-

ADDIS ABABA UNIVERSITY

FACULITY OF BUSINESS AND ECONOMICS
DEPARTEMNT OF PUBLIC ADMINISTRATION AND
DEVELOPMENT MANAGEMENT
MASTERS IN PUBLIC MANAGEMENT AND POLICY

ASSESSMENT OF LEVEL OF CUSTOMER SATISFACTION WITH

QUALITY SERVICE IN COMMERCIAL BANK OF ETHIOPIA IN
BAHIR DAR DISTRICT

PREPARED BY

SHEWANGZAW MERHA ANTENH

JUNE 17, 2019

Addis Ababa, Ethiopia
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 ASSESSMENT OF LEVEL OF CUSTOMERS’ SATISFACTION WITH
QUALITY SERVICE IN COMMERCIAL BANK ETHIOPIA IN
BAHIRDAR DISTRICT

BY: SHEWANGZAW MERHA ANTENH GSE/0460/10

A THESIS SUBMITTED TO ADDISABABA UNIVERSITY SCHOOL OF

GRADUATE STUDIES IN PARTIAL FULFILLEMENT OF THE
REQUIREMENTNTS FOR THE DEGREE OF MASTER OF PUBLIC
MANAGEMENT AND POLICY

JUNE, 2019

ADDIS ABABA, ETHIOPIA

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ADDISABABA UNIVERSITY SCHOOL OF GRADUATE STUDIES FACULTY OF
BUSINESS

ASSSSMENT OF LEVEL OF CUSTOMERS‟ SATISFACTION WITH QUALITY SERVICE

IN COMMERCIAL BANK OF ETHIOPIA IN BAHIR DAR DISTRICT

BY SHEWANGZAW MERHA ANTENH

APPROVED BY BOARD OF EXAMINERS

_________________________ ___________________ ___________________

Dean, Graduate Studies Signature Date

_______________________ ___________________ ___________________

Research Advisor Signature Date

________________________ ____________________ ___________________

External Examiner Signature Date

________________________ ____________________ ___________________

Internal Examiner Signature Date

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 DECLARATION

I, the under signed, declare that this thesis is my original work, prepared under the guidance of DR,
DERIBE ASSEFA. All sources of materials used for the thesis have been duly acknowledged. I further
confirm that the thesis has not been submitted either in part or in full to any other higher learning
institution for the purpose of earning any degree.

____________________________________ _____________________________

NAME SIGNITURE AND DATE

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 ENDORSEMENT

This is to certify that this project work, “Assessment of Level Of Customers‟ Satisfaction With
Quality Service in commercial Bank of Ethiopia in Bahir Dar District”, undertaken by
Shewangzaw Merha Antenh for the partial fulfillment of Masters of Public Management and
Policy at Addis Ababa University, is an original work and not submitted earlier for any degree
either at this University or any other University.

Name

Signature and date

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 ACKNOWLEDGEMENTS
Initially I would like to deeply thank the almighty God for his blessing and permission to
accomplish this research. Then it is with immense gratitude that I acknowledge the support and
help of my advisor Deribe Assefa (DR) for his countless support, invaluable advice and patience.

I am also greatly indebted to Commercial Bank of Ethiopia staffs for their cooperation in
Collecting the data on time.

Finally, my appreciation and special thanks goes to all to my beloved family and friends for all
the Encouragements and supports.

Thank you all!

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Acronyms/Abbreviations
CBE Commercial Bank of Ethiopia

NBE National Bank of Ethiopia

SERVQUAL Service Quality

SPSS Statistical Package for Social Science.

SWIFT Societal world Inter Financial Transfer

CAD Cash Against Document

TT Telegram Transfer (Advance Payment)

LC Letter of Credit

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 List of Figures / Tables
Figure 2.1 SERVQUAL Model: Adopted from the Journal of Marketing, Measuring Service
Quality Using SERVQUAL Model (Kumar et al., 2009, p.) ........................................................ 16

Table 3.2 CBE Branch Categories ................................................................................................ 22

Table 4.1 Customers Type ............................................................................................................ 25
Table 4.1.1 Age Distribution of Respondents ............................................................................... 26
Table 4.1.2 Educational Level of Respondents ............................................................................ 26
Table 4.1.3 Respondents years of relation with the bank ............................................................. 27
Table 4.1.4 Customers relationship with other banks ................................................................... 27
Table 4.2 Service Quality using Tangibility Dimension .............................................................. 28
Table 4.2.1 Reliability................................................................................................................... 29
Table 4.2.2 Responsiveness of CBE to Customers ....................................................................... 30
Table 4.2.3 Assurance ................................................................................................................... 31
Table 4.2.4 Empathy ..................................................................................................................... 32
Table 4.2.5 The score of each of the major domains of Five quality Dimension. ........................ 34
Table `4.3.1 Rating Modern banking system, mobile banking ..................................................... 35
Table 4.3.2 CBE modern banking compared to other banks ...................................................... 35
Table 4.3.3 Measuring waiting time of CBE ................................................................................ 36
Table 4.3.4 The deviation between customers‟ expectation and performance ............................. 37
Table 4.3.5 The gap between customers expectation and actual performance of CBE effect on
their relationship with the bank..................................................................................................... 38
Table 4.3.6 Did customers put complaints to the management .................................................... 38
Table 4.3.7 Rating CBE's complaint handling process & time of response ................................. 39
Table 4.3.8Willingness to continue being customer of CBE ........................................................ 40

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 Abstract
Today competition is getting intense than before. So that companies need to start paying special
attention to their service quality, competitors, development of new technological aspects ever
after. Companies should constantly anticipate the customers unlimited needs and expectations
and try to address the gap. The aim of this study is to assess customers’ satisfaction and the
service quality of Commercial Bank of Ethiopia. And to give an insight for the management for
areas of improvement. A total of 120 respondents who have used CBE’s service were
participated in the study from 10 branches. The data has been analyzed using descriptive
statistics. From the analysis made, it is found that 80 percent of the respondents are satisfied
with the service quality of the bank but still looking for improvement in the cashless banking
system of CBE. The five SERVQUAL dimensions (empathy, reliability and assurance) showed
good rating but tangibility and responsiveness was found to be the areas that need special
attention of the bank management. The overall service quality perceived by the customers is
good and need improvement. For the attainment of its vision be the leading company and
benchmark in the market in which we operate with levels of profitability and creation of
shareholders’ value in line with the best industry benchmarks

Key words: Service Quality, Customer Satisfaction, SERVQUAL dimensions, CBE

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 Table of Contents
Acknowledgements .......................................................................................................................... i

Acronyms/Abbreviations ................................................................................................................ ii

List of Figures / Tables .................................................................................................................. iii

Abstract .......................................................................................................................................... iii

Table of Contents ............................................................................................................................ v

CHAPTER ONE ............................................................................................................................. 1

1.Introduction .................................................................................................................................. 1

1.1. Background of the Study .................................................................................................. 1

1.1.1. Banking History in Ethiopia and Profile of the Study Bank ..................................... 2

1.2. Statement of the Problem ................................................................................................. 3

1.3. Research Questions .......................................................................................................... 5

1.3.1. Basic research questions ........................................................................................... 5

1.4. Objectives of the Study .................................................................................................... 5

1.5. Significance of the Study ................................................................................................. 6

1.6. Scope/Delimitation/ of the Study ..................................................................................... 6

1.7. Limitation of the Study .................................................................................................... 6

1.8. Organization of the Study ................................................................................................ 7

Chapter Two.................................................................................................................................... 8

Review of Related Literature .......................................................................................................... 8

2.1. Customer Service ............................................................................................................. 8

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 2.2. Service Quality ................................................................................................................. 8

2.3. Total Quality Management............................................................................................. 10

2.4. Characteristics of Services ............................................................................................. 11

2.5. Service quality Dimensions............................................................................................ 12

2.6. Customer Perception ...................................................................................................... 13

2.7. Relation between Customers‟ perception and Customer Satisfaction ........................... 14

2.8. Distinction between Service Quality and Customer satisfaction ................................... 15

2.9. What Is Customer Satisfaction/Dissatisfaction? ............................................................ 18

2.10. Customers Satisfaction in case of Ethiopian Commercial Banks............................... 18

Chapter Three................................................................................................................................ 20

Research Methodology ................................................................................................................. 20

3.1. Research Design ............................................................................................................. 20

3.2. Sampling Technique and Sample Size ........................................................................... 20

3.3. Method of Data Collection ............................................................................................. 23

3.4. Method of Data Analysis................................................................................................ 24

3.5. Ethical Issues .................................................................................................................. 24

Chapter Four ................................................................................................................................. 25

Data Analysis and Presentation .................................................................................................... 25

4.1. Socio-demographic profile of the study participants ..................................................... 25

4.2. Service Quality of CBE using SERVQUAL .................................................................. 28

4.2.1. Service Quality using Tangibility Dimension......................................................... 28

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 4.3. Overall level of customer satisfaction ............................................................................ 32

4.4. Ranking the five quality dimensions .............................................................................. 33

4.5. Service quality with respect to technological advancement, waiting time and
responsiveness ........................................................................................................................... 34

4.6. Meeting customers‟ expectations and complaints handling ........................................... 37

4.6.1. Deviation between Customers expectation and performance ................................. 37

4.6.2. Complaint handling process of the bank ................................................................. 38

Chapter Five .................................................................................................................................. 42

Summary, Conclusion and Recommendation ............................................................................... 42

5.1 Summary ........................................................................................................................ 42

5.2 Conclusion...................................................................................................................... 43

5.3 Recommendations .......................................................................................................... 43

References ..................................................................................................................................... 45

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 CHAPTER ONE

1. Introduction
Banks play a vital role in the economy of the country. They are the main intermediaries between
those with excess money (depositors) and those individuals and business with viable projects but
requiring money for their investment (creditors) and foreign currency for their importers. Bank
have at least the following functions: lending money, depositing others‟ money transferring
money locally or globally and working as paying agent, approving foreign currency for importers
and exporters with different mode of payment like TT,LC and CAD and processing, issuing,
opening, collecting and settling documents and keeps in safe custody and others.

