IMPACT OF SERVICE QUALITY ON CUSTOMER SWICHING PROPENSITY: CORPORATIVE RURAL BANKS OF SRI LANKA

Abstract

Corporative rural banks had golden era in serving banking and micro financing facilities for the rural community in Sri Lanka. Although these banks are still operating throughout the country rural community is swiching towards other banks which were establised in the rural areas by highlighting poor service quality offered by corporative rural banks. This paper aims to examine the role of service quality in determining customer switching propensity of the corporative rural banks. Data was gathered through a survey questionnaire from a random sample of 350 corporative-banking customers from Western, Uva and Sabaragamuwa Provinces. Correlation Analysis and Multiple Linear Regression Analysis were used to analyze data to examine degrees of impact of service quality on switching propensity. Service quality was measured through tangibles, reliability, responsiveness, assurance and empathy. These are the five dimensions which are used to measure the quality of the services in the service industries. Research findings revealed that five dimensions of service quality significantly affect switching propensity of rural corporative banking customers and tangibles and responsiveness are the two most critical service quality factors which affect switching propensity of corporative rural banking customers of Sri Lanka. The results demonstrate that how service quality helps limiting bank switching behavior and deliver a strong message to corporative rural bankers about the importance of service quality in retaining their customers. Corporative rural banks need to improve overall service quality while putting special attention on tangibles and responsiveness. It is worthly spending money on improving tangibles, training banking employees and providing advanced technology for employees for a responsive behavior towards customers.

For full paper: fmscresearch@sjp.ac.lk