CHAPTER ONE INTRODUCTION

1.1 Background of the study Customer satisfaction is generally described as the full meeting of ones expectations. Customer satisfaction is the feeling or attitude of a customer towards a product or service after it has been used. Kotler (2000) has been described as satisfaction is a persons feelings of pleasure or disappointment resulting from comparing a products perceived performance (or outcome) in relation to his or her expectations. Satisfaction is very important factor to the any organization. Especially it is important to the government bank like BOC. Because as a service supplied institution, any banks main target is the customer. The working of the customers mind is a mystery which is difficult to solve and understanding the nuances of what customer satisfaction is, a challenging task. Thats why there are many expectations in the customers mind from the bank. If cant recognize the expected expectations of customers bank cant achieve their targets, then customer can easily switch from one service provider to another provider, at low cash. At present market become a competitive market. And also there are large number of banks are situated in Sri Lanka. But government banks are situated too low. Among those banks BOC is the one of the main government bank in the Sri Lanka. As a main government bank of BOC, people are expected better service from this bank. Customers are expected the quality of product from the product supplied organization. Although customers are expected a quality of service from the service organization, sometime they cannot provide quality of service. However Customer Satisfaction depends on the service quality of the any organization. If satisfy the customers, firstly should be provide high quality service to the customers. It is also same to the BOC in Pambahinna. In service oriented industry well trained employees, convenience of the branch location, attractive physical facilities and new technologies are highly affected. In this branch space of the branch is not sufficient. As well there are other weaknesses in this
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branch when consider about the customer satisfaction. Then it is important study on customer satisfaction with reference to Pampahinna branch. Because of high customer satisfaction and loyalty give an organization a better base than its competitors and allows it to flourish in the industry. 1.2 Research Problem
Do service quality dimensions have an impact on the level of customer

satisfaction about Pambahinna BOC branch? 1.3 Research Objectives Major Objective

To determine whether there is a relationship between service quality dimensions and customer satisfaction.

Specific Objectives

To investigate the level of customer satisfaction about Pambahinna BOC branch.

To investigate most important factors influence on customer satisfaction. To investigate the expectations and requirements of the customers.

Research Questions

What is the level of customer satisfaction? What are the important factors that influence on customer satisfaction? What are the expectations and requirements of the customers?

1.4 Significance of the study Customers are the life blood of the banking sector. Therefore retaining the current customers and attracting new customers is very essential for survival of the banking sector. For that reason, they should identify the customers requirements and expectations by studying the customer satisfaction of banking sector. As a government own financial institution, BOC, directly participate in the development of the country. They provide more than 50% of financial contributions to government for launch giant, development project customers investments are very
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important for that. Therefore bank can attract more customers by delighting them. To delight customers this study finding may useful for bank. Studying the prior researches provide great support for other researches. Because going through the prior studies they can identify the gap and similarities between them and new comers who enter to this field, they can gather basic knowledge regarding the prior research. 1.5 Hypothesis
1)

H0 There is not a relationship between customer satisfaction and service quality dimensions. H1 There is a relationship between customer satisfaction and service quality dimensions.

2)

H0 The level of service in BOC is not high. H1 The level of service in BOC is high.
3)

H0 -Service features are not a most important factor impact on customer satisfaction about Pambahinna BOC branch. H1 Service features is the most important factor of customer satisfaction about Pambahinna BOC branch.

4)

H0 Tangible is not the most important factor of customer satisfaction about Pambahinna BOC branch. H2 - Tangible is the most important factor of customer satisfaction about Pambahinna BOC branch.

5) H0 Responsiveness is not the most important factor of customer satisfaction about Pambahinna BOC branch. H3 - Responsiveness is the most important factor of customer satisfaction about Pambahinna BOC branch. 6) H0 - Assurance and Reliability is not the most important factor of customer satisfaction about Pambahinna BOC branch. H4 - Assurance and Reliability is the most important factor of customer satisfaction about Pambahinna BOC branch.
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7) H0 Empathy is not the most important factor of customer satisfaction about Pambahinna BOC branch. H5 - Empathy is the most important factor of customer satisfaction about Pambahinna BOC branch.
1.6

Methodology research for achieving the research objectives.

1. The data collected from both primary and secondary sources was used in this

2. A standard questionnaire was used as the instrument in collecting primary data for measuring level of Customer Satisfaction about Pambahinna branch and collects the secondary data from various methods such as, Articles published in the news papers and the internet, web sites of Bank of Ceylon, Annual reports of BOC, relevant text books, research articles, journals and magazines.
3. A standard questionnaire was used as the main research instrument in

collecting primary data for measuring level of customer satisfaction about Pambahinna branch. This questioner divide into three section and its questions are created on the model of customer satisfaction.
4. The population of the research consists of the entire customers of the BOC

Pambahinna branch. Among this population as the sample unit of the study was selected the customers of BOC Pambahinna branch in university of Sabaragamuwa.
5. The data gathered with the use of the questionnaire was analyzed using SPSS

analysis (tabular and graphical analysis), bi- variety and multivariate analysis (Pearsons Correlation analysis, reliability test Chronbatchs Alpha value and multiple linear regression analysis).

1.7 Limitation of the study

Information was collected only from 25 customers of BOC. So could not get all the users feedback. Therefore couldnt make 100% accuracy decisions.

The most of customers they are not prefer to give the actual information and the information which collected from questioner are not sufficient, because misunderstand of questions.

In this research study to show the relationship between service quality factors and customer satisfaction, the researcher had used only five service quality factors. (features, Tangible, Responsiveness, Assurance and Reliability and Empathy) But there Research was conducted only limited sample and researcher had no opportunity to cover population.

The study was based on the assumption that the respondents will always be truthful and correct.

The study depends upon responses of the respondents, who are believed to be giving the right information. Thus the accuracy of the survey and its findings depends a lot on the respondents and their responses.

The study was confined to the Pambahinna village, so the results may not be the same in other parts of country which are having different market conditions.

