DEBRE MARKOS UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENT

Assessment of Service Quality On Customers’ Satisfaction (In Case of

Commercial Bank of Ethiopia Menkorer Branch)

Prepared by; Tadele Muluken ID 1407410

Adviser: Dirgu G

A Proposal Submitted to Department of Management in Partial Fulfilment

for The Requirement of Bachelor of Art Degree in Management

February, 2025

Debre Markos, Ethiopia

Acronyms
CBE: Commercial Bank of Ethiopia

SERVQUAL: Service Quality

CSQ: Customer Satisfaction Questionnaire

CBQ: Core Banking Questionnaire

SQQ: Service Quality Questionnaire

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 Table of Contents
Contents Page

Acronyms...................................................................................................................i
Chapter One...............................................................................................................1
1. Introduction..........................................................................................................1
1.1 Background of The Study................................................................................1
1.2 Statement of the Problem.................................................................................2
1.3 Research question.............................................................................................4
1.4 Objective of the study......................................................................................4
1.4.1 General objective.......................................................................................4
1.4.2 Specific objective.......................................................................................4
1.5 Significance of the Study.................................................................................4
1.6 Scope of the study............................................................................................5
1.7 Organization of the study.................................................................................6
Chapter Two..............................................................................................................7
2. Review of Related Literature.................................................................................7
2.1 Theoretical Literature.......................................................................................7
2.1.1 Definitions of Service................................................................................7
2.2 Service Quality.................................................................................................8
2.3 Characteristics of Services...............................................................................9
2.4 Customer Satisfaction....................................................................................10
2.4.1 Definition.................................................................................................10
2.4.2 Factors that cause Customer Satisfaction.................................................11
2.4.3 customer satisfaction in banking service context.....................................12
2.5 Empirical framework......................................................................................13
2.5.1 A difference between service quality and customer satisfaction..............13

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Chapter Three..........................................................................................................15
3. Research Methodology........................................................................................15
3.1 Locations of study area..................................................................................15
3.2 Research Design.............................................................................................15
3.3 Target population...........................................................................................16
3.4 Sampling Techniques.....................................................................................16
3.5 Sample Size Determination............................................................................16
3.6 Sources of Data..............................................................................................17
3.7 Methods of Data Collection...........................................................................17
3.8 Methods of Data Analysis and Presentation..................................................17
3.9 Ethical Consideration.....................................................................................18
4. Budget and Time Plan.........................................................................................19
4.1 Budget plan....................................................................................................19
4.2 Work plan.......................................................................................................19

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 Chapter One
1. Introduction
This chapter addresses the introductory part of the research. It mainly incorporates background
of the study, statement of the problem, objectives and Significance of the study, scope of the
study, definition of terms and organization of the study.

1.1 Background of The Study

The banking sector plays a pivotal role in the economic development of any country by
facilitating financial intermediation, mobilizing savings, and providing credit to individuals and
businesses (Beck & Levine, 2004). In Ethiopia, the banking industry has undergone significant
transformation over the past two decades, with the Commercial Bank of Ethiopia (CBE) being
the largest and most prominent player in the sector. Established in 1963, CBE has grown to
become the cornerstone of Ethiopia's financial system, accounting for a substantial share of the
country's banking assets, deposits, and loans (CBE Annual Report, 2022). Despite its dominance,
the bank faces increasing competition from private banks and the need to adapt to evolving
customer expectations in a rapidly changing financial landscape.

Service quality has emerged as a critical determinant of customer satisfaction and loyalty in the
banking sector (Parasuraman, Zeithaml, & Berry, 2015). Customers today are more discerning
and demand not only efficient and reliable services but also personalized and innovative banking
solutions (Lovelock & Wirtz, 2016). In this context, assessing service quality and its impact on
customer satisfaction is essential for banks to retain their customer base and maintain a
competitive edge. The SERVQUAL model, developed by Parasuraman et al. (2015), is one of
the most widely used frameworks for evaluating service quality, focusing on five dimensions:
tangibles, reliability, responsiveness, assurance, and empathy.

