An Empirical Analysis of New Zealand Bank Customers' Satisfaction

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AN EMPIRICAL ANALYSIS OF NEW ZEALAND BANK CUSTOMERS’ SATISFACTION _______________________________________________________ A thesis submitted in partial fulfillment of the requirements for the Degree of Master of Commerce and Management at Lincoln University by Jing Wei _______________________________________________________ Lincoln University 2010 Abstract of a thesis submitted in partial fulfilment of the requirements for the Degree of M.C.M AN EMPIRICAL ANALYSIS OF NEW ZEALAND BANK CUSTOMERS’ SATISFACTION By Jing Wei It is important that banks deliver quality services which in turn results in customer satisfaction in today’s competitive banking environment. Within the New Zealand financial service market, competition is deemed to be strong given that there have been new entrants into the market as well as mergers and acquisition and exits over the last ten years (Chan, Schumacher, and Tripe, 2007). In order to retain the customers, customer satisfaction becomes a crux issue to bank management. This research identifies and examines the factors influencing bank customer satisfaction in New Zealand’s banking industry. Specifically, the goal of this study is to identify the dimensions of perceived service quality; and examine the relationships between bank customer satisfaction and service quality, and perceived value and corporate image. The effects of demographic factors on the constructs are also investigated. The data was collected from a convenience sample of individual bank customers who bank with a local commercial bank. The results indicate that service quality has the most influence on bank customers’ satisfaction compare to value and corporate image. The results also provide support for the moderating effect of value on the relationships between service quality and customer satisfaction, and the moderating effect of corporate image on the relationships between service quality dimensions and service quality. In addition, the results also reveal that the perceptions of the constructs are primarily affected by age and ethnicity of customers. Keywords: multi-level model, customer satisfaction, service quality, banking industry ii Acknowledgement First of all, I would like to express my deep appreciation to my main supervisor Dr Christopher Gan a respectable, responsible and resourceful scholar, for his constant assistance, especially in data collection and analysis of the research findings. I also would like to gracefully acknowledge the input, support and guidance from my associate supervisor, Mr. Michael D. Clemes, who had spent countless hours to edit my work. Thanks to my associate supervisor, Dr. Baiding Hu, who had given me valuable advices in statistic analysis. I thanked them for their patience, valuable guidance, and perspectives throughout the research. Without their exceptional support and encouragement, I could not have completed my thesis. The continual help and support of my parents throughout the past years made this thesis possible. I could not possibly have completed the thesis without your support and advice. Thanks for all your help over many years. I would like to express my special thanks to my wife, Jun (Christie) Hou, thank you for your love and support for every chapter and every page of this work. I am also extremely grateful to all my friends who had assisted and supported me while writing my thesis. I would like to thank William Wang, James Wang, Leven Dai, and Ricky Zhang who had helped me to distribute the survey questionnaire during the data collection period. I would like to thank Nancy Zheng, Jonathan Wu, and Xin Shu who assisted me on the statistical methodology analysis. I also would like to express my appreciation to my friend Andrew Hodge and Craig Mc William, who provide helps in my language and writing. My appreciation also goes to postgraduate fellows and staff in the Commerce division for their support and assistance. iii Table of Contents Abstract ii Acknowledgement iii Table of Contents iv List of Figures viii List of Tables ix List of Appendices xi Chapter 1: Introduction 1 1.1 Introduction and Customer Satisfaction 1 1.2 The New Zealand Banking Sector 2 1.3 Research Problem Statement 5 1.4 Research Justification 6 1.5 Structure of the thesis 7 Chapter 2: Literature Review 8 2.1 Introduction 8 2.2 Customer Satisfaction 8 2.3 Service Quality 8 2.4 Service Quality Models 10 2.5 Service