1.8

Disposition of the Thesis. This thesis is composed of five chapters. Chapter One: This chapter presents a brief background of the study, problem statement, research objectives, and research questions. Finally significance of the study, hypotheses of the study, limitations of the study are presented. Chapter Two: This chapter presents a Literature review explains various authors findings and finally Conceptualization and Operationalization of the research. Chapter Three: The third chapter discusses about the methodology of the study. Here includes the type of data that the researcher used, data sources, data collection methods, data presentation and data analysis methods.

Chapter Four: The chapter four is about presentation, analysis and discussion of the data that are collected by the researcher for the purposes of achieving preset objectives. Chapter Five: The chapter five comprises the summary of the entire research study known as conclusion. Then recommendations included to it.

CHAPTER TWO LITERATURE REVIEW 2.1 Literature

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2.1.1 Customer There are two distinct types of customers. They are external and internal. An external customer can be defined in many ways, such as the one who uses the product or service, the one who purchase the product or service, or the one who influence the sale of the product or service. An external customer exists outside the organization and generally falls into three categories: current prospective and lost customers. Each category provides valuable customer satisfaction information for the organization. Every employee in the organization must know how their job enhances the total satisfaction of the external customer. Performance must be continually improved in order to retain existing customers and to gain new ones. An internal customer is just as important. Every function, whether it is engineering, order processing or production has an internal customer each receives a product or service and in exchange, provides a product or service. Every person in a process is considered a customer of the preceding operation. (Bester Field et al, 2005) 2.1.2 Satisfaction Satisfaction is the state felt by a person who has experienced a performance (or outcome) that has fulfilled his or her expectations. Satisfaction is thus a function of relative levels of expectation and perceived performance. Expectations are formed on the basis of past experiences with the same or similar situations, statements made by friends and other associates, and statements made by the supplying organization. Satisfaction is a feeling of fulfillment of a need or requirement comparing with an expectation. These are several level of satisfaction. Such as, If the performance falls short of expectations. The customer is dissatisfied. If the performance matches the expectation, the customer is satisfied. If the performance exceeds expectations. The customer is highly satisfied or delighted. (Kotler & Keller, 2006) 2.1.3 Customer Satisfaction Customer Satisfaction is the state of mind that customers have about a company when their expectations have been met or exceeded over the life time of the product or
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service. The achievement of customer satisfaction leads to company loyalty and product repurchase. (http:en.wikpedia.org/wiki/customer-satisfaction) 2.1.4. Customer Satisfaction of Banking The term bank is generally understood as an institution that holds a banking license granted by financial supervision authorities. Under the authorities, the bank conducts the most fundamental banking services like accepting deposits and making loans and other financial services (Wikipedia) The service quality has been widely used to assess the service performance of various service organizations including banks (Cowling and Newman, 1995). There are 18 service quality attributes in banking. They are: access, aesthetics, attentiveness, availability, care, tidiness, comfort, commitment, communication, competence, courtesy, flexibility, friendliness, functionality, integrity, reliability, responsiveness and security and all those are directs to the customer satisfaction. (Johnston 1995) Customer satisfaction is also related to the service offerings. With retail banking, the convenience and competitiveness of the providers offerings can be expected to affect a customers overall satisfaction and ongoing patronage. The location is a major determinant of bank choice (Anderson et al, 1976, Laroche and Taylor, 1988) In retail banking there is an ongoing relationship between the service provider and the customer. Hence, customer satisfaction is based on as evaluation of multiple interactions. For this investigation, satisfaction is considered as a composite of overall customer attitudes towards the service provider that incorporates a number of measures. These frequently used measures are overall service quality, meeting expectations and Customer Satisfaction. (Housknecht, 1990, Heskett et al, 1994, Jones and Sasser, 1995) 2.1.5 Service Quality Ghobadian et al (1994) posit that most of the service quality definitions fall within the Customer led category. Juran (1999) elaborates the definition of customer led quality as features of products which meet customers needs and thereby provide customer satisfaction. As service quality relates to meeting customers needs, we will be looking at perceived service quality in order to understand consumers
8

(Arnauld et al, 2002) Gronroos (1984) and Parasuraman et al (1985) look at perceived quality of service as the difference between customers. 2.2 Conceptualization and Operationalization 2.2.1 Conceptualization The concept is created as follow to do this study. The conceptual framework based on factors of service quality and those are related to the customer satisfaction. They are service features, tangible, responsiveness, reliability and assurance and empathy. The following conceptual framework has build prior to this study by considering above factors of service quality.

Figure 2.1 Conceptual frameworks. Service Features Investment rates Deposits Loans Service charges

Tangible Appearance Clean and pleasant place Location Space Technology Documents

Customer Satisfaction Brand loyalty Responsiveness Speed Banking hours Well trained staff Recommend to others Switch off to other banks Frequency Number of accounts Number of years

Assurance and Reliability Promised service Trust Confidence Accuracy

Empathy Caring And listening Handling enquiries

Source: Constructed by a researcher. Service quality measurements It is generally accepted that customer satisfaction often depends on the quality of product or service offering. (Anderson and Sullivan, 1993; Levesque and McDougall, 1996) For this reason, research on Customer Satisfaction is often closely associated with the measurement of quality. (East, 1997). Thus, both service quality and Customer Satisfaction share a close relationship, through they are normally conceptualize as unique or separate constructs (Bitner and Hubbert, 1994, Cronin and Taylor, 1992; Patterson and Johnson, 1993; Taylor and Baker, 1994) Levesque and McDougall, (1996) identified service quality, service features and customer complaint handling in measuring determinants of the Customer Satisfaction. After extensive research, Zeithamal, Parasuraman and Berry found five dimensions customers use when evaluating service quality. They named their survey instrument SERVQUAL. They are Tangibles, Eliability, Responsiveness, Assurance and Empathy. All dimensions are important to customers, but some more than others. Service providers need to know which are which to avoid majoring in minors. At the same time they cant focus on only one dimension and left the others suffer.
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Sureshchandar, Rajendran, and Anantharaman, (2003) have identified five factors of service quality from the customers perspective. Those are a) Core service or service product, b) Human elements of service delivery, c) Systematization of service delivery non-human element, d) Tangibles of service and e) Social Responsibility. Parasuraman et al. (1985) identified 97 items or criteria in measuring service quality. They argued that consumers used similar criteria irrespective of the type of service in measuring service quality. They then group these criteria into ten key categories which the labeled as Service quality determinants (P.48). The determinants are reliability, responsiveness, competence, access, courtesy, communication, credibility, security, understanding, knowing the customer and tangibles. Later in another research (Parasuraman et al, 1988), they refined the dimensions into only five dimensions, tangibles, reliability and assurances responsiveness, Service features and empathy. Service features The competitiveness of providers offerings (competitive interest reasonable service fees), (Levesque and McDougall, 1996) H1: Service features are most important factor impact on Customer Satisfaction about Pambahinna BOC of students in university of Sabaragamuwa. rates on loans,

