Factors affecting customer preference on financial services of Micro financial Institution of Bishoftu Town
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Date
2019-06
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Addis Ababa University
Abstract
Microfinance is the provision of financial services and the management of small amounts of money through a range of products and a system of intermediary functions that are targeted at low income clients. So far very few studies have been conducted in the area of customer satisfaction of microfinance services. This study therefore sought to identify the factors affecting customers’ preferences on choosing and using Financial Services of Micro Finance Institutions. Both qualitative and quantitative research methods were employed to achieve the objective of the study. In order to make the preference of the customers more representative; random sampling procedure was used for selection of respondents from the customers of the selected Microfinance Institutions found in Bishoftu Town by selecting their active customers from their files. The questionnaire survey was employed on a sample size of 393 customers. However, 384 questionnaires were returned with important information. Descriptive and inferential statistic such as frequency, percentage, and regression analysis were used to analyze data. The result of explanatory and regression analysis showed that five factors named as service quality, price of products and services, convenience, governments regulations and financial literacy explained 32% of variation in the preference of respondents. The Questionnaire was piloted so as to improve its validity. From the findings, customer preference (choice) on financial services of a microfinance institution affected by service quality, price of products and services, convenience and government regulations. Whereas, financial literacy flexibility and culture do not influence customer preference of a microfinance institution customers. As customers place more emphasis on these factors, the Micro Financial Institutions should considered seriously on service quality, price, convenience and polices and regulations in designing their marketing strategies by strengthening their customer relationship management and providing good customers services to customers.
Description
A Thesis submitted to Addis Ababa University Department of Management in Partial Fulfillment of the Requirements for the Degree of Masters of Arts in Business Administration.
Keywords
Bishoftu town, Customer preference, Ethiopia, Micro financial Institutions