents surveyed, 199 representing 66.3% of the total respondents were

male and 101 representing 33.7% were female. This result cuts across the three banks that

were used in the survey. This gives a strong indication that, generally, males have more interest in transacting with banks than females.

The study also aimed at bringing out the categories of occupation and their interest in

banking activities of the various banking institutions. The observation made was not

significantly different across the banks. Within each bank, employees seem to have more

interest in transacting with banks than any other category. Bank A recorded 14% of the total respondent (representing 42% within the Bank A respondents) being employees. The

result in The Bank B and Bank C shows 14.33% (42.99% within banks) and 14%

(representing 42% within Banks) respectively. Possible reason attributed to this observation

may be of the fact that, employees salaries are paid through their bank account and also

may want to have access to loan facilities provided by the banks. 3.67% of the respondents were students across each of the banking institution representing 11% of the respondent

within each bank being students.

The survey also brings out whether customers select banks based on their education

background. For the purpose of this research, customer education levels were classified as

having a formal education (first cycle, second cycle and third cycle) and informal education (no school). Out of the 300 respondents’ survey, 40 representing 13.3% of the total

respondents had no formal education whereas the remaining 86.7% of the total respondent

had had a formal education in either first, second or third cycle of education. This implies

that educated people have more interest in banking as compared to people with no formal

education.

The survey also considered the mix of customers that were involved in the study in terms of

the length of time within which they have transacted with their current bankers. Data

obtain from the survey indicates that, most of the banks customers are considered as new

as more than half of the respondents have transact with their banks for a period less than

one year.

6.1.2 Rating of Product/Service Attributes

The survey also aimed at bringing out the factors that influence the customers’ choice of

banking institutions in Ghana. The 300 sample selected were asked to rate seven attributes that commonly influence customers choice of banks in Ghana from 1 to 7 with 1 indicating

the least important and 7 being the most important. The attributes used and the score

obtained by each of the selected banks and in total is shown in table 1.

Table 1: Effective Scores of Customer Rating of Product Attribute of

Selected Banking Institutions

Selected Banks

Total Bank A Bank B Bank C

Product/

Service

Attribute

Popularity 400 397 403 1,200

Access to loan facilities 426 420 427 1,273

Wide product range 422 426 412 1,260

Low cost of service 459 461 472 1,392

Branch networked 392 390 397 1,179

Accessibility 355 355 353 1,063

Convenience 356 354 357 1,067

Maximum Effective Score 700 700 700 2,100

Effective Score is defined as the respondent rating multiplied by the number of respondents rating a bank as such. Mathematically,


ISSN: 2047-2528 Vol. 2 No. 7 [01-13]


This analysis tends to identify the most important factors/variables that influence

customer choice of banking institution in Ghana. From the values obtained in table 1,

customers select their bankers on the basis of Low Cost of Service. Followed by this factor

is ‘Access to loan facilities’ in respect of Bank A and Bank C customers. The customers of

Bank B see ‘wide product range’ as the next influencing factor apart from low service cost.

However, in total low service cost is seen as the most influencing factor followed by ‘Access

to loan facilities’ as these are the attributes with the highest effective score. This may be

seen as the two most important factors that influence customer for choosing as their

bankers.

6.1.3 Test of Hypothesis

The Study is premised on the null hypothesis that, ‘There is no association between

services quality attributes and banks selected by clients’ as against an alternative

hypothesis that, ‘There is association between services quality attributes and banks

selected by clients’ The contingency table shown in Table 2 indicates the observed and

expected frequencies for the categories. Within each cell, the expected frequency is placed

in a bracket and the observed frequency is not in the bracket.

Table 2: Crosstabulation of bank service attribute against bank type

Selected Banks Total

Bank A Bank B Bank C

Popularity 400.00 (399.81) 397.00 (398.81) 403.00 (401.38) 1200

Access to

loan facilities

426.00 (424.13) 420.00 (423.08) 427.00 (425.79) 1273

Wide product range

422.00 (419.80) 426.00 (418.76) 412.00 (421.44) 1260

Low cost of

service

459.00 (463.78) 461.00 (462.62) 472.00 (465.60) 1392

Branch

networked

392.00 (392.81) 390.00 (391.84) 397.00 (394.35) 1179

Accessibility 355.00 (354.17) 355.00 (353.28) 353.00 (355.55) 1063

Convenience 356.00 (355.50) 354.00 (354.61) 357.00 (356.89) 1067

Total 2810.00 2803.00 2821.00 8434

Chi-Sq = 12.599, DF = 12, P-Value = 0.000

At a significance level of 5% we fail to accept the null hypothesis, as the valuep of 0.000

is lesser than value of 0.05. We therefore conclude that, there is significance

association between services quality attributes and banks selected by clients. Customers

select their bankers based on one or more of the selected attributes.