Tangible The physical appearance of the service facility (equipment, machinery, employee appearance etc.) or the man made physical environment, (Moller, 2007).Tangible defines the appearance of the physical facilities and surroundings, the equipment, personnel and of cause the way of communication. The tangible dimensions create the first hand impression which the customers get and may in the future relate company with. (http://www.bukisa.com/articles/289284_the-importance-of-the-dimensions-ofservice-quality) H1: Tangible is most important factor impact on Customer Satisfaction about Pambahinna BOC of students in University of Sabaragamuwa.
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Responsiveness The employees willingness to help the customers and provide prompt service like Friendliness, being consistently courteous (Moller, 2007).Responsiveness means Respond quickly, promptly, rapidly, immediately, instantly. (http://www.serviceperformance.com/articles/33_Five_Service_Dimensions.php).Res ponsiveness refers to the reaction time of the service. (Author: Elyse, PMP, CPHIMS).Responsiveness defines the companys willingness to help its customers and provide it with a good, fast and quality service. Like all the other dimensions responsiveness is also very important, the customers will with no doubt be able to feel if they are valued customers and if they get the best quality service possible. (http://www.bukisa.com/articles/289284-the-importance-of-the-dimensions-ofservice-quality) H1: Responsiveness is most important factor impact on Customer Satisfaction about Pambahinna BOC of students in University of Sabaragamuwa Reliability and Assurance Reliability Reliability means the ability of employees to perform accurately and confidently (Moller, 2007). Reliability refers to the dependability of the service providers and their ability to keep their promises. (Author: Elyse, PMP, CPHIMS). Reliability defines the ability of the company to perform and complete the promised service, quality, accurately and on time. Reliability just as important as the first hand impression, because every customer wants to know that their suppliers of what it may be are reliable and give the service agreed including great quality within the given timeframe service-quality) Assurance Assurance refers to the level of certainty a customer has regarding the quality of the service provided (Author: Elyse, PMP, and CPHIMS) Assurance defines the employees of the company, that they are skilled workers which can gain the trust and confidence of the customers. The employees must be able to give the customers assurance in the products they are trying to sell. If the coming or current clients of the
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without

compromising

on

the

quality.

(http://www.bukisa.com/articles/289284_the-importance-of-the-dimensions-of-

company are not comfortable or feel safe dealing with the employees they are likely not to continue doing business with your company. Assurance is a lot about keeping and maintaining business relations. (http://www.bukisa.com/articles/289284_theimportance-of-the-dimensions-of-service-quality) H1: Reliability and Assurance is most important factor impact on Customer Satisfaction about Pambahinna BOC of students in University of Sabaragamuwa Empathy Whether or not the employee was caring and provided individualized attention. (Moller, 2007). Empathy is when a service employee shows that she understands and sympathizes with the customer's situation. The greater the level of this understanding is the better. Some situations require more empathy than others (Author: Elyse, PMP and CPHIMS). Empathy defines a company who cares and gives individualized attention to its customers so they feel special and valued as a customer. The first dimension of empathy combines the second, third and fourth dimension to a higher level, without they yet still can be compared, as they are all individual dimensions of the service quality mix. It is very important to give the customers individualized and quality attention, the more special and valued they feel the higher the chances are for them to return to your company and continue doing business (http://www.bukisa.com/articles/289284_the-importance-of-the-dimensions-ofservice-quality) Services can be performed completely to specifications. Yet customers may not feel provider employees care about them during delivery. And this hurts customers assessments of providers service quality. (http://www.serviceperformance.com/articles/33_Five_Service_Dimensions.php) H1: Empathy is most important factor impact on Customer Satisfaction about Pambahinna BOC of students in University of Sabaragamuwa Customer satisfaction Customer satisfaction is defined as a business term, is a measure of how products and services supplied by a company meet or surpass customer expectation. But that seems off when you look at the separate. (http:en.wikpedia.org/wiki/customersatisfaction)
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Brand loyalty Brand loyalty is a consumers preference to buy a particular brand in a product category. It occurs because consumers perceive that the brand offers the right product features, images or level of quality at the right price. This perception becomes the foundation for a new buying habit. Basically, consumers initially will make a trial purchase of the brand and, after satisfaction, tend to form habits and continue purchasing the same brand because the product is safe and familiar. Brand loyalists have this mindset. I am committed to this brand; I am willing to pay a higher price for this brand over other brands; will recommend this brand to others. (http://www.extension.iastate.edu/agdm/wholefarm/html/c5-54.html).So Recommend to others and switch off to other banks can get under brand loyalty. Frequency Frequency is the number of occurrences of a repeating event per unit time. It is also referred to as temporal frequency. The period is the duration of one cycle in a repeating event, so the period is the reciprocal of the frequency. (http://en.wikipedia.org/wiki/Frequency). So number of years and number of accounts can get under frequency. As pointed out Parasuraman et al, 1988 refined the dimensions into only five dimensions, tangibles, reliability and assurances responsiveness, Service features and empathy. The relationship between service quality dimensions and customer satisfaction has received considerable academic attention in the past few years. But the nature of the exact relationship between service quality dimensions and Customer Satisfaction (especially in the way the two constructs have been operationalized) is still shrouded with uncertainty. Even many researchers have operationalized Customer Satisfaction by using a single item scale, Sureshchandar et.al (2002), they have operationalized Customer Satisfaction as a multi dimensional construct. Sureshchandar et.ai(2002), have identified in their research that people whose perception of service quality dimensions are poor have poor satisfaction levels, people whose perception of service quality dimensions are medium satisfaction levels, and those who have ranked the service quality dimensions as high are highly satisfied with
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the services of the organization. Therefore, there exists a great dependency between service quality dimensions and Customer Satisfaction, an increase in one is likely to lead to an increase in another. The responsiveness service expectation dimension was found to consistently to be the most important expectation across all countries. Thereafter, the relative importance of subsequent service dimensions has been ranked as follows, Responsiveness, Reliability, Tangibles, Assurance and Empathy. For most countries the core service attributes of efficient staff, shorter queues, service reliability and convenient locations are most important to customers. Furthermore, this attributer appeared to be increasingly important over time. Any efforts to increase the speed of processing information and customers are likely to have an important and positive effect on Customer Satisfaction. The results suggest that core dimensions such as responsiveness (driven by staff efficiency and shorter queues), and reliability (performing dependably and accurately) are more important while relational issues surrounding assurance and empathy are of less important. Jamal and Nasar (2002) have investigated the determinants of Customer Satisfaction in the retail banking in Pakistan. The report findings are from a survey, which found about determinants of customer satisfaction in the retail banking in Pakistan. For that purpose a total of 300 questionnaires were randomly distributer to customers of a specific bank in Pakistan. According to their findings, they have emphasized that there was a strong relationship between service quality dimensions and Customer Satisfaction. There was however no relationship between tangible aspects of the service environment. 2.2.2 Operationalization of independent variables This study based on service quality and Customer Satisfaction in banking industry. Data was collected using questionnaires (Appendix 1) from customers. The factors and the related question on questioner were reflected by the following table. Table 2.1 Dimensions and sub dimensions (Measures) of independent variables. Dimensions Indicators Measures Elements /Sub dimensions