Quality Studies in the Banking Sector 15 2.6 Constructs related to Customer Satisfaction 22 2.7 Chapter Summary 25 Chapter 3: Conceptual Model and Research Hypotheses 26 3.1 Introduction 26 3.2 Conceptual Gaps in the Literature 26 3.3 Hypotheses Development 28 3.3.1 Hypotheses Relating to Research Objective One 28 3.3.2 Hypotheses Relating to Research Objective Two 31 3.3.3 Hypotheses Relating to Research Objective Three 32 3.3.4 Hypotheses Relating to Research Objective Four 33 3.3.5 Hypotheses Relating to Research Objective Five 33 iv 3.4 Chapter Summary 34 Chapter 4: Research Design and Methodology 35 4.1 Introduction 35 4.2 Sample Derivation 35 4.3 Sample Size 35 4.4 Data Collection Procedures 36 4.5 Questionnaire Development 37 4.5.1 Focus Group Interview 37 4.5.2 Design and Layout of the Survey Instrument 38 4.5.3 Pre-testing Procedures 39 4.6 Data Analysis Technique 40 4.6.1 Factor Analysis 40 4.6.2 Summated Scale 48 4.6.3 Multiple Rregression analysis 49 4.6.4 Analysis of Variance (ANOVA) 52 4.7 Assumption for Regression Analysis and ANOVA 53 4.8 Chapter Summary 57 Chapter 5: Results and Discussions 59 5.1 Introduction 59 5.2 Sample and Response Rate 59 5.3 Descriptive Statistics 61 5.4 Assessment for Factor Analysis 66 5.4.1 Statistical Assumptions for Factor Analysis 66 5.4.1.1 Examination of the Correlation Matrix 66 5.4.1.2 Examination of the Anti-Image Correlation Matrix 67 5.4.1.3 Examination of Barlett’s Test of Sphericity 67 5.4.1.4 Examination of Kaiser-Meyer-Olkin measure of sampling adequacy 67 5.4.2 Factor Analysis Results 67 5.4.2.1 The Latent Roots Criterion 67 5.4.2.2 Scree Test Criterion 68 5.4.2.3 Factor Rotation 68 5.4.2.4 Interpretation of Factors 69 5.4.3 Summated Scales 69 v 5.4.3.1 Content Validity 70 5.4.3.2 Dimensionality 70 5.4.3.3 Reliability 70 5.5 Assessment of the Regression Models and ANOVA 72 5.5.1 Assumptions for Regression Analysis and ANOVA 72 5.5.1.1 Outliers 72 5.5.1.2 Multicollinearity 72 5.5.1.3 Linearity 73 5.5.1.4 Normality of the Error Term Distribution 73 5.5.1.5 Independence of the Error Terms (No Autocorrelation) 73 5.5.1.6 Homoscedasticity of the Error Terms 74 5.5.2 Results Pertaining to Research Objective One 74 5.5.2.1 Hypotheses 1, 2, 3, 4, 5 and 6 75 5.5.2.2 Discussion Regarding Research Objective One 76 5.5.3 Results Pertaining to Research Objective Two 76 5.5.3.1 Hypothesis 7 77 5.5.3.2 Discussion Regarding Research Objective Two 78 5.5.4 Results Pertaining to Research Objective Three 78 5.5.4.1 Hypothesis 8a 79 5.5.4.2 Hypothesis 8b 80 5.5.4.3 Hypothesis 8c 81 5.5.4.4 Hypothesis 8d 82 5.5.4.5 Hypothesis 8e 84 5.5.4.6 Discussion Regarding Research Objective Three 85 5.5.5 Results Pertaining to Research Objective Four 85 5.5.5.1 Hypothesis 9, 10, 11 85 5.5.5.2 Discussion Regarding Research Objective Four 86 5.5.6 Results Pertaining to Research Objective Five 88 5.5.6.1 Hypothesis 12 88 5.5.6.2 Hypothesis 13 89 5.5.6.3 Discussion Regarding Research Objective Five 90 5.6 Chapter Summary 91 Chapter 5: Conclusions and Implications 92 vi 6.1 Introduction 92 6.2 Summary of the Study 92 6.3 Conclusions Pertaining to Research Objective One 93 6.4 Conclusions Pertaining to Research Objective Two 94 6.5 Conclusions Pertaining to Research Objective Three 95 6.6 Conclusions Pertaining to Research Objective Four 96 6.7 Conclusions Pertaining to Research Objective Five 97 6.8 Implications 98 6.8.1 Theoretical Implications 98 6.8.2 Managerial Implications 99 6.9 Research Limitations 101 6.10 Directions for Future Research 102 References 104 vii List of Figures Figure Page 2 Conceptualisation of Service Quality from previous literature 13 3 Bank Customers’ Satisfaction Conceptual Framework 27 5.1 The Scree Plot 68 5.2 Customer Satisfaction of Surveyed Customers in the Banking Industry: Path Model 87 4A Residual Scatter Plots 143 5A Normality Plots 145 6A Normal P-P Plot of Regression Standardised Residual 147 viii List of Tables Table Page 2 Empirical Findings in Service Quality Attributes 21 4.1 Modes of Factor Analysis 41 4.2 Guidelines for Identifying Significance Factor Loadings Based 47 on Sample Size 5.1 Independent Sample Test for Non-Response Bias 60 5.2 Profile of the Respondents 62 5.3 Respondents’ Current Banking Experiences Compare with Other 63 Banks 5.4 Respondents’ Current Banking Status 65 5.5 Reliability of Scaled Items for Dimensions of Service Quality 71 5.6 Reliability of Scaled Items for Customer Satisfaction and related 71 Constructs

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