Content uploaded by Muhammad Nawaz
Author content
All content in this area was uploaded by Muhammad Nawaz on May 18, 2024
Content may be subject to copyright.
Content uploaded by Muhammad zulqarnain Asab
Author content
All content in this area was uploaded by Muhammad zulqarnain Asab on Nov 26, 2014
Content may be subject to copyright.
European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.6, No.11, 2014
134
Which Factors Influence the Customers Switching Behavior?
(Evidence from the Customers of Banking Sector of Pakistan)
Syed Shahzaib Pirzada (corresponding Author)
MBA (Finance) Department of Management Sciences , The Islamia University of Bahawalpur, Pakistan
E-mail: Shahzaib86pirzada@gmail.com
Muhammed Nawaz
MBA (Finance) Department of Management Sciences , The Islamia University of Bahawalpur, Pakistan
E-mail: muhammednawazmalik@gmail.com
Muhammad Usama Javed
MBA (Marketing) Department of Management Sciences , The Islamia University of Bahawalpur, Pakistan
E-mail: u.chudhry@gmail.com
Muhammad Zulqarnain Asab
MBA (Finance) Department of Management Sciences , The Islamia University of Bahawalpur, Pakistan
E-mail: asabmuh@gmail.com
Abstract
This study investigates which factors influence customer’s switching behavior specifically in banks. Flourishing
organizations very well aware about one fact that the road to their success moves with their customers. Those
companies who do not value their customers they create chance for their rivals to capture customers. Same
instance happen in banking sector. We developed a questionnaire and used that for data collection survey from
200 customers having their bank accounts in different banks of Pakistan. Results of the current study expose that
number of bank branches, quality of services, profit or interest rates offered by banks to their customers directly
impact on the attitude and it drive intention to behave in a particular way of customers. If the profit or interest
rate will not be higher than any other bank then this factor will create intention to switch. Same behavior will be
establish by customers in the case of low service quality and single bank branch or distant branch from center of
city. Study also indicate that banks should concentrate on improving their service quality according to the market
demand and for the betterment of customers’ perception, satisfaction and loyalty.
Keywords: Switching behavior, service quality, convenience, religious belief, advertisement, profit & interest
rate
1. INTRODUCTION
Strong Banking sector of any country plays very important role to the development, stabilization of the
economy of that country when there is competitive globalized corporate environment. Flow of money is
maintained efficiently, when there is strong banking sector in the country. Mergers and Acquisitions, technology
advancement make banking system more complicated but efficient and effective to play major role in the
country’s financial system. The efficiency of banking sector of Pakistan can be estimated from the 2008 financial
crisis when the whole Europe was drowning in the financial crisis and their banks were being insolvent, at that
time Pakistani banks were stable and didn’t effected by worldwide financial crisis. The State bank of Pakistan is
the main central bank of Pakistan which gives loans to the other commercial banks and to the Govt. central bank
makes the monetary policy of the Pakistan and it also supervises the reserves of the country. All the statistics,
financial data of scheduled banks are collected and disseminated through state bank. It cannot be denied from the
fact that foreign banks working in Pakistan named as Standard Chartered Bank Ltd., HSBC Bank Middle East
Ltd., and Dubai Islamic Bank Ltd etc. make Pakistan baking sector stronger. Services sector is the largest and
fastest growing sector in the world because it is always on the way to expansion, innovation and inventions.
Some researches proved that services sector of any country contribute more to the GDP of the country some
figures such as 47%, 53% and 74% of GDP is contributed by service sector of developing countries, Middle East
countries and developed countries respectively. Chakravarty, 2003; Chakravarty & Scott, 1999 Banks survival is
only possible when there is a strong relationship between clients and banks as well. Customers account can only
be maintained by the banks when banks have direct relationship with their clients otherwise customers will try to
switch from this bank. There is also evidence that banks are well aware of the importance of building
relationships with their customers for long-term profitability and survival of the banks. Sustainment of any bank
necessitates it to retain the existing customers and inspire them not to switch.
The main objective of this study was to investigate the relationship of various factors which affect the behavior
of banking customers and why people switch from their one bank to another and open new account in another
European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.6, No.11, 2014
135
bank. This study used a content model to prove our research by showing the favorable relationship of variables;
Bank branches, Religious belief, Advertisement, service quality, profit and interest rates, and the switching
behavior of customers. The variables used in this study have strong influence on the behavior pattern of banking
customers and how they behave in the response of these differentiating factors. This study provides the answers
of many questions regarding the banks and their customer’s relationships. These variables drive the behavior of
people who have the bank account or they want to open new account in any public or private bank. This study
will be beneficial for the banking organizations to understand the behavior of customers and to know the
importance of these strong influencing factors we used as variables for their customers retention and attraction.