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Variable 01 Service Features

1. Interest rates Deposits Loans (Q5) (Q6)

Liker scale

BOC pay competitive interest rate on deposits than other banks 1. Completely dissatisfied Dissatisfied 3. Neither satisfy nor dissatisfy 4. Satisfy 5. Very much satisfy BOC charge competitive interest rate on loans than other banks 1. Completely dissatisfied 2. Dissatisfied Neither satisfy nor dissatisfy 4. Satisfy 5. Very much satisfy

2.Service charges (Q7)

Liker scale

Charges for other services in BOC Completely dissatisfied Dissatisfied 3. Neither satisfy nor dissatisfy 4. Satisfy 5. Very much satisfy

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Variable 02 Tangible

1. Appearance (Q8)

Liker scale

Neat in appearance 1. Completely dissatisfied 2. Dissatisfied Neither satisfy nor dissatisfy Satisfy 5.Very much satisfy

2. Clean and pleasant place (Q9)

Liker scale

Maintaining clean and pleasant, convenient working environment Completely dissatisfied Dissatisfied 3. Neither satisfy nor dissatisfy Satisfy Very much satisfy

3. Location (Q10)

Liker scale

Convenience of the location of the branch 1.Completely dissatisfied Dissatisfied Neither satisfy nor dissatisfy Satisfy Very much satisfy

Space (Q11)

Liker scale

There is a enough space in bank (Internal and External- vehicle park) Completely dissatisfied Dissatisfied Neither satisfy nor dissatisfy Satisfy Very much satisfy

5.Technology (Q12)

Liker scale

High Technology used by BOC (The computer system used, ATMetc) Completely dissatisfied Dissatisfied 3. Neither

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Variable 05 Empathy

1. Caring And listening (Q21)

Liker scale

Response to complaints very friendly Completely dissatisfied Dissatisfied Neither satisfy nor dissatisfy Satisfy Very much satisfy

2.Handling enquiries (Q22)

Liker scale

Way of handling enquiries Completely dissatisfied Dissatisfied Neither satisfy nor dissatisfy Satisfy Very much satisfy

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CHAPTER THREE RESEARCH METHODOLOGY

3.1 Research Design The research design involves a series of decisions including the determination of type, purpose, setting, sampling plan and time horizon etc. of the study. According to this research here researcher identify who are the customers of Pambahinna BOC branch as population of the study, from this population researcher selected 25 customers of BOC Pambahinna branch as the sample to gather data. Also customers are selected by using Random sample method. In here researcher use both primary and secondary data and secondary data and to collect primary data researcher use questioner. For obtain secondary data researcher use Internet, books and websites. 3.1.1. Type of the study The type of the study is Explanatory and descriptive nature. The study can be explanatory when the focus is on cause-effect relationships, explaining what causes produce what effects (Yin, 1994).Explanatory type of research is grounded in theory, and theory is created to answer why and how questions. In an explanatory study, the researcher uses theories or hypotheses to account for the forces that caused a certain phenomenon to occur. 3.1.2 Purpose of the Study The purpose of this study is to fill the gap in the knowledge of the customer satisfaction regarding banking sector .But researcher think research is not enough. 3.1.3 Study Setting This study was conducted in the natural environment with less interference of the researcher. As the type of this study is descriptive, the data were collected in the natural setting under a field survey. 3.1.4 Time Horizon of the Study
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The data for this study were collected at a single point of time (Zikmund, 1997; Sekaran, 1999), thus, the study is single cross-sectional in time horizon. The period chosen for the study is May-June 2011. Data were collected during this period. 3.1.5 Data Sources Used for the Study Primary data The study has been used primary data. The primary data has collected through distributing questioners to selected dealers. Secondary data The researcher Collect the secondary data from various methods such as, Articles published in the news papers and the internet, web sites of Bank of Ceylon, Annual reports of BOC, relevant text books, research articles, journals and magazines. 3.1.6. Research Approach In first step, to find out the variables, which affect, Customer Satisfaction a rigorous literature survey was conducted. Secondly, a pilot survey was conducted to modify a questioner. Finally, a field survey was conducted by using the refined questionnaire. 3.2 Sample Plan

The sample plan has been explained under the major areas of population, sampling method, data collection method, and data analyzing method. 3.2.1 Population of the Study

The population of the research consists of the entire customers of the BOC Pambahinna branch. Among these customers approximately BOC Pambahinna branch has five thousand two hundred dealers in the University of Sabaragamuwa. 3.2.2 Sample Unit

Sample unit of the study was the customers of BOC Pambahinna branch in University of Sabaragamuwa.

