International Journal of Bank MarketingElucidating perceived overall service quality in retail bankingZalfa Laili Hamzah Siew Peng Lee Sedigheh Moghavvemi

Article informationTo cite this documentZalfa Laili Hamzah Siew Peng Lee Sedigheh Moghavvemi (2017) Elucidating perceivedoverall service quality in retail banking International Journal of Bank Marketing Vol 35 Issue 5pp781-804 httpsdoiorg101108IJBM-12-2015-0204Permanent link to this documenthttpsdoiorg101108IJBM-12-2015-0204

Downloaded on 15 August 2017 At 0751 (PT)References this document contains references to 113 other documentsTo copy this document permissionsemeraldinsightcomThe fulltext of this document has been downloaded 150 times since 2017

Users who downloaded this article also downloaded(2015)Service quality service convenience price and fairness customer loyalty and the mediatingrole of customer satisfaction International Journal of Bank Marketing Vol 33 Iss 4 pp 404-422 ltahref=httpsdoiorg101108IJBM-04-2014-0048gthttpsdoiorg101108IJBM-04-2014-0048ltagt(2016)Impact of service quality on customer satisfaction in private and public sector banksInternational Journal of Bank Marketing Vol 34 Iss 5 pp 606-622 lta href=httpsdoiorg101108IJBM-03-2015-0030gthttpsdoiorg101108IJBM-03-2015-0030ltagt

Access to this document was granted through an Emerald subscription provided by emerald-srm376953 []

For AuthorsIf you would like to write for this or any other Emerald publication then please use our Emeraldfor Authors service information about how to choose which publication to write for and submissionguidelines are available for all Please visit wwwemeraldinsightcomauthors for more information

About Emerald wwwemeraldinsightcomEmerald is a global publisher linking research and practice to the benefit of society The companymanages a portfolio of more than 290 journals and over 2350 books and book series volumes aswell as providing an extensive range of online products and additional customer resources andservices

Emerald is both COUNTER 4 and TRANSFER compliant The organization is a partner of theCommittee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative fordigital archive preservation

Related content and download information correct at time of download

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Elucidating perceived overallservice quality in retail banking

Zalfa Laili HamzahDepartment of Marketing University of Malaya Kuala Lumpur Malaysia

Siew Peng LeeDepartment of Economics University of Tunku Abdul Rahman

Petaling Jaya Malaysia andSedigheh Moghavvemi

Department of Operation and Management Information SystemsUniversity of Malaya Kuala Lumpur Malaysia

AbstractPurpose ndash The purpose of this paper is to examine the dimensions of service quality (SERVQUAL) from theperspective of the customers and its relationships with perceived overall SERVQUAL in retail banking andalso investigate the relationships between perceived overall SERVQUAL and customer trust customersatisfaction and bank reputationDesignmethodologyapproach ndash A survey questionnaire was constructed and data were collected from375 regular customers of local banks The convenience sampling method was employed to collect data fromexisting customers of local banks operating in the Klang Valley area of Malaysia Structural equationmodelling was applied to analyse the dataFindings ndash The results of the study indicate four key dimensions of SERVQUAL ndash tangibles empathyreliability and security and internet banking ndash all of which are significantly and positively related tocustomersrsquo perceived overall SERVQUAL Internet banking facilities are another significant determinant ofthe perceived overall SERVQUAL The results are indicative of the strong and positive effect upon customersatisfaction their trust in the bank and finally a bankrsquos reputationResearch limitationsimplications ndash This study has presented and tested empirical study of perceivedoverall SERVQUAL model in the banking industry particularly in the Malaysian context This researchidentified the dimensions of SERVQUAL (ie tangibles empathy reliability and security and internet banking)that influence the overall perceived SERVQUAL and how these overall perceptions will eventually influencecustomer trust customer satisfaction and bank reputation is valid and reliable in retail banking industryThis study however only focussed on the banking industry Given the diversity of the service industry thesefindings may have to be tested for the applicability to different service industries in future studiesPractical implications ndash This research is useful to bank managers as it helps them improve SERVQUAL toprotect and expand their respective market share in a highly competitive industry Banks could utilise theresults of this study to improve their service tangibility empathy reliability and security which will affectboth customer trust and satisfaction and enhance a bankrsquos reputationSocial implications ndash The findings of specific dimensions of SERVQUAL will contribute to customerperception of banksrsquo image and reputation and strengthen trust and satisfaction Moreover assistingcustomers towards the understanding of how they should received high quality of services with regard toquality should be perceived as emphatic reliable secured and tangibility of serviceOriginalityvalue ndash The findings of this study highlight the specific dimensionalities of SERVQUALin influencing the perceived overall SERVQUAL This study will increase the understanding on the impact ofperceived overall SERVQUAL on consumer trust customer satisfaction and a bankrsquos reputation Specificallyit reports an empirical study of a model of perceived overall SERVQUAL that simultaneously considers thedirect effects of perceived overall SERVQUAL on customer trust customer satisfaction and bank reputationKeywords Trust Reputation Customer satisfaction Perceived overall service qualityPaper type Research paper

IntroductionDelivering high perceived overall service quality (SERVQUAL) is essential for companiesthat intend to distinguish themselves from their competitors and sustain their competitiveadvantages (Stamenkov and Dika 2015 Chowdhary and Prakash 2007 Wang et al 2003)

International Journal of BankMarketing

Vol 35 No 5 2017pp 781-804

copy Emerald Publishing Limited0265-2323

DOI 101108IJBM-12-2015-0204

Received 20 December 2015Revised 6 June 2016

13 July 2016Accepted 19 August 2016

The current issue and full text archive of this journal is available on Emerald Insight atwwwemeraldinsightcom0265-2323htm

781

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

In a competitive financial service environment the pursuit of highly perceived overallSERVQUAL is considered to be a central strategy to distinguish themselves in the quest ofrealizing long-term success Moreover scholars and practitioners suggest that companiesthat provide good services are perceived as being of high quality which could then be usedto build customer trust increase customer satisfaction and improve corporate reputation(Kassim and Abdullah 2010 Eisingerich and Bell 2008 Wang et al 2003 Dawar andParker 1994) all of which will result in an increase in business and financial performancesHowever it has been argued that the provision of a high-quality service is necessary butinsufficient for a successful business (Stamenkov and Dika 2015) This situation might bedue to the fact that thus far most measurements of SERVQUAL such as SERVQUAL andservice quality performance (SERVPERF) are insufficiently comprehensive to explain theconstruct and merely address generic scales across industries which is unfeasible (Bradyand Cronin 2001 and Mittal et al 2015) By generic scales customers tend to combineevaluations of attributes resulting in less accurate customer perception of the overallperceive SERVQUAL of a particular industry

Previous research on perceived overall SERVQUAL has received great attention inrecent decades which is still being debated (Chowdhary and Prakash 2007 Parasuramanet al 1988 Cronin and Taylor 1992 Brady and Cronin 2001 Kang and James 2004Groumlnroos 1984) Research in the past have solely focussed on functional quality(Edvardsson 2005) which is inadequate for capturing all of the aspects of SERVQUAL(Mittal et al 2015) Furthermore research on perceived overall SERVQUAL tends to begeneric rather than context specific As a result there is a lack of understanding ofSERVQUAL in a specific context as generic context does not capture the specific nature ofthe type of service (Mittal et al 2015) A clear understanding of specific context is essentialbecause customers have a unique set of expectations based on the different types ofservices such as the service industry For example banking is regarded as a high contactservice as customers are directly connected to service providers (Lovelock 1996)Furthermore banks facing challenges with regard to changes of marketing environmentfierce competition technology innovation and the complex demand of customers thatnecessitating continuous evaluations of the dimensionalities of SERVQUAL (Tsoukatos andMastrojianni 2010)

Thus an understanding of the specific dimensionalities of SERVQUAL is critical to allservice industries including banks as they need to deliver high quality of services in orderto fulfil customersrsquo demands and to survive in a competitive business environment(Chowdhary and Prakash 2007) As the current banking industry becomes morecompetitive customers tend to become more and more demanding Therefore it isimportant that banks be concerned with delivering high-quality services to customers(Chowdhary and Prakash 2007) For example they need to understand specific dimensions(eg reliability empathy and convenience) applied in banking in order to fulfil customersrsquodemands with different expectations of services being provided (Mittal et al 2015 Kang andJames 2004) Fulfilling customer demands is important to banks as it results in gainedtrust improved reputation and subsequently retention of customers especially when thebank industry is one of the fastest-growing sectors The importance of this sector in thenational economy is reflected in its contribution to the GDP

While researchers agree that perceived SERVQUAL is a multi-dimensional construct noconsensus has been reached about its generally valid and generic dimensions (Korda andSnoj 2010) and no general agreement has been agreed upon to the nature or content of thedimensions (Brady and Cronin 2001) For example Parasuraman et al (1988) developed theSERVQUAL measurement with five dimensions They claimed that the scale can begeneralised across service industries and have received wide acceptance amongstresearchers Nevertheless the empirical evidence suggests that widespread usage of these

782

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

dimensions is unjustified (Gilmore 2003) In the financial sector Bahia and Nantel (2000)developed a bank SERVQUAL model containing six dimensions (ie effectiveness andassurance access price tangibles service portfolio and reliability) while Guo et al (2008)reported four dimensions (ie reliability human capital communication and technology) forcapturing SERVQUAL in the Chinese banking sector Despite these SERVQUAL studiesconducted in the financial sector there is a lack of agreement regarding the specificdimensions of SERVQUAL in the banking sector (Monferrer-Tirado et al 2016) In thiscontext understanding the SERVQUAL dimensions and their respective relationships withthe perception of overall SERVQUAL of banking sector remains a key issue that requiresfurther investigation Moreover Chowdhary and Prakash (2007) suggested that theidentification of the determinants of SERVQUAL is necessary in order to be able to specifymeasure control and improve customer perceived SERVQUAL

Perceived overall SERVQUAL was argued to have a significant impact on businessperformance such as customer satisfaction (Caruana 2002 Hu et al 2009) customer trustand bank reputation (Cronin et al 2000) These research works however were conductedindependently The research that integrates bank SERVQUAL dimensionalities and itsimpact on consumer trust customer satisfaction and bank reputation is still scarce(Tsoukatos and Mastrojianni 2010 Caruana 2002 Bahia and Nantel 2000 Lee andMoghavvemi 2015) particularly in a Malaysian context This will limit the understandingof how specific dimensionalities of SERVQUAL play their respective roles in developingtrust enhance customer satisfaction and build their reputation in banking As pointed outearlier the dimensions of SERVQUAL may differ according to the type of service industryIn this regard understanding SERVQUAL dimensions and perceived overall SERVQUALremains a key issue that requires further investigation vis-agrave-vis the financial sector

Theory of expectancydisconfirmation paradigm also provides the grounding of thisstudy with SERVQUAL as an antecedent and customer satisfaction as an outcome Thetheory suggests that key determinants of satisfaction are expectations and perception ofproduct and service performances (Oliver 1989) Previous research works also suggestedthat the theory provide a complete picture of the role of perceived overall SERVQUAL as adeterminant of satisfaction and behavioural outcome (Gupta and Stewart 1996) Perceivedoverall SERVQUAL also has been suggested to influence customer trust and bankreputation However the effect of both constructs has not been tested in one model Thus abetter understanding of the effect of perceived overall SERVQUAL on customer satisfactionwith the presence of customer trust and bank reputation is helpful to the management whenstrategizing their respective banks and allocating corporate resources (Caruana 2002)Therefore it is also crucial to look at developing a richer model that incorporates theseconstructs simultaneously as proposed in the current study

Therefore an empirical investigation is required to properly address the followingquestions what are the dimensions of SERVQUAL in the banking context To what extentdo the dimensionalities of SERVQUAL influence the perceived overall SERVQUAL Doesperceived overall SERVQUAL influence consumer trust customer satisfaction and bankreputation Thus this study examines the dimensionalities of SERVQUAL that affect theperceived overall SERVQUAL and its impact upon customer trust customer satisfactionand bank reputation in Malaysia As such collectively investigating the overallSERVQUAL determinants is essential for strategizing their services marketing decisionsand thereby warrants further investigation The issue of overall SERVQUAL is important inMalaysia for many reasons First there is a lack of research on how to manage SERVQUALin the Malaysian banking industry Second with the enormous growth of foreign bankslocal banks are aware of the competition because there is a segment within the currentmarket that would switch to foreign banking services if the quality being offered were onpar with the local banks Since the Asian financial crisis in 1997 the Malaysian banking

783

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

scene has undergone a number of significant changes including the restructuring andredesigning of the service delivery methods being offered Over time the Malaysianbanking sector is continuously improving due to increasing competition from the growth offoreign banks in local As such local banks are pressured to find ways to sustain theirrespective competitiveness Thus this research is considered to be timely

The remainder of this paper is structured in the following manner The followingsections will provide information on the constructs being examined in this study explain thetheoretical background as well as provide a proposed conceptual model and the researchhypotheses The research methodology will then be detailed in the subsequent sectionThe following section presents the analysis results and discussion of the research The finalsection concludes the study by pointing out research contributions research limitationsand directions for future research

SERVQUALSERVQUAL has been studied extensively in recent decades Traditionally SERVQUALrefers to the customerrsquos overall evaluation of service firmsrsquo attributes by comparing theirexpectations and actual performance (Parasuraman et al 1988) Parasuraman et al (1988)developed a 22-item instrument recognised as SERVQUAL which is widely used formeasuring service quality The five dimensions of SERVQUAL that rely on customers toform their judgement on perceived SERVQUAL are assurance ndash employeesrsquo knowledge andcourtesy and their ability to convey trust and confidence empathy ndash caring and individualattention given to customers reliability ndash ability to perform the promised servicedependably and accurately responsiveness ndash willingness to help customers and provideprompt service and tangibles ndash appearance of physical facilities equipment personneland written materials (Parasuraman et al 1988)

The scale of SERVQUAL was developed based on five industries which are repair andmaintenance retail banking credit card companies securities and brokerages and longdistance telephone services Despite their advantages and popularity however both scaleshave their respective limitations The main empirical problem is their unstable dimensions(Van Dyke et al 1997) which could differ depending upon the service industry to which thescale was applied to (Babakus and Boller 1992) Babakus and Boller (1992) proposed thata quality measurement scale be adapted to specific individual service industry and that ageneral scale should not be used at all

Furthermore scholars have argued that SERVQUAL is a multi-dimensional constructwith no agreement on generic dimensions (Lee and Moghavvemi 2015) However this modelhas been criticised by Babakus and Boller (1992) and Parasuraman et al (1994) both ofwhom suggested further modifications to the SERVQUAL model This is because manystudies fail to fully appreciate all five dimensions leading to an alternativeconceptualisation of SERVQUAL Thus the SERVQUAL model remains the guidingmodel in numerous studies in the service sector focussing on various organisations such asbanks retail and tourism Many researchers have incorporated other constructs andmeasures alongside the SERVQUAL dimensions in order to enrich and extend theexplanatory power of this model (Bahia and Nantel 2000 Jamal and Naser 2002 Al-Hawariand Ward 2006) Bahia and Nantel (2000) proposed an alternative measure of perceivedquality in retail banking consisting of 31 items with six dimensions (ie effectiveness andassurance access price tangibles service portfolio and reliability) Another researcherhave suggested that high-quality of banking services should have high-quality of serviceenvironment interaction empathy and reliability (Karatepe et al 2015) Jamal and Naser(2002) and Al-Hawari and Ward (2006) have adopted the Parasuraman et alrsquos (1988)framework to examine the quality of service in retail banking services However mostSERVQUAL studies focussed on developed countries with limited number of works

784

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

pertaining to commercial banks For example Shafie et al (2004) examined the SERVQUALin Islamic banking industry They suggested that an additional dimension (eg compliancewith Islamic law) should be added to the SERVQUAL method as the Islamic bankingindustry operate under different principles and cultures compared to other serviceindustries They posited that it is important for Islamic banks to consider culturaldifferences when adopting SERVQUAL

In the banking industry the internet revolution has changed the way banks interact withcustomers all in the name of enhancing their provision of services (Akinci et al 2004 Jun andCai 2001 Joseph et al 1999) Banks not only provide their services via traditional methodsthey also introduced internet banking services to build and maintain relationships withcustomers (Mols 2000) Internet banking has helped customers conveniently manage theirpersonal banking affairs For example banks offer their customers a variety of services24 hours a day with internet access availability anywhere and anytime (Hamzah et al 2014)Moreover internet banking provides customers with enhanced control over their financialaffairs that is user friendly and fits their lifestyle (Hamzah et al 2014) Internet banking alsocould potentially save costs increase customer penetration and develop the bankrsquos non-corebusiness Due to these advantages internet banking is fast gaining popularity amongcustomers The changing needs of customers have forced banking services to transform theirservices by providing high-quality internet banking services Researchers have suggestedthat high-quality internet banking services should be easy and convenient for operation(Pikkarainen et al 2006) and perceive usefulness provide ease of use reliabilityresponsiveness and a high level of security (Liao and Cheung 2008) Therefore this studysuggests that internet banking could be an important determinant of the quality of bankingservices which will influence the customersrsquo perception of overall SERVQUAL

Customer satisfactionJamal and Naser (2002) defined customer satisfaction as a feeling or evaluation bycustomers towards products or services Customer satisfaction is the result of the provisionof goods and services that meet or exceed customerrsquo needs (Szymanski and Henard 2001)Satisfied customers would be more than willing to pay premiums provide referrals and usemore products (Reichheld 1996) In todayrsquos highly competitive banking industry customersatisfaction is regarded as the essence of success ( Jamal and Naser 2002 Siddiqi 2011)Satisfied customers will be more than likely to stay and recommend their respective banksto their acquaintances Inevitably this will reduce bank costs associated with the provisionof services due to fewer complaints (Reichheld and Aspinall 1993)

Bank reputationScholars have suggested that SERVQUAL is important in increasing reputation(s) (Caruanaand Ewing 2010 Walsh et al 2009) Consumers assume that retailers who possess areputation for providing high SERVQUAL and products are at a lower risk (Purohit andSrivastava 2001 Dawar and Parker 1994) which will shift their preference towards thesestores (Koistinen and Jaumlrvinen 2009) In retail services a good reputation is vital for customersvis-agrave-vis purchasing or repeat purchasing behaviours (Wang et al 2003 Graham and Fearn2005) This implies that customers are more likely to purchase and remain loyal to reputableretailers (Nguyen and LeBlanc 2001) Ou et al (2006) stated that a retailerrsquos reputation is a signof excellent quality A favourable and well-known reputation becomes an asset for a serviceprovider as it will reside in the minds of customers Moreover customers tend to forgiveminor mistakes if a service provider is of positive repute (Kang and James 2004)

There are two schools pertaining to company reputation and image the similarity schoolthat states that company reputation is a synonym for company image and the differenceschool that differentiates these two phrases The terms corporate image and corporate

785

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

reputation are considered as identical by Gotsi and Wilson (2001) who defined image as ldquothetotal impression of the companyrdquo Image is about overall impression residing in the mind ofcustomers Fombrun (1996) considers the term corporate reputation and corporate image asdifferent concepts According to Wartick (1992) corporate reputation is an ldquoaggregation of asingle stakeholderrsquos perceptions of how well organizational responses are meeting thedemands and expectations of many organizational stakeholdersrdquo Yoon et al (1993) viewedcorporate reputation as the firmrsquos history of communicating to the customers in terms of thequality its products or services compared to that of its competitors Based on thediscussions of the definitions of reputation corporate reputation is a stakeholderrsquos overallevaluation of a company over time This evaluation is based on the customerrsquos directexperiences with the bank

TrustTrust is formed when customers believe that banks will perform as promised (credibility trust)and have confidence in employeesrsquo ability and courtesy (benevolence trust) (Yap et al 2012)El-Manstrly et al (2011) defined trust as a function of the perceived reliability and integrity ofa brand or service provider Jan and Abdullah (2014) reported that trust in the banking sectorincreases awareness concerning the importance of technology-related critical success factorsResearch has revealed that higher overall SERVQUAL would lead to a higher level oftrustworthiness and positively increase the level of customer loyalty

Theoretical background and hypotheses developmentHaving identified the variables associated with SERVQUAL this study modified themeasurement for SERVQUAL to capture the customer perceptions of SERVQUAL in retailbanking particularly in the context of Malaysia This section presents the theoreticalbackground of a proposed conceptual framework for perceived overall SERVQUAL Theconceptual framework is developed based on the literature review and prior scales that areavailable for investigating the relationships between the perceived overall SERVQUALtrust customer satisfaction and bank reputation The overall perceived SERVQUAL isinfluenced by multiple constructs within SERVQUAL (tangibles empathy reliability andsecurity convenience and internet banking)

According to Lee and Moghavvemi (2015) many researchers (ie Behara et al 2002Ladhari et al 2011) found that SERVQUAL model and its measurement scales are changingin conformity to the different types of service or country Due to those reasons we followBahia and Nantel (2000) and Lee and Moghavvemirsquos (2015) study who identified dimensionsbased on the most cited and most applicable dimensions of SERVQUAL in the context ofbanking in Malaysia such as tangibles empathy reliability and security convenience andinternet banking These dimensions are identified from our exploratory study which wasconducted previously Additionally the five dimensions (tangibles reliabilityresponsiveness assurance and empathy) of the SERVQUAL approach developed byParasuraman et al (1988) appears to be less universally applicable (Gilmore 2003)Thus based on literature the SERVQUAL model is further modified to assess the level ofSERVQUAL in the Malaysian banking sector The research model and the hypothesesrelationship between the constructs in this study is presented in Figure 1

Earlier literature suggests that SERVQUAL incorporates a number of dimensionsFor the purpose of this study the SERVQUAL model includes tangibles empathyreliability and security convenience and internet banking Tangibles comprise the physicalfacilities equipment and the appearance of personnel Bank customers usually look for anytangibles as the indicators of a bankrsquos overall SERVQUAL Customers can assess thepremises of the bank or the appearance of the bankrsquos staff Physical facilities availabilitythe adequacy of equipment and the appearance of a bankrsquos employees are viewed as

786

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

important factors in terms of tangibility amongst customers in Hong Kong (Lau et al 2013)Therefore the number of counters the design of the transaction form and the availability ofa water dispenser might increase the perception of SERVQUAL being received Moreoverbank users in India (Ravichandran et al 2010) and Bangladesh (Rahman 2013) also rankedtangibles dimension as highly important in increasing customer satisfaction and loyaltyTherefore the following hypothesis is developed

H1 There is a positive relationship between tangibles and perceived overall SERVQUAL

Empathy is customersrsquo expectations with regard to the extent to which the serviceprovider appears to understand and is concerned about their individual needs and wantsThe concept of empathy is to understand the needs of the customers and provideindividual attention (Siddiqi 2011) Researchers revealed that empathy plays a vital role ininfluencing customer satisfaction with regard to the value of the SERVQUAL provided byfrontline staff (Annamalah et al 2011 Kamal et al 2013 Shanka 2012 Siddiqi 2011Estiri et al 2011) Bank staff and customer interactions are reflected in the dimension ofempathy This means that bank customers perceive good overall SERVQUAL in terms ofbanking hours and personal attention given to them by the bankrsquos staff Therefore thefollowing hypothesis is proposed

H2 There is a positive relationship between empathy and perceived overall SERVQUAL

Reliability and security is the extent to which customers can rely on the service provider tokeep promises and perform in the best interests of the customers (Lee and Moghavvemi2015) Reliability has been identified as an influential component in determining thecustomer loyalty in previous studies (Estiri et al 2011 Kumar et al 2010 Lau et al 2013Mistry 2013) Zafar et al (2012) surveyed 192 bank users in Pakistan and the results of theirstudy showed that reliability is positively correlated to customer loyalty because customersexpect bank employees to have zero error records and fulfil their promise of delivering acertain service within a stipulated time frame Customers will not be satisfied with theoverall SERVQUAL if they do not feel reliable and secure about the competence of theservice provider Thus banks need to instil feelings of confidence in customers and banksrsquostaff are expected to handle customers in a professional and competent manner In thisstudy security refers to the physical reliability at the bank such as adequate securityguards and CCTVs ATM machine or bank located at a secure location etc As suchreliability and security of the bank service is an important factor for customers in evaluatingthe overall SERVQUAL (Lee and Moghavvemi 2015) The hypothesis is as follows

H3 There is a positive relationship between reliability and security and perceivedoverall SERVQUAL

Internet banking

Tangibility

Empathy

Reliability andsecurity

Convenience

Perceivedoverall service

quality

Customersatisfaction

H7

H8

TrustH6

Bankreputation

H1

H2

H3

H4

H5 Figure 1The conceptual

research framework

787

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Kumar et al (2009) included an additional dimension convenience to the SERVQUAL modelTheir findings indicated that the convenience factor plays a significant role in delivering theSERVQUAL of banks in Malaysia Therefore the convenience dimension was also added tothe modified SERVQUAL model for the banksrsquo customers Similarly Awan et al (2011)found that the convenient availability of financial services is ranked high on the list of priorityby customers for SERVQUAL in the banking sector of Pakistan This implies that the greaterthe level of convenience the greater the perceived overall SERVQUAL The convenience ofservice remains the responsibility of the service provider indicating the full range of availableservices convenience and ease-of-access via its location operating hours employees andoperation systems Hence the following hypothesis is formulated

H4 There is a positive relationship between convenience and perceivedoverall SERVQUAL

Internet banking distinguishes itself from its competitors (Abdullah and Kassim 2009)Internet banking is the use of the internet as a delivery channel for banking services such asopening a deposit account or transferring funds between different accounts and newbanking services ie electronic bills and payments ( Jun and Cai 2001) The internet hasbeen accepted as a new channel of banking transactions With the high growth of newtechnology the increased use of the internet has a great impact on the characteristics ofsubsequent services Studies have shown that the provision of internet banking services isimportant in attracting more customers (Hamzah et al 2014) Rod et al (2009) and Jun andCai (2001) found that the more positive the customer perception of the SERVQUAL ofinternet banking the greater the likelihood that overall SERVQUAL will be perceivedTherefore we include the provision of high-quality internet banking as being influential tothe overall SERVQUAL of the banking sector The developed hypothesis is as follows

H5 There is a positive relationship between internet banking and perceivedoverall SERVQUAL

In the banking industry trust is regarded as one of the relevant collaborative relationshipsbetween a customer and a bank and as a channel to enhance competitiveness (Barney andHansen 1994 Levy and Hino 2016) Trust is conceptualised as the customersrsquo expectationsand beliefs that their service provider will carry out actions as promised (Levy and Hino2016) Singh and Sirdeshmukh (2000) found that trust is essential for building andmaintaining long-term relationships They are of the belief that if one party can bringpositive outcomes to the other party trust can therefore be developed A high level of trustleads to the future potential of the relationship between customers and service providers(Amin et al 2013) The way in which perceived overall SERVQUAL (such as speed andefficiency of transactions employees of bank are polite and friendly and willingness to help)affects trust has yet been adequately investigated For this reason one of the objectives ofthis study is to investigate the overall perceived SERVQUAL of customer trust in a bankBased on the above discussion the following hypothesis is proposed

H6 There is a positive relationship between perceived overall SERVQUAL andcustomer trust

The relationship between SERVQUAL and customer satisfaction has received considerableacademic attention in the past few years (Cronin et al 2000 Sureshchandar et al 2002)SERVQUAL and customer satisfaction are widely recognised as key influences in theformation of consumersrsquo purchase intentions in a service environment (Taylor and Baker1994) Perceived SERVQUAL and satisfaction have generally been conceptualised to bedistinct constructs (Spring and Mackoy 1996) As such greater understanding of therelationship between perceived overall SERVQUAL and customer satisfaction is required

788

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

(Spring and Mackoy 1996) Gonzaacutelez et al (2007) found that perceived SERVQUALinfluences customer satisfaction in behavioural intention of tourism industry Maumlgi andJulander (1996) indicate that perceived SERVQUAL influences customer satisfaction inSwedish grocery retailing Based on earlier studies this study hypothesises that perceivedoverall SERVQUAL has a significantly positive effect on customer satisfaction Higherlevels of perceived overall SERVQUAL will lead to higher customer satisfaction As suchthe hypothesis is developed

H7 There is a positive relationship between perceived overall SERVQUAL andcustomer satisfaction

It has been suggested that SERVPERF is essential in building a good reputation(Wang et al 2003) Zeithaml and Shappiro stated that perceived SERVQUAL is associatedwith the reputation of brand name Selnes (1993) found that the reputation of a brand isinfluenced by how consumer experiences performance of quality of services or productCustomers form a general overall evaluation of services based on their sum of beliefs orexpectations of a set of attributes Their perceptions of quality of service are influenced bytheir respective experiences on high- or low-quality performances For example when theyexperience high-quality services the reputation of a bank will increase vis-agrave-vis customersThus the hypothesis is proposed as follows

H8 There is a positive relationship between perceived overall SERVQUAL andbank reputation

Research methodologyThis study aims to examine the dimensions of SERVQUAL in the banking sector It will alsolook into how the dimensions will influence the perceived overall SERVQUAL which resultsin the building of trust customer satisfaction and bank reputation A questionnaire surveywas conducted to examine the quality of services among local banks in Malaysiaparticularly in the Klang Valley area Malaysia Currently there are 27 commercial banks16 Islamic banks and 11 investment banks offering various products and servicesto the public (Bank Negara Malaysia 2015b) Since the pricing in Malaysian banks isregulated the SERVQUAL being delivered becomes important if the banks want to retainand attract customers With the increasing number of international banks local banks arecompeting in a highly competitive environment for the provision of quality services basedon customer expectations

The judgement sampling method was used to collect data Respondents were first askedwhether they had bank accounts with local banks if they replied in the affirmative theywere asked to participate in the survey For each question the respondents were asked totick the response that best described their degree of agreementdisagreement Most of thequestionnaire items were adapted from previous studies on banking and a few moreconstructs were introduced in our study in order to obtain adequate measures of thedimensions of interest (see Figure 1) All items were measured using a seven-point Likertscale ndash ranging from 1 indicating strongly disagree to 7 indicating strongly agree Wemeasured the antecedents of perceived overall SERVQUAL (ie tangibles empathyconvenience reliability and security and internet banking) and the consequences ofperceived overall SERVQUAL on customer satisfaction trust and bank reputation

In total 400 questionnaires were gathered over a six-week period However only 375 wereusable for further data analysis The two-step approach of structural equation modelling(SEM) using AMOS 180 (maximum likelihood estimation) was employed to predict therelationships between the constructs This approach was selected due to its capability oftesting the causal relationships between the constructs with multiple measurement items

789

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

ResultsProfile of respondentsThe demographic profile of the respondents is presented in Table I Based on the results61 per cent of the respondents were females while 39 per cent (229) were males Thesmaller percentage of the latter is due to difficulties in approaching them The majority ofthe respondents (754 per cent) were between 21 and 40 years old The largest group ofrespondentsrsquo works for the public and private sectors was 68 per cent while those who areself-employed were 10 per cent and students housewife or others (investmentconsultants insurance agents) made up of 22 per cent of the total respondents Personalincome was measured in Malaysian Ringgit (RM) In total 30 per cent of the respondentshad a monthly income of between RM2001 and RM4000 Most of the respondents preferinternet banking (68 per cent) and use ATMs (79 per cent) while a lower percentage(40 per cent) prefer tellers at the bank These results are consistent with the statisticspublished by the central bank which indicated that online banking has become verypopular in Malaysia Currently 31 banks in Malaysia offer internet banking and nearly198 million internet banking subscribers (penetration to population of 637 per cent)conducted more than 210 million banking transactions valued at 233 billion Ringgit as ofJune 2015 (Bank Negara Malaysia 2015a)

Exploratory factor analysisTable II presents the mean scores standard deviations Cronbachrsquos α value and the results ofthe exploratory factor analysis of the constructs in this study The mean scores have been

Profile Description Frequency Percentage ()

Gender Male 146 389Female 229 611

Age Below 20 years 5 1321-30 years 153 40831-40 years 129 34441-50 years 61 16351 years above 27 72

Profession Salaried-private sector 169 451Salaried-government 88 235Student 59 157Businessself-employment 37 99Housewife 12 32Others 10 27

Monthly income Below RM2000 53 141RM2001-RM4000 113 301RM4001-RM6000 63 168RM6001-RM8000 28 75RM8001-RM10000 41 109RM10001 and above 77 205

Preferred transaction Automated teller machines 294 784Internet banking 255 680Tellers at bank 150 400Phone banking 19 51

Duration of being bank customer Less than 1 year 14 371-5 years 149 3976-10 years 110 293More than 10 years 102 272

Note nfrac14 375

Table IDemographic profileof respondents

790

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Constructs Item statements Mean SD αFactorloading

Tangibles Infrastructure and facilities such as parking space andATMs are adequate 446 014 0802 0579Equipment in the bank is modern-looking 0780Printed materials such as brochures and statementsare attractive 0758Maintain clean and pleasant branch facilities 0831The lobby area is comfortable while waiting for services 0817Provide easy-to-read and understandable bank statement 0719

Empathy Bank gives customers individual attention 474 091 0832 0754Bank staff never too busy to respond to my requests 0608Bank staff understand customerrsquos specific needs 0777Bank staff are friendly and polite 0667Bank is very responsive to customer complaints 0831Bank staff are polite when handling customer complaints 0828Bank staff willing to help elderly and disabled customers andgive them special attention 0599

Reliability andsecurity

Bank maintains error-free records (eg accurate bills andstatements) 511 089 0894 0791Bank keeps confidentiality of account and privacy ofcustomers 0746Bank delivers up-to-date records 0711Physical security at bank is adequate (eg security guardsCCTVs) 0633ATM machine is located at a secure location 0775Bank is located in secure location 0825Bank is quick to alert customers to any suspicious orfraudulent transaction 0686Bank always asks questions for verification in phone banking 0564

Convenience Bank branches are located in a convenient location 453 095 0817 0729Bank extends its working hours in order to meet customer needs 0639Number of open tellers during peak hours is adequate 0655Waiting time for receiving services is not too long 0685Bank provides the necessary convenience for customers(eg parking area and special counters for elderlydisabledcustomers) 0644ATMs are conveniently located (eg shopping mallsgovernment departments etc) 0732Bank service is easily accessible by telephone 0595

Internetbanking

The online banking has adequate security features 519 102 0929 0844The online banking is fast for making transactions 0901It is easy to learn how to operate online system 0902The online system makes appropriate confirmationconcerning the completion of transactions 0890I received confirmation of every online transaction by SMS 0766The online banking system has a user-friendly interface 0887

Overall servicequality

My bank always delivers excellent overall service 495 087 0915 0849The services offered by my bank are high quality 0878My bank delivers superior service in every way 0861My bank offers me a complete range of products 0789The personnel provide a friendly atmosphere 0831The bank insists on error-free records 0831

(continued )

Table IIMean scores

Cronbachrsquos α andfactor loading

791

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

computed by equally weighing the mean scores of all of the items The analysis shows that ona seven-point scale the mean scores of the independent variables range from 453 to 519which indicates that customers perceive that the quality of service being offered by the banksis moderate The mean score for internet banking is 519 (SDfrac14 102) which suggests thatcustomers find the service provided by the internet as highly important The mean score foroverall SERVQUAL is 495 (SDfrac14 087) which implies that the customers of banks indicatethat the overall SERVQUAL is moderate The mean score for trust is 525 (SDfrac14 086)suggesting that the customers find the service provider trustworthy The results of theexploratory factor analysis show that the factor loadings for all items are greater than 050and each of these items load strongly onto their respective associated factors

Measurement modelIn order to achieve an adequate goodness of fit on the measurement model and identifypossible problems this study assessed the path estimates standardised residuals andmodification indices of the measurement model (Hair et al 2006) The assessment of thestandardised regression weight indicates that all items were loaded high within theirconstructs which was within the acceptable values of 070 and above except for threeitems thus these items were deemed unsatisfactory (Hair et al 2006) and deleted from themeasurement model In terms of the assessment of the standardised residual values theresults indicated that all of the items have standardised residual values of less than 25with the exception of one item from reliability and security which was deleted from themodel The modification indices assessment shows the co-variance between some of theitems in the tangibility and empathy construct with high error co-variance betweenthese indicators The estimation of a coefficient may be considered removed fromthe measurement model if the modification indices value is equal to 4 or greater(Hair et al 2006) The substantial modification indices value is assumed to be 788 for a

Constructs Item statements Mean SD αFactorloading

Trust The bank staff are trustworthy 525 086 0918 0839The bank treats me in an honest way in every transaction 0840I feel safe in my transactions with the bank 0865The bank will not let other people know my account balance 0817Bank tellers accurately verify all transaction requests 0842Overall I have complete trust in my bank 0855

Customersatisfaction

The services of this bank meet my expectations 501 085 0883 0827I did the right thing when I chose this bank for its services 0861I am satisfied with the quality of the bankrsquos services 0859I am satisfied with the various bonus link programmes ofthe bank 0614I am satisfied with the interactions that I have had with the bank 0818The bank satisfies my needs 0830

Bankreputation

I will continue to patronize this bank even if the servicecharges are increased 459 099 0874 0769I am willing to pay more for using the services of this bank 0832To me this bank would rank first among the other banks 0828The bank I patronize reflects a lot about who I am 0845This bank has a good reputation in this industry 0692The bank does what it promises for its customers 0736

Note Scores based on a seven-point scale ranging from 1frac14 strongly disagree to 7frac14 strongly agreeTable II

792

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

significant model improvement Based on the results of the aforementioned assessmentthese items were dropped from the initial measurement model in order to improve themodelrsquos fit Furthermore these items add very little explanatory power to themeasurement model and thus they were removed from further analysis The estimatedparameters were all statistically significant between the latent and measured variablesThe results of the measurement model ndash χsup2df (253) TLI (091) CFI (091) IFI (091)RMSEA (006) and GFI (082) ndash indicate the acceptable model fit of the data

Convergent and discriminant validityAccording to Hair et al (1995) uni-dimensionality should always be assessed prior toexamining validity This is due to the fact that the analysis of validity is based on theassumption of uni-dimensionality (Nunnally and Bernstein 1994) In order to test foruni-dimensionality the confirmatory factor analysis (CFA) was conducted (Anderson andGerbing 1991) through SEM AMOS 180 to ascertain that each item in the model representsthe same measure (Ahire et al 1996) SEM takes a confirmatory approach rather than anexploratory approach to analyse data and provide a confirmatory test of measurement theoryfor the constructs SEM explains how measured variables logically and systematicallyrepresent the constructs involved in the theoretical model This study applied thepre-validated measurement to prior studies thus CFA is the most appropriate approach inassessing a constructrsquos validity (Hair et al 2006) CFA describes the extent to which a set ofmeasured items actually reflects the theoretical latent construct

The construct validity test was performed to determine to what extent the items appearto measure the construct of interest instead of other constructs The convergent validity ofthe measurement items can be assessed by composite reliability and the variance extractedmeasure Composite reliability depicts the degree to which the item indicates a commonconstruct The variance extracted measure reflects the amount of variance in the itemscaptured by the construct

The CFA results showed that the standardised parameter estimates were higher than070 and the signs of parameter estimation were all in the same direction to measure specificlatent variables

The composite reliability correlation average variance extracted (AVE) and square root ofthe AVE were calculated and presented in Table III The results revealed that the compositereliability of all of the constructs was greater than 072 and the output of AVE for themodel with independent and dependent variables exceeded 050 (Fornell and Larcker 1981)Hair et al (1995) and Carmines and Zeller (1988) recommended that composite reliability should

Construct CR AVE 1 2 3 4 5 6 7 8 9

Tangibles 080 082 090Empathy 081 082 0587 090Reliability andSecurity 072 067 0533 0429 081Convenience 078 079 0592 0716 0361 088Internet banking 093 085 0437 0355 0720 0305 092Overall servicequality 092 083 0505 0435 0698 0320 0666 091Trust 090 082 0467 0383 0713 0282 0626 0772 090Customersatisfaction 088 080 0500 0409 0594 0320 0571 0822 0744 089Bank reputation 082 073 0403 0234 0580 0222 0517 0641 0596 0587 085Notes CR composite reliability The values in the diagonal are the square root of the AVE po001

Table IIIComposite reliability

average varianceextracted correlation

793

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

be greater than 070 and AVE should be greater than 050 to indicate construct validity In orderto evaluate discriminant validity this study compared the square root of each constructrsquos AVEsto its correlation with other variables (Chin 1998) The results showed that all items were loadedsignificantly on their predefined constructs and that the construct correlations were all belowthe square root of AVE for each construct If the square root of the AVE for each construct islarger than the correlation between the construct and any other construct in the model then themeasures should be considered to possess adequate discriminant validity (Fornell and Larcker1981) Thus our results proved the reliability of the data and convergent validity

Structural model and hypothesis testingAfter conducting the validity and reliability tests for all the constructs through themeasurement model it is also necessary to demonstrate the overall fit of the structuralmodel (see Figure 2) In this study the hypothesised model was assessed using multiplemodel-fit measures to assess its overall goodness of fit

The structural model revealed an adequate model fit with the data The results in Table IVshow that χsup2df (246) TLI (091) CFI (092) IFI (092) RMSEA (006) and GFI (082) were aboveor quite close to the cut-off criteria The table also shows the recommended level of each index(Hair et al 2006 Meyers et al 2005) In this study the GFI values of 070 and 082 were lowerthan the commonly cited thresholds of 090 however they were within range of therecommended levels Yen and Lu (2008) argued that a GFI ranging from 080 to 090 could beinterpreted as a reasonable fit In Table IV all the model-fit indices on the measurement andstructural model were above or quite close to the cut-off criteria suggested by Hair et al (2006)This indicates that all the data fit reasonably well with the proposed model Thus it can beconcluded that the models are valid and we can continue to analyse the outcome of thehypothesised effects

Results of hypotheses testingThe relationship between the independent variables and overall SERVQUAL wasinvestigated Table V summarises the results of the hypothesised relationships As shown in

Figure 2Structural model

794

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

In a competitive financial service environment the pursuit of highly perceived overallSERVQUAL is considered to be a central strategy to distinguish themselves in the quest ofrealizing long-term success Moreover scholars and practitioners suggest that companiesthat provide good services are perceived as being of high quality which could then be usedto build customer trust increase customer satisfaction and improve corporate reputation(Kassim and Abdullah 2010 Eisingerich and Bell 2008 Wang et al 2003 Dawar andParker 1994) all of which will result in an increase in business and financial performancesHowever it has been argued that the provision of a high-quality service is necessary butinsufficient for a successful business (Stamenkov and Dika 2015) This situation might bedue to the fact that thus far most measurements of SERVQUAL such as SERVQUAL andservice quality performance (SERVPERF) are insufficiently comprehensive to explain theconstruct and merely address generic scales across industries which is unfeasible (Bradyand Cronin 2001 and Mittal et al 2015) By generic scales customers tend to combineevaluations of attributes resulting in less accurate customer perception of the overallperceive SERVQUAL of a particular industry

Previous research on perceived overall SERVQUAL has received great attention inrecent decades which is still being debated (Chowdhary and Prakash 2007 Parasuramanet al 1988 Cronin and Taylor 1992 Brady and Cronin 2001 Kang and James 2004Groumlnroos 1984) Research in the past have solely focussed on functional quality(Edvardsson 2005) which is inadequate for capturing all of the aspects of SERVQUAL(Mittal et al 2015) Furthermore research on perceived overall SERVQUAL tends to begeneric rather than context specific As a result there is a lack of understanding ofSERVQUAL in a specific context as generic context does not capture the specific nature ofthe type of service (Mittal et al 2015) A clear understanding of specific context is essentialbecause customers have a unique set of expectations based on the different types ofservices such as the service industry For example banking is regarded as a high contactservice as customers are directly connected to service providers (Lovelock 1996)Furthermore banks facing challenges with regard to changes of marketing environmentfierce competition technology innovation and the complex demand of customers thatnecessitating continuous evaluations of the dimensionalities of SERVQUAL (Tsoukatos andMastrojianni 2010)

Thus an understanding of the specific dimensionalities of SERVQUAL is critical to allservice industries including banks as they need to deliver high quality of services in orderto fulfil customersrsquo demands and to survive in a competitive business environment(Chowdhary and Prakash 2007) As the current banking industry becomes morecompetitive customers tend to become more and more demanding Therefore it isimportant that banks be concerned with delivering high-quality services to customers(Chowdhary and Prakash 2007) For example they need to understand specific dimensions(eg reliability empathy and convenience) applied in banking in order to fulfil customersrsquodemands with different expectations of services being provided (Mittal et al 2015 Kang andJames 2004) Fulfilling customer demands is important to banks as it results in gainedtrust improved reputation and subsequently retention of customers especially when thebank industry is one of the fastest-growing sectors The importance of this sector in thenational economy is reflected in its contribution to the GDP

While researchers agree that perceived SERVQUAL is a multi-dimensional construct noconsensus has been reached about its generally valid and generic dimensions (Korda andSnoj 2010) and no general agreement has been agreed upon to the nature or content of thedimensions (Brady and Cronin 2001) For example Parasuraman et al (1988) developed theSERVQUAL measurement with five dimensions They claimed that the scale can begeneralised across service industries and have received wide acceptance amongstresearchers Nevertheless the empirical evidence suggests that widespread usage of these

782

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

dimensions is unjustified (Gilmore 2003) In the financial sector Bahia and Nantel (2000)developed a bank SERVQUAL model containing six dimensions (ie effectiveness andassurance access price tangibles service portfolio and reliability) while Guo et al (2008)reported four dimensions (ie reliability human capital communication and technology) forcapturing SERVQUAL in the Chinese banking sector Despite these SERVQUAL studiesconducted in the financial sector there is a lack of agreement regarding the specificdimensions of SERVQUAL in the banking sector (Monferrer-Tirado et al 2016) In thiscontext understanding the SERVQUAL dimensions and their respective relationships withthe perception of overall SERVQUAL of banking sector remains a key issue that requiresfurther investigation Moreover Chowdhary and Prakash (2007) suggested that theidentification of the determinants of SERVQUAL is necessary in order to be able to specifymeasure control and improve customer perceived SERVQUAL

Perceived overall SERVQUAL was argued to have a significant impact on businessperformance such as customer satisfaction (Caruana 2002 Hu et al 2009) customer trustand bank reputation (Cronin et al 2000) These research works however were conductedindependently The research that integrates bank SERVQUAL dimensionalities and itsimpact on consumer trust customer satisfaction and bank reputation is still scarce(Tsoukatos and Mastrojianni 2010 Caruana 2002 Bahia and Nantel 2000 Lee andMoghavvemi 2015) particularly in a Malaysian context This will limit the understandingof how specific dimensionalities of SERVQUAL play their respective roles in developingtrust enhance customer satisfaction and build their reputation in banking As pointed outearlier the dimensions of SERVQUAL may differ according to the type of service industryIn this regard understanding SERVQUAL dimensions and perceived overall SERVQUALremains a key issue that requires further investigation vis-agrave-vis the financial sector

Theory of expectancydisconfirmation paradigm also provides the grounding of thisstudy with SERVQUAL as an antecedent and customer satisfaction as an outcome Thetheory suggests that key determinants of satisfaction are expectations and perception ofproduct and service performances (Oliver 1989) Previous research works also suggestedthat the theory provide a complete picture of the role of perceived overall SERVQUAL as adeterminant of satisfaction and behavioural outcome (Gupta and Stewart 1996) Perceivedoverall SERVQUAL also has been suggested to influence customer trust and bankreputation However the effect of both constructs has not been tested in one model Thus abetter understanding of the effect of perceived overall SERVQUAL on customer satisfactionwith the presence of customer trust and bank reputation is helpful to the management whenstrategizing their respective banks and allocating corporate resources (Caruana 2002)Therefore it is also crucial to look at developing a richer model that incorporates theseconstructs simultaneously as proposed in the current study

Therefore an empirical investigation is required to properly address the followingquestions what are the dimensions of SERVQUAL in the banking context To what extentdo the dimensionalities of SERVQUAL influence the perceived overall SERVQUAL Doesperceived overall SERVQUAL influence consumer trust customer satisfaction and bankreputation Thus this study examines the dimensionalities of SERVQUAL that affect theperceived overall SERVQUAL and its impact upon customer trust customer satisfactionand bank reputation in Malaysia As such collectively investigating the overallSERVQUAL determinants is essential for strategizing their services marketing decisionsand thereby warrants further investigation The issue of overall SERVQUAL is important inMalaysia for many reasons First there is a lack of research on how to manage SERVQUALin the Malaysian banking industry Second with the enormous growth of foreign bankslocal banks are aware of the competition because there is a segment within the currentmarket that would switch to foreign banking services if the quality being offered were onpar with the local banks Since the Asian financial crisis in 1997 the Malaysian banking

783

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

scene has undergone a number of significant changes including the restructuring andredesigning of the service delivery methods being offered Over time the Malaysianbanking sector is continuously improving due to increasing competition from the growth offoreign banks in local As such local banks are pressured to find ways to sustain theirrespective competitiveness Thus this research is considered to be timely

The remainder of this paper is structured in the following manner The followingsections will provide information on the constructs being examined in this study explain thetheoretical background as well as provide a proposed conceptual model and the researchhypotheses The research methodology will then be detailed in the subsequent sectionThe following section presents the analysis results and discussion of the research The finalsection concludes the study by pointing out research contributions research limitationsand directions for future research

SERVQUALSERVQUAL has been studied extensively in recent decades Traditionally SERVQUALrefers to the customerrsquos overall evaluation of service firmsrsquo attributes by comparing theirexpectations and actual performance (Parasuraman et al 1988) Parasuraman et al (1988)developed a 22-item instrument recognised as SERVQUAL which is widely used formeasuring service quality The five dimensions of SERVQUAL that rely on customers toform their judgement on perceived SERVQUAL are assurance ndash employeesrsquo knowledge andcourtesy and their ability to convey trust and confidence empathy ndash caring and individualattention given to customers reliability ndash ability to perform the promised servicedependably and accurately responsiveness ndash willingness to help customers and provideprompt service and tangibles ndash appearance of physical facilities equipment personneland written materials (Parasuraman et al 1988)

The scale of SERVQUAL was developed based on five industries which are repair andmaintenance retail banking credit card companies securities and brokerages and longdistance telephone services Despite their advantages and popularity however both scaleshave their respective limitations The main empirical problem is their unstable dimensions(Van Dyke et al 1997) which could differ depending upon the service industry to which thescale was applied to (Babakus and Boller 1992) Babakus and Boller (1992) proposed thata quality measurement scale be adapted to specific individual service industry and that ageneral scale should not be used at all

Furthermore scholars have argued that SERVQUAL is a multi-dimensional constructwith no agreement on generic dimensions (Lee and Moghavvemi 2015) However this modelhas been criticised by Babakus and Boller (1992) and Parasuraman et al (1994) both ofwhom suggested further modifications to the SERVQUAL model This is because manystudies fail to fully appreciate all five dimensions leading to an alternativeconceptualisation of SERVQUAL Thus the SERVQUAL model remains the guidingmodel in numerous studies in the service sector focussing on various organisations such asbanks retail and tourism Many researchers have incorporated other constructs andmeasures alongside the SERVQUAL dimensions in order to enrich and extend theexplanatory power of this model (Bahia and Nantel 2000 Jamal and Naser 2002 Al-Hawariand Ward 2006) Bahia and Nantel (2000) proposed an alternative measure of perceivedquality in retail banking consisting of 31 items with six dimensions (ie effectiveness andassurance access price tangibles service portfolio and reliability) Another researcherhave suggested that high-quality of banking services should have high-quality of serviceenvironment interaction empathy and reliability (Karatepe et al 2015) Jamal and Naser(2002) and Al-Hawari and Ward (2006) have adopted the Parasuraman et alrsquos (1988)framework to examine the quality of service in retail banking services However mostSERVQUAL studies focussed on developed countries with limited number of works

784

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

pertaining to commercial banks For example Shafie et al (2004) examined the SERVQUALin Islamic banking industry They suggested that an additional dimension (eg compliancewith Islamic law) should be added to the SERVQUAL method as the Islamic bankingindustry operate under different principles and cultures compared to other serviceindustries They posited that it is important for Islamic banks to consider culturaldifferences when adopting SERVQUAL

In the banking industry the internet revolution has changed the way banks interact withcustomers all in the name of enhancing their provision of services (Akinci et al 2004 Jun andCai 2001 Joseph et al 1999) Banks not only provide their services via traditional methodsthey also introduced internet banking services to build and maintain relationships withcustomers (Mols 2000) Internet banking has helped customers conveniently manage theirpersonal banking affairs For example banks offer their customers a variety of services24 hours a day with internet access availability anywhere and anytime (Hamzah et al 2014)Moreover internet banking provides customers with enhanced control over their financialaffairs that is user friendly and fits their lifestyle (Hamzah et al 2014) Internet banking alsocould potentially save costs increase customer penetration and develop the bankrsquos non-corebusiness Due to these advantages internet banking is fast gaining popularity amongcustomers The changing needs of customers have forced banking services to transform theirservices by providing high-quality internet banking services Researchers have suggestedthat high-quality internet banking services should be easy and convenient for operation(Pikkarainen et al 2006) and perceive usefulness provide ease of use reliabilityresponsiveness and a high level of security (Liao and Cheung 2008) Therefore this studysuggests that internet banking could be an important determinant of the quality of bankingservices which will influence the customersrsquo perception of overall SERVQUAL

Customer satisfactionJamal and Naser (2002) defined customer satisfaction as a feeling or evaluation bycustomers towards products or services Customer satisfaction is the result of the provisionof goods and services that meet or exceed customerrsquo needs (Szymanski and Henard 2001)Satisfied customers would be more than willing to pay premiums provide referrals and usemore products (Reichheld 1996) In todayrsquos highly competitive banking industry customersatisfaction is regarded as the essence of success ( Jamal and Naser 2002 Siddiqi 2011)Satisfied customers will be more than likely to stay and recommend their respective banksto their acquaintances Inevitably this will reduce bank costs associated with the provisionof services due to fewer complaints (Reichheld and Aspinall 1993)

Bank reputationScholars have suggested that SERVQUAL is important in increasing reputation(s) (Caruanaand Ewing 2010 Walsh et al 2009) Consumers assume that retailers who possess areputation for providing high SERVQUAL and products are at a lower risk (Purohit andSrivastava 2001 Dawar and Parker 1994) which will shift their preference towards thesestores (Koistinen and Jaumlrvinen 2009) In retail services a good reputation is vital for customersvis-agrave-vis purchasing or repeat purchasing behaviours (Wang et al 2003 Graham and Fearn2005) This implies that customers are more likely to purchase and remain loyal to reputableretailers (Nguyen and LeBlanc 2001) Ou et al (2006) stated that a retailerrsquos reputation is a signof excellent quality A favourable and well-known reputation becomes an asset for a serviceprovider as it will reside in the minds of customers Moreover customers tend to forgiveminor mistakes if a service provider is of positive repute (Kang and James 2004)

There are two schools pertaining to company reputation and image the similarity schoolthat states that company reputation is a synonym for company image and the differenceschool that differentiates these two phrases The terms corporate image and corporate

785

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

reputation are considered as identical by Gotsi and Wilson (2001) who defined image as ldquothetotal impression of the companyrdquo Image is about overall impression residing in the mind ofcustomers Fombrun (1996) considers the term corporate reputation and corporate image asdifferent concepts According to Wartick (1992) corporate reputation is an ldquoaggregation of asingle stakeholderrsquos perceptions of how well organizational responses are meeting thedemands and expectations of many organizational stakeholdersrdquo Yoon et al (1993) viewedcorporate reputation as the firmrsquos history of communicating to the customers in terms of thequality its products or services compared to that of its competitors Based on thediscussions of the definitions of reputation corporate reputation is a stakeholderrsquos overallevaluation of a company over time This evaluation is based on the customerrsquos directexperiences with the bank

TrustTrust is formed when customers believe that banks will perform as promised (credibility trust)and have confidence in employeesrsquo ability and courtesy (benevolence trust) (Yap et al 2012)El-Manstrly et al (2011) defined trust as a function of the perceived reliability and integrity ofa brand or service provider Jan and Abdullah (2014) reported that trust in the banking sectorincreases awareness concerning the importance of technology-related critical success factorsResearch has revealed that higher overall SERVQUAL would lead to a higher level oftrustworthiness and positively increase the level of customer loyalty

Theoretical background and hypotheses developmentHaving identified the variables associated with SERVQUAL this study modified themeasurement for SERVQUAL to capture the customer perceptions of SERVQUAL in retailbanking particularly in the context of Malaysia This section presents the theoreticalbackground of a proposed conceptual framework for perceived overall SERVQUAL Theconceptual framework is developed based on the literature review and prior scales that areavailable for investigating the relationships between the perceived overall SERVQUALtrust customer satisfaction and bank reputation The overall perceived SERVQUAL isinfluenced by multiple constructs within SERVQUAL (tangibles empathy reliability andsecurity convenience and internet banking)

According to Lee and Moghavvemi (2015) many researchers (ie Behara et al 2002Ladhari et al 2011) found that SERVQUAL model and its measurement scales are changingin conformity to the different types of service or country Due to those reasons we followBahia and Nantel (2000) and Lee and Moghavvemirsquos (2015) study who identified dimensionsbased on the most cited and most applicable dimensions of SERVQUAL in the context ofbanking in Malaysia such as tangibles empathy reliability and security convenience andinternet banking These dimensions are identified from our exploratory study which wasconducted previously Additionally the five dimensions (tangibles reliabilityresponsiveness assurance and empathy) of the SERVQUAL approach developed byParasuraman et al (1988) appears to be less universally applicable (Gilmore 2003)Thus based on literature the SERVQUAL model is further modified to assess the level ofSERVQUAL in the Malaysian banking sector The research model and the hypothesesrelationship between the constructs in this study is presented in Figure 1

Earlier literature suggests that SERVQUAL incorporates a number of dimensionsFor the purpose of this study the SERVQUAL model includes tangibles empathyreliability and security convenience and internet banking Tangibles comprise the physicalfacilities equipment and the appearance of personnel Bank customers usually look for anytangibles as the indicators of a bankrsquos overall SERVQUAL Customers can assess thepremises of the bank or the appearance of the bankrsquos staff Physical facilities availabilitythe adequacy of equipment and the appearance of a bankrsquos employees are viewed as

786

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

important factors in terms of tangibility amongst customers in Hong Kong (Lau et al 2013)Therefore the number of counters the design of the transaction form and the availability ofa water dispenser might increase the perception of SERVQUAL being received Moreoverbank users in India (Ravichandran et al 2010) and Bangladesh (Rahman 2013) also rankedtangibles dimension as highly important in increasing customer satisfaction and loyaltyTherefore the following hypothesis is developed

H1 There is a positive relationship between tangibles and perceived overall SERVQUAL

Empathy is customersrsquo expectations with regard to the extent to which the serviceprovider appears to understand and is concerned about their individual needs and wantsThe concept of empathy is to understand the needs of the customers and provideindividual attention (Siddiqi 2011) Researchers revealed that empathy plays a vital role ininfluencing customer satisfaction with regard to the value of the SERVQUAL provided byfrontline staff (Annamalah et al 2011 Kamal et al 2013 Shanka 2012 Siddiqi 2011Estiri et al 2011) Bank staff and customer interactions are reflected in the dimension ofempathy This means that bank customers perceive good overall SERVQUAL in terms ofbanking hours and personal attention given to them by the bankrsquos staff Therefore thefollowing hypothesis is proposed

H2 There is a positive relationship between empathy and perceived overall SERVQUAL

Reliability and security is the extent to which customers can rely on the service provider tokeep promises and perform in the best interests of the customers (Lee and Moghavvemi2015) Reliability has been identified as an influential component in determining thecustomer loyalty in previous studies (Estiri et al 2011 Kumar et al 2010 Lau et al 2013Mistry 2013) Zafar et al (2012) surveyed 192 bank users in Pakistan and the results of theirstudy showed that reliability is positively correlated to customer loyalty because customersexpect bank employees to have zero error records and fulfil their promise of delivering acertain service within a stipulated time frame Customers will not be satisfied with theoverall SERVQUAL if they do not feel reliable and secure about the competence of theservice provider Thus banks need to instil feelings of confidence in customers and banksrsquostaff are expected to handle customers in a professional and competent manner In thisstudy security refers to the physical reliability at the bank such as adequate securityguards and CCTVs ATM machine or bank located at a secure location etc As suchreliability and security of the bank service is an important factor for customers in evaluatingthe overall SERVQUAL (Lee and Moghavvemi 2015) The hypothesis is as follows

H3 There is a positive relationship between reliability and security and perceivedoverall SERVQUAL

Internet banking

Tangibility

Empathy

Reliability andsecurity

Convenience

Perceivedoverall service

quality

Customersatisfaction

H7

H8

TrustH6

Bankreputation

H1

H2

H3

H4

H5 Figure 1The conceptual

research framework

787

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Kumar et al (2009) included an additional dimension convenience to the SERVQUAL modelTheir findings indicated that the convenience factor plays a significant role in delivering theSERVQUAL of banks in Malaysia Therefore the convenience dimension was also added tothe modified SERVQUAL model for the banksrsquo customers Similarly Awan et al (2011)found that the convenient availability of financial services is ranked high on the list of priorityby customers for SERVQUAL in the banking sector of Pakistan This implies that the greaterthe level of convenience the greater the perceived overall SERVQUAL The convenience ofservice remains the responsibility of the service provider indicating the full range of availableservices convenience and ease-of-access via its location operating hours employees andoperation systems Hence the following hypothesis is formulated

H4 There is a positive relationship between convenience and perceivedoverall SERVQUAL

Internet banking distinguishes itself from its competitors (Abdullah and Kassim 2009)Internet banking is the use of the internet as a delivery channel for banking services such asopening a deposit account or transferring funds between different accounts and newbanking services ie electronic bills and payments ( Jun and Cai 2001) The internet hasbeen accepted as a new channel of banking transactions With the high growth of newtechnology the increased use of the internet has a great impact on the characteristics ofsubsequent services Studies have shown that the provision of internet banking services isimportant in attracting more customers (Hamzah et al 2014) Rod et al (2009) and Jun andCai (2001) found that the more positive the customer perception of the SERVQUAL ofinternet banking the greater the likelihood that overall SERVQUAL will be perceivedTherefore we include the provision of high-quality internet banking as being influential tothe overall SERVQUAL of the banking sector The developed hypothesis is as follows

H5 There is a positive relationship between internet banking and perceivedoverall SERVQUAL

In the banking industry trust is regarded as one of the relevant collaborative relationshipsbetween a customer and a bank and as a channel to enhance competitiveness (Barney andHansen 1994 Levy and Hino 2016) Trust is conceptualised as the customersrsquo expectationsand beliefs that their service provider will carry out actions as promised (Levy and Hino2016) Singh and Sirdeshmukh (2000) found that trust is essential for building andmaintaining long-term relationships They are of the belief that if one party can bringpositive outcomes to the other party trust can therefore be developed A high level of trustleads to the future potential of the relationship between customers and service providers(Amin et al 2013) The way in which perceived overall SERVQUAL (such as speed andefficiency of transactions employees of bank are polite and friendly and willingness to help)affects trust has yet been adequately investigated For this reason one of the objectives ofthis study is to investigate the overall perceived SERVQUAL of customer trust in a bankBased on the above discussion the following hypothesis is proposed

H6 There is a positive relationship between perceived overall SERVQUAL andcustomer trust

The relationship between SERVQUAL and customer satisfaction has received considerableacademic attention in the past few years (Cronin et al 2000 Sureshchandar et al 2002)SERVQUAL and customer satisfaction are widely recognised as key influences in theformation of consumersrsquo purchase intentions in a service environment (Taylor and Baker1994) Perceived SERVQUAL and satisfaction have generally been conceptualised to bedistinct constructs (Spring and Mackoy 1996) As such greater understanding of therelationship between perceived overall SERVQUAL and customer satisfaction is required

788

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

(Spring and Mackoy 1996) Gonzaacutelez et al (2007) found that perceived SERVQUALinfluences customer satisfaction in behavioural intention of tourism industry Maumlgi andJulander (1996) indicate that perceived SERVQUAL influences customer satisfaction inSwedish grocery retailing Based on earlier studies this study hypothesises that perceivedoverall SERVQUAL has a significantly positive effect on customer satisfaction Higherlevels of perceived overall SERVQUAL will lead to higher customer satisfaction As suchthe hypothesis is developed

H7 There is a positive relationship between perceived overall SERVQUAL andcustomer satisfaction

It has been suggested that SERVPERF is essential in building a good reputation(Wang et al 2003) Zeithaml and Shappiro stated that perceived SERVQUAL is associatedwith the reputation of brand name Selnes (1993) found that the reputation of a brand isinfluenced by how consumer experiences performance of quality of services or productCustomers form a general overall evaluation of services based on their sum of beliefs orexpectations of a set of attributes Their perceptions of quality of service are influenced bytheir respective experiences on high- or low-quality performances For example when theyexperience high-quality services the reputation of a bank will increase vis-agrave-vis customersThus the hypothesis is proposed as follows

H8 There is a positive relationship between perceived overall SERVQUAL andbank reputation

Research methodologyThis study aims to examine the dimensions of SERVQUAL in the banking sector It will alsolook into how the dimensions will influence the perceived overall SERVQUAL which resultsin the building of trust customer satisfaction and bank reputation A questionnaire surveywas conducted to examine the quality of services among local banks in Malaysiaparticularly in the Klang Valley area Malaysia Currently there are 27 commercial banks16 Islamic banks and 11 investment banks offering various products and servicesto the public (Bank Negara Malaysia 2015b) Since the pricing in Malaysian banks isregulated the SERVQUAL being delivered becomes important if the banks want to retainand attract customers With the increasing number of international banks local banks arecompeting in a highly competitive environment for the provision of quality services basedon customer expectations

The judgement sampling method was used to collect data Respondents were first askedwhether they had bank accounts with local banks if they replied in the affirmative theywere asked to participate in the survey For each question the respondents were asked totick the response that best described their degree of agreementdisagreement Most of thequestionnaire items were adapted from previous studies on banking and a few moreconstructs were introduced in our study in order to obtain adequate measures of thedimensions of interest (see Figure 1) All items were measured using a seven-point Likertscale ndash ranging from 1 indicating strongly disagree to 7 indicating strongly agree Wemeasured the antecedents of perceived overall SERVQUAL (ie tangibles empathyconvenience reliability and security and internet banking) and the consequences ofperceived overall SERVQUAL on customer satisfaction trust and bank reputation

In total 400 questionnaires were gathered over a six-week period However only 375 wereusable for further data analysis The two-step approach of structural equation modelling(SEM) using AMOS 180 (maximum likelihood estimation) was employed to predict therelationships between the constructs This approach was selected due to its capability oftesting the causal relationships between the constructs with multiple measurement items

789

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

ResultsProfile of respondentsThe demographic profile of the respondents is presented in Table I Based on the results61 per cent of the respondents were females while 39 per cent (229) were males Thesmaller percentage of the latter is due to difficulties in approaching them The majority ofthe respondents (754 per cent) were between 21 and 40 years old The largest group ofrespondentsrsquo works for the public and private sectors was 68 per cent while those who areself-employed were 10 per cent and students housewife or others (investmentconsultants insurance agents) made up of 22 per cent of the total respondents Personalincome was measured in Malaysian Ringgit (RM) In total 30 per cent of the respondentshad a monthly income of between RM2001 and RM4000 Most of the respondents preferinternet banking (68 per cent) and use ATMs (79 per cent) while a lower percentage(40 per cent) prefer tellers at the bank These results are consistent with the statisticspublished by the central bank which indicated that online banking has become verypopular in Malaysia Currently 31 banks in Malaysia offer internet banking and nearly198 million internet banking subscribers (penetration to population of 637 per cent)conducted more than 210 million banking transactions valued at 233 billion Ringgit as ofJune 2015 (Bank Negara Malaysia 2015a)

Exploratory factor analysisTable II presents the mean scores standard deviations Cronbachrsquos α value and the results ofthe exploratory factor analysis of the constructs in this study The mean scores have been

Profile Description Frequency Percentage ()

Gender Male 146 389Female 229 611

Age Below 20 years 5 1321-30 years 153 40831-40 years 129 34441-50 years 61 16351 years above 27 72

Profession Salaried-private sector 169 451Salaried-government 88 235Student 59 157Businessself-employment 37 99Housewife 12 32Others 10 27

Monthly income Below RM2000 53 141RM2001-RM4000 113 301RM4001-RM6000 63 168RM6001-RM8000 28 75RM8001-RM10000 41 109RM10001 and above 77 205

Preferred transaction Automated teller machines 294 784Internet banking 255 680Tellers at bank 150 400Phone banking 19 51

Duration of being bank customer Less than 1 year 14 371-5 years 149 3976-10 years 110 293More than 10 years 102 272

Note nfrac14 375

Table IDemographic profileof respondents

790

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Constructs Item statements Mean SD αFactorloading

Tangibles Infrastructure and facilities such as parking space andATMs are adequate 446 014 0802 0579Equipment in the bank is modern-looking 0780Printed materials such as brochures and statementsare attractive 0758Maintain clean and pleasant branch facilities 0831The lobby area is comfortable while waiting for services 0817Provide easy-to-read and understandable bank statement 0719

Empathy Bank gives customers individual attention 474 091 0832 0754Bank staff never too busy to respond to my requests 0608Bank staff understand customerrsquos specific needs 0777Bank staff are friendly and polite 0667Bank is very responsive to customer complaints 0831Bank staff are polite when handling customer complaints 0828Bank staff willing to help elderly and disabled customers andgive them special attention 0599

Reliability andsecurity

Bank maintains error-free records (eg accurate bills andstatements) 511 089 0894 0791Bank keeps confidentiality of account and privacy ofcustomers 0746Bank delivers up-to-date records 0711Physical security at bank is adequate (eg security guardsCCTVs) 0633ATM machine is located at a secure location 0775Bank is located in secure location 0825Bank is quick to alert customers to any suspicious orfraudulent transaction 0686Bank always asks questions for verification in phone banking 0564

Convenience Bank branches are located in a convenient location 453 095 0817 0729Bank extends its working hours in order to meet customer needs 0639Number of open tellers during peak hours is adequate 0655Waiting time for receiving services is not too long 0685Bank provides the necessary convenience for customers(eg parking area and special counters for elderlydisabledcustomers) 0644ATMs are conveniently located (eg shopping mallsgovernment departments etc) 0732Bank service is easily accessible by telephone 0595

Internetbanking

The online banking has adequate security features 519 102 0929 0844The online banking is fast for making transactions 0901It is easy to learn how to operate online system 0902The online system makes appropriate confirmationconcerning the completion of transactions 0890I received confirmation of every online transaction by SMS 0766The online banking system has a user-friendly interface 0887

Overall servicequality

My bank always delivers excellent overall service 495 087 0915 0849The services offered by my bank are high quality 0878My bank delivers superior service in every way 0861My bank offers me a complete range of products 0789The personnel provide a friendly atmosphere 0831The bank insists on error-free records 0831

(continued )

Table IIMean scores

Cronbachrsquos α andfactor loading

791

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

computed by equally weighing the mean scores of all of the items The analysis shows that ona seven-point scale the mean scores of the independent variables range from 453 to 519which indicates that customers perceive that the quality of service being offered by the banksis moderate The mean score for internet banking is 519 (SDfrac14 102) which suggests thatcustomers find the service provided by the internet as highly important The mean score foroverall SERVQUAL is 495 (SDfrac14 087) which implies that the customers of banks indicatethat the overall SERVQUAL is moderate The mean score for trust is 525 (SDfrac14 086)suggesting that the customers find the service provider trustworthy The results of theexploratory factor analysis show that the factor loadings for all items are greater than 050and each of these items load strongly onto their respective associated factors

Measurement modelIn order to achieve an adequate goodness of fit on the measurement model and identifypossible problems this study assessed the path estimates standardised residuals andmodification indices of the measurement model (Hair et al 2006) The assessment of thestandardised regression weight indicates that all items were loaded high within theirconstructs which was within the acceptable values of 070 and above except for threeitems thus these items were deemed unsatisfactory (Hair et al 2006) and deleted from themeasurement model In terms of the assessment of the standardised residual values theresults indicated that all of the items have standardised residual values of less than 25with the exception of one item from reliability and security which was deleted from themodel The modification indices assessment shows the co-variance between some of theitems in the tangibility and empathy construct with high error co-variance betweenthese indicators The estimation of a coefficient may be considered removed fromthe measurement model if the modification indices value is equal to 4 or greater(Hair et al 2006) The substantial modification indices value is assumed to be 788 for a

Constructs Item statements Mean SD αFactorloading

Trust The bank staff are trustworthy 525 086 0918 0839The bank treats me in an honest way in every transaction 0840I feel safe in my transactions with the bank 0865The bank will not let other people know my account balance 0817Bank tellers accurately verify all transaction requests 0842Overall I have complete trust in my bank 0855

Customersatisfaction

The services of this bank meet my expectations 501 085 0883 0827I did the right thing when I chose this bank for its services 0861I am satisfied with the quality of the bankrsquos services 0859I am satisfied with the various bonus link programmes ofthe bank 0614I am satisfied with the interactions that I have had with the bank 0818The bank satisfies my needs 0830

Bankreputation

I will continue to patronize this bank even if the servicecharges are increased 459 099 0874 0769I am willing to pay more for using the services of this bank 0832To me this bank would rank first among the other banks 0828The bank I patronize reflects a lot about who I am 0845This bank has a good reputation in this industry 0692The bank does what it promises for its customers 0736

Note Scores based on a seven-point scale ranging from 1frac14 strongly disagree to 7frac14 strongly agreeTable II

792

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

significant model improvement Based on the results of the aforementioned assessmentthese items were dropped from the initial measurement model in order to improve themodelrsquos fit Furthermore these items add very little explanatory power to themeasurement model and thus they were removed from further analysis The estimatedparameters were all statistically significant between the latent and measured variablesThe results of the measurement model ndash χsup2df (253) TLI (091) CFI (091) IFI (091)RMSEA (006) and GFI (082) ndash indicate the acceptable model fit of the data

Convergent and discriminant validityAccording to Hair et al (1995) uni-dimensionality should always be assessed prior toexamining validity This is due to the fact that the analysis of validity is based on theassumption of uni-dimensionality (Nunnally and Bernstein 1994) In order to test foruni-dimensionality the confirmatory factor analysis (CFA) was conducted (Anderson andGerbing 1991) through SEM AMOS 180 to ascertain that each item in the model representsthe same measure (Ahire et al 1996) SEM takes a confirmatory approach rather than anexploratory approach to analyse data and provide a confirmatory test of measurement theoryfor the constructs SEM explains how measured variables logically and systematicallyrepresent the constructs involved in the theoretical model This study applied thepre-validated measurement to prior studies thus CFA is the most appropriate approach inassessing a constructrsquos validity (Hair et al 2006) CFA describes the extent to which a set ofmeasured items actually reflects the theoretical latent construct

The construct validity test was performed to determine to what extent the items appearto measure the construct of interest instead of other constructs The convergent validity ofthe measurement items can be assessed by composite reliability and the variance extractedmeasure Composite reliability depicts the degree to which the item indicates a commonconstruct The variance extracted measure reflects the amount of variance in the itemscaptured by the construct

The CFA results showed that the standardised parameter estimates were higher than070 and the signs of parameter estimation were all in the same direction to measure specificlatent variables

The composite reliability correlation average variance extracted (AVE) and square root ofthe AVE were calculated and presented in Table III The results revealed that the compositereliability of all of the constructs was greater than 072 and the output of AVE for themodel with independent and dependent variables exceeded 050 (Fornell and Larcker 1981)Hair et al (1995) and Carmines and Zeller (1988) recommended that composite reliability should

Construct CR AVE 1 2 3 4 5 6 7 8 9

Tangibles 080 082 090Empathy 081 082 0587 090Reliability andSecurity 072 067 0533 0429 081Convenience 078 079 0592 0716 0361 088Internet banking 093 085 0437 0355 0720 0305 092Overall servicequality 092 083 0505 0435 0698 0320 0666 091Trust 090 082 0467 0383 0713 0282 0626 0772 090Customersatisfaction 088 080 0500 0409 0594 0320 0571 0822 0744 089Bank reputation 082 073 0403 0234 0580 0222 0517 0641 0596 0587 085Notes CR composite reliability The values in the diagonal are the square root of the AVE po001

Table IIIComposite reliability

average varianceextracted correlation

793

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

be greater than 070 and AVE should be greater than 050 to indicate construct validity In orderto evaluate discriminant validity this study compared the square root of each constructrsquos AVEsto its correlation with other variables (Chin 1998) The results showed that all items were loadedsignificantly on their predefined constructs and that the construct correlations were all belowthe square root of AVE for each construct If the square root of the AVE for each construct islarger than the correlation between the construct and any other construct in the model then themeasures should be considered to possess adequate discriminant validity (Fornell and Larcker1981) Thus our results proved the reliability of the data and convergent validity

Structural model and hypothesis testingAfter conducting the validity and reliability tests for all the constructs through themeasurement model it is also necessary to demonstrate the overall fit of the structuralmodel (see Figure 2) In this study the hypothesised model was assessed using multiplemodel-fit measures to assess its overall goodness of fit

The structural model revealed an adequate model fit with the data The results in Table IVshow that χsup2df (246) TLI (091) CFI (092) IFI (092) RMSEA (006) and GFI (082) were aboveor quite close to the cut-off criteria The table also shows the recommended level of each index(Hair et al 2006 Meyers et al 2005) In this study the GFI values of 070 and 082 were lowerthan the commonly cited thresholds of 090 however they were within range of therecommended levels Yen and Lu (2008) argued that a GFI ranging from 080 to 090 could beinterpreted as a reasonable fit In Table IV all the model-fit indices on the measurement andstructural model were above or quite close to the cut-off criteria suggested by Hair et al (2006)This indicates that all the data fit reasonably well with the proposed model Thus it can beconcluded that the models are valid and we can continue to analyse the outcome of thehypothesised effects

Results of hypotheses testingThe relationship between the independent variables and overall SERVQUAL wasinvestigated Table V summarises the results of the hypothesised relationships As shown in

Figure 2Structural model

794

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

dimensions is unjustified (Gilmore 2003) In the financial sector Bahia and Nantel (2000)developed a bank SERVQUAL model containing six dimensions (ie effectiveness andassurance access price tangibles service portfolio and reliability) while Guo et al (2008)reported four dimensions (ie reliability human capital communication and technology) forcapturing SERVQUAL in the Chinese banking sector Despite these SERVQUAL studiesconducted in the financial sector there is a lack of agreement regarding the specificdimensions of SERVQUAL in the banking sector (Monferrer-Tirado et al 2016) In thiscontext understanding the SERVQUAL dimensions and their respective relationships withthe perception of overall SERVQUAL of banking sector remains a key issue that requiresfurther investigation Moreover Chowdhary and Prakash (2007) suggested that theidentification of the determinants of SERVQUAL is necessary in order to be able to specifymeasure control and improve customer perceived SERVQUAL

Perceived overall SERVQUAL was argued to have a significant impact on businessperformance such as customer satisfaction (Caruana 2002 Hu et al 2009) customer trustand bank reputation (Cronin et al 2000) These research works however were conductedindependently The research that integrates bank SERVQUAL dimensionalities and itsimpact on consumer trust customer satisfaction and bank reputation is still scarce(Tsoukatos and Mastrojianni 2010 Caruana 2002 Bahia and Nantel 2000 Lee andMoghavvemi 2015) particularly in a Malaysian context This will limit the understandingof how specific dimensionalities of SERVQUAL play their respective roles in developingtrust enhance customer satisfaction and build their reputation in banking As pointed outearlier the dimensions of SERVQUAL may differ according to the type of service industryIn this regard understanding SERVQUAL dimensions and perceived overall SERVQUALremains a key issue that requires further investigation vis-agrave-vis the financial sector

Theory of expectancydisconfirmation paradigm also provides the grounding of thisstudy with SERVQUAL as an antecedent and customer satisfaction as an outcome Thetheory suggests that key determinants of satisfaction are expectations and perception ofproduct and service performances (Oliver 1989) Previous research works also suggestedthat the theory provide a complete picture of the role of perceived overall SERVQUAL as adeterminant of satisfaction and behavioural outcome (Gupta and Stewart 1996) Perceivedoverall SERVQUAL also has been suggested to influence customer trust and bankreputation However the effect of both constructs has not been tested in one model Thus abetter understanding of the effect of perceived overall SERVQUAL on customer satisfactionwith the presence of customer trust and bank reputation is helpful to the management whenstrategizing their respective banks and allocating corporate resources (Caruana 2002)Therefore it is also crucial to look at developing a richer model that incorporates theseconstructs simultaneously as proposed in the current study

Therefore an empirical investigation is required to properly address the followingquestions what are the dimensions of SERVQUAL in the banking context To what extentdo the dimensionalities of SERVQUAL influence the perceived overall SERVQUAL Doesperceived overall SERVQUAL influence consumer trust customer satisfaction and bankreputation Thus this study examines the dimensionalities of SERVQUAL that affect theperceived overall SERVQUAL and its impact upon customer trust customer satisfactionand bank reputation in Malaysia As such collectively investigating the overallSERVQUAL determinants is essential for strategizing their services marketing decisionsand thereby warrants further investigation The issue of overall SERVQUAL is important inMalaysia for many reasons First there is a lack of research on how to manage SERVQUALin the Malaysian banking industry Second with the enormous growth of foreign bankslocal banks are aware of the competition because there is a segment within the currentmarket that would switch to foreign banking services if the quality being offered were onpar with the local banks Since the Asian financial crisis in 1997 the Malaysian banking

783

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

scene has undergone a number of significant changes including the restructuring andredesigning of the service delivery methods being offered Over time the Malaysianbanking sector is continuously improving due to increasing competition from the growth offoreign banks in local As such local banks are pressured to find ways to sustain theirrespective competitiveness Thus this research is considered to be timely

The remainder of this paper is structured in the following manner The followingsections will provide information on the constructs being examined in this study explain thetheoretical background as well as provide a proposed conceptual model and the researchhypotheses The research methodology will then be detailed in the subsequent sectionThe following section presents the analysis results and discussion of the research The finalsection concludes the study by pointing out research contributions research limitationsand directions for future research

SERVQUALSERVQUAL has been studied extensively in recent decades Traditionally SERVQUALrefers to the customerrsquos overall evaluation of service firmsrsquo attributes by comparing theirexpectations and actual performance (Parasuraman et al 1988) Parasuraman et al (1988)developed a 22-item instrument recognised as SERVQUAL which is widely used formeasuring service quality The five dimensions of SERVQUAL that rely on customers toform their judgement on perceived SERVQUAL are assurance ndash employeesrsquo knowledge andcourtesy and their ability to convey trust and confidence empathy ndash caring and individualattention given to customers reliability ndash ability to perform the promised servicedependably and accurately responsiveness ndash willingness to help customers and provideprompt service and tangibles ndash appearance of physical facilities equipment personneland written materials (Parasuraman et al 1988)

The scale of SERVQUAL was developed based on five industries which are repair andmaintenance retail banking credit card companies securities and brokerages and longdistance telephone services Despite their advantages and popularity however both scaleshave their respective limitations The main empirical problem is their unstable dimensions(Van Dyke et al 1997) which could differ depending upon the service industry to which thescale was applied to (Babakus and Boller 1992) Babakus and Boller (1992) proposed thata quality measurement scale be adapted to specific individual service industry and that ageneral scale should not be used at all

Furthermore scholars have argued that SERVQUAL is a multi-dimensional constructwith no agreement on generic dimensions (Lee and Moghavvemi 2015) However this modelhas been criticised by Babakus and Boller (1992) and Parasuraman et al (1994) both ofwhom suggested further modifications to the SERVQUAL model This is because manystudies fail to fully appreciate all five dimensions leading to an alternativeconceptualisation of SERVQUAL Thus the SERVQUAL model remains the guidingmodel in numerous studies in the service sector focussing on various organisations such asbanks retail and tourism Many researchers have incorporated other constructs andmeasures alongside the SERVQUAL dimensions in order to enrich and extend theexplanatory power of this model (Bahia and Nantel 2000 Jamal and Naser 2002 Al-Hawariand Ward 2006) Bahia and Nantel (2000) proposed an alternative measure of perceivedquality in retail banking consisting of 31 items with six dimensions (ie effectiveness andassurance access price tangibles service portfolio and reliability) Another researcherhave suggested that high-quality of banking services should have high-quality of serviceenvironment interaction empathy and reliability (Karatepe et al 2015) Jamal and Naser(2002) and Al-Hawari and Ward (2006) have adopted the Parasuraman et alrsquos (1988)framework to examine the quality of service in retail banking services However mostSERVQUAL studies focussed on developed countries with limited number of works

784

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

pertaining to commercial banks For example Shafie et al (2004) examined the SERVQUALin Islamic banking industry They suggested that an additional dimension (eg compliancewith Islamic law) should be added to the SERVQUAL method as the Islamic bankingindustry operate under different principles and cultures compared to other serviceindustries They posited that it is important for Islamic banks to consider culturaldifferences when adopting SERVQUAL

In the banking industry the internet revolution has changed the way banks interact withcustomers all in the name of enhancing their provision of services (Akinci et al 2004 Jun andCai 2001 Joseph et al 1999) Banks not only provide their services via traditional methodsthey also introduced internet banking services to build and maintain relationships withcustomers (Mols 2000) Internet banking has helped customers conveniently manage theirpersonal banking affairs For example banks offer their customers a variety of services24 hours a day with internet access availability anywhere and anytime (Hamzah et al 2014)Moreover internet banking provides customers with enhanced control over their financialaffairs that is user friendly and fits their lifestyle (Hamzah et al 2014) Internet banking alsocould potentially save costs increase customer penetration and develop the bankrsquos non-corebusiness Due to these advantages internet banking is fast gaining popularity amongcustomers The changing needs of customers have forced banking services to transform theirservices by providing high-quality internet banking services Researchers have suggestedthat high-quality internet banking services should be easy and convenient for operation(Pikkarainen et al 2006) and perceive usefulness provide ease of use reliabilityresponsiveness and a high level of security (Liao and Cheung 2008) Therefore this studysuggests that internet banking could be an important determinant of the quality of bankingservices which will influence the customersrsquo perception of overall SERVQUAL

Customer satisfactionJamal and Naser (2002) defined customer satisfaction as a feeling or evaluation bycustomers towards products or services Customer satisfaction is the result of the provisionof goods and services that meet or exceed customerrsquo needs (Szymanski and Henard 2001)Satisfied customers would be more than willing to pay premiums provide referrals and usemore products (Reichheld 1996) In todayrsquos highly competitive banking industry customersatisfaction is regarded as the essence of success ( Jamal and Naser 2002 Siddiqi 2011)Satisfied customers will be more than likely to stay and recommend their respective banksto their acquaintances Inevitably this will reduce bank costs associated with the provisionof services due to fewer complaints (Reichheld and Aspinall 1993)

Bank reputationScholars have suggested that SERVQUAL is important in increasing reputation(s) (Caruanaand Ewing 2010 Walsh et al 2009) Consumers assume that retailers who possess areputation for providing high SERVQUAL and products are at a lower risk (Purohit andSrivastava 2001 Dawar and Parker 1994) which will shift their preference towards thesestores (Koistinen and Jaumlrvinen 2009) In retail services a good reputation is vital for customersvis-agrave-vis purchasing or repeat purchasing behaviours (Wang et al 2003 Graham and Fearn2005) This implies that customers are more likely to purchase and remain loyal to reputableretailers (Nguyen and LeBlanc 2001) Ou et al (2006) stated that a retailerrsquos reputation is a signof excellent quality A favourable and well-known reputation becomes an asset for a serviceprovider as it will reside in the minds of customers Moreover customers tend to forgiveminor mistakes if a service provider is of positive repute (Kang and James 2004)

There are two schools pertaining to company reputation and image the similarity schoolthat states that company reputation is a synonym for company image and the differenceschool that differentiates these two phrases The terms corporate image and corporate

785

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

reputation are considered as identical by Gotsi and Wilson (2001) who defined image as ldquothetotal impression of the companyrdquo Image is about overall impression residing in the mind ofcustomers Fombrun (1996) considers the term corporate reputation and corporate image asdifferent concepts According to Wartick (1992) corporate reputation is an ldquoaggregation of asingle stakeholderrsquos perceptions of how well organizational responses are meeting thedemands and expectations of many organizational stakeholdersrdquo Yoon et al (1993) viewedcorporate reputation as the firmrsquos history of communicating to the customers in terms of thequality its products or services compared to that of its competitors Based on thediscussions of the definitions of reputation corporate reputation is a stakeholderrsquos overallevaluation of a company over time This evaluation is based on the customerrsquos directexperiences with the bank

TrustTrust is formed when customers believe that banks will perform as promised (credibility trust)and have confidence in employeesrsquo ability and courtesy (benevolence trust) (Yap et al 2012)El-Manstrly et al (2011) defined trust as a function of the perceived reliability and integrity ofa brand or service provider Jan and Abdullah (2014) reported that trust in the banking sectorincreases awareness concerning the importance of technology-related critical success factorsResearch has revealed that higher overall SERVQUAL would lead to a higher level oftrustworthiness and positively increase the level of customer loyalty

Theoretical background and hypotheses developmentHaving identified the variables associated with SERVQUAL this study modified themeasurement for SERVQUAL to capture the customer perceptions of SERVQUAL in retailbanking particularly in the context of Malaysia This section presents the theoreticalbackground of a proposed conceptual framework for perceived overall SERVQUAL Theconceptual framework is developed based on the literature review and prior scales that areavailable for investigating the relationships between the perceived overall SERVQUALtrust customer satisfaction and bank reputation The overall perceived SERVQUAL isinfluenced by multiple constructs within SERVQUAL (tangibles empathy reliability andsecurity convenience and internet banking)

According to Lee and Moghavvemi (2015) many researchers (ie Behara et al 2002Ladhari et al 2011) found that SERVQUAL model and its measurement scales are changingin conformity to the different types of service or country Due to those reasons we followBahia and Nantel (2000) and Lee and Moghavvemirsquos (2015) study who identified dimensionsbased on the most cited and most applicable dimensions of SERVQUAL in the context ofbanking in Malaysia such as tangibles empathy reliability and security convenience andinternet banking These dimensions are identified from our exploratory study which wasconducted previously Additionally the five dimensions (tangibles reliabilityresponsiveness assurance and empathy) of the SERVQUAL approach developed byParasuraman et al (1988) appears to be less universally applicable (Gilmore 2003)Thus based on literature the SERVQUAL model is further modified to assess the level ofSERVQUAL in the Malaysian banking sector The research model and the hypothesesrelationship between the constructs in this study is presented in Figure 1

Earlier literature suggests that SERVQUAL incorporates a number of dimensionsFor the purpose of this study the SERVQUAL model includes tangibles empathyreliability and security convenience and internet banking Tangibles comprise the physicalfacilities equipment and the appearance of personnel Bank customers usually look for anytangibles as the indicators of a bankrsquos overall SERVQUAL Customers can assess thepremises of the bank or the appearance of the bankrsquos staff Physical facilities availabilitythe adequacy of equipment and the appearance of a bankrsquos employees are viewed as

786

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

important factors in terms of tangibility amongst customers in Hong Kong (Lau et al 2013)Therefore the number of counters the design of the transaction form and the availability ofa water dispenser might increase the perception of SERVQUAL being received Moreoverbank users in India (Ravichandran et al 2010) and Bangladesh (Rahman 2013) also rankedtangibles dimension as highly important in increasing customer satisfaction and loyaltyTherefore the following hypothesis is developed

H1 There is a positive relationship between tangibles and perceived overall SERVQUAL

Empathy is customersrsquo expectations with regard to the extent to which the serviceprovider appears to understand and is concerned about their individual needs and wantsThe concept of empathy is to understand the needs of the customers and provideindividual attention (Siddiqi 2011) Researchers revealed that empathy plays a vital role ininfluencing customer satisfaction with regard to the value of the SERVQUAL provided byfrontline staff (Annamalah et al 2011 Kamal et al 2013 Shanka 2012 Siddiqi 2011Estiri et al 2011) Bank staff and customer interactions are reflected in the dimension ofempathy This means that bank customers perceive good overall SERVQUAL in terms ofbanking hours and personal attention given to them by the bankrsquos staff Therefore thefollowing hypothesis is proposed

H2 There is a positive relationship between empathy and perceived overall SERVQUAL

Reliability and security is the extent to which customers can rely on the service provider tokeep promises and perform in the best interests of the customers (Lee and Moghavvemi2015) Reliability has been identified as an influential component in determining thecustomer loyalty in previous studies (Estiri et al 2011 Kumar et al 2010 Lau et al 2013Mistry 2013) Zafar et al (2012) surveyed 192 bank users in Pakistan and the results of theirstudy showed that reliability is positively correlated to customer loyalty because customersexpect bank employees to have zero error records and fulfil their promise of delivering acertain service within a stipulated time frame Customers will not be satisfied with theoverall SERVQUAL if they do not feel reliable and secure about the competence of theservice provider Thus banks need to instil feelings of confidence in customers and banksrsquostaff are expected to handle customers in a professional and competent manner In thisstudy security refers to the physical reliability at the bank such as adequate securityguards and CCTVs ATM machine or bank located at a secure location etc As suchreliability and security of the bank service is an important factor for customers in evaluatingthe overall SERVQUAL (Lee and Moghavvemi 2015) The hypothesis is as follows

H3 There is a positive relationship between reliability and security and perceivedoverall SERVQUAL

Internet banking

Tangibility

Empathy

Reliability andsecurity

Convenience

Perceivedoverall service

quality

Customersatisfaction

H7

H8

TrustH6

Bankreputation

H1

H2

H3

H4

H5 Figure 1The conceptual

research framework

787

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Kumar et al (2009) included an additional dimension convenience to the SERVQUAL modelTheir findings indicated that the convenience factor plays a significant role in delivering theSERVQUAL of banks in Malaysia Therefore the convenience dimension was also added tothe modified SERVQUAL model for the banksrsquo customers Similarly Awan et al (2011)found that the convenient availability of financial services is ranked high on the list of priorityby customers for SERVQUAL in the banking sector of Pakistan This implies that the greaterthe level of convenience the greater the perceived overall SERVQUAL The convenience ofservice remains the responsibility of the service provider indicating the full range of availableservices convenience and ease-of-access via its location operating hours employees andoperation systems Hence the following hypothesis is formulated

H4 There is a positive relationship between convenience and perceivedoverall SERVQUAL

Internet banking distinguishes itself from its competitors (Abdullah and Kassim 2009)Internet banking is the use of the internet as a delivery channel for banking services such asopening a deposit account or transferring funds between different accounts and newbanking services ie electronic bills and payments ( Jun and Cai 2001) The internet hasbeen accepted as a new channel of banking transactions With the high growth of newtechnology the increased use of the internet has a great impact on the characteristics ofsubsequent services Studies have shown that the provision of internet banking services isimportant in attracting more customers (Hamzah et al 2014) Rod et al (2009) and Jun andCai (2001) found that the more positive the customer perception of the SERVQUAL ofinternet banking the greater the likelihood that overall SERVQUAL will be perceivedTherefore we include the provision of high-quality internet banking as being influential tothe overall SERVQUAL of the banking sector The developed hypothesis is as follows

H5 There is a positive relationship between internet banking and perceivedoverall SERVQUAL

In the banking industry trust is regarded as one of the relevant collaborative relationshipsbetween a customer and a bank and as a channel to enhance competitiveness (Barney andHansen 1994 Levy and Hino 2016) Trust is conceptualised as the customersrsquo expectationsand beliefs that their service provider will carry out actions as promised (Levy and Hino2016) Singh and Sirdeshmukh (2000) found that trust is essential for building andmaintaining long-term relationships They are of the belief that if one party can bringpositive outcomes to the other party trust can therefore be developed A high level of trustleads to the future potential of the relationship between customers and service providers(Amin et al 2013) The way in which perceived overall SERVQUAL (such as speed andefficiency of transactions employees of bank are polite and friendly and willingness to help)affects trust has yet been adequately investigated For this reason one of the objectives ofthis study is to investigate the overall perceived SERVQUAL of customer trust in a bankBased on the above discussion the following hypothesis is proposed

H6 There is a positive relationship between perceived overall SERVQUAL andcustomer trust

The relationship between SERVQUAL and customer satisfaction has received considerableacademic attention in the past few years (Cronin et al 2000 Sureshchandar et al 2002)SERVQUAL and customer satisfaction are widely recognised as key influences in theformation of consumersrsquo purchase intentions in a service environment (Taylor and Baker1994) Perceived SERVQUAL and satisfaction have generally been conceptualised to bedistinct constructs (Spring and Mackoy 1996) As such greater understanding of therelationship between perceived overall SERVQUAL and customer satisfaction is required

788

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

(Spring and Mackoy 1996) Gonzaacutelez et al (2007) found that perceived SERVQUALinfluences customer satisfaction in behavioural intention of tourism industry Maumlgi andJulander (1996) indicate that perceived SERVQUAL influences customer satisfaction inSwedish grocery retailing Based on earlier studies this study hypothesises that perceivedoverall SERVQUAL has a significantly positive effect on customer satisfaction Higherlevels of perceived overall SERVQUAL will lead to higher customer satisfaction As suchthe hypothesis is developed

H7 There is a positive relationship between perceived overall SERVQUAL andcustomer satisfaction

It has been suggested that SERVPERF is essential in building a good reputation(Wang et al 2003) Zeithaml and Shappiro stated that perceived SERVQUAL is associatedwith the reputation of brand name Selnes (1993) found that the reputation of a brand isinfluenced by how consumer experiences performance of quality of services or productCustomers form a general overall evaluation of services based on their sum of beliefs orexpectations of a set of attributes Their perceptions of quality of service are influenced bytheir respective experiences on high- or low-quality performances For example when theyexperience high-quality services the reputation of a bank will increase vis-agrave-vis customersThus the hypothesis is proposed as follows

H8 There is a positive relationship between perceived overall SERVQUAL andbank reputation

Research methodologyThis study aims to examine the dimensions of SERVQUAL in the banking sector It will alsolook into how the dimensions will influence the perceived overall SERVQUAL which resultsin the building of trust customer satisfaction and bank reputation A questionnaire surveywas conducted to examine the quality of services among local banks in Malaysiaparticularly in the Klang Valley area Malaysia Currently there are 27 commercial banks16 Islamic banks and 11 investment banks offering various products and servicesto the public (Bank Negara Malaysia 2015b) Since the pricing in Malaysian banks isregulated the SERVQUAL being delivered becomes important if the banks want to retainand attract customers With the increasing number of international banks local banks arecompeting in a highly competitive environment for the provision of quality services basedon customer expectations

The judgement sampling method was used to collect data Respondents were first askedwhether they had bank accounts with local banks if they replied in the affirmative theywere asked to participate in the survey For each question the respondents were asked totick the response that best described their degree of agreementdisagreement Most of thequestionnaire items were adapted from previous studies on banking and a few moreconstructs were introduced in our study in order to obtain adequate measures of thedimensions of interest (see Figure 1) All items were measured using a seven-point Likertscale ndash ranging from 1 indicating strongly disagree to 7 indicating strongly agree Wemeasured the antecedents of perceived overall SERVQUAL (ie tangibles empathyconvenience reliability and security and internet banking) and the consequences ofperceived overall SERVQUAL on customer satisfaction trust and bank reputation

In total 400 questionnaires were gathered over a six-week period However only 375 wereusable for further data analysis The two-step approach of structural equation modelling(SEM) using AMOS 180 (maximum likelihood estimation) was employed to predict therelationships between the constructs This approach was selected due to its capability oftesting the causal relationships between the constructs with multiple measurement items

789

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

ResultsProfile of respondentsThe demographic profile of the respondents is presented in Table I Based on the results61 per cent of the respondents were females while 39 per cent (229) were males Thesmaller percentage of the latter is due to difficulties in approaching them The majority ofthe respondents (754 per cent) were between 21 and 40 years old The largest group ofrespondentsrsquo works for the public and private sectors was 68 per cent while those who areself-employed were 10 per cent and students housewife or others (investmentconsultants insurance agents) made up of 22 per cent of the total respondents Personalincome was measured in Malaysian Ringgit (RM) In total 30 per cent of the respondentshad a monthly income of between RM2001 and RM4000 Most of the respondents preferinternet banking (68 per cent) and use ATMs (79 per cent) while a lower percentage(40 per cent) prefer tellers at the bank These results are consistent with the statisticspublished by the central bank which indicated that online banking has become verypopular in Malaysia Currently 31 banks in Malaysia offer internet banking and nearly198 million internet banking subscribers (penetration to population of 637 per cent)conducted more than 210 million banking transactions valued at 233 billion Ringgit as ofJune 2015 (Bank Negara Malaysia 2015a)

Exploratory factor analysisTable II presents the mean scores standard deviations Cronbachrsquos α value and the results ofthe exploratory factor analysis of the constructs in this study The mean scores have been

Profile Description Frequency Percentage ()

Gender Male 146 389Female 229 611

Age Below 20 years 5 1321-30 years 153 40831-40 years 129 34441-50 years 61 16351 years above 27 72

Profession Salaried-private sector 169 451Salaried-government 88 235Student 59 157Businessself-employment 37 99Housewife 12 32Others 10 27

Monthly income Below RM2000 53 141RM2001-RM4000 113 301RM4001-RM6000 63 168RM6001-RM8000 28 75RM8001-RM10000 41 109RM10001 and above 77 205

Preferred transaction Automated teller machines 294 784Internet banking 255 680Tellers at bank 150 400Phone banking 19 51

Duration of being bank customer Less than 1 year 14 371-5 years 149 3976-10 years 110 293More than 10 years 102 272

Note nfrac14 375

Table IDemographic profileof respondents

790

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Constructs Item statements Mean SD αFactorloading

Tangibles Infrastructure and facilities such as parking space andATMs are adequate 446 014 0802 0579Equipment in the bank is modern-looking 0780Printed materials such as brochures and statementsare attractive 0758Maintain clean and pleasant branch facilities 0831The lobby area is comfortable while waiting for services 0817Provide easy-to-read and understandable bank statement 0719

Empathy Bank gives customers individual attention 474 091 0832 0754Bank staff never too busy to respond to my requests 0608Bank staff understand customerrsquos specific needs 0777Bank staff are friendly and polite 0667Bank is very responsive to customer complaints 0831Bank staff are polite when handling customer complaints 0828Bank staff willing to help elderly and disabled customers andgive them special attention 0599

Reliability andsecurity

Bank maintains error-free records (eg accurate bills andstatements) 511 089 0894 0791Bank keeps confidentiality of account and privacy ofcustomers 0746Bank delivers up-to-date records 0711Physical security at bank is adequate (eg security guardsCCTVs) 0633ATM machine is located at a secure location 0775Bank is located in secure location 0825Bank is quick to alert customers to any suspicious orfraudulent transaction 0686Bank always asks questions for verification in phone banking 0564

Convenience Bank branches are located in a convenient location 453 095 0817 0729Bank extends its working hours in order to meet customer needs 0639Number of open tellers during peak hours is adequate 0655Waiting time for receiving services is not too long 0685Bank provides the necessary convenience for customers(eg parking area and special counters for elderlydisabledcustomers) 0644ATMs are conveniently located (eg shopping mallsgovernment departments etc) 0732Bank service is easily accessible by telephone 0595

Internetbanking

The online banking has adequate security features 519 102 0929 0844The online banking is fast for making transactions 0901It is easy to learn how to operate online system 0902The online system makes appropriate confirmationconcerning the completion of transactions 0890I received confirmation of every online transaction by SMS 0766The online banking system has a user-friendly interface 0887

Overall servicequality

My bank always delivers excellent overall service 495 087 0915 0849The services offered by my bank are high quality 0878My bank delivers superior service in every way 0861My bank offers me a complete range of products 0789The personnel provide a friendly atmosphere 0831The bank insists on error-free records 0831

(continued )

Table IIMean scores

Cronbachrsquos α andfactor loading

791

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

computed by equally weighing the mean scores of all of the items The analysis shows that ona seven-point scale the mean scores of the independent variables range from 453 to 519which indicates that customers perceive that the quality of service being offered by the banksis moderate The mean score for internet banking is 519 (SDfrac14 102) which suggests thatcustomers find the service provided by the internet as highly important The mean score foroverall SERVQUAL is 495 (SDfrac14 087) which implies that the customers of banks indicatethat the overall SERVQUAL is moderate The mean score for trust is 525 (SDfrac14 086)suggesting that the customers find the service provider trustworthy The results of theexploratory factor analysis show that the factor loadings for all items are greater than 050and each of these items load strongly onto their respective associated factors

Measurement modelIn order to achieve an adequate goodness of fit on the measurement model and identifypossible problems this study assessed the path estimates standardised residuals andmodification indices of the measurement model (Hair et al 2006) The assessment of thestandardised regression weight indicates that all items were loaded high within theirconstructs which was within the acceptable values of 070 and above except for threeitems thus these items were deemed unsatisfactory (Hair et al 2006) and deleted from themeasurement model In terms of the assessment of the standardised residual values theresults indicated that all of the items have standardised residual values of less than 25with the exception of one item from reliability and security which was deleted from themodel The modification indices assessment shows the co-variance between some of theitems in the tangibility and empathy construct with high error co-variance betweenthese indicators The estimation of a coefficient may be considered removed fromthe measurement model if the modification indices value is equal to 4 or greater(Hair et al 2006) The substantial modification indices value is assumed to be 788 for a

Constructs Item statements Mean SD αFactorloading

Trust The bank staff are trustworthy 525 086 0918 0839The bank treats me in an honest way in every transaction 0840I feel safe in my transactions with the bank 0865The bank will not let other people know my account balance 0817Bank tellers accurately verify all transaction requests 0842Overall I have complete trust in my bank 0855

Customersatisfaction

The services of this bank meet my expectations 501 085 0883 0827I did the right thing when I chose this bank for its services 0861I am satisfied with the quality of the bankrsquos services 0859I am satisfied with the various bonus link programmes ofthe bank 0614I am satisfied with the interactions that I have had with the bank 0818The bank satisfies my needs 0830

Bankreputation

I will continue to patronize this bank even if the servicecharges are increased 459 099 0874 0769I am willing to pay more for using the services of this bank 0832To me this bank would rank first among the other banks 0828The bank I patronize reflects a lot about who I am 0845This bank has a good reputation in this industry 0692The bank does what it promises for its customers 0736

Note Scores based on a seven-point scale ranging from 1frac14 strongly disagree to 7frac14 strongly agreeTable II

792

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

significant model improvement Based on the results of the aforementioned assessmentthese items were dropped from the initial measurement model in order to improve themodelrsquos fit Furthermore these items add very little explanatory power to themeasurement model and thus they were removed from further analysis The estimatedparameters were all statistically significant between the latent and measured variablesThe results of the measurement model ndash χsup2df (253) TLI (091) CFI (091) IFI (091)RMSEA (006) and GFI (082) ndash indicate the acceptable model fit of the data

Convergent and discriminant validityAccording to Hair et al (1995) uni-dimensionality should always be assessed prior toexamining validity This is due to the fact that the analysis of validity is based on theassumption of uni-dimensionality (Nunnally and Bernstein 1994) In order to test foruni-dimensionality the confirmatory factor analysis (CFA) was conducted (Anderson andGerbing 1991) through SEM AMOS 180 to ascertain that each item in the model representsthe same measure (Ahire et al 1996) SEM takes a confirmatory approach rather than anexploratory approach to analyse data and provide a confirmatory test of measurement theoryfor the constructs SEM explains how measured variables logically and systematicallyrepresent the constructs involved in the theoretical model This study applied thepre-validated measurement to prior studies thus CFA is the most appropriate approach inassessing a constructrsquos validity (Hair et al 2006) CFA describes the extent to which a set ofmeasured items actually reflects the theoretical latent construct

The construct validity test was performed to determine to what extent the items appearto measure the construct of interest instead of other constructs The convergent validity ofthe measurement items can be assessed by composite reliability and the variance extractedmeasure Composite reliability depicts the degree to which the item indicates a commonconstruct The variance extracted measure reflects the amount of variance in the itemscaptured by the construct

The CFA results showed that the standardised parameter estimates were higher than070 and the signs of parameter estimation were all in the same direction to measure specificlatent variables

The composite reliability correlation average variance extracted (AVE) and square root ofthe AVE were calculated and presented in Table III The results revealed that the compositereliability of all of the constructs was greater than 072 and the output of AVE for themodel with independent and dependent variables exceeded 050 (Fornell and Larcker 1981)Hair et al (1995) and Carmines and Zeller (1988) recommended that composite reliability should

Construct CR AVE 1 2 3 4 5 6 7 8 9

Tangibles 080 082 090Empathy 081 082 0587 090Reliability andSecurity 072 067 0533 0429 081Convenience 078 079 0592 0716 0361 088Internet banking 093 085 0437 0355 0720 0305 092Overall servicequality 092 083 0505 0435 0698 0320 0666 091Trust 090 082 0467 0383 0713 0282 0626 0772 090Customersatisfaction 088 080 0500 0409 0594 0320 0571 0822 0744 089Bank reputation 082 073 0403 0234 0580 0222 0517 0641 0596 0587 085Notes CR composite reliability The values in the diagonal are the square root of the AVE po001

Table IIIComposite reliability

average varianceextracted correlation

793

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

be greater than 070 and AVE should be greater than 050 to indicate construct validity In orderto evaluate discriminant validity this study compared the square root of each constructrsquos AVEsto its correlation with other variables (Chin 1998) The results showed that all items were loadedsignificantly on their predefined constructs and that the construct correlations were all belowthe square root of AVE for each construct If the square root of the AVE for each construct islarger than the correlation between the construct and any other construct in the model then themeasures should be considered to possess adequate discriminant validity (Fornell and Larcker1981) Thus our results proved the reliability of the data and convergent validity

Structural model and hypothesis testingAfter conducting the validity and reliability tests for all the constructs through themeasurement model it is also necessary to demonstrate the overall fit of the structuralmodel (see Figure 2) In this study the hypothesised model was assessed using multiplemodel-fit measures to assess its overall goodness of fit

The structural model revealed an adequate model fit with the data The results in Table IVshow that χsup2df (246) TLI (091) CFI (092) IFI (092) RMSEA (006) and GFI (082) were aboveor quite close to the cut-off criteria The table also shows the recommended level of each index(Hair et al 2006 Meyers et al 2005) In this study the GFI values of 070 and 082 were lowerthan the commonly cited thresholds of 090 however they were within range of therecommended levels Yen and Lu (2008) argued that a GFI ranging from 080 to 090 could beinterpreted as a reasonable fit In Table IV all the model-fit indices on the measurement andstructural model were above or quite close to the cut-off criteria suggested by Hair et al (2006)This indicates that all the data fit reasonably well with the proposed model Thus it can beconcluded that the models are valid and we can continue to analyse the outcome of thehypothesised effects

Results of hypotheses testingThe relationship between the independent variables and overall SERVQUAL wasinvestigated Table V summarises the results of the hypothesised relationships As shown in

Figure 2Structural model

794

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

scene has undergone a number of significant changes including the restructuring andredesigning of the service delivery methods being offered Over time the Malaysianbanking sector is continuously improving due to increasing competition from the growth offoreign banks in local As such local banks are pressured to find ways to sustain theirrespective competitiveness Thus this research is considered to be timely

The remainder of this paper is structured in the following manner The followingsections will provide information on the constructs being examined in this study explain thetheoretical background as well as provide a proposed conceptual model and the researchhypotheses The research methodology will then be detailed in the subsequent sectionThe following section presents the analysis results and discussion of the research The finalsection concludes the study by pointing out research contributions research limitationsand directions for future research

SERVQUALSERVQUAL has been studied extensively in recent decades Traditionally SERVQUALrefers to the customerrsquos overall evaluation of service firmsrsquo attributes by comparing theirexpectations and actual performance (Parasuraman et al 1988) Parasuraman et al (1988)developed a 22-item instrument recognised as SERVQUAL which is widely used formeasuring service quality The five dimensions of SERVQUAL that rely on customers toform their judgement on perceived SERVQUAL are assurance ndash employeesrsquo knowledge andcourtesy and their ability to convey trust and confidence empathy ndash caring and individualattention given to customers reliability ndash ability to perform the promised servicedependably and accurately responsiveness ndash willingness to help customers and provideprompt service and tangibles ndash appearance of physical facilities equipment personneland written materials (Parasuraman et al 1988)

The scale of SERVQUAL was developed based on five industries which are repair andmaintenance retail banking credit card companies securities and brokerages and longdistance telephone services Despite their advantages and popularity however both scaleshave their respective limitations The main empirical problem is their unstable dimensions(Van Dyke et al 1997) which could differ depending upon the service industry to which thescale was applied to (Babakus and Boller 1992) Babakus and Boller (1992) proposed thata quality measurement scale be adapted to specific individual service industry and that ageneral scale should not be used at all

Furthermore scholars have argued that SERVQUAL is a multi-dimensional constructwith no agreement on generic dimensions (Lee and Moghavvemi 2015) However this modelhas been criticised by Babakus and Boller (1992) and Parasuraman et al (1994) both ofwhom suggested further modifications to the SERVQUAL model This is because manystudies fail to fully appreciate all five dimensions leading to an alternativeconceptualisation of SERVQUAL Thus the SERVQUAL model remains the guidingmodel in numerous studies in the service sector focussing on various organisations such asbanks retail and tourism Many researchers have incorporated other constructs andmeasures alongside the SERVQUAL dimensions in order to enrich and extend theexplanatory power of this model (Bahia and Nantel 2000 Jamal and Naser 2002 Al-Hawariand Ward 2006) Bahia and Nantel (2000) proposed an alternative measure of perceivedquality in retail banking consisting of 31 items with six dimensions (ie effectiveness andassurance access price tangibles service portfolio and reliability) Another researcherhave suggested that high-quality of banking services should have high-quality of serviceenvironment interaction empathy and reliability (Karatepe et al 2015) Jamal and Naser(2002) and Al-Hawari and Ward (2006) have adopted the Parasuraman et alrsquos (1988)framework to examine the quality of service in retail banking services However mostSERVQUAL studies focussed on developed countries with limited number of works

784

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

pertaining to commercial banks For example Shafie et al (2004) examined the SERVQUALin Islamic banking industry They suggested that an additional dimension (eg compliancewith Islamic law) should be added to the SERVQUAL method as the Islamic bankingindustry operate under different principles and cultures compared to other serviceindustries They posited that it is important for Islamic banks to consider culturaldifferences when adopting SERVQUAL

In the banking industry the internet revolution has changed the way banks interact withcustomers all in the name of enhancing their provision of services (Akinci et al 2004 Jun andCai 2001 Joseph et al 1999) Banks not only provide their services via traditional methodsthey also introduced internet banking services to build and maintain relationships withcustomers (Mols 2000) Internet banking has helped customers conveniently manage theirpersonal banking affairs For example banks offer their customers a variety of services24 hours a day with internet access availability anywhere and anytime (Hamzah et al 2014)Moreover internet banking provides customers with enhanced control over their financialaffairs that is user friendly and fits their lifestyle (Hamzah et al 2014) Internet banking alsocould potentially save costs increase customer penetration and develop the bankrsquos non-corebusiness Due to these advantages internet banking is fast gaining popularity amongcustomers The changing needs of customers have forced banking services to transform theirservices by providing high-quality internet banking services Researchers have suggestedthat high-quality internet banking services should be easy and convenient for operation(Pikkarainen et al 2006) and perceive usefulness provide ease of use reliabilityresponsiveness and a high level of security (Liao and Cheung 2008) Therefore this studysuggests that internet banking could be an important determinant of the quality of bankingservices which will influence the customersrsquo perception of overall SERVQUAL

Customer satisfactionJamal and Naser (2002) defined customer satisfaction as a feeling or evaluation bycustomers towards products or services Customer satisfaction is the result of the provisionof goods and services that meet or exceed customerrsquo needs (Szymanski and Henard 2001)Satisfied customers would be more than willing to pay premiums provide referrals and usemore products (Reichheld 1996) In todayrsquos highly competitive banking industry customersatisfaction is regarded as the essence of success ( Jamal and Naser 2002 Siddiqi 2011)Satisfied customers will be more than likely to stay and recommend their respective banksto their acquaintances Inevitably this will reduce bank costs associated with the provisionof services due to fewer complaints (Reichheld and Aspinall 1993)

Bank reputationScholars have suggested that SERVQUAL is important in increasing reputation(s) (Caruanaand Ewing 2010 Walsh et al 2009) Consumers assume that retailers who possess areputation for providing high SERVQUAL and products are at a lower risk (Purohit andSrivastava 2001 Dawar and Parker 1994) which will shift their preference towards thesestores (Koistinen and Jaumlrvinen 2009) In retail services a good reputation is vital for customersvis-agrave-vis purchasing or repeat purchasing behaviours (Wang et al 2003 Graham and Fearn2005) This implies that customers are more likely to purchase and remain loyal to reputableretailers (Nguyen and LeBlanc 2001) Ou et al (2006) stated that a retailerrsquos reputation is a signof excellent quality A favourable and well-known reputation becomes an asset for a serviceprovider as it will reside in the minds of customers Moreover customers tend to forgiveminor mistakes if a service provider is of positive repute (Kang and James 2004)

There are two schools pertaining to company reputation and image the similarity schoolthat states that company reputation is a synonym for company image and the differenceschool that differentiates these two phrases The terms corporate image and corporate

785

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

reputation are considered as identical by Gotsi and Wilson (2001) who defined image as ldquothetotal impression of the companyrdquo Image is about overall impression residing in the mind ofcustomers Fombrun (1996) considers the term corporate reputation and corporate image asdifferent concepts According to Wartick (1992) corporate reputation is an ldquoaggregation of asingle stakeholderrsquos perceptions of how well organizational responses are meeting thedemands and expectations of many organizational stakeholdersrdquo Yoon et al (1993) viewedcorporate reputation as the firmrsquos history of communicating to the customers in terms of thequality its products or services compared to that of its competitors Based on thediscussions of the definitions of reputation corporate reputation is a stakeholderrsquos overallevaluation of a company over time This evaluation is based on the customerrsquos directexperiences with the bank

TrustTrust is formed when customers believe that banks will perform as promised (credibility trust)and have confidence in employeesrsquo ability and courtesy (benevolence trust) (Yap et al 2012)El-Manstrly et al (2011) defined trust as a function of the perceived reliability and integrity ofa brand or service provider Jan and Abdullah (2014) reported that trust in the banking sectorincreases awareness concerning the importance of technology-related critical success factorsResearch has revealed that higher overall SERVQUAL would lead to a higher level oftrustworthiness and positively increase the level of customer loyalty

Theoretical background and hypotheses developmentHaving identified the variables associated with SERVQUAL this study modified themeasurement for SERVQUAL to capture the customer perceptions of SERVQUAL in retailbanking particularly in the context of Malaysia This section presents the theoreticalbackground of a proposed conceptual framework for perceived overall SERVQUAL Theconceptual framework is developed based on the literature review and prior scales that areavailable for investigating the relationships between the perceived overall SERVQUALtrust customer satisfaction and bank reputation The overall perceived SERVQUAL isinfluenced by multiple constructs within SERVQUAL (tangibles empathy reliability andsecurity convenience and internet banking)

According to Lee and Moghavvemi (2015) many researchers (ie Behara et al 2002Ladhari et al 2011) found that SERVQUAL model and its measurement scales are changingin conformity to the different types of service or country Due to those reasons we followBahia and Nantel (2000) and Lee and Moghavvemirsquos (2015) study who identified dimensionsbased on the most cited and most applicable dimensions of SERVQUAL in the context ofbanking in Malaysia such as tangibles empathy reliability and security convenience andinternet banking These dimensions are identified from our exploratory study which wasconducted previously Additionally the five dimensions (tangibles reliabilityresponsiveness assurance and empathy) of the SERVQUAL approach developed byParasuraman et al (1988) appears to be less universally applicable (Gilmore 2003)Thus based on literature the SERVQUAL model is further modified to assess the level ofSERVQUAL in the Malaysian banking sector The research model and the hypothesesrelationship between the constructs in this study is presented in Figure 1

Earlier literature suggests that SERVQUAL incorporates a number of dimensionsFor the purpose of this study the SERVQUAL model includes tangibles empathyreliability and security convenience and internet banking Tangibles comprise the physicalfacilities equipment and the appearance of personnel Bank customers usually look for anytangibles as the indicators of a bankrsquos overall SERVQUAL Customers can assess thepremises of the bank or the appearance of the bankrsquos staff Physical facilities availabilitythe adequacy of equipment and the appearance of a bankrsquos employees are viewed as

786

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

important factors in terms of tangibility amongst customers in Hong Kong (Lau et al 2013)Therefore the number of counters the design of the transaction form and the availability ofa water dispenser might increase the perception of SERVQUAL being received Moreoverbank users in India (Ravichandran et al 2010) and Bangladesh (Rahman 2013) also rankedtangibles dimension as highly important in increasing customer satisfaction and loyaltyTherefore the following hypothesis is developed

H1 There is a positive relationship between tangibles and perceived overall SERVQUAL

Empathy is customersrsquo expectations with regard to the extent to which the serviceprovider appears to understand and is concerned about their individual needs and wantsThe concept of empathy is to understand the needs of the customers and provideindividual attention (Siddiqi 2011) Researchers revealed that empathy plays a vital role ininfluencing customer satisfaction with regard to the value of the SERVQUAL provided byfrontline staff (Annamalah et al 2011 Kamal et al 2013 Shanka 2012 Siddiqi 2011Estiri et al 2011) Bank staff and customer interactions are reflected in the dimension ofempathy This means that bank customers perceive good overall SERVQUAL in terms ofbanking hours and personal attention given to them by the bankrsquos staff Therefore thefollowing hypothesis is proposed

H2 There is a positive relationship between empathy and perceived overall SERVQUAL

Reliability and security is the extent to which customers can rely on the service provider tokeep promises and perform in the best interests of the customers (Lee and Moghavvemi2015) Reliability has been identified as an influential component in determining thecustomer loyalty in previous studies (Estiri et al 2011 Kumar et al 2010 Lau et al 2013Mistry 2013) Zafar et al (2012) surveyed 192 bank users in Pakistan and the results of theirstudy showed that reliability is positively correlated to customer loyalty because customersexpect bank employees to have zero error records and fulfil their promise of delivering acertain service within a stipulated time frame Customers will not be satisfied with theoverall SERVQUAL if they do not feel reliable and secure about the competence of theservice provider Thus banks need to instil feelings of confidence in customers and banksrsquostaff are expected to handle customers in a professional and competent manner In thisstudy security refers to the physical reliability at the bank such as adequate securityguards and CCTVs ATM machine or bank located at a secure location etc As suchreliability and security of the bank service is an important factor for customers in evaluatingthe overall SERVQUAL (Lee and Moghavvemi 2015) The hypothesis is as follows

H3 There is a positive relationship between reliability and security and perceivedoverall SERVQUAL

Internet banking

Tangibility

Empathy

Reliability andsecurity

Convenience

Perceivedoverall service

quality

Customersatisfaction

H7

H8

TrustH6

Bankreputation

H1

H2

H3

H4

H5 Figure 1The conceptual

research framework

787

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Kumar et al (2009) included an additional dimension convenience to the SERVQUAL modelTheir findings indicated that the convenience factor plays a significant role in delivering theSERVQUAL of banks in Malaysia Therefore the convenience dimension was also added tothe modified SERVQUAL model for the banksrsquo customers Similarly Awan et al (2011)found that the convenient availability of financial services is ranked high on the list of priorityby customers for SERVQUAL in the banking sector of Pakistan This implies that the greaterthe level of convenience the greater the perceived overall SERVQUAL The convenience ofservice remains the responsibility of the service provider indicating the full range of availableservices convenience and ease-of-access via its location operating hours employees andoperation systems Hence the following hypothesis is formulated

H4 There is a positive relationship between convenience and perceivedoverall SERVQUAL

Internet banking distinguishes itself from its competitors (Abdullah and Kassim 2009)Internet banking is the use of the internet as a delivery channel for banking services such asopening a deposit account or transferring funds between different accounts and newbanking services ie electronic bills and payments ( Jun and Cai 2001) The internet hasbeen accepted as a new channel of banking transactions With the high growth of newtechnology the increased use of the internet has a great impact on the characteristics ofsubsequent services Studies have shown that the provision of internet banking services isimportant in attracting more customers (Hamzah et al 2014) Rod et al (2009) and Jun andCai (2001) found that the more positive the customer perception of the SERVQUAL ofinternet banking the greater the likelihood that overall SERVQUAL will be perceivedTherefore we include the provision of high-quality internet banking as being influential tothe overall SERVQUAL of the banking sector The developed hypothesis is as follows

H5 There is a positive relationship between internet banking and perceivedoverall SERVQUAL

In the banking industry trust is regarded as one of the relevant collaborative relationshipsbetween a customer and a bank and as a channel to enhance competitiveness (Barney andHansen 1994 Levy and Hino 2016) Trust is conceptualised as the customersrsquo expectationsand beliefs that their service provider will carry out actions as promised (Levy and Hino2016) Singh and Sirdeshmukh (2000) found that trust is essential for building andmaintaining long-term relationships They are of the belief that if one party can bringpositive outcomes to the other party trust can therefore be developed A high level of trustleads to the future potential of the relationship between customers and service providers(Amin et al 2013) The way in which perceived overall SERVQUAL (such as speed andefficiency of transactions employees of bank are polite and friendly and willingness to help)affects trust has yet been adequately investigated For this reason one of the objectives ofthis study is to investigate the overall perceived SERVQUAL of customer trust in a bankBased on the above discussion the following hypothesis is proposed

H6 There is a positive relationship between perceived overall SERVQUAL andcustomer trust

The relationship between SERVQUAL and customer satisfaction has received considerableacademic attention in the past few years (Cronin et al 2000 Sureshchandar et al 2002)SERVQUAL and customer satisfaction are widely recognised as key influences in theformation of consumersrsquo purchase intentions in a service environment (Taylor and Baker1994) Perceived SERVQUAL and satisfaction have generally been conceptualised to bedistinct constructs (Spring and Mackoy 1996) As such greater understanding of therelationship between perceived overall SERVQUAL and customer satisfaction is required

788

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

(Spring and Mackoy 1996) Gonzaacutelez et al (2007) found that perceived SERVQUALinfluences customer satisfaction in behavioural intention of tourism industry Maumlgi andJulander (1996) indicate that perceived SERVQUAL influences customer satisfaction inSwedish grocery retailing Based on earlier studies this study hypothesises that perceivedoverall SERVQUAL has a significantly positive effect on customer satisfaction Higherlevels of perceived overall SERVQUAL will lead to higher customer satisfaction As suchthe hypothesis is developed

H7 There is a positive relationship between perceived overall SERVQUAL andcustomer satisfaction

It has been suggested that SERVPERF is essential in building a good reputation(Wang et al 2003) Zeithaml and Shappiro stated that perceived SERVQUAL is associatedwith the reputation of brand name Selnes (1993) found that the reputation of a brand isinfluenced by how consumer experiences performance of quality of services or productCustomers form a general overall evaluation of services based on their sum of beliefs orexpectations of a set of attributes Their perceptions of quality of service are influenced bytheir respective experiences on high- or low-quality performances For example when theyexperience high-quality services the reputation of a bank will increase vis-agrave-vis customersThus the hypothesis is proposed as follows

H8 There is a positive relationship between perceived overall SERVQUAL andbank reputation

Research methodologyThis study aims to examine the dimensions of SERVQUAL in the banking sector It will alsolook into how the dimensions will influence the perceived overall SERVQUAL which resultsin the building of trust customer satisfaction and bank reputation A questionnaire surveywas conducted to examine the quality of services among local banks in Malaysiaparticularly in the Klang Valley area Malaysia Currently there are 27 commercial banks16 Islamic banks and 11 investment banks offering various products and servicesto the public (Bank Negara Malaysia 2015b) Since the pricing in Malaysian banks isregulated the SERVQUAL being delivered becomes important if the banks want to retainand attract customers With the increasing number of international banks local banks arecompeting in a highly competitive environment for the provision of quality services basedon customer expectations

The judgement sampling method was used to collect data Respondents were first askedwhether they had bank accounts with local banks if they replied in the affirmative theywere asked to participate in the survey For each question the respondents were asked totick the response that best described their degree of agreementdisagreement Most of thequestionnaire items were adapted from previous studies on banking and a few moreconstructs were introduced in our study in order to obtain adequate measures of thedimensions of interest (see Figure 1) All items were measured using a seven-point Likertscale ndash ranging from 1 indicating strongly disagree to 7 indicating strongly agree Wemeasured the antecedents of perceived overall SERVQUAL (ie tangibles empathyconvenience reliability and security and internet banking) and the consequences ofperceived overall SERVQUAL on customer satisfaction trust and bank reputation

In total 400 questionnaires were gathered over a six-week period However only 375 wereusable for further data analysis The two-step approach of structural equation modelling(SEM) using AMOS 180 (maximum likelihood estimation) was employed to predict therelationships between the constructs This approach was selected due to its capability oftesting the causal relationships between the constructs with multiple measurement items

789

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

ResultsProfile of respondentsThe demographic profile of the respondents is presented in Table I Based on the results61 per cent of the respondents were females while 39 per cent (229) were males Thesmaller percentage of the latter is due to difficulties in approaching them The majority ofthe respondents (754 per cent) were between 21 and 40 years old The largest group ofrespondentsrsquo works for the public and private sectors was 68 per cent while those who areself-employed were 10 per cent and students housewife or others (investmentconsultants insurance agents) made up of 22 per cent of the total respondents Personalincome was measured in Malaysian Ringgit (RM) In total 30 per cent of the respondentshad a monthly income of between RM2001 and RM4000 Most of the respondents preferinternet banking (68 per cent) and use ATMs (79 per cent) while a lower percentage(40 per cent) prefer tellers at the bank These results are consistent with the statisticspublished by the central bank which indicated that online banking has become verypopular in Malaysia Currently 31 banks in Malaysia offer internet banking and nearly198 million internet banking subscribers (penetration to population of 637 per cent)conducted more than 210 million banking transactions valued at 233 billion Ringgit as ofJune 2015 (Bank Negara Malaysia 2015a)

Exploratory factor analysisTable II presents the mean scores standard deviations Cronbachrsquos α value and the results ofthe exploratory factor analysis of the constructs in this study The mean scores have been

Profile Description Frequency Percentage ()

Gender Male 146 389Female 229 611

Age Below 20 years 5 1321-30 years 153 40831-40 years 129 34441-50 years 61 16351 years above 27 72

Profession Salaried-private sector 169 451Salaried-government 88 235Student 59 157Businessself-employment 37 99Housewife 12 32Others 10 27

Monthly income Below RM2000 53 141RM2001-RM4000 113 301RM4001-RM6000 63 168RM6001-RM8000 28 75RM8001-RM10000 41 109RM10001 and above 77 205

Preferred transaction Automated teller machines 294 784Internet banking 255 680Tellers at bank 150 400Phone banking 19 51

Duration of being bank customer Less than 1 year 14 371-5 years 149 3976-10 years 110 293More than 10 years 102 272

Note nfrac14 375

Table IDemographic profileof respondents

790

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Constructs Item statements Mean SD αFactorloading

Tangibles Infrastructure and facilities such as parking space andATMs are adequate 446 014 0802 0579Equipment in the bank is modern-looking 0780Printed materials such as brochures and statementsare attractive 0758Maintain clean and pleasant branch facilities 0831The lobby area is comfortable while waiting for services 0817Provide easy-to-read and understandable bank statement 0719

Empathy Bank gives customers individual attention 474 091 0832 0754Bank staff never too busy to respond to my requests 0608Bank staff understand customerrsquos specific needs 0777Bank staff are friendly and polite 0667Bank is very responsive to customer complaints 0831Bank staff are polite when handling customer complaints 0828Bank staff willing to help elderly and disabled customers andgive them special attention 0599

Reliability andsecurity

Bank maintains error-free records (eg accurate bills andstatements) 511 089 0894 0791Bank keeps confidentiality of account and privacy ofcustomers 0746Bank delivers up-to-date records 0711Physical security at bank is adequate (eg security guardsCCTVs) 0633ATM machine is located at a secure location 0775Bank is located in secure location 0825Bank is quick to alert customers to any suspicious orfraudulent transaction 0686Bank always asks questions for verification in phone banking 0564

Convenience Bank branches are located in a convenient location 453 095 0817 0729Bank extends its working hours in order to meet customer needs 0639Number of open tellers during peak hours is adequate 0655Waiting time for receiving services is not too long 0685Bank provides the necessary convenience for customers(eg parking area and special counters for elderlydisabledcustomers) 0644ATMs are conveniently located (eg shopping mallsgovernment departments etc) 0732Bank service is easily accessible by telephone 0595

Internetbanking

The online banking has adequate security features 519 102 0929 0844The online banking is fast for making transactions 0901It is easy to learn how to operate online system 0902The online system makes appropriate confirmationconcerning the completion of transactions 0890I received confirmation of every online transaction by SMS 0766The online banking system has a user-friendly interface 0887

Overall servicequality

My bank always delivers excellent overall service 495 087 0915 0849The services offered by my bank are high quality 0878My bank delivers superior service in every way 0861My bank offers me a complete range of products 0789The personnel provide a friendly atmosphere 0831The bank insists on error-free records 0831

(continued )

Table IIMean scores

Cronbachrsquos α andfactor loading

791

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

computed by equally weighing the mean scores of all of the items The analysis shows that ona seven-point scale the mean scores of the independent variables range from 453 to 519which indicates that customers perceive that the quality of service being offered by the banksis moderate The mean score for internet banking is 519 (SDfrac14 102) which suggests thatcustomers find the service provided by the internet as highly important The mean score foroverall SERVQUAL is 495 (SDfrac14 087) which implies that the customers of banks indicatethat the overall SERVQUAL is moderate The mean score for trust is 525 (SDfrac14 086)suggesting that the customers find the service provider trustworthy The results of theexploratory factor analysis show that the factor loadings for all items are greater than 050and each of these items load strongly onto their respective associated factors

Measurement modelIn order to achieve an adequate goodness of fit on the measurement model and identifypossible problems this study assessed the path estimates standardised residuals andmodification indices of the measurement model (Hair et al 2006) The assessment of thestandardised regression weight indicates that all items were loaded high within theirconstructs which was within the acceptable values of 070 and above except for threeitems thus these items were deemed unsatisfactory (Hair et al 2006) and deleted from themeasurement model In terms of the assessment of the standardised residual values theresults indicated that all of the items have standardised residual values of less than 25with the exception of one item from reliability and security which was deleted from themodel The modification indices assessment shows the co-variance between some of theitems in the tangibility and empathy construct with high error co-variance betweenthese indicators The estimation of a coefficient may be considered removed fromthe measurement model if the modification indices value is equal to 4 or greater(Hair et al 2006) The substantial modification indices value is assumed to be 788 for a

Constructs Item statements Mean SD αFactorloading

Trust The bank staff are trustworthy 525 086 0918 0839The bank treats me in an honest way in every transaction 0840I feel safe in my transactions with the bank 0865The bank will not let other people know my account balance 0817Bank tellers accurately verify all transaction requests 0842Overall I have complete trust in my bank 0855

Customersatisfaction

The services of this bank meet my expectations 501 085 0883 0827I did the right thing when I chose this bank for its services 0861I am satisfied with the quality of the bankrsquos services 0859I am satisfied with the various bonus link programmes ofthe bank 0614I am satisfied with the interactions that I have had with the bank 0818The bank satisfies my needs 0830

Bankreputation

I will continue to patronize this bank even if the servicecharges are increased 459 099 0874 0769I am willing to pay more for using the services of this bank 0832To me this bank would rank first among the other banks 0828The bank I patronize reflects a lot about who I am 0845This bank has a good reputation in this industry 0692The bank does what it promises for its customers 0736

Note Scores based on a seven-point scale ranging from 1frac14 strongly disagree to 7frac14 strongly agreeTable II

792

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

significant model improvement Based on the results of the aforementioned assessmentthese items were dropped from the initial measurement model in order to improve themodelrsquos fit Furthermore these items add very little explanatory power to themeasurement model and thus they were removed from further analysis The estimatedparameters were all statistically significant between the latent and measured variablesThe results of the measurement model ndash χsup2df (253) TLI (091) CFI (091) IFI (091)RMSEA (006) and GFI (082) ndash indicate the acceptable model fit of the data

Convergent and discriminant validityAccording to Hair et al (1995) uni-dimensionality should always be assessed prior toexamining validity This is due to the fact that the analysis of validity is based on theassumption of uni-dimensionality (Nunnally and Bernstein 1994) In order to test foruni-dimensionality the confirmatory factor analysis (CFA) was conducted (Anderson andGerbing 1991) through SEM AMOS 180 to ascertain that each item in the model representsthe same measure (Ahire et al 1996) SEM takes a confirmatory approach rather than anexploratory approach to analyse data and provide a confirmatory test of measurement theoryfor the constructs SEM explains how measured variables logically and systematicallyrepresent the constructs involved in the theoretical model This study applied thepre-validated measurement to prior studies thus CFA is the most appropriate approach inassessing a constructrsquos validity (Hair et al 2006) CFA describes the extent to which a set ofmeasured items actually reflects the theoretical latent construct

The construct validity test was performed to determine to what extent the items appearto measure the construct of interest instead of other constructs The convergent validity ofthe measurement items can be assessed by composite reliability and the variance extractedmeasure Composite reliability depicts the degree to which the item indicates a commonconstruct The variance extracted measure reflects the amount of variance in the itemscaptured by the construct

The CFA results showed that the standardised parameter estimates were higher than070 and the signs of parameter estimation were all in the same direction to measure specificlatent variables

The composite reliability correlation average variance extracted (AVE) and square root ofthe AVE were calculated and presented in Table III The results revealed that the compositereliability of all of the constructs was greater than 072 and the output of AVE for themodel with independent and dependent variables exceeded 050 (Fornell and Larcker 1981)Hair et al (1995) and Carmines and Zeller (1988) recommended that composite reliability should

Construct CR AVE 1 2 3 4 5 6 7 8 9

Tangibles 080 082 090Empathy 081 082 0587 090Reliability andSecurity 072 067 0533 0429 081Convenience 078 079 0592 0716 0361 088Internet banking 093 085 0437 0355 0720 0305 092Overall servicequality 092 083 0505 0435 0698 0320 0666 091Trust 090 082 0467 0383 0713 0282 0626 0772 090Customersatisfaction 088 080 0500 0409 0594 0320 0571 0822 0744 089Bank reputation 082 073 0403 0234 0580 0222 0517 0641 0596 0587 085Notes CR composite reliability The values in the diagonal are the square root of the AVE po001

Table IIIComposite reliability

average varianceextracted correlation

793

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

be greater than 070 and AVE should be greater than 050 to indicate construct validity In orderto evaluate discriminant validity this study compared the square root of each constructrsquos AVEsto its correlation with other variables (Chin 1998) The results showed that all items were loadedsignificantly on their predefined constructs and that the construct correlations were all belowthe square root of AVE for each construct If the square root of the AVE for each construct islarger than the correlation between the construct and any other construct in the model then themeasures should be considered to possess adequate discriminant validity (Fornell and Larcker1981) Thus our results proved the reliability of the data and convergent validity

Structural model and hypothesis testingAfter conducting the validity and reliability tests for all the constructs through themeasurement model it is also necessary to demonstrate the overall fit of the structuralmodel (see Figure 2) In this study the hypothesised model was assessed using multiplemodel-fit measures to assess its overall goodness of fit

The structural model revealed an adequate model fit with the data The results in Table IVshow that χsup2df (246) TLI (091) CFI (092) IFI (092) RMSEA (006) and GFI (082) were aboveor quite close to the cut-off criteria The table also shows the recommended level of each index(Hair et al 2006 Meyers et al 2005) In this study the GFI values of 070 and 082 were lowerthan the commonly cited thresholds of 090 however they were within range of therecommended levels Yen and Lu (2008) argued that a GFI ranging from 080 to 090 could beinterpreted as a reasonable fit In Table IV all the model-fit indices on the measurement andstructural model were above or quite close to the cut-off criteria suggested by Hair et al (2006)This indicates that all the data fit reasonably well with the proposed model Thus it can beconcluded that the models are valid and we can continue to analyse the outcome of thehypothesised effects

Results of hypotheses testingThe relationship between the independent variables and overall SERVQUAL wasinvestigated Table V summarises the results of the hypothesised relationships As shown in

Figure 2Structural model

794

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

pertaining to commercial banks For example Shafie et al (2004) examined the SERVQUALin Islamic banking industry They suggested that an additional dimension (eg compliancewith Islamic law) should be added to the SERVQUAL method as the Islamic bankingindustry operate under different principles and cultures compared to other serviceindustries They posited that it is important for Islamic banks to consider culturaldifferences when adopting SERVQUAL

In the banking industry the internet revolution has changed the way banks interact withcustomers all in the name of enhancing their provision of services (Akinci et al 2004 Jun andCai 2001 Joseph et al 1999) Banks not only provide their services via traditional methodsthey also introduced internet banking services to build and maintain relationships withcustomers (Mols 2000) Internet banking has helped customers conveniently manage theirpersonal banking affairs For example banks offer their customers a variety of services24 hours a day with internet access availability anywhere and anytime (Hamzah et al 2014)Moreover internet banking provides customers with enhanced control over their financialaffairs that is user friendly and fits their lifestyle (Hamzah et al 2014) Internet banking alsocould potentially save costs increase customer penetration and develop the bankrsquos non-corebusiness Due to these advantages internet banking is fast gaining popularity amongcustomers The changing needs of customers have forced banking services to transform theirservices by providing high-quality internet banking services Researchers have suggestedthat high-quality internet banking services should be easy and convenient for operation(Pikkarainen et al 2006) and perceive usefulness provide ease of use reliabilityresponsiveness and a high level of security (Liao and Cheung 2008) Therefore this studysuggests that internet banking could be an important determinant of the quality of bankingservices which will influence the customersrsquo perception of overall SERVQUAL

Customer satisfactionJamal and Naser (2002) defined customer satisfaction as a feeling or evaluation bycustomers towards products or services Customer satisfaction is the result of the provisionof goods and services that meet or exceed customerrsquo needs (Szymanski and Henard 2001)Satisfied customers would be more than willing to pay premiums provide referrals and usemore products (Reichheld 1996) In todayrsquos highly competitive banking industry customersatisfaction is regarded as the essence of success ( Jamal and Naser 2002 Siddiqi 2011)Satisfied customers will be more than likely to stay and recommend their respective banksto their acquaintances Inevitably this will reduce bank costs associated with the provisionof services due to fewer complaints (Reichheld and Aspinall 1993)

Bank reputationScholars have suggested that SERVQUAL is important in increasing reputation(s) (Caruanaand Ewing 2010 Walsh et al 2009) Consumers assume that retailers who possess areputation for providing high SERVQUAL and products are at a lower risk (Purohit andSrivastava 2001 Dawar and Parker 1994) which will shift their preference towards thesestores (Koistinen and Jaumlrvinen 2009) In retail services a good reputation is vital for customersvis-agrave-vis purchasing or repeat purchasing behaviours (Wang et al 2003 Graham and Fearn2005) This implies that customers are more likely to purchase and remain loyal to reputableretailers (Nguyen and LeBlanc 2001) Ou et al (2006) stated that a retailerrsquos reputation is a signof excellent quality A favourable and well-known reputation becomes an asset for a serviceprovider as it will reside in the minds of customers Moreover customers tend to forgiveminor mistakes if a service provider is of positive repute (Kang and James 2004)

There are two schools pertaining to company reputation and image the similarity schoolthat states that company reputation is a synonym for company image and the differenceschool that differentiates these two phrases The terms corporate image and corporate

785

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

reputation are considered as identical by Gotsi and Wilson (2001) who defined image as ldquothetotal impression of the companyrdquo Image is about overall impression residing in the mind ofcustomers Fombrun (1996) considers the term corporate reputation and corporate image asdifferent concepts According to Wartick (1992) corporate reputation is an ldquoaggregation of asingle stakeholderrsquos perceptions of how well organizational responses are meeting thedemands and expectations of many organizational stakeholdersrdquo Yoon et al (1993) viewedcorporate reputation as the firmrsquos history of communicating to the customers in terms of thequality its products or services compared to that of its competitors Based on thediscussions of the definitions of reputation corporate reputation is a stakeholderrsquos overallevaluation of a company over time This evaluation is based on the customerrsquos directexperiences with the bank

TrustTrust is formed when customers believe that banks will perform as promised (credibility trust)and have confidence in employeesrsquo ability and courtesy (benevolence trust) (Yap et al 2012)El-Manstrly et al (2011) defined trust as a function of the perceived reliability and integrity ofa brand or service provider Jan and Abdullah (2014) reported that trust in the banking sectorincreases awareness concerning the importance of technology-related critical success factorsResearch has revealed that higher overall SERVQUAL would lead to a higher level oftrustworthiness and positively increase the level of customer loyalty

Theoretical background and hypotheses developmentHaving identified the variables associated with SERVQUAL this study modified themeasurement for SERVQUAL to capture the customer perceptions of SERVQUAL in retailbanking particularly in the context of Malaysia This section presents the theoreticalbackground of a proposed conceptual framework for perceived overall SERVQUAL Theconceptual framework is developed based on the literature review and prior scales that areavailable for investigating the relationships between the perceived overall SERVQUALtrust customer satisfaction and bank reputation The overall perceived SERVQUAL isinfluenced by multiple constructs within SERVQUAL (tangibles empathy reliability andsecurity convenience and internet banking)

According to Lee and Moghavvemi (2015) many researchers (ie Behara et al 2002Ladhari et al 2011) found that SERVQUAL model and its measurement scales are changingin conformity to the different types of service or country Due to those reasons we followBahia and Nantel (2000) and Lee and Moghavvemirsquos (2015) study who identified dimensionsbased on the most cited and most applicable dimensions of SERVQUAL in the context ofbanking in Malaysia such as tangibles empathy reliability and security convenience andinternet banking These dimensions are identified from our exploratory study which wasconducted previously Additionally the five dimensions (tangibles reliabilityresponsiveness assurance and empathy) of the SERVQUAL approach developed byParasuraman et al (1988) appears to be less universally applicable (Gilmore 2003)Thus based on literature the SERVQUAL model is further modified to assess the level ofSERVQUAL in the Malaysian banking sector The research model and the hypothesesrelationship between the constructs in this study is presented in Figure 1

Earlier literature suggests that SERVQUAL incorporates a number of dimensionsFor the purpose of this study the SERVQUAL model includes tangibles empathyreliability and security convenience and internet banking Tangibles comprise the physicalfacilities equipment and the appearance of personnel Bank customers usually look for anytangibles as the indicators of a bankrsquos overall SERVQUAL Customers can assess thepremises of the bank or the appearance of the bankrsquos staff Physical facilities availabilitythe adequacy of equipment and the appearance of a bankrsquos employees are viewed as

786

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

important factors in terms of tangibility amongst customers in Hong Kong (Lau et al 2013)Therefore the number of counters the design of the transaction form and the availability ofa water dispenser might increase the perception of SERVQUAL being received Moreoverbank users in India (Ravichandran et al 2010) and Bangladesh (Rahman 2013) also rankedtangibles dimension as highly important in increasing customer satisfaction and loyaltyTherefore the following hypothesis is developed

H1 There is a positive relationship between tangibles and perceived overall SERVQUAL

Empathy is customersrsquo expectations with regard to the extent to which the serviceprovider appears to understand and is concerned about their individual needs and wantsThe concept of empathy is to understand the needs of the customers and provideindividual attention (Siddiqi 2011) Researchers revealed that empathy plays a vital role ininfluencing customer satisfaction with regard to the value of the SERVQUAL provided byfrontline staff (Annamalah et al 2011 Kamal et al 2013 Shanka 2012 Siddiqi 2011Estiri et al 2011) Bank staff and customer interactions are reflected in the dimension ofempathy This means that bank customers perceive good overall SERVQUAL in terms ofbanking hours and personal attention given to them by the bankrsquos staff Therefore thefollowing hypothesis is proposed

H2 There is a positive relationship between empathy and perceived overall SERVQUAL

Reliability and security is the extent to which customers can rely on the service provider tokeep promises and perform in the best interests of the customers (Lee and Moghavvemi2015) Reliability has been identified as an influential component in determining thecustomer loyalty in previous studies (Estiri et al 2011 Kumar et al 2010 Lau et al 2013Mistry 2013) Zafar et al (2012) surveyed 192 bank users in Pakistan and the results of theirstudy showed that reliability is positively correlated to customer loyalty because customersexpect bank employees to have zero error records and fulfil their promise of delivering acertain service within a stipulated time frame Customers will not be satisfied with theoverall SERVQUAL if they do not feel reliable and secure about the competence of theservice provider Thus banks need to instil feelings of confidence in customers and banksrsquostaff are expected to handle customers in a professional and competent manner In thisstudy security refers to the physical reliability at the bank such as adequate securityguards and CCTVs ATM machine or bank located at a secure location etc As suchreliability and security of the bank service is an important factor for customers in evaluatingthe overall SERVQUAL (Lee and Moghavvemi 2015) The hypothesis is as follows

H3 There is a positive relationship between reliability and security and perceivedoverall SERVQUAL

Internet banking

Tangibility

Empathy

Reliability andsecurity

Convenience

Perceivedoverall service

quality

Customersatisfaction

H7

H8

TrustH6

Bankreputation

H1

H2

H3

H4

H5 Figure 1The conceptual

research framework

787

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Kumar et al (2009) included an additional dimension convenience to the SERVQUAL modelTheir findings indicated that the convenience factor plays a significant role in delivering theSERVQUAL of banks in Malaysia Therefore the convenience dimension was also added tothe modified SERVQUAL model for the banksrsquo customers Similarly Awan et al (2011)found that the convenient availability of financial services is ranked high on the list of priorityby customers for SERVQUAL in the banking sector of Pakistan This implies that the greaterthe level of convenience the greater the perceived overall SERVQUAL The convenience ofservice remains the responsibility of the service provider indicating the full range of availableservices convenience and ease-of-access via its location operating hours employees andoperation systems Hence the following hypothesis is formulated

H4 There is a positive relationship between convenience and perceivedoverall SERVQUAL

Internet banking distinguishes itself from its competitors (Abdullah and Kassim 2009)Internet banking is the use of the internet as a delivery channel for banking services such asopening a deposit account or transferring funds between different accounts and newbanking services ie electronic bills and payments ( Jun and Cai 2001) The internet hasbeen accepted as a new channel of banking transactions With the high growth of newtechnology the increased use of the internet has a great impact on the characteristics ofsubsequent services Studies have shown that the provision of internet banking services isimportant in attracting more customers (Hamzah et al 2014) Rod et al (2009) and Jun andCai (2001) found that the more positive the customer perception of the SERVQUAL ofinternet banking the greater the likelihood that overall SERVQUAL will be perceivedTherefore we include the provision of high-quality internet banking as being influential tothe overall SERVQUAL of the banking sector The developed hypothesis is as follows

H5 There is a positive relationship between internet banking and perceivedoverall SERVQUAL

In the banking industry trust is regarded as one of the relevant collaborative relationshipsbetween a customer and a bank and as a channel to enhance competitiveness (Barney andHansen 1994 Levy and Hino 2016) Trust is conceptualised as the customersrsquo expectationsand beliefs that their service provider will carry out actions as promised (Levy and Hino2016) Singh and Sirdeshmukh (2000) found that trust is essential for building andmaintaining long-term relationships They are of the belief that if one party can bringpositive outcomes to the other party trust can therefore be developed A high level of trustleads to the future potential of the relationship between customers and service providers(Amin et al 2013) The way in which perceived overall SERVQUAL (such as speed andefficiency of transactions employees of bank are polite and friendly and willingness to help)affects trust has yet been adequately investigated For this reason one of the objectives ofthis study is to investigate the overall perceived SERVQUAL of customer trust in a bankBased on the above discussion the following hypothesis is proposed

H6 There is a positive relationship between perceived overall SERVQUAL andcustomer trust

The relationship between SERVQUAL and customer satisfaction has received considerableacademic attention in the past few years (Cronin et al 2000 Sureshchandar et al 2002)SERVQUAL and customer satisfaction are widely recognised as key influences in theformation of consumersrsquo purchase intentions in a service environment (Taylor and Baker1994) Perceived SERVQUAL and satisfaction have generally been conceptualised to bedistinct constructs (Spring and Mackoy 1996) As such greater understanding of therelationship between perceived overall SERVQUAL and customer satisfaction is required

788

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

(Spring and Mackoy 1996) Gonzaacutelez et al (2007) found that perceived SERVQUALinfluences customer satisfaction in behavioural intention of tourism industry Maumlgi andJulander (1996) indicate that perceived SERVQUAL influences customer satisfaction inSwedish grocery retailing Based on earlier studies this study hypothesises that perceivedoverall SERVQUAL has a significantly positive effect on customer satisfaction Higherlevels of perceived overall SERVQUAL will lead to higher customer satisfaction As suchthe hypothesis is developed

H7 There is a positive relationship between perceived overall SERVQUAL andcustomer satisfaction

It has been suggested that SERVPERF is essential in building a good reputation(Wang et al 2003) Zeithaml and Shappiro stated that perceived SERVQUAL is associatedwith the reputation of brand name Selnes (1993) found that the reputation of a brand isinfluenced by how consumer experiences performance of quality of services or productCustomers form a general overall evaluation of services based on their sum of beliefs orexpectations of a set of attributes Their perceptions of quality of service are influenced bytheir respective experiences on high- or low-quality performances For example when theyexperience high-quality services the reputation of a bank will increase vis-agrave-vis customersThus the hypothesis is proposed as follows

H8 There is a positive relationship between perceived overall SERVQUAL andbank reputation

Research methodologyThis study aims to examine the dimensions of SERVQUAL in the banking sector It will alsolook into how the dimensions will influence the perceived overall SERVQUAL which resultsin the building of trust customer satisfaction and bank reputation A questionnaire surveywas conducted to examine the quality of services among local banks in Malaysiaparticularly in the Klang Valley area Malaysia Currently there are 27 commercial banks16 Islamic banks and 11 investment banks offering various products and servicesto the public (Bank Negara Malaysia 2015b) Since the pricing in Malaysian banks isregulated the SERVQUAL being delivered becomes important if the banks want to retainand attract customers With the increasing number of international banks local banks arecompeting in a highly competitive environment for the provision of quality services basedon customer expectations

The judgement sampling method was used to collect data Respondents were first askedwhether they had bank accounts with local banks if they replied in the affirmative theywere asked to participate in the survey For each question the respondents were asked totick the response that best described their degree of agreementdisagreement Most of thequestionnaire items were adapted from previous studies on banking and a few moreconstructs were introduced in our study in order to obtain adequate measures of thedimensions of interest (see Figure 1) All items were measured using a seven-point Likertscale ndash ranging from 1 indicating strongly disagree to 7 indicating strongly agree Wemeasured the antecedents of perceived overall SERVQUAL (ie tangibles empathyconvenience reliability and security and internet banking) and the consequences ofperceived overall SERVQUAL on customer satisfaction trust and bank reputation

In total 400 questionnaires were gathered over a six-week period However only 375 wereusable for further data analysis The two-step approach of structural equation modelling(SEM) using AMOS 180 (maximum likelihood estimation) was employed to predict therelationships between the constructs This approach was selected due to its capability oftesting the causal relationships between the constructs with multiple measurement items

789

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

ResultsProfile of respondentsThe demographic profile of the respondents is presented in Table I Based on the results61 per cent of the respondents were females while 39 per cent (229) were males Thesmaller percentage of the latter is due to difficulties in approaching them The majority ofthe respondents (754 per cent) were between 21 and 40 years old The largest group ofrespondentsrsquo works for the public and private sectors was 68 per cent while those who areself-employed were 10 per cent and students housewife or others (investmentconsultants insurance agents) made up of 22 per cent of the total respondents Personalincome was measured in Malaysian Ringgit (RM) In total 30 per cent of the respondentshad a monthly income of between RM2001 and RM4000 Most of the respondents preferinternet banking (68 per cent) and use ATMs (79 per cent) while a lower percentage(40 per cent) prefer tellers at the bank These results are consistent with the statisticspublished by the central bank which indicated that online banking has become verypopular in Malaysia Currently 31 banks in Malaysia offer internet banking and nearly198 million internet banking subscribers (penetration to population of 637 per cent)conducted more than 210 million banking transactions valued at 233 billion Ringgit as ofJune 2015 (Bank Negara Malaysia 2015a)

Exploratory factor analysisTable II presents the mean scores standard deviations Cronbachrsquos α value and the results ofthe exploratory factor analysis of the constructs in this study The mean scores have been

Profile Description Frequency Percentage ()

Gender Male 146 389Female 229 611

Age Below 20 years 5 1321-30 years 153 40831-40 years 129 34441-50 years 61 16351 years above 27 72

Profession Salaried-private sector 169 451Salaried-government 88 235Student 59 157Businessself-employment 37 99Housewife 12 32Others 10 27

Monthly income Below RM2000 53 141RM2001-RM4000 113 301RM4001-RM6000 63 168RM6001-RM8000 28 75RM8001-RM10000 41 109RM10001 and above 77 205

Preferred transaction Automated teller machines 294 784Internet banking 255 680Tellers at bank 150 400Phone banking 19 51

Duration of being bank customer Less than 1 year 14 371-5 years 149 3976-10 years 110 293More than 10 years 102 272

Note nfrac14 375

Table IDemographic profileof respondents

790

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Constructs Item statements Mean SD αFactorloading

Tangibles Infrastructure and facilities such as parking space andATMs are adequate 446 014 0802 0579Equipment in the bank is modern-looking 0780Printed materials such as brochures and statementsare attractive 0758Maintain clean and pleasant branch facilities 0831The lobby area is comfortable while waiting for services 0817Provide easy-to-read and understandable bank statement 0719

Empathy Bank gives customers individual attention 474 091 0832 0754Bank staff never too busy to respond to my requests 0608Bank staff understand customerrsquos specific needs 0777Bank staff are friendly and polite 0667Bank is very responsive to customer complaints 0831Bank staff are polite when handling customer complaints 0828Bank staff willing to help elderly and disabled customers andgive them special attention 0599

Reliability andsecurity

Bank maintains error-free records (eg accurate bills andstatements) 511 089 0894 0791Bank keeps confidentiality of account and privacy ofcustomers 0746Bank delivers up-to-date records 0711Physical security at bank is adequate (eg security guardsCCTVs) 0633ATM machine is located at a secure location 0775Bank is located in secure location 0825Bank is quick to alert customers to any suspicious orfraudulent transaction 0686Bank always asks questions for verification in phone banking 0564

Convenience Bank branches are located in a convenient location 453 095 0817 0729Bank extends its working hours in order to meet customer needs 0639Number of open tellers during peak hours is adequate 0655Waiting time for receiving services is not too long 0685Bank provides the necessary convenience for customers(eg parking area and special counters for elderlydisabledcustomers) 0644ATMs are conveniently located (eg shopping mallsgovernment departments etc) 0732Bank service is easily accessible by telephone 0595

Internetbanking

The online banking has adequate security features 519 102 0929 0844The online banking is fast for making transactions 0901It is easy to learn how to operate online system 0902The online system makes appropriate confirmationconcerning the completion of transactions 0890I received confirmation of every online transaction by SMS 0766The online banking system has a user-friendly interface 0887

Overall servicequality

My bank always delivers excellent overall service 495 087 0915 0849The services offered by my bank are high quality 0878My bank delivers superior service in every way 0861My bank offers me a complete range of products 0789The personnel provide a friendly atmosphere 0831The bank insists on error-free records 0831

(continued )

Table IIMean scores

Cronbachrsquos α andfactor loading

791

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

computed by equally weighing the mean scores of all of the items The analysis shows that ona seven-point scale the mean scores of the independent variables range from 453 to 519which indicates that customers perceive that the quality of service being offered by the banksis moderate The mean score for internet banking is 519 (SDfrac14 102) which suggests thatcustomers find the service provided by the internet as highly important The mean score foroverall SERVQUAL is 495 (SDfrac14 087) which implies that the customers of banks indicatethat the overall SERVQUAL is moderate The mean score for trust is 525 (SDfrac14 086)suggesting that the customers find the service provider trustworthy The results of theexploratory factor analysis show that the factor loadings for all items are greater than 050and each of these items load strongly onto their respective associated factors

Measurement modelIn order to achieve an adequate goodness of fit on the measurement model and identifypossible problems this study assessed the path estimates standardised residuals andmodification indices of the measurement model (Hair et al 2006) The assessment of thestandardised regression weight indicates that all items were loaded high within theirconstructs which was within the acceptable values of 070 and above except for threeitems thus these items were deemed unsatisfactory (Hair et al 2006) and deleted from themeasurement model In terms of the assessment of the standardised residual values theresults indicated that all of the items have standardised residual values of less than 25with the exception of one item from reliability and security which was deleted from themodel The modification indices assessment shows the co-variance between some of theitems in the tangibility and empathy construct with high error co-variance betweenthese indicators The estimation of a coefficient may be considered removed fromthe measurement model if the modification indices value is equal to 4 or greater(Hair et al 2006) The substantial modification indices value is assumed to be 788 for a

Constructs Item statements Mean SD αFactorloading

Trust The bank staff are trustworthy 525 086 0918 0839The bank treats me in an honest way in every transaction 0840I feel safe in my transactions with the bank 0865The bank will not let other people know my account balance 0817Bank tellers accurately verify all transaction requests 0842Overall I have complete trust in my bank 0855

Customersatisfaction

The services of this bank meet my expectations 501 085 0883 0827I did the right thing when I chose this bank for its services 0861I am satisfied with the quality of the bankrsquos services 0859I am satisfied with the various bonus link programmes ofthe bank 0614I am satisfied with the interactions that I have had with the bank 0818The bank satisfies my needs 0830

Bankreputation

I will continue to patronize this bank even if the servicecharges are increased 459 099 0874 0769I am willing to pay more for using the services of this bank 0832To me this bank would rank first among the other banks 0828The bank I patronize reflects a lot about who I am 0845This bank has a good reputation in this industry 0692The bank does what it promises for its customers 0736

Note Scores based on a seven-point scale ranging from 1frac14 strongly disagree to 7frac14 strongly agreeTable II

792

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

significant model improvement Based on the results of the aforementioned assessmentthese items were dropped from the initial measurement model in order to improve themodelrsquos fit Furthermore these items add very little explanatory power to themeasurement model and thus they were removed from further analysis The estimatedparameters were all statistically significant between the latent and measured variablesThe results of the measurement model ndash χsup2df (253) TLI (091) CFI (091) IFI (091)RMSEA (006) and GFI (082) ndash indicate the acceptable model fit of the data

Convergent and discriminant validityAccording to Hair et al (1995) uni-dimensionality should always be assessed prior toexamining validity This is due to the fact that the analysis of validity is based on theassumption of uni-dimensionality (Nunnally and Bernstein 1994) In order to test foruni-dimensionality the confirmatory factor analysis (CFA) was conducted (Anderson andGerbing 1991) through SEM AMOS 180 to ascertain that each item in the model representsthe same measure (Ahire et al 1996) SEM takes a confirmatory approach rather than anexploratory approach to analyse data and provide a confirmatory test of measurement theoryfor the constructs SEM explains how measured variables logically and systematicallyrepresent the constructs involved in the theoretical model This study applied thepre-validated measurement to prior studies thus CFA is the most appropriate approach inassessing a constructrsquos validity (Hair et al 2006) CFA describes the extent to which a set ofmeasured items actually reflects the theoretical latent construct

The construct validity test was performed to determine to what extent the items appearto measure the construct of interest instead of other constructs The convergent validity ofthe measurement items can be assessed by composite reliability and the variance extractedmeasure Composite reliability depicts the degree to which the item indicates a commonconstruct The variance extracted measure reflects the amount of variance in the itemscaptured by the construct

The CFA results showed that the standardised parameter estimates were higher than070 and the signs of parameter estimation were all in the same direction to measure specificlatent variables

The composite reliability correlation average variance extracted (AVE) and square root ofthe AVE were calculated and presented in Table III The results revealed that the compositereliability of all of the constructs was greater than 072 and the output of AVE for themodel with independent and dependent variables exceeded 050 (Fornell and Larcker 1981)Hair et al (1995) and Carmines and Zeller (1988) recommended that composite reliability should

Construct CR AVE 1 2 3 4 5 6 7 8 9

Tangibles 080 082 090Empathy 081 082 0587 090Reliability andSecurity 072 067 0533 0429 081Convenience 078 079 0592 0716 0361 088Internet banking 093 085 0437 0355 0720 0305 092Overall servicequality 092 083 0505 0435 0698 0320 0666 091Trust 090 082 0467 0383 0713 0282 0626 0772 090Customersatisfaction 088 080 0500 0409 0594 0320 0571 0822 0744 089Bank reputation 082 073 0403 0234 0580 0222 0517 0641 0596 0587 085Notes CR composite reliability The values in the diagonal are the square root of the AVE po001

Table IIIComposite reliability

average varianceextracted correlation

793

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

be greater than 070 and AVE should be greater than 050 to indicate construct validity In orderto evaluate discriminant validity this study compared the square root of each constructrsquos AVEsto its correlation with other variables (Chin 1998) The results showed that all items were loadedsignificantly on their predefined constructs and that the construct correlations were all belowthe square root of AVE for each construct If the square root of the AVE for each construct islarger than the correlation between the construct and any other construct in the model then themeasures should be considered to possess adequate discriminant validity (Fornell and Larcker1981) Thus our results proved the reliability of the data and convergent validity

Structural model and hypothesis testingAfter conducting the validity and reliability tests for all the constructs through themeasurement model it is also necessary to demonstrate the overall fit of the structuralmodel (see Figure 2) In this study the hypothesised model was assessed using multiplemodel-fit measures to assess its overall goodness of fit

The structural model revealed an adequate model fit with the data The results in Table IVshow that χsup2df (246) TLI (091) CFI (092) IFI (092) RMSEA (006) and GFI (082) were aboveor quite close to the cut-off criteria The table also shows the recommended level of each index(Hair et al 2006 Meyers et al 2005) In this study the GFI values of 070 and 082 were lowerthan the commonly cited thresholds of 090 however they were within range of therecommended levels Yen and Lu (2008) argued that a GFI ranging from 080 to 090 could beinterpreted as a reasonable fit In Table IV all the model-fit indices on the measurement andstructural model were above or quite close to the cut-off criteria suggested by Hair et al (2006)This indicates that all the data fit reasonably well with the proposed model Thus it can beconcluded that the models are valid and we can continue to analyse the outcome of thehypothesised effects

Results of hypotheses testingThe relationship between the independent variables and overall SERVQUAL wasinvestigated Table V summarises the results of the hypothesised relationships As shown in

Figure 2Structural model

794

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

reputation are considered as identical by Gotsi and Wilson (2001) who defined image as ldquothetotal impression of the companyrdquo Image is about overall impression residing in the mind ofcustomers Fombrun (1996) considers the term corporate reputation and corporate image asdifferent concepts According to Wartick (1992) corporate reputation is an ldquoaggregation of asingle stakeholderrsquos perceptions of how well organizational responses are meeting thedemands and expectations of many organizational stakeholdersrdquo Yoon et al (1993) viewedcorporate reputation as the firmrsquos history of communicating to the customers in terms of thequality its products or services compared to that of its competitors Based on thediscussions of the definitions of reputation corporate reputation is a stakeholderrsquos overallevaluation of a company over time This evaluation is based on the customerrsquos directexperiences with the bank

TrustTrust is formed when customers believe that banks will perform as promised (credibility trust)and have confidence in employeesrsquo ability and courtesy (benevolence trust) (Yap et al 2012)El-Manstrly et al (2011) defined trust as a function of the perceived reliability and integrity ofa brand or service provider Jan and Abdullah (2014) reported that trust in the banking sectorincreases awareness concerning the importance of technology-related critical success factorsResearch has revealed that higher overall SERVQUAL would lead to a higher level oftrustworthiness and positively increase the level of customer loyalty

Theoretical background and hypotheses developmentHaving identified the variables associated with SERVQUAL this study modified themeasurement for SERVQUAL to capture the customer perceptions of SERVQUAL in retailbanking particularly in the context of Malaysia This section presents the theoreticalbackground of a proposed conceptual framework for perceived overall SERVQUAL Theconceptual framework is developed based on the literature review and prior scales that areavailable for investigating the relationships between the perceived overall SERVQUALtrust customer satisfaction and bank reputation The overall perceived SERVQUAL isinfluenced by multiple constructs within SERVