WOLKITIE UNIVERSITY

COLLEGE OF BESINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENT

ASSESSMENT OF SERVICE QUALITY ON CUSTOMER SATISFACTION IN CASE OF

COMMERCIAL BANK OF ETHIOPIA IN WOLKITIE BRANCH.

THIS PROPOSAL PAPER SUBMITTED TO DEBARTMENT OF MANAGEMENT IN

PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR AWARD OF BA DEGREE IN
MANAGEMENT.

BY; ADDISU KEREBH

ID NO SSR/0096/12
ADVISOR;TAFESE T(MBA)

GANUARY,2023
WOLKITIE,ETHIOPIA
 ABSTRACT
This proposal is aimed at conducting a study to investigate the assessment of service quality on
customer satisfaction in the case of commercial bank of Ethiopia in wolkitie branch.The general
objective of the study will be to assess service quality on customer satisfaction in case of
commercial bank of Ethiopia (CBE) in wolkitie branch. The researcher will be use descriptive
type of research method. For the purpose of the study, both primary data and secondary data
should be used. To collect necessary data, the researcher employe questionnaires and interviews.
The type of sampling technique used to select a sample from total population will be covinance
sampling (non probability sampling).It is so because some peoples are with better knowledge and
are covenant to collect the relevant data.The collected data will analize by using descriptive
statistic.
Table contents Page

Abstract…………………………………………………………………………………………………………………

Chapter one

1
Introduction………………………………………………………………………………………………………..1

1.1. Back ground of study……………………………………………………………………………………

1.2. Statement of problem………………………………………………………………………………….
1.3. Research questions………………………………………………………………………………………
1.4. Objective of the study………………………………………………………………………………….
1.4.1 General objective………………………………………………………………………………
1.4.2 Specific objective……………………………………………………………………………….
1.5 Significance of the study…………………………………………………………………………………..

1.6 Scope of the study……………………………………………………………………………………………

1.7 Limitation of the study……………………………………………………………………………………..

1.8 Organization of the study………………………………………………………………………………

CHAPTER TWO

2.1 Literature review………………………………………………………………………………………………

2.2 Definition of service………………………………………………………………………………………….

2.3 Service quality…………………………………………………………………………………………………

2.4 Characteristics of service………………………………………………………………………………….

2.4.1 Intangibility of service………………………………………………………………………………

 2.4.2 Inseparability of service……………………………………………………………………………

2.4.3 Heterogeneity of service……………………………………………………………………………

2.4.4 Pershability of service………………………………………………………………………………….

2.5 Service quality dimension…………………………………………………………………………………

2.6 Service quality dimension associated to the banking

sector……………………………………………………………………………………………………………………..

2.7 Customer satisfaction……………………………………………………………………………………….

2.8 Factors that cause customer satisfaction…………………………………………………………

2.9 Customer satisfaction In banking service context……………………………………………

2.10 Empirical frame work……………………………………………………………………………………

CHAPTER THREE

3 Research methodology………………………………………………………………………………………..

3.1 Research design………………………………………………………………………………………………..

3.2Target population………………………………………………………………………………………………

3.3 Sample size

determination…………………………………………………………………………………..

3.4 Sapling techniques……………………………………………………………………………………………

3.5 Source of data…………………………………………………………………………………………………

3.6 Method of data collection………………………………………………………………………………..

3.7 Method of data analysis and presentation…………………………………………………….

CHAPTER FOUR

4 Data analysis and discussion of results………………………………………………………………

4.1 Introduction……………………………………………………………………………………………………

4.2 Analysis of questionnaire…………………………………………………………………………………

4.3 Back ground information from respondents …………………………………………………….

4.4 Descriptive statistical analysis…………………………………………………………………………..

4.4.1 Response and percentage of service quality

dimension………………………………………………………………………………………………………………

4.4.2 Customer satisfaction…………………………………………………………………………………

CHAPTER FIVE

5 Findings, conclusion, and recommendation…………………………………………………………

5.1 Discussion of findings………………………………………………………………………………………

5.2 Conclusion………………………………………………………………………………………………………

5.3 Recommendation……………………………………………………………………………………………

Reference

Appendix
 List of table Page

Table 4.1 Demographic profile for customers…………………………………………………………

Table 4.2 Reliability………………………………………………………………………………………………..

