Management customer complaints and performance: banks, be careful!

Matteo Cotugno () and Valeria Stefanelli ()
Additional contact information
Matteo Cotugno: Università Cattolica del Sacro Cuore, Piacenza
Valeria Stefanelli: University of Salento

Journal of Management & Governance, 2023, vol. 27, issue 1, No 13, 412 pages

Abstract: Abstract Based on stakeholders’ theory, our paper investigates the relationship between customer complaints and bank performance. We use a unique hand-collected database of customer complaints published by the banking and financial ombudsman and the financial data of the universe of Italian banks during the 2010–2017 period and employ a fixed effect panel data model and two-step system GMM estimation. We first confirm that higher complaints scaled by bank size reduce profitability and increase bank risk. Then, we show that bank institutional form affects this outcome. In contrast to cooperative banks, the performance of commercial banks is negatively influenced by customer complaints. Moreover, in contrast to medium and large banks, small banks’ profitability is not affected by customer complaints. We also found that a bank’s decision to settle customer complaints has a positive impact in the long run. The results are consistent when using normalized variables for size and different robustness checks. Consequently, managerial and policy implications related to customer complaints are proposed. Indeed, commercial banks must protect relational capital with customers by strengthening dialogue among the compliance function, complaints office and commercial areas to proactively manage the risk of complaints and improve performance. Policy makers should enhance banking transparency and simultaneously promote greater financial education of clients, which can foster trust in banks and their stability.

Keywords: Customer complaints; Banking; Performance (search for similar items in EconPapers)
JEL-codes: G20 G21 G32 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10997-021-09616-3 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:jmgtgv:v:27:y:2023:i:1:d:10.1007_s10997-021-09616-3

Ordering information: This journal article can be ordered from
http://www.springer. ... 29/journal/10997/PS2

DOI: 10.1007/s10997-021-09616-3

Access Statistics for this article

Journal of Management & Governance is currently edited by Lino Cinquini

More articles in Journal of Management & Governance from Springer, Accademia Italiana di Economia Aziendale (AIDEA) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().