Bank Loyalty Research Articles

Assessing Banks’ Service Quality and Customer Satisfaction: An Analytical Framework

The paper aims to develop and validate an analytical framework to assess the service quality and customer satisfaction and hence customer loyalty in banks. We develop a multivariate probit model for the evaluation of service quality and customer satisfaction and an ordered logit model for the rating of customer service of the most frequently used bank. To validate the models, we conduct a survey of 1107 customers from the branches of eight banks in three major cities of the peninsular Malaysia in 2013. The validation was carried out in two stages. First, we analyze the customers’ satisfaction on the core and relational dimension of service quality using multivariate probit model. In the second stage, we analyze the customers’ overall service rating on their most frequently used bank using ordered logit model. The proposed framework can be used by banks to assess service quality and customer satisfaction and identify customers who are likely to switch. This would prove extremely beneficial to banks in the formulation of segment specific customer retention strategies. The framework would also assist regulators to gauge the level of customer confidence in the individual banking institution and intervene as and when necessary to maintain stability in the banking system.

Effect of Work-Family Conflict on Job Commitment in Commercial Banks in Nigeria

Effect of Work-Family Conflict on Job Commitment in Commercial Banks in Nigeria

Enhancing Bank Loyalty through Sustainable Banking Practices: The Mediating Effect of Corporate Image

As the demand for a more sustainable society increases, adopting a sustainable banking approach serves as a competitive advantage for banks that are focused on attaining bank loyalty. This study revolves around understanding the role of sustainable banking practices in bank loyalty while exploring the mediating effect of corporate image on the relationship between sustainable banking practices and bank loyalty. For this study, 511 questionnaires derived from customers of the banking sector were adopted. Results from structural equation modeling showed that sustainable banking practices positively and directly affected bank loyalty and corporate image, corporate image directly and positively affected bank loyalty, and corporate image also mediated the relationship between sustainable banking practices and bank loyalty.

Juridical Review of the Implementation of Corporate Social Responsibility (CSR) as a Banking Commitment to Realizing Sustainable Banking (Case Study at PT Bank BJB, Tbk)


 
 
 Applicability of the Financial Services Authority Regulation (POJK) No. 51 of 2017 on Sustainable Finance will gradually require banks to apply the principles of sustainable finance. One of the banking commitments to realize sustainable banking is carried out through the implementation of social and environmental responsibility (CSR) that integrates economic, social, environmental and governance aspects. The legal issue in implementing CSR is the change like regulation, which is all voluntary rules to become obligatory rules. Also, banking CSR practices require adjustments to accommodate sustainable financial principles to realize sustainable banking. The approach method used in this study is a normative juridical approach with descriptive, analytical research specifications, using secondary data in the form of primary, secondary and tertiary legal materials analyzed qualitatively juridically. The results of the study indicate that the regulations governing CSR as a commitment of banks to realize sustainable banking still require more detailed arrangements, specifically the determination of the amount and source of CSR funds and sanctions for violations of CSR. Also, banks have not been optimal in using CSR as a means to accelerate the realization of sustainable banking. The effort that must be made by banks is to include CSR as part of the company's value and change the view that CSR is a good practice of banking that will generate long-term benefits for all stakeholders. 
 
 

Examining customer engagement and brand loyalty in retail banking

PurposeIn recent times, there has been a growing research interest in customer engagement; however, there is a paucity of empirical evidence on the drivers and outcomes of customer engagement such as brand loyalty. Furthermore, the customer engagement and brand loyalty literature have paid little attention to trustworthiness, even though it has the potential of explaining customer engagement, brand loyalty and their relationships. Consequently, the purpose of this paper is to ascertain the drivers of customer engagement and its relationship with brand loyalty in the context of retail banking in Ghana.Design/methodology/approachThe authors employed the survey research design. The authors collected data from retail banking customers in Ghana using the intercept approach. There were 385 respondents. The authors analysed the data using the structural equation modelling approach.FindingsThe results show that trustworthiness drives customer engagement which results in brand loyalty. The findings reveal that trustworthiness is defined through integrity, benevolence and ability while customer engagement is defined via emotional engagement, cognitive engagement and behavioural engagement.Originality/valueThis study examines the impact of trustworthiness on customer engagement and brand loyalty. It shows the mediating role of customer engagement in the relationship between trustworthiness and brand loyalty.