Table 4.3 Assurance……………………………………………………………………………………………….

Table 4.4 Responsiveness……………………………………………………………………………………….

Table 4.5 Empathy………………………………………………………………………………………………….

Table 4.6 Tangibles………………………………………………………………………………………………

Table 4.7 Response and percentage of customer
satisfaction…………………………………………………………………………………………………………….
 CHAPTER ONE

1. INTRODUCTION
1.1 BACKGROUND OF THE STUDY

Quality had been defined as conforming for requirement and specification, this implies that the
organization must establish requirement and specification once establish the quality goal of the various
function of service quality can be defined by customer and accurse where an organization supplies
goods and service to specification that satisfy their needs (Juran, 1982)

Service quality it may be technical or functional. This refers to the relatively quantifiable aspect of
service deliver, because it can be easily measure by both customer and supplier. It forms an important
to bases for judging service quality (Parimer and Cole, 1995).

Customer satisfaction is the extent to which a product perceived performance matches a buyer
expectation. If the product performance falls short of expectation of the buyer will be satisfied ordering
hated. Today customer face arranges of choice in product and service as we choice in the bases of their
perception. Quality service value company need to understand the determinant of customer usual and
the difference between total customer value and total cost (Kotler, 2004)

Customer satisfaction is considered as important in defining organizational performance. Customer

satisfaction is critical, because it is a key to business success of any banking institution. In the
competition where organizations will take competitive advantage through the human factor and
customers (Singh et al, 2011).

Business environmental developed and free trade of global competition is increasing with exploding.
Because of these reasons, to stay in a competitive environment and deliver acceptable financial
managers must know to handle changes which un expected by cementing on customer’s satisfaction
(Nessecmetal , 2011)

In developing country, customer satisfaction is important to business success of banking institutions.

Suggested reason for this apparent trend includes flexible employment. Higher mobility and competition
in banking industry (Panda, 2003). Banking institutions across the globe have recognized the importance
of customer satisfaction and developing and maintaining enduring relationship with customers as two
crucial parameters leading to increased business profits. As the same time, several banking institutions
experiencing increasing level of retail customer dissatisfaction (Mistry, 2013). The causes of
dissatisfaction are not well known empirically, however from rational point of view. The probable causes
may include low technology, low responsiveness from the bank employees and unreliable service.
However, whether any of these really holds true and the extent to which are out of the above list of
possible causes but none of them are established.
Customer satisfaction is the outcome, felt by buyers who will be experience of a company performance
that fulfilled expectation of customer are satisfied when their expectation is exceeded the satisfied
customers remain loyal logger buy more are less price sensitive to the favorable about the company.
From this point of view, to create customer satisfaction company must more their value chain as the
whole value delivered system in customer centered way.(Kotler,19996;215)and, therefore this study is
conducted to assess the service quality on customer satisfaction in case of CBE WOLKITE BRANC H.

1.2 Statement of the problem

Customer satisfaction is the first mission and purpose of any business organization .It is when customers
are satisfied that the organization could achieve higher sales, profit and market share and vice versa
(Peter Durker, the legendary management guru).Customer satisfaction also helps the organization to
gain loyalty and achieve the decided objectives and; therefore, it is essential for organization to satisfy
their customers prompt, so that they can achieve what they plan.

In this competitive environment, each bank’s strong and sustainable competition position in the market
and in the customer mind can be attaining only if the customer was satisfied and become happy with
the delivery of service quality. Because customer satisfaction is also based up on the level of service
quality provided by service provider, it acts as a determinant of customer satisfaction (Wilson al, 2008).
Nevertheless; the banks are not satisfying their customers enough due to many factors in which using
traditional technologies is among them. Levesque and McDougall,( 1996) have confirmed and
reinforced the notion that consistent poor customer experience as result of service quality leads
decrease in the level of customer satisfaction and the chances of further willingness to recommend the
service (i.e. Word- of- mouth advertising of referrals) is lessened.