6.1.4 Preliminary analysis of variables

As stated earlier, ten variables were used to assess customer satisfaction. The preliminary

analysis of variables is carried out to have a fair idea of the responses given by the

respondents. The analysis is carried out for each bank and the three banks in total to verify

if there exist any differences in the responses given by the respondents. Observation of the

responses to the rating of the variables of interest shows that, highest rating for each variable is 5 indicating strongly agreement to the statement posed to respondents. However,

each variable has a minimum rating of 1 indicating strongly disagreement to the statement

posed to them. Summary of responses from respondents is shown in Table 3.


ISSN: 2047-2528 Vol. 2 No. 7 [01-13]


Table 3: Descriptive summary of responses

Variable Descriptive Statistics

Minimum Maximum Sum

Average Skewness

X1 1 5 777 2.59 .4150

X2 1 5 988 3.29 -.0730

X3 1 5 764 2.55 .5820

X4 1 5 986 3.29 -.2040

X5 1 5 1061 3.54 -1.073

X6 1 5 769 2.56 .2010

X7 1 5 1082 3.61 -.7070

X8 1 5 935 3.12 -.1510

X9 1 5 923 3.08 -.1350

X10 1 5 899 3.00 -.0580

– Product/Service Range With respondents being asked whether they agree to the fact that, Customers have a wide range of product and services to choose from, 49.7% disagree to that fact. 25% were undecided and the 25.3% agreed. The sum of the all the responses yielded a sum of 777 which is highly positively skewed to the right. Thus, generally, respondents disagree to that fact.

– Affordability of price product/Service With respondents being asked whether they agree to the fact that, the price for the bank’s products and service are affordable, 24.7% disagree to that fact. 41.7% were undecided and the 33.9% agreed. The sum of the all the responses yielded a sum of 988 which is slightly negatively skewed (almost normal). Thus, generally, respondents are undecided about this fact.

– Courtesy of Staff With respondents being asked whether they agree to the fact that, the staff is courteous and friendly, 62.6% disagree to that fact. 7.7% were undecided and the 29.7% agreed. The sum of the all the responses yielded a sum of 764 which is highly positively skewed to the right. Thus, generally, respondents disagree to that fact.

– Knowledgeable Staff With respondents being asked whether they agree to the fact that, the staff is knowledgeable in their area of operation, 25.7% disagree to that fact. 32.0% were undecided and the 42.3% agreed. The sum of the all the responses yielded a sum of 986 which is negatively skewed. Thus, generally, respondents agree to this fact.

– Responsive to Customer Complaints With respondents being asked whether they agree to the fact that, the bank is responsive to customers’ complaints, 19.0% disagree to that fact. 7.7% were undecided and the 73.3% agreed. The sum of the all the responses yielded a sum of 1,061 which is negatively skewed. Thus, generally, respondents agree to this fact.


ISSN: 2047-2528 Vol. 2 No. 7 [01-13]


– Slow to customer complaints With respondents being asked whether they agree to the fact that, the bank is slow to respond to customers’ complaints, 37.0% disagree to that fact. 44.0% were undecided and the 19.0% agreed. The sum of the all the responses yielded a sum of 769 which is positively skewed. Thus, generally, respondents disagree to this fact.

– Product/Service Innovation With respondents being asked whether they agree to the fact that, the bank is able to sustain innovative product, 26.0% disagree to that fact. 7.7% were undecided and the 66.3% agreed. The sum of the all the responses yielded a sum of 1,082 which is negatively skewed. Thus, generally, respondents agree to this fact.

– Access to loan facilitie With respondents being asked whether they agree to the fact that, the banks readily gives loans to customers, 33.7% disagree to that fact. 23.7% were undecided and the 43.6% agreed. The sum of the all the responses yielded a sum of 935 which is negatively skewed. Thus, generally, respondents agree to this fact.

