COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENT
THE EFFECT OF SERVICE QUALITY ON CUSTOMER SATISAFCTION
A CASE OF COMMERCIAL BANK OF ETHIOPIA DEBRE MARKOS
MAIN BERANCH

BY: HAILEMICHAEL AYELE

ADVISOR: METADEL

A RESEARCH SUBMITTED TO DEPARTMENT OF MANAGEMENT IN

PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE
BACHILAR OF ART (B.A) DEGREE IN MANAGEMENT.

JANUARY, 2025
DEBRE MARKOS, ETHIOPIA

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Acknowledgment
Above all, I must thank the Almighty God for blessing me abundantly and providing me with
everything I needed throughout my study.

Second, I would like to express respectfully, my deepest gratitude and appreciation to my advisor
Metadel (MBA) for she valuable and constructive comments and correction that help my
substantially preparing research. Finally, my deepest and heartfelt gratitude also goes to my
family and friends for their unreserved financial and moral support.

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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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Contents Page
Acknowledgment................................................................................................................................................... 2
Acronyms.....................................................................................................................................................................3
List of Table ................................................................................................................................................................6
Abstract........................................................................................................................................................................7
CHAPTER ONE..........................................................................................................................................................8
1. INTRODUCTION................................................................................................................................................... 8
1.1. Background of the study.......................................................................................................................................8
1.2. Statement of the problem....................................................................................................................................10
1.3. Objectives of the study........................................................................................................................................11
1.3.1. General objective.............................................................................................................................................11
1.3.2. Specific objectives...........................................................................................................................................11
1.5. Significance of the study.....................................................................................................................................11
1.6. Scope and Limitation of the study.......................................................................................................................12
1.7. Organization of the study....................................................................................................................................12
CHAPTER TWO.......................................................................................................................................................12
REVIEW OF RELATED LITERATURE..................................................................................................................12
2.1.1 Definitions of Service.......................................................................................................................................12
2.2. Service Quality................................................................................................................................................... 13
2.3. Characteristics of Services..................................................................................................................................14
2.4. Service Quality Dimensions................................................................................................................................15
2.4.1. Seroquel Dimensions Associated to the Banking Sector..................................................................................17
2.5. Customer Satisfaction.........................................................................................................................................18
2.6. Factors that cause Customer Satisfaction............................................................................................................20
2.7. Customer Satisfaction in Banking Services Context...........................................................................................21
2.8. Empirical framework..........................................................................................................................................21
CHAPTER THREE...................................................................................................................................................22
3. RESEARCH METHODOLOGY...........................................................................................................................22
3.1 Locations of study area........................................................................................................................................22
3.2 Research design and its Approach........................................................................................................................23
3.2.1Target population...................................................................................................................23
3.2.2. Sampling techniques............................................................................................................23
3.2.3. Sampling size.......................................................................................................................23
3.2.2. Sampling techniques............................................................................................................23
3.3.1. Method of data collection.................................................................................................................................26
3.4. Method of data analysis......................................................................................................................................26
CHAPTER FOUR......................................................................................................................................................27
4.Data Analysis and Discussion of Results................................................................................................................27
4.1. Background information from Respondents........................................................................................................27
4.2. Descriptive statistical Analysis...........................................................................................................................28
4.2.1. Response and percentage of Service quality dimension...................................................................................28
4.3 Customer Satisfaction..........................................................................................................................................39
4.3.1 Response and percentages of customer satisfaction..........................................................................................39
CHAPTER FIVE.......................................................................................................................................................43
5. Conclusion and Recommendations........................................................................................................................43
5.1. Conclusion.......................................................................................................................................................... 43

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5.2. Recommendation................................................................................................................................................ 43
REFERENCE............................................................................................................................................................ 44
APENDEX.................................................................................................................................................................45

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List of Table Page
Table 4.1 Background information of respondent .....22
Table 4.2 Reliability ..........23
Table 4.3 Assurance ...25
Table 4.4 Responsiveness ..27
Table 4.5 Empathy .29
Table 4.6 Tangibles 31
Table 4.7 Customer Satisfaction 33

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Abstract

Service delivery Quality improvement is key issue that determines the very survival any of company.
Customer satisfaction suffers as a result of poor service quality. The aim of this study was to assess the
effect of service quality on customer satisfaction a case of commercial bank of Ethiopia Debre Markos
main branch. The study uses the descriptive of research design and used primary data source. Primary
data was collected using survey questionnaires. Through employing purposive and convenience sampling
methods, the populations of this study are all customers who receive services from the business
customers, Accordingly, Sample size of 85 respondents is taken from 21600 society has been using its
service. The result of this study shows that, most of the respondents are satisfied and have a good image
toward the service quality delivered by the commercial bank of Ethiopia. Most of customers were very
satisfied and satisfied respectively with the reliability dimensions of service quality followed by tangibles,
assurance and empathy. Furthermore, customers were relatively less satisfied with responsiveness
dimensions of service quality. Based on this, the researcher recommended that the bank to take corrective
actions as much as possible to make their customer loyal and sustain.

Key words: service quality, customer satisfaction, SERVQUAL

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 CHAPTER ONE
1. INTRODUCTION

1.1. Background of the study

Customer satisfaction is the extent to which a product perceived performance matches a buyer
expectation. If the product performance falls short of expectation the buyer will be satisfied
ordering hated. Today customer face arrange of choice in product and service as we choice in the
basis of their perceptions. Quality service value company need to understand the deferment of
customer usual and the difference between total customer value and total cost (Kotler, 2004:17)
Customer satisfaction is considered important in defining organizational performance. Enhancing
customer satisfaction is critical because it is a key to business success of any banking institution.
In the competitive economy, customer’s satisfaction has come under limelight due to stiff
competition where organizations are trying to take competitive advantage through the human
factor and customers (Cronin, J. J. etal.1992). Business environment in developed and
developing countries has changed due to globalization and free trade and global competition is
increasing with exploding. Because of these reasons, to stay in a competitive environment and
deliver acceptable financial returns, managers must know how to handle changes which are
unexpected by cementing on customers’ satisfaction (Ekinci, Y. 2004).
In developing country customer satisfactions has become 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 their customers as two crucial parameters leading to
increased business profits. As the same time, several banking institutions experiencing
increasing level of retail customer dissatisfaction (Carman, J.M.1990). 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 bank employees and unreliable
service. However, whether any of these really holds true and the extent to which they impact on
customer satisfaction is not known. Moreover, there may be other causes which are out of the
above list of possible causes but none has been established.
Customer satisfaction is the outcome felt by buyers who have experienced accompany
performance that and fulfilled expectation customer are satisfied when their expectation are

