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A RELATIONAL STUDY ON BANKS OVERALL SERVICE QUALITY,

OVERALL PRODUCT QUALITY, CORPORATE SOCIAL PERFORMANCE,


AND BANK REPUTATION IN CONTEXT OF PRIVATE COMMERCIAL
BANKS IN BANGLADESH

By

Ahmed Saifullah Siddique


ID: 0120086

An Internship Report Presented in Partial Fulfillment


of the Requirements for the Degree
Bachelor of Business Administration

INDEPENDENT UNIVERSITY, BANGLADESH


April 2006
A relational study on banks overall service quality, product quality, social performance, and bank reputation 2

A RELATIONAL STUDY ON BANKS OVERALL SERVICE QUALITY,


OVERALL PRODUCT QUALITY, CORPORATE SOCIAL PERFORMANCE,
AND BANK REPUTATION IN CONTEXT OF PRIVATE COMMERCIAL
BANKS IN BANGLADESH

Submitted by

Ahmed Saifullah Siddique


ID: 0120086

Submitted to

Mr. Shuvankar Shil


Internship Supervisor
School of Business

INDEPENDENT UNIVERSITY, BANGLADESH


April 2006

April 26, 2006


A relational study on banks overall service quality, product quality, social performance, and bank reputation 3

Mr. Shuvankar Shil


Internship Supervisor
School of Business
Independent University, Bangladesh.

Subject: Submission of Internship Report

Dear Sir,

I am submitting my Internship report and would like to take the opportunity to thank you for your
guidance and supervision in its completion. I completed my Internship Attachment at United
Commercial Bank Ltd. from the 15 of February 2004 to 3rd of May 2006. The title of my report
is “A Relational Study on Banks Overall Service Quality, Overall Product Quality, Corporate
Social Performance, and Bank Reputation in the context of private commercial banks of
Bangladesh”. The report has its due limitations and conducting the research was not without
difficulties. However, with your guidance, it was completed in the best possible manner.

Sincerely Yours,

Ahmed Saifullah Siddique


ID: 0120086

ACKNOWLEDGEMENT
A relational study on banks overall service quality, product quality, social performance, and bank reputation 4

In the preparation and finish this internship report, I acknowledge the encouragement and

assistance given by a number of people and institution. I am most grateful to the UCB’s management

to give me the opportunity to complete my internship in their organization.

I would like to express my gratitude to my Supervisor Mr. Shuvankar Shil for

providing me detailed feedback and advice on this report. He always gave me his suggestions

in making this study as flawless as possible.

I also want to render my special thanks to Mr. Mr. Sawkat Jamil (AVP) for providing all the

support in the organization. Furthermore, I want to convey my heartiest thanks to my classmates and

friends especially Mr. Russel Amin and Mr. Abdus Samad Khan who have helped me a lot with their

kind view, assistance, and encouragement. Without their help this report could not be fulfill.

Finally Special thanks go to the respondents, who spared their time generously,

and took the trouble of answering a detail questionnaire and helped me to complete my study.

Table of Contents

Page

Executive Summary I
A relational study on banks overall service quality, product quality, social performance, and bank reputation 5

1.0 Introduction 2

1.1 Statement of the Problem 3

1.2 Purpose of the Study 4

1.3 Research Timeline 4

1.4 Limitation of the Research 4

2.0 Review of Related Literature 5

2.1 Overall Service Quality 5

2.2 Overall Product Quality 6

2.3 Corporate Social Performance 7

2.4 Bank Reputation 8

2.5 Relationship between overall service quality and bank reputation 9

2.6 Relationship between overall product quality and bank reputation 10

2.7 Relationship between corporate social performance and bank reputation 10

3.0 Operational Definitions 11

4.0 Research Questions 12

5.0 Hypothesis 12

6.0 Development of Conceptual Framework 13

7.0 Methodology 13

7.1 Research Design 13

7.2 Research Approach 14

Page

7.3 Sampling Method 15

7.4 Data Collection Procedure 15

7.5 Survey Instrument 16


A relational study on banks overall service quality, product quality, social performance, and bank reputation 6

7.6 Pilot Test Questionnaire 17

7.7 Data Analysis Procedure 17

8.0 Results 18

8.1 Reliability coefficients and descriptive statistics 18

8.2 Correlation analysis 19

8.3 Linear Regression analysis 20

8.4 Step wise Regression analysis 21

9.0 Assessment of Research Hypothesizes 22

10.0 Significance of the study 24

11.0 Recommendation and conclusion 25

References 27

Appendix 1 32

Appendix 2 35

List of Tables

Page

1.0 Operational definition 11

2.0 Reliability coefficients and descriptive statistics 18


A relational study on banks overall service quality, product quality, social performance, and bank reputation 7

3.0 Correlation analysis 19

4.0 Linear regression (enter method) 20

5.0 Stepwise regression of bank reputation 20

List of Figures

1.0 Conceptual framework of research variables and their relationship 13

Executive summary

This research plans to investigate the affect of banks overall service quality, overall product

quality, and corporate social performance on bank reputation within the context of private

commercial banks of Bangladesh. It is a study designed to measure the correlational relationships


A relational study on banks overall service quality, product quality, social performance, and bank reputation 8

among banks overall service quality, overall product quality, corporate social performance and

bank reputation. Here, banks overall service quality, overall product quality, and corporate social

performance are considered as the independent variables and bank reputation is considered as

dependent variable. The survey yielded a total of 80 complete usable questionnaires will be given

to clients and employees of 10 private commercial banks of Bangladesh. The survey comprises

among the clients of UCB, Prime Bank Ltd, Premier Bank Ltd, BRAC Bank Ltd, Bank Asia,

NCC Bank Ltd, Islami Bank Bangladesh Ltd, The City Bank Ltd, One Bank Ltd, etc. SPSS

version 11 software will be employed in this study for data analysis. Correlation analysis and

stepwise regression were performed to assess the hypothesis. The correlation analysis revealed

concise support to prove almost all the hypothesis but the stepwise regression provided partial

support to the hypothesis. After successfully analyzed the gathered information, it could be stated

that all the measured independent variables (i.e., overall service quality, overall product quality,

and corporate social) statistically and significantly correlated with bank reputation.