– Convenience Bank Product/Service With respondents being asked whether they agree to the fact that, the banks product/service are convenient to customers, 32.0% disagree to that fact. 28.3% were undecided and the 39.6% agreed. The sum of the all the responses yielded a sum of 923 which is negatively skewed. Thus, generally, respondents agree to this fact.

– Promptness of Service Provision With respondents being asked whether they agree to the fact that, the banks provides service to customer promptly, 39.0% disagree to that fact. 19.0% were undecided and the 42.0% agreed. The sum of the all the responses yielded a sum of 899 which is negatively skewed. Thus, generally, respondents agree to this fact. 6.1.5 Correlation Analysis This part of the analysis examines correlation between the variables suspected to determine customer level of satisfaction. A basic assumption made in interpreting the correlation matrix is that, a correlation coefficient greater than 0.5 is consider to be high, otherwise, it is low correlation. The correlation matrix constructed from the data obtained from customers of all the three selected banks to evaluate customer level of satisfaction of the bank performance is shown in Table 4.

Table 4: Correlation Matrix

X1 X2 X3 X4 X5 X6 X7 X8 X9 X10

X1 1.000

X2 .073 1.000

X3 -.416 .105 1.000

X4 -.218 .183 -.345 1.000

X5 .401 -.188 .212 .021 1.000

X6 -.639 -.361 .528 -.339 -.061 1.000

X7 .400 -.674 -.571 -.347 .037 .057 1.000

X8 .036 -.055 -.019 .053 .070 -.031 .031 1.000

X9 .067 .080 .007 -.077 .045 .014 .022 -.031 1.000

X1 .038 .028 -.007 -.047 -.018 -.028 .008 -.038 -.086 1.000


ISSN: 2047-2528 Vol. 2 No. 7 [01-13]


From the table 4, variable – Product/Service Range and – Slow to customer complaints

and Variables – Affordability of price product/Service and – Product/Service

Innovation forms a group. Variable – Curtsey of Staff is ‘closer’ to (2, 7) group than (1, 6)

group. Thus these groups of variables may correlate with the same factors.

Given this result and the small number of variables, we might expect that the apparent

linear relationship between the variables can be explained in terms of, at most, two or three

common factors.

This matrix is obtained at the Bartlett’s Test of Sphericity yield a value 1,777 with degree of

freedom of 42 and an associated level of significance valuep of 0.000 which is smaller

than alpha (α) value of 0.05. Thus, the hypothesis that the correlation matrix is an identity

matrix is rejected, that is, the correlation matrix has significant correlation among at least

some of the variables and thus supports the use of factor analysis.

6.2 Further Analysis

In this section perform a further analysis to identify the most important factors that

underlie customer level of satisfaction of performance of the selected banks. The statistical

tool, as stated earlier for this analysis is the Factor Analysis. The analysis is performed for

each bank and all the three banks in total. The analysis will be considered in various sub

headings such as total variance explained, the component matrix and rating of banks using

Principal component.

6.2.1 Total Variance Explained

The method applied in the factor analysis is the Principal Component Analysis, thus, the

communality for each variable, to is 1.0 as unities were inserted in the diagonal of

the correlation matrix. As there are ten variables in the analysis, ten factors have been

extracted. The total variation accounted for by all the ten factors is 10 (which is equal to

the number of variables) relatively, 100%. This variation is explained by the variance

(Eigenvalues) of the factors.

Considering all the responses from the customers of the three banks, the factors underlying

the choice of bank by customers are influenced by five factors as five factors as five of the

factors have their eigenvalues greater one. Table 5 shows the factors extracted together

with the percentage of variation in the data explained by each factor for all the three Banks.