In Ethiopia, the banking sector has witnessed significant growth in recent years, with an
increasing number of customers accessing formal financial services (World Bank, 2020).
However, challenges such as limited branch networks, technological gaps, and inconsistent
service delivery have been reported, particularly in rural and semi-urban areas (Alemayehu &
Addis, 2021). Debre Markos, a rapidly growing city in the Amhara region, is home to the

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Menkorer branch of CBE, which serves a diverse customer base, including individuals,
businesses, and government institutions. Given the strategic importance of this branch,
understanding the quality of services it provides and its impact on customer satisfaction is crucial
for identifying areas of improvement and enhancing overall service delivery.

Previous studies have highlighted the importance of service quality in driving customer
satisfaction in the banking sector. For instance, a study by Kumar, Kee, and Manshor (2009)
found that service quality dimensions such as reliability and responsiveness significantly
influence customer satisfaction in Malaysian banks. Similarly, research conducted in Ethiopia by
Tadesse (2016) revealed that service quality is a key determinant of customer loyalty in the
banking sector. However, there is a paucity of research focusing on specific branches of CBE,
particularly in semi-urban areas like Debre Markos. This study seeks to fill this gap by assessing
the service quality of CBE's Menkorer branch and its impact on customer satisfaction.

The findings of this study will provide valuable insights for CBE's management to design and
implement strategies aimed at improving service quality and enhancing customer satisfaction.
Additionally, the study will contribute to the broader literature on service quality and customer
satisfaction in the banking sector, particularly in the context of developing economies like
Ethiopia.

1.2 Statement of the Problem

The Commercial Bank of Ethiopia (CBE) is the largest financial institution in the country,
playing a critical role in Ethiopia's economic development by providing essential banking
services to individuals, businesses, and government institutions. However, despite its dominance
in the sector, CBE faces increasing competition from private banks and the growing expectations
of customers for high-quality services. In recent years, the banking industry in Ethiopia has
witnessed significant growth, with more customers accessing formal financial services.
However, challenges such as inconsistent service delivery, limited technological advancements,
and inadequate branch networks, particularly in semi-urban and rural areas, have been reported
(Alemayehu & Addis, 2021; World Bank, 2020).

Debre Markos, a rapidly growing city in the Amhara region, is home to the Menkorer branch of
CBE, which serves a diverse customer base. While the branch plays a vital role in meeting the

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financial needs of the community, there have been anecdotal reports of customer dissatisfaction
due to long waiting times, limited service options, and occasional inefficiencies in service
delivery. These issues raise concerns about the quality of services provided by the branch and its
impact on customer satisfaction.

Customer satisfaction is a key determinant of customer loyalty and retention in the banking
sector (Parasuraman, Zeithaml, & Berry, 2015). However, without a clear understanding of the
specific service quality dimensions that influence customer satisfaction, it is challenging for the
Menkorer branch to address these issues effectively. While previous studies have explored the
relationship between service quality and customer satisfaction in the Ethiopian banking sector
(e.g., Tadesse, 2016), there is limited research focusing on specific branches of CBE, particularly
in semi-urban areas like Debre Markos. This lack of localized research creates a gap in
understanding the unique challenges and opportunities faced by branches operating in such
contexts.

Despite the growing body of literature on service quality and customer satisfaction in the
banking sector, several gaps remain, particularly in the context of Ethiopia and its semi-urban
areas. First, most studies on service quality in Ethiopia have focused on the banking sector at a
national level or on private banks, with limited attention given to specific branches of CBE,
especially in semi-urban and rural areas (Tadesse, 2016; Alemayehu & Addis, 2021). This
creates a gap in understanding the localized challenges and customer expectations faced by
branches like the Menkorer branch in Debre Markos.