The 1st factor which influences the customers most is the reputation of bank in the general public. Why people
do trust in a particular bank? Why customers feel secure themselves by depositing their money in the particular
bank, the bank they have chosen for their money saving is trustworthy? What are the religious factors which
customers think should be included in their services provided by bank? How religious belief attracts the
customers toward the bank? How the advertisements influence the large population of people to switch towards
new bank? The convenience role for the customers is very essential, people prefer to go their nearest bank
branch for any kind of financial matters; cash withdraw, deposits, and every sort of payment. It’s a desire of
every person that their respective bank branch must be nearer that they can reach there in very short time. If the
number of particular bank’s branches will maximum then the size of customers will vary. People prefer to open
their accounts by influencing the branches of the bank. They feel convenience if in one city there are maximum
number of the same bank branches. The role of personal contacts in public for bankers as well as customers
plays a significant role for choosing a bank. The bank employees personally influence the people to open the
accounts in their respective banks. From the general public perspective they ask about bank’s services and the
benefits like incentives, markup, and profit rates from their knowing group about the bank. Generally people are
influenced by advertisements which they see on media channels. In Pakistan some banking groups advertise their
services quality, and the types of saving accounts, shows the profit rates and debt financing facilities also
advertised. In advertisements they influence every class of people for instance; business class, households,
retired persons, children, youngsters, villagers and farmers. For example; bank Al Habib, bank Alfalah, Habib
bank, Askari bank, Meezan bank, Soneri bank, Faysal bank, National bank, MCB bank, Standard Chartered bank,
Dubai bank etc influence the people by their advertisements due to which they tend to switch from one bank to
another bank and open new accounts over there. Advertisements cover very large portion of banks population.
These advertisements change the psychology and attitude of people by creating and deriving demands of
something new for them. The quality of services provided by the banks directly impacts the psychology of
people because service quality dimensions attract and retain the customers. The environment of bank branches,
courteous communication of bank staff, sense of empathy, the use of latest technology are the essential contents
which improve the service quality of any organization. Upper and Middle class people mostly focus on quality of
services. In every services providing organization must have the best and customer satisfactory level service
quality. The role of interest, profit rate on deposits and savings also has a strong influence on customer switching
behavior in banking sector. In Pakistan not only modern and western culture people but middle and low level
income people also prefer to open account in those branches which provide the highest profit and interest on
their deposits or savings. Those customers who have excess money don’t hesitate to open saving accounts and
for taking fixed interest rate on their investment in the bank. Some of the customers prefer to fix their money and
takes interest on their money while some other customers consider this “interest” as a sin according to their
religion “Islam”. Now most of the banking industries have opened Islamic bank branches to overcome this
concept of sin where they provide the facility of profit and loss sharing accounts and deal their customers in the
light of religion Islam. In Islamic banking they consider interest as “Haram” but the profit and loss sharing is
“Halal” according to Islam. In conventional banking fix rate of interest on deposits have been provided to the
customers. Now in the age of intense competition the banking sector is very conscious for the quality of services
and profit, interest rates. There is a direct relationship with the service quality and the profit rates. Many past
researches have proved this fact. People fix their money in banks and takes interest as a rental charge on their
money in conventional banking while in Islamic banking profit and loss sharing is allowed and they will share
the loss with customer having saving account in the Islamic bank and they share the profit as the banks are in
profit.
2. LITERATURE REVIEW
Switching is defined as “Make a shift in or exchange of, and a change” by word web dictionary while behavior is
defined as “The action or reaction of something”. This study provide answer for, why the banking customer
switch to another bank or open their account in another bank? Which factors intervene to change the behavior of
banking customers? A lot of reasons exist which significantly influence the complaint behavior of the consumers
towards banks in which they have accounts. When customers complain to the banks it means they are not
satisfied with the banks services and their trust and loyalty with the banks goes down (Alfansi et al., 2010).
European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.6, No.11, 2014
136
A research was conducted which investigated the customers switching behavior in the banking industry and
found that customers demand quite different from banks due to various reasons such as price of service,
inconvenient location of the banks etc (Gerrard & Cunningham 1997). Another research was conducted which
found in its study that there are many ways of switching events that lead how customers are behaved when
customers complaint against different bank services such as facilities, disclosure of information, confidentiality
and services challenges. They also concluded that there are six different variables that are important to attain the
understanding of customers switching behavior in banks such as inconvenient location of the bank’s branches,
service failures, high pricing, and behavior of banks personnel, reflex issues, and better facilities by competitors.