1.0 Introduction

Bank is very old institution that is contributing towards the development of any economy as

well as plays a vital role of financial intermediary of a country. Bank is treated as an important

service industry in modern world. But due to globalization and free market economy, this

industry is facing severe competition in Bangladesh, and implementation of WTO will further
A relational study on banks overall service quality, product quality, social performance, and bank reputation 9

increase this competition. Banking sector in Bangladesh can be divided mainly into four

categories which are Nationalized Bank, Local Private Commercial Bank, Specialized financial

institution and Foreign Bank. At present there are 49 scheduled banks are operating in

Bangladesh. Of these 4 are nationalized, 5 are specialized, 30 are local private commercial banks

and 10 are foreign bank (Malek, 2005). However, despite many fundamental banking

reformations, still domestic banks are lagging behind on many fronts compared with foreign

commercial banks with wide range of capitalization, overseas network, modern management

expertise, experience, technological advancement, etc. That results for the domestic banks

relative weakness in service quality and product quality as delivered to domestic customers.

So there is inevitable competition among domestic, and foreign banks because managers and

staffs of foreign banks are aware of innovative products and services of high quality, and

competition for customers, who are becoming increasingly knowledgeable regarding banks

services and products. As a result domestic banks management are now very strictly focusing on

improved service quality and product if they are to build positive reputation and increase profits.

Because reputation plays an especially important strategic role in service markets since the pre

purchase evaluation of service quality is necessarily vague, and incomplete. As Julian and

Ramashen, 1994 said delivering quality services and products to customers is essential for

success and survival of today’s competitive banking environment. The provision of products and

services of high quality enhances reputation, improves customer retention, attracts new customer

through word of mouth, and increase financial performance, and profitability. So it is therefore

important for any retail bank in Bangladesh to understand the main drivers of Bank reputation as

well as to take effective measure to improve both service and product quality which will enhance

their reputations and thus attract a large share of profitable customers, and maintain a sustainable

competitive advantage in the long run (Yonggui Wang, Hing- P. Lo, 2003).
A relational study on banks overall service quality, product quality, social performance, and bank reputation 10

1.1 Statement of the Problem

The researcher intends to investigate the effect of overall service quality, overall product

quality and corporate social performance on bank reputation within the context of private

commercial banks of Bangladesh. Previous research (Yonggui Wang, Hing- P. Lo, 2003)

conducted on several banking industries in China reveals the importance of overall service

quality, and overall product quality in the development of bank reputation and investigated a

relationship among overall service quality ,overall product quality, and bank reputation.

Moreover Benjamin A. Neville, Simon J. Bell and Bulent Menguc study gives researchers strong

evidence to show a relationship between reputation and company’s social performance which was

unrevealed in Yonggui Wang, Hing- P. Lo, 2003 study. In the current study, therefore, the

researcher will utilize the study of Yonggui Wang, Hing- P. Lo, 2003 with an added variable

corporation’s social performance to investigate such relationship. In the context of commercial

banks of Bangladesh no such studies were carried on this topic previously. This patronizes the

current study to explore if there is any significant relationship exists among banks overall service

quality, overall product quality, corporate social performance and bank reputation.

The research problem then is stated as follows: This study will investigate the relationship

among banks overall service quality, overall product quality, corporate social performance and

bank reputation within the context of banking industry of Bangladesh.

1.2 Purpose of the Study

The purpose of this study is to present and test the model which will identify the relationship

among banks overall service quality, overall product quality, corporate social performance and

bank reputation within the context of banking industry of Bangladesh.

1.4 Research Timeline


A relational study on banks overall service quality, product quality, social performance, and bank reputation 11

2006 February 24 Research proposal writing

2006 March 15 Literature review writing

2006 March 25 Data collection (survey, etc)

2006 April 15 Data analysis and interpretation

2006 April 26 Draft copy submission

2006 April 30 Final submission of research paper

1.5 Limitation of research

There are numbers of limitations in this study. The respondent of the population will be

limited in terms of size and composition. Since, the researcher has conducted survey, there were

lot of chances that all the respondents will reluctant to fill up the questionnaire. First, data

collection is restricted within Dhaka city only, which may fail to represent the actual scenario of

the relationship between measured variables. The result could be different if people from outside

Dhaka city were brought under consideration. Second, the researcher is only considering the

clients of only one branch of each bank and thus, is not including the other clients.

2.0 Review of the related literature

2.1 Overall service quality

Quality of service is essential for customer satisfaction (Cronin and Taylor, 1992;

McAlexander et al., 1994), repeat purchases (Schneider and Bowen, 1995), and winning

customer loyalty (Zeithaml et al., 1990), and customer retention (Zeithaml et al., 1996). It also
A relational study on banks overall service quality, product quality, social performance, and bank reputation 12

affects companies’ market share, and thus profitability (Schneider and Bowen, 1995).Service

quality has been the subject of considerable interest by both practitioners and researchers in

recent years, spurred on by the original work by Parasuraman, Zeithaml and Berry, (1985). An

important reason for the interest in service quality by practitioners results from the belief that this

has a beneficial effect on bottom line performance for the firm. Definition of service quality

revolved around the idea that it is the result of comparison that customers make between their

expectations about a service and their perception of the way the service has been performed

(Lewis and Booms, 1983; Lehtinen & Lehtinen, 1982; Gonoroos, 1984; Parasuraman et al, 1985,

1988, 1991, 1994). Lehtinen and Lehtinen (1982) gave a three dimensional view of service

quality. They see it as consisting of what they term “interaction”, “physical” and “corporate”

quality. Traditionally, service quality has been defined as the difference between customer’s

expectation of service to be received and perception of service actually received. (Gonoroos,

1984; Parasuraman et al, 1988, 1991). Furthermore Dabholkher et al. (2000) suggested that it is

better to consider factors associated with service quality like reliability and responsiveness as

being antecedents of customer’s perceptions of service quality as dimension and components of

the construct. Yonggui Wang, Hing-P,Yer V,Hui;2003 measured service quality by customer

perception only through the SERVPERF model(Cronin and Tylor,1992). According to their study

they suggested tangibility, reliability, responsiveness, assurance and empathy of service as

antecedents of service quality. And their study proposed that tangibility, reliability,

responsiveness, assurance and empathy of service have a positive impact on customer perception

of service quality. Furthermore service quality is often conceptualized as the difference between

customer’s expectation of service to be received and perception of service actually received

(Gonoroos, 1984; Parasuraman et al, 1988, 1991) and this construct is used in this study to define

overall service quality.


