Service Quality of Banks

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Measuring the Service Quality of Service Sector - A Case of Commercial Bank of Ethiopia

R.Renjith Kumar, Asst. Prof and Head of the Department, Ilahia School of Management Studies, Ilahia College of Engineering and Technology, Muvattupuzha, Kerala

Service sector is growing in Ethiopia which basically an agrarian country is trying to become a developing country in the North Eastern Africa. Banking services have gained significant role in this country due to increasing number of customers and clients utilizing the services. The main objective of this study was to apply the SERVQUAL Model as developed by Paraswaram (1988, 1995) in an Ethiopian service marketing context with particular reference to identify the service gaps by comparing the expectations and perception of the customers of the selected bank. The adopted SERVQUAL instrument had twenty two items covering five dimensions of service quality and the respondents were asked to give scores on a seven point liker scale both for the expectations and perceptions of service provided by the bank. The results showed a negative gap between expectation and perception of customers about the bank’s service quality. Suitable recommendations are given to the bank for managing the service quality gaps and for future research.

Introduction to Service quality
Service quality focuses on the standard of service delivery and the interaction between the customer and the service provider in order to ensure that the customer’s expectations are met (Hernon, 2001, Palmer, 2005).

Service quality is the difference between customer’s expectations for service performance prior to the service encounters and their perceptions of the services received” (Asubonteng, Mc Cleary and Swan, 1996:64).

The service quality process can be examined in terms of the gaps between expectations and perceptions on the part of the management, employees and customers. The most important one is the service gap, which is between customer’s expectation of the service and their perception of the service actually delivered. The goal of the service firm is to close the service gap or at least narrow it as far as possible. Service quality focuses on the customer’s cumulative attitude toward the firm, which is collected by the consumer from a number of successful or unsuccessful service experiences.

Customer satisfaction compares consumer perceptions to what consumers normally expect. Service Quality compares perceptions to what a consumer should expect from a firm that delivers high quality services. Service quality is thus a measure of higher standard of quality services.

The SERVQUAL instrument is based on five service dimensions: tangibles, reliability, responsiveness, assurance, and empathy. A 22 item section record customer expectations of excellent banks in the banking industry. A 22 item section measurers consumer perceptions (actually delivered) of the bank. Results from the two sections are then compared to arrive at “gap scores” for each of the five dimensions. The larger the gap, the farther consumer perceptions are from expectations, and lower the service quality evaluation. The smaller the gap, the higher the service quality evaluation. Customer expectations are measured on a 7-point scale from “absolutely essential” to “not at all essential”. Similarly, customer perceptions are measured on another 7-point scale ranging from “strongly agree” to “strongly disagree”. Thus a 44-item SERQUAL scale is used to measure customer expectations and perceptions regarding the five service quality dimensions.

Problem Statement
Previous empirical studies focused on service quality in Ethiopia focused on other service sectors and therefore justifies the research in the banking sector. Empirical research using the SERQUAL model in Ethiopian context is limited. The overall service quality of banks is assessed from the bank customer’s perspectives. The...
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