Factors Influencing Customers’ Bank Selection Decision in Ethiopia: The Case of Bahir Dar City

Abstract

To plan a suitable marketing strategy, to keep existing customers and for attracting new customers, commercial banks need to identify the criteria by which customers determine their bank selection decision. The central objective of this study is to examine determinants of customers’ bank selection decision in private and state owned Commercial banks in Ethiopia. The study employed survey type specifically questionnaire to collect data from sample respondents of 204 customers in five Commercial Banks. Results of the multinomial regression model indicated that friendly or pleasing manner of staff, ATM service, bank speed, service quality, external bank appearance and internal sitting arrangement, secured feeling, proximity to home or work place, availability of several branches and long operating hours were significant factors whereas others’ recommendations, number of counter windows, safety of funds, good reception at the bank and low service charge were insignificant factors for bank selection decision. The implication of this paper is bank management, academicians and policy makers have to devote resources and evaluate and redesign current marketing strategies in order to attract (or retain) business customers in the competitive bank environment inside and outside Bah Dar city.

Keywords: Selection decision, Customers, Banks, Ethiopia