Second, while the SERVQUAL model has been widely used to assess service quality in various
contexts, its application in the Ethiopian banking sector, particularly at the branch level, remains
underexplored. Existing studies often rely on generic assessments of service quality without
delving into the specific dimensions (tangibles, reliability, responsiveness, assurance, and
empathy) that may have a more pronounced impact on customer satisfaction in semi-urban areas.

Third, there is a lack of empirical evidence on how service quality influences customer
satisfaction in the context of CBE's Menkorer branch. Understanding this relationship is crucial
for identifying actionable strategies to improve service delivery and enhance customer
satisfaction. By addressing these gaps, this study aims to provide a localized and nuanced
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understanding of service quality and its impact on customer satisfaction, offering valuable
insights for CBE's management and contributing to the broader literature on service quality in
the banking sector.

1.3 Research question

The researcher will try to answer the following basic research questions.

1, Identify weather the bank gives quality service in terms tangibility,

responsiveness, reliability, assurance and empathy?

2, Evaluate customer’s perception toward the service quality?

3, Identify the impact of service quality on customer satisfaction in the bank?

4, Analyze the customer satisfaction level in commercial bank of Ethiopia

Menkorer branch?

1.4 Objective of the study

1.4.1 General objective
The general objective of the study is to assess the effect of service quality on
customer satisfaction in case of commercial bank of Ethiopia (CBE) in Debre
Markos Town.

1.4.2 Specific objective

The specific objectives of the study are:

 To identify weather the bank gives quality service in terms tangibility,

responsiveness, reliability, assurance and empathy.
 To evaluate customer’s perception toward the service quality.
 To identify the impact of service quality on customer satisfaction in the
bank.
 To analyze the customer satisfaction level in commercial bank of Ethiopia
Menkorer branch.
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1.5 Significance of the Study
This research will be significant because it enables to know the level of customer
satisfaction of CBE-Menkorer branch that uses to create a good customer handling
in relation specifically selected bank, depending up on this the paper will produce
the following significant. For the researcher, the primary significance will be to
full fill the academic requirement for obtaining the degree in management, and to
get research experience for the researcher, this study will serve as an input for the
researcher and other interested people in related topics and will help them acquire
broader knowledge about the subject matter under study. Another it will help the
managers and employees of CBE Menkorer branch to eliminate customer
dissatisfaction and its impacts if any, and identify the gap between customer think
about customer satisfaction and what actual customer satisfaction looks like in the
bank. Lastly, the study will try to improve the performance of the commercial bank
by identifying its weaknesses and encouraging its strengths.

1.6 Scope of the study

The study will be limited on geographical, conceptual and methodological
delimitation. The geographical delimitation of the study will be only in Debre
Markos Town commercial bank of Ethiopia Menkorer branch. Since it is very
difficult to conduct the study in all parts our country Ethiopia due to quality and
other problems. The conceptual scope of the study will only conduct on service
quality on customer satisfaction in case of commercial bank of Ethiopia mekorer
branch to examine the service quality on customer satisfaction, and to identify the
types of service quality. Methodological delimitations of the study also use
descriptive statistics to analysis and interpret the data. The study will use both
qualitative and quantitative data because the study gathers data by preparing both
questionnaire and structured interview. The study will be conduct the time between

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January to June . The whole output and recommendation of the study will be
delimited to CBE menkorer branch.

1.7 Organization of the study

The research paper will be organized in to five chapters. Chapter one contains
introduction parts that includes the background information, statement of the
problem, research question, objective of the study, significance of the study , scope
of the study and organization of the study. Chapter two contains literature review
that focused on reviewing related literatures include a brief main purpose of
literature review, which have a great help towards identification of the theories and
ideas that explored such as data subsequently relate to the study. Chapter three
contains research methodology, which divided in to sub-section, and specifies the
location of the study, research design, target population, sampling techniques and
sample size, sources and methods of data collection, methods of data analysis and
presentation and ethical consideration of the study. Chapter four contains data
analysis and discussion of results of parts that includes introduction, data analysis,
and background information from a respondent, descriptive statistical analysis,
response and percentage of service quality dimension, analysis of close-ended
questions. Chapter five contains conclusion, recommendation, reference and
appendix.