The Influence of Accessibility, Personal Sales and Interest in the Decision of Use of Micro Business Credits (KUM) and Customer Loyalty (Study on Customer of BANK MANDIRI Sepanjang Kota Sidoarjo)

This study aims to determine the effect of accessibility, personal selling, interest rates on micro business credit usage decisions and customer loyalty in independent banks throughout the city of Sidoarjo.Methodology: This type of research is quantitative. The research data are primary data obtained from samples with the number of 100 respondents who are customers of Bank Mandiri throughout the city of Sidoarjo. The sampling technique is done using a questionnaire. The data analysis used is Partial Least Square (PLS). Data is processed using SmartPLS.The results of the study show that accessibility, personal sales, and interest rates are significantly influenced by purchasing decisions and customer loyalty. Given accessibility, personal sales and interest rates that have a significant positive influence and a major contribution to Bank Mandiri's buying and loyalty decisions throughout the city of Sidoarjo. Directions must pay attention to accessibility, personal sales, and interest rates

Factors Motivating Employee Loyalty and Employee Retention in Deposit Money Banks in Nigeria

For some time, the banking sector in Nigeria has been witnessing incessant labour turnover. The study focused on the factors motivating employee loyalty and employee retention in the deposit money banks. This study used descriptive survey research design. Four banks namely First Bank of Nigeria, United Bank for Africa, Guaranty Trust Bank and First City Monument Bank were randomly selected for the study. The sample size for the study consists of 190 employees out of the total population of 360 employees. A set of self constructed questionnaire was used for data collection. 118 copies of the questionnaire that were correctly completed out of the 190 copies which were administered were used for the study. Percentages, frequency and mean ranking were used to analyze the data collected. The result showed that training and development (3.95) and promotion (3.86) were the main motivating factors for employee loyalty while training and development (4.01) and job security (3.90) were the best ranked employee retention factors. The implication of the result is that, apart from training and development, the better motivating factors for employee loyalty and employee retention are not the same. The result of the hypothesis showed a strong positive relationship between employee retention and loyalty factors in deposit money banks(r = 0.83). It is recommended that management should provide quality training and development programmes as important motivating factors for both employee loyalty and employee retention. The inclusion of other major motivating factors in the organizations’ HRM policy will be an added advantage.

Mainstreaming as rhetoric or reality? Gender and global health at the World Bank.

Background: Over the past decade gender mainstreaming has gained visibility at global health organisations. The World Bank, one of the largest funders of global health activities, released two World Development Reports showcasing its gender policies, and recently announced a $1 billion initiative for women's entrepreneurship. We summarise the development of the Bank's gender policies and analyse its financing of gender projects in the health sector. This article is intended to provide background for future research on the Bank's gender and global health portfolio. Methods: First, we constructed a timeline of the Bank's gender policy development, through a review of published articles, grey literature, and Bank documents and reports. Second, we performed a health-focused analysis of publicly available Bank gender project databases, to track its financing of health sector projects with a gender 'theme' from 1985-2017. Results: The Bank's gender policy developed through four major phases from 1972-2017: 'women in development' (WID), institutionalisation of WID, gender mainstreaming, and gender equality through 'smart economics'. In the more inclusive Bank project database, projects with a gender theme comprised between 1.3% (1985-1989) and 6.2% (2010-2016) of all Bank commitments. Most funding targeted middle-income countries and particular health themes, including communicable diseases and health systems. Major gender-related trust funds were absent from both databases. The Bank reports that 98% of its lending is 'gender informed', which indicates that the gender theme used in its publicly available project databases is poorly aligned with its criteria for gender informed projects. Conclusion: The Bank focused most of its health sector gender projects on women's and girls' issues. It is increasingly embracing private sector financing of its gender activities, which may impact its poverty alleviation agenda. Measuring the success of gender mainstreaming in global health will require the Bank to release more information about its gender indicators and projects.

Does Building Trust Enhance the Effect of E-Leadership on the Organizational Commitment? Empirical Evidence from Islamic Banks in Palestine

This study aims to investigate the enhancing role of building trust in the effect of e-leadership on an organizational commitment to the virtual teams in Islamic banks in Palestine. Furthermore, the article has found that: (1) E-leadership is significantly related to building trust and organizational commitment of the virtual teams in Islamic Banks in Palestine. (2) The three dimensions of e-leadership (engage, execute, and elastic) significantly predicted organizational commitment (3) building trust is significantly enhancing the effect of E-leadership on the organizational commitment in Islamic Banks in Palestine. Based on the results, the scholars recommend that banks should develop the banking procedures to be more elastic and more suitable for banking services to facilitate bank transactions.