1.1. Background of the Study

Customer service quality is a crucial source of distinctive competency and often considered as
key success factor in sustaining competitive advantage in industries. Service quality has become
one of the key driving forces for business sustainability and is vital for firms‟ accomplishment
(Palmer, 2001). Service quality in banking implies consistently anticipating and satisfying the
needs and expectations of customers. 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. Provisions of high quality service results in higher customer
satisfaction and enhances customer loyalty. Customers are the sole judge of service quality; an
organization can build strong reputation for quality service when it can constantly meet customer
service expectations [Berry et al., (1990), Gefan (2002)] defined Service quality as the subjective
comparison that customers make between the quality of the service that they want to receive and
what they actually get. Similarly, customer satisfaction is crucial in the banking sector because of
the special nature of the financial services which are characterized by intensive contacts with
customers who have different needs and require customized solutions (Molina et al., 2007). In
addition, customer satisfaction is known to be one of the most important and serious issues
towards success in today‟s competitive business environment, as it affects company‟s‟ market
shares and customer retention (Ooi, et al., 2011).Satisfaction is an overall customer attitude
towards a service provider, or an emotional reaction to the difference between what customers
anticipate and what they receive. Customer satisfaction is a collective outcome of perception,

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evaluation and psychological reactions to the consumption experience with a product/service
(Hansemark and Albinson. (2004).Here customers‟ perception takes the major share towards
customers‟ satisfaction because satisfaction is the result of what is perceived towards the specific
service. For example, if the quality of service delivered is beyond expectation then customers
will be delighted and if customer‟s perception is equal or under their expectation level with the
delivered service quality the customers will be satisfied and dissatisfied respectively. Customer
satisfaction leads to repeat purchases, loyalty and to customer retention (Zairi, 2000). However,
dissatisfied customers may try to reduce the dissonance by abandoning or returning the product,
or they may try to reduce the dissonance by seeking information that might Service quality is an
important antecedent of customer satisfaction which is the result of the customer‟s perception
and the quality of the service and it is a significant predictor of customer satisfaction using
SERVQUAL instruments. Service quality and customer satisfaction have been identified as key
elements of the service-profit chain (Heskettet al., 1997). As the perceived service quality is the
key driver of perceived value, one of the determinants of success of a firm is how the customers
perceive the resulting service quality, (Collart, 2000). It is the perceived value, which determines
customer satisfaction. Many firms including banking industry begin to track customers‟
satisfaction through measuring level of service quality perceived by their customers. Customer
satisfaction or dissatisfaction is considered to be the result of a comparison between the pre-use
expectations that a customer has about the product or service and the post-use perception of
product or service performance. Excellent service quality is vital to business profitability and
survival, Newman and Cowling (1996). Thus, from the finding of Newman and Cowling, the
researcher understands that if service quality is going down in the organization and doesn‟t meet
the expectation of its customers, it will have negative effects on the organization‟s profitability.
Thus, this study, therefore, will assess customers‟ satisfaction on the service quality of
Commercial Bank of Ethiopia in Bahir Dar.

1.1.1. Banking History in Ethiopia and Profile of the Study Bank

Banking is one of the oldest professions in human history, it also flourished with civilizations.
Since humans started using money bank services were in use throughout history. Modern
banking as we know it today was established in Italy and Greece in the 15th century.

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A broader definition of a bank is any financial institution that receives, collects, transfers, pays,
exchanges, lends, invests, or safeguards money for its customers. This broader definition
includes many other financial institutions that are not usually thought of as banks but which
nevertheless provide one or more of these broadly defined banking services. These institutions
include finance companies, investment companies, investment banks, insurance companies,
pension funds, security brokers and dealers, mortgage companies, and real estate investment
trusts (Encarta, 2009). CBE has been playing a conspicuous role in economic development of the
country for 75 year presence in all directions of the country. Despite the flourishing of private
commercial banks, the CBE has remained in the lead in terms of assets, deposits, capital, and
customer base and branch network.

1.2. Statement of the Problem

The unique characteristics of service contribute to the complexities involved in assessing and
managing service quality. Quality can be several things at the same time and may have various
meanings, depending on the person. This complicates both the consumer‟s assessment of service
quality and the provider‟s ability to control it. Most services involve a direct contact between the
customers and the service provider. This means that, in addition to task proficiency, interpersonal
skills like courtesy, friendliness, tolerance and pleasantness are important dimensions of quality,
particularly in high contact service where frontline employees are the key to customer
satisfactions (Mersha and Abdlakha,1990). The financial services, particularly banks, compete in
the market place with generally undifferentiated products; therefore service quality becomes a
primary Competitive weapon (Stafford, 1996).Satisfaction and dissatisfaction information are
important because understanding them leads to the right improvements that can create satisfied
customers who reward the company with loyalty, repeat business, and positive referrals. Creating
satisfied customers includes prompt and effective response and solutions to their needs and
desires as well as building and maintaining good relationships. A business can achieve success
only by understanding and fulfilling the needs of customers. From a total quality perspective, all
strategic decisions a company makes are “customer-driven.” In other words, the company must
show constant sensitivity to emerging customer and market requirements. According to the study
by Collart (2000), one of the determinants of success of a firm is how the customers perceive the
resulting service quality, as this is the key driver of perceived value. It is the perceived value

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which determines customer satisfaction. Many firms including banking industries begin to track
their customers‟ satisfaction through measuring their level of service quality perceived by their
customers. According to this model, the five dimensions of service quality are: Tangibility,
Reliability, Responsiveness, Assurance and Empathy. Modern banks are playing lots of new
roles and making life of common consumer as well as business men easy. In the past decade, the
banking sector has undergone radical changes, resulting in a market place, which is characterized
by intense competition, little growth in primary demand and increased deregulation. The
government of Ethiopia increased deregulation, in order to encourage the investors to participate
in the banking sectors, as a result the number of bank has been increased which further raises the
competition and difficulty among the banks. In this competitive environment, each bank wants to
attract new potential customers and retain the existing ones to ensure its survival and keep its
own competitiveness in the market. This can be achieved through providing quality services to
customers. Failure to do so will lead to bankruptcy or will make organizations out of
competition. Several studies have been done on service quality and customers‟ satisfaction which
results to measure the satisfaction level of the customers on service organization in Ethiopia and
all the studies used SERVQUAL to measure the service quality.

Thus, identifying these gaps strive the researcher to assess customers‟ satisfaction and the service
quality of the bank and give an insight for the management about customers‟ satisfaction on the
service quality of the bank. Some of the problems for both quality of service quality and
customer satisfaction use of weak like unstable internet and network connections, power
interruption, lack of trained manpower, lack of foreign currency for importers and investors and
low accessibility of ATM machines so on. The reason for the researcher to conduct this study is
the high level of problems related to commercial bank service quality and customer satisfaction
in CBE at Bahir Dar district. The problem here is: are customers really enjoying efficient and
effective services? Therefore, the main problem of this study will be: How satisfied are
customers with the service quality in Commercial Bank of Ethiopia in Bahir dar? Related to this
problem, experimental support implies that customers‟ support for and response to a particular
product depend on their level of understanding of what the product can do and what they stand to
benefit there from (Balachandher et al.,, 2001). In this relation, it is relevant to find out the
perception of customers on its service delivery of Commercial Bank of Ethiopia. In line with this
the problem statement this study will try to identify how employees treat their customers,

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employees willingness and ability to help their customers to provide prompt and promised
service ,it intends to identify knowledge and courtesy of employees and services offered by the
CBE at Bahir Dar district and it also try to evaluate complaints feedback handling time and
technique .

1.3. Research Questions

1.3.1. Basic research questions

This study tried to look at the level of customers‟ satisfaction towards different service quality
dimension interims of (Reliability, Responsiveness, tangibility, Empathy and Assurance) of
services at Commercial Bank of Ethiopia, and the study tried to answer the following questions

1. To what extent customers are satisfied with service quality of Commercial Bank of
Ethiopia in Bahir dar District?

2. How are the five service quality dimensions ranked by CBE customers?

3. Does Commercial Bank of Ethiopia handle its complaints feedback properly and on time?

1.4. Objectives of the Study

The main objective of this study is to evaluate customer satisfaction with the quality of services
offered by the Commercial Bank of Ethiopia in Bahirdar. Specifically, the objectives for this
study are:

To assess the level of customer satisfaction/dissatisfaction regarding service quality of

Commercial Bank of Ethiopia in Bahirdar, to measure customers‟ satisfaction level towards
service quality measurement of Reliability, Responsiveness, Tangibility, Empathy and Assurance
and perception on service quality and to recommend different constructive suggestions to
enhance the service quality and customer satisfaction for commercial bank of Ethiopia.

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1.5. Significance of the Study

The research provides some insight about service quality of Commercial Bank of Ethiopia in
Bahir Dar. And the satisfaction level of customers towards the bank service with respect to the
various services that the bank rendered. It can also be a good indicator for managers to identify
the gap between management‟s perception of service quality and that of their customers and
taking actions to close the gaps. It is also intended to help the company management to consider
the level of service quality as per the view point of customers so that based upon customers‟
feedbacks the managers might to divert their attention to this valuable essential function of the
business and to attract new potential customers and enable them retain the existing customers.
The study has also the following importance:

The findings of this research will help the bank‟s management to understand the role of good
quality service, it will provide literature for the bank industry under customer service quality, it
will helps to other researchers who want to conduct further study on the subject in the future and
it will provide solution for Commercial Bank of Ethiopia in Bahir Dar city service quality
problems and it may give an insight for the management what they should do in the future.

1.6. Scope/Delimitation/ of the Study

This study will focus on quality of service and customer satisfaction in CBE at Bahir Dar district.
Quality of service specifically assess on 10 branches‟ of CBE in Bahir Dar. Specifically, saving
account, credit facility (loan account), current account, foreign remittance, trade service, internet
banking and card banking services will be the area of interest. Quality of service specifically
assess from Intangibility, Perishable, Inseparability and Variability dimensions. Whereas
customer satisfaction will measure using different variables: Customer expectation, service
standard and service provision…etc.

1.7. Limitation of the Study

Due to time and resource constraints, the study will not include CBE branches and offices
outside of Bahir Dar city. The respondents for the study will limit to 10 branches of CBE located
in Bahir Dar city. Moreover, Lack of up-to-date literature in the area, lack of adequate recording
system and the respondents will not interest to fill and return the questioner. Despite the

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limitations the researcher faces the above stated problems the study will conduct by using the
second alternative possible, while maintain the quality of research kept.

1.8. Organization of the Study

The study report will be organized in to five chapters. The first chapter dealt with Background of
the Study, Statement of the problem, and Objective of the study, Significance of the study and
delimitation of the study.

In the second chapter literature review of the topic which includes different perspective of
different Authors and various theoretical concepts that relates with service quality and its
measurement and dimension of service quality and issues related with quality service will
discuss.

The third chapter will dealt with the research design & methodology of the research briefly.