Table 5: Total Variance Explained

Factors

Initial Eigenvalues Extraction Sums of

Squared Loadings

Total % of

Variance

Cumulati

ve %

Total

% of

Variance

Cumulati

ve %

1 2.322 23.224 23.224 2.322 23.224 23.224

2 2.015 20.151 43.375 2.015 20.151 43.375

3 1.365 13.652 57.027 1.365 13.652 57.027

4 1.129 11.287 68.314 1.129 11.287 68.314

5 1.079 10.794 79.108 1.079 10.794 79.108

6 .915 9.146 88.254

7 .839 8.389 96.643

8 .248 2.477 99.120

9 .062 .615 99.735

10 .026 .265 100.000


ISSN: 2047-2528 Vol. 2 No. 7 [01-13]


The eigenvalues for the factors are, as expected, in decreasing order of magnitude as we go

from factor 1 to factor 10. Factor 1 account for a variance of 2.322, which is 23.2% of the

total variance. Likewise, the second factor accounts for 2.015, which is 20.2% of the total

variance. The third factor also accounts for 1.365 which represents 13.7% of the total

variation. The fourth factor accounts for 1.129 which represents 11.3% of the total

variation and finally, the fifth factor accounts for 1.079 which represents 10.8% of the total

variation. Thus the first five factors combined accounts for 79.1% of the total variance in

the data. The remaining five factors together accounted for 20.9% of the total variance.

6.2.2 Number of factors

Although ten factors have been computed as shown in Table 5, it is obvious that not all the

ten factors will be useful in evaluating customer satisfaction level of banks performance. In

other words, to gain some degree of parsimony and to summarize the information contained

in the original variables, a smaller number of factors should be extracted.

Using the criterion of retaining only factors with eigenvalues of 1 or greater, the first five

factors will be retained for interpretation. However, using the scree plot criteria as shown in

figure 1, a model with three factors is suggested since the elbow of scree is on the third

factor. We therefore retain three factors for interpretation on the basis of easy

interpretation and the need to gain a high degree of parsimony. Considering the first three

factors, the total variation accounted for amounts to 57% which exceeds half of the total

variation and that the gain achieved in going to five factors is marginal.

Figure 4.1: Scree plot showing the relationship between the eigenvalues and the factors for

all bank combined.

6.2.3 The Component Matrix and Interpretation of Extracted Factors

The Component Matrix in table 6 below shows the initial unrotated component analysis

factor matrix, and presents the correlations that relate the ten variables under study to the

extracted factors. In the table below, the coefficients, called factor loadings, indicate how

closely the variables are related to each factor. As stated earlier, correlation coefficients of

0.5 or greater are considered to be high, otherwise low.


ISSN: 2047-2528 Vol. 2 No. 7 [01-13]


Table 6: Unrotated Component Matrix

Variables

Factors

1 2 3 4 5 6 7 8 9 10

X1 .826 -.083 .480 -.121 .065 .035 -.175 .033 .169 -.016

X2 -.206 -.816 .213 -.282 -.032 .196 -.184 .299 -.045 .043

X3 -.810 .150 .512 .043 .104 .000 -.084 -.166 .063 .092

X4 .042 -.631 -.394 .449 -.041 -.287 .381 .046 .095 .048

X5 .205 .124 .727 .446 .132 -.353 .221 .124 -.090 -.012

X6 -.660 .662 -.091 .030 -.041 -.002 .089 .311 .093 -.035

X7 .673 .683 -.212 -.073 -.050 .025 .005 .117 -.033 .110

X8 .085 .014 .034 .653 .016 .752 -.013 .007 -.002 -.001

X9 .030 .010 -.690 -.287 -.299 .216 .550 -.045 .003 .000

X10 .033 -.014 .001 -.342 .751 .236 .512 -.003 .001 .000

From table 6, Factor 1 has higher loadings on (Product/Service Range), (Courtesy of

Staff), (Slow to customer complaints) and (Product/Service Innovation) as the factor

loadings of these variables is greater than 0.5. From the preliminary analysis, respondents

disagree to the fact that; banks have a wider product/service range, the staff of the various

banks is courteous and friendly and then the banks being slow to responding to customer

complaints. They however agree to the fact that, the various banks are able to sustain

product innovation. Therefore, this factor may be labeled as ‘Customer Relation and

Services’.

Factor 2 has high loadings on (Affordability of price of Product/Service) and

(Knowledgeable staff). From the preliminary, respondents were undecided where the

product/ services offered by the banks are affordable but agree to the fact that, staff is

knowledgeable in their area of operation. Thus this factor may be labeled in line with

variable X4. Thus factor 2 may be labeled as ‘Staff Competency’.

