13th International Scientific Conference on Economic and Social Development

Barcelona, 14-16 April 2016

THE EFFECT OF SERVICE QUALITY DIMENSIONS ON

CUSTOMERS’ LOYALTY THROUGH CUSTOMER SATISFACTION
IN JORDANIAN ISLAMIC BANK

Ayed Al Muala
Zarqa University
Faculty of Administration and Economic Sciences

ABSTRACT
This research aims to study the effect of banking Service Quality Dimensions on customers’
satisfaction, and customers’ loyalty; the dimensions include tangibility, reliability, empathy,
responsiveness, and Assurance, Data were collected through questionnaires forming a
representative sample. A total of 250 questionnaires were distributed to Jordanian Islamic
Bank customers in Amman city, the findings indicated that there is a positive effect of
Tangibility, Reliability, Empathy, Responsiveness, Assurance, on customer satisfaction toward
customers’ loyalty. The results of study support Hypothesis of study (H1, H2, H3, H4, H5, and
H6) (2), the data indicate that the findings of Hypothesis are significantly and positively related
to customers’ loyalty.
Keywords: Service Quality Dimensions, Customer satisfaction, loyalty, Jordan

1. INTRODUCTION
In the past two decades, general interests into service quality in research fields showed A wide
research about service quality has taken place in the last two decades manifested centrifugal
relation among quality of customer services, performance improvement and organizational
competitiveness. This relation clearly showed that the improvement of customer service will
lead in its turn to an improvement in the performance and competitiveness (Douglas and
Connor, 2003; Rosen et al., 2003). Certain standards and indicators of customer satisfaction
and service quality are used by service units' administrators to value customers' needs by the
institution. Service organizations consider service quality as substantial tool to keep their
competitiveness in the marketplace. For instance, financial services that offered by different
banks are considered as an important competitive tool by using distinguished products
(Logasvathi, & Haitham 2015).. In other words, customers can be attracted by high quality
services that banks offer. Therefore, structural adjustment improves banks plans to make
different activities which empower them to be more competitive in market place Angur et al.,
1999). In addition, banks play an essential role in economic and financial growth in Jordan.
Apparently, the growth of Jordanian economy is greatly influenced by effective banking
system. Furthermore, banks experience many challenges in their sectors due to the changing of
customers requirements and to come over these challenges, it's important for banks to use the
latest information technology to compete efficiently with global organizations(Lau et al., 2013).
Moreover, banks are responsible to provide best quality service to customers to ensure
permanent competitive advantages. Service providers face many challenges to value the quality
of services due to the critical quality of service to business sector. The challenges of valuing
the service quality come from its diversity, intangibility and the difficulty of separation
(Saghier, & Nathan, 2013). In this vision, the service demands an autonomous framework for
measuring and explaining quality. Service quality model developed by (Parasuraman et al.,
1985, 1988) is the most popular model and is widely practiced to measure the quality of service
in service sectors. In addition, wide research has taken place on service quality and customer
satisfaction. Conversely, there are no recent researches on retail banking setting to look into the
impact of the performance of service features on customer satisfaction in complete model.

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2. LITERATURE REVIEW
Customers’ Satisfaction and Loyalty
The strategic objective which is the basis of the relationship marketing approach consists of
achieving customer loyalty. A comprehensive definition of bank loyalty views the construct as
“ the biased (i.e. non random) behavioural response (i.e. revisit), expressed over time, by some
decision-making unit with respect to one bank out of a set of banks, which is a function of
psychological (decision-making and evaluative) process resulting in brand commitment”
(Bloemer et al., 1998). An important statement which has to be remarked is the distinction
between customer loyalty and customer retention. According to Dick and Basu, loyalty is a
complex construction, which comprises both psychological and behavioural components;
different loyalty types are supposed to form a combination of repeated purchasing and relative
attitude towards business firms (Dick and Basu, 1994). Therefore, customer loyalty can be
defined in terms of customer behaviour, which will be equivalent with customer retention, and
in terms of attitudes. behavioural loyalty or retention can be evaluated by various quantitative
indicators such as: number of purchases made by the customer, the frequency of purchasing,
the percentage from the total spending made by a customer for a particular service or product,
with regard to a particular organization and the possibility of buying by the customer.
According to kotler customer satisfaction can be defined in many ways, but generally he
emphasized that it is related to customer evaluation of experience and expectancy. Customer
satisfaction should be taken into account to assure customer loyalty towards service supplies of
any organization. In banks, customers care about the level of services given to them which leads
them to decide to purchase if they're satisfied with these services after using them. Customers'
satisfactions get higher when they have to offer minimal payment and get and get maximum of
profit and usage. On the other hand, a study was done in the Malaysian retail banking industries
by Lo, Osman, Ramayah and Rahim (2010) stated that assurance and empathy had the highest
impact on customer satisfaction. More studies by Arasli, Smadi and Katircioglu (2005) showed
that reliability had the highest influence on customer satisfaction. Finally, ( Lau et al., 2013,
Saghier, & Nathan, (2013) ………… due to the fact that loyalty is related to customer
satisfaction, banks performed new affective strategies to improve the quality of service
satisfaction and loyalty(Awan et al., 2011).
On the other hand, a study was done in the Malaysian retail banking industries by Lo, Osman,
Ramayah and Rahim (2010) stated that assurance and empathy had the highest impact on
customer satisfaction. More studies by Arasli, Smadi and Katircioglu (2005) showed that
reliability had the highest influence on customer satisfaction. Finally, (Lau et al., 2013, Saghier,
& Nathan, (2013) have identified the dimensions of service quality as the predecessors of
customer satisfaction. Relatively many studies have investigated service quality in the retail
banking sector in Jordan. Due to the fact that loyalty is related to customer satisfaction, banks
performed new affective strategies to improve the quality of service satisfaction and loyalty
(Awan et al., 2011).