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 Chapter Two
2. Review of Related Literature
2.1 Theoretical Literature
This chapter is an overview and critical analysis of relevant literature on topic. It covers
customer satisfaction concepts, theories and models, service quality concepts and models and
customer behavioral intentions referral concepts and models.

2.1.1 Definitions of Service

Service is a broad and multifaceted concept that has been defined in various ways across
different disciplines. In the context of business and marketing, service is often described as an
intangible activity or benefit that one party offers to another, which does not result in the
ownership of anything physical (Lovelock & Wirtz, 2016). Unlike tangible products, services are
characterized by their intangibility, inseparability, variability, and perishability. Intangibility
means that services cannot be seen, touched, or stored before consumption, making it
challenging for customers to evaluate their quality beforehand. Inseparability refers to the fact
that services are typically produced and consumed simultaneously, often involving direct
interaction between the service provider and the customer. Variability highlights the potential for
inconsistency in service delivery due to differences in customer expectations, employee
performance, and situational factors. Finally, perishability indicates that services cannot be
stored for future use, requiring effective demand management to balance supply and customer
needs (Zeithaml, Bitner, & Gremler, 2018).

In the banking sector, service encompasses a wide range of activities, including financial
transactions, customer support, advisory services, and digital banking solutions. These services
are designed to meet the financial needs of individuals, businesses, and institutions while
ensuring convenience, security, and efficiency (Kotler & Keller, 2016). For example, a bank may

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offer services such as account management, loan processing, investment advice, and mobile
banking applications. The quality of these services is often measured by their ability to meet or
exceed customer expectations, which can significantly influence customer satisfaction and
loyalty. According to Parasuraman, Zeithaml, and Berry (2015), service quality is determined by
the gap between customer expectations and perceptions of the actual service delivered. This gap
can be influenced by various factors, including the competence and attitude of service personnel,
the efficiency of service processes, and the availability of modern technology.

The definition of service also extends to the broader concept of customer experience, which
encompasses every interaction a customer has with a service provider, from initial contact to
post-service follow-up (Bitner, Ostrom, & Morgan, 2008). In today's competitive business
environment, delivering exceptional service is not just about meeting functional needs but also
about creating positive emotional experiences that build long-term relationships with customers.
For instance, a bank that provides personalized financial advice, resolves customer complaints
promptly, and offers user-friendly digital platforms is likely to enhance customer satisfaction and
loyalty. As Grönroos (2007) emphasizes, service is not merely a transaction but a process of
creating value for customers through meaningful interactions and tailored solutions. This
customer-centric approach to service is particularly relevant in the banking sector, where trust,
reliability, and responsiveness are critical to maintaining a competitive edge.

2.2 Service Quality

Service quality is a critical factor that influences customer satisfaction, loyalty, and overall
organizational success. It refers to the extent to which a service meets or exceeds customer
expectations (Parasuraman, Zeithaml, & Berry, 2015). The concept is often evaluated using the
SERVQUAL model, which identifies five key dimensions: tangibility, reliability,
responsiveness, assurance, and empathy. Tangibility relates to the physical aspects of service,
such as infrastructure and equipment, while reliability focuses on the ability to deliver promised
services consistently. Responsiveness measures how promptly and effectively service providers
address customer needs, assurance reflects the trust and confidence inspired by employees, and
empathy emphasizes personalized attention and care for customers. High service quality
enhances customer satisfaction and contributes to the long-term success of businesses,

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particularly in the banking and financial sectors, where customer trust and reliability are crucial
(Zeithaml, 2000).

