College of Leadership and Governance

School of Public Policy Studies

Ethiopian Public Administration, Governance and Ethics

Group: Assignment

Section (1)

Group (6)

Question: commercial bank of Ethiopia CMC branch service quality

Dimensional Measurement
Group members
No Name commercial ID
1 Asrar Fedlu
5 Gelana Solomon
4 Guyo Dima
2 Mesfin Boyeto
3 Mitiku Melka

Program: Regular

Submitted to: D/r Tamiru

January, 2023

Addis Ababa, Ethiopia

 Table of Contents
1.Introduction..............................................................................................................................................1
1.1.Objectives of the study..................................................................................................................2
1.1.1 General Objectives......................................................................................................................2
1.1.2 Specific Objectives......................................................................................................................2
1.2 The significance of the study.............................................................................................................2
1.3 Scope of the study.............................................................................................................................2
2.REVIEW OF RELATED LITERATURES..........................................................................................................3
3. Methodology...........................................................................................................................................4
3.1 Data analysis......................................................................................................................................5
4.Conclusion................................................................................................................................................9
5.Recommendations..................................................................................................................................10
6.Reference...............................................................................................................................................11
1.Introduction
Banks play an important and active role in the financial and economic development of a country.
An effective banking system greatly influences the growth of a country in various sectors of the
economy. Practitioners in the banking industry face a large number of complex challenges in the
global marketplace. It is crucial for banks to better understand changing customer needs and
adopt the latest information technology system in order to compete more effectively with global
organizations (Malhotra and Mukherjee, 2004).

activities include the Automated Teller Machine (ATM), Money Transfers, Banking via Mobile
Phone, etc. Though these services are virtually duplicated by most banks, what is the focus now
is the quality of the service which is provided.

Delivering high-quality service has become a strategic approach for satisfying and retaining
customers, as well as building and sustaining profitable and long-term relationships with them.

Therefore, service quality becomes more critical for banks because they are challenged by many
factors such as, the pressures of globalization, customers sophisticated demands and
expectations, and competition from non-banking financial institutions (Zeithaml, Parasurmn and
Berry, 1990).

Every industry has different service quality standards. After all, you don’t expect the same type
of service from a hotel and a retail store. And service quality also varies by brand promise, as a
five-star resort has very different expectations than a roadside motel. 

In this study, we elaborate on and discuss the five service quality dimensions tangibility,
reliability, responsiveness, assurance, and empathy commercial bank of Ethiopia CMC branch

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1.1.Objectives of the study

1.1.1 General Objectives

The general objective of this study was to examine and Compare the dimensions of the service
quality measurement model (SERVQUAL) in case of commercial bank of Ethiopia CMC
branch.

Identify the dimensions of the service quality measurement model (SERVQUAL)

1.1.2 Specific Objectives

The study seeks to achieve the following objectives:

1. Identify the effect of the quality of banking services dimensions on the level of customer
satisfaction.

2. Identify a significant difference between customers ‘expectations and perceptions of

service quality performance of the target banks.

3. Identify Which of the five-service quality dimension(s) do customers of the bank favor
most.

1.2 The significance of the study

The significance of the study can be seen in the following considerations:

1. This study derives its importance from the environmental variables; the banks need to
undertake continuous studies on their situations and the increase of the quality of services
provided
2. The importance of the study can be seen through its addressing of the level of customer
satisfaction with the quality of services provided.
3. The need to adopt a measure to help in understanding the quality of banking services.

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1.3 Scope of the study
the study was only limited to examine the dimensions of the service quality measurement model
(SERVQUAL) in case of commercial bank of Ethiopia CMC branch.

2.REVIEW OF RELATED LITERATURES

Definition of the Services

Services were defined as: ―Those economic activities that typically produce an intangible
product such as education, entertainment, food and lodging, transportation, insurance, trade,
government, financial, real estate, medical repair and maintenance like occupations
(Parasuraman et al., 1985; Heizer and Render, 1999;).

The Concept of Service Quality

“Service quality is the degree and direction of discrepancy between customer’s perceptions and
expectations in terms of different but relatively important dimensions of the service quality,
which can affect their future purchasing behaviors”, or “A Customer’s assessment of the
overall excellence of the service”. Parasurman et al. (1985; 1988; 1991)

The Service Quality Dimensions (SERVQUAL)

service quality dimensions can be identified, service managers should be able to improve the
delivery. Therefore, it is very important to know the key service quality dimensions among the
different groups of service organizations in order to formulate effective strategy for future. On
the other hand, the service provider should know how far they are discriminated from their
competitors and in which aspects, because it is good for future planning.