Factor 3 has high loadings on (Responsive to Customer Complaints) and (Convenience

of bank product/service). From the preliminary it was observed that respondents agreed to

the fact that the banks are responsive to customer complaints and also agrees to the fact

that the banks’ product and service were convenient. Thus, this factor may be labeled as

‘Responsive and Convenient banking’

Even though factor four and five has high loadings on variable eight and ten respectively,

these variables may be considered as a single factor that may be use to explain the basis

customer satisfaction of bank performance. Thus, apart from the factor specified, Access to

loan and Promptness of service provision may be considered as factors that underlies

customer level of satisfaction of performance of banks in Ghana.

6.2.4 Performance Rating of the Selected Banks

As part of the object of the analysis, we wish to rate the banks in terms of performance with

respect to each of the factor extracted. The performance rating was done based on the sum

of the factor scores for each respondent for each bank and the direction of the factor scores.

The basis of rating the banks highly depends on the general trend of the responses

provided by the respondents. Table 7 shows the performance rating of the banks based on

factor scores.


ISSN: 2047-2528 Vol. 2 No. 7 [01-13]


Table 4.6: Performance rating of selected banks

Number of

Responden

ts

Minimum

Score

Maximu

m

Score

Sum of

Scores

Ratin

g

Factor 1: Customer Relation and Service

Bank A 100 -1.5195 1.6684 -.8842 3

Bank B 100 -1.4580 1.6949 -.4054 2

Bank C 100 -1.5003 1.6542 1.2897 1

Factor 2: Staff Competency

Bank A 100 -1.3792 1.8527 1.7265 3

Bank B 100 -1.3614 1.8524 -3.2334 1

Bank C 100 -1.3683 1.8406 1.5069 2

Factor 3: Responsive and Convenient

banking

Bank A 100 -2.1633 2.9164 -3.0067 2

Bank B 100 -2.1930 2.9164 -4.3568 3

Bank C 100 -2.1142 2.9147 7.3636 1

Rating of the banks based on factor 1 depends on the loadings on this factor. Most of the

loadings on this factor were positive and the respondents agreeing to statement made about their views, the best bank with respect to this factor is the one with the highest positive

score. On this basis, Bank C was rate at the best bank in terms of ‘Customer Relation and

Service’ as it is the bank with the highest positive factor 1 score. This is followed by The

Bank B and then Bank A in that order.

Rating of the banks based on factor 2 also depends on the loadings on this factor. Most of

the high loadings on this factor were negative and the respondents agreeing to statement

made about their views, the best bank with respect to this factor is the one with the highest

negative score. On this basis, in terms of Staff Competency, The Bank B was rated as the

best bank as it had the highest sum of negative factor score. This is followed by Bank C

and then Bank A.

On similar basis, in terms of Responsive and Convenient banking, Bank C had the highest

factor score hence considered as the best bank in terms of this factor. This is followed by

Bank A and then Bank C.

7. DISCUSSION, CONCLUSION AND RECOMMENDATIONS

7.1 Discussion

The most popular bank observe among respondents in the study is Ghana Commercial

Bank. The result is in agreement with the Ghana Banking awards which adjudge the Ghana Commercial Bank as the bank with large number of networked branches.

Contrary to the perception that sex groups have no relationship with interest in banking

activities, it was found out that, that perception is not entirely true since the data obtained

suggest that male have interest in banking activities as compared to females. In fact, it was found out that males and females differ in banking preference.

The results from both preliminary analysis and further analysis were also in line on the

basis of consumer based indicator. The preliminary analysis revealed that education


ISSN: 2047-2528 Vol. 2 No. 7 [01-13]


attainment and occupational status influence the choice of banks, while the further

analysis also reveals that ‘Customer Relation and Service’ (wide product range, product

innovative, attitude towards customer complaints) is the most important factor that determines the choice of bank.

From the results in the further analysis, the first factor (Customer Relation and Service)

was also in agreement with the study carried out by Berry Laroche et al 1985. Thus,

consumer selects a bank which meets acceptable standards.

7.2 Conclusion

The objective of this research was to investigate the underlying factors that determine the

customer level of satisfaction of banking institutions in Ghana. The study found that three

factors influence consumer’s satisfaction level of the banks. These three factors were found to be Customer Relation and Service, Staff Competency and Responsive and Convenient

banking.