A relational study on banks overall service quality, product quality, social performance, and bank reputation 13

2.2 Overall product quality

Researcher found several different conceptualizations of product quality. According to

Yonggui Wang, Hing-P Lo (2003) opinion, in marketing and economics literature quality has

been viewed in terms of products attribute. In contrasts, in the field of operations management,

quality has been defined as having multiple dimensions such as fitness of use (whether the

product does what it is supposed to do, and whether it possesses features that meet the needs of

customers) , reliability (to what extent the product is free from deficiencies) . In service point of

view Parasuraman et al (1988) defined product quality as an overall assessment. Garvin (1988)

defined product quality in very comprehensive manner. According to Garvin (1988) overall

product quality comprises the following eight attributes: performance, features, conformance,

reliability, durability, serviceability, aesthetics, and customer perceived quality. In brief:

performance means a products primary operating characteristics, Features refers to the additional

features (or the bells and whistles) of the product, conformance represents the extent to which a

products design and operating characteristics meet the established standards, reliability indicates

the probability that a product will operate properly over a specified period of time under stated

condition of use, durability means the amount of use the consumer gets from a product before it

physically deteriorates or until a replacement is preferable, serviceability refers to the speed,

competence and courtesy of repair, aesthetic refers to how a product appeals to the five senses,

customer perceived quality indicates the customers perception of a products quality, based on the

reputation of the corporation. The researcher will utilize the definition of Garvin (1988) for this

study.

2.3 Corporate social performance


A relational study on banks overall service quality, product quality, social performance, and bank reputation 14

The concept of corporate social performance evolved from the concept of corporate social

responsibility and corporate social responsiveness, which responded to questions regarding

organizations social responsibilities and how these should be enacted ( Benjamin A. Nevile,

Simon J. Bell and Bulent Mengic, 2006 ). According to Woods (1991) definition, corporate

social performance is a business organizations configuration of principles of social responsibility,

processes of social responsiveness, policies, programs and observable outcomes as they relate to

firms societal relationship. Whereas Zeller, Lapenu and Greeley, (2003) stated that the social

performance of an organization (whether a private-for-profit firm, cooperative or NGO)

comprises the relations of the organization with its clients and with other stakeholder groups.

Social performance is not equal to social impact, i.e. the change in welfare and quality of life (in

all of its dimensions) among clients and non-clients (and the wider local, national and global

community) due to the activities of an organization. The measurement of social performance

involves investigating the structure of an organization (i.e. mission, ownership, management

principles, relation to and care for its staff) and its conduct in the market and local and wider

community such as services, products, market behavior, other relations with clients and other

stakeholders, incl. community and social/political organizations (Zeller, Lapenu and Greeley,

2003). Furthermore based on Davis (1973) iron law of responsibility, the principle of corporate

social performance incorporates the principle of legitimacy, whereby the society has the right to

define an organization’s legitimate functions such as the principle of public responsibility, where

an organization must take responsibility of social problems that are related to their business

operation ( Preston and Post, 1975) and the principle of managerial discretion, which recognized

that business decision are made by moral human actors ( Carroll, 1979). For this study, the

definition of Wood (1991) will be used to define corporate social performance.


A relational study on banks overall service quality, product quality, social performance, and bank reputation 15

2.4 Bank reputation

Reputation plays an especially vital strategic role in service markets because, the pre- purchase

evaluation of service quality is necessarily vague and incomplete. It is apparent that bank

reputation also plays an important role in the determining of purchasing and repurchasing and

behaviors of customers (Yonggui Wang, Hing P;2003). According to ( Barich and Kotler, 1991;

Andressen and Lindestad,1998) customer loyalty is similarly enhanced especially in retail

banking industry where quality cannot be evaluated accurately before purchase. It is also widely

acknowledged that a positive reputation is a strategic factor that can be employed to earn above

average profit (Weigelt and Camerar, 1988). Nguyen and Leblenc (2000) defined reputation as an

effective means of predicting the outcome of the service production process and can perhaps be

considered the most reliable indicator of the ability of a service firm to satisfy a customers

desires. Economists have analyzed issues of reputation in relation to product quality and price

{shapiro, 1983). Researchers in marketing have considered reputation under the rubric of brand

equity or customer equity and have associated it with the credibility of the firm ( Aaker, 1996;

Rust et al, 2001). Gatewood et al, (1993) and Shapiro (1983) described reputation as a

combination of tough competitor, providing a good place to work and having quality products. A

good reputation among different stakeholders provides several benefits such as higher customer

retention ( Caminiti, 1992; Preece et al, 1995) thus increasing repurchases and higher product

prices (Shapiro 1983) which both lead to higher income as well as lower costs via reduced

personnel fluctuation ( Ceminity, 1992; Dowling, 1986; Edson and Master,2000; Preece et al,

1995; Nakra 2000). Finally reputation is a result of the past action of a firm, and can be viewed as

a mirror of the firm’s history of communicating to its target group information about the quality

of its product in comparison with those of competitors, thus reflecting what stakeholders think

and feel about the firm and indicating that the organization is highly esteemed, worthy and
A relational study on banks overall service quality, product quality, social performance, and bank reputation 16

meritorious (Weigelt and Camerer, 1988; Hall, 1993; Fombrun and Shanley, 1990). The

researcher will use the definition of Nguyen and Leblenc (2001) to define bank reputation for this

study.

2.5 Relationship between banks overall service quality and bank reputation

Reputation plays an important strategic role in service markets because the pre-purchase

evaluation of service quality is vague and unpredictable (Barney 1991; Hall 1993). So according

to Yonggui Wang (2003) statement, it is apparent that quality of service and product not only

benefits by lowering cost through reduced waste and decreased deficiencies in products and

services, but also by increasing competitiveness through the establishment of a good reputation.

Rao (1994) claimed that the reputation is a result of financial performance, production quality,

service quality, management effectiveness- or some combination of this various factor that appeal

in one way or another to a firm’s multiple constituencies. So it is widely agreed in all

manufacturing industries as well as all service industries that improvement in service quality will

certainly contribute to appositive reputation. Finally the following hypothesis was proposed by

Yonggui Wang and Hing P (2003) ‘banks overall service quality has a positive impact on bank

reputation.

