Pak J Commer Soc Sci
Pakistan Journal of Commerce and Social Sciences
2014, Vol. 8 (2), 331- 354
Impact of Service Quality on Customer Satisfaction
and Customer Loyalty: Evidence from Banking
Sector
Mubbsher Munawar Khan
Institute of Business Administration, University of the Punjab, Lahore, Pakistan.
Email: [email protected]
Mariam Fasih
University of the Punjab, Lahore, Pakistan.
Email: [email protected]
Abstract
The aim of this research study is to determine the satisfaction level of banking customers
regarding quality of different services provided by their bank and their loyalty with the
respective bank. Service quality is studied within a spectrum of different dimensions. An
effort is also made to find out which service quality dimensions may enhance customer
satisfaction and customer loyalty in a better way.
Respondents are chosen from a range of varying demographic features using stratified
random sampling. Banks from both public and private sector are selected for sampling.
Survey questionnaires were distributed among 270 customers of different banks. An 83%
(225 respondents) valid response rate is yielded. Descriptive statistics, one sample t-test,
correlation and regression are used to analyze the data.
Findings indicate that service quality and all its dimensions have significant and positive
association with customer satisfaction and customer loyalty.
Banking sector is a significant sector in Pakistan’s economy and has seen unprecedented
growth and raging competition during the last decade. Therefore this study has been
specifically conducted to look into this phenomenon and seek empirical justification in
this regard by considering service quality as the main contributory factor towards
customer satisfaction and customer loyalty.
Keywords
: banking sector, customer loyalty, customer satisfaction, service quality.
1. Introduction
Banks are key players in financial markets operations and play an important role in
keeping a country’s economy running smoothly. In today’s highly competitive corporate
environment, quality of services is an essential element for enhancing customer
satisfaction and customer loyalty. These are important factors in improving the
performance of banks and in determining their success, i.e. better profitability and a
bigger market share.