Because of the above reason, the researcher is interested to undertake the study on the problems
related to tangibility, responsiveness, reliability, assurance, and empathy in commercial bank of Ethiopia
WOLKITE BRANC H. Most of bank institutions are having the problems related to service quality on
customer satisfaction and in this case different researchers have been tried to find out solutions for
those problems, but still now they are not solved. Hence the researcher conducted the study on the
assessment of service quality on customer satisfaction in case of commercial bank of Ethiopia (CBE)
WOLKITE BRANC H.

1.3 Research question

The researcher tried to answer the following basic research questions.

1. Is the bank provides quality service by considering tangibility, responsiveness, reliability, assurance,
and empathy to its customers?

2. How do consumers perceive the service quality of the bank?

3. What is the level of customer satisfaction in the bank?

4. What is the impact of service quality on customer satisfaction?

1.4 Objective of the study

1.4.1 General objective

The general objective of the study is to assess service quality on customer satisfaction in case of
commercial bank of Ethiopia (CBE) in WOLKITE BRANC H

1.4.2 Specific objective

The specific objectives of the study were:

1, To identify weather the bank gives quality service in terms tangibility, responsiveness, reliability,
assurance and empathy.

2, To evaluate customer’s perception toward the service quality.

3, To identify the impact of service quality on customer satisfaction in the bank.

4, To analyze the customer satisfaction level in commercial bank of Ethiopia WOLKITE BRANC H.

1.5 Significance of the Study

The study provided the following significance.

 It would help the managers and employees of CBE WOLKITE BRANC H 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.
 It could help those researchers who are motivated to conduct on similar issues.
 It helped the researcher to gain experience in conducting the research in other community
issues that need to be solved.

1.6 Scope of the study

The study gave much emphasis on service quality on customer satisfaction in case of CBE WOLKITE
BRANC H. The study was conducted in time between Decembers up to June. The whole output and
recommendation of the study is delimited to CBE WOLKITE BRANC H.

1.7 Limitation of the study

 The respondents were not gave accurate response which leads to problems for effective
recommendation.
 The researcher lacks experience, since it was the first time for the researcher to conduct the
research.
  Unavailability of sufficient and well documented secondary data also has decreased the
accuracy of the findings

1.8 Organization of the study

The research paper was organized in to five chapters. Chapter one contains introduction parts that
includes the background information, statement of the problem, objective of the study, research
question, significance of the study , scope of the study, limitation of the study and organization of the
study. Chapter two contains literature revieview 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
design ,methodology, target population, sample size and sampling techniques , sources and methods of
data collection and analysis and presentation of the study. Chapter four contains data analysis and
discussion of results of parts that includes introduction, data analysis, and background information from
a respondents, descriptive statistical analysis, response and percentage of service quality dimension,
analisis of close-ended questions. Chapter five contains conclusion, recommendation, reference and
appendix.
CHAPTER TWO
2.1Literature Review

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.

2.2 Definitions of Service

Service: are deeds performances and processes provided or coproduced by one entity or person
for and with a mother entity or person (Zeithaml. 2009).

Service includes core service: products and product-service bundles provided a more inclusive
definition of service with the derived service perspective, suggesting that all products and
physical goods are valued for the inherent service (calue derived) they provide not the goods
itself. Services differ from product due to their intangibility, heterogeneity. simultaneous
production and consumption and perish ability (Zeithaml, 2009), (Vargo and Lusch, 2004).

It should precisely distinguish them on the basis of their attributes a good is a tangible physical
object or product that can be created and transferred: it has existence over time and thus can be
created and used later. A service is intangible and perishable. It is an occurrence or process that
is created and used simultaneously while the customer can’t retain. (Ear, Poul, and Daryl
Wyckoff, 1978).

But, majority of them are agreed that service is a serious of activities of more or less intangible
nature that normally but not necessarily take place in interaction between customers and service
employees and or physical resource or goods and or system of the service provider with are
provided as solution to customer problems “most authorities consider the services sectors to
include all economic activities whose output is not physical product or construction is generally
consumed at the time it is produced and provides added value in the form of continence.
Amusement, timelines, comfort which are basically intangible concerns of its purchaser” (James
Brain Quinn, Jordan. Bruch, Penny, Cushman).