A researcher concluded that it is important for financial institutions to consider customers different behaviors
regarding their investments then bank lose their revenues from that customer. Heavy costs comprise of account
opening cost and many other costs are also linked with the acquisition of new customers and these costs can be
as superior as the costs of customer maintenance efforts Keaveney (1995). On the basis of past data and general
perceptions about banking and its customer’s relationship studies we developed the relationship of variables;
Bank branches, religious belief, advertisement, service quality, profit & interest rate with the switching behavior
of in the banking sector of Pakistan.
2.1. BANK BRANCHES
In the sense of convenience for bank customers we used bank branch our first variable in this study. Kisser (2002)
conducted a research and inferred that due to time and cost constraints many customers give value to the nearest
bank branch and open their accounts in these branches. Different researches were conducted by different
researchers in the past which asserted that customers always try to select those banks which have more branches
and are convenient in location and they also prefer to select those banks branches accounts in which ATM are
installed (Safakli, 2007; Salleh & Hazimah, 2009; Kisser, 2002). Another study was conducted which inserted
that different people choices are different regarding banks services even some people prefer to open account in
those banks branches which parking space is available (Almossawi, 2001).
Various researchers asserted in their researches that the goodwill, reputation of an organization plays an
important role in building positive relationship with the customers when these firms have potential and
trustworthiness in the minds of the customers (Vendelo, 1998). Bank managers always use different marketing
looms to provide unswerving customer services and fastest announcement that help them to encourage customers
for building trust and to be a loyal with their particular bank. These methods at last would lead towards
increasing customer’s loyalty with banks which are necessary for the benefit of both either customers or banks.
In addition to providing judicious and truthful services to their customers that refuse menace, managers should
persuade their employees to converse with their customers in a manner which attracts them and build trust and
confidence between them and banks and which stimulates the goodwill and banks trust in the mind of customers
(Clemes et al., 2007a; Gil et al., 2007; Gronroos, 1994).
The distance to branches that is favorable for banks customers and can run major role to attract customers who
are interested more about convenient location of the bank because it saves their time and cost as well. Kiser
(2002) conducted a research in which he found and inserted that clients may prefer to select the nearby bank
branch, especially when there is narrow geological ease of access to substitute banks. Different researchers are of
the view point that no doubt internet banking minimizes the expanse between customers and their banks but this
emergence of technology does not facilitate those customers who give preference confronting communication,
especially for elder people who may be unenthusiastic to use the internet or who are not more aware of such
technologies. However, before taking into deliberation internet banking the management of the banks should
carefully focus on nearest bank branches which may not providing high returns on deposits, but these branches
are easily accessible for customers as well (Gan et al., 2006; Polatoglu and Ekin, 2001). Electronic banking plays
a very important role including minimization of service costs. A study was conducted by a researcher which
found that customers using electronic banking facilities can experience inferior costs which are allied with
banking different operations conducted for customers, due to reductions in customer’s mistakes and stash in
labor costs (Gan et al., 2006). The branches of a particular bank in the same city make convenience for its
customers and this convenient characteristic is important modern era.
H1: There is a significant positive relationship between Number of Bank Branches and the switching
behavior of customers in banking sector.
2.2. RELIGIOUS BELIEF
In Pakistan there is a Muslim community and the majority of people (90%) belongs to the Muslim family having
their religion Islam, 10 % of the population consists on minorities. Due to this Islamic population people have
strong religious belief and they try to use their belief in business. The key distinguishing feature between
conventional banks and Islamic banks is interest (riba). Islamic banks are not permitted to offer a predetermined
markup rate on customers’ deposits while conventional/commercial banks charge a fixed percentage of interest.
Different researches were conducted which found that Islamic banks are also not permitted to arraign interest on
loans either fixed or predetermined rate of return that is guaranteed apart from the performance of the investment.
European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.6, No.11, 2014
137
They are of the view point that Islamic banking major difference from the conventional banks is markup rate and
rate of interest. Interest or “Riba” is not allowed in Islam due to which the Islamic banks neither offer interest on
deposits nor arraign interest on lending either to customers or financial institutions. It is also asserted by the
researchers that dealings are conceded out on the foundation of PLS (profit and loss sharing) between the Islamic
banks and their customers either lenders or depositors (Ahmed, 1989; Karim et al., 2008; Chong and Liu, 2009).
In Pakistan there is a population having different religions, not only on the basis of religion but also on the basis
of nationalities. Therefore it is critical for banks to assess the choice of customers or to consider their customer
which may be different as according to their literary, morals and thinking (Jabnoun and Khalifa, 2005; Furrer et
al., 2002). Metawa and Almossawi (1998), Naser et al. (1999), Othman and Owen (2001) conducted different
banking researches which suggested that in addition with other factors religious preferences are most important
factors of bank selection decisions. Erol and Al-Bdour, 1989; Haran et al., 1994; Erol et al., 1990 and Ahmad
and Haran 2002 investigated in their studies that there is an indirect correlation between religious factors and
bank selection decision these researchers were contrary of the earlier above researchers. We made the
relationship of religious belief and the behavior of people on the basis of past researches.