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Table 3.1: Number of customers about BOC Pambahinna branch in University of Sabaragamuwa, and the number of the selected customers for the study by students in each year in University of Sabaragamuwa. Faculties First year Second year Third year Fourth year Total (SUSL) Source - http://www.sab.ac.lk/ 3.2.3 Sample Frame No. of customers 900 900 750 650 3400 No. of customers selected 45 45 35 30 25

The list of customers in university of Sabaragamuwa which is available at the Pambahinna BOC branch was taken as the sampling frame. 3.2.4 Sampling procedure

The researcher randomly selected as one student from each rooms in the hostel. 3.2.5 Sample size Table 3.2: Testing the sample adequacy: KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Sphericity Approx. Chi-Square df Sig. .721 30.571 10 .001

Source: Output of the analysis of survey data, 2011(Refer appendix ) According to the tables 3.2, Kaiser-Meyer-Olkin Measure of Sampling Adequacy is equal or more than 0.5. Therefore, it shows the sample adequately represent the population of customers about BOC Pambahinna branch in University of Sabaragamuwa Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy index
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(value of 0.730) confirm the appropriateness of the data for exploratory factor analysis (EFA). 3.3 Research instruments A standard questionnaire was used as the instrument in collecting primary data for measuring level of Customer Satisfaction about Pambahinna branch. Questionnaire Questionnaire, the main research instrument was comprised of three major sections. Such as section A, B, C. Section A: Section A of the questioners includes the self- developed questions related to the general information regarding the transactions of BOC Pambahinna branch. Under that there are four questions. Section B: Section B of the questioner includes the self-developed questions related to the conceptualization or model of the study. These questions relate to the each independent variables or service quality dimensions. First one is the Service features. Under that there are three questions for each indicator of Service Features. Second one is the Tangible. Under that there are six questions for each indicator of Tangible. Third one is the Responsiveness. Under that there are three questions for each indicator of responsiveness. Fourth one is the Assurance and Reliability. Under that there are four questions for each indicator of Assurance and Reliability. Fifth one is the empathy. Under this there are two questions for each indicator of Empathy. Finally there are eighteen questions under section B.

Section C: Section C of the questioner includes the self-developed questions related to the conceptualization or model of the study. These questions relate to the dependable variables. Under this there are eight questions.
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3.4. Analysis of data The analysis was conducted in three steps. At the first step, descriptive statistical measures such as mean, frequencies and categorical tables were used. Further, to identify the relationships between the dependant and independent variables, cross tabulations were employed. Then in the second step to test the reliability of the questionnaire Reliability analysis was conducted. In the second step, hypotheses testing were conducted using One sample tests, Independent Samples T-tests, Regression and correlations analysis. 3.4.1 Descriptive Statistics Descriptive statistics were used to analyze each variable of the study. Frequency distribution was counted to measure how many respondents have given the same answer to the same question. Percentages were calculated to determine the fraction of entrepreneurs who gave a particular response. The personal information of each entrepreneur was collected only for confirming the identity of each entrepreneur of the selected sample and to study their backgrounds. 3.4.2 Reliability of the questionnaire The Cronbachs alpha value method used to check whether the questionnaire developed by the researcher especially for this research purpose, measures the variables reliably. If the corresponding alpha value of a given set of questions is greater than 0.7or closer to accepted minimum level 0.70 (Sekaran 2006; Malhothra 2004) the researcher can conclude that the set of questions used to measure a particular variable is reliable. 3.4.3 Hypotheses Testing The test statistics of determining the nature of Beta is important. Various methods of determining the utility of the model as a predictor of the independent variable include t test and f test for detecting the significant of the slope. In statistical data analyzing, H0 is always called the null hypothesis and H1 is called the formulated hypothesis, which is called the alternative hypothesis. Accordingly, if null hypothesis (H0) reject then can conclude that at least one of the independent variables significantly contribute to the prediction of the dependent
24