2.3 Service Quality

Bandyopadhyay 2003, pp,187-188) claimed that quality in goods sectors is “commonly defined
as the product’s fitness for the its intended use, which mean how well product meet the needs
and the expectations of its customer.”

Garvin (1983) referred to “the production oriented quality approaches as objective quality.”
Clemes, Gan and Kao, 2007) However, “understanding quality in the good sector is inadequate
for understanding service quality because of the fundamental difference between the two terms”
(Parasuraman, et al, 1985) (Parasuraman, et,1985, pp.42 “Suggest that service quality is
performance based rather than object therefore precise manufacturing specifications concerning
uniform quality can rarely best”.

Hong and Goo argued (2004)Service quality is “more difficult for consumers to evaluate than
product quality : this is due to a lack tangible evidence associated with the service” in the past
decades. Researches (Carman 1990: 1990 Garvin 1983: Parasuraman et al, 1985.1988) have
defended and measured service quality by examining the attributes of service quality, while
others (Bitner and Hubbert 1994: Iacobacci. Greystone and Ostrom, 1994: Oliver, 1993 and
desarbo 1988: ParasuramanZeithaml, and Berry, 1994: 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 (Clemse et al 2007: Parasuraman et al, 1985).

Service quality is the customer’s overall impression of the relative infection or superiority of the
organization and its services.(Hubert and Bitner, 1994).Gronroos (1984) identified service
quality as the evaluation process outcome. In which the customers are involved and where a
certain experience is always compared to the perceived service received “service quality is not
objectively measure according to some technical stands but is subkectly felt by customers and
measured relative to customer determined standards (kwortnik, 2005).
Berry et al., (1990) also “defined service quality as the discrepancy between customer
expectations or desire and their perception.”

“The previous literature suggests that the evaluation of quality in services is more difficult than
goods (Parasuraman et al., 1985) and that delivering quality service is increasingly recognized as
the key to success for service provider” (Cronin and Taylor, 1992). But “perceived service
quality has confirmed to be a complex concept to understand” (Brady and Cronin, 2001, pp.34).
Therefore, Rust and Oliver (2000) propose that it is essential for companies to develop the
awareness of customers Perceptions of service quality.

2.4 Characteristics of Services

According to Bitner et al … (1993) service has four characteristics: intangibility, inseparability,
heterogeneity and perish ability.

2.4.1 Intangibility of services

Regan (1963) “introduced the idea of services being activities, benefits or satisfaction which are
offered for sale, or are provided in connection with the sale of goods” the degree of intangibility
has been suggested as a means of differentiating tangible products with services (Levit, 1981)
Most of the time, services are explained ad being intangible since their outcome is considered to
be an action rather than a physical product (Johns 1999). (Darby and karni 1973 and
Zeithaml1981) highlight the fact that the degree of tangibility has implication for the ease
intangibility cannot be used to differentia clearly services with products. (Bowen 1990 and
Wyckham, Fitroy and Mandry 1975 suggest that the intangible tangible concept is difficult for
people to grasp. Bowen (1990)” provides empirical evidence to support this view. “Onkvisit and
Shaw (1990). “feel that the importance of intangibility is over-emphasized:

2.4.2 Inseparability of services

Inseparability is taken to reflect the simultaneous delivery and consumption of services (Regan
1963: Wyckham et al 1975: Donnelly 1976: Gronoroos 1978: Zeithamal 1981 Carman and
Langeard 1980: Zethaml et al., 1985: Bowen 1990 and Onkvisit and Shaw 1991 and it is
believed to enable consumers to affect or shape the performance and quality of the service
(Gronoroos, 1978 Zeithamal, 1981).
2.4.3 Heterogeneity of Service
Heterogeneity “reflects the potential for high variability in service delivery” (Zeithaml et al
1985). This is a particular problem for service with high labor content. As the service
performance is delivered different people and the performance of people can vary from day to
day (Rathmell, 1966: Carman and Langeard, 1980: Zeithamal 1985 Onkivistansshaw, 1991
onkvisit and Shaw (199 1) consider “heterogeneity to offer the opportunity to provide a degree
of flexibility and customization of the service. “Wyckham et al.; (1975) suggest that
“heterogeneity can be introduced as a benefit and point of differentiation.”