H2: There is a significant positive relationship between Religious Beliefs and the switching behavior of
customers in banking sector.
2.3. ADVERTISEMENT
What is advertising? Advertising is actually defined as the promotion of products or services of a brand or
company for the purpose of awaking the consumers about the existence of a new product in their surroundings.
Advertisement has become too much important for all the banks in this highly globalized competitive market
environment and its importance can’t be ignored in the broad spectrum of marketing. Clemes et al.,(2007);
Cengizet et al.,(2007) suggested that advertisement is one of the important determinant which attracts the
customers towards the bank image in. They are of the view point that Advertising efficiency has a direct positive
effect on bank image in the market as well as customer expectations towards bank. One more study asserted that
when the business is being promoted through advertisement by announcing various offers is the best way to
attract more customers. It is also inserted that when clients of banks become fully aware of banks offerings and
services/products then their attitude towards banks retention increases or remains positive (Clemes et al., 2007a).
Due to the materialization of advance technology including different devices such as TV and radio not just
converse new information but improve the advertisement with bank’s products and services. These technological
devices enables the customers to evaluate the products/services and offerings of own banks with other banks not
on the national level but also on the international level. In our study we relate the Advertisement’s impact on
switching behavior of bank customers.
H3: There is a significant positive relationship between advertisement and the switching behavior of
customers in banking sector.
2.4. SERVICE QUALITY
Parasuraman and Zeithaml conducted a research in (2006) and inferred that service quality exists when there is
fulfillment of desire, need of the customers which they expect from the services. While kotler&Keller in 2006
said service quality is a name of competitive edge which some organizations hold and offered to satisfy the
needs of their customers what they expecting its efficiency and effectiveness makes it competitive edge for the
organization to face this globalized competitive environment. Services are defined by some characteristics such
as services naturally are ethereal in it means these are not visible and tangible neither we can measure these
services by some instruments. Earlier studies found that superior service quality has positive relationship with
customer switching behaviors especially in the banking sector (Clemes, eta al., 2007; Safakli, 2007). According
to (Yu et al., 2005) asserted that qualities of services are perceived by customers concerning these services are
two different but valuable things which influence the customers overall satisfaction level direct positively
towards an organization. It was also suggested that Customer satisfaction is positively correlated with quality of
the products and services. Therefore organizations should improve the service quality for the retention of their
customers. How organizations evaluate their product and service quality are better or not, to know this they can
arrange different programs by inviting customers and should provide them time to complain and for their
suggestions (Ojo, 2010). In the study of Al-Rousan et al., (2010) they concluded when an organization tries to
make its service quality then customers become loyal with that organization. Many studies agreed with this
statement that organization’s success start when clients of that organization shows their loyalty and they link
their loyalty with quality of the product and service (Wong & Sohal, 2003). Providing superior service quality to
customers emerge an opportunity for a firm to differentiate themselves in competitive markets (Karatepe et al.,
2005). The study of (Gronroos, 2000) concluded, bank personnel should have full competency in their field and
they should work professionally by having chivalrous behavior for all segments of their customers either they are
small customers or big one. On the basis past researches we relate the service quality and the behavior of
banking customers.
H4: There is a significant positive relationship between service quality and the switching behavior of
European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.6, No.11, 2014
138
customers in banking sector.
2.5. PROFIT & INTEREST RATE
Another determining factor either to select a particular bank or another bank is competitive interest rates which
different banks charge differently. Islamic banks do not use this interest rate but they use the word of profit
sharing (Laroche and Taylor, 1988). Another research was conducted which asserted that differences in
interest/profit rates, either on deposits or on landings are probable to be minimum between those banks which
are competing for this variable of interest rate. Bank clients always try to make investment in those banks which
pay more on their deposits and charge low on their borrowings and then make comparison of own banks with
other banks in the market as well. Therefore it can be concluded that satisfaction of the customers is expected to
manipulate by the bank competitive edge on the basis of profit and or interest rates in this globalized competitive
environment.
A study was conducted in the past which concluded that some customers can’t understand the price of the
services provided by the bank because this price is the combination of different sub part of charges such as
account opening fee, other charges of ATM and the amount of interest paid, received on the deposits, lending by
the bank an feel high cost of bank and switch from one bank to another bank (Gerrard and Cunningham, 2004).
