(Luận văn thạc sĩ) customer satifaction and switching intentions a study of retail banking

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

NGO TUAN TAI

CUSTOMER SATISFACTION AND
SWITCHING INTENTIONS: A STUDY
OF RETAIL BANKING

MASTER OF BUSINESS (Honours)

1
Ho Chi Minh City – Year 2014


UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

NGO TUAN TAI

CUSTOMER SATISFACTION AND
SWITCHING INTENTIONS: A STUDY
OF RETAIL BANKING

ID: 22110051

MASTER OF BUSINESS (Honours)
SUPERVISOR: DR. LE NGUYEN HAU

2
Ho Chi Minh City – Year 2014


ACKNOWLEDGMENT
I would like to express my deep gratitude, special appreciation and thanks to my
supervisor Dr. Le Nguyen Hau. I would like to thank Dr. Hau for encouraging my
research and for his valuable time and efforts in guiding me to complete this study.
I would like to thank all members of International School of Business (ISB)
– University

of

Economic Ho Chi Minh City for supporting and assisting me

wholeheartedly. And also, my special thanks to Professor Nguyen Dinh Tho who
provided me with the appropriate orientations of my study.
I would like to thank to my friends who assisted me in distributing my
questionnaires to the respondents and all respondents who spent their valuable time in
completing my questionnaires.
I would like to thank the board of directors of Aardwolf Company, who
sympathized with me and gave me facilities during the last two years enabling me to
complete both my jobs and study.
Finally, a special thanks to my family. It’s very hard to express how grateful I am
to my mother, wife and son. They are always my great supports.
Ngo Tuan Tai
Ho Chi Minh City, April 20, 2014

i

ABSTRACT
There is an intense competition in the retail banking in Vietnam. To exist and
develop in such intense competition, bank managements must develop customer-oriented
strategies to maintain their bank’s market shares. In this industry, the retail banking
products and services are closely identical, additionally their prices are competitive
giving consumers an ability to purchase those financial products and services from
various banks or financial companies. Subsequently, consumers are also more prone to
change their current bankers. Hence, how does a bank prevent their customers from
switching to other banks? What is the distinction among the banks as a foundation for
the banks to build up appropriate strategies to maintain the business relationship with
their customer in such intense competition?
The study assumes that perceived bank reputation is a distinctive factor among the
various banks. Hence, the main aim of this study is to investigate the effects of various
components of customer satisfaction on perceived bank reputation, and also determine
the impact of the perceived bank reputation on customer intentions to switch. The data
for this study was obtained from 198 retail banking consumers in Ho Chi Minh City and
Binh Duong province. The analysis results revealed the perceived bank reputation is
impacted by customer satisfaction of branches and image, and it plays an important role
in lessening the consumer intention to switch the bank.
Key words: customer satisfaction, bank reputation, switching intentions

ii


TABLE OF CONTENTS
Page
Chapter 1: Introduction ............................................................................................. 1
1.1.

Research background ............................................................................... 1

1.2.

Research objectives and questions ............................................................ 5

1.3.

Scope of the study .................................................................................... 5

1.4.

Signification ............................................................................................. 6

1.5.

Study structure ......................................................................................... 6

Chapter 2: Literature review, model and hypotheses ................................................ 8
2.1.

Customer satisfaction ............................................................................... 8

2.2.

Bank reputation ...................................................................................... 11

2.3.

Switching behavior ................................................................................ 12

2.4.

Conceptual model .................................................................................. 14

2.5.

Hypotheses ............................................................................................. 15

Chapter 3: Research method..................................................................................... 19
3.1.

Research process .................................................................................... 19

3.2.

Measurement scales ............................................................................... 20

3.3.

Qualitative test of measurement scales ................................................... 23

3.4.

Data collection ....................................................................................... 23

3.5.

Data analysis method ............................................................................. 24

Chapter 4: Data analysis and results ........................................................................ 27
4.1.

Respondent profile and descriptive statistics .......................................... 27

4.2.

