THE EFFECT OF SERVICE QUALITY ON CUSTOMER SATISFACTION;IN CASE OF COMMERCIAL BANK OF ETHIOPIA.

Abstract

Banks are extremely crucial in a country's economic life. Although the banking business is expanding and providing a variety of financial services to the general people, their sheer existence is meaningless unless they provide excellent service. The aim of this study is to assess the effect of service quality on customer satisfaction Commercial Bank of Ethiopia west Addis Ababa district. SERVQUAL model Parasuraman et al., (1988) with five dimensions was used by this research to evaluate the effect of service quality on customer satisfaction of CBE specifically in west Addis district. Quantitative means of data collection method is employed to collect the data through questionnaire. This study used descriptive and explanatory design. Proportionate and disproportionate stratified sampling technique is used to select the sample size and a sample of 399 bank customers are taken to undertake the study. Structure questionnaire are used in the process of data collection from the respondent. The data collected from the questionnaire were analyzed using statistical tools such as mean, standard deviation, correlation, and regression analysis VIA SPSS Version 21.The findings of the study indicate from correlation analysis all service quality dimensions (Assurance, Responsiveness, Tangibility, Empathy,& Reliability) have a strong and statistically significant relationship with customer satisfaction. When we see the regression analysis (Empathy, Responsiveness, Assurance and Reliability) has significance effect on customer satisfaction respectively. Furthermore, 73.8%% of the variations in customer satisfaction is explained by service quality dimensions in CBE. The quality of service offered by CBE doesn’t meets with the expectation of customer. So, the bank needs to improve the quality of service to satisfy and attract the unsatisfied customers. Based on the analysis and results of the survey, recommendations are made to the bank.