Entity crisis, halo effect and loyalty

Abstract

Taking as reference the period of deep financial and economic crisis suffered at global level, with special incidence in the Spanish financial industry, this paper examines the effect of entity crisis on consumer loyalty, studying the halo effect on trust, brand image and social norms. A causal model is proposed and contrasted with a sample of 500 bank customers and structural equation models were used to verify the hypothesized relationships. The contribution of this research is related to the analysis of the model proposed from a theoretical and empirical perspective. The general model establishes the consumption habits of customers during an entity crisis. It can be seen that the most important antecedent of loyalty are social norms, followed by trust and then brand image. However, the intensity of the crisis in each entity changes the results. The findings suggest that loyalty is an anti-cyclic strategy for firms. Investing in building customer loyalty in boom years generates positive credit towards the firm from customers who are unwilling to abandon it even when it is in crisis. The halo effect is fulfilled in the sense that customers’ general opinion of the entity and the more emotional variable determines and moderates negative news from the environment which attempts to influence consumers’ beliefs.