2.6 Relationship between banks overall product quality and bank reputation

Product quality has been become a priority of mangers if they are willing to build a strong

reputation for their firm, Yonggui Wang and Hing P (2003). This is because customer value

products as well as services in the course of accumulating the judgment over time about quality-

which determines the effectiveness of the reputation building activities of a firm especially in

service industries ( Nguyen and Leblenc, 2001). So Julian and Ramaseshan (1994) stated that,
A relational study on banks overall service quality, product quality, social performance, and bank reputation 17

delivering quality product and service to customer is essential for success and survival in today’s

competitive banking environment. The provision of products and services of high quality

enhances reputation, improve customer retention, attract new customer through word of mouth,

and increases financial performance and profitability. Finally the following hypothesis was

proposed by Yonggui Wang and Hing P (2003) “banks overall product quality has a positive

impact on bank reputation”.

2.7 Relationship between corporate social performance and bank reputation

Reputation has recently received increased attention by scholars as an important theoretical

construct for the study of corporate social performance (business and society, Vol.41 No.4,

December 2002, special issue). This has resulted from the recognition that stake holder’s

resource allocation decisions are based on an overall evaluation of organizations behavior thus

corporate social performance. Zeller, Lapenu and Greeley, (2003) stated that the social

performance of an organization (whether a private-or-profit firm, cooperative or NGO) comprises

the relations of the organization with its clients and with other stakeholder groups. On the other

hand reputation is stakeholder’s assessment of the credibility of the organizations projection.

Reputation therefore comprises a holistic evaluation of organizations image, framed by stock

holder’s personal value regarding corporate social performance. More specifically, corporate

reputation comprises a global perception or net assessment of the organizations social behavior

based on stakeholder’s instrumental or normative expectation (Benjamin A. Neville, Simon

J.Bell, bulent Menguc, 2005). Moreover stakeholder evaluates organizations motivation,

processes, outcomes and reputation holistically and relative to their particular expectation about

social performance. So finally (Benjamin A. Neville, Simon J.Bell, bulent Menguc, 2005)

propose that “corporate reputation will be directly and significantly related to corporate social
A relational study on banks overall service quality, product quality, social performance, and bank reputation 18

performance”. They also added that the positive relationship between corporate social

performance and corporate reputation will strengthen as the fit between social initiatives and

corporate strategy increases.

3.0 Operational Definitions

Summaries of the operational definitions of the measured variables that are going to be used

are listed below in Table 1.

Measured Variable Operational Definitions

Banks overall service quality Will be operationally defined by (Gonoroos, 1984)

Banks overall product quality Will be operationally defined by Garvin (1988).

Corporate social performance Will be operationally defined by Wood (1991)

Bank reputation Will be operationally defined by Nguyen and Leblenc (2001)

Table 1: Operational Definitions of Measured Variables

4.0 Research Questions

This study proposed to investigate the following research questions:

1. Is there any significant relationship between overall service quality of bank and bank

reputation in the context of banking industry of Bangladesh?

2. Is there any significant relationship between overall product quality of bank and bank

reputation in the context of banking industry of Bangladesh?


A relational study on banks overall service quality, product quality, social performance, and bank reputation 19

3. Is there any significant relationship between corporate social performance and bank reputation

in the context of banking industry of Bangladesh?

5.0 Hypothesis

The hypotheses derived from the research questions are:

1. There is a significant relationship between overall service quality of a bank and bank

reputation in the context of banking industry of Bangladesh.

2. There is a significant relationship between overall product quality and bank reputation in the

context of banking industry of Bangladesh.

3. There is a significant relationship between corporate social performance and bank reputation in

the context of banking industry of Bangladesh.

6.0 Development of Conceptual Framework

The researchers have developed a conceptual frame work for this research based on the

research variables, such as banks overall service quality, banks overall product quality, corporate

social performance and bank reputation. According to Ticehurst and Veal (2000), a conceptual

framework indicates how the researcher views the concept involved in a study especially the

relationship between concepts.


A relational study on banks overall service quality, product quality, social performance, and bank reputation 20

Overall Service Quality

Overall Product Quality Bank


Reputation
Corporate Social
Performance

Figure1. Conceptual Framework of Research Variables and their Relationships

7.0 Methodology

7.1 Research Design

This study has been design to identify the research questions and to test its hypotheses by

conducting a co-relational research. The preceding conceptual framework (Figure 1) of the

proposed model depicts the pattern and structure of the co-relational relationships among the set

of measured variables. The conceptual framework illustrates the name of research variables and

relationship with them. The research question and hypotheses clearly support this model. In this

study the researcher are going to investigate the relationship between overall service quality,

overall product quality, corporate social performance and bank reputation within the context of

banking industry in Bangladesh. According to Cooper & Schindler (2003), the research that

study the relationship between two or more variables is referred to as a co-relational study. That

is why co relational research design has been adopted in order to detect the appropriate answers

of research question and to test the hypothesis.


A relational study on banks overall service quality, product quality, social performance, and bank reputation 21

The purpose of this study is to investigate the causal relationship among the measured

variables. Here banks overall service quality, overall product quality and corporate social

performance are considered as independent variable and bank reputation is considered as

dependent variable.. In this research, the researcher intended to identify whether any relationships

exists between these measured variables or not. So the researcher is attempting to find out, if any

changes in the independent variable have a changing effect on the dependant ones as well,

thereby proving that a relationship exists. A co relational study provides a measure of the degree

between two or more variables. Therefore, the present study was characterized as a co relational

study.

7.2 Research Approach

To analyze this research problem, the researchers will gather information from the clients who

maintain regular transaction in their deposit account and those who are taking regular service for

in land remittance and foreign exchange. Researcher uses structured questionnaire for this study.

The rationale behind using questionnaire to collect data is:

1) It takes competitively less time to fill up a questionnaire. Therefore, the customers will

not be reluctant in providing accurate data.

2) Personal interview is both time and cost consuming.

3) The data gathered through questionnaire is easy to put in quantitative analysis.