Reliability analysis ................................................................................. 28

4.3.

Exploratory factor analysis for the independent variables ....................... 29

4.4.

Exploratory factor analysis for the dependent variables .......................... 33
iii


4.5.

The first hypothesis testing (satisfaction and bank reputation) ................ 34

4.6.

The second hypothesis testing (reputation and switching intentions) ...... 39

4.7.

Summary of hypothesis testing results ................................................... 41

4.8.

Discussion of findings ............................................................................ 43

Chapter 5: Conclusion, implication and limitation .................................................. 46
5.1.

Conclusion ............................................................................................. 46

5.2.

Implication ............................................................................................. 47

5.3.

Limitation .............................................................................................. 49

References .................................................................................................................. 51
Appendix 1: Research questionnaire ........................................................................ 55
Appendix 2: Descriptive statistic .............................................................................. 59
Appendix 3: Results of cronbach’s alpha reliability analysis .................................. 61
Appendix 4: First time of running exploratory factor analysis of independent
variables .................................................................................................................... 70
Appendix 5: Total Variance Explained for the second time of running exploratory
factor analysis of independent variables................................................................... 72

iv

LIST OF TABLES
Page
Table 3.1: Measurement constructs ......................................................................... 21
Table 4.1: Respondent profile ................................................................................... 27
Table 4.2: Cronbach’s alpha ..................................................................................... 28
Table 4.3: KMO and Barlett’s Test for independent variables ............................... 30
Table 4.4: Rotated component matrix for independent variables ........................... 30
Table 4.5: Two replacement constructs .................................................................... 32
Table 4.6: Cronbach’s alpha of the two replacement constructs ............................ 33
Table 4.7: KMO and Barlett’s Test for dependent variables .................................. 34
Table 4.8: Rotated component matrix for dependent variables .............................. 34
Table 4.9: Model summary of the first hypothesis testing ....................................... 37
Table 4.10: ANOVA for regression of the first hypothesis testing .......................... 38
Table 4.11: Multiple regression analysis results of the first hypothesis testing ...... 38
Table 4.12: Model summary of the second hypothesis testing ................................. 40
Table 4.13: ANOVA for regression of the second hypothesis testing ...................... 41
Table 4.14: Multiple regression analysis results of the second hypothesis testing .. 41
Table 4.15: Hypothesis testing results (summary) ................................................... 42

v


LIST OF FIGURES
Page
Figure 1: Conceptual model ..................................................................................... 14
Figure 2: Research process........................................................................................ 19
Figure 3: Modified research model ........................................................................... 35
Figure 4: Bank reputation – Histogram ................................................................... 36
Figure 5: Bank reputation – Scatterplot ................................................................... 37
Figure 6: Switching intentions – Histogram ............................................................. 39

Figure 7: Switching intentions – Scatterplot ............................................................ 40

vi


Chapter 1
INTRODUCTION
1.1. Research background
There are a large number of bankers in Vietnam that are categorized into three
types: state-owned commercial banks, joint stock commercial banks and wholly foreignowned banks (Vietnam banking technology report, 2012). The strong competitive trends
in banking products and services on financial markets have increasingly urged not only
the small and medium joint stock commercial banks, but also the state-owned
commercial banks to renew and continue to have effective customer policies, strategies
and services towards the customers in order to maintain and increase their bank’s market
shares.
The state-owned commercial banks have great advantages of finance capabilities,
larger branch networks, greater supports from the government, etc. over other
commercial bankers enabling them to build up reliability and safety, portraying a
respectable image in the eyes of consumers, thus they have accounted for a large
percentage of the bank’s market shares in Vietnam and have gained satisfaction of the
consumers. Nevertheless, those banks are enduring intense competitions from the
following financial banks and companies:
 The new established commercial banks in recent years, those banks just recently
participate in the market, thus they have important advantages such as they learn
from experiences of the existing banks to build up appropriate strategies, they