The researcher suggested that bank management should control the price of their product/service as compared to
their competitors and are more beneficial for their own customers segment. (Gerrard and Cunningham, 2004)
stated in their research that customers switching behavior cannot be reduced by the banks when they are trying to
give more interest or profit on deposits but on the other hand they are charging high prices of service as
compared to their rivals.
(Clemes et al., 2007) found that the segment of young customers in banks are very fast to switch bank even if
they feel very minor ambiguity comes in their mind. This segment always try to focus on the price, convenience
and reputation before switching to another bank .It has become much important for the banks personnel to build
long lasting relationship with their customers so that their loyalty can be ensured and the level of switching can
be reduced as well (Oliver, 2004).
H5: There is a significant positive relationship between Profit & interest rate and the switching behavior
of customers in banking sector.
STRUCTURAL MODEL
3. RESEARCH METHODOLOGY
Our research is descriptive. This type of study describe and explain the phenomenon and or current scenario. But
the researchers couldn’t interpret and constitute their own knowledge in this type of researches (Creswell, 1994).
Descriptive study provide empirical results in the sense of verification of developed hypothesis either these
proposed statements were right or wrong. Study based upon past and the present data regarding current scenario
(Kumar, 2005).
3.1 SAMPLE/DATA
To prove our objective of the study we collected data from 250 respondents by using self-administered
questionnaire survey technique. The population for our sample was those people who have their bank accounts.
We conveniently collected data by asking people before taking their responses, do they have bank account. If
they are customer of any bank then they can fill our questionnaire otherwise we move another individual.
European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.6, No.11, 2014
139
3.2 INSTRUMENT AND MEASURES
Our scale was divided into two major portions. In first part we settled respondent’s personal characteristics based
questions for instance: their income, age, gender, education, occupation, status. By this information we could
understand our respondent’s characteristics individually.
Second portion of the scale was based on the statements settled according to the variable’s nature and those
questions were selected which could measure that particular variable accuracy. We used 5 point likert scale for
measuring the response level of respondent in the favor of every written statement.
3.3. PROCEDURE
250 questionnaires were distributed among those respondents who have account in any type of bank. It was
necessary to know for us before response collection either they have account in any bank or not? Because the
person who have interaction with bank can better give the answer as compared to unexperienced person. 50
questionnaire were considered waste due to in complete and extreme level response. 200 respondent’s data
considered useful in which 118 were males and 82 were females. In our survey we give briefing before
questionnaire filling to the respondents for the accurate results by the respondents. After collection of data we
coded the responses with the help of numbering written for the response level magnitude of respondent for
instance: 1 for strongly agree, 2 for agree, 3 for neutral, 4 for disagree, 5 for strongly disagree and entered in to
statistical package software for social sciences (SPSS.21) for tests and analysis.
3.4. RELIABILITY ANALYSIS
Cronbach’s Alpha values range which are considered acceptable and recommended by Nunnaly (1970) is 0.50
and by Moss et al. (1998) is 0.60. Overall Cronbach Alpha for our study was 0.730 which was more than
acceptable range level. This shows our all (20) items were valid and reliable for the further research.
Table 1: Reliability of Scale
Scales Items Cronbach alpha
1) Switching behavior of customers in banking sector
2) Bank Branches
3) Advertisement
4) Religious Belief
5) Service Quality
6)
Profit & Interest rate
4
2
2
4
4
4
.704
.681
.525
.544
.729
.553
4. RESULTS AND ANALYSIS
4.1. PROFILE OF THE RESPONDENTS
Personal profile information and demographics such as gender, age, income, Profession, education, status have
been shown in table.2 below.
Table.2:
Variable Category Frequency Percentage
Gender Male
Female
118
82
59
41
Status Student
Employed
Unemployed
Businessman
Housewife
89
49
20
37
5
44.5
24.5
10
18.5
2.5
Age 20-25 Years
25-30 Years
30-35 Years
35-40 Years
Above 40 Years
8
98
59
28
7
4
49
29.5
14
3.5
Income 15000-20000
20000-25000
25000-30000
30000-35000
Above 35000
31
58
49
37
25
15.5
29
24.5
18.5
12.5
Education Matriculation
Intermediate
Graduation
Master
MPhil
5
8
45
74
68
2.5
4
22.5
37
34
European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.6, No.11, 2014
140
4.2. HYPOTHESIS TESTING
Hypothesis was tested on the basis of regression test analysis in SPSS.21. Results of hypothesis given in table
no.3 below.
TABLE.3:
4.2.1. BANK BRANCHES AND SBOCIBS
Regression results proved the significant positive relationship of bank branches and the switching behavior of
customer with having (B=.214) and (P<0.05) values. Beta value means bank branches contribute more than 21.4%
in the SBOCIBS. Results supports our hypothesis therefore H1 is accepted.
