A Study on the Determinants of Customer Retention in Small Scale Private Commercial Banks in Addis Ababa

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Addis Ababa University


Today, banking is regarded as a consumer-oriented services industry and banks have started realizing that their business increasingly depends on the quality of the consumer service provided and overall satisfaction of the customer. This study examined determinants of customer retention in Small scale commercial banks in Addis Ababa. Six specific objectives were developed related to independent variables: quality of the products provided by banks, information technology, and corporate image, pricing of bank products as well as services and customer satisfaction. The variables’ relationships were established through explanatory studies under positivism paradigm. The study adopted convenience sampling technique to select a sample of 350 banks’ customers. Primary data were collected using questionnaires and 309 bank customers responded timely. The data is analyzed with the help of the multiple regression analysis. The significance of all hypotheses was tested by comparing their standardized beta and p-value. Out of seven variables tested it is found that tangibility, responsiveness, Information technology and customer satisfaction has significant effect on customer retention. As the finding shows that majority of customers are comfortable with the banks to remain the future customer and customer satisfaction has significant effect on customer retention. Therefore, the researcher recommend banks should have to work hard to satisfy their customers to sustain their strength and try to improve it to delight customers.



Determinants of Customer Retention