1


have all information about the market, and importantly they have great ambitions

and thirst for gaining the market share.
 The current commercial banks are growing up such as Sacombank, Techcombank,
ACB bank, etc. Those banks are competing intensively in gaining the consumers
and increasing market shares.
 The foreign-own banks such as HSBC, ANZ, etc. with advance technologies,
strong financial capability and professional services have been overtaking the
retail banking market. Those banks have an advantage of having their foreigner
clients whom have a trusting relationship in there home countries. They especially
have a resilient advantage with worldwide branch networks aboard that enable
them to offer unique banking products and services, which are far more superior
against the local banks.
 The financial companies such as Prudential Vietnam, AIA, etc. are offering many
distinct financial products attracting the consumers. Hence, the consumers now
have a wider range of choices in purchasing the financial products.
Due to such competitions above, consumers now have the ability to purchase
closely identical financial products provided from various banks or financial companies.
Subsequently, consumers are more prone to change their current bankers if they realize
any changes among the banks, even it’s just a minor change. For instance, due to a
difficulty in lending funds resulted from economic recessions, plus a surplus in cash
deposit, the state-owned bankers have lowered the deposit rate since the beginning of
May, 2013. Typically, Vietcombank cut its monthly deposit interest rate for the VND to
2


6%, 1.5% lower than the ceiling rate stipulated by the State Bank of Viet Nam, whereas
most other banks currently apply a rate of 7.5 per cent for deposits fewer than 12 months,
and 10 per cent for 12 months or more (Vietnamnews, May 08, 2013). In this situation, it
found that numerous consumers preferred to deposit their fund’s in the stated-owned
banks due to the high trust in those banks, but they had to consider switching to other
banks due to such a low deposit interest rate that they were receiving.

Obviously, when the consumers perceive a reduction in their benefit from a
service provider, they are prone to switch to another service provider. Bank’s deposit rate
cut can be considered to be a banking service price increase. A number of studies have
supported that price increases make customers feel unfair resulting in switching actions
such as Clemes et al. (2010) revealed the price is an important factor influencing the
marginal probability that customers will switch banks.
Regarding the case above, although the consumers might switch to other bankers
due to price increase, there were still financial experts’ optimistic opinions about the
significant bank deposit rate cuts of the state-owned commercial banks. For example,
National Financial and Monetary Policy Advisory Council member, Mr. Cao Sy Kiem
said that the classification of interest rates was positive as it reflected the banking
system's health. He added: "Healthy banks can attract depositors even when they cut
deposit rates and this will create conditions for them to lower lending rates and boost
credit growth. The weak banks won't be able to lure more borrowers by raising deposit
rates” (Vietnamnews, May 09, 2013). Additionally, Mr. Nguyen Xuan Thanh, the
Vietcombank general director, said that economic conditions still leave room for the State
3


Bank to further reduce the ceiling deposit rate, with inflation being controlled at 6-7 per
cent and the consumer price index increasing 2.4 per cent in the first four months of this
year (Vietnamnews, May 08, 2013). Thus, apart from the price factor, the consumers still
take other factors into their considerations of switching or staying current banks.
Nowadays, almost financial service providers trust that a conscientious customer service
will be more important for consumer satisfaction than lower prices in those activities
(Molina et al, 2007).
The competition in banking industry in Vietnam is extremely intense. Almost the
consumers realize and assume that products, services and qualities of banks in Vietnam
are now very closely identical. Indeed, a new banking product that is launched by a bank
will be almost immediately copied and launched by other banks. Hence, how does a bank

prevent their customers from switching to another banks? What is the distinction among
the banks as a base for the banks to build up appropriate strategies to maintain the
business relationship with their customer in the intension competition? The distinction
among the banks in Vietnam can be considered to be the reputation, because reputation is
valuable, distinctive, difficult to duplicate, non-substitutable and provides the foundation
with sustainable competitive advantages (Wang, Lo and Hall as cited in Wang et al,
2003). Reputation plays a particularly important strategic role in service market because
the pre-purchase evaluation of service quality is necessarily vague and incomplete (Wang
et al., 2003). Thus, the argument is if the consumers feel satisfied with a banker, how
they will perceive the bank reputation? A good reputable bank can lessen their customer
intentions to switch to other bankers?
4


