Application of Servqual Model on Measuring Service Quality: a Bayesian Approach

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Enterprise Risk Management ISSN 1937-7916 2010, Vol. 1, No. 1: E9

Application of Servqual Model on Measuring Service Quality: A Bayesian Approach

Dr. K. Ravichandran, Assistant Professor, College of Business Administration in Alkharj, King Saud University, P O Box 165, 11942, Alkharj, Saudi Arabia. Email: varshal2@yahoo.com

Dr. S. Prabhakaran, Assistant Professor, College of Business Administration in Alkharj, King Saud University, P O Box 165, 11942, Alkharj, Saudi Arabia. Email: jopraba@gmail.com

Mr. S. Arun Kumar, Assistant Professor, Department of Management Studies, Saranathan College of Engineering, Trichy, Tamilnadu, India. email:arunkanthh@yahoo.co.in

Abstract Financial liberalization has led to intense competitive pressures and private banks dealing in retail banking are consequently directing their strategies towards increasing service quality level which fosters customer satisfaction and loyalty through improved service quality. This 145

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Enterprise Risk Management ISSN 1937-7916 2010, Vol. 1, No. 1: E9

article examines the influence of perceived service quality on customer satisfaction suing an adaptive Bayesian frame work in private sector banks Bayesian structural regression estimates are shown to provide a banking institution with reliable information for use in positioning the private banks in its market place.. The article concludes that increase in service quality of the banks can develop customer satisfaction which ultimately retains valued customers.

Keywords: Perceived Service Quality, SERVQUAL, customer satisfaction, BSR, Structural Regression

1. INTRODUCTION

Private Banks dealing in retail banking Industry is consequently put into lot of pressures due towards increase in global competition. Various strategies are formulated to retain the customer and the key of it is to increase the service quality level. Typically, customers perceive very little difference in the banking products offered by private banks dealing in services as any new offering is quickly matched by competitors. Parasuraman et. al (1985) and Zeithaml et., al (1990) noted that the key strategy for the success and survival of any business institution is the deliverance of quality services to customers.

The quality of services offered will determine customer satisfaction and attitudinal loyalty. The inter relationships of variables defining the antecedents and also the consequences of customer satisfaction have been studied extensively in the consumer research literature ( e.g., Anderson and Sullivan 1993; Bearden and Teel 1983; Bolton and Drew 1991a, 1991b; Cardozo 1965; Churchill and Surprenant 1982; Cronin and Taylor 1992; Greg M. Lepak 1998; LaTour and Peat 1979; Oliver 1977,1980; Oliver and DebSaro 1988; Tse and Wilton 1988; Westerbrook 1982; Yi 1990), However, there appears to be conflicting evidence as to the nature of the linkages between the antecedents and consequences of satisfaction.

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Enterprise Risk Management ISSN 1937-7916 2010, Vol. 1, No. 1: E9

1.1 About private retail banking in India Initially all the banks in India were private banks, which were founded in the pre-independence era to cater to the banking needs of the people. In 1921, three major banks i.e. Banks of Bengal, Bank of Bombay, and Bank of Madras, merged to form Imperial Bank of India. In 1935, the Reserve Bank of India (RBI) was established and it took over the central banking responsibilities from the Imperial Bank of India, transferring commercial banking functions completely to IBI. In 1955, after the declaration of first-five year plan, Imperial Bank of India was subsequently transformed into State Bank of India (SBI). In 1994, the Reserve Bank of India issued a policy of liberalization to license limited number of private banks, which came to be known as New Generation tech-savvy banks. Global Trust Bank was, thus, the first private bank after...
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