The Fourth chapter will talk about the data analysis part of the research. The techniques use to
analyze the data will also part the fourth chapter. Finally, the fifth chapter will cover summary,
Conclusion and Recommendation of the research.

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 Chapter Two

Review of Related Literature

The primary purpose of this chapter is to get the theoretical understanding of the concept of
service quality, characteristics of service quality, dimensions of quality, what customer service
and satisfaction means, and what Quality management is. The researcher will tell that this part of
the research gives a clear insight for readers about the components of service quality
management and customers‟ satisfaction. In addition, in this chapter, literatures that are related
and important for this research are reviewed and presented as follows.

2.1. Customer Service

According to Davidow and Uttal (1989) customer service means all features, acts and
information that augment the customer‟s ability to realize the potential value of a core product or
service. Customer service is concerned with establishing, maintaining and enhancing
relationships between and/or among relevant business parties in order to achieve the objective of
the relevant parties Osuagwu (2002). According to W.L. Robert (2005) customer service is
defined as the ability of knowledgeable, capable and enthusiastic employees to deliver products
and services to their internal and external customers in a manner that satisfies identified and
unidentified needs and ultimately result in positive word-of-mouth publicity and return business.

2.2. Service Quality

Though quality is a much studied subject in manufacturing, as well as service sectors, there is no
universally accepted definition to define quality. The definition of quality is subjective, personal
and changes from person-to-person, place-to-place, organization- to- organization, situation- to-
situation and time-to-time. However, "Conformance to Standards" and "Fitness for Use" is the
classic definitions of quality, FEATHER (John) and STURGES Paul (2003). Quality research in
the goods sector was established long before it was established in the service sector.
(Bandyopadhyay (2003, 187-188) claimed that quality in goods sectors is commonly defined as
the product‟s fitness for its intended use, which means how well the products meet the needs and
the expectations of its customer. However, understanding quality in the goods sector is
inadequate for understanding service quality because of the fundamental difference between the

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two terms. Service quality is performance based rather than objects, therefore precise
manufacturing specifications concerning uniform quality can rarely be set (Parasuraman, et al.,
1985, 42). Service quality is more difficult for consumers to evaluate than product quality; this is
due to a lack of tangible evidence associated with the service (Hong and Goo, 2004). However
in the above definitions, the concepts of quality were mainly applied to tangible products in the
manufacturing sector. Due awakening of consumerism in 1980s, the quality of service as a
subject of academic interest caught the attention of marketing professionals and they attempted
to define service quality from customers' perspective. Experts like Kotler, Levitt, Gr6nroos,
Garvin, Cronin, Taylor, Teas, Rust, Parasuraman, Zeithaml, and Berry have contributed to the
growth of the subject and many models were developed on its measurement. In the past decades,
researchers (Carman 1990; Garvin 1983;Parasuraman et al, 1985, 1988) have defined and
measured service quality by examining the attributes of service quality, while others (Bitner and
Hubbert 1994; Iacobucci, Grayson, and Ostrom, 1994; Oliver, 1993; Oliver and DeSarbo, 1988)
focused on the application in services to conceptualize the relationship between service quality
and customer satisfaction. Therefore, a combination of the service quality and customer
satisfaction literature has formed the foundation of service quality theory (Clemes et al., 2007; as
cited in Wei 2010). The conceptualization and measurement of service quality is one of the most
debated topics in service marketing literature. Several researchers pointed out that service quality
is difficult to measure as it is an elusive and abstract construct (Carman 1990). Parasuraman et
al., (1985) argue that service quality involves not only the outcome but also the delivery process.
And also, service quality relates to satisfaction but the two are not the same. In addition, different
researchers defined service quality in different ways. Lovelock and Wright (1999) define quality
as the degree to which a service satisfies customers by meeting their needs, wants and
expectations. On the other hand, other researchers like Bitner and Hubbert (1994) describe that
the service quality as the customers‟ overall impression of the relative inferiority or superiority
of the organization and its services. It is the evaluation process outcome, in which customers are
involved and where a certain experience is always compared to the perceived service received. It
cannot be objectively measured according to some technical standards but is subjectively felt by
customers and measured relative to customer determined standards as per Kwortnik, 2005. Berry
et al., (1990) also defined service quality as the discrepancy between customers‟ expectations or
desire and their perceptions. The previous literature suggests that the evaluation of quality in

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services is more difficult than goods and that delivering quality services is increasingly
recognized as the key to success for service providers (Cronin and Taylor, 1992 as cited in Wei
2010). But, perceived service quality has confirmed to be a complex concept to understand as per
(Brady and Cronin, 2001, pp.34). Therefore, Rust and Oliver (1994) propose that it is essential
for companies to develop the awareness of customers‟ perceptions of service quality. In the same
taken the team of Parasuraman, Zeithaml and Berry (hereafter PZB) 1990 had conducted several
research studies to define service quality and identify the criteria that customers use while
evaluating the service quality in service organizations. They define service quality as "the extent
of discrepancy between customers' expectations or desires and their perception of what is
delivered" .In other words, it is the comparison of what customers expect before the use of
product/ service with their experience of what is delivered. This definition has been widely
quoted and referred in service marketing literature and the researcher chooses this definition as
more appropriate for this research.

2.3. Total Quality Management

Total quality management (TQM) is different from the old concept of quality because its focus is
on serving customers, identifying the causes of quality problems, and building quality into the
production process. According to Heizer and Render (2006) TQM stress a commitment by
management to have a continuing companywide drive towards excellence in all aspects of
products and service that are important to the customer. Heizer and Render(2006) have also
developed seven concepts for effective Quality Improvement (QI) program by modifying the 14
points developed by Deming as follow: (1) Continuous Improvement,(2) Six Sigma,(3)Employee
empowerment, (4) Benchmarking, (5) Just-in-Time,(6) Taguchi concept, and (7) Knowledge of
TQM.

Gurus of Quality Management

The concept of quality has existed for many years, though it‟s meaning has changed and evolved
over time. In the early twentieth century, quality management meant inspecting products to
ensure that they met specifications. In the 1940s, during World War II, quality became more
statistical in nature. Statistical sampling techniques were used to evaluate quality, and quality
control charts were used to monitor the production process. In the 1960s, with the help of so-

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called “quality gurus,” the concept took on a broader meaning. Quality began to be viewed as
something that encompassed the entire organization, not only the production process. Since all
functions were responsible for product quality and all shared the costs of poor quality, quality
was seen as a concept that affected the entire organization. Quality gurus have put forth several
approaches to improve company performance. These approaches are embodied in a set of quality
management practices, known as total quality.

2.4. Characteristics of Services

According to Bitner etal.,(1993)service has four characteristics: intangibility, Inseparability,

heterogeneity and perishability.

1. Intangibility: The idea of services being activities, benefits or satisfactions which are offered
for sale, or are provided in connection with the sale of goods. The degree of tangibility has been
suggested as a means of differentiating tangible products with services (Levitt, 1981). Most of
the time, services are explained as being intangible since their outcome is considered to be an
action rather than a physical product (Johns, 1999). (Darby and Karni, 1973 and Zeithaml, 1981)
highlight the fact that the degree of tangibility has implications for the ease with which
consumers can evaluate services and products. Other researchers propose that intangibility
cannot be used to differentiate clearly services with all products. (Bowen 1990 and Wyckham,
Fitzroy and Mandry 1975) suggest that the intangible-tangible concept is difficult for people to
grasp. Bowen (1990) provides empirical evidence to support this view feel that the importance of
intangibility is over- emphasized.

2. Inseparability: is taken to reflect the simultaneous delivery and consumption of services and
it is believed to enable consumers to affect or shape the performance and quality of the service
(Grönroos, 1978; Zeithaml, 1981 as citied in Wolak et al., 1998).

3. Heterogeneity of Services: reflects the potential for high variability in service delivery. This
is a particular problem for services with high labor content, as the service performance is
delivered by different people and the performance of people can vary from day to day and from
time to time (Rathmell, 1966).Heterogeneity to offer the opportunity to provide a degree of
flexibility and customization of the service. Heterogeneity can be introduced as a benefit and
point of differentiation as per Wyckham et al., (1975).
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4. Perishability of Services: services cannot be stored and carried forward to a future time
period (Rathmell, 1966; Donnelly, 1976; and Zeithaml et al., 1985 as citied in Wolak et al.,
1998). Services are “time dependent” and “time important” which make them very perishable.
Hartman and Lindgren (1993) also claim that the issue of perishability is primarily the concern
of the service producer and that the consumer only becomes aware of the issue when there is
insufficient supply and they have to wait for the service.

2.5. Service quality Dimensions

Service's unique characteristics of intangibility, heterogeneity, and inseparability lead them to

possess high levels of experience and credence properties, which, in turn, make them more
difficult to evaluate than tangible goods (Bitner 1990; Zeithaml 1981). Identification of the
determinants of service quality is necessary in order to be able to specify measure, control and
improve customer perceived service quality. The SERVQUAL is a concise multiple-item scale
with good reliability and validity that researcher can use to better understand the service
expectations and perceptions of consumers and, as a result, improve service. SERVQUAL was
also selected since it is important when it is used occasionally to track the service quality trends,
and when it is used in combination with other forms of service quality instrument identify ten
determinants for measuring service quality which are tangibility, reliability,
responsiveness,communication,access,competence,courtesy,credibility,security, and
understanding/knowledge of customers. Later “these ten dimensions were further purified and
developed into five dimensions i.e. tangibility, reliability, responsiveness, assurance and
empathy to measure service quality, SERVQUAL (Parasuraman et al., 1988). These five
dimensions identified as follows:

I. Tangibility: refers to physical facilities, equipment, and appearance of personnel. Jabnoun

and Alt amimi, (2003) indicated that customers choose tangibility factor of service quality in
the banking industry. Bank could build customer relationships by delivering added tangible
and intangibility elements of the core products. According to Ananth et al. (2011) tangibility
is measured by modern looking equipment, physical facility, employees are well dressed
and materials are visually appealing.

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 II. Reliability: means ability to perform the promised service dependency and accurately.
Reliability is a significant factor of product quality in addition to good personal service,
staff attitude, knowledge and skills (Walker, 1990). It is found that service reliability is the
service “core” to most customers and managers should use every opportunity to build a “do-
it-right-first” attitude (Berry et al., 1990).

III. Responsiveness: means willingness to help customers and provide prompt service.
Customers are very sensitive to employees' working environment in service organizations
(Brown and Mitchell, 1993).It involves timeliness of services (Parasuraman et al., 1985).It
is also involves understanding needs and wants of the customers, convenient operating
hours, individual attention given by the staff, attention to problems and customers‟ safety in
their transaction (Kumar et al., 2009).