1.2. Research objectives and questions:
The research is to investigate the effects of various components of customer
satisfaction on perceived bank reputation, and also determines the impact of the
perceived bank reputation on customer intentions to switch. Specifically, the research is
to answer the following questions:
 If the consumers feel satisfied with a banker, how they will perceive the bank
reputation?
 A bank is perceived of having a good reputation by consumers that can lessen
their customer intentions to switch to other bankers?
1.3. Scope of the study
This study is conducted in mainly Ho Chi Minh City and Binh Duong province
areas. It focuses on the retail banking consumers who are utilizing retail banking services
and products from different banks, such as loans, saving deposits, automatic teller
machines (ATM), bank transactions, internet banking services, etc. in general.
This study focuses on examining relationship among three factors below:
 Customer satisfaction of banks’ branches, image, automatic teller machines,

personal service, and communication;
 Perceived bank reputation of the consumers; and
 Customer switching intentions.
Due to narrow areas and time limit in collecting the data, the study is only
considered for small and particular groups, and the results therefore cannot represent for
the whole banking industry in Vietnam.
5


1.4. Signification
Firstly, the study determines which components of customer satisfaction among
the five components as mentioned, or all of the components that affect customer
perception of bank reputation. It also indicates how strong those components effect the
customer’s perceived bank reputation. Furthermore, the study indicates how the
perceived bank reputation influences customer switching intentions.
Secondly, the study provides with useful implications for bank managers to
develop the appropriate strategies in enhancing bank reputation and retaining consumers.
Finally, the study stipulates with valuable orientations for prospective studies.
1.5. Study structure
The research is composed of five chapters:
 Chapter 1: Introduction giving research background, research problem,
research questions and research objectives.
 Chapter 2: Literature review, model and hypotheses indicating the reviews of
theory and previous studies, and then formulation of the research model and
hypothesis.
 Chapter 3: Research method showing how the research is designed and
implemented.
 Chapter 4: Data analysis and results providing with collected data analysis,
results and discussion of the results.

6


 Chapter 5: Conclusion, implication and limitation supplying with conclusion of
the research results, contributions to management practice, and the limitations
of the study.
The references, questionnaire of the survey, and the appendices of data analysis
results are attached at the end of the thesis.

7


Chapter 2
LITERATURE REVIEW, MODEL AND HYPOTHESES
2.1. Customer satisfaction
Customer satisfaction is an important topic for researchers and managers because
it is likely that a high level of customer satisfaction leads to increases in repeat patronage
among current customers and aids customer recruitment by enhancing an organization’s
market reputation (Singh and Kaur, 2011). The definitions of customer satisfaction are
widely presented two approaches transaction-specific and cumulative satisfaction or
overall satisfaction (Matos et al., 2009; Yang and Peterson, 2004). The transaction specific approach defines customer satisfaction as being a specific purchase occasion’s
post-choice evaluative judgment (Oliver as cited in Matos et al., 2009), i.e. the consumer
perceives that after the purchase there is the fulfillment of a need, a desire or an objective;
this can be pleasant (Matos et al., 2009). Whereas, the cumulative satisfaction reflects
customer satisfaction in a cumulative evaluation fashion that requires summing the
satisfaction associated with specific products and various facets of the firm (Yang and
Peterson, 2004).
Previous studies in services directed at people and characterized by high customer
contact with individually customized service solutions has identified several dimensions
which effectively have a different influence on overall consumer satisfaction (Molina et

al, 2007). Levesque and McDougall (1996) point out that customer satisfaction and
retention are critical for retail banks. They investigate the major determinants of customer
satisfaction (service quality, service features, customer complaint handling and
8