2.4.4 Perishability of Services

In general, 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). Onkvisit and Shaw
(1991) suggest that “services are time dependent” and “time important” which make them very
perishable.” Hartman and linger (1993) 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

Initially, Parasuraman et.al (1985) in their focus group study developed five dimensions of
service quality. These were: Reliability, responsiveness empathy, assurance and Tangibles
Reliability:refers to performing as per the promises and designated time, just ability to render
unfailing and reliable service.

Tangibles: pertain to the physical facilities, equipment, personnel and communication materials:

Responsiveness: refers to the willingness of service providers to help customers and provide
prompt service:

Assurance: relates to the knowledge and courtesy of employees and their ability to convey trust
and confidence: and

Empathy: refers to the provision of caring and individualized attention to customers.

Service’s unique characteristics of intangibility, heterogeneity, and inseparability lead them to
possess highly levels of experience and credence properties. Which in turn make them more
difficult to evaluate than tangible goods (Bitner 1990: Zeithaml 1981).

2.6 Service Quality Dimensions Associated to the Banking Sector

The Five dimension of Service Quality have developed for the service sectors: tangibility.
Reliability, assurance, responsive, and empathy (Van et. Al 2003). Tangibility represents
physical facilities, equipment and appearance of personnel. Examples of tangible factor related to
banc include comfortable store designs. Up-to-date equipment for customer use and sufficient
staff provide service. These aspects are important for retail banks, because there are extensive
face-face contacts between a customer and staff. Therefore. Maintaining a professional
Contemporary Management Research and Comfortable store environment can increase customer
satisfaction.

The next dimension is responsiveness, which represents the willingness to help customers and
provide on time services. In order to be helpful and responsive to customers, HSBC for example,
has incorporated the statement due date on SMS alerts sent to cardholders (HSBC 2011). This
personal service targeted to enhance satisfaction. The other crucial service dimension is
reliability which means the ability to perform the promised service dependably and accurately.
The major reason for customers to prefer banks for investment funds is because of the soundness
and reputation of banks. Banks always assure customers a high level of security during
transaction. Banking service can improve customers, confidence and trust if staffs are able to
provide proper service to each customer. For instance, understanding the needs of each
individual customer, such as knowing the customers expected retirement age, annual income.
And hobbies are required to help a good match of insurance and financial products for
customers. Assurance is the knowledge and courteousness of employees may save a large sum of
money in banks. For complicated products, such as insurance, funds and margins, employees
must provide a clear explanation of each product to customers to that customer can feel confident
about the services provided by banks.
The final dimension is empathy, which represents the individualized attention that firms provide
to its customers. Employees, who show understanding of customer needs and are knowledgeable
to solve customer problems, are success factors for the service industry. Friendly customer
services please customers when they walk into a bank. The purpose of this dimension is to retain
customers to keep using the bank service (Van Iwaarden et al., 2003).

2.7 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 9Oliver,2001).