The theoretical part of the study outlined one hypothesis that was supported by the

empirical studies. The Hypothesis argued that the customer choice of banking institutions

is influence by service quality attributes exhibited by the banks. This was verified in the preliminary analysis in which we showed that specifically attributes such as popularity,

access to loan facilities, wide product range etc. are significant variables affecting choice.

From a theoretical viewpoint, this study contributes to the customers’ decision making

process for choosing their bankers by looking at consumer motives and examining the importance of different attributes affecting the actual choice.

7.3 Recommendation

I therefore recommend that, as banks, improving on the quality of the products/service

should be a priority; they should also consider paying much attention to customer complaints and as far as possible make their products/service affordable to all persons.

Continual improvement of staff competency is also vital in meeting customer satisfaction.

Thus sectional training programmes should be organized for the staffs of the banks to

improve their competence level in terms of quality service delivery and customer relation.

REFERENCES

Akan, P. (1995), Dimensions of service quality: a study in Istanbul. Managing Service

Quality.

Anderson, E.W., Fornell, C., and Mazvancheryl, S.K. (2004), “Customer Satisfaction and Shareholder Value”, Journal of Marketing, Vol. 68, pg; 172–185.

Atkinson, A. Answering (1988), the eternal question: what does the customer want? The

Cornell Hotel and Restaurant Administration Quarterly, vol 29(2): pg 12-14.

Barsky, J.D. & Labagh, R.(1992). A strategy for customer satisfaction. The Cornell Hotel

and Restaurant Administration Quarterly, vol 35(3): 32-40. Choi, T. Y., & Chu, R. (2001), Determinants of hotel guests' satisfaction and repeat

patronage in the Hong Kong hotel industry. International Journal of Hospitality

Management, vol 20: 277-297.

Eshghi, A., Haughton, D., and Topi, H., (2007), “Determinants of customer loyalty in the

wireless telecommunications industry”, Telecommunications policy, Vol 31, Issue 2,

Pages 93-106. Gordor B.K., Innocent G.A., Howard N.K. (2006). A Guide to Questionnaire Surveys. Ghana

Mathematics Group. Accra, Ghana.

Gustafsson, A., Johnson, M.D., and Roos, I. (2005), “The Effects of Customer Satisfaction,

Relationship Commitment Dimensions, and Triggers on Customer Retention”, Journal

of Marketing, Vol. 69, pg. 210–218.

Jain, S.K. and Gupta, G. (2004). Measuring Service Quality: SERVQUAL vs. ERVPERF


ISSN: 2047-2528 Vol. 2 No. 7 [01-13]


Scales, VIKALPA ,Vol 29, No 2, April - June 2004, pp 25-37

Kim, M.K., Park, M.C., and Jeong, D.H. (2004) “The effects of customer satisfaction and

switching barrier on customer loyalty in Korean mobile telecommunication services”,

Electronics and Telecommunications Research Institute, School of Business,

Information and Communications University, Yusong-gu, Hwaam-dong, Taejon 305-

348, South Korea. Knutson, B(1988). Frequent travellers: making them happy and bringing them back. The

Cornell Hotel and Restaurant Administration Quarterly, vol 29(1) pg 83-87.

Nadiri, H., Kandampully, J. and Hussain, K. (2009). Zone of tolerance for banks: a diagnostic model of service quality, The Service Industries Journal, 29: 11, pp. 1547 —

1564

Oliver, R.L. (1999), “Whence Consumer Loyalty, “The Journal of Marketing, Fundamental Issues and Directions for Marketing, Vol. 63, pp. 33-44

Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1985). A Conceptual Model of Service Quality and Its Implications for Future Research, The Journal of Marketing, Vol. 49, No.

4 (Autumn, 1985), pp. 41-50

Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1988). SERVQUAL: A Multiple-Item Scale For Measuring Consumer Perceptions Of Service Quality, Journal Of Retailing, Spring,

Volume 64, Number 1, pp. 12-40.

Tse, D. K., and Wilton, P. C. (1988), "Models of Consumer Satisfaction Formation: An

Extension," Journal of Marketing Research, 25 (May), 204-12.

Zeithaml, V.A. (1988). Consumer Perception of Price, Quality and Value: A Means end Model and Synthesis of Evidence, Journal of marketing, 52, pp. 2-22

factors that determine customer satisfaction level …ajbms.org/articlepdf/1ajbms2012262222.pdf ·...

Documents