Bank Service Quality, Customer Loyalty and Satisfaction in Banking Sector of Bangladesh

Abstract

The study examines the relationship between customer satisfaction and loyalty with respect to service quality in four types of banks in Bangladesh; State-Owned Commercial Banks (SOCB), Private Commercial Banks (PCB), Islami Shariah-compliant Private Commercial Banks (ISPC) and Foreign Commercial Banks (FCB). It also explores the effect of age, income and geographical location on customer satisfaction. The research employs the structured questionnaire which relates to SERVPERF model and Likert scale, as the major service quality dimensions are considered to be Tangibles, Reliability, Responsiveness, Assurance and Empathy. The analysis was conducted with the help of SPSS and SmartPLS4, correlation and multiple regression analyses were performed, and a sample of 400 respondents was selected according to Cochran formula. The results indicate that there is a large disparity between the quality of services, customer satisfaction, and loyalty by the type of bank. SOCBs are more responsive whereas PCBs are more altruistic. FCBs are doing better in Tangibles and Assurance. Customer satisfaction and loyalty also have a positive relationship in the study, especially in SOCBs and PCBs. Also, income and age were recognized as the factors that influenced customer perceptions of service quality. The article recommends the improvement of the customer experiences to encourage more satisfaction and loyalty. Nevertheless, there are limitations such as the attention to four types of banks, regional sample, self-reported data, and cross-sectional design that prevents the causal relationship development.