4.2.2. ADVERTISEMENT AND SBOCIBS
The regression test’s results reject our second hypothesis by giving the beta value (.099) and (P=0.051.) which is
(P > 0.05) greater than the range, insignificant. The values don’t support the hypothesis. Significant relationship
was not confirmed between advertisement and SBOCIBS. Therefore H2 is rejected.
4.2.3. RELIGIOUS BELIEF AND SBOCIBS
There is not any significant positive relationship exist between religious belief and SBOCIBS. Results of test
disapprove by showing the negative relationship of these variables. (B= -.101) and (P=0.051), the beta is
negative which predicts the negative relationship and the p value is not acceptable, therefore H3 is rejected.
4.2.4. SERVICE QUALITY AND SBOCIBS
According to the regression test results there is a significant and positive relationship prevail between service
quality and SBOCIBS with acceptable values of (B=.338) and (P=0.000). Service quality more than 33.8%
contribute in SBOCIBS. It means if we increase the service quality then the switching of customers towards
other banks will be reduce with the same extent. H4 is accepted.
4.2.5. PROFIT & INTEREST RATE AND SBOCIBS
Regression results of our study confirms the significant positive relationship between profit and interest rates and
the SBOCIBS. Beta value (b=.522) which means profit & interest rates contribute more than 52.2% in the
dependent variable (SBOCIBS). P value (0.000) is perfectly showing significance level. H5 is accepted.
5. DISCUSSION
Overall regression results were good and supported the literature mostly by showing the values like (R=.719) it
means variables which are used in current study have shown 72% positive relationship. This percentage showing
the contribution of variables used. If we talk about R square value (.518) which indicates 52% variation in the
data used in the response of variables. Which is good for current study. Fisherman F test (F=41.642) value is
positive, and greater value of F ratio indicates the reliability of results is high. Model is significant having the P
value (P=0.000) significant. The probability of error in the dependent and independent variable have value (.023).
Regression value (37.253) for all test. Three variables; bank branches, service quality, profit & interest rate
asserted significantly positive impact on the switching behavior of customers in Pakistani banks. Past literature
also supported our hypothesis and results. In these three variables profit and interest rate was remain highly
significant by its t test value (7.851) which is good by the standards because it’s greater than 1.645 and positive.
At second number the service quality remained good having t value (5.516) and the last variable was bank
branches (t=3.622).
We concluded that in Pakistan profit rates and interest rates offered by banks to its existing, potential customers
plays a very important role in customers for retaining, sustaining and to make them loyal. Quality of service also
play the crucial role in the switching intentions of customers. If the services are good then the customers will be
satisfied and loyal otherwise they will tend towards switching to another bank.
European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.6, No.11, 2014
141
6. BUSINESS IMPLICATION
Our study will be helpful for servicing sector specifically banking organizations. We used service quality
variable in this study and the results suggested that the servicing firms must provide quality of services to make,
retain or sustain its customers and it’s necessary also for making them loyal. Banks should take much care about
the services they provide to customers. They should ask from their customers if they demands any amendment in
the services. Bank employees must be so trained to make the customers feel the empathy. Their behavior and
attitude must be sympathetic and polite with the customers. If they will show their anger, hastiness and
hecticness then the customers will plan to switch another bank. The profit and interest rates must be settled as
attractively it can cope with the competitor’s strategies but distinctively and distinguishably in the market.
Because when customer start feeling and assessing the information of the other service providing firms then it’s
a sign for the organization to check its products and packages. Mostly people switch in the inception of
convenience which they feel in the service obtainment. In our study people responded extremely favorable for
the convenient in services and for the location of firm. It means people prefer those banks which have many
branches in the same city.
7. LIMITATIONS
Results of regression test rejected our two hypothesis it may be possible due to wrong sampling technique used
or in the sense of data collected by the respondents were inconvenient to answer accurately or they may be didn’t
understand the statements used in our scale. One of the reason may be data used just of 200 people. If we used
large sample size then we can say all the hypothesis were accepted. We cannot generalize the results of our study
because responses may change when the population, demographics change. In future the potential researchers
must be used large sample size for the generalization of results.
8. REFERENCES
Al-Rousan, Ramzi, M., Mohamed, B. (2010). Customer loyalty and the impacts of service quality: The case of
five star hotels in Jordan. International Journal of Human and Social Sciences, 5(13): 124-139.
Ashfaq Ahmad, K.-u.-R. M. (2010). Islamic Banking Experience of Pakistan: Comparison between Islamic and
Conventional Banks. Internation Journal of Business and Management, 137-143.