variable. If H0, reject it demonstrates that any of the independent variables (or combination of them) not explain the behaviors of the dependent variable. The aforesaid F test and p values are used to determine which of the independent variables useful predictors are. The importance of the F values is that, if the computed F value exceeds the table value, we can reject the null hypothesis (H0) and be able to conclude that at least one of these independent variables is a significant predictor of the dependent variable. Therefore, H0 is rejected if computed F value > table F value Thus, if a b value is not rejected, that particular b (Beta) value has a significant F value. Therefore, this implies a need to the hypothesis, which is attributed to that b. considering the effects on the dependent variable F distribution, is used to compare two population variances. The F values can be obtained using a computer statistical package that provides an exact F statistics giving the computed F value and corresponding degree of freedom. This is the use of the table value of F. For this study P value is used (instead of the table value) to come to a conclusion. The predictive ability of the regression analysis could be designed by both F value and the P value of the regression model. The P value is the value of significance at which the hypothesis test procedure changes the conclusion. ''(Alpha value) is the significant value at which the hypothesis test procedure changes conclusion. If; (Alpha value) is the smallest value for for which one can reject the null hypothesis (H0) that is the point at which the test is significant. Therefore P value is often called the observed or observed significant level. Here, the analysis uses = 0.05 as the minimum level and if the observed value is more than 0.05 it fails to reject the null hypothesis (H0). Therefore, this can be symbolically presented as follows: If p value <; then, reject H0 If p value >; then, accept H0 Thus;
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The smaller the p value, the higher the significance When using p value in this manner, the procedure in our study is, Reject H0, If p value < (0.05) and, Accept H0, If p value > (0.05). Measure of location To measure the location within a data set the, mean or average value has selected for this study. Measures of central tendency describe the centre of the distribution. If, Service Features 2.49 (The answer of the respondent is Strongly dissatisfy or Dissatisfy), then the independent variable being measured takes low values and hence does not drive them for their customer satisfaction. If, Service Features = 2. 5 - 3.49(The answer of the respondent is neutral), then the independent variable being measured takes average value and hence marginally influence their customer satisfaction. If, Service Features 3.5 (The answer of the respondent is Very much satisfy or Satisfy ), then the independent variable being measured takes high values and hence does drive them for their customer satisfaction. Similarly, the customer satisfaction of the BOC Pambahinna branch measured using the Liker five-point scale; from strongly dissatisfy to very much satisfy. In that manner; If, the answer of the respondent 2.49 then the level of customer satisfaction and Service features are low. If, the answer of the respondent = 2. 5 - 3.49 then the customer satisfaction and service features of them is average. If, the answer of the respondent 3.5 then the customer satisfaction and service features of them is high. Likewise for each independent variable can measure one by one. One Sample T-test The One-Sample T Test procedure tests.
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To test the hypothesis 3.5 midpoint value of 5-point scale used. A significance level of = 0.05 is selected. Pearsons Co-efficient of Correlation Analysis Pearsons Co-efficient of Correlation make out the degree of linear relationship that exists between two variables If the Pearsons coefficient of correlation is close to 1 (> 0.5) with a high significant level (F< 0.05) then, there is a strong positive relationship between the two variables. If the Pearsons coefficient of correlation is close to -1 (> - 0.5) with a high significant level (F< 0.05) then, there is a strong negative relationship between the two variables. If the Pearsons coefficient of correlation is close to 0 (<-0.5 or 0.5) with a high significant level (F< 0.05) then, there is a positive or negative relationship between the two variables, but not so strong. Regression analysis Correlation analysis provides a research only with the type of relationship between two variables. But in multiple regressions analysis the whole set of variables will be used to predict the dependent variable. Hence to identify the most important dimensions of two variables, step-by-step regression analysis was conducted. The inclusion of variable will be done according to the highest weight age with the dependent variable in the correlation analysis. Therefore, in this analysis it was assumed that the independent variable could be represented as a linear relationship with the other variables. It must be emphasized here that the multiple regressions could be used to conduct the omitted parameter test to assess the direct and indirect effects of the independent variables on the dependent variable. Only multivariate model could include all the variables at the same time in an analysis. It must be mentioned here that the multiple regression analysis is the only one of the multivariate methods, which uses more than one variable in an analysis. One purpose of using the regression analysis is to arrive at a method for predicting a value for the dependent variable.
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Correlation analysis provides only a significant relationship between each independent variable. In other words, the regression model always indicates by how much (Beta value) each independent variable could affect the dependent variable. Thus, the technique of multiple linear regressions explains the behavior of a dependent variable using more than one predictor (independent/exploratory) variable simultaneously. The regression model is given below. Y= b0 + b1 + b2 + b3 According to the sequence of r value of variables, the multiple regressions are given below. Customer satisfaction = b0+b1 (Service features) +b2 (Tangible) +b3 (Responsiveness) +b4 (Assurance and Reliability) + b5 (Empathy) +E Y = b0 + b1(X1) + b2 (X2) + b3 (X3) + b4 (X4) + b5 (X5) + E Where, Customer Satisfaction Service Features Tangible Responsiveness Empathy =Y = X1 = X2 = X3 = X5

Assurance and Reliability = X4

Beta (b0) is the intercept of the sample regression line and is the estimate of the population intercept examining the estimate of the slope (b1, b2, b3,, bk,) This model provides information on the nature of the relationship. Considering the population slope (b): when, b=0, the population line is perfectly horizontal. H0 = b1 = b2 = bk = 0 H1 = at least one b 0
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Coefficient of determination (R2) is another method of examining how well the model provides estimates that fit the sample data. When any additional variables are included, the predictive ability of the model should be significantly improved with the addition. The less the error term, the higher the predictability can identify of the regression analysis.

CHAPTER FOUR DATA PRESENTATIONAND ANALYSIS

4.1 Sample Profile 4.1.1 General Information reason for use BOC Pambahinna branch 4.1.1.1 The ways of get information about BOC Pambahinna branch
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When people going to join with a bank as a customer do their transactions first they should know about the bank, location, its services and advantages can get after join the bank. They can know about these things by getting information in various ways. These ways can be, from other persons, Printed media, electronic media and others. For BOC Pambahinna branch is as follows. Table 4.1: The ways of get information about the BOC Pambahinna branch Ways of get information From other persons From printed media From electronic media Other Source: Survey Data 2011 Figure 4.1: The ways of get information about the BOC Pambahinna branch. Percentage 80% 4% 0% 16%

Source: Survey Data 2011 4.1.1.2: The reason for select BOC Pambahinna branch to do transaction People select bank to do transaction upon several reasons. They are may be government bank, closeness of the bank, Special offers from the bank, banking from longtime and quick service and hospitality of the staff. For BOC Pambahinna branch is as follows. Table 4.2: The reasons of select the BOC Pambahinna branch Reason for select the bank Government bank Closeness of the bank
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Percentage 16% 72%

Special offers from the bank Quick service and hospitality of the staff Source: Survey Data 2011