situational factors), and future intentions in the retail bank sector. The study of Molina et
al (2007) explores significance of confidence benefits as one of the retail banking
customer satisfaction antecedents which are frontline employee satisfaction, accessibility
and service policy satisfaction.
This research is based on the study of Masto et al., (2009) suggesting customer
satisfaction in retail banking as a multidimensional construct, which is composed of five
different components, namely personal services, automatic teller machines (ATM),
communication, branches, and bank image.
Personal services. The component of personal service refers to retail banking
services provided by cashiers (Masto et al., 2009). Cashier is one of the customer-contact
employees of banks. Customer-contact employees often find themselves answering
questions, taking payment for goods and services, and helping customers find what they
are seeking. Those employees in a retail bank are considered as being “first in line” when
it comes to providing customer service to “walk-in” customers. Their perceptions of how
they are treated will influence what they believe the company will do for the customer
(Julian and Ramaseshan, 1994).
Automatic teller machines. ATM could carry out the same, essentially routine, and
various transactions as do human tellers in branch offices, but at half the cost and with a
four-to-one advantage in productivity (Moutinho et al., 1997). The key factors in
encouraging ATM usage are restricted bank opening hours, limited availability of branch
staff, dissatisfaction with speed or service in the branches and perceived time
convenience of ATMs. On the other hand, the key factors inhibiting ATM usage include
9

complexity of use, a preference for human interaction and perceived attendance risks
(Durkin et al., 2003).
Communication. This component refers to information provided by bankers
(Matos et al., 2009). Information is defined as relevant data about choice alternatives.
Data become information because they are relevant to the consumer engaged in decision
making (Evans et al. as cited in Waite and Harrison, 2004). The utility of information
relates to its usefulness in reducing the amount of perceived risk and uncertainty involved
in conducting the transaction under consideration. The greater the level of perceived
risks, the more information will be required until perception reaches levels acceptable for
the consumer (Newman and Locman as cited in Waite and Harrison, 2004)
Branches. Bank branches are the places in which consumers interact and deal
with human banking tellers, and the delivery and consumption of financial services and
products are through (Durkin et al., 2003). Despite the availability of alternative forms of
bank service delivery, banks maintain branches because customers prefer full-service
branches for conducting financial business and buying financial services. Many fullservice branch offices will remain, and they will become leaner and more efficient in
their operations, offering many new services. A sound branch system provides a solid
base from which to market new products. (Moutinho et al., 1997).
Bank image. The corporate image or bank image could be considered as a type of
brand image in which the name refers to the organization as a whole rather than to its
individual products (Bravo et al., 2009). Image has been treated as a “gestalt”, reflecting a
customer’s overall impression (Bloemer et al., 1998). Keaveney and Hunt as cited in
10


Bloemer et al., (1998) have argued that the image of a retail institution is formed along
the lines of category-based processing theory, i.e. when a customer encounters a bank, he
or she will form a mental picture as to whether the bank matches any other categories of
banks experienced in the past. According to the category-based processing paradigm, it is
proposed that incoming information, as well as customer evaluation of attributes, will be

judged relative to the bank image.
2.2 Bank reputation
Reputation has been described as a social identity, and an important and intangible
resource that can markedly contribute to a firm’s performance and survival (Hall, Rao,
Yoon et al., as cited in Clemes et al., 2010). Corporate reputation can be taken to be the
sum of the perception of all relevant stakeholders with reference to the services, persons
and communicative activities of a company as well as the result over time of corporate
activity in the minds of the stakeholders (Walsh et al., 2006). One of the more tangible
aspects of a firm's corporate identity is the character of its leadership because we have
seen, the technical aspects of a firm's structure and policy may be difficult for outsiders to
understand, and may be deliberately concealed whereas the personal qualities of a
company's leaders - its owners, directors, managers - are less easily concealed, and more
easily understood (Bromley, 2011).