The five dimensions which are related to the importance of people in the service organization
are explained as follows:

Reliability: The ability to provide the promised service dependably and accurately. Customers
expect the services providers to have the ability to perform the desired service dependably,
accurately and consistently. This involves keeping the service promise and the reputation.

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Responsiveness: The willingness to help customers and provide prompt service. Keeping
customers waiting, particularly for no apparent reason, creates unnecessary negative perceptions
of quality. In the event of service failure, the ability to recover quickly with professionalism can
create very positive perceptions of quality.

Assurance: The knowledge and courtesy of employees and their ability to inspire trust and
confidence. The assurance dimension includes competence to perform the service, politeness
and respect for the customer, and effective communication with the customers.

Empathy: The provision of caring, individualized attention the organization provides its
customers. Empathy includes approachability, sense of security, and the effort to understand the
customer ‘s needs.

Tangibles: The appearance of physical facilities, equipment’s, personnel, and communication

materials. The condition of the physical surrounds is tangible evidence of the care and attention
to details exhibited by the service providers.

Measuring Service Quality Using SERVQUAL Model

Measuring service quality is quite different from measuring product quality because service is
an experience. To date, probably the most significant contribution toward the development of a
quantitative yardstick for assessing a firm's service quality is the work conducted by
(Parasuraman et al., 1985, 1988, 1991).

The central idea in this model is that service quality is a function of the difference scores or gaps
between expectations and perceptions. An important advantage of the SERVQUAL
methodology is that it has been proven valid and reliable across a large range of service
contexts.

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 3. Methodology
In This section we deal with the methodology used to carry out the study.

For the proper achievement of the objectives of the study; among different primary data
collection methods, interview was used.

probability (random) sampling methods ware applied in this study, the respondents who are the
clients of the sampled branch banks were asked for cooperation to establish a friendly
atmosphere and given the when they were receiving the service of specific branch.

Primary data were collected through interview developed based on SERVQUAL instrument
which could be easily understood for the respondents. Respondents were contacted personally
by researcher in order to seek true response of quality of service in banks.

3.1 Data analysis

Main factor No Dimension/ question Selected institution (commercial bank
area of Ethiopia CMC branch) feedbacks

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 (from 100%)

1. Up-to-date equipment 15%

Tangible 2. Physical facilities are 30%

visually appealing

3. Employees well-dressed/neat 40%

4. Appearance of the physical 15%

facilities are consistent with
the type of service industry
5. The firm meets their 10%
promised time-frames for
response
6. The firm is sympathetic and 10%
reassuring, when the
Reliability customer has problems
7. They are dependable 20%

8. They provide their services 20%

at the times promised

9. They keep accurate records 40%

10. They shouldn’t be expected 25%

to tell customers exactly
when the service will be
performed, negative
11. It is not reasonable to expect 25%
Responsiveness prompt service from
employees, negative
12. Employees do not always 25%
have to be willing to help
customers, negative
13. It’s OK to be too busy to 25%
respond promptly to
customer requests, negative

14. Employees should be 20%

trustworthy

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Assurance 15. Customers should feel safe 25%
when transacting with
employees
16. Employees should be polite 30%

17. Employees should get 25%

adequate support from the
firm to do their job well
18. Firms should not be expected to 25%
give each customer
individualized
attention, negative
19. Employees should not be 15%
Empathy expected to give each customer
individualized
attention, negative
20. It is unrealistic to expect 20%
employees to fully understand
the needs of the
customer, negative
21. It is unreasonable to expect 20%
employees to have the best
interests of the customer at
heart, negative
22. Firms should not necessarily 20%
have to operate at hours
convenient to all
customers, negative

1 Tangible

According to the result in the above table tangibility has Up-to-date equipment ,15% Physical
facilities are visually appealing ,30% Employees well-dressed/neat,40% Appearance of the
physical facilities are consistent with the type of service industry,15%

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As a result, negative difference between perceptions and expectations of the customers related to
the tangibility dimension was recorded. Hence, the overall service quality performance related to
tangibility dimension is below customers ‘expectations.

2 Reliability

The firm meets their promised time-frames for response10%, The firm is sympathetic and
reassuring, when the customer has problems10%, They are dependable 20%, They provide their
services at the times promised 20%, They keep accurate records 40%

Customers ‘expectations and perceptions on the Reliability dimension of the banks were sought
based on five attributes as shown in the table above.