4% 8%

Figure 4.2: The reasons of select the BOC Pambahinna branch

Source: Survey Data 2011

4.1.1.3: The services get from BOC Pambahinna branch Normally people use bank to get some services. There are may be Personal bank services (Saving accounts, Fixed accounts), Current account services, Pawning services, Loan facilities and Foreign money exchange. These some services also can get from BOC Pambahinna branch. Table 4.3: The services get from the BOC Pambahinna branch Services get from bank Personal bank services Current account services Percentage 100% 0%
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Pawning services Loan facilities Foreign money exchange Source: Survey Data 2011

0% 0% 0%

Figure 4.3: The services get from the BOC Pambahinna branch

Source: Survey Data 2011

4.2 Validation of Measurement Properties Properties of the measurement should be assessed at least through ensuring content validity and construct validity (Sekaran, 2003). Hence, the validations of measurements used in the study are discussed in the following sections. 4.2.1 Content Validity Content validity ensures that the measure includes an adequate and representative set of items that tap the concept. The more the scale items represent the domain or universe of the concept being measured, the greater the content validity. To put it differently, content validity is a function of how well the dimensions and elements of a concept have been delineated (Sekaran, 2003). 4.2.2 Construct Validity
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Construct validity testifies to how well the results obtained from the use of the measure fit the theories around which the test is designed (Sekaran, 2003). Factor analysis is a multivariate technique that would confirm the dimensions of the concept that have been operationally defined, as well as to indicate which of the items are most appropriate for each dimension (establishing construct validity) (Sekaran, 2003). Table 4.4: Construct validity of Service Features, Tangible, Responsiveness, Assurance and Reliability, Empathy and Customer Satisfaction Construct Dimensions Cumulative % Service Quality Service features Tangible Responsiveness Assurance and Reliability Empathy Customer Satisfaction 53.786 68.372 80.691 90.205 96.301 100.000

Source: Output of the analysis of survey data, 2011 (Refer Appendix.)

4.3 Reliability of the Constructs It is very important to the researchers to ensure the reliability of the questionnaires developed by themselves for a particular research purpose. The reliability of a questionnaire is that the question items of a particular questionnaire measure the variables being studied reliably. Table 4.5 Summery of the reliability analysis

Source: Output of the analysis of survey data, 2011

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Key:

The table 4.5 shows that the reliability of the variables is closer to or greater

than the accepted minimum level 0.70 (Sekaran 2006; Malhothra 2004) 4.4 Level of Customer Satisfaction The first objective of the study is to investigate the level of customer satisfaction about Pambahinna BOC branch. Hence the decision Criteria is to investigate the level of customer satisfaction is if Mean value is equal or less than 1.0-2.49 on five point scale and standard deviation less than 1.0 could consider as the level of Customer Satisfaction is low and if Mean value is equal or less than 2.5-3.49 on five point scale and standard deviations less than 1.0 could consider as the level of Customer Satisfaction is Moderately low. On the other hand if Mean value is equal or greater than 3.5- 5.0 on five point liker scale and standard deviation less than 1.0 could consider as the level of Customer Satisfaction is high. To test whether the population mean conform to a given hypothesis one-sample t test for a single mean conducted. So test the hypothesis that the mean level exceeds 3.5, the midpoint value on a 5-point scale and significance level of = 0.05 are selected. Further if the value of the calculated t statistics are larger than the critical value (test value 3.5), reject Ho. If the calculated t value is smaller than the critical value, do not reject Ho. Based on the objective one, the hypothesis 1 was derived after reviewing the relevant literature as follows. Level of Customer Satisfaction The data given in the table 4.6 shows the key descriptive statistics of the different scales measuring the Customer Satisfaction. Table 4.6 Descriptive Statistics of Customer Satisfaction N Recommend to others 25 Switch off to the bank 25 Number of accounts 25 Number of years 25 Valid N (likewise) 25 Source: Output of the analysis of survey data, 2011
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Minimum Maximum 0 1 0 1 0 1 1 2

Mean .68 .72 .84 1.12

Std. Deviation .476 .458 .374 .332

According to the table 4.6, it is noticeable that the four indicators namely recommend to others, Switch off to another bank, Number of accounts and Number of years from Q 27-30 are above the scales mid-point, 3.5 on a 5-point scale. From the results, it may be seen that the mean value of all are above 0.68 and less than 1.12 on a 5- point scale. And standard deviation without number of years for other every question item takes values less than 1.0 by further supporting the idea by providing evidence. Hence the level of Customer Satisfaction is less within the selected sample of Customers in Pambahinna BOC branch. To test whether these results are statistically significant, a Single sample test was performed. The result of the tests is given in the table 4.7

Table 4.7 One-Sample T- Test of Customer Satisfaction Sig. (2t Recommend to others Switch off to another bank Number 0f accounts Number of years 8.660 8.660 6.928 12.101 df 24 24 24 24 tailed) .000 .000 .000 .000 Test Value = 0 Mean 95% Confidence Interval Difference 2.00 2.00 1.60 2.24 of the Difference Lower 1.52 1.52 1.12 1.86 Upper 2.48 2.48 2.08 2.62

Source: Output of the analysis of survey data, 2011 The results given in the table 4.7 disclose that t values at 3.5 midpoint value are significantly difference from estimated mean values Q 27to Q30. The t values are ranged from 8.660- 12.101. And they are statistically significant at 0.0001% (99%) level of significance. Further test values are positive at 95% confidence interval of the

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difference. Hence, the results suggest that there is significant difference exists in indicators of Customer Satisfaction and they are statistically significant. Level of Customer Satisfaction The data given in the table 4.8 shows the key descriptive statistics of Customer satisfaction (Comparing with independent variables). Table 4.8 Descriptive Statistics of Customer Satisfaction N Mean Service Features 25 1.5867 Tangible 25 1.8733 Responsiveness 25 2.2000 Assurance and Reliability 25 2.8300 Empathy 25 1.7000 Customer Satisfaction 25 1.4000 Source: Output of the analysis of survey data, 2011 Std. Deviation .81240 .59566 .64550 .76960 .84163 .36799 Std. Error Mean .16248 .11913 .12910 .15392 .16833 .07360