In the banking industry, service quality plays a vital role in attracting and retaining customers.
As financial institutions compete to expand their customer base, providing exceptional service
becomes a strategic advantage. Studies indicate that customers are more likely to remain loyal to
banks that offer reliable and efficient services, personalized customer support, and transparent
financial transactions (Ladhari, 2009). Service quality in banks is influenced by factors such as
employee competence, technological advancements, and institutional policies. The digitalization
of banking services, including mobile and internet banking, has significantly improved service
efficiency and accessibility. However, challenges such as system downtimes, cybersecurity risks,
and inconsistent service experiences can negatively impact customer perceptions of service
quality. Therefore, continuous monitoring and improvement of service delivery are necessary for
maintaining customer trust and satisfaction.

Service quality is not only crucial for customer satisfaction but also for overall organizational
performance. A strong service culture fosters employee engagement, job satisfaction, and
productivity, which in turn improves service delivery (Grönroos, 2007). Financial institutions
that invest in employee training, customer relationship management, and advanced service
technologies tend to achieve higher levels of service excellence. Moreover, regulatory bodies
emphasize service quality as part of financial sector governance to ensure fair treatment of
customers and ethical banking practices. In this regard, service quality is a multidimensional
aspect that requires a holistic approach, integrating customer expectations, employee
performance, and technological advancements. By prioritizing service quality, businesses can
build a competitive advantage, enhance their brand reputation, and sustain long-term growth.

2.3 Characteristics of Services

Services are fundamentally different from tangible goods, and their unique characteristics have
significant implications for how they are managed, delivered, and evaluated. One of the most
defining characteristics of services is intangibility, which means that services cannot be seen,
touched, or physically possessed before they are purchased (Zeithaml, Parasuraman, & Berry,
2015). Unlike physical products, services are performances or experiences rather than objects.

9
For example, when a customer visits a bank to open an account, they cannot physically hold the
service; instead, they experience the process and outcomes of the service delivery. This
intangibility makes it challenging for customers to evaluate the quality of a service before
consumption, often leading them to rely on tangible cues such as the physical environment,
employee behavior, or brand reputation to form expectations (Lovelock & Wirtz, 2016). For
banks, this means that creating a positive and professional atmosphere, along with clear
communication, is essential to build trust and reassure customers.

Another key characteristic of services is inseparability, which refers to the fact that services are
typically produced and consumed simultaneously (Grönroos, 1984). Unlike goods, which are
manufactured, stored, and sold at a later time, services often involve direct interaction between
the service provider and the customer. For instance, when a customer interacts with a bank teller
or a loan officer, the service is being created and delivered in real time. This inseparability
implies that the quality of the service is heavily influenced by the behavior and skills of the
service provider, as well as the customer's active participation in the process. In the banking
sector, this characteristic underscores the importance of training employees to deliver consistent
and high-quality service, as well as managing customer interactions effectively to ensure
satisfaction (Kotler & Keller, 2016).

A third critical characteristic of services is heterogeneity, which means that services can vary in
quality and consistency due to their reliance on human performance and interaction
(Parasuraman, Zeithaml, & Berry, 2015). Unlike manufactured goods, which can be standardized
to ensure uniformity, services are often customized to meet individual customer needs, leading to
potential variability in delivery. For example, the experience of a customer at a bank branch may
differ depending on the time of day, the specific employee they interact with, or even the
customer's own mood and expectations. This variability poses a challenge for service providers,
as they must strive to maintain consistent service quality across different interactions and
contexts. In the banking industry, this characteristic highlights the need for standardized
processes, rigorous employee training, and continuous monitoring of service delivery to
minimize inconsistencies and ensure a uniform customer experience (Fitzsimmons &
Fitzsimmons, 2013).

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2.4 Customer Satisfaction
Early concepts of satisfaction have typically defined satisfaction as a post utility evaluation and
judgment concerning a specific purchase decision (Churchill and Sauprenat and 1998) Oliver,
2001), Most researchers agree satisfaction is an attitude or evaluation that is formed by the
customer by comparing what they expect to receive to their subject perceptions of the
performance they actually get (Oliver, 2001).