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exceeded satisfied customer remain loyal longer .buy more are less price sensitive 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,
1996:215) Customer satisfaction is a personal feeling of either pleasure or disappointment
resulting from the evaluation of services provided by an organization to an individual in relation
to expectations (Oliver, 1980).
Service quality has been identified as a critical success factor for organizations to build their
competitive advantage and increase their competitiveness. Service quality has been defined as an
attitude resulting from the comparison of expected levels of service with perceived performance
(Hibrework, 2013)
Even though, the Ethiopian financial institutions have a far reaching history, the use of money
and coins in Ethiopia has a long history, and the introduction of modern banking is nearly a
century old. Despite the long history, which precedes the advent of modern banking throughout
most of Africa, the Ethiopian financial system has not progressed that much as one expects and
the problems that commercial banks face in Ethiopia are many.
The Ethiopian economy has yet untapped large potential for commercial banking and private
Banks in Ethiopia are in their infant stage. They are less in number and scope; however they are
playing a decisive role in the Ethiopian economy at the same time challenges exist in their
operations.
Since Ethiopia is a country which has no capital or stock markets more than 90 percent financial
saving is done by banks. The National Bank of Ethiopia also raised the saving interest rate from
4 percent to 5 percent. (Biritu, 2011) and yet this is less than the rate of inflation , and these
problems call for extensive research that aims at assessing the impacts of low level of saving rate
which is lower than the rate of inflation on in banking sector .
1.2. Statement of the problem
Satisfying customers is the first major mission and purpose of any business organization. It is
when customers are satisfied the organizations achieves higher sales, profit and market share and
vice versa. (Zeithaml, etl, 2006)
Customer satisfaction also leads organizations to gain loyalty and achieve the desired objectives.
Therefore, it is essential for organizations to satisfy their customers promptly so that they can
achieve what they plan. Banks as a business organization should provide a great care for its
customers’ to attract, retain and gain their loyalty (Kotler, 2004:17)

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A business can achieve success only by understanding and fulfilling the needs of customer .from
a total quality perspective ,all strategic decisions a company makes are “customer driven “ in
other word ,the company must show constant sensitivity to emerging customer and service
quality requirements .according to the study by collart (2000),one of the determinants of success
of a firm is how the customer satisfaction the resulting service quality ,as this is the key driver of
perceived value it is the perceived value which determines customers satisfaction .many firms
including banking industries begin to track their customers satisfaction through measuring their
level of service quality by their customers .the most widely used model to measure service
quality was developed by parasuraman et al.(1985,1988) known as SERVQUAL. According to
this model, five dimensions of service quality are tangibles, Reliability, Responsiveness,
Assurance and empathy. (A detailed discussion of the SERVQUAL mod is done in the literature
review section of this paper).
However, as an employee of the bank the researcher observed some problems on service quality
of the bank such as lack of adequate equipment, system failure (it may be internal or external).
use of weak like unstable internet and network connections, lack of trained manpower, the non –
performing loans they carry, the dominance of the state owned banks in the market, customer
complaints, sometimes the government uses them to implement its vice an cucrisis so on.
The reason for the researcher to conduct this study is the high level of problems related to
commercial bank service quality and customer satisfaction in Debre Markos main branch.
1.3. Objectives of the study
1.3.1. General objective
The general objective of this study was assessing Customer Satisfaction on service quality in
case of Commercial Bank of Ethiopia Debre Markos main branch.
1.3.2. Specific objectives
The specific objectives of this study were the following:
1. To examine the tangibility of service quality in case of CBE.
2. To identifies the impact of service quality dimensions on customer satisfaction of the banks.
3. To provide some recommendations for the bank.
1.4. Research Question
The study wills answers the following questions:
1. What is the tangibility of service quality in case of CBE?
2. What is the impact of service quality on customer satisfaction of the banks?

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1.5. Significance of the study
This research is significant because it enables to know the level of customer satisfaction of CBE-
Debre Markos main branch that uses to create a good customer handling in relation specifically
selected bank. It will use the management decisions of that good customer service can develop or
make correction action on poor customer service depending up on this the paper will produce the
following significant. For me share knowledge besides, it may also necessitate farther study on
related issues, by the bank management body to get information and to enhance quality of
service, researchers it may be help as a baseline for other researchers and used as a source of
additional material for further study.
1.6. Scope and Limitation of the study
The study focuses on effects of service quality on of customer satisfaction. Spatially this study
was delimited to commercial bank of Ethiopia in Debre Markos main branch. This delimitation
to a single branch was mainly due to time and budget limitation. The research was based on a
descriptive research design to gather socio-economic data through questioner and secondary data
from bank annual report, book, published and unpublished recording and other relevant written
materials. The studies was used purposive sampling method to include 85 respondents
specifically business customers.
This study was not free from limitation. This is because during data collection time the
respondents were not frequently available in their work place due to additional duties on other
assignments and unwillingness of some respondents to give genuine response. However,
researcher was tried to minimize the problem through convincing the respondents about the
importance of this research to researcher and bank manager. The other issue was the problem
associated with financial,
The absence of adequate secondary data from bank and time constraints was another problem
encountered the researcher.
1.7. Organization of the study
The research was consisting of five chapters. The first chapter ,back ground of the study ,
statement of the problem, objective of the study, significance of the study, scope and limitation
of the study and organization of the study. The second chapter represents literature review that
the researcher reviewed research made on this area and written documents .The third chapter was
includes the research methodology. The fourth chapter was includes data presentation and
analysis. The last chapter deals with the overall conclusion and recommendation of the study.

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 CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1 Theoretical Literature
This chapter presents an overview and critical analysis of relevant literature on the 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
Different scholars define service and its feature in different ways some of these are:
Services: are deeds, performances and processes provided or coproduced by one entity or person
for and with another 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 (value 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 which are
provided as solution to customer problems “most authorities consider the services sector 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, time-lines, comfort which are basically intangible concerns of its purchaser.”(James
Brain. Quinn, Jordan. Baruch, Penny, Cushma1987).
2.2. Service Quality
“Quality research in the goods sector was established long before it was established in the
service sector” (Gummesson, 1991). Bandyopadhyay 2003, pp. 187-188) claimed that quality in

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goods sectors is “commonly defined as the product’s fitness for its intended use, which means
how well the product meet the needs and the expectations of its customer”.
Garvin (1983) referred to “the product oriented quality approach as ‘objective quality.”
(Clemes, Gan, and Kao, 2007). However, “understanding quality in the goods sector is
inadequate for understanding service quality because of the fundamental difference between the
two terms” (Parasuraman, et al., 1985). (Parasuraman, et al., 1985, pp. 42) “Suggest that
service quality is performance based rather than objects, therefore precise manufacturing
specifications concerning uniform quality can rarely be set”.
Service quality is “more difficult for consumers to evaluate than product quality; this is due to a
lack of tangible evidence associated with the service” (Hong and Goo, 2004). In the past
decades, researchers (Carman 1990; Garvin 1983; Parasuraman et al, 1985, 1988) have defined
and measured service quality by examining the attributes of service quality, while others (Bitner
and Hubbert 1994; Iacobucci, Grayson, and Ostrom, 1994; Oliver, 1993; Oliver and DeSarbo,
1988; Parasuraman, Zeithaml, 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 (Clemes et al., 2007; Parasuraman et al., 1985).
Bitner and Hubbert (1994) “define service quality as the customers’ overall impression of the
relative inferiority or superiority of the organization and its services.” Gronroos (1984)
“identified service quality as the evaluation process outcome, in which customers are involved
and where a certain experience is always compared to the perceived service received.” “Service
quality is not objectively measured according to some technical standards but is subjectively felt
by customers and measured relative to customer determined standards” (Kwortnik, 2005).
Berry et al., (1990) also “defined service quality as the discrepancy between customers’
expectations or desire and their perceptions.”
“The previous literature suggests that the evaluation of quality in services is more difficult than
goods (Parasuraman et al., 1985) and that delivering quality services is increasingly recognized
as the key to success for service providers” (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.