According to the table 4.8 it is noticeable that five dimensions of Service Quality which are affecting to Customer Satisfaction are less than the scales mid- point, 3.5 on a 5 point scale. In addition, standard deviations of these dimensions take values less than 1.0 by further supporting the idea by providing evidence. Hence, the level of Customer Satisfaction is less within the selected sample of customers in Pambahinna BOC branch. To test whether these results are statistically significant, a Single Samples Test was performed. The results of the tests of the tests are given in the table 4.9. Table 4.9 One-Sample T- Test of Customer Satisfaction Test Value = 0 95% Confidence Sig. (2t Service Features Tangible Responsiveness Assurance and Reliability Empathy Customer Satisfaction 9.765 15.725 17.041 18.386 10.100 19.022 df 24 24 24 24 24 24
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Mean Difference 1.5867 1.8733 2.2000 2.8300 1.7000 1.4000

Interval of the Difference Lower 1.2513 1.6275 1.9336 2.5123 1.3526 1.2481 Upper 1.9220 2.1192 2.4664 3.1477 2.0474 1.5519

tailed) .000 .000 .000 .000 .000 .000

Source: Output of the analysis of survey data, 2011 Service Quality dimensions Influence to the level of Customer Satisfaction Table 4.10 shows the influence of Customer Satisfaction and the dimensions of Service Quality (Service Features, Tangible, Responsiveness, Assurance and Reliability and Empathy) on the level of Customer Satisfaction.

Table 4.10: Correlations Service Features Pearson Correlation Sig. (2-tailed) Customer Satisfaction .466(*) .019 .387 .056 .702(**) .000 .540(**) .005 .505(*) .010

Pearson Correlation Sig. (2-tailed) Responsiveness Pearson Correlation Sig. (2-tailed) Assurance and Reliability Pearson Correlation Sig. (2-tailed) Empathy Pearson Correlation Sig. (2-tailed) * Correlation is significant at the 0.05 level (2-tailed). ** Correlation is significant at the 0.01 level (2-tailed). Key: Strong positive relationship Pearson coefficient of correlation > 0.5 Positive, not strong relationship Pearson coefficient of correlation < 0.5 Source: Output of the analysis of survey data, 2011 (Refer Appendix.) Summary of Service Quality Influence to the level of Customer Satisfaction 1. Test statistics of Service Features Pearson Correlation Significant level (2-tailed) P- Value = .466 = 0.019 < 0.001 < 0.005

Tangible

The Pearsons coefficient of correlation is = 0.466* (P=0.019); which is not very much close to plus one. But the significant level is (P- value) 0.019 which is < 0.01
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< 0.05. Therefore, researcher can conclude that though there is a positive correlation between Customer Satisfaction and Service Features, it is not much strong. 2. Test statistics of Tangible Pearson Correlation Significant level (2-tailed) P- Value = .387 = 0.056 < 0.001 < 0.005

The Pearsons coefficient of correlation is = 0.387 (P=0.056); which is not close to plus one. But the significant level is (P- value) 0.056 which is < 0.01 Customer Satisfaction and Tangible, it is not much strong. 3. Test statistics of Responsiveness Pearson Correlation Significant level (2-tailed) P- Value = .702 = 0.000 < 0.001 < 0.005 < 0.05. Therefore, researcher can conclude that though there is a positive correlation between

The Pearsons coefficient of correlation is = 0.702(**) (P=0.000); which is close to plus one. But the significant level is (P- value) 0.000 which is < 0.01 between Customer Satisfaction and Responsiveness. 4. Test statistics of Assurance and Reliability Pearson Correlation Significant level (2-tailed) P- Value = .540 = 0.005 < 0.001 < 0.005 < 0.05. Therefore, researcher can conclude that though there is a strong positive correlation

The Pearsons coefficient of correlation is = 0.540(**) (P=0.005); which is close to plus one. But the significant level is (P- value) 0.005 which is < 0.01 between Customer Satisfaction and Assurance and Reliability. 5. Test statistics of Empathy Pearson Correlation Significant level (2-tailed) P- Value = .505 = 0.010 < 0.001 < 0.005 < 0.05. Therefore, researcher can conclude that though there is a strong positive correlation

The Pearsons coefficient of correlation is = 0.505(**) (P=0.010); which is close to plus one. But the significant level is (P- value) 0.010 which is < 0.01
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< 0.05.

Therefore, researcher can conclude that though there is a strong positive correlation between Customer Satisfaction and Empathy.

4.5

Most important factor influence on Customer Satisfaction

The third objective of the study was to investigate most important dimensions influence on Customer Satisfaction.

To cover this objective the hypothesis number three, four, five, six and seven were derived. Hypotheses 3: Service features is the most important dimension influence on Customer Satisfaction of Pambahinna BOC branch. To test above, firstly the researcher conducted the Correlation analysis under section 4.6 in order to find whether there are correlations exist among the dependent variable (Customer Satisfaction) and each of the independent variables. Pearsons coefficient of correlation was used for the purposes of analyzing and interpretation. The multiple linear regression analysis was carried out to investigate the relationship between the dependent variable (Customer Satisfaction) with each independent variable namely Service features, Tangible, responsiveness, Assurance and Reliability and Empathy. The stepwise was applied to identify the most important variables in the model. Table 4.11 shows the model summery after applying the stepwise multiple regression procedure. The final model includes the variable as Service Features. All the variables are significant at 99% level of significance. Table 4.11: The Model summery of the stepwise multiple regression analysis Model R 1 .702(a) A Predictors: (Constant), R R Square .492 Adjusted R Square .470

Source: Output of the analysis of survey data, 2011

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Table 4.12: The model developed through the stepwise multiple regression analysis Un-standardized Model Coefficients Standardized Coefficients t Sig. .013 .000

a.

B Std. Error Beta 1 (Constant) .520 .194 2.682 Reliability .400 .085 .702 4.723 Dependent Variable: Customer satisfaction (Refer Appendix.) Source: Output of the analysis of survey data, 2011

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