Determinants of customer loyalty in the banking sector: The case of Pakistan

African Journal of Business Management 07/2010; 4:1040-1047.


The concept of customer loyalty has received much consideration and attention from both academics and practitioners in different industries. In increasingly competitive markets, being able to build consumer loyalty is seen as the key factor in winning market share and developing a sustainable competitive advantage. Banking industry is no exception as it has high interaction with the customers, so managers must understand the factors which influence the loyalty of the customers towards their respective banks. It is always costly to attract new customers, so the managers always try to find ways to retain their current customers and concentrate on different factors which enhances the customer loyalty among the customers of the organizations. This research attempts to find the factors of customer loyalty and their relationships with the banking industry in one of the developing countries, which is Pakistan. Then analyzing the relationship among different factors, a model for the customer loyalty is proposed at the end of the research. In order to do this, a questionnaire is designed and validated, then based on the data which is gained from the 316 respondents' answers to the designed questionnaire, the analysis is done and the results and the relations among the factors are explained. Perceived quality, satisfaction, trust, switching cost and commitment are the factors which influence the loyalty of the customers. Theses factors also influence each other as well. The relationships of different factors with each other are also studied and the SPSS software is used to analyze the data gathered from the respondents. During the past decade, the financial service sector has undergone drastic changes, resulting in a market place which is characterized by intense competition, little growth in primary demand and increased deregulation. Government of Pakistan has privatized quite a number of banks which further increases the competition and com-plexity among the banks. Finding a place in this heating sun becomes vital to the long-range profitability and ultimate survival of the bank. This can be done both by maintenance or having new ones. In this research we tried to find the main determinants of the customer loyalty in banking industry of Pakistan in order to help this key industry to have a wider look for supporting their customers and finally having more loyal ones.

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Available from: Bilal Afsar, Jan 09, 2014
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    • "Na literatura, encontram-se ainda autores que abordam o tema qualidade dos serviços com a utilização de modelos estatísticos com variáveis consideradas relevantes ao seu trabalho ou por outros métodos integrados. Com base nas limitações temporais impostas por esta pesquisa, Lee e Marlowe (2003), Afsar, Rehman, Qureshi e Shahjehan (2010) e Chebat e Slusarczyk (2005) são autores reconhecidos cientificamente com trabalhos voltados à avaliação da qualidade dos serviços e suas relações com os clientes em diferentes localidades com a utilização de modelos estatísticos como quiquadrado e alpha de Cronbach. Ressalta-se que, embora a estatística seja utilizada como metodologia de pesquisa, os dados das variáveis, assim como em todos os construtos encontrados, são obtidos por questionários e entrevistas com os clientes bancarizados. "
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    ABSTRACT: The objective of this research is to demonstrate how a researcher can, in a structured way, select relevant articles and identify which characteristics they possess that contribute scientifically to a topic of interest - as shown here in international literature on Quality Assessment Banking. The work is characterized as exploratory, descriptive, theoretical-illustrative, with the theoretical instrument of intervention being the Knowledge Development Process - Constructivist (Proknow-C). Development of the process found: (a) a portfolio of 28 articles aligned with the vision adopted by the researchers that informed the drafting of the theoretical framework of this research; (b) that the journal International Journal of Bank Marketing presents the highest impact factor for the scientific community regarding the JCR and SJR bases; (c) banking, customer satisfaction, customer loyalty and service quality as the most recurring keywords; and (d) the authors A. H. Aldlaigan and F. A. Buttle and the article Customer satisfaction and retail banking: an assessment of some of the key Antecedents of customer satisfaction in retail banking written by A. Jamal and K. Naser as prominent in the area.
    Revista de Administração Contemporânea 06/2013; 17(3):325-349. DOI:10.1590/S1415-65552013000300005
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    • "Both parties will mutually use commitment to continuously show their trustworthiness toward the exchange relationship (Wang, 2009). Commitment is frequently defined as a desire to maintain a relationship (Moorman et al., 1992; Afsar et al., 2010). We use the term "commitment" to refer to consumers' ultimate relationship disposition, encompassing beliefs, attitudes, and behaviors toward the brand and their relationship with that brand. "
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    ABSTRACT: The objective of this paper is to investigate the effects of brand experience and service quality on repurchase intention with the role of brand relationship quality. The study was conducted on 258 respondents and research results are analyzed by using structural equation modeling. As a result of this study, brand experiences, satisfaction, and trust have positively effects on repurchase intention for a brand. The research findings indicate that brand experience appears to be far more salient than brand constructs in shaping and building meaningful and long-lasting relationship with consumers.
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    • "These only attest to the significance of customer loyalty to organizational profitability, growth and development, and yet most studies on the subject focus on customer satisfaction and psychological issues and largely outside the banking sector. In the few cases that the focus is on the banking sector the concern has been on determinants of bankruptcy (see Ahmed, 2005) and the analysis has been very qualitative, failing to bring out any causal-effects relationships (Lind and Mason, 1997) or multiple linear regression has been used (see Afsar, 2010) which is also inadequate since loyalty in most of these studies is measured (and rightly so) as a categorical variable (see Maddala, 1992; Gujarati, 2004). This study diverges from the rest by looking at the determinants of customer loyalty in the banking sector using a non-linear discrete choice model (probit) to assess factors that do not only border on customer satisfaction and psychological issues, but also inculcate locational and infrastructure factors in Ghana. "
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    ABSTRACT: The increasing concern of banks about market share and customer equity in the light of unpredictable behaviour of customers has brought to the fore the pre-eminence of customer loyalty. This underscored the analysis of customers' loyalty to banks in Ghana. This study fitted a binary probit model, utilizing cross-sectional data from 130 customers of banks in the Wa Municipality. The results of the regression showed that satisfaction, bank type, distance, ATM facility, time to transact, switch cost, loan commitment, other facilities and auxiliary banking are the significant determinants of customers' loyalty to their main banks. Proximity to customers and infrastructure base of a bank are essential factors influencing customers' loyalty. Banks should consider establishing branches and providing ATM services within and without the municipality, to get banking closer to customers, as a way of reducing customer defection.
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