Modelling the Mediation Effect of Service Recovery on the relationship between Customer complaints and Customer loyalty in Retail banking Industry

Abstract

In the last three decades, ample empirical studies have reported the significant association between customer satisfaction, customer complaints and customer loyalty in retail banking. However, the findings of such studies are far from conclusive. Initially, interviews and extensive literature review were undertaken to understand the linkages among the constructs. Anecdotal and empirical evidence indicate direct associations between the independent, mediating and the dependent variables. But, the intervening effect of service recovery is neglected by past studies. Thus, this conceptual paper proposes the mediation effect of service recovery on the relationship between customer complaints and customer loyalty in retail bankin. The insights provided by this paper can assist bank managers in addressing the issues of customer switching and loyalty erosion that embattle the banking industry.