2.4.1 Definition
Several authors have defined customer satisfaction in various ways:

According to Kotler (2000). Satisfaction is a person’s feeling of pleasure or disappointment

resulting from comparing a product’s perceived performance (or outcome) in relation his or her
expectation.

Gaither (1999) defines customer satisfaction as the determination of customer requirements and
demonstrated success in meeting them.

Kotler (2006) again defined customer’s satisfaction by giving details on the attributes of a
highly-satisfied customer. According to him a highly-satisfied customer stay loyal, longer and
busy more as the company introduces new products and upgrades existing products: talks
favorably about the company and its products. Pays less attention to competing brands and is less
sensitive to price. Offers service or products ideas to the company and costs less to serve him
than new customers because transactions are routine.

Lovelock and Wirtiz(2007) divine Customer Satisfaction “as an attitude like judgment following
a purchase act or a series of consumer product interaction.”

“Satisfaction is a person’s feeling of pleasure or disappointment result from comparing a

products performance (outcome) in relation to his or her expectation (Kotlerkeller, 2006)

2.4.2 Factors that cause Customer Satisfaction

Customer satisfaction is the customer feeling that products service has meet or exceed his\her
expectations. Actual manifestation of the state of satisfaction will vary from person to person,
product to product and service to service. The state of satisfaction depends on a number of
factors which consolidate as psychological, economical and physical factors.

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The quality of service is one of the major determinants of the customer satisfaction which can be
enhanced by using ICT available to survive (Vijay, 2012)

The service delivery process also plays a key role in customer satisfaction when the process of
service delivery is too long it lengthens customer waiting time

According to (Sasraku 2007) the physical evidence also plays a role in customer satisfaction the
physical evidence includes the edifice or buildings and its decorations an imposing banking hall
with comfortable seats places of conveniences etc. the office or building and its external and
internal decorations can satisfy a customer the customer can pride him or herself as costumer of
that bank.

Another service element that causes customer satisfaction or dissatisfaction is the people or they
employees delivering the product or service (covey, 2004) the employees occupy the first point
of contact with the customer. Employee behaviors are therefore impotent to customers if the
employee is cold or rude the customer takes it as a measure of the state of the company unhappy
employees will have difficulty in keeping customers happy (Dei- Tumi 2005)

Also, easy access to the bank premise would make a customer feel happy in transacting business
with a bank for example, if the bank premise is located on a high street. However,the nice edifice
of a banking hall will not be noticeable if customer service is poor and there `are, unnecessary
delayers and lack of personal support form staff (Sasraku, 2007)

The technology being used by the bank in service delivery could be a source of satisfaction to
costumer when electronic devise like computers are used they tend to speed the processing time
of transactions system and processing solely do no cerate satisfaction

Service system quality, behavioral service quality service transaction accuracy and machine
service quality are necessary to make the technology in use worthwhile (Aldlaingan&Buttle
2002)

Furthermore, the security of customer and their deposits in an area of concern to customers
when customer are assured of protection from external they feel secured and happy

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For example, if a bank is situated at a place noted for criminal activates customers are scared and
dissatisfied (Sasraku, 2007).

2.4.3 customer satisfaction in banking service context

Customers are not reliable to evaluate services be for the service process takes place the
interaction with the service provider and the customer the so-called service, is key in the
evaluation of service performance (Gil, 2008) during these customer, the customer is able to get
an impression of the way the company provides its service. His/her experience is defined by the
interaction the organization then, the processes and the employees

In banking services, satisfaction is usually conceptualized as a multidimensional construct

(Manrai L.A, 2007) the list of bank service attributes used foe the measurement of satisfaction
composes element like appearance of the facility attitude and behavior of staff décor and
atmosphere, business hour interest rate waiting time bank customer may regard x=some of these
elements as being not equally important as the others.