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2.3. Characteristics of Services
According to Bitner et al., (1993) service has four characteristics: intangibility, inseparability,
heterogeneity and perishable
A. Intangibility of Services
Regan (1963) “introduced the idea of services being activities, benefits or satisfactions 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
(Levitt, 1981). Most of the time, services are explained as being intangible since their outcome is
considered to be an action rather than a physical product (Johns, 1999). (Darby and Karni 1973
and Zeithaml 1981) highlight the fact that the degree of tangibility has implications for the ease
with which consumers can evaluate services and products. Other researchers propose that
intangibility cannot be used to differentiate clearly services with all products. (Bowen 1990 and
Wyckham, Fitzroy 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 (1991) “feel that the importance of intangibility is over- emphasized”.
B. Inseparability of Services
Inseparability is taken to reflect the simultaneous delivery and consumption of services (Regan
1963; Wyckham et al 1975; Donnelly 1976; Grönroos 1978; Zeithaml 1981; Carman and
Langeard 1980; Zeithaml 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
(Grönroos, 1978; Zeithaml, 1981).
C. Heterogeneity of Services
Heterogeneity “reflects the potential for high variability in service delivery” (Zeithaml et al.,
1985). This is a particular problem for services with high labor content, as the service
performance is delivered by different people and the performance of people can vary from day to
day (Rathmell, 1966; Carman and Langeard, 1980; Zeithaml, 1985; Onkvisit and Shaw, 1991).
Onkvisit and Shaw (1991) 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.”
D. Perish ability 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

14
(1991) suggest that “services are “time dependent” and “time important” which make them
very perishable.” Hartman and Lindgren (1993) claim that the “issue of perish ability 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.”
2.4. Service Quality Dimensions
Initially, Parasuramanet. al. (1985) in their focus group study developed five dimensions of
service quality. These were: Reliability, Responsiveness, empathy, assurance and Tangibles.
Reliability: It 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 high levels of experience and credence properties, which, in turn, make them more
difficult to evaluate than tangible goods (Bitner 1990; Zeithaml 1981). “Identification of the
determinants of service quality is necessary in order to be able to specify measure, control and
improve customer perceived service quality” (Johnston 1995).
The most frequently used scales in the measurement of perceived service quality are
SERVQUAL (Parasuram, Zeithaml, and Berry 1988) and SERVPERF (Cronin and Taylor 1992).
Both are the result of research work from the US school of quality. SERVPERF directly
measures the customers’ perceptions of service performance and assumes that respondents
automatically compare their perceptions of the service quality levels with their expectations of
those services. The SERVPERF scale is identical to the SERVQUAL scale in its dimensions and
structure.
Cronin and Taylor (1992) argued on the framework of Parasuraman et al. (1985), with respect to
conceptualization and measurement of service quality and developed performance only
measurement of service quality called SERVPERF by illustrating that service quality is a form of
consumer attitude and the performance only measure of service quality is an enhanced means of
measuring service quality.

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They argued that SERVQUAL confounds satisfaction and attitude. They stated that service
quality can be conceptualized as “similar to an attitude”, and can be ope rationalized by the
adequacy-importance model. In particular, they maintained that Performance instead of
“Performance-Expectation” determines service quality. Service quality is evaluated by
perceptions only without expectations and without importance weights.
The SERVPERF model was carved out of SERVQUAL by Cronin and Taylor in 1992.
SERVPERF measures service quality by using the perceptions of customers. Cronin and Taylor
argued that only perception was sufficient for measuring service quality and therefore
expectations should not be included as suggested by SERVQUAL (Baumann et al, 2007 as
cieted in Mesay S 2012). The SERVPERF scale is found to be superior not only as the efficient
scale but also more efficient in reducing the number of items to be measured by 50% (Hartline
and Ferrell, 1996; Babakus and Boller, 1992; Bolton and Drew, 1991 as cieted in Mesay S 2012).
In this study, the SERVPERF scale is used to measure to service quality in retail banking.
2.4.1. Seroquel Dimensions Associated to the Banking Sector
The Five dimensions of SERVQUAL have been developed for the service sectors: tangibility,
reliability, assurance, responsiveness, and empathy (Van Iwaarden et al., 2003). Tangibility
represents physical facilities, equipment and appearance of personnel. Examples of the tangible
factor related to banks include comfortable store designs, up-to-date equipment for customer use-
and sufficient staff to provide service. These aspects are important for retail banks, because there
are extensive face-to-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
(HSBC2011). This personal service targeted to enhance customer satisfaction. The other crucial
service dimension is reliability which means the ability to perform the promised services
dependably and accurately. The major reason for customers to prefer banks for investment funds
is because of these soundness and reputation of banks. Banks always assure customers a high
level of security during transactions. Banking service can improve customers’ confidence and
trust if staffs arable to provide proper service to each customer. For instance, understanding the
needs of each individual customer, such as knowing the customers’ expected retirement age,

16
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 and their ability to motivate trust
and confidence. Bank commitments are important, as customers 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, so that customers 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 knowledge
solve customer problems are success factors for the service industry. Friendly customer service
pleases 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).
2.5. Customer Satisfaction
Early concepts of satisfaction have typically defined satisfaction as a post utility evaluation and
judgment concerning a specific purchase decision (Churchill and Sauprenant 1992; Oliver,
1980). Most researchers agree that satisfaction is an attitude or evaluation that is formed by the
customer by comparing what they expect to receive to their subjective perceptions of the
performance they actually get (Oliver, 1980).
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 to his or her expectation.
 Gaither (1994) defines customer satisfaction as the determination of customer
requirements and demonstrated success in meeting them.
 Kotler (2006) again defined customer satisfaction by giving details on the attributes of a
highly satisfied customer. According to him, a highly satisfied customer stays loyal,
longer, and buys 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 product ideas to the
company and costs less to serve him than new customers because transactions are routine.