These finding indicates that the overall service quality on studied banks, promised service
dependably and accurately was below customers ‘expectation on this dimension. But They keep
accurate records meet customers satisfaction.

3 Responsiveness

According to the information in the above table the customers ‘expectations and perceptions
were sought on four attributes coming under the Responsiveness dimension.

The above result showed that the overall service quality performance related to responsiveness
dimension is medium customers ‘expectations.

4 Assurance

Employees should be trustworthy 20%, Customers should feel safe when transacting with
employees 25%, Employees should be polite 30%, Employees should get adequate support from
the firm to do their job well 25%

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Customers ‘expectations and perceptions on the Assurance dimension of the banks were sought
based on four attributes as shown in the table above.
As a result, negative difference between perceptions and expectations of the customers related to
the assurance dimension was recorded. Hence, the overall service quality performance related to
assurance dimension not good and not bad as that Mach customers ‘expectations.

5 Empathy

Firms should not be expected to give each customer individualized attention, negative 25%,
Employees should not be expected to give each customer individualized attention,
negative15% .It is unrealistic to expect employees to fully understand the needs of the customer,
negative 20% ,It is unreasonable to expect employees to have the best interests of the customer
at heart, negative 20% ,Firms should not necessarily have to operate at hours convenient to all
customers, negative 20%

Finally, the above result showed that the overall service quality performance related to empathy
dimension is medium customers ‘expectations.

All the above analysis for the five dimensions indicates that the customers ‘perceptions fall short
of their expectations. In other words, the levels of service quality that the customers receive are
lower than their expectation, i.e. there is negative disconfirmation.

4.Conclusion
Based on the finding, the study demonstrates that the result of SERVQUAL gap score for studied
banks are negative and high standard deviation for each dimension/ attributes indicates that the
negative scores for each dimension/attributes could potentially be even higher. The research

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results revealed that customers‘ perceptions were consistently lower than their expectations and
banks are not able to meet customers‘ expectation.

Now a day, there is a very stiff competition among banks through their initiatives for meeting customer
expectations and gaining a cutting edge. Therefore, this study compares the service quality
performance of the selected banks in terms of users‘ perception of their banking services.

In this study, among the service quality dimensions Responsiveness is rated the most important
dimension at the banks in determining a quality banking service also Reliability and Assurance
will take the second and third position. Tangibles and Empathy are assumed to be least
important in determining quality banking service.

5.Recommendations

delivering high quality services that met customers ‘expectations is vital for banks to compete
efficiently and effectively with their competitors. Based on the analysis and conclusion, the

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following recommendations are proposed to improve service quality at the commercial banks of
Ethiopia CMC branch: -
The SERVQUAL gap scores for selected bank show a negative gap in all dimensions implying
that the customers‘perceptions falls short of their expectations; In order to close these gaps the
staff and management of the bank should consider the following points:
Empowerment of front-line staff should be fundamental for achieving and improving the
level of service quality. Therefore, the banks should empower front-line workers to address
customer concerns and motivate them based on their performance.
Management commitment to quality improvement is crucial since management is primary
driver for quality improvement initiatives.
Improved communication flow would enable staff to deliver what customers expect more
promptly and to provide information to management about customers‘ expectations so that
necessary changes would be made frequently.
Regular research should also be conducted to find out customer expectations about various
service aspects. As customer expectation and satisfaction are not static figures, regular
research at sufficient intervals should be conducted.

CBE CMC branch should work to improve the Responsiveness.The willingness to help
customers and to provide prompt service should be improved by giving continuous
training to staff with relation to responsiveness dimension. The bank should minimize the
gap in this area by improving responsiveness to customer requests, questions, complaints
and problems and by recruiting qualified staff.

The bank should work hard on relationship marketing to improve the customer service skill of
employees including, caring for the customers and giving individualized attention to
customers. Providing proper training in this area is also critical as well.

6.Reference

Malhotra, N., & Mukherjee, A. (2004).http://dx.doi.org/10.3233/HSM-1997-16106

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Zeithaml, V., Berry, L., & Parasuraman, A. (1988). Communication and Control Processes in
the Delivery of Service Quality, Journal of Marketing, vol. 52, no. 2. pp. 35-48,
American Marketing Association.

Beliyu Girma, (2012). Quality of Service Delivery and its Impact on Customer Satisfaction:
In Four Selected Commercial Banks of Addis Ababa.

Bennington, L., & Cummane, J. (1998). Measuring Service Quality: A Hybrid Methodology.
Total Quality Management, vol. 9, no.6, pp. 395-406.

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