IV. Assurance: It indicates knowledge and courtesy of employees and their ability to inspire
trust and confidence. (Parasuraman et al., 1988) found that assurance is an important factor
of service quality next to reliability and responsiveness towards customer satisfaction.

V. Empathy: refers to caring, individualized attention the firm provides its customers (ibid).
Jabnoun and Al-Tamimi, (2003) found that bank customers believed empathy as an essential
factor of service quality. It is suggested that employees' commitment to deliver quality
services, skillfully handling of conflicts and efficient delivery of services resulted in
satisfied customers for long term benefits (Nelson and Chan, 2005).

2.6. Customer Perception

The other item that is highly correlated with customer satisfaction is perception. Perception is the
process by which people select, organize, and interpret information, to form a meaningful picture
of the world (Kotler & Armstrong, 2010). Customers perceive the quality of the service in these
two dimensions, what they get and how they get it (Gronroos, 1982). Perceived quality is
considered as good when the expectation becomes realistic. The perception level should be
higher than the expectation level to create the positive perception and satisfaction. If the
difference between expectation and perception is very significant, it can be said that the
customers are satisfied highly. In the moderate level, the gap becomes zero which refers that the
expectation level and perception level are the same. On the contrary, if the expectation becomes
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higher than the perception, the negative results come to show that the customers are not satisfied
and the company should improve their service more than before (Gronroos, 1990).

2.7. Relation between Customers’ perception and Customer Satisfaction

The principal purpose of a business is to create satisfied customers Dracker (1954). Increasing
customer satisfaction has been found to lead to higher future profitability (Anderson, Fornell,
and Lehmann 1994), lower costs related to defective goods and services increased buyer
willingness to pay price premiums, provide referrals, and use more of the product (Reichheld
1996; Anderson and Mittal 2000), and higher levels of customer retention and loyalty. Increasing
loyalty, in turn, has been found to lead to increases in future revenue and reductions in the cost of
future transactions (Anderson, Fornell, and Lehmann 1994). A firm‟s future profitability depends
on satisfying customers in the present – retained customers should be viewed as revenue
producing assets for the firm (Anderson and Sullivan 1993; Reichheld 1996; Anderson and
Mittal 2000 as cited in Malthouse et al., 2003). Empirical studies have found evidence that
improved customer satisfaction need not entail higher costs, in fact, improved customer
satisfaction may lower costs due to a reduction in defective goods, product re-work, etc. (Fornell
1992; Anderson, Fornell, and Rust 1997 as cited in Malthouse et al., 2003). Customer
satisfaction and retention that are bought through price promotions, rebates, switching barriers,
and other such means are unlikely to have the same long-run impact on profitability as when
such attitudes and behaviors are won through superior products and services (Anderson and
Mittal 2000).Furthermore, Lin (2003) defined customer satisfaction as the outcome of a
cognitive and affective evaluation of the comparison between expected and actually perceived
performance, which is based on how customers appraise delivery of goods or services. Jamal and
Kamal (2002) describes customer satisfaction as “a feeling or attitude of a customer towards a
product or service after it has been used.” Therefore, any business, service or manufacturing
industry‟s main motive is increasing profit from time to time and all the industries know that
profit is generated only and only if they can satisfy their customer. Customer‟s satisfaction is the
positive result of conformance to a specific service/product of their customers‟ perception.
Hence customer satisfaction is the positive end result of customers‟ perception.

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2.8. Distinction between Service Quality and Customer satisfaction

The literature on services has made a distinction between service quality and customer
satisfaction (Bitner, 1990; Bolton & Drew, 1991; Parasuraman et al., 1988). This differentiation
is important for firms to concentrate on enhancing their capability to satisfy customers through
providing high service quality. The position of scholars is that service quality involves an
attitude and is an evaluation over several service encounters over time. It is also thought to be an
overall assessment about a service category or an organization. In support of this, respondents in
Parasuraman et al., (1988)‟s study demonstrated satisfaction with specific service encounters but
were not happy with the service quality of the firm. Conversely, recent thoughts on customer
satisfaction is summarized in the following definition of satisfaction by Oliver (1981) as a
psychological state resulting when the emotion surrounding disconfirmed expectations is coupled
with the consumer‟s prior feelings about the consumption experience. Furthermore, definitions
by other scholars (Howard & Sheth 1969; Hunt, 1979 as cited in Harr, 2008) Support the
thinking that it relates to a specific service encounter. Moreover, Oliver (1981) distinguished
customer satisfaction from service quality in his definition of attitude as the consumer‟s
relatively enduring affective orientation for a product, store, or process while satisfaction is the
emotional reaction following a disconfirmation experience which acts on the base attitude level
and is consumption-specific Therefore, service quality is “more stable and is situational oriented
(Oliver, 1981, p. 42). The two constructs are related in that service encounters of customer
satisfaction over time result in perceptions of service quality (Oliver, 1981;Parasuraman et al.,
1988).There is also a lot of argument regarding whether customer satisfaction is the antecedent
of service quality or the outcome of service quality. Initially, scholars take the position that
satisfaction is an antecedent of service quality since to reach an overall attitude (service quality)
implies an accumulation of satisfactory encounters (Bitner, 1990; Bolton & Drew, 1991).
However, other scholars take the opposite view that service quality is the antecedent of customer
satisfaction (Cronin & Taylor, 1992; Ekinci, 2004; Rust & Oliver, 1994; Swan & Bowers, 1998
as cited in Harr, 2008).Empirical research by Cronin & Taylor (1992) showed that service
quality has a significant effect on customer satisfaction. Similarly, recent studies by (González &
Brea, 2005; & Ekinci 2004 using recursive structural models provided empirical support that
service quality results in customer satisfaction. According to Zeithaml et al., (2006), customer

15 | P a g e
satisfaction is a broader concept than service quality which focuses specifically on dimensions of
service. Satisfaction is an overall customer attitude towards a service provider, or an emotional
reaction to the difference between what customers anticipate and what they receive, Hansemark
and Albinson (2004).Regarding the fulfillment of some needs, goals or desire customer
satisfaction is a collective outcome of perception, evaluation and psychological reactions to the
consumption experience with a product/service (Yi, 1990). Here customers‟ perception takes the
major share towards customers‟ satisfaction because their satisfaction is the result of their
perception towards the specific service. For example, if the quality of service delivered is beyond
their expectation then the customers will be delighted and if customer‟s perception is equal to
their expectation level or under their expectation with the delivered service quality the customers
will be satisfied and dissatisfied respectively. Customer satisfaction leads to repeat purchases,
loyalty and to customer retention (Zairi, 2000). However, dissatisfied customers may try to
reduce the dissonance by abandoning or returning the product, or they may try to reduce the
dissonance seeking information that might confirm its high value (Kotler,2000).By seeking
information that might confirm its high value (Kotler, 2000).

Conceptual framework on factors that contribute for how customers satisfaction or

dissatisfaction.

SERVQUAL Dimensions
Tangibles

Reliability Expectation

Perceived
Responsiveness Service
Perception quality

Empathy q

100

Assurance
80

60 East
West
Figure 2.140SERVQUAL Model: Adopted from the Journal of Marketing, Measuring Service
North
Quality Using
20 SERVQUAL Model (Kumar et al., 2009, p.)
0
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
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athy
Based on Figure 2.1, Parasuraman and his colleagues (1985) identified five gaps that can lead to
service quality failures: Parasuraman et al. (1985) proposed service quality to be a function of
pre purchase customer expectations, perceived process quality, and perceived output quality.
They defined service quality as the gap between customers‟ expectations of service and their
perceptions of the service experience, ultimately deriving the now-standard SERVQUAL
multiple-item survey instrument (Parasuraman et al., 1988).

The SERVQUAL scale is a principal instrument for assessing quality (Parasuraman 1988). This
instrument has been widely utilized by both managers and academics to assess customer
perceptions of service quality for a variety of services (e.g. banks, credit card companies, repair
and maintenance companies, and long-distance telephone companies). Based on Parasuraman et
al.‟s (1988) conceptualization of service quality, the original SERVQUAL instrument included
multiple sections that intended to measure Customer expectations for various aspects of service
quality, and customer perceptions of the service they actually received from the focal service
organization (Parasuraman et al., 1988). In short, the SERVQUAL instrument is based on the
gap theory (Parasuraman et al., 1985) and suggests that a consumer‟s perception of service
quality is a function of the difference between his/her expectations about the performance of a
general class of service providers and his/her assessment of the actual performance of a specific
firm within that class (Cronin, J. J. & Taylor, S.A. , 1992).

Five dimensions; the results of the initial published application of the SERVQUAL instrument
indicated that five dimensions of service quality emerged across a variety of services
(Parasuraman et al., 1988). These dimensions include tangibles, reliability, responsiveness,
assurance, and empathy tangibles are the physical evidence of the service (e.g. physical facilities,
appearance of personnel, or tools or equipment used to provide the service), reliability involves
consistency of performance and dependability (i.e. a firm performs the service right the first time
and honors its promises), responsiveness concerns the willingness or readiness of employees to
provide service (e.g. timeliness of service), assurance corresponds to the knowledge and courtesy
of employees and their ability to inspire trust and confidence, and, finally, empathy pertains to
caring, individualized attention that a firm provides its customers.

17 | P a g e
2.9. What Is Customer Satisfaction/Dissatisfaction?
Comparing customer expectations with their perceptions is based on what marketers
refer to as the expectancy disconfirmation model. Simply stated, if customer
perceptions meet expectations, the expectations are said to be confirmed and the
customer is satisfied. If perceptions and expectations are not equal, then the
expectation is said to be disconfirmed.

Although the term disconfirmation sounds like a negative experience, it is not

necessarily so. There are two types of disconfirmations. If actual perceptions were less
than what was expected, the result is a negative disconfirmation, which results in
customer dissatisfaction and may lead to negative word-of mouth publicity and/or
customer defection. In contrast, a positive disconfirmation exists when perceptions
exceed expectations, thereby resulting in customer satisfaction, positive word-of-
mouth publicity, and customer retention. Every day, consumers utilize the
disconfirmation paradigm by comparing their expectations with perceptions.
(k. Hoffman and Batteson, 2011)

2.10. Customers Satisfaction in case of Ethiopian Commercial Banks

Yonatan Gebre (June 2010), under his Master‟s Thesis found that, the un weighted
SERVQUAL scores for the Commercial Bank of Ethiopia, Awash International Bank
and United Bank had a negative gap in all dimensions. This implies that the
customers‟ perceptions falls short of their expectations. These banks should strive
promptly to close these gaps by identifying the causes. In order to close these gaps the
banks should consider the following steps with regard to their staff and management.