17
  Kotler and Armstrong (2001) in their Principles of Marketing, define customer
satisfaction as the extent to which a product’s perceived performance matches a
buyer’s expectations. They continued that, if the product’s performance falls short of
expectations, the buyer would be dissatisfied but if 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 of consumers
(Zeithaml, berry &Parasuraman 1993) or “what they feel the service provider should
offer rather than would offer” (Parasuraman et al., 1988). Customer perceptions are
defined as “the customer’s judgment of the service organization’s performance”
(Parasuraman et al., 1988).
 Customer satisfaction is a “psychological concept that involves the feeling of wellbeing
and pleasure that results from obtaining what one hopes for and expects from an
appealing product and/or service” (WTO, 1985);
 CS “as an attitude-like judgment following a purchase act or a series of consumer
product interactions.” ( Lovelock &Wirtz, 2007);
 “Satisfaction is merely the result of things not going wrong; satisfying the needs and
desires of consumers.” (Besterfield, 1994);
 “Satisfaction is a person’s feeling of pleasure or disappointment resulting from
comparing a product’s performance (outcome) in relation to his or her expectation.”
(Kotler& Keller, 2006 p. 144).
Again, CS may be described as a process or an outcome. 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 a process which is
currently the dominant view held by most scholars (Oliver, 1980, Parasuraman et al., 1988). The
process perspective presupposes that customer satisfaction is a feeling of satisfaction that results
from the process of comparing perceived performance and one or more predictive standards,
such as expectations or desires (Khalifa& Liu, 2002). This perspective is grounded in the
expectancy dies confirmation 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 dies confirmation). If expectation exceeds perceived performance, the customer is
highly satisfied.

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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 (Vavra, 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).
2.6. Factors that cause Customer Satisfaction
A customer satisfaction is an ambiguous and abstract concept. 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,
economic 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 products that banks offer to its
customers can cause customer satisfaction or dissatisfaction. Consumers do not buy a product or
service for its own sake. They buy to acquire benefits that the product offers. They buy to satisfy
a need. Products therefore exist for what they fulfill in terms of consumer needs. It is the
essential feature or benefit that the buyer expects to receive from using the product that
motivates buying behavior (Boateng, 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 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
customer of that bank.
Another service element that causes customer satisfaction or dissatisfaction is the people or thee
employee delivering the product or service (Covey, 2004). The employees occupy the first point
of contact with the customer. Employee behaviors are therefore important to customers. If the

19
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 delays and lack of personal support from staff (Sasraku, 2007).
The technology being used by the bank in service delivery could be a source of satisfaction to
customers. When electronic devices like computers are used, they tend to speed up the
processing time of transactions. System and processes solely do no create satisfaction.
Service system quality, behavioral service quality, service transaction accuracy and machine
service quality are necessary to make the technology in use worthwhile (Aldlaigan&Buttle,
2002).
Furthermore, the security of customers and their deposits is an area of concern to customers.
When customers are assured of protection from external threats they feel secured and happy.
For example, if a bank is situated at a place noted for criminal activities, customers are scared
and dis8satisfied (Sasraku, 2007). Of course the internal security is equally important to
customer who will want to deal with personnel with integrity and good moral values especially,
the financial institutions (Lovelock &Wirtzn.d 2007).
2.7. Customer Satisfaction in Banking Services Context
In contrast to products, customers are not really able to evaluate services before the service
process takes place. The interaction with the service provider and the customers, the so called
service encounter, is the key in the evaluation of service performance (Gil, 2008). During these
encounters, the customer is able to get an impression of the way the company provides its
services. His/her service experience is defined by the interaction with the organization, the
processes and the employees.
Accordingly, customer satisfaction is built upon the basis of service encounters. Service
providers have significant opportunities to manage the interactions that together form the
experience (Wirtz, 1994). They can design and the interactive production process; select, train
and manage service employees; design and maintain the service environment; selectively target,
socialize and educate customers.
In banking services, satisfaction is usually conceptualized as a multidimensional construct
(Manrai, L.A., Manrai, A.K., 2007). The list of bank service attributes used for the measurement

20
of satisfaction comprises elements like: appearance of the facility, attitude and behavior of staff,
decor and atmosphere, business hours, interest rate, waiting time. Bank customers may regard
some of these elements as being not equally important as the others.
2.8. Empirical framework
A. Distinction between Service quality and Customer satisfaction
The literature on services 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 providing 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, a 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 dies-confirmed expectations is coupled with the consumer’s prior feelings about
the consumption experience”. Moreover, Oliver (1981) distinguished customer satisfaction from
service quality in his definition of attitude as “the consumer’s relatively enduring affect's
orientation for a product, store, or process while satisfaction is the emotional reaction following a
dies confirmation experience which acts on the base attitude level and is consumption-specific”
(Oliver, 1981, p. 42). Therefore, service quality is “more stable and is situation ally oriented”
(Oliver, 1981, p. 42).
The two constructs 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”(Bitner, 1990; Bolton & Drew, 1991). 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, 1998).

21
Empirical research by Cronin & Taylor (1992) “showed that service quality has a significant
effect on customer satisfaction.” Similarly, recent studies by (González & Brea, 2005; &Ekinci
2004) using recursive structural models provided empirical support that service quality results in
customer satisfaction. According to Zeithaml et al., (2006), customer satisfaction “is a broader
concept than service quality which focuses specifically on dimensions of service”.
B. Relation between service quality and customer satisfaction
Private Banks dealing in retail banking Industry is consequently put into lot of pressures due
towards increase in global competition.
Different strategies are formulated to satisfy and retain the customer and the key of it is to
increase the service quality level. Typically, customers perceive very little difference in the
banking products offered by private banks dealing in services as any new offering is quickly
matched by competitors.
Parasuramanet.al (1985) and Zeithaml et. al (1990) noted that the key strategy for the success
and survival of any business institution is the deliverance of quality services to customers. The
quality of services offered will determine customer satisfaction and attitudinal loyalty
(Ravichandran et al. 2010).
Parasuraman, A., ZeithmaI, V.A., & Berry, L.L.(1988) found that the performance of the service
provider on core and relational dimensions of services was an important driver for customer
satisfaction in retail banking.

22
 CHAPTER THREE
3. RESEARCH METHODOLOGY
This chapter discuss about the methodology 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 was clearly defining the research design, the sample and sampling
techniques, sources and instruments that have been utilized in collecting data and finally the
method of data analysis were presented as follows.
3.1 Locations of study area
The study was conduct 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, it is located in the Amhara Regional State, East Gojjam Zone and covers total
area of 65.85 km2. It shares border with Aneded to the east and Gozamen to south, north and
west .it has latitude and longitude of 10 0 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. (Debre Markos city administration 2017)
3.2 Research design and its Approach
The study employed descriptive type of research design through survey questionnaire.
Descriptive statistics to demonstrate the profile of respondent and to see the perception of
customer about the quality of service by using ( Fequencey, percentage). Therefore, the purpose
of the research is mainly descriptive.
The researcher it was used quantitative research approach. The purpose of quantitative research
is to gather, analyze, and measure statistical data. In a quantitative research approach a number
of objects are selected and studied in order to increase the ability to draw general conclusions.
Based on the above explanation, the researcher used quantitative research approach in the study
in order to assess the service quality and customer satisfaction in commercial bank of Ethiopia in
Debre Markos main branch.
3.2.1Target population
The population in case of this study is total customers of commercial bank of Ethiopia in Debre
Markos main branch has 120,000. From this population both individual and business customers