Satir (2006) implies that in order to constitute

reputation, it is important to use corporate communication means and media efficiently
and consistently, to explain what and why properly about each activity, to associate it
with corporate vision, mission and values. This handles corporate reputation as corporate
activities, quality of service, the degree of its performance and fulfilling its social
11


responsibilities, the synthesis of corporations’ expectations related with using their
sources voluntarily to solve the social problems, the essence of perceived quality. On the
other hand, Wang et al. (2003) imply that it’s widely accepted that quality products and
services produce benefits not only by lowering the cost through reduced waste and
decreased deficiencies in product and service, but also increasing competitiveness
through the establishment of a good reputation the attraction and retention of customers.
They also reveal from their quantitative study findings from focus groups that it is

apparent that bank reputation also plays an important role in the determining the
purchasing and repurchasing behaviors of customers.
Interest in reputation has grown in the past decade, and the concept of corporate
reputation has been studied by researchers in the fields of economics, organizational
theory and marketing (Wang et al., 2003). There are many approaches of studying the
corporate reputation; nevertheless, like the work of Walsh et al. (2006), this study focuses
closely on customer-based corporate reputation (i.e. bank reputation as perceived by
customers). Based upon customer perceptions, Bontis et al. (2007) measured corporate
reputation by asking customers to rate the organization’s reputation in comparison to
those of its competitors on a five-point Likert-type scale ranging from best in the industry
to worst in the industry; Wang et al, (2003) also measured the bank reputation by asking
the customers to assess the bank reputation by overall perceptions of their total
experience in the bank and comparative perceptions with other banks.
2.3 Switching behavior

12


Customer switch or defection in service environments means that customers
forsaking one service provider for another (Garland, 2002). Further, Keaveney, and
Parthasarathy (as cited in Kura et al., 2012) defined customer switching as an act of being
loyal to one service categories (e.g. banking services), but switch from one service
provider to another as a result of dissatisfaction or any other related problems. Thus,
the minimization of customer switch is a priority for most banks (Garland, 2002),
because the personal retail banking customers intend to switch banks creating a loss of
profits and raising new customer acquisition costs (Clemes et al., 2010).
Many researchers have investigated a combination of several factors that may
cause customers to switch banks in order to assist bank management to develop strategies
to minimize the negative effects of defection and enhance long-term relationships with
customers (Clemes et al, 2010). There are many reasons that motivate the customers to

switch the service providers, where Keaveney (as cited in Kaur et al, 2011) is the first
work to introduce the model of customer switching behaviour, containing eight main
casual factors that are critical to switching behaviour, namely, pricing, inconvenience,
core service failures, service encounter failures, employee responses to service failures,
competitive issues, ethical problems and involuntary factors. Lopez et al. (2006)
articulated customers’ switching behavior in three main areas:
(1) The processes underlying customer-switching decisions;
(2) The specific factors that motivate switching; and
(3) The heterogeneous nature of the firms’ customer base and its relevance in
order to analyze the differences between switchers and stayers.
13


Lopez et al. (2006) argued that the previous works help to identify the processes
and factors that motivate switching decisions, but provide no information about the
differences between switchers and stayers. For this reason, Lopez et al. (2006) posited the
area (3) above is a recent stream of research deals with the heterogeneous nature of the
customer base in more detail, finding significant differences in switching behavior
between customers. Clemes et al, (2010) revealed seven factors that influence a
customers’ decision to switch the banks: price, reputation, service quality, effective
advertising competition, involuntary switching, distance, and switching costs.
2.4 Conceptual model
The conceptual model (Figure 1) presents an overview of the relationships
hypothesized and tested in this study. Based on the literatures review, six hypotheses
have been built up. These hypotheses concentrate on the relationships between five
components of customer satisfaction, bank reputation and how the bank reputation impact
on switching intentions.

