Mediating Effect of Customer Satisfaction on The Relationship Between Service Quality and Customer Loyalty in The Ghana Banking Industry

International Journal of Research and Scientific Innovation (IJRSI) | Volume IX, Issue IV, April 2022 | ISSN 2321–2705

Mediating Effect of Customer Satisfaction on The Relationship Between Service Quality and Customer Loyalty in The Ghana Banking Industry

Dr. Daniel Kasser Tee
Adjunct Lecturer and Marketing & Corporate Communications Practitioner
Accra Institute of Technology (AIT) Accra-Ghana

Abstract: Understanding customer satisfaction and customer loyalty in banking remains critical as banks strive to attain high performance standards to justify their existence. The aim of this paper, therefore, was to determine the mediating role of customer satisfaction between its antecedent, service quality and its consequent, customer loyalty. Quantitative research method was employed to generate 850 usable questionnaires through systematic random sampling. A mediation effect investigation was done, using regression analysis to establish the interrelationships between the three study constructs. Overall, the study empirically tested and established interrelationships between the three variables in Ghana’s retail banking industry with satisfaction emerging as a strong mediator variable. Results of the study also revealed a positive and significant mediating role of customer satisfaction between service quality and customer loyalty. There were positive and significant relationships between service quality and customer satisfaction and between customer satisfaction and customer loyalty. The positive relationship between service quality and customer loyalty was insignificant. It is, therefore, concluded that, there is the need for banks to improve service quality at all levels, as the benefits to be derived are enormous, impacting strongly on customer satisfaction and weakly on customer loyalty.

Keywords: Banking; Service Quality; Customer Satisfaction; Customer Loyalty; Mediation

I.INTRODUCTION

As it is common with many other industries, bank customers are getting increasingly sophisticated and, thus, expect their service providers to meet their changing needs more than ever before. Banks are therefore expected to provide excellent products and services to satisfy existing and future needs of their customers, while minimizing customer attrition. Understanding customer satisfaction and loyalty in banking therefore remains critical, as banks strive to attain high performance standards to justify their existence (Tee, 2019). Neilson and Chadha (2008); Ravichandran et al. (2010) have earlier theorized that customers today perceive very little differences between banking products. Banks are thus faced with the risk of losing customers to better endowed competitors, if they do not pay particular attention to the softer customer-related issues, such as satisfaction and loyalty. Improving service quality, therefore, remains a critical aspect of the operations of banks, as they work to ensure success under such competitive circumstances (Radomir et al., 2011).

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