Ahmed, S. (1989), “Islamic banking and finance – a review essay”, Journal of Monetary Economics, Vol. 24, pp.
157-67. 220
Alfansi, L., Nanere, M., Atmaja, F. T. & D’Souza, C. (2010). Empirical evidence on the antecedences of
customer loyalty. ANZMAC, 1-10.
Almossawi, M. (2001). Bank selection criteria employed by college students in Bahrain: an empirical analysis.
Int. J. Bank. Mark., 19(3), 115-125.
Arup Kumar Baksia, B. B. (2011). Service quality and switching behavior of customers. Management Science
Letters, 405-414.
Chong, B.S. and Liu, M.-H. (2009), “Islamic banking: interset-free or interest-based”, Pacific-Basin Finance
Journal, Vol. 17 No. 1, pp. 125-44.
Chakravarty, S. (2003). The differential role of relationships in the rationing of consumer loans. Working Paper,
Purdue University.
Creswell, J. W. (1994). Research design: Qualitative and quantitative approaches. Thousand Oaks, CA: SAGE
Publications.
Chakravarty, S., & Scott, J. S. (1999). Relationships and rationing in consumer loans. Journal of Business, 72,
523–544.
Clemes, M.D., Gan, C.E.C. & Kao, T.H. (2007). University student satisfaction: an empirical analysis, Journal
of Marketing for Higher Education, 17 (2), pp. 292-325.
Clemes. M. D., Gan.C & Zhang.D (2010), Customer switching behaviour in the Chinese retail banking industry,
Internal journal of bank marketing, Vol.28, No.7, pp.519-546
Dr Ramaiyer Subramaniam, D. J. (2012). CUSTOMERS’ SWITCHING BEHAVIOR IN BANKING
INDUSTRY-EMPIRICAL EVIDENCE FROM MALAYSIA. International Journal of Business, Economics and
Law, 156-162.
Erol, C. and Al-Bdour, R. (1989), “Attitude, behaviour, and patronage factors of bank customers towards Islamic
banks”, International Journal of Bank Marketing, Vol. 7, pp. 31-7.
Erol, C., Kaynak, E. and El-Bdour, R. (1990), “Conventional and Islamic bank: patronage behaviour of
Jordanian customers”, International Journal of Bank Marketing, Vol. 8 No. 5, pp. 25-35.
Faizan Mohsan, M. M. (2011). Impact of Customer Satisfaction on Customer Loyalty and Intentions to Switch:
Evidence from Banking Sector of Pakistan. International Journal of Business and Social Science, 263-270.
Furrer, O., Ching-Liu, B.S. and Sudharshan, D. (2002), “The relationship between culture and service quality
perceptions”, Journal of Service Research, Vol. 2 No. 4, pp. 355-70.
European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.6, No.11, 2014
142
Gil, I., Berenguer, G. and Cervera, A. (2007), “The roles of service encounters, service value, and job
satisfaction in achieving customer satisfaction in business relationships”, Industrial Marketing Management, Vol.
37 No. 8, pp. 921-39.
Gronroos, C. (1994), “Quo vadis, marketing? Towards a relationship marketing paradigm”, Journal of Marketing
Management, Vol. 10, pp. 347-60.
Gerrard, P., & Cunningham, J. B. (1997). Islamic banking: a study in Singapore. Int. J. Bank. Mark., 15(6), 204-
216.
Gan, C and Clemes, M. (2006). A logit analysis of electronic banking in New Zealand. International Journal of
Bank Marketing, 24 (6), 360-383.
Gerrard, P. and Cunningham, J. B. (2004), “Consumer Switching Behaviour in the Asia Banking Market”, The
Journal of Service Marketing, Vol. 18, No. 2/3, pp. 215.
Hameedah Sayani, H. M. (2013). Determinants of bank selection in the United Arab Emirates. International
Journal of Bank Marketing, 206-228.
Haran, S., Ahmad, N. and Planisek, S.L (1994), “Bank patronage factors of Muslims and non-Muslim
customers”, International Journal of Bank Marketing, Vol. 12 No. 1, pp. 32-40.
Jabnoun, N. and Khalifa, A. (2005), “A customised measure of service quality in the UAE”, Managing Service
Quality, Vol. 15 No. 4, pp. 374-88.
Kumar, R. (2005). Research methodology – A step-by-step guide for beginners. SAGE.
Kotler, P., & Keller, K. L. (2006). Marketing Management (pp. 402). New Delhi, India: Prentice-Hall.
Keaveney, S. (1995) “Customer Switching Behavior In Service Industries: An Exploratory Study” Journal of
Marketing, 59 (2): pp. 71-83.
