THE EFFECT OF ELECTRONIC BANKING SERVICE QUALITY ON CUSTOMER LOYALTY AND THE MEDIATION EFFECT OF CUSTOMER SATISFACTION ON THE RELATIONSHIP BETWEEN SERVICE QUALITY AND CUSTOMER LOYALTY: THE CASE OF COMMERCIAL BANK OF ETHIOPIA

Abstract

The major aim of the study was to examine the effect of electronic banking service quality on customer loyalty on commercial Banks in Ethiopia. Moreover, the study tries to investigate the relationship between dimensions of service quality and customer loyalty. Bank service quality (BSQ) model of (Parasuraman, Zeithaml et al. 1988) was used to evaluate overall level of service quality and its effect on customer loyalty. The model had five factors; reliability, responsiveness, empathy, Tangibles, and assurance. Descriptive and explanatory research approaches were used. Eight branch banks of commercial bank of Ethiopia were selected randomly and 394 questionnaires were administered to customers of selected branch banks using conveniencesampling method and 394 responses were analyzed in to SPSS version 27. The correlation result indicated that there is a positive and significant relationship between all BSQ dimensions and customer loyalty. All independent variables have a significant effect on customer loyalty except Assurance has a positive but insignificant effect on customer loyalty and empathy has a negative but insignificant effect on customer loyalty. Considering the results of these finding, the researcher has given recommendations that CBE needs to seek changes to remain competitive in the industry through enhancing customer satisfaction and loyalty and should focus on improving service quality all the areas which requires integrated and collaborative approach with all stakeholders.