Mainstreaming as rhetoric or reality? Gender and global health at the World Bank

Background: Over the past decade gender mainstreaming has gained visibility at global health organisations. The World Bank, one of the largest funders of global health activities, released two World Development Reports showcasing its gender policies, and recently announced a $1 billion initiative for women’s entrepreneurship. We summarise the development of the Bank’s gender policies and analyse its financing of gender projects in the health sector. This article is intended to provide background for future research on the Bank’s gender and global health portfolio. Methods: First, we constructed a timeline of the Bank’s gender policy development, through a review of published articles, grey literature, and Bank documents and reports. Second, we performed a health-focused analysis of publicly available Bank gender project databases, to track its financing of health sector projects with a gender ‘theme’ from 1985-2017. Results: The Bank’s gender policy developed through four major phases from 1972-2017: ‘women in development’ (WID), institutionalisation of WID, gender mainstreaming, and gender equality through ‘smart economics’. In the more inclusive Bank project database, projects with a gender theme comprised between 1.3% (1985-1989) and 6.2% (2010-2016) of all Bank commitments. Most funding targeted middle-income countries and particular health themes, including communicable diseases and health systems. Major gender-related trust funds were absent from both databases. The Bank reports that 98% of its lending is ‘gender informed’, which indicates that the gender theme used in its publicly available project databases is poorly aligned with its criteria for gender informed projects. Conclusion: The Bank focused most of its health sector gender projects on women’s and girls’ issues. It is increasingly embracing private sector financing of its gender activities, which may impact its poverty alleviation agenda. Measuring the success of gender mainstreaming in global health will require the Bank to release more information about its gender indicators and projects.

Factors behind loyalty in banking - a study based on state-owned commercial banks in Bangladesh

This paper focuses on the causes of customer satisfaction and its relationship with loyalty in state-owned banking in Bangladesh. The study was conducted in ten branches of six state-owned commercial banks in Chittagong metropolitan area of Bangladesh. Some of the most influencing factors of loyalty have been identified in the study such as having understanding the specific needs of their customers; providing services timely, caring to customers, having required knowledge and skill of employees to perform the services and so on. This study provides some guidelines for developing customer loyalty in banking services.IIUC Studies Vol.13 December 2016: 27-42

Measuring the value of central bank commitment in the benchmark New Keynesian model

We measure the value of commitment in executing monetary policies in context of the benchmark New Keynesian model and where “value” is represented by the standard quadratic welfare function containing weighted output gap and inflation variances. The value of commitment is calculated as the difference in this welfare across commitment regimes of which there are at least six. Inspired by Bilbie (2014) we show how by means of selecting the optimal level of a single parameter in the setup of several so-called “discretionary” targeting regimes (price-targeting, speed-limit, etc.) one can produce optimal inertia identical to that of the Clarida, Gali, and Gertler (1999) “global commitment.” Combining the targeting regimes with the commitment regime, we are left with three levels of commitment. Deriving welfare analytically as a function of all permissible parameters, rather the standard practice of calculating welfare based on a single or handful of parameter sets, we can measure the gain that would occur from jumping to higher commitment levels over all permissible sets. We also compare welfare surfaces with parameter combinations we have sampled. Result: depending on parameter selection the gains from optimal inertia may be high or low. Our sample of parameters actually used in the literature puts many near the high end, a few not. We find no parameter sets where a switch from no- to high-commitment would imply low or negligible gains. A side-effect of the analysis is that the optimal inertia regimes reduce nominal and real interest rate variance even when interest stability is not an objective of the central bank. We include Taylor-type rules that satisfy the requirements of each commitment level. Conceptually, the results indicate that at least in the benchmark NKM long-time questions such as whether price- or inflation-targeting is preferable are off point. The pertinent question is: in what commitment regime does the central bank find itself in?

Corporate governance practices’ influence on customer loyalty in Nigerian retail banks