2.5 Empirical framework

2.5.1 A difference between service quality and customer satisfaction

The literature on service has made a distinction between service quality and customer
satisfaction (Bitner 1990, Bolton & Drew, 1991 parasuraman et al 1988) As cited in Harr (2008)
this differentiation is important for firms to concentrate on enhancing their capability to satisfy
customers through high service quality

The position of scholars characterized by Parasuraman et al, (1988) 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 (parasuraman et
al 1988) 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 thought 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
13
Experience ‘’ Moreover, Oliver (1981) distinguished customer satisfaction form 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 store or process which acts on the bats attitude level and is consumption – specific
oriel(Oliver, 1981).

The two construct 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 ) which implies an
accumulation of satisfactory encounters ( Bitner1990 Bolton & Drew 1091) 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

Empirical research by Cronin & Taylor (1992) showed that service quality has a significant
effect on customer satisfaction similarly recent studies by (Gonzalez & Brea 2005 &Ekinci
2004) using recursive structural models provided empirical support that service quality results in
concept than service quality which focuses specifically on dimensions of service

B Relation between service in quality and customer satisfaction

Private Banks dealing in retail banking Industry is consequently put into of pressures due to
wards increase in global competition

Different strategies are formulated to satisfy and retain the customer and the key of it increase
the service quality level Typically customers perceive very little difference in the banking
products offered by private banks dealing in service as any new offering is quickly matched by
competitors

Parasuramanet al (1985) and Zenithal et al (1990) noted that the key strategy for the success and
survival of any business institution is the deliverance of quality service to customers the quality
of service offered will determine customer satisfaction and attitudinal loyalty (Ravichandran et al
2010)
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Parasuraman A zeithmal, V A… & berry, LL (1988) found that the performance of the service
provider on core and relational dimensions of service was an important driver for customer
satisfaction in retail banking.

Chapter Three
3. Research Methodology
This chapter discuss about the methodology that will be used to conduct this study. The primary
aim of the study is to examine the effect of service quality on customer satisfaction of CBE, the
methodology section will be clearly defining the research design, the sample and sampling
techniques, sources and instruments that will be utilized in collecting data and the method of data
analysis, finally ethical consideration will be presented as follows.

3.1 Locations of study area

The study will be conducted in Debre Markos town. Debre Markos the capital city of East
Gojjam Administrative Zone is located in the north west of the capital city of Ethiopia, Addis
Ababa at a distance of 300 km and 265 kms to the capital city of Amhara National Regional
State, Bahir Dar. Specifically, the town covers total area of 65.85 km2. It’s established at foot of
mount Choke & from these mountains; its altitude descends to south and southeast directions.
The city is located in the strategic place for the northern Ethiopia at the center & it has 3 outlets
which are connect the North, south east and west areas. The estimated population of
approximately 140,699 as of 2022. It shares border with Aneded to the east and Gozamen to
south, north and west .it has latitude and longitude of 100 20/ N, 370 43/ E and Altitude of
2446m above sea level and it has moderate temperature and Annual rainfall ranges from
1300mm to 1380 mm received and the existing wind direction is from north to south.

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3.2 Research Design
Descriptive type of research design will be used to assess service quality on customer
satisfaction of commercial bank of Ethiopia Menkorer branch. Because Firstly, this study is
about the study of customer satisfaction with service quality of Menkorer branch, to describe or
portray a reality regarding customer satisfaction with service quality to better understanding
those service that customers are satisfied or dissatisfied with, so this has necessitated a
descriptive research design will be undertaken for the research, Secondly, in this study basically
researcher will try to describe the existing and current customer satisfaction on service quality
system in case of commercial bank of Ethiopian, Menkorer branch. And it describes status and
issue to come up with appropriate solution and describe and explore the nature of the situation as
it exists in the time of study.