The entire participants were given a letter from the researchers explaining the context of the

research focus. All participation was voluntary. If the participants wanted to withdraw, they were

free to do so at any time without providing any reason. Therefore, questionnaire is the most

useful method to collect data for this study.


A relational study on banks overall service quality, product quality, social performance, and bank reputation 22

7.3 Sampling Method

The sample of this research is formed by the clients who had taken service from 10 renowned

private commercial banks in Dhaka city during the data collection period of this study. The

researcher used simple random sampling method to collect data from the population of this

research. Malhotra (2003) categorized simple random sampling as a probability sampling. The

sampling frame for this research was client’s database of each bank. From this data base the

researcher collected the name of clients and during the survey period who had undertaken

transaction, from them information were received. The list was considered as the appropriate

source to use for this study. It covers all clients of the bank who deposit and withdraw cash on a

regular basis. The sample size was 80 in this case. In the previous researchers which are

conducted on similar topic has used a sample size of 100 to 200 (Yonggui Wang, Hing- P. Lo,

2003). But due to time limitation researcher only use a sample size of 80.

7.4 Data Collection Procedure

The questionnaire, which is mentioned before to be used for data collection of this study will

be distributed among the clients through the researchers’ supervisor and other intern colleagues.

There are several reasons behind the selection of this method. First, it allows large amounts of

information to be obtained at a relatively low cost. Second, more accurate responses are obtained

because interviewer bias is avoided. Finally, the number of non-usable questionnaires is reduced

since the personal contacts tend to make respondents more cooperative in completing the

questionnaires.

7.5 Survey Instrument


A relational study on banks overall service quality, product quality, social performance, and bank reputation 23

The researchers will use questionnaire method in order to gather data from this study. The

sample size is 80 of this study. So it is not possible to make a personal interview with the large

number of sample as the time for this study is limited. On the other hand the samples can fill up

the questionnaire without any hesitation although they have chance to quite at any time.

Moreover, the researchers found that most of the previous research with large number of sample

size has done by questionnaire method.

A structured questionnaire will be used in this research to collect data from the respondents.

The questionnaire is divided into four sections. First section consists of Banks overall service

quality, second section consists of banks overall product quality, third section consists of banks

corporate social performance and last section consists of banks reputation.

A sample of the questionnaire has been attached in the appendix 1. The first 9 questions

have been set to measure the respondents’ opinions regarding banks overall service quality. This

scale was taken from Yonggui Wang, Hing-P, Lo and Yer (2003) and has a reliability of 0.89.

Questions (10 – 18) measures the banks overall product quality regarding product convenience

and product availability, these have been used by Yonggui Wang, Hing-P, Lo and Yer (2003) and

has a reliability of 0.80. The next 2 questions (19 – 20) are expected to measure bank reputation.

This has been taken from Yonggui Wang, Hing-P, Lo and Yer (2003) and has a reliability of

0.81. The last 4 questions measure corporate social performance. The scale was developed and

used by Quester and Lim (2003) with a reliability of 0.55. For all of these variables, the previous

researchers had used 7 point Likert scale starting from 1 for strongly disagree to 7 for strongly

agree. Therefore, the researcher of present study also used 7 point Likert scale to measure all

these variables.

7.6 Pilot Test Questionnaire


A relational study on banks overall service quality, product quality, social performance, and bank reputation 24

A pilot test is conducted to detect weakness in designing instruments and to provide proxy

data for selection of probability sampling (Cooper and Scahindler, 2003). According to Malhotra

(2003), pre-testing refers to the testing of the questionnaire on a small sample of respondents in

order to identify and eliminate potential problem. The researcher intend to conduct a pre-test to

evaluate the questionnaire for clarity, bias, ambiguous questions and find out whether it is

relevance to organizational setting of UCBL. Burns and Bush (1998) suggested that a pre test of

5-10 representative respondents is usually sufficient to identify problems with a questionnaire.

The researcher distributed 10 questionnaires among 10 clients of UCBL.

7.7 Data Analysis Procedure

Pearson’s Correlation analysis will be used to find out whether any relationship exists between

the independent and dependent variables. Correlation analysis is the statistical tool that can be

used to describe the degree to which one variable is linearly related to another (Levin & rubin,

1998). After collecting the data, correlation matrix for the variables will be prepared and the

researcher will use enter and stepwise regression to test the strength of associations between the

study variables. The Statistical Package for Social Science (SPSS) version 11 will be employed

to analyze the collected data from the survey.

8.0 Results of the study

Table 2

8.1 Reliability coefficients and descriptive statistics

Variables Number of Alpha Mean Std.Deviation


A relational study on banks overall service quality, product quality, social performance, and bank reputation 25

Items Values

Overall service quality 9 0.9261 5.2167 1.32438

Overall product quality 9 0.9315 4.5028 1.41432

Corporate so-performance 9 0.5509 6.1375 0.81024

Bank Reputation 2 0.8049 4.6500 1.56989

n= 80

Above table 1 depicts us the calculated value of alpha, mean and standard deviation of the studied

variables. The questions in the questionnaire to approach the variables were obtained from

various articles. The alpha values, means and standard deviations have been calculated by SPSS

11 through input of research data. The survey was done with a questionnaire having a 7 point

likert scale as the response format. The alpha values represent the reliability of each studied

vaiable. The value of alpha ranges from 0 to 1. The nearer the value of alpha to 1, the better the

reliability. If the value is low, either there are to few items or there is very little commonality

among the items (Churchill, 1979). At the early stages of research, Nunnally (1978) suggested

that the reliability of 0.50-0.60 is sufficient, although a coefficient of 0.7 or above is desirable

(Hair et al., 1998). The total alpha of the study is 0.9553. Table 1 lists alphas for all variables for

private commercial bank in Bangladesh. The means have been calculated by taking the average of

all the answers of the questions in each variable. The calculated mean for banks overall service

quality is 5.2167 with a standard deviation of 1.32438. This shows that on an average people

think fairly positively about overall service quality as the value is above 4 which is a point that

shows the indifference of people’s opinions. The mean for overall product quality is 4.5028 and

has a standard deviation of 1.41432. So it can be interpreted that respondents generally have

slightly positive perceptions about banks overall product quality. Corporate social performance

has a mean of 6.1375 and a standard deviation of 0.81024. This shows that people have a positive
A relational study on banks overall service quality, product quality, social performance, and bank reputation 26

perception on corporate social performance. The mean value for bank reputation is 4.6500 with a

standard deviation of 1.56989. This gives us the idea that the general people have on an above

average perception regarding bank reputation. The standard deviation says us how much

people’s opinion differs from the mean value for each other perception.