Orientation: Customer loyalty is crucial in the retail banking sector, given the increasing competition within the industry and from emerging non-traditional players.Research purpose: This study sought to establish the influence of corporate governance practices on customer loyalty in Nigerian retail banks.Motivation for the study: Conducting a study of this nature highlights how corporate governance practices contribute to customer loyalty in the retail banking sector of Nigeria as a developing country in Africa.Research design, approach and method: Premised on relationship marketing and stakeholder theoretical orientations, the study used a sample of 424 bank customers scientifically selected from eight commercial banks identified within Ibadan Metropolis, Nigeria. A six-construct survey instrument was used to collect relevant data. Partial least square structural equation modelling (PLS-SEM) version 3 was utilised to ascertain the interaction between customer loyalty and corporate governance practices domains.Main findings: The result of the PLS-SEM model established that all corporate governance practices had a positive effect on customer loyalty at a very significant level (p < 0.01), except transparency and disclosure, which had an inverse relationship and effect on customer loyalty, though at a non-significant level (β = -0.005, p = 0.93). Presence of competent bank management had the highest positive influence on customer loyalty.Practical/managerial implications: The findings of this study will be useful for bank management and role players in the financial and other service sectors on the importance of good corporate governance and specific attributes of the identified corporate governance that are critical for business success.Contribution/value-add: This study was able to identify corporate governance practices from customers’ perspective, which is a departure from the traditional shareholder perspective in business studies. It has advanced the relatively known terrain in corporate governance and business literature by opening up new debates on the relevance of corporate leadership beyond the confines of the boardroom.

Lifting the Lid on Financial Inclusion: Evidence from Emerging Economies

Financial inclusion has become a subject of growing interest for academics, professionals, and policy-makers in recent times. Researchers stress the importance of financial inclusion and highlight the significant role of financial institutions, such as banks, in promoting financial inclusion. Therefore, it is imperative to analyse the role and commitment of banks in promoting financial inclusion, especially those financial institutions (i.e., Islamic banks) which came into existence to promote socio-economic justice through redistribution of wealth in society. The study is built on the argument that Islamic banking business model is based on intangible sources i.e., Shari’ah law and such sources are exploited to create value i.e., stability, profitability and financial inclusion. The empirical analysis support the hypothesis that Islamic banks utilize various tangible and non-tangible resources to promote financial inclusion. Hence, Islamic banks are serving as the ultimate source of financial inclusion in the society.

Whither the post-Washington Consensus? International financial institutions and development policy before and after the crisis

ABSTRACTThis article explores the direction, drivers and implications of change in the International Monetary Fund (IMF) and the World Bank’s policy vision for developing countries before and after the global economic crisis. By examining the evolution of the Fund’s structural conditionalities and the thematic distribution of Bank commitments, it provides evidence for a significant change on the ground: a partial retreat from the post-Washington Consensus (PWC) agenda, which marked a turn-of-the-century upgrade of orthodox neoliberalism. Conceptualising the PWC as a paradigm expansion that followed severe policy failures, the analysis finds that although narrow institutional reforms towards upgrading fiscal and financial regimes remain popular, there is now less emphasis on good governance and broad institutions; meanwhile in social policy the twins increasingly diverge. It is argued that this selective disengagement is driven by extant operational imperatives and constraints, which are further intensified by changes in lending framework and ongoing transformations in development finance. Rather than constitute a paradigm shift, the partial decline of the PWC reflects an adjustment in policy practice towards increased flexibility and discretion in a progressively challenging environment. These findings have implications for the study of the twins. They also highlight the evolving parameters of North–South development cooperation.

Corporate Social-Environmental Performance versus Financial Performance of Banks in Central and Eastern European Countries

Developed market economies demonstrate a growing interest in issues concerning Corporate Social Responsibility (CSR) and its effects, confirmed by the sizeable theoretical and empirical literature on this issue. A substantial research proves also the positive relation between CSR commitment and financial results of banks in mature markets. However, there is less evidence on CSR existence and its impact in other geographical areas, especially in the research concerning Central and Eastern European Countries (CEEC). In our study we analyze the interrelation between being socially responsible and tangible financial outcome (Corporate Financial Performance—CFP) of banks in the CEEC. The aim is also to empirically verify the relation between efficiency of corporate social-environmental performance (CSP) and the efficiency of CFP for CEEC banks. In our study, we analyze the financial and CSP data of the biggest public banks in CEEC. The researched period is 2012–2016. The empirical part analyzes the interrelation between CSP and CFP based on the panel regression. Moreover, in order to evaluate the CSP efficiency and the CFP efficiency we use the Data Envelopment Analysis (DEA) approach. The empirical results reveal that in case of banks in the Central and Eastern Europe (CEE) region being socially responsible is not reflected in the bottom line. The financial condition of the banks also does not impact the CSR engagement. Our study confirms, however, that CEEC banks with better financial efficiency have higher efficiency of CSR activities. The conclusions may lead to the improved decision-making processes concerning CSR activities and their communication in banks in CEEC.