Kiser. E.K (2002), Household switching behaviour at depository institutions: Evidence from survey data; Federal
Reserve Board, 20th and C ST., NW, Washington, DC 20551, (202) 451-2584
Karim, N., Tarazi, M. and Reille, X. (2008), Islamic Microfinance: An Emerging Market Niche. Focus Note 49,
CGAP, Washington, DC.
Karatepe, O., Yavas, U., and Babakus, E., (2005). Measuring Service Quality of Banks: Scale Development and
Validation. Journal of Retailing and Consumer Services, 12(5): 373-383.
Laroche, M & Taylor, T 1988, „An empirical study of major segmentation issues in retail banking‟,
International Journal of Bank Marketing, Vol. 6, no. 1, pp.31-48.
Metawa, S.A. and Almossawi, M. (1998), “Banking behaviour of Islamic bank customers: perspectives and
implications”, International Journal of Bank Marketing, Vol. 16 No. 7, pp. 299-13.
Moss, S., Prosser, H., Costello, H., Simpson, N., Patel, P., Rowe, S., et al. (1998). Reliability and validity of the
PAS-ADD Checklist for detecting psychiatric disorders in adults with intellectual disability. Journal of
Intellectual Disability Research, 42(2), 173-183.
Michael D. Clemes (New Zealand), C. G. (2007). Customer switching behavior in the New Zealand banking
industry. Banks and Bank Systems, 50-65.
Nunnally, J.C (1970). Introduction to psychological measurement. New York: McGraw-Hill.
Naser, K., Jamal, A. and Al-Khatib, K. (1999), “Islamic banking: a study of customer satisfaction and
preferences in Jordan”, International Journal of Bank Marketing, Vol. 17 No. 3, pp. 135-51.
Ojo, O. (2010). The relationship between service quality and customer satisfaction in the telecommunication
industry: Evidence from Nigeria. BRAND. Broad Research in Accounting, Negotiation, and Distribution, 1(1).
Oliver, P. (2004), “Banking on young love”, The New Zealand Herald.
Othman, A. and Owen, L. (2001), “Adopting and measuring customer service quality in Islamic banks: a case
study in Kuwait finance house”, International Journal of Islamic Financial Services, Vol. 3 No. 1, pp. 1-26.
Parasuraman, A., & Zeithaml, V. A. (2006). Understanding and improving service quality: A literature review
and research agenda in B. Weitz and R. Wensley (Ed.), Handbook of Marketing, London: Sage Publications.
Polatoglu, V.N., & Ekin, S. (2001). An empirical investigation of the Turkish consumers’ acceptance of Internet
banking services. International Journal of Bank Marketing, 19(4), 156-165.
Safakli. O. V (2007), A research on the basic motivational factors in consumer bank selection: evidence from
Northern Cyprus, Bank and bank systems, Volume 2, Issue 4
Salleh. H. S and Hazimah. N. (2009), Commercial bank selection: comparison between single and multiple bank
users in Malaysia. International Journal of Economics and Finance. Vol.1, No. 2
VENDELO, M. T. (1998) Narrating corporate reputation. International Studies of Management & Organization,
28, 120-137.
Wong, A. and Sohal, A. (2003), “Service quality and customer loyalty perspectives on two levels of retail
relationships”, Journal of Service Marketing, Vol. 17, pp. 495-513
Yu, C. J., Wu, L., Chiao, Y., Tai, H. (2005). Perceived quality, customer satisfaction, and customer loyalty: the
case of Lexus in Taiwan. Total Quality Management & Business Excellence, 16(6): 707 - 719.
The IISTE is a pioneer in the Open-Access hosting service and academic event
management. The aim of the firm is Accelerating Global Knowledge Sharing.
More information about the firm can be found on the homepage:
http://www.iiste.org
CALL FOR JOURNAL PAPERS
There are more than 30 peer-reviewed academic journals hosted under the hosting
platform.
Prospective authors of journals can find the submission instruction on the
following page: http://www.iiste.org/journals/ All the journals articles are available
online to the readers all over the world without financial, legal, or technical barriers
other than those inseparable from gaining access to the internet itself. Paper version
of the journals is also available upon request of readers and authors.
MORE RESOURCES
Book publication information: http://www.iiste.org/book/
Recent conferences: http://www.iiste.org/conference/
IISTE Knowledge Sharing Partners
EBSCO, Index Copernicus, Ulrich's Periodicals Directory, JournalTOCS, PKP Open
Archives Harvester, Bielefeld Academic Search Engine, Elektronische
Zeitschriftenbibliothek EZB, Open J-Gate, OCLC WorldCat, Universe Digtial
Library , NewJour, Google Scholar