Table 3

8.2 Correlation analysis

Service quality Product quality Social performance Bank reputation

O.All service quality - 0.832** 0.500** 0.809**

O.All product quality - 0.335** 0.742**

Corporate So-Performance - 0.362**

Bank reputation -

**. Correlation is significant at the 0.01 level (2 tailed)

A correlation analysis was conducted on all variables to explore the relationship between 2

variables particularly relationships among the independent variables with dependent variable. The

bivariate correlation procedure was subject to a two tailed of statistical significance at two

different levels, highly significant (p<.01) and significant (p<.05).

In interpreting the strength of relationships between variables, the guidelines suggested by

Rwontree (1981) were followed. His classification of the correlation coefficient (r) is as followes:

0.0 to 0.2 Very weak, negligible

0.2 to 0.4 Weak, low

0.4 to 0.7 Moderate

0.7 to 0.9 Strong, High, Marked

0.9 to 1.0 Very strong, very high.


A relational study on banks overall service quality, product quality, social performance, and bank reputation 27

The results of correlation analysis for all the variables are shown in Table 3. It examines the

correlations among banks overall service quality, overall product quality, corporate social

performance, and bank reputation in the context of private commercial banks in Bangladesh. The

variable, overall service quality significantly and strongly positively correlated with the

dependent variable bank reputation (r = .809, p< .01). Overall product quality is found fairly and

positively correlated with bank reputation (r = .742, p< .01). The variable, corporate social

performance is weakly and positively correlated with bank reputation (r = 0.362, p<.01).

Banks overall service quality is also significantly and positively correlated with banks overall

product quality (r = 0.832, p< .01). But overall service quality is very moderately correlated with

corporate social performance (r=0.500, p<.01), and overall product quality is very weakly

correlated with corporate social performance (r=0.335, p<.01).

Table 4

8.3Linear regression (enter method)

Variables R R2 Adjusted Std. error of the

R2 estimate

Overall service quality 0.820 0.673 0.660 0.91524

Overall product quality

Corporate So-performance

In table 4 linear regression show us how much independent variable is influencing dependent

variable. From the R2 it is very apparent that overall service quality, overall product quality, and

corporate social performance has 67.3% influence on bank reputation. In the above table 4 R
A relational study on banks overall service quality, product quality, social performance, and bank reputation 28

square (R2) or adjusted R square ( R2 adj ) show how well the linear combination of IVs in the

regression analysis predicts the percentage of total variance of DVs, whereas the a change in R2

is the difference between an R2 for one set of predictors and an R2 for a subset of these predictors.

Table 5

8.4 Stepwise regression of bank reputation

Dependent variable bank reputation

Independent

Variables B SE B β R2

Overall service

Quality 0.960 0.079 0.809** 0.655

Further, stepwise regression has been shown in order to find out which one of the three

components influence the clients to consider as a key antecedent of bank reputation. Table 5

shows the result of the analysis. At this stage, the over all service quality (p < .01) is found to be

significantly related with bank reputation, while the rest two (Overall product quality, and

Corporate social performance) fail to be considered. It implies that the banks clients still consider

service quality as a main driver of bank reputation. Overall product quality and corporate social

performance, these two variables has been excluded from the regression equation because they

don’t have significant association and hence it would not fit into it. From the R2 it is apparent

that, overall service quality explains 65.5% of the variance of the bank reputation. Regression

coefficient (B) reflects the relative impact of IVs on DV. Hair et al. (1998) cautioned that beta

coefficients should be used only as a guide to the relative importance of the independent variables
A relational study on banks overall service quality, product quality, social performance, and bank reputation 29

included in the equation, and only over the range of values for which simple data actually exist.

The beta (β) value indicates the effect of IVs on DV to the effect on DV of other IVs at each

stage, because this value reduces regression coefficient to a comparable unit, the number of

standard deviations ( Tabachnick & FIdell, 2001).

Standard Error of the Beta (SEB) coefficient is the standard error of the estimate of beta (B).

In case of SEB, a small standard error implies a more reliable prediction.

9.0 Assessment of research hypothesizes

Hypothesis 1

There is a significant relationship banks overall service quality and bank reputation in the

context of banking industry of Bangladesh.

The result of correlation analysis depicts that banks overall service quality is positively and

significantly correlated with bank reputation (r = 0.809, p< .01). It is obvious that a positive

correlation exist between service quality and reputation because if people get best service from

the bank he will recommend that bank to others thus reputation enhances. Thus, the result of

correlation analysis provided support for hypothesis 1.

Moreover, the result of stepwise regression also depicts that in overall service quality of a

bank (p<.01), is found to be statistically significantly related with bank reputation. Significantly

and positively related predictor variable, service quality explained 65.5% of the bank reputation.

Hence, the result of stepwise regression support for hypothesis 1.

Hypothesis 2
A relational study on banks overall service quality, product quality, social performance, and bank reputation 30

There is a significant relationship between overall product quality and bank reputation in the

context of banking industry of Bangladesh.

The result of correlation analysis depicts that banks overall product quality is positively and

strongly correlated with bank reputation (r = 0.742, p< .01). Thus, the result of correlation

analysis provided support for hypothesis 2.

However, the result of stepwise regression describe that overall product quality of a bank

within the context of Bangladesh failed to enter into the regression equation which indicates that

it is not significantly associated with bank reputation. Therefore, the result of stepwise

regression analysis provided no support for hypothesis 2. As far as theory and previous empirical

studies are concern; it should support the hypothesis but may be the inattentive and whimsical

responses of the respondents created the unsupportive nature of the result of regression analysis.

Hypothesis 3

There is a significant relationship between corporate social performance and bank reputation

in the context of banking industry of Bangladesh.

The result of correlation analysis depicts that corporate social performance is positively and

weakly correlated with bank reputation (r = 0.362, p<.01). Because social performance indicates

social responsibility and firms contribution to social welfare that makes a good perception among

clients. Thus, the result of correlation analysis provided support for hypothesis 3.

