Retail Banking Service Quality and Customer Loyalty: The Role of Trust and Commitment as Mediators

Ephrem Habtemichael Redda and Marko Van Deventer
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Ephrem Habtemichael Redda: North-West University, South Africa
Marko Van Deventer: North-West University, South Africa.

International Review of Management and Marketing, 2023, vol. 13, issue 5, 18-25

Abstract: The study seeks to demarcate the association between crucial constructs, namely service quality, trust, commitment, and loyalty in a retail banking environment. Amediated model is proposed to further investigate these relationships by incorporating trust and commitment as mediating variables between service quality and bank loyalty. The study follows a descriptive research design and implements a quantitative research method to achieve its objectives. Data collected from a sample size (n = 271) were analysed and the mediation analysis was performed using the PROCESS macro-Version 3.5. The results of the analysis confirm that service quality in retail banking has a significant positive impact on the trust and commitment of customers towards retail banking services. In turn, customer trust and commitment are confirmed as immediate predictors of customer loyalty in retail banking. The mediation analysis reveals that the direct effect of service quality on bank loyalty is positive and significant. Furthermore, the mediation analysis reveals that the indirect effect of service quality on bank loyalty is positive and significant validating the mediating role of rust and commitment between service quality and customer loyalty. Since the direct effect of service quality on loyalty remained significant after the intervention/mediation of trust and commitment in the model, the mediation is interpreted as partial mediation. The findings of this study do provide a marketing guide to banking professionals who design and implement banking solutions in the retail banking environment. The testing and provision of empirical evidence of the direct and indirect effect of service quality on bank loyalty by incorporating trust and commitment as mediating variables in an emerging economy, South Africa, can be regarded as the main contribution of this study.

Keywords: Service Quality; Trust; Commitment; Loyalty; Mediation Analysis (search for similar items in EconPapers)
JEL-codes: M3 M31 (search for similar items in EconPapers)
Date: 2023
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