3.3 Target population

Target populations of the study will contain all customers and manager of CBE of Menkorer
branch, and the total number of customer will be 15000, and one manager

3.4 Sampling Techniques

The researcher will use convenience sampling techniques of non-probability sampling. The
researcher will use non-probabilistic because it provides the opportunities for the researcher to
take those who are willing and able to respond properly and convenience sampling to provides a
quick, cost-effective, and practical way to collect data from readily available customers. This
method is especially useful when time and resources are limited, allowing researchers to gather
real-time feedback on customer experiences. Since respondents are actual service users, the data
collected can help identify strengths and weaknesses in service delivery, guiding

improvements. Convenience sampling is also beneficial for exploratory research, helping

researchers generate initial insights before conducting more rigorous studies. However, while it
offers efficiency, researcher should be aware of potential biases and the limited generalizability
of findings. Despite these limitations, it remains a valuable approach for obtaining customer
perceptions and enhancing service quality.

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3.5 Sample Size Determination
From the total population of 15000 (fifteen thousand) customers, the researcher derived
100(hundred) customers. To get accurate sample size the researcher uses Yemane’s formula;

YEMANE’S FORMULA

n = N/1+N (e) 2

Where: - n=sample=?

N= Total population =15000

e= error=0.1

n=15000/1+15000(0.1)2

=15000/1+15000(0.01)

=15000/1+150

=15000/151

=99.34 approximately 100

Thus, the researcher will take 100 customers as a sample.

3.6 Sources of Data

For the purpose of this research, both primary and secondary data will be used. Primary data will
be obtained from primary source which include the actual information received from customers
and managers of the bank using questionnaires and interview. Secondary data will be gathered
from books, documents, existing research papers, journals and publication, websites, CBE
reports and other relevant journal.

3.7 Methods of Data Collection

For the proper achievement of the objectives of the study; The researcher will obtain data
through questionnaire and interview. The type of questionnaire that the researcher will include a

17
structured questionnaire; this type of questionnaire will be selected to involve a high number of
closed-ended questions and a smaller number of open-ended questions. The questionnaire will be
constructed entirely in Amharic and English. The close-ended questions consisting two parts;
service quality questionnaires and customer satisfaction questionnaires, those questions will be
given to the customers of CBE- Menkorer branch, the respondents who are the clients of the
branch banks will be asked for cooperation and given the questionnaire when they will be
receiving the service of specific branch. And the interview and open-end questions will be
conducted with the manager of the organization.

3.8 Methods of Data Analysis and Presentation

After the relevant data is collected, the collected data will be changed and interpreted in to
meaningful information, statement, tabulating and percentage, the processed data will be
analyzed through descriptive analysis techniques. The main reason of choosing this method it is
easily to work and it can be easily understandable by the readers. Then the data will be
interpreted, and finally, based on the findings, the recommendation will be given.

3.9 Ethical Consideration

The researcher will respect the rights of the respondents and ensures their willingness to be
interviewed, volunteer to fill and return back questionnaires and did not force to do none of the
above activities without their willingness. Only volunteer respondents will be administered for
the questionnaires and interview. The researcher will explain the objectives of the research to the
respondents and that the feedback will be obtained from the respondents will be used for the
research purpose only and will be kept confidential. The researcher explains ensures to the
respondents that their identity will not be disclosed to anyone.

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4. Budget and Time Plan
4.1 Budget plan
item quantity Per unit(Birr) Total cost
paper 1 500.00 500.00
pens 1 20.00 20.00
pencil 1 20.00 20.00
ruler 1 30.00 30.00
Binder 1 100.00 100.00
flash 1 400.00 400.00
transport 10 trips 20.00 200.00
internet 1000 mints 0.5 500.00
print 100 3.00 300.00
Total cost 2070.00

4.2 Work plan

no Activity January February March April May June
1 Topic X
selection
2 Preparation X X
19
 of proposal
3 Collection X X
of useful
material
4 Data X X
collection
5 Data X
analyst
6 Summation X
of research
7 Presentation X
of final
research

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