However, the result of stepwise regression describe that corporate social performance of a

bank within the context of Bangladesh failed to enter into the regression equation which indicates

that it is not significantly associated with bank reputation. Therefore, the result of stepwise

regression analysis provided no support for hypothesis 3. As far as theory and previous empirical

studies are concern; it should support the hypothesis but may be the inattentive and whimsical

responses of the respondents created the unsupportive nature of the result of regression analysis.
A relational study on banks overall service quality, product quality, social performance, and bank reputation 31

10.0 Significance of the Study

Business organization’s success is recognized as the dominant factor of the loyalty of the

customer/client towards the brand or organization. It is commonly known that customer

satisfaction is related to customer loyalty, which in turn related to profitability ( Hesket et al,

1994; Storbacka et al, 1994). On the other good reputation derives from the factor of clients

overall satisfaction, and these two variables can achieve profitability. The study will make the

following significant contribution in the context of banking industry in Bangladesh.

First, this study will help the researchers to extend their understanding of the correlation

relationship between banks overall service quality, overall product quality corporate social

performance, and bank reputation. The results of this study will expose the importance and

impact of their relationship in the banking sector in Bangladesh.

Second, the present study will help the banks manager to better understand of how to hold

loyal clients by satisfying their overall needs, and hold the clients trust upon the bank which thus

results good profit, and enhances reputation as well.

Third, no such study was conducted to address this concern in the context of commercial bank

in Bangladesh. The study result will produce a methodology which can be imitated by other study

also.

Finally, as the researcher are only considering bank, there is always scope for further study in

other service organizations in Bangladesh like hospitals, hotels telecommunication companies,

airlines, etc.

11.0 Recommendation and Conclusion


A relational study on banks overall service quality, product quality, social performance, and bank reputation 32

After analyzing the study variables in the context of the banking industry of Bangladesh, the

following issues were found to be recommended.

From the result of the correlation analysis it was found that three studied independent

variables are strongly and positively correlated with dependent variable. But from the result of

stepwise regression, it was revealed that only overall service quality is significantly related to

bank reputation thus it seems very important drivers for bank reputation for our clients. So overall

service quality should be taken especial care for the benefit of the bank. Although different kind

of banking card or product, and scheme has been introduced in our country by foreign bank, still

majority people are not aware about that. Because banking products are completely different from

other product and their functions are also vague and complex in people mind. So management of

banks should take effective measure so that they can bring their product to peoples mind and

make them understand about their products attributes. Beside that management should ensure that

all of their branches are operating in similar fashion and providing similar product choices (such

as savings, cards, and personal loans) so that clients of any location have similar perception about

bank. Furthermore, managers should improve quality of their product overtime with the changing

environment. The survey result of this study indicates that the main reason for customer to

planning to switch to a new bank is that new bank provides a greater variety of bank products.

Therefore, if managers were to become convinced that product quality plays an important role in

the process of positive reputation building, they could identify the key antecedents and take

measure to improve it. On the other hand every corporation should contribute in nonprofit

oriented social welfare activities which build a positive image on peoples mind and thus the

reputation of bank increases. Corporate social performance represents their belief, values,

behavior, culture, etc and can be also considered as promotional activity. Finally it is therefore

very important for any retail bank in Bangladesh to take effective measures to improve service
A relational study on banks overall service quality, product quality, social performance, and bank reputation 33

quality, product quality, and corporate social performance if they are to build and enhance their

reputation and thus attract a large share of profitable customers and maintain a sustainable

competitive advantage in the long run.

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Appendix

Research Questionnaires

Appendix - 1

Questionnaire for Banks clients

Please circle the number which closely matches your opinion:

This questionnaire has been designed to conduct a research to fulfill the course requirement of

BBA 499: Internship, under the School of Business, Independent University Bangladesh (IUB).
A relational study on banks overall service quality, product quality, social performance, and bank reputation 39

Your cooperation and active participation will enable me to conduct the research work

successfully. Please be assured that the information you provide will be strictly confidential and

will be used only for academic purposes.

The following questions are related to your opinion regarding the overall service quality of

……….. Bank

1 2 3 4 5 6 7

Strongly Somewhat Disagree Uncertain Agree Somewhat Strongly

Disagree Disagree Agree Agree

1. The complementary equipment for automatic transactions, 1 2 3 4 5 6 7


inquiries and product bulletin are adequate.
2. When customers have a problem, the service provider 1 2 3 4 5 6 7
shows a sincere interest in solving it.
3. The service provider delivers its services at the times 1 2 3 4 5 6 7
it promises to do so.
4. The employees give me a prompt service. 1 2 3 4 5 6 7
5. The employees are always willing to help me. 1 2 3 4 5 6 7
6.Customers feel safe in transactions with the service provider. 1 2 3 4 5 6 7
7. The employees are consistently courteous with customers. 1 2 3 4 5 6 7
8. The service provider has operating hours and locations 1 2 3 4 5 6 7
convenient to all its customers.
9. Service of a very high quality. 1 2 3 4 5 6 7
A relational study on banks overall service quality, product quality, social performance, and bank 2
reputation

The following questions are related to your views on the overall product quality of

……. Bank.

1 2 3 4 5 6 7

Strongly Somewhat Disagree Uncertain Agree Somewhat Strongly

Disagree Disagree Agree Agree

10. It is convenient and easy to get or use the bank’s product mix 1 2 3 4 5
6 7 in terms of difference kinds of savings.
11. It is convenient and easy to get or use the bank’s product mix 1 2 3 4 5
6 7 in terms of all kinds of banking
cards.
12. It is convenient and easy to get or use the personal finance product 1 2 3 4 5
6 7 mix including private loans.
13. Product variety and features for different kinds of savings are adequate. 1 2 3 4 5
6 7
14. Product variety and features for different kinds of banking cards 1 2 3 4 5
6 7 product are adequate.
15. Product variety and features for personal finance products including 1 2 3 4 5
6 7 private loans are adequate.
16. Product quality is adequate in terms of variety and features. 1 2 3 4
5 6 7
17. Product quality is adequate in terms of product inconvenience. 1 2 3 4
5 6 7
18. Overall product quality is adequate based on experiences. 1 2 3 4
5 6 7
A relational study on banks overall service quality, product quality, social performance, and bank 3
reputation