Service Quality Dimensions’

Service quality has become the focus of attention for many academic researchers because of
the serious Competition in the marketplace and has been identified as the main key in
maintaining competitive advantage and trustful relationship with satisfied customers.
(Zeithmal, 2000). According to Ueno (2010) consider the service quality gaps model is the
conceptualization of service quality as the gap between expected service and perceived service.
Furthermore, the importance of service quality can be represented in the service industries and
service providers should understand the concept of service quality to show their customers the

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differentiation of products. Many studies have been discussing service quality by developing
new models and theories to address the importance of implementation and various dimensions
of service quality. Moreover, service quality has been defined by many researchers in many
different ways. (Eshghi et al, 2008), defined service quality as an overall evaluation by customer
service, where other researchers stated that customer service is an expansion to which service
fulfill customer's expectations and needs. In addition, service quality has been defined as the
level of variation between customers' expectations for service and their understanding of the
implementation of that service (Parasuraman et al., 1994).

Tangibles: as a service quality include the companies' structure of several elements, such as
company representatives, physical facilities, materials, tools and communication materials.
According to (Fitzsimmons & Fitzsimmons, 2001) care and attention paid for details and
information given by the service providers resulted clear appearance of physical environmental
conditions. Tangibles summarized as physical affirmation of the service (Davis et al. (2003)
.more precisely, according to Parasuraman et al. (1985) tangibility appear to be physical
facilities, tools, personnel and registered materials. finally, the recent research detected that
tangibles are the banking services offered by the providers of the Jordanian bank as understood
by Jordanian bank customers. these tangibles are valued by 4 items of the total 22 tangibles
dimension of service quality.

Reliability: in service quality depends on dealing with the issues of customer services; provide
these services at the first time and on time and keep a record of no errors. Moreover, reliability
has been defined as the most essential factor in traditional service (Parasuraman et al., 1988).
Reliability be formed of right order completion, precise records; precise quote, accurate bills,
precise outcomes and credibility in the services. (Yang et al., 2004) indicated that reliability is
the most important factor in banking services. a study by Parasuraman et al. (1985) stated that
service quality was performed in four different companies, those companies include banks,
maintenance service companies credit card companies and telecommunication companies.
According to (Parasuraman et al., 1985, p. 24) reliability is higher in these four companies
comparing to some of the values which are related to the important dimensions. Finally,
reliability is defined as the “ability to perform the promised service dependably and accurately”
(Parasuraman et al., 1988, p. 23). This research is concerned to discuss reliability as a possibility
and capability of providing banking services at a particular Jordanian bank to fulfill the
promised services as expected by the particular Jordanian bank headquarters' banking
customers. Out of 22 items of service quality, 5 items of reliability dimension are used to
measure this.

Responsiveness: as a SERVQUAL dimension Responsiveness is defined by (Parasuraman et

al., 1988) as "the willingness to help customers and provide prompt service". on the other side
Johnston (1997) defined responsiveness as quickness and timeliness of service delivery. this
contains of operating quickness and abilities to respond immediately to customer requests.
More specifically, responsiveness is defined as the desire and preparedness of workers to
provide quality service. It contains the timeliness of service (Parasuraman et al., 1985). It also
consists observing the needs and demands of customers, easy and fast processing time, taking
care of customers individually by the staff, solving problems and customers' safety (Kumar et
al., 2009).finally, responsiveness in this research is the preparedness of banking services
providers at a particular bank headquarters, to offer services on time as expected by a particular
Jordanian band headquarters' banking customers. Four items out of the 22-items of
responsiveness dimension service quality are used to measure this.

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Empathy: as a SERVQUAL dimension Parasuraman et al. (1985) defined empathy as

individual attention and looking after clients by the company staff. it also consists giving
attention to staffs who perceive the needs of their clients and clients facilities during working
hours

Assurance: confidence and trust when dealing with the organization. These feelings reflect
employees experience and knowledge and their capability to be confident in themselves and
build a confidence in the customers themselves. According to (Blery et al., 2009) assurance
can be developed by the level of information, knowledge and kind treatment by the employees
in offering the services and their capability to build trust and confidence in clients. Thus, model
of study as shown in figure 1, has dimensions of service quality as independent variables and
customer satisfaction as dependent variable.