23
were available and the majority of the study participants were individual customers, constituting
around 82 percent and the remaining 18 percent were business customers.
3.2.2. Sampling techniques
This research focuses effects of service quality on customer satisfaction in case of CBE at Debre
Markos main branch. The researcher employed non-probability sampling techniques. Among the
techniques the researcher has used both purposive and convenience sampling methods. It prefers
“purposive” the samplings frame of this study only business account customers because of
financial and time constraints researcher find it difficult to access individual customers. The
other It must also be noted that a convenient sample was used to select respondents from
business account customers who are scattered across the town which made it difficult to contact
each of them individually. Given that it was also difficult in getting the exact number of business
account customers in town, which is required for the use of a convenience sample was therefore
preferred.
3.2.3. Sampling size
Sample is the segment of the population that is selected for investigation (Bryman and Bell,
2003). Sample size is actually the total number of units which are to be selected for the analysis
in the research study. However, it is not possible for researchers to get in touch with a big
number of samples, as the sample size is critical question in practice. The decision about the size
and the sample needs to consider about time and cost, the need of precision, and a variety of
further considerations (Bryman and Bell, 2003).
The population of business account customers too large. Therefore, it going to be expensive and
time consuming to collect data from each member is a large population. The researcher intends
to have a representative sample of convenient respondents from business account customers are
included in this study.
3.3. Types and source of data
With regard to the sources of data, the study used both primary and secondary source of data.
Based on the nature, scope, objectives and availability of time and resource, the researcher used
questionnaires and secondary data source like books, documents, existing research papers,
journals and publication, websites, CBE reports and other relevant journal.

24
3.3.1. Method of data collection
For the proper achievement of the objectives of the study; the researcher used questionnaire,
close ended questions. The respondents who are the clients of the branch banks were ask for
cooperation and given the questionnaire when they were receiving the service of specific branch.
Structured questionnaires was developed containing closed ended and the respondents can easily
understand.
3.4. Method of data analysis
The collected data has to be changed and interpreted in to meaningful information, figure and
statement. So it was analyzed, processed and interpreted according to the nature of data. The
researcher it was organized the data gathered and the response of the question was presented in
different ways tables, frequency distributions and percentage within their descriptions using like
scale based questionnaire. So the researcher was used descriptive method. The main reason of
choosing this method it was easily to work and it could be easily understandable by the readers.

25
 CHAPTER FOUR
Data Analysis and Discussion of Results
This chapter was presented a discussion of the final result and the process through which the
result were obtained. In addition to this, background of information was presented.
4.1. Background information from Respondents
Table 4.1.Background information of respondent
No Item Alternative Number of Respondents Percentage
1 Sex Male 40 47.05
Female 45 52.94
Total 85 100
2 Age 18-28 12 14.11
29-38 28 32.94
39-48 30 35.31
Above 48 15 17.64
Total 85 100
3 Educational Below 25 29.41
level Grade10th
Certificate 30 35.31
Diploma 17 20
Degree 8 9.41
Above 5 5.9
Degree
Total 85 100
Source: survey result (2024)

Table 4.1 As highlighted above on the tables the general information of the respondents for
business customers are business customers from the total population of 85 respondents
questionnaires’‟ were collected and from which 52.94 % were Female and the remaining 47.05%
are Male, this implies most of participants are female respondents. 14.11% of them were
between18-28, 32.94% of them are between 29-38, 35.31% of them are between 39-48, and the
remaining 17.64% are above the age of 48. It is obvious that most of them were in the
economically active group. Their educational level is also 29.41% of them are below grade 10th,

26
35.31% of them Certificate, 20% of them have diploma, 9.41% of them have degree, and 5.9%
of them are above degree. This implies that most of the clients were Certificate holders whereas,
the least were Above Degree.
4.2. Descriptive statistical Analysis
4.2.1. Response and percentage of Service quality dimension
Table 4.2 .Reliability ( are all the questions below categorized under reliability dimensions IF
NOT please give title for each table like table 4.2.1.reliability table 4.2.2. consistency like this
then prepare list of tables)
No Item Response in No Response in %
1.1 Banks’ fulfill its
promise as promised.

Very satisfied 22 25.8

Satisfied 53 62.4

Neutral 7 8.2

Dissatisfied 2 2.4
Very dissatisfied 1 1.2
Total 85 100%

Source: survey result (2024)

Table 4.2 of item 1.1 shows the result of customer response towards the question Banks’ fulfill
its promise. From the result it can be obtained that majority of respondent are 62.4% satisfied.
While 1.2 percent are very dissatisfied. The tables it indicates most of respondents are satisfied
by banks’ fulfill its promise as promised.

No Item Response in No Response in %

27
1. Banks’ perform the
service exactly at the
first time
Very satisfied 32 37.6
Satisfied 44 51.8
Neutral 2 2.4
Dissatisfied 5 5.8
Very dissatisfied 2 2.4
Total 85 100%
Source: survey result (2024)
Accordingly concerning to bank’s performing the service exactly at the first time, the majority
of the respondents about 51.8% respond as they are satisfied. While the others are 2.4%
respondents are neutral and strongly dissatisfied. Based on the above table the researcher to
conclude that most of customers of the bank are happy by the treatment which is performed by
the bank; when they get the service for the first time and the bank expected to improve treat
those new customers who are not happy in order to shoot the climax of their satisfaction.
No Item Response in No Response in %
2 Banks show a keen
interest in solving
your problems
Very satisfied 26 30.5
Satisfied 40 47.1
Neutral 11 12.9
Dissatisfied 6 7.1
Very dissatisfied 2 2.4
Total 85 100%
Source: survey result (2024)
According to the above table implies that 47.1% percent customers are satisfied. And the others
smaller number of respondents 2.5% are very dissatisfied. From this the researcher concludes
that with this specific reliability question, customers are satisfied.
No Item Response in No Response in %

28
3 Banks insist on error
free record
Very satisfied 29 34.1
Satisfied 25 29.4
Neutral 23 27.1
Dissatisfied 7 8.2
Very dissatisfied 1 1.2
Total 85 100%
Source: survey result (2024)
Customers are asked about whether the banks employee provide error free service or not and the
majority of respondent says 34.1 % of customers are strongly satisfied, and also 1.2% customers
are strongly dissatisfied. The table implies that most of respondents are satisfied; however the
respondents who are neither satisfied nor dissatisfied are a little big, so the manager of the bank
needs to give orientation for the employees to make error free records when they serve the
customers.
Table 4.3.Assurance
No Item Response in No Response in %
1 Bank’s staff behavior
instills confidence in
me
Very satisfied 33 38.8
Satisfied 34 40
Neutral 11 13
Dissatisfied 7 8.2
Very dissatisfied - -
Total 85 100%
Source: survey result (2024)
The above table implies that the result of bank’s staff behavior. From the majority of
respondents 40 % are satisfied, while 8.2 % are dissatisfied. The researcher concludes that
customers are satisfied with the first assurance question. The bank expected to improve possess a

29
little effort to get the climax aim that of satisfying those who did not satisfied and the neutral
one.
No Item Response in No Response in %
2. I feel safe in my
transaction with the
bank
Very satisfied 40 47.1
Satisfied 30 35.3
Neutral 9 10.6
Dissatisfied 5 5.8
Very dissatisfied 1 1.2
Total 85 100%
Source: survey result (2024)
The above table it implies that question is that you feel safe in your transactions with the bank.
For this, 47.1 % of customers are strongly satisfied, and 1.2 % customers are strongly
dissatisfied. The researcher concludes that Employees of the bank expected to shift those who
are not very satisfied, not satisfied and neutral to highly satisfied customers.
No Item Response in No Response in %
3 Bank’s staff are
courteous with me
Very satisfied 20 23.5
Satisfied 36 42.4
Neutral 10 11.7
Dissatisfied 17 20
Very dissatisfied 2 2.4
Total 85 100%
Source: survey result (2024)
Table 4.3 of item 3 it implies the majority of respondents 42.4 % of the satisfied, and the rest 2.4
% of the respondents are strongly dissatisfied with courteousness of the employees. The
researcher to conclude that employees of the bank expected have to improve their behavior in a
bit way in order to satisfy their customers for the smooth running of the transaction created
between them.