The following questions are related to your opinion regarding corporate social

performance of ……………. Bank. (For employee use only)

1 2 3 4 5 6 7

Strongly Somewhat Disagree Uncertain Agree Somewhat Strongly

Disagree Disagree Agree Agree

19. Bank conducted Socio-economic studies to as the situation. 1 2 3 4


5 6 7 of their clients
20. Bank ever changed its products and services due to
negative impact of social cohesion or welfare of its clients. 1 2 3 4
5 6 7
21. Bank provides some kind of insurance that frees the
family from the burden of death in case of the death of borrower. 1 2 3 4
5 6 7
22. Bank proposes specific measures (such as rescheduling of the loan)
in case of natural disaster. 1 2 3 4
5 6 7
23. Banks actions are compatible with the local culture and values. 1 2 3 4
5 6 7

The following questions are related to your perception about ………. Bank
reputation
25Bank’s reputation is adequate based on the overall experiences. 1 2 3 4
5 6 7
A relational study on banks overall service quality, product quality, social performance, and bank 4
reputation

26 Bank’s reputation after comparing with that of other competitors 1 2 3 4


5 6 7
is adequate.

Please tick (√) the appropriate answers


Gender: Male Female

Age Group: 15 – 20 20 – 25 25 – 30 30 - 35 35 - 40

40 - 45 above 45

Please provide the following information (optional)

Name: _______________________________________

Appendix – 2

Reliability of Service Quality

****** Method 1 (space saver) will be used for this analysis ******
_

R E L I A B I L I T Y A N A L Y S I S - S C A L E (A L P H A)

Reliability Coefficients

N of Cases = 80.0 N of Items = 9

Alpha = .9261

Reliability of Product Quality

****** Method 1 (space saver) will be used for this analysis ******
_

R E L I A B I L I T Y A N A L Y S I S - S C A L E (A L P H A)
A relational study on banks overall service quality, product quality, social performance, and bank 5
reputation

Reliability Coefficients

N of Cases = 80.0 N of Items = 9

Alpha = .9315

Reliability of Corporate Social performance

****** Method 1 (space saver) will be used for this analysis ******
_

R E L I A B I L I T Y A N A L Y S I S - S C A L E (A L P H A)

Reliability Coefficients

N of Cases = 80.0 N of Items = 9

Alpha = .5509

Reliability of Bank Reputation

****** Method 1 (space saver) will be used for this analysis ******
_

R E L I A B I L I T Y A N A L Y S I S - S C A L E (A L P H A)

Reliability Coefficients

N of Cases = 80.0 N of Items = 2

Alpha = .8049

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation


SERVICE 80 2.33 7.00 5.2167 1.32438
PRODUCT 80 1.56 6.89 4.5028 1.41432
SO_PERF 80 3.50 7.00 6.1375 .81024
REPU 80 1.00 7.00 4.6500 1.56989
Valid N (listwise) 80
A relational study on banks overall service quality, product quality, social performance, and bank 6
reputation

Correlations

SERVICE PRODUCT SO_PERF REPU


SERVICE Pearson Correlation 1 .832** .500** .809**
Sig. (2-tailed) . .000 .000 .000
N 80 80 80 80
PRODUCT Pearson Correlation .832** 1 .335** .742**
Sig. (2-tailed) .000 . .002 .000
N 80 80 80 80
SO_PERF Pearson Correlation .500** .335** 1 .362**
Sig. (2-tailed) .000 .002 . .001
N 80 80 80 80
REPU Pearson Correlation .809** .742** .362** 1
Sig. (2-tailed) .000 .000 .001 .
N 80 80 80 80
**. Correlation is significant at the 0.01 level (2-tailed).

Variables Entered/Removedb

Variables Variables
Model Entered Removed Method
1 SO_PERF,
PRODUC
. Enter
T, a
SERVICE
a. All requested variables entered.
b. Dependent Variable: REPU

Linear Regression

Model Summary

Adjusted Std. Error of


Model R R Square R Square the Estimate
1 .819a .671 .658 .91790
a. Predictors: (Constant), SO_PERF, PRODUCT,
SERVICE
A relational study on banks overall service quality, product quality, social performance, and bank 7
reputation

ANOVAb

Sum of
Model Squares df Mean Square F Sig.
1 Regression 130.667 3 43.556 51.696 .000a
Residual 64.033 76 .843
Total 194.700 79
a. Predictors: (Constant), SO_PERF, PRODUCT, SERVICE
b. Dependent Variable: REPU

Coefficientsa

Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) -2.13E-02 .795 -.027 .979
SERVICE .771 .155 .650 4.965 .000
PRODUCT .235 .134 .212 1.761 .082
SO_PERF -6.67E-02 .149 -.034 -.447 .656
a. Dependent Variable: REPU

Variables Entered/Removeda

Variables Variables
Model Entered Removed Method
1 Stepwise
(Criteria:
Probabilit
y-of-F-to-e
nter <=
SERVICE .
.050,
Probabilit
y-of-F-to-r
emove >=
.100).
a. Dependent Variable: REPU

Stepwise Regression
A relational study on banks overall service quality, product quality, social performance, and bank 8
reputation

Model Summary

Change Statistics
Adjusted Std. Error of R Square
Model R R Square R Square the Estimate Change F Change df1
1 .809a .655 .651 .92769 .655 148.236 1
a. Predictors: (Constant), SERVICE

ANOVAb

Sum of
Model Squares df Mean Square F Sig.
1 Regression 127.573 1 127.573 148.236 .000a
Residual 67.127 78 .861
Total 194.700 79
a. Predictors: (Constant), SERVICE
b. Dependent Variable: REPU

Coefficientsa

Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) -.355 .424 -.838 .404
SERVICE .960 .079 .809 12.175 .000
a. Dependent Variable: REPU

Excluded Variablesb

Collinearity
Partial Statistics
Model Beta In t Sig. Correlation Tolerance
1 PRODUCT .221a 1.874 .065 .209 .308
SO_PERF -.057a -.746 .458 -.085 .750
a. Predictors in the Model: (Constant), SERVICE
b. Dependent Variable: REPU
A relational study on banks overall service quality, product quality, social performance, and bank 9
reputation