Figure (1) Research conceptual model

Hypotheses formulation
The current study is based on six hypotheses as following:
H1 Customer satisfaction is positively with Customer Loyalty
H2 Tangibility is related positively with Customer Satisfaction.
H3 Reliability is related positively with Customer Satisfaction.
H4 Empathy is related positively with Customer Satisfaction.
H5 Responsiveness is related positively with Customer Satisfaction.
H6 Assurance is related positively with Customer Satisfaction.

3. RESEARCH METHODOLOGY
This section will address the following issues that Pertains to research design such as
population; sample size and sampling method, hypothesis of the research, questionnaires
design, analysis method and result of reliability. The population of the study consists of all
Jordanian Islamic Bank at Amman city. About 250 questionnaires were distributed to
Jordanian Islamic Bank customers’ at Amman city, however; only 200 questionnaires
obtained have valid responses and were used for data analysis in this research paper.
According to Sekaran (2003). Thus, a total of 200 responses were usable and used for
subsequent analysis, giving a response rate of 80 %. The questionnaire has been adopted
from questions of previous studies. It measures the quality of services by implementing the
five dimensions "SERVQUAL" instrument: each dimension is followed by questions. The
5-point Likert -scale is used for all responses with (1 = strongly disagree, 2 = disagree, 3 =

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undecided, 4 = agree, 5 = strongly agree). The questionnaire is divided into four parts: part
(1) demographic variables (12 items); part(2) service quality dimensions (22) items were
adapted from Parasuraman et al. (1994); part (3) customer satisfaction (5) items adopted
from AL Muala and Al Qurneh (2012). Finally, part (4) customer loyalty (5) items adapted
from AL Muala and Al Qurneh (2012). Furthermore, to draw a representative sample, a
convenience sample was choose; Convenience samples are the most common form of
sampling design in social science research Mohr (1990) and provide researchers with an
acceptable database to use statistical inference techniques. This approach to sampling design
is also applicable in services marketing.

Reliability Test
The reliabilities for the variables were calculated and all concur with Nunnally's (1978)
minimum threshold of 0.70. Table.1, lists the Cronbach’s Alpha (coefficient alpha) of each
factor. All the factors show a high degree of reliability. Table (1) show that there were five
independent factors and one dependent factor of customers’ satisfaction that was examined
by the researcher.

Table 1: reliability results

Variables Number Cronbach Alpha
of Item
Customer Loyalty 5 0.80
Tangibility 5 0.85
Reliability 5 0.87
Empathy 4 0.86
Responsiveness 4 0.81
Assurance 4 0.85
Customers’ Satisfaction 4 0.85
TOTAL 35
Demographic variables
The respondents’ gender are show that the male respondents (54.2%) than female (45.8%).
The respondents belongs to the age group between 26 years old and 35 years old (48.2%).
Respondents who possess a bachelor degree (26.6) or diploma are (18.3%). Moreover, 14% of
the respondents are from the group with incomes less than 300 JD and 301- 500 JD (13.4%).

Hypothesis test
The results of Hypothesis (1) the data indicate tangibility dimension value is significantly and
positively affect customers’ satisfaction of the total sample (Beta=.109, p=.036),the data shows
that reliability dimension is significantly and positively affect to customers’ satisfaction of the
total sample (Beta=.113, p=.025).
Therefore, the results support Hypothesis of study (H1, H2, H3, H4, H5 and H6) (2), the data
indicate that the findings of Hypothesis are significantly and positively related to customers’
satisfaction and customer loyalty.

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Table 3: hypothesis results

Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta T Sig.
1 (Constant) .834 .164 5.086 .000
Tangibility .109 .052 .110 2.105 .036
Reliability .113 .059 .113 2.920 .025
Empathy .170 .051 .173 3.305 .001
Responsiveness .016 .053 .015 .295 .000
Assurance .383 .044 .411 8.646 .000
Customer .645 .123 .10 4.675
satisfaction

4. CONCLUSION
The research examined the effect of banking service quality dimensions (Tangibility,
Reliability, Empathy, Responsiveness, Assurance) on customers’ satisfaction and customer
loyalty at Amman city , after collecting and analyzing the data using SPSS, regression analysis
show that all dimension have effect on customers’ satisfaction. Among the independent
variables, Assurance posses the highest effect on customers’ satisfaction. Based on these results
I recommend that Jordanian Islamic Bank should focus more on Assurance dimension to
improve service quality in order to satisfy their customers’ more as well as to enhance their
buying decision of the bank service. Addition, customer satisfaction have a significant impact
on customer loyalty.

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