30
No Item Response in No Response in %
4 Bank’s staff have the
knowledge to answer
all my questions
Very satisfied 18 21.2
Satisfied 33 38.8
Neutral 19 22.4
Dissatisfied 10 11.7
Very dissatisfied 5 5.9
Total 85 100%
Source: survey result (2024)
The above table it implies that for the question about employee of the bank have enough
knowledge to answer the required questions, 38.8 % of customers are satisfied, and 5.9 % of the
customers are strongly dissatisfied. The researcher to conclude that the employees expected
improves or update their knowledge to answer the entire question of customers even though they
satisfy them.
Table 4.4 Responsiveness
No Item Response in No Response in %
1 Bank’s staff tell you
exactly the time the
service will be
performed
Very satisfied 14 16.5
Satisfied 27 31.7
Neutral 27 31.7
Dissatisfied 16 18.9
Very dissatisfied 1 1.2
Total 85 100%
Source: survey result (2024)
The above table this implies the question is that the bank keeps customers informed about when
services will be Performed 31.7 % of the respondent are satisfied and neutral each and 1.2 % of

31
respondents are strongly dissatisfied. The researcher to conclude that even if there are a large
number of respondents are satisfied, the neutral and not satisfied respondents are needs
information about the service delivered by the bank.
No Item Response in No Response in %
2 Bank’s staff give you
prompt service
Very satisfied 20 23.5
Satisfied 35 41.2
Neutral 4 4.7
Dissatisfied 22 25.9
Very dissatisfied 4 4.7
Total 85 100%
Source: survey result (2024)
The above table it implies the question for responsiveness is whether the bank staff gives prompt
services for the customers. The majority respondents 41.2% are satisfied and the other 4.7%
strongly dissatisfied. The researcher to conclude that banks expected to improves speed of its
service because significant numbers of respondents are below strongly satisfied.
No Item Response in No Response in %
3 Bank’s staff always
willing to assist you
Very satisfied 23 27.1
Satisfied 40 47.1
Neutral 10 11.7
Dissatisfied 11 12.9
Very dissatisfied 1 1.2
Total 85 100%
Source: survey result (2024)
Table 4.4 of item 3 implies that, 47.1 percent of the respondents are satisfied, and 1.2 percent of
the respondents are strongly dissatisfied with the bank’s staff willingness to assist customers.
The researcher to conclude that Employees of the bank expected to improve their behavior in
assisting customers in order to satisfy their customer and to make them loyal to the bank.

32
No Item Response in No Response in %
4 Banks staff are not busy to
respond to my question
Very satisfied 13 15.3
Satisfied 31 36.5
Neutral 22 25.9
Dissatisfied 12 14.1
Very dissatisfied 7 8.2
Total 85 100%
Source: survey result (2024)
Table 4.4. Item 4 implies that 36.5 % of the respondents are satisfied, and 8.2 % of the
respondents are strongly dissatisfied for the question banks staff are not too busy to respond to
their question. The researcher to conclude that the manager of the bank expected to improves for
the employee to serve their customers by devoting their time effectively in order to satisfy the
neutral and not satisfied customers.
Table 4.5 Empathy
No Item Response in No Response in %
1 Banks give me
individual attention
Very satisfied 15 17.7
Satisfied 47 55.3
Neutral 8 9.4
Dissatisfied 12 14.1
Very dissatisfied 3 3.5
Total 85 100%
Source: survey result (2024)
The above table implies that the opening question for empathy dimension is that whether
employees of the bank give individual attention to customers. From their response, majority
55.3% of the customers are satisfied and 3.5% of the respondents are strongly dissatisfied. The
researcher to conclude that employees expected to improves remain their current behavior with
regard to giving individual attention to customers and make little effort to satisfy those neutral
and not satisfied customers.

33
No Item Response in No Response in %
2 Banks operating hours
convenient to me
Very satisfied 21 24.7
Satisfied 45 52.9
Neutral 8 9.4
Dissatisfied 9 10.6
Very dissatisfied 2 2.4
Total 85 100%
Source: survey result (2024)
The above table implies that as far as bank operating hours convenient to me is concerned 52.9
% of the majority respondents are satisfied, and the rest 2.4 percent of the respondents are
strongly dissatisfied. The researcher to conclude that the bank expected to keep this operating
hour and if it is possible improves in a little bit, since it results in higher customer satisfaction.
No Item Response in No Response in %
3 The bank has my
interest at heart
Very satisfied 16 18.8
Satisfied 43 50.6
Neutral 10 11.7
Dissatisfied 14 16.5
Very dissatisfied 2 2.4
Total 85 100%
Source: survey result (2024)
Table 4.5 of item 3 implies that the result of whether the bank carries customers’ interests at
heart or not. Majority 50.6 % of the respondents are satisfied and the rest 2.4 percent of the
respondents are strongly dissatisfied. The researcher to conclude that the bank is satisfying the
customers significantly with this aspect and expected to maintain or improve the performance in
some way to satisfy customers’ interest in the way they want.

34
No Item Response in No Response in %
4 Bank’s staff
understand my
specific needs
Very satisfied 17 20
Satisfied 37 43.5
Neutral 12 14.1
Dissatisfied 18 21.2
Very dissatisfied 1 1.2
Total 85 100%
Source: survey result (2024)
The above table implies that the empathy is whether the bank staff understands specific needs of
customers. 43.5 % of customers are satisfied, and 1.2% of the customers are strongly dissatisfied.
The researcher to conclude that employees expected to improve this performance as it is and if
possible to enhance in order to satisfy those who didn’t satisfied.
No Item Response in No Response in %
5 The bank has
employees who deal
with customers in a
caring fashion
Very satisfied 20 23.5
Satisfied 35 41.2
Neutral 11 12.9
Dissatisfied 18 21.2
Very dissatisfied 1 1.2
Total 85 100%
Source: survey result (2024)
The above table implies that with respect to ability of bank’s employee to deal with customers
in a caring fashion, and 1.2 percent of the respondents are strongly dissatisfied. The researcher to
conclude that the employees should also keep the existing and further improves for better
customer satisfaction.
Table 4.6 Tangibles

35
No Item Response in No Response in %
1 The bank’s employee
has a neat and
professional
appearance mater
Very satisfied 49 57.6
Satisfied 27 31.8
Neutral 7 8.2
Dissatisfied 2 2.4
Very dissatisfied - -
Total 85 100%
Source: survey result (2024)
Customer are asked about the bank staff appearance and majority 57.6 percent of customers are
strongly satisfied and 2.4percent of the customers are dissatisfied The researcher to conclude
that with regard to staffs appearance the bank expected to keep the existing situation.
No Item Response in No Response in %
2 Material associated with the
service like pamphlets,
statements are visually
appealing at the bank
Very satisfied 35 41.2
Satisfied 32 37.6
Neutral 10 11.8
Dissatisfied 7 8.2
Very dissatisfied 1 1.2
Total 85 100%
Source: survey result (2024)
The above table implies that as far as material associated with the service like pamphlets,
statements are visually appealing at the bank is concerned, 41.2% of the majority respondents are
strongly satisfied and the rest 1.2percent of the respondents are strongly dissatisfied. The
researcher to conclude that the bank expected to work more to improve material associated with
the service in the bank in order to make customers very satisfied.

