Effect of Service Quality on Customer Loyalty: the Mediation of Customer Satisfaction, and Corporate Reputation in Banking Industry

Abstract

This study devotes to investigate the reciprocal relationship between service quality, reputation, satisfaction, and loyalty in the banking sector. Data served the research objectives are collected by a comprehensive survey on 400 customers of the Bank for Investment and Development of Vietnam, Binh Thuan province, Vietnam. The data are then analyzed using the Partial Least Squares-Structural Equation Model (PLS-SEM) approach to examine the above-mentioned complex relationship. The findings confirmed an indirect relationship between service quality and customer loyalty. Particularly, satisfaction, and bank reputation are mediating factors in the relationship between service quality and customer loyalty. Components of service quality include the responsiveness; the tangibles; the assurance; the reliability, and the empathy. The study contributes to enriching the theoretical framework of customer relationship management in the banking sector by its empirical insights. Further studies can invest in other cases of commercial banks in Vietnam, especially in investigating more factors that also play important roles in customer loyalty.