The author also recommends that the banks should develop training programs to
improve the Staffs skill, friendliness and courtesy, in addition to that Banks should
introduce improved communication flow that would enable staff to deliver what

18 | P a g e
customers expect more promptly and to provide information to management about
customers‟ expectations so that necessary changes would be made.

Maintaining a good Management information system by assembling as much pertinent

information as necessary about the customers and their expectations this helps to
increase competency and customer retention. And Banks also reconsider their banking
service hours and install Automatic Teller Machines (ATM) at various locations to
provide round the clock access to customers.

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 Chapter Three

Research Methodology

3.1. Research Design

Research design constitutes the blue print for the collection, measurement and analysis of data. It
helps the researcher in the allocation of limited resources by posing crucial choices. It is used as
the plan and structure of investigation so conceived as to obtain answers to research questions.
The plan is the overall scheme or program of the research (cooper, 2003). This study will be
conducted based on the descriptive research design using quantitative and qualitative method to
analyze the data from customers. The objective of descriptive research is „to portray an accurate
profile of persons, events or situations‟ (Saunders et al, 2009). The descriptive research type
describes data and characteristics about the population or phenomenon being studied. Descriptive
research answers the questions who, what, where, when and how. It is mainly concerned with
describing the nature or condition and the degree in detail of the present situation. In addition
Creswell (1994) also states descriptive research design is a technique of gathering information
about the existing condition. Descriptive studies are usually the best methods for collecting
information that will demonstrate relationships and describe the world as it exists. So this study
used descriptive research approach to describe the customers‟ satisfaction towards the service
quality of Commercial Bank of Ethiopia. It will also use descriptive analysis to assess the service
quality dimensions and the satisfaction level of the customers. In addition, it will help obtain an
accurate profile of the situation under this study and thus the study will consist of quantitative
and qualitative data types and sources.

3.2. Sampling Technique and Sample Size

Sample is the segment of the population that is selected for investigation (Bryman and Bell,
2003). Sample size is actually the total number of units which are to be selected for the analysis
in the research study. However, it is not possible for researchers to get in touch with a big
number of samples, as the sample size is critical question in practice. The decision about the size
and the sample needs to consider about time and cost, the need of precision, and a variety of
further considerations (Bryman and Bell, 2003).The population of the study is all Bahir Dar
district branches of Commercial Bank of Ethiopia which are 78 and categorized in five grading

20 | P a g e
system. Out of which a representative sample branches were drawn from the five branch
categorization of the bank. Stratified sampling is a method of sampling from a population and it
is a process of dividing members of the population into homogeneous subgroups before
sampling. Stratified sampling ensures that at least one observation is picked from each of the
strata, even if probability of being selected is far less than 1. Every element in the population
must be assigned to only one stratum. Hence, based on the above the researcher used stratified
sampling technique. For this study the strata are the different Classification of the branches. The
number of branches drawn from each stratum was selected using proportionate stratified random
sampling method and random selection was used to pick the number of branches within each
stratum. The sample size of each stratum in this technique is proportionate to the population size
of the stratum when viewed against the entire population. This means that each stratum has the
same sampling fraction. Because all samples have the same size in their classification and have
an equal chance of being selected. CBE branches are classified into four categories with the
exception of one special class branch for the purpose of proper administration. The classification
is made based on their profit making ability and the number of depositors of each branch has.
The profit is either due to the location of the branch, proximity to the major market areas and the
number of years of the branch since it is opened. Grade four branches are the highest profit
makers and have the higher number of depositors next to the special class branch. Based on the
above classification, the branch category and the number of branches in each category are
summarized in the following

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Table 3.2 CBE Branch Categories
Category No of Sample Service Type Sample
branches Branches Respondents
Special(district) Branch 1 1 Saving Account 7
Current Account 4
Loan Account 3
Foreign Account 2
Grade four branch 4 1 Saving Account 8
Current Account 2
Loan Account 2
Foreign Banking 2
Grade three branch 20 2 Saving Account 5
Current Account 2
Loan Account 1
Foreign Account 1
Grade Two Branch 20 2 Saving Account 10
Current Account 2
Loan Account 5
Foreign Banking 1
Grade One Branch 33 4 Saving Account 11
Current Account 3
Loan Account 1
Total 78 10
Source: The bank business development department confidential document

When we go up counting the classification grades (4 - 3 - 2 - 1) the number of depositors and

profit decreases. The target samples for the study was all the bank customers regardless of
whether they are doing their banking transactions with domestic banking service, foreign
banking service, loan service or other banking services of the selected branches. Of the total
branches operating in Bahir Dar district, the researcher selected ten (10) sample branches. The
researcher was take the representative sample size by determining the total number of
respondents as 150.Differnt researchers‟ states that if the population size is large and known the
researcher can use the table that will help the researcher in managing representative sample size.
Hence, since the research population (customers of CBE in Bahir Dar) is known and the number
is too large reaching up to 150,000 the table suggests using 150 sample sizes. The researcher,
therefore, used 150 for better accurate data gathering taking into account the non- returnable
questionnaires. The number of respondent from each branch was determined disproportionately
as 15.The number of branches within each stratum was chosen proportionately. For example in
grade four branch there were 8 branches and total population is 78 and there will be 10
22 | P a g e
representative samples then the researcher manages to arrange a formula (No. of representative
sample multiplied by the No. of first class branches and divided to the whole population
(10X8/78) = 1 By rounding up, one branch will be chosen using simple random sampling from
first class branches. Using the same calculation two branches will be selected from grade 2 and
grade 3 branches since they are the same in number and 4 branches were considered from the
grade 1 branch. In general 10 branches were considered including the special class branch which
is the head (district) office branch. Respondents from each category were proportionately
stratified from each service of the branch. The classification is made based on their profit making
ability and the number of depositors of each branch has. This is either due to the location of the
branch, proximity to the major market areas and the number of years of the branch since it is
opened. Grade Four branches are the highest profit makers and have the higher number of
depositors next to the special class branch.

3.3. Method of Data Collection

There are several methodological approaches available to gather data and for the proper
achievement of the objectives of the study; the researcher used primary and secondary data
sources. Primary data was collected using questionnaires. Primary data is a data collected on
source which has not been subjected to processing or any other manipulation which are collected
by the investigator conducting the research. Secondary data is collected by someone other than
the user. According to Saunders et al., (2009) the use of two or more independent sources of
data or data collection methods helps to confirm findings in the study. Therefore, primary
sources of data were collected through the in-depth interviews and questionnaires. Secondary
data were obtained from different documents of the bank like service strategy documents, quality
service control results and different literatures will be referred. In this research the original
SERVQUAL model of Parauramna et al. (1985), (five dimensions, namely Tangibility,
Reliability, Responsiveness, Assurance and Empathy) are used.

Questionnaire;

The questionnaires are used as a primary data source for qualitative and quantitative data
gathering. It was designed to enable the researcher obtain as detailed information as possible. A
total of 150 questionnaires was prepared and distributed to fifteen customers for each of the ten

23 | P a g e
branches (list of branches is attached). The numbers of respondents were determined
proportionately using the number of customers from each service, Saving Account customer,
Current Account, Loan service and Foreign banking service customers of the bank. The
questionnaires consist of open ended questions (qualitative data) where the questions provide a
guideline for the respondent but it does not have to be followed strictly and closed - ended
questions (quantitative data). The aim of the questionnaire was to research and gather
information on the service quality of the bank and their level of satisfaction.

3.4. Method of Data Analysis

After collecting the data, the data was analyzed using a descriptive data analysis technique which
was presented by tables, frequency distributions and percentages to give a condensed picture of
the data. This will be achieved through summary of simple statistics, which includes the mean,
mode, median and standard deviation values which are computed for each variable in this study.
The researcher used Statistical Package for Social Sciences (SPSS version 21 software) which
help to process, analyze and tabulate the data that enables to provide frequency table along with
percentage employed to analyze the responses of customers.

3.5. Ethical Issues

Any information provide from the survey is treat with the strictest confidence it deserves.

24 | P a g e
 Chapter Four
Data Analysis and Presentation
This chapter of the thesis illustrates the result of the fieldwork conducted by the researcher. It is
organized based on the research questions. The results are obtained from questionnaires
administered to customers of CBE, who are found to be in the ten branches of Bahir Dar District.
The chapter presents the data collected and their findings. Analysis is also made based upon the
findings in collaboration with the literature reviewed. A total of 150 questionnaires were
administered while undertaking the research. However, out of these 150 questionnaires, only
120 questionnaires were correctly filled and returned.

4.1. Socio-demographic profile of the study participants

In the study both individual and business customers were considered and the majority of the
study participants were individual customers, constituting around 75 percent and the remaining
25 percent were business customers.

Table 4.1 Customers Type

Type of Customer Frequency Percent

Individual 90 75

Business 30 25

Total 120 100

Source: (Own Survey, 2019)

Most of the customers (both individual and business) are in the age category of 35-44,
comprising around 50 percent of the study participants, followed by the age category of 25-34
(23 percent). On the other hand, those in the age group of 18-24 and 45-64 were 10 percent and
12 percent respectively. This shows as most of the customers of the bank are adults of middle
age.

25 | P a g e
Table 4.1.1 Age Distribution of Respondents
Age Distribution Of Respondents Frequency Percent

Valid 18-24 years 12 10

25-34 years 28 23

35-44 years 65 50

45-64 years 14 12

65 and above 1 .2

Total 120 100

Source: (Own Survey, 2019)

All of the customers who participated in the study have attended formal school. Moreover,
around 26 percent of the customers have diploma and above. Out of those who have professional
qualification, around 26 percent have diploma, 40 percent have first degree and around 13
percent have second degree and above. It is only 28 percent of the customers who reported
having a certificate level of qualification.

Table 4.1.2 Educational Level of Respondents

Educational level of Respondents Frequency Percent

Certificate 33 27.8

Diploma 31 25.6

Degree 40 33.7

Valid Masters 15 12.6

Above masters 1 .3

Total 120 100

All of the study participants had experience in using the banking services of Commercial Bank
of Ethiopia for at least 12 months. Most of the customers (around 55 percent) have spent 13-18
years with Commercial Bank of Ethiopia, 23 percent have spent 7-12 years and 9 percent have
spent 19 years and above. Those who are young to the bank are around 13 percent of the study

26 | P a g e
participants have spent 1-6 years with the bank. With regard to the type of banking service 52
percent of the participants are using, saving account, 29 percent of the respondents revealed that
they are using current account and International banking services, 15 percent declared they are
using International banking and loan service and 4 percent mentioned they are using loan
provision service of the bank. This puts the respondents in the right position to evaluate the
quality of service provision of the bank in respect with the different service types of the bank.