Mainstreaming as rhetoric or reality? Gender and global health at the World Bank

Background:Over the past decade gender mainstreaming has gained visibility at global health organisations. The World Bank, one of the largest funders of global health activities, released twoWorld Development Reportsshowcasing its gender policies, and recently announced a $1 billion initiative for women’s entrepreneurship. However, the development of the Bank’s gender policies and its financing for gender programmes have never been systematically analysed by external researchers in the context of global health. We use the Bank as a case study of how global health organisations frame their gender policies and measure their success.Methods:We constructed a timeline of the Bank’s governance of gender, through a review of published articles, grey literature, and Bank documents and reports. Additionally, we performed the first health-focused analysis of two publicly available Bank gender project databases, and tracked the Bank's financing of gender projects in the health sector from 1985-2017.Results:The Bank’s gender policy developed through four major phases from 1972-2017: ‘women in development’ (WID), institutionalisation of WID, gender mainstreaming, and gender equality through ‘smart economics’. In the more inclusive of the two Bank project databases, gender projects comprised between 1.3% (1985-1989) and 6.2% (2010-2016) of all Bank commitments, which is significantly less than the Bank’s claim that 98% of its lending is gender informed. Most funding targeted middle-income countries and particular themes, including communicable diseases and health systems. Major gender-related trust funds were absent from both databases.Conclusion:The Bank focused most of its health sector gender projects on women’s and girls’ issues. It is increasingly embracing private sector financing of its gender activities, which may impact its poverty alleviation agenda. Measuring the success of gender mainstreaming in global health will require the Bank and global health organisations to reconsider their use of gender indicators.

Customer Relationship Management Practices and Customer Loyalty in Commercial Banks: An Empirical Study

Differentiating products through best practices, providing timely services to encourage word of mouth publicity, and increasing quality of services through best practices have become benchmarks in retail banking sector in India. A number of research studies have been performed that have highlighted the importance of Customer Relationship Management (CRM) in banking industry and its contribution to customer satisfaction and retention. This empirical paper closely examines the association between CRM best practices and customer loyalty in commercial banks in Kerala. The assessment done based on the opinion of customers exposed that there is a good association between CRM practices and customer loyalty in commercial banks in Kerala.

Bank loyalty, social networks and crisis

In this paper, we consider how the intensity and channels of the relation between social networks and bank loyalty vary according to the state of the economy. We analyze bank exit over the period 2005–2012 for over 300,000 retail clients of a commercial bank that experienced a bank run in 2008 due to a shock in solvency risk. The unique and rich data we constructed in close collaboration with the bank enables us to distinguish different sorts of family networks from neighborhood networks, while controlling for a wide range of client-level and branch-level characteristics and events. Using a proportional hazards model, we show the importance of family networks. In times of financial distress, family networks become even more important and retail clients take weaker, less direct social relationships into account.

Dynamic Relationship Between Oil Price And Inflation In South Africa

The oil price-inflation relationship has been at the center of attention among economists and policy analysts, especially after 1970's oil shocks that resulted in a significant increase in the rate of inflation in number of countries around the world. However in the recent years, a number of empirical study, mostly in developed economies, has found that the effect of oil price shocks on inflation has weakened; mainly due to a reduction in oil intensity in production process and lower inflation environment. Moreover, some empirical evidences have shown the response of inflation from a negative and a positive oil shock to differ. This study aims to investigate the evolving relationship between oil price and inflation in South Africa, using time series data of inflation and oil price starting from January, 1922 to July, 2013. The study has a policy relevance on monetary policy reaction to oil shocks as South Africa is a small open economy with higher dependency on oil import and a floating exchange rate system. We fit both symmetric and asymmetric dynamic conditional correlation GARCH (DCC-GARCH) to the data. The results reveal the oil price to have a positive relationship with inflation, however the correlation is low and ranges between 0.07-0.08. The time-series patterns show a tendency of temporary upward shift in the pair-wise conditional correlations during predominant oil crisis. We also observe an upward shift in correlation in the year 1986, which can be attributed to South Africa's oil embargo. Further, the asymmetric-DCC model, based on the DCC exponential GARCH (DCC-EGARCH) framework, which fits the data better than the symmetric DCC-GARCH, show that the positive shocks have higher effect on inflation than negative shocks of the same magnitude. Finally, we observe that the correlation has been decreasing gradually over time for both symmetric and asymmetric specification of DCC model. The weaker oil price-inflation relationship, observed in recent years, could be attributed to the South African Reserve Bank's commitment to stabilize inflation expectation in the presence of external shocks. The study highlights the relative importance of oil shocks on inflation, and recommends that the Reserve Bank needs to remain attentive to oil price shocks, especially the positive ones.