Customer satisfaction:
- Bank branches

- Bank image
- Automatic teller machines
(ATMs)

Switching
intensions

Bank
reputation
H1a,b,c,d,e

- Personal service
- Communication

Figure 1: Conceptual model

14

H2


2.5 Hypotheses
Jin et al (2007) indicate that customer satisfaction is a cumulative construct,
summing satisfaction with specific products, services, and transaction experiences of the
organization. As with the firm reputation-trust link, literature confirms that firm
reputation provides a halo effect to lead consumers to a higher satisfaction level. In other
words, regardless of performance, shopping at a reputable firm itself can result in
satisfaction. They also add that as collectivism culture adopts an external frame of
reference, firm reputation is more likely to contribute to increasing satisfaction in this
context as opposed to individualism culture where each internal attribute is valued more.

The ethical reputation is examined in the work of Mulki and Jaramillo (2011), this
study shows that customers are also likely to see ethical reputation as a surrogate for
reliability and quality of service in selecting providers. They are inclined to refer socially
minded products and services to their friends and family members as a way of supporting
causes important to them. The work also indicates that customers’ perception of
suppliers’ ethical reputation is positively related to satisfaction with supplier. Examining
the causality between corporate reputation and customer satisfaction, a work of Helm et
al. (2009) have implied that a high-quality offering is one important cornerstone of
reputation management because it is a prerequisite for generating customer satisfaction
(Helm et al. as cited Chang, 2013). Balance theory suggests that if a customer has a
positive attitude toward a restaurant based on its good reputation, subsequent to the direct
experience of the fine quality of the restaurant, the customer will, in all likelihood,
indicate satisfaction with dining at the restaurant (Helm et al. as cited in Chang, 2012).
15


Thus, a strong corporate reputation indicates that customers can expect to receive highquality products/services, and these expectations tend to drive customers’ satisfaction
with a business (Chang, 2012).
The customers, who are satisfied with the performance of a company, are more
likely to engage in positive word-of-mouth, thus positively reinforcing the company’s
reputation (Hennig-Thurau as cited in Walsh et al., 2006). In banking industry, Wang et
al. (2003) suggest that a bank’s reputation plays a critical role in determining the
purchasing and repurchasing behaviour of customers, and they conclude that service
quality causes superior reputation in the banking industry in China. Levesque and
McDougall (1996) reveal that customer satisfaction in banking industry is driven by a
number of factors, including but not limited to, service quality dimensions. The key
explanatory variables are in the service quality domain; core and relational performance,
problem encountered and satisfaction with problem recovery. Additionally, if a
company’s reputation is positive, it can be assumed that its services/products will also be
perceived positively by its potential customers (Walsh et al., 2006). Service quality is one

of the key concepts of corporate reputation (Satir, 2006). Hence, corporate reputation is
to be positively linked to customer satisfaction, and this link is also revealed to be
strongly correlated by a work of Walsh et al (2006). In banking sector, Bontis et al.
(2007) explore the relationship between customer satisfaction and bank reputation is
significant, in other words customer satisfaction enhances reputation in the service
environment. As the results of above arguments, the following hypotheses are proposed:

16


 H1a: Customer satisfaction of bank branches has a positive effect on the bank
reputation.
 H1b: Customer satisfaction of bank image has a positive effect on the bank
reputation.
 H1c: Customer satisfaction of bank ATMs has a positive effect on the bank
reputation.
 H1d: Customer satisfaction of bank personal service has a positive effect on
the bank reputation.
 H1e: Customer satisfaction of communication has a positive effect on the bank
reputation.
To explore the relationship between corporate reputation and customer switching
intentions, Walsh et al. (2006) imply that brand and corporate reputations are important
surrogates. Brands play a subordinate role due to product homogeneity in the energy
sector, whereas corporate reputations are highly relevant. If a company’s reputation is
positive, then it can be assumed that its services will also be perceived positively by its
customers, which should have an immediate effect on customer willingness to switch
power supply companies (p. 414). But, their expected negative relationship between
corporate reputation and switching intentions could only be confirmed in its tendency.
The non-significant and weak relationship between corporate reputation and switching
intentions may be due to the fact that in its current form (including its name), the

respective power supply company has only existed for a few years and has thus had little
opportunity to develop a strong reputation in Germany (Walsh et al., 2006).
17