Table 4.1.3 Respondents years of relation with the bank

Years of Relationship with bank Frequency Percent

1-6 years 16 13.2

7-12 years 28 22.9

13-18 years 66 55

19 years and above 10 8.8

Total 120 100

Around 30 percent of the respondents are using the service of other private and government
banks, 20 percent of the respondents declared they are using other private banks apart from CBE
services and 20 percent of the respondents are also customers of other private banks. It is only 30
percent of the respondents are loyal customers of CBE.

Table 4.1.4 Customers relationship with other banks

Customers relationship with other banks Frequency Percent

No, I am not 36 30

Yes, Other private banks 24 20

Yes, government banks 36 30

Both, Other private & Government Bank 24 20

Total 120 100

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4.2. Service Quality of CBE using SERVQUAL

4.2.1. Service Quality using Tangibility Dimension

The mean score of the overall level of satisfaction by the tangibility domain was 3.8 (SD=1).
This shows as the customers‟ satisfaction is good as the mean is closer to the highest point on the
scale. The calculation of the means of the dimensions of tangibility indicated that the neat
appearance of the staff (M=4, SD=0.8) and visually appealing physical equipment are the
satisfaction drivers for the domain. The satisfaction of the customers by convenience of the
branches location (M=3.8, SD=1) and the modern looking equipment (M=3.8, SD=1) were also
good. Though the mean score of customers satisfaction by the visually appealing nature of the
material attractiveness associated with the services was reasonably high, in relative terms the
dimension appear to be the key dissatisfaction driver in relation to the domain.

Table 4.2 Service Quality using Tangibility Dimension

Tangibility N Max Min M SD

Modern looking 120 1-5 3.75 1.12

equipment
Visually appealing 120 1-5 4.4 .89
physical equipment
Neat appearance of 120 1-5 4.02 .84
staffs
Materials associated 120 1-5 3.3 1.2
with service are
visually appealing

Location 120 1-5 3.75 1.02

Convenience of
Branches

Source: (Own Survey, 2019)

The satisfaction of the customers by the reliability of the bank is good. The mean score of the
sub scale as rated by the customers participated in the study was 4 (SD=0.9). Insistence on error
free records (M=4.7, SD=0.6) and sincere interest to solve the problems of customers‟ (M=4,
SD=0.8) were the dominant aspects of reliability by which higher level of customer satisfaction

28 | P a g e
was reported. The next high customer satisfaction driver was noting that staffs performed the
right service on the first encounter of the customers with the bank service (M=3.9, SD=1),
followed by the staff integrity in keeping their promises (M=3.7, SD=1) and the staff ability to
provide services they promised to do so (M=3.7, SD=1).

Table 4.2.1 Reliability

Reliability N MIN M SD

MAX

Staff keeps promises 120 1-5 3.74 1.12

Sincere interest in solving customers problem 120 1-5 4.02 .84

Staffs performing right the first time 120 1-5 3.85 1.03

Provide service they provide to do so 120 1-5 3.74 1.15

Insist on error free records 120 1-5 4.73 .56

Source: (Own Survey, 2019)

Responsiveness is willingness to help customers and provide prompt service. A firm is known to
be responsive when it communicates to its customers how long it would take to get answers or
have their problems dealt with (Zeithaml et al., 2006). The customers regard the responsiveness
of the bank as good. The satisfaction level of the customers who participated in the research
declared that they are happy by the responsiveness of the bank staff in the service delivery
process. The mean score of the sub scale was 4(SD=1). As can be seen from table 4.2.3 below
three of the sub scale was above 4, affirming that the customers are highly satisfied by the
responsiveness of the staff. These include the staff willingness to help, promptness of the staff in
providing service to customers and informing customers as when service will be performed. On
the other hand, the satisfaction of the staff by the availability of the staff to respond to customers
is lower in relative terms. Yet, it is good in absolute terms - when seen against the rating scale.

29 | P a g e
Table 4.2.2 Responsiveness of CBE to Customers
Responsiveness N MIN M SD

MAX

Staff telling customers when service will be performed 120 1-5 4.09 1.1

Prompt Service to Customers 120 1-5 4.09 1.1

Staff willingness to help 120 1-5 4.13 .95

Staffs are never be busy to respond to customers 120 1-5 3.6 .97

Source: (Own Survey, 2019)

As assurance explained by Zeithaml et al., (2006) is knowledge and courtesy of employees and
their ability to inspire trust and confidence. This dimension includes willingness to instill
confidence in customers, being consistently courteous with customers, knowledgeable to answer
customers‟ questions and feel safe in transactions with the bank. The customers who participated
in the study demonstrated high level of satisfaction by the staff knowledge, courtesy, as well as
their ability to instill trust and confidence in the employees of the bank. The score of the domain
was 4.1(SD=0.8). The key driver of satisfaction for the domain was the staff knowledge in
addressing the concerns and questions of the customers followed by the degree of security
(safety) the customers enjoy in their transaction. The customers also stated their high level of
satisfaction by the friendliness and courtesy of the staff as well as the behaviors of the staff that
instill confidence. Table 4.2.4 shows the score of each of the elements of the sub scale. As can be
inferred from the score in the table, staff knowledge to answer the customers question and the
degree of safety the customers enjoy stands as the two major satisfaction drivers for assurance.

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Table 4.2.3 Assurance
Assurance N MIN M SD

MAX

Behavior of Staffs instill confidence to customers 120 1-5 4.09 1.1

Customers feel safe in their transactions 120 1-5 4.09 1.1

Customers feel safe in their 120 1-5 4.13 .95

Staff having knowledge to answer questions 120 1-5 3.6 .97

Source: (Own Survey, 2019)

Among the five domains of the constructs of customer satisfaction, empathy was found to be the
major driver of the customers‟ satisfaction. Zeithaml et al., (2006) described empathy as caring
individualized attention the firm provides to its customers and the customer is treated as if he is
unique and special. The mean score of the sub scale was 4.2 (SD=0.8), which is higher than from
all of the sub scales. The level of the customers‟ satisfaction by the individual attention they are
given by the staff (M=4.2, SD=0.9), the individual attention they get from the staff (M=4.4,
SD=0.8), as well as the understanding of their specific needs by the staff (M=3.8, SD=1) were
found to be high. Moreover, the customers are highly satisfied by the convenience of the
operating hours of the bank (M=4.4, SD=0.8). On the basis of the level of satisfaction by the
dimension of the domain, it is possible to note that getting personal attention from the staff and
convenience of the operating hours are the primary drivers of customer satisfaction for the sub
scale.

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 Table 4.2.4 Empathy
Empathy N MIN M SD

MAX

Individual attention given by staff 120 1-5 4.19 .86

Individual attention given by staff 120 1-5 4.42 .82

Individual attention given by staff attention 120 1-5 4.42 .82

Understand the specific needs of 120 1-5 3.81 1.03

Customers

Source: (Own Survey, 2019)

4.3. Overall level of customer satisfaction

The issue of customer satisfaction whether being antecedent of service quality or the outcome of
service quality is widely debated across existing literatures. Recent studies by (González &
Brea, 2005; & Ekinci 2004 using recursive structural models provided empirical support that
service quality results in customer satisfaction. The overall customer satisfaction of the
customers was found to be high (M=4, SD=0.9). This was measured as the mean of all the five
domains indicated below.

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The use of indices is standard practice in state-of-the-art modeling, and brings advantages to any
survey. All survey measures consist of two components the true information and error.
Combining a number of measures into a single index increases the proportion of true score to
error, and provides a better picture of the true score, the common element in each measure. A
customer satisfaction index is the best single measure of how satisfied your customers are
overall, in relation to what matters most to them. To calculate a satisfaction index, the
importance of the parameters and satisfaction scores were combined in this study so as to
produce a weighted average score, presented as a percentage of the theoretical maximum.

4.4. Ranking the five quality dimensions

From the five domains empathy, assurance and reliability of the bank were found to be the
drivers of the customer satisfaction. On the other hand, tangibility, was identified an area that
needs improvement with particular emphasis on the drivers of customers satisfaction for the sub
scale.

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Table 4.2.5 The score of each of the major domains of Five quality Dimension.
Tangibility N MIN M SD

MAX

Tangibility 120 1-5 3.84 .99

Reliability 120 1-5 4.02 .91

Responsiveness 120 1-5 3.98 .99

Assurance 120 1-5 4.11 .78

Empathy 120 1-5 4.16 .80

Source: (Own Survey, 2019)

4.5. Service quality with respect to technological advancement, waiting time

and responsiveness
The evaluation of the service quality of the bank in terms of the utilization of modern
technologies like using mobile banking or E-banking in advancing the services of the bank rated
by the customers participated (52 percent) consider it as good. Looking at the degree of the
customers‟ appreciation of the bank of using modern technologies, around 16 percent rated it as
satisfactory,17 percent rated it as good, 19 percent rated it as very good and excellent. On the
other hand, around 48 percent of the respondents indicated as the service quality with regard to
use of technological advancements is poor.

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Table `4.3.1 Rating Modern banking system, mobile banking

Frequency Valid Percent

Poor 57.24 47.7

Satisfactory 18.84 15.7

Good 20.88 17.4

Very Good 20.52 17.1

Excellent 2.64 2.2

Total 120 100

The customers‟ comparison of the banks‟ service with other private banks on the bases of the
utilization of modern technologies by the customers revealed that the relative position of the
bank as perceived by the customers is not good. Around 80.8 percent of the customers who took
part in the study reported as the position of the bank is low (53.8 percent rated it as very low
while 27 percent rated as low) in comparison with other private banks. Contrary to this, around
19 percent of the customers indicated as the bank is better in this regard.

Table 4.3.2 CBE modern banking compared to other banks

Frequency Valid Percent

Very Low 64.56 53.8

Low 32.4 27

Moderate 19.68 16.4

High 1.92 1.6

Very High 1.56 1.3

Total 120 100

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The rating of the bank by its relative position with other private banks in terms of waiting time
by the customers participated in the study also revealed as the bank is in a good position. Around
95 percent of the customers expressed as the bank is performing better than other banks. Out of
this, around 53 percent rated the service as good compared to other banks, 20 percent rated it as
very good, and 12 percent rated it as excellent, and 10 percent of the customers rated as
satisfactory. Yet, around 5 percent of the customers think that the bank is poorly performing than
other banks with regard to waiting time.

