A Study on Services Quality of Commercial Banks in Dire Dawa, Ethiopia: A Comparative Study of Public and Private Banks

Abstract

This study compares the perception of customers’ about service quality of the public and private commercial banks in Dire Dawa, Ethiopia. This study is a questionnaire survey based on the combined and modified SERVQUAL by Parasuraman et al. (1988) and Banking Service Quality (BSQ) Scale by Bahia and Nantel (2000). It included nine service quality dimensions, with 35 statements, to measure and compare the wide range of services offered by Ethiopian public and private banks. A total of 500 questionnaires were administered and data was collected by stratified random sampling to customers of the two banking sectors and 488 were used for analysis purpose (243 public and 245 private). Comparison was done by using mean of nine dimensions that were used to measure the customers’ perceptions and independent samples t-test was used to explore the differences in the mean values of services quality dimensions between the two groups of customers (public banks’ customers and private banks’ customers). The mean result reveals that private banks outperform public banks in terms of tangibles, reliability, responsiveness, assurance, empathy, effectiveness and price dimensions. Moreover, the result of hypotheses test shows there are significant differences in perception between customers of the Ethiopian public and private banks regarding the responsiveness, assurance, empathy, effectiveness, and price dimensions as indicators of service quality.

Keywords: Public Bank, Private Bank, Services quality, Customers’ Perceptions