36
No Item Response in No Response in %
3 Banks physical
facilities visually nice
Very satisfied 12 14.1
Satisfied 31 36.5
Neutral 11 12.9
Dissatisfied 22 25.9
Very dissatisfied 9 10.6
Total 85 100%
Source: survey result (2024)
Table 4.5 of item 3 implies that the result of banks physical facilities. With this respect 36.5
percent of the respondents are satisfied and 10.6 of the respondents are strongly dissatisfied with
this specific tangibles dimension question. The researcher to conclude that the bank also
expected to work more to improves physical facilities in the bank in order to make customers
very satisfied.
No Item Response in No Response in %
4 Banks has modern
equipment and tools
(like ATM)
Very satisfied 27 31.8
Satisfied 44 51.7
Neutral 4 4.7
Dissatisfied 8 9.4
Very dissatisfied 2 2.4
Total 85 100%
Source: survey result (2024)
The above table of the last question of service quality is whether the bank has modern equipment
and tools or not. It implies that majority 51.7 % of the respondents are satisfied, and 2.4 percent
of the respondents are strongly dissatisfied. So, the bank expected to maintain the existing
situation and if possible is better to further improve the equipment and tools of the bank.

37
4.3 Customer Satisfaction
4.3.1 Response and percentages of customer satisfaction
Table 4.7 Customer Satisfaction
No Item Response in No Response in %
1 I am satisfied with the
bank’s complete
range service
Very satisfied 20 23.5
Satisfied 53 62.4
Neutral 3 3.5
Dissatisfied 9 10.6
Very dissatisfied - -
Total 85 100%
Source: survey result (2024)
The above table 4.7 of item 1 implies that the level of customers’ satisfaction to the complete
range of services. The result indicates that the majorities 62.4 % of the respondents are satisfied
and 10.6percent of the respondents are dissatisfied with the bank’s complete range of services.
The researcher to conclude that the bank also expected tries to enhance the satisfaction level of
entire customers in relation to the complete ranges of its services.
No Item Response in No Response in %
2 I am satisfied with the
performance of the
employees of this
bank
Very satisfied 23 27
Satisfied 35 41.2
Neutral 18 21.2
Dissatisfied 9 10.6
Very dissatisfied - -
Total 85 100%
Source: survey result (2024)

38
The above table 4.7 of item 2 the level of customers’ satisfaction to performance of the
employees. The result implies that majority 41.2% of the respondents are satisfied and 10.6 % of
the respondents are dissatisfied with the performance of the employees of this bank. Certainly,
most customers of the bank are satisfied in employee performance; but the bank expected to
keep this situation and work more to create better satisfaction to entire customers in order to
make them sustain and loyal to the bank.
No Item Response in No Response in %
3 I am satisfied of being
a client of this bank
Very satisfied 33 38.8
Satisfied 41 48.2
Neutral 3 3.5
Dissatisfied 6 7.1
Very dissatisfied 2 2.4
Total 85 100%
Source: survey result (2024)
The above table 4.7 of item 3 it implies the level of customers’ satisfaction to performance of
the employees. The majorities 48.2 % of the respondents are satisfied and the least 2.4% of the
respondents are strongly dissatisfied with the performance of the employees of this bank. From
the above analysis most customers are satisfied by being a client of the bank and significant
numbers of respondents are neutral and not satisfied. The researcher conclude that the bank
expected to make an endeavor to create a sense of belonging in the minds of the customers.
No Item Response in No Response in %
4 I am satisfied with the bank
employees’ professional
competence
Very satisfied 21 24.7
Satisfied 40 47.1
Neutral 19 22.4
Dissatisfied 5 5.8
Very dissatisfied - -
Total 85 100%
Source: survey result (2024)

39
The above table 4.7 of item 4 implies that 47.1 percent of the respondents are satisfied and 5.8
percent of the respondents are dissatisfied with the bank employees’ professional competence.
The researcher conclude that most of the bank customers are highly satisfied with professional
competence of employee, the banks expect to further improve in order to better satisfy especially
those who dissatisfied.
No Item Response in No Response in %
5 I am satisfied with the
quick service of this
bank
Very satisfied 20 23.5
Satisfied 35 41.2
Neutral 7 8.2
Dissatisfied 19 22.4
Very dissatisfied 4 4.7
Total 85 100%
Source: survey result (2024)
The above table 4.7 of item 5 implies that information regarding quick services of the bank.
Accordingly 41.2% of the respondents are satisfied and 4.7% of the respondents are strongly
dissatisfied with the quick service of this bank. The researcher conclude that the bank also
expects to improve speed of the services to address those who are neutral and not satisfied.
No Item Response in No Response in %
6 I am satisfied with the
respectful behavior of
employees
Very satisfied 20 23.5
Satisfied 45 53
Neutral 3 3.5
Dissatisfied 16 18.8
Very dissatisfied 1 1.2
Total 85 100%
Source: survey result (2024)

40
The above table 4.7 of item 6 implies 53% the majority of the respondents are strongly satisfied,
and the least 1.2 % of the respondents is strongly dissatisfied with the respectful behavior of
employees. The researchers conclude that employees of the bank expect to keep their existing
behavior to satisfy those who are not satisfied.
No Item Response in No Response in %
7 General satisfaction towards
service quality
Very satisfied 17 20
Satisfied 50 58.8
Neutral 9 10.6
Dissatisfied 8 9.4
Very dissatisfied 1 1.2
Total 85 100%
Source: survey result (2024)
The above table 4.7 of item 7 implies that the general satisfaction level of service quality.
Majority 58.8 % of the respondents are satisfied and insignificant number 1.2 % of the
respondents are strongly dissatisfied. The researchers conclude that most customers of the bank
are satisfied with the service quality delivered by the bank and the bank expected to work more
on those aspects that enhance the satisfaction levels of customers with relation to service quality.
Analysis of open ended question
Among the respondent 47 percent states their opinion regarding service quality. From their
Suggestion it can be inferred that error with the ATM service that of fast maintenance, lack of
house like structure which prevent sun light when customers are waiting others customers which
are the big issue, network problem is also an issue raised by the customers which is the major
obstacle in the check clearing operations, quick transfer of fund, cash withdrawal and etc. In
addition, the temporary failures regarding the services are not corrected immediately and lack of
parking even if the overall satisfaction average of the tangible dimension is good.
In general the result of this study it shows that, most of the respondents are satisfied and have a
good image toward the service quality delivered by commercial bank of Ethiopia. Most of
customers were very satisfied and satisfied respectively with the reliability dimensions of service
quality followed by tangibles, assurance and empathy.
Furthermore, customers were relatively less satisfied with responsiveness dimensions of service
quality. Again the result of descriptive statistics also indicates that customers are satisfied with
the service quality delivered by the bank.