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.
 Kolter and Armstrong (2001) in their principles of marketing, define customer
satisfaction as the extent to which a product’s perceived performance match a buyer’s
expectations. They continued that, if the product’s performance falls short of
expectations, the buyer would be dissatisfaction but performance matches or exceeds
 expectation, the customer will be satisfied or highly satisfied. In service quality literature,
customer expectations are understood as desires or wants consumers (Zethaml, berry
&Parasuraman 1993) or what they feel the service provide should offer rather than would
offer” (Parasuraman et.al.,1988).
 Customer satisfaction is a “psychological concept that involves the feeling of wellbeing
and pleasures that results from obtaining what one hopes for and expects. From an
appealing products and/or service” (WTO, 1985)
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 merely the result of things not going wrong; satisfying the needs and
desires of consumers.” (Bestefiled, 1994);
 “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,
2006,144)
One area that has received considerable debate in customer satisfaction literature is
whether customer satisfaction should be defined as an outcome or a process. Many early
definitions conceptualized satisfaction as process which is currently the dominant view
held by most scholars (Oliver, 1980 Parasurman et al…, 1988). The process perspective
presupposes that customer satisfaction is feeling of satisfaction that results from the
process of company perceived performance and one or more predictive standards, such as
expectations or desires (Khalifa& Liu, 2002). This perspective is grounded in the
expectancy disconfirmation theory proposed by Richard Oliver (Oliver, 1980). The
customer is satisfied if the performance of product/service is equal to his/her expectations
and he/she is dissatisfied if the product/service performance is perceived to be below
his/her expectation (negative disconfirmation). If an expectation exceeds perceived
performance, the customer is highly satisfied.
By taking satisfaction as a process these definitions do not focus on satisfaction itself but things
that cause satisfaction, the antecedents to satisfaction, which occur primarily during the service
delivery process (Vara, 1997).

Recent studies have found that satisfaction as an outcome or end result during the process of the
consumption of a service; it is viewed as a post-purchase experience (Vavra, 1997). This view
has its roots in motivation theories that postulate that people are driven by the desire to satisfy
their needs (Maslow, 1954) or that their behavior is directed at the achievement of relevant goals
(Vroom, 1964). In this way satisfaction is perceived as a goal to be achieved and can be
described as consumer fulfillment response (Rust & Oliver, 1994)

2.8 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.

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 M.K.2012)

Several factors affect customer satisfaction. The kinds of product that banks offer to its
customers can cause customer satisfaction or dissatisfaction. Customer does not buy a product or
service for its own sake. They buy to acquire benefits that the terms of consumer need it is the
essential feature or benefit that the buyer expects to receive from using the product that
motivates buying behavior (Boating, 1994)

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 t (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

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

2.9 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

According customer satisfaction is built upon the basis of service encounters service providers
have significant opportunities to manage the interactions that together form the experience (Wir
z 1994) they can design and the interactive production process select train and manage
serviceemployees, design and the service environment.; selectively target socialize and educate
customers.

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.

2.10 Empirical framework

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

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 p 42

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

Parasuraman et 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)

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

3.1 Research Design

The study focuses on the assessment of service quality on customer satisfaction in case of CBE (WOLKITE
BRANC H). In order to achieve objectives of the study; the required data need to be relevant and
reliable. Therefore, the researcher has been used descriptive research design as it describes the problem
and suggests some recommendation on those problems.

3.2 Target population

Target populations of the study were customers and manager of CBE of WOLKITE BRANC H, and the
total number of customer was70000, and one manager.

3.3 Sample Size Determination

From the total population of 70000 (seventy thousand) customers, the researcher derived 100(hundred)
customers as a sample by using Yamane (1967) formula

n= N/1+¿ N (e)2

n= 70000/1+70000(0.1)2 Where n= sample size

N= Total population size

70000/1+700 e= Acceptable level of error (0.1)

70000/701

99.85 Approximately 100

Thus, the researcher took 100 customers as a sample.

3.4 Sampling Techniques
The researcher used connivance sampling techniques of non-probability sampling. This is so because it
provides the opportunities for the researcher to take those who are willing and able to respond
properly.

3.5 Sources of Data

For the purpose of this research, both primary and secondary data were used. Primary data were
obtained from primary source which include the actual information received from customer and
managers of the bank. Secondary data has been gathered from book and other materials available in the
organization

3.6 Methods of Data Collection

The researcher obtained data through questionnaire and interview. Questionnaires consists close-ended
and the questions consisting two parts; service quality questionnaire and customer satisfaction
questionnaire, those were given to the customers of CBE-Arbamnich branch, whereas the interview was
conducted with the manager of the organization

3.7 Methods of Data Analysis and Presentation

After the relevant data has been collected, the researcher processed the data through tabulating and
percentage, and the processed data has been analyzed through descriptive analysis techniques. Then
the data has been interpreted, and finally, based on the findings, the recommendation was given.