Table 4.3.3 Measuring waiting time of CBE

Frequency Percent

Poor 6 5.0

Satisfactory 11.52 9.6

Good 64.08 53.4

Very Good 23.76 19.8

Excellent 14.52 12.1

Total 120 100

The customers also expressed as their level of satisfaction by the banks‟ ability to meet their
service needs is good. More than 85 percent of the customers reported as they are satisfied by the
bank with respect to the bank‟s ability to meet their specific needs of services. They state some
of the satisfactory drivers like employee‟s manner in welcoming customers, helping or guiding
customers with much patience, the availability of branches and convenient working hours. On
the other hand around 39 percent of the customer who were participated in the research was not
satisfied with the bank service. Some of the dissatisfaction drivers were revealed as the waiting
time and lack of E-banking in CBE‟s services. Among the administered dissatisfied customer in
the study majority of the customers suggest some way outs for CBE‟s service quality progress.

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4.6. Meeting customers’ expectations and complaints handling

4.6.1. Deviation between Customers expectation and performance

As it is discussed in the literature review the perception level should be higher than the
expectation level to create the positive perception. As to the responses of the customers
participated in study, the gap between the expectation of the customers while considering to be
the customers of the bank and the extent to which their expectations were realized was found to
be wide. The majority of the study participants indicated as there degree of the difference
between their expectations and the reality was low (41 percent) and 58 percent as moderate. On
the other hand, around 0.6 percent of the study participants reported that the gap was very wide.

Table 4.3.4 The deviation between customers‟ expectation and performance

Gap Frequency Valid Percent

High deviation 57 47.7

Moderate 19 15.7

Low deviation 21 17.4

Very low deviation 20 17.1

No deviation 3 2.2

Total 120 100

Regarding the effect of the variation, more than half of the participants reported the difference in
their expectation and quality of service they got did not affect them negatively. While around 40
percent expressed as they were not affected by the difference, around 14 percent reported as they
were stayed positive. On the contrary, 46 percent reported as the gap did affect them negatively.
This will have a negative effect on the bank image and customers base in the long term and
needs to be tackled early.

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Table 4.3.5 The gap between customers expectation and actual performance of CBE effect on
their relationship with the bank
Effect of the gap Frequency Percent

Yes, it affects negatively 55 45.5

No, I stayed neutral 48 40.2

Yes, it affects positively 17 14

Total 120 100

Source: (Own Survey, 2019)

In view of the above, the respondents were asked whether they had presented their complaints to
the bank management in relation to their expectations. Around 45 percent responded as they do
so while a significant percentage of the customers (54 percent) indicated as they did not report
their complaints to the management. The low level dissatisfaction and complaint by the
customers to the management may influence the customers‟ satisfaction negatively and hinders
the management capacity to improve the quality of the service they rendered.

Table 4.3.6 Did customers put complaints to the management

Frequency Percent

Yes 55 45.4

NO 65 53.8

Total 120 100

Source: (Own Survey, 2019)

4.6.2. Complaint handling process of the bank

Complaint is one way of getting feedback for management and handling complaints on time very
wisely is one of the management responsibilities. In view of this, around 84 percent of the study
participants expressed as they did get response in time. Moreover, most of those who got the
responses reported as the response were satisfactory, in time and positive. In connection to this,
23 percent of the customers indicated as the response was quick and positive, 39 percent

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indicated as the response was satisfactory in addressing their concern, and 23 percent indicated
as the response was quick. Nevertheless, around 2 percent of the customers reported as they did
not get response while around 14 percent complain about the delay in giving the response.

Table 4.3.7 Rating CBE's complaint handling process & time of response
Frequency Percent

No response at all 3 2.2

Late response 16 13.5

Satisfactory response with 47 39.4

reasonable

Quick response 27 22.3

quick and positive response 27 22.6

Total 120 100

Source: (Own Survey, 2019)

As a proxy indicator of the customers‟ satisfaction as well as a measure of the customers‟

commitment, the customers who participated in the study were asked if they are intending to
continue being the bank‟s customers. Most of the study participants (76 percent) asserted as they
will continue being the customers of Commercial Bank of Ethiopia. 35 percent of the respondent
customers indicated as they will be limited to CBE in their use of banking services out of which,
12 percent of the respondent declared their loyalty for CBE banking service and 23 percent
declared that they will stay with CBE and wait for changes in the service quality aspect while
around 41 percent of the customers indicated as they will also be using other banks though will
remain customers of Commercial Bank of Ethiopia and 24 percent of the respondents confirm
that they will be moving to other banks to get the service that they are looking for.

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Table 4.3.8 Willingness to continue being customer of CBE
Customers willingness to Frequency Percent
continue with CBE
No, I will not 29 24.2
Yes, but will work with others 49 41
Yes, I will wait and see for 27 22.6
changes
Yes, I will keep my loyalty 15 12.1
Total 120 100
Source: (Own Survey, 2019)
Gap Analysis

With the aim of areas where to focus for improvement the satisfaction gab was analyzed. The
answer is not necessarily to concentrate on the areas where satisfaction is lowest. In order to
make sure that maximum „Doing Best What Matters Most‟ is observed, the gaps between
importance and satisfaction were analyzed for each domain. The key to customer satisfaction is
„Doing Best What Matters Most‟ to customers. In other words satisfaction should be highest in
the areas that are priorities for customers. In light of this, the gap between the Customers‟
satisfaction level and their importance to the customers is indicated below.

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As can been from the above figure, the gap for Empathy is the highest followed by Assurance
and reliability and the lowest scores goes to Tangibility followed by Responsiveness. Effective
way to target improvement is to focus initially on areas that have large satisfaction gaps, but are
relatively easy and cheap to address. These „quick wins‟ are an excellent way to bring rapid
improvement in customer satisfaction. In general, the customers also expressed as their level of
satisfaction by the banks‟ ability to meet their service needs is good. More than 80 percent of the
customers reported as they are satisfied by the bank with respect to the bank‟s ability to meet
their specific needs of services. They state some of the satisfactory drivers like employee‟s
manner in welcoming customers, helping or guiding customers with much patience, the
availability of branches and convenient working hours. On the other hand around 35 percent of
the customer who were participated in the research was not satisfied with the bank service. Some
of the dissatisfaction drivers were revealed as the waiting time and lack of E-banking in CBE‟s
services. Among the administered dissatisfied customer in the study majority of the customers
suggest some way outs for CBE‟s service quality progress.

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 Chapter Five
Summary, Conclusion and Recommendation
The chapter presents summary of findings, the conclusion finally drawn and recommendations
based on the presented data, analysis made and reviewed literatures.

5.1 Summary

From the data collected, analysis made and reviewed literatures in order to meet the objective of
the study which was: To assess the level of customer satisfaction with service quality in
Commercial Bank of Ethiopia in Bahir dar district using SERVQUAL model, To clearly asses
the gap between customer expectation and perception in the service quality provided by CBE and
other related objectives mentioned earlier, the study put the following as its summary of findings.
After analyzing the information gathered through structured questionnaires, the following major
findings are presented:-

 About 80 percent respondents are satisfied with CBE‟s service quality while the
remaining was not satisfied.

 As revealed in the analysis customers ranked the five service quality dimensions as
empathy, assurance and reliability of the bank were found to be the drivers of the
customer satisfaction and the bank should work more on tangibility and responsiveness
dimensions respectively.

 The gap analyses of the five dimensions were rated as good. But improvement in all the
five dimensions is needed, especially on the two service quality dimensions: While
tangibility and responsiveness have shown up to be less; thus requiring concerted effort
for improvement from the Bank.

 The customers of the bank have higher expectations than what they actually receive from
the bank even though the gap is not very high.

 As seen from the analysis around 46 percent of the respondents are customers of other
private banks, so that they can compare the service of one bank from the other.

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  Around 46 percent of the respondents confirm that if there are no changes with the
service quality of the bank that they will move to other banks.

5.2 Conclusion

Satisfied customers are a good work of mouth communicators for an organization and will stay
longer. In the contrary customers are difficult to retain and create a negative impact in attracting
the new ones. From the overall findings in relation with the literature review in this research it
can be concluded that CBE‟s customers perceived the bank‟s service quality below their
expectation especially in tangibility aspect of materials associated with the service which is
related to cashless banking service of the bank. We can infer form the findings that around 80
percent of the customers are satisfied with the service quality of CBE. But the remaining 20
percent are not satisfied with the service quality. Which in turn has a negative impact on the
banks competitiveness in the market. Since CBE is the first government commercial bank in
Ethiopia, customers have high expectation form the bank to be the leading bank in every aspects
of the service delivery process. The findings of the research also indicate that should work in all
the service quality dimensions and in addressing customer‟s feedback to be competitive in the
market. Despite the differences in the result of the dimensions the bank management should give
attention to all the five SERVQUAL dimensions and tangibility and responsiveness needs special
attention of the management. Generally, to outreach the markets it is very important to the bank
to improve in all the five service quality dimensions and provide quality service that will satisfy
its customers in order to keep its values and attain its vision to be the strongest and most
preferred Bank of the People.

5.3 Recommendations

CBE should make the necessary investments to improve its Tangibles such as, in using
introducing cashless banking (E-Banking systems and updating the materials associated with the
service because it will be difficult for the bank to cope-up with its current status in this dynamic
world. CBE should improve the responsiveness dimension of CBE‟s service quality and to
narrow the gap between perceptions and expectations, a training initiative should be made
focusing on fast response from management to customers' requests, swift reply to complaints.

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The banks should attempt to remain competitive by providing attractive and prompt banking
service that earns by customers‟ confidence and trust.

A great attention and effort in closing the gap is expected from CBE. The bank needs to develop
a strategy to target and retain those dissatisfied customers. This can also be helpful to attract the
new one at the same token. The strategy could be the one which can clearly point out the reasons
why the customers are not satisfied with regard to the dimensions. Then a strategy that could
help to eliminate or at least decrease these dissatisfactions and that can measure the results and
take corrective actions should be implemented. Or it can be considered as a strategy that works
for the service excellence of the bank. CBE should also give attention to the services it promises
to customers versus what the bank can actually deliver and address its deficiencies. The bank
have to take in to consideration the resource that it actually has at hand, some of them are:
human resources, technological capacity, capacity of the stake holders in providing services to
the bank and other factors that have a correlation with its service giving . As Human resources is
the core element in achieving organizational objectives, before. Human resource is a base for
providing a quality service due to the nature of the service delivery process. Therefore, CBE
should keep working on developing the knowledge of its employees on customer service and
other operational areas than before. In addition to this continuous assessment of customer service
excellence should be implemented.

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 References
Berry, LL., A. Parasuraman, Valarie A. Zeithaml, Dennis Adsit, John Hater, Eric J. Vanetti,
David J. Veale(1994) “Improving Service Quality in America: Lessons Learned [and
Executive Commentary]”, The Academy of Management Executive Vol. 8, No. 2, pp.
32- 52

Berry LL, Zeithaml VA, Parasuraman A (1990), five imperatives for improving service quality.

Sloan Manage Rev, 31(4): 29-38.

Besterfield, D.H.(1994).Quality Control, Prentice-Hall, Englewood Cliffs, NJ. 67 Bitner,

J.M.and Hubbert, A.R. (1994). „Encounter Satisfaction versus Overall Satisfaction
versus Quality‟, In Rust, R. & Oliver, R. (Eds.), Service Quality: New Directions in
Theory and Practice, Sage, Thousand Oaks, California, 72-94.

Bitner, M.J. (1990). Evaluating service encounters: the effect of physical surroundings and
employee responses. Journal of Marketing, 54, April, 69-82.

Bitner M.J., Fisk R.P. and Brown S.W. (1993). “Tracking the Evolution of the Services
Marketing Literature”, Journal of Retailing, 69, 1, 61 - 103.

Bolton, Ruth N. (1998), “A Dynamic Model of the Duration of Customer's Relationship with a
Continuous Service Provider: The Role of Satisfaction,” Marketing Science, 17 (1), 45-
65.

Bolton, R.N. and Drew, J.H. (1991), “A Longitudinal Analysis of the Impact of Service
Changes on Customer Attitudes,” Journal of Marketing, 55, 1-9.

Boulding, W., A. Kalra, R. Staelin and V.A. Zeithaml. (1993). A dynamic process model of
service quality: From expectations to behavioral intentions. Journal of Marketing 30:7-
27.

Bowen, J. (1990). „Development of a Taxonomy of Services to Gain Strategic Marketing

Insights‟, Journal of the Academy of Marketing Science, 18, 1, 43-49.

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Brady, M.K, & J. Cronin,( 2001),” Some New Thoughts on Conceptualizing Perceived Service
Quality: A Hierarchical Approach “, The Journal of Marketing, Vol. 65 No.3 , pp.34-
49.

Brown KA, Mitchell TR (1993). Organizational obstacles: links with financial performance,
customer satisfaction and job satisfaction in a service environment, Hum Relat, 46(3)
Clow, E. & Kutz L.(2003) “Service Marketing ,Operation Management and
Strategy”,2nd ed. Biztantra press ,New Delhi. Collart, D. (2000), Customers
Relationship management, price water house cooper, New York, USA Cronin, J. J., &
Taylor, S. A. (1992). Measuring Service Quality; a Re-examination and Extension. The
Journal of Marketing, 56, (3), 55-68.

Gronroos, C. (1982).A Service Quality Model and its Marketing Implications. European Journal
of Marketing. Vol.18, Number 4, p.36-44.

Gronroos, C. (1990). Service Management and Marketing. Lexington Books. Canada Kotler, P.
& Armstrong,G. (2001). Principles of marketing. Prentice Hall. New Jersey.

Parasuraman, A., Zeithaml,V. A., & Berry, L. L. (1985). A Conceptual Model of Service Quality
and its Implications for Future Research. Journal of Marketing. Vol. 49, p.41-50.

Parasuraman, Valarie A. Zeithaml, Leonard L. Berry “Reassessment of Expectations as a

Comparison Standard in Measuring Service Quality”: The Journal of Marketing, Vol. 58, No. 1
(Jan., 1994), pp .111-124.

Parasurman A, A.,Zeithmal, V.A. and Berry, L. L1993”More on Improving Service quality

Measurement”, Journal of Retailing, Vol.69,No.1, pp.140-147

Perspective – An empirical study. Total Quality Management .Vol 18.The History of Banking
and Other Financial Institutions in Ethiopia (2010).

National Bank of Ethiopia. http://www.nbe.gov.et/History/history.htm.

Zeithaml, A.Valarie (1990). Delivering Quality Service-Balancing Customer Perceptions and

Expectations. The Free Press. New York.

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Zeithaml, A.Valarie.,Bitner, J.M,. and Gremler, D. Dwayne (2009). Services Marketing:
Integrating Customer Focus across the Firm. McGraw Hill International Edition. New
York.

Zelthmal A., & Bitner M. (2006), Service Marketing -Integrating Customer Focus Across the
firm), 3rd ed. Tata MacGraw-Hill. Publishing Company Limited, New Delhi

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 ADDIS ABABA UNIVERISTY

FACULITY OF BUSINESS AND ECONOMICS

DEPARTEMNET OF PUBLIC ADMINISTARATION AND DEVELOPMENTAL

MANAGEMNET

MASTERS IN PUBLIC MANAGEMENT AND POLICY

Questionnaire to be filled by Commercial Bank of Ethiopia customers

Dear Respondent,

This questionnaire is prepared to gather data to be used as an input for the research entitled
“Assessment of Level of Customer satisfaction with Quality Service in Commercial Bank of
Ethiopia In Bahir Dar District.” It‟s prepared in partial fulfillment of Masters of Public
Management and Policy in Addis Ababa University. The expected respondents of this
questionnaire will be actual customers of the bank. The study focuses on the customer service
quality so that the respondents will be expected to give accurate data to make a proper analysis.
The data will be kept confidentially and it will be used only for research purpose.

I would like to thank you in advance for your kind cooperation.

Shewangzaw Merha Tel: 0912688848

Part I. General Information

1. General Profile
a. Type of Customer Private Customer Business Customer
b. Age 18-24 years 25-24 years 35-44 years 45-64 years

Older than 64 years

c. Educational Status: Certificate and below Diploma □ Degree □ Masters □

above Masters □

d. How long have you been the customer of Commercial Bank of Ethiopia?

1-5 years □ 6-11 years □ 12-17 years □ 19 years & above□

e. What type of services are you frequently using from the bank? You can select more than one

item. Saving deposits □ Current account □ Borrower □ International Banking

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f. Are you customers of other private or government banks?

No, I am not □ Yes, other private banks □ Yes, Government banks □

Yes, Both government & other private banks □

Part II. Information Related to Assessment of the Service Quality of CBE using
SERVQUAL, five dimensions.

1 stands for Poor”, 2 is “Satisfactory”, 3 stands for “Good”, 4 stands for “Very Good”, 5
stands for “Excellent”.

Dimensions 1 2 3 4 5

A Tangibility

Modern looking equipment

Visually Appealing physical facilities

Neat appearance of staff

Materials associated with the service are visually

appealing

Convenience Location of Branches

B Reliability

Staff keeping promise

Sincere interest in solving customers‟ problems

Staff performing service right the first time

Provide services at the time they promise to do so

C Responsiveness

Staff telling customers exactly when services will be

performed

Prompt service to Customers

Staff willingness to help

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D Assurance

Behaviors of staff instill confidence in customers

Customers feel safe in their transactions

Friendliness and courtesy of staff

Staff having knowledge to answer questions

E Empathy

Convenient operating hours

Individual attention given by staff

III. Assessment of service quality in respect with technological advancement, waiting time
and responsiveness

1. How do you rate CBE‟s modern banking service in relation with technology like, core banking
system, mobile banking etc.?

Poor □ Satisfactory □ Good □ Very Good □ Excellent □

2. To what extent do you believe that CBE banking system is advanced in modern technology
utilization compared with other banks in the country?

Very Low □ Low □ Moderate □ High □ Very High □

3. How do you rate the waiting time of CBE‟s service?

Poor □ satisfactory □ Good □ Very good □ Excellent □

4. Are you satisfied with the service of the bank in respect to your specific needs of service, like
loan service, domestic banking & foreign banking service?

Yes □ No □

a) If your answer is „YES‟ for the previous questions how do you explain its quality? You can
measure the quality in terms of its speed, employee‟s manner, technology usage, internal policy,
terms & tariffs and others, if any.
______________________________________________________________________________
______________________________________________________________________________
_____________________

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b) If your answer is „No‟ what makes you dissatisfied?

______________________________________________________________________________
____________________________________________________________

c) How do you think that CBE can bring change on its service quality?

______________________________________________________________________________
______________________________________________________________________________
______________________

IV. Assessing customers expectation towards CBE service

1. What was your expectation/perception towards CBE‟s service quality before you became
Customer of the bank?

___________________________________________________________________________
___________________________________________________________________________
__________________________________________________________________________

2. If there is a deviation, how do you rate the gap between your expectation and the Actual
performance of CBE‟s?

High deviation □ Moderate □ Low deviation □ Very low deviation □

a) Based on your answer for Question (a) does it affect your relationship with the bank?

Yes, it affects negatively No, I stayed neutral □ Yes, it affects positively □

3. If your answer for the above question is yes, it affects negatively, where do you think that the
gap lies between your expectation and CBE‟s performance? Like technology, waiting time,
employees manner and others if any,

______________________________________________________________________________
______________________________________________________________________________
______________________

4. Did you take any step to put in complaints with management for any dissatisfaction?

Yes □ No □

a) If your answer is „Yes‟ for the previous question what was the response?
______________________________________________________________________________
______________________________________________________________________________
______________________

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b) How do you rate the response of the banks‟ management for your complaint?

No response at all □ late response □ Respond at reasonable time

Quick response Quick & positive response □

5. How do you rate the total service quality of CBE?

Poor □ Satisfactory □ Good □ Very Good □ Excellent □

6. How do you rate your satisfaction level with the overall service of the bank?

Highly Unsatisfied □ UN satisfied □ Neutral □ Satisfied□ Very satisfied □

7. How do you measure CBE‟s service quality compared to other banks?

Poor □ Satisfactory □ Good□ Very Good □ Excellent □

8. Are you willing to continue being customer of the bank?

No, I will move to other banks □ Yes, I will stay as a customer □

Yes, I will wait & see for changes □

Thank you for your willingness and precious time.

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List of Selected Bahir Dar District Branches

Bahir Dar Tana Branch

Bahir Dar Mahel Gebya Branch

Bahir Dar Abay Mado Branch

Baelay Zeleke Branch

Debre Markos Branch

Finoteselam Branch

Motta Branch

Bychena Branch

Debrework Branch

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