41
 CHAPTER FIVE
5. Conclusion and Recommendations

5.1. Conclusion
The study was planned for assessing effects of service quality on customer satisfaction in case of
CBE Debre Markos main branch. The data were obtained through questionnaire from business
customers of the bank.
To begin, to analyze service quality dimensions most affect customer satisfaction. The study
analyzes the service quality dimension in terms of tangibility, reliability, empathy,
responsiveness, and assurance. The result of this study implies that, most of the respondents are
satisfied and have a good image toward the service quality delivered by the commercial bank of
Ethiopia. Most of customers were very satisfied and satisfied respectively with the reliability
dimensions of service quality followed by tangibles, assurance and empathy. Furthermore,
customers were relatively less satisfied with responsiveness dimensions of service quality. Again
the result of descriptive statistics also indicates that customers are satisfied with the service
quality delivered by the bank.
5.2. Recommendation
Based on the findings and conclusions of the study, the researcher forwards the following
recommendations to the management of the banks and suggestion for other researchers.

 Since majority of respondent are satisfied with the current service of the bank; the researcher
suggest that, the staffs should give more attention and understand the specific need of
customer by design efficient service delivery system for the entirely satisfaction of customer

 Management of CBE will enable the bank to leverage on those key aspects that drive
customer satisfaction and build loyalty.

42
REFERENCE

Aldlaigan, A.H. and Buttle, F.A. (2002), “SYSTRA-SQ: a new measure of bank service
quality”, International Journal of Service Industry Management, Vol. 13 No. 4, pp.
362-
81.
Babakus E, Boller GW (1982). An Empirical Assessment of the SERVQUAL Scale, J. Bus.
Res. 24(3): 253 – 68.
Berry LL, Zeithaml VA, Parasuraman A (1990). Five imperatives for improving service quality.
Sloan Manage Rev, 31(4): 29-38.
Carman, J.M. (1990). Consumer Perceptions of Service Quality: An Assessment of the
SERVQUAL Dimensions. Journal of Retailing, 66 (spring), pp. 33-35.
Cronin, J. J. Jr., and Taylor, S. A. (1992). Measuring Service Quality: A Reexamination and
Extension. Journal of Marketing, 56 (July), pp. 55-66.
Ekinci, Y. (2004). ‘An Investigation of the Determinants of Customers Satisfaction’, Tourism
Analysis, 8 (2), 197-203.
Garvin, D.A. (1983). Quality on the Line. Harvard Business Review, pp. 65-75.
Hartman D.E. and Lindgren J.H. Jr (1993). “Consumer Evaluations of Goods and services –
Implications for Services Marketing”, Journal of Services Marketing, 7, 2, 4
Hibrework Mekonnen (2013) Assessment Of Customer Satisfaction On The Service Quality Of
Dashen Bank S.C, Addis Ababa Branches 15.
Kotler P. & Kelvin K.,(2006) Marketing Management, 12th Edition, Pearson Education Inc, New
Jersey.
Manrai, L.A., Manrai, A.K. (2007), „A field study of customers’ switching behavior for bank
services”, Journal of Retailing and Consumer Services, vol. 14, Issue 3, pp. 208-
215.
Rathmell J.M. (1966). “What is meant by Services?” Journal of Marketing, 30, 32 -36.
Regan W.J. (1963). “The Service Revolution”, Journal of Marketing, 47, 57 - 62.
Zeithaml, V.A., Bitner, M.J & Gremler, D.D (2006). Services Marketing: Integrating Customer
Focus across the Firm. McGraw Hill, New York.
http://en.wikipedia.org/wiki/Main_Page www.combanketh.com

43
 APENDEX
DEBRE MARKOS UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF MANAGEMENT
(Questionnaire for Customer)
Dear Respondent, I am currently a student of Debre Markos University, and I am doing my BA
research. On “The effect of service quality on customer satisfaction a case of commercial bank
of Ethiopia Debre Markos main branch”
The purpose of this questionnaire is to gather data regarding the Service quality on Customer
satisfaction in the case of CBE. The study is purely for academic purpose and thus does not
affect you in any case. All of your response to the given question would be used for the research
and will be kept confidential.
Your frank and timely response is vital for the success of the study. Therefore, I kindly request
you to respond to each question carefully.
Thank you in advance for your cooperation and timely response!
Questionnaire to be filled by customer of CBE Branch
Note:
1. No need of writing your name.
2. Where alternative answers are given, encircle your choice and put “√” mark where necessary.
3. Please return the completed questionnaire in time.
Part I. personal information
1.1 Gender
1. Male
2. Female
Age
1.2. Educational level
1. Primary school
2. High school
3. Certificate
4. Diploma
5. First degree and above
6. Other please specify_______________

44
Part III: Service quality questionnaire (SQQ) Please rank your views using 1-5 on whether
you are satisfied or not with the service provided by the bank and the general environment under
which it operates
1= very satisfied 2=satisfied 3=neutral
4= dissatisfied 5=very dissatisfied
Item 1=Very satisfied
2=satisfied
3=Neutral
4=dissatisfied
5=Very dissatisfied
RESPONSIVENESS 1 2 3 4 5
Bank’s staff tell you exactly the time the service will be
performed
RELIBILITY
Bank’s
Banks’ staff
fulfillgive you prompt
its promise service
at the time indicates
Bank’s staff always willing to assist you
Banks’ perform the service exactly at the first time
Banks staff are not busy to respond to my question
Banks show a keen interest in solving your problems
EMPATHY
Banksgive
Banks insist
meonindividual
error freeattention
record
Banks operating hours convenient to me
ASSURANCE
The bank has my interest at heart
Bank’s staff behavior instills confidence in me
Bank’s staff understand my specific needs
I feelbank
The safe in
hasmyemployees
transactionwho
withdeal
the bank
with customers in a
caring
Bank’s fashion
staff are courteous with me
TANGIBLES
Bank’s staff have the knowledge to answer all my
The bank’s employee has a neat and professional
questions mater
appearance
Material associated with the service like
pamphlets, statements are visually appealing at the
bank
Banks physical facilities visually nice(like that of parking,
client sitting material)
Banks has modern equipment and tools (like ATM...)

Part IV: Customer satisfaction questionnaire

I am satisfied with the bank’s complete service
I am satisfied with the performance of the employees of
this bank
I am satisfied of being a client of this bank
I am satisfied with the bank employees’ professional
competence 45
I am satisfied with the quick service of this bank
I am satisfied with the respectful behavior of employees
General satisfaction towards service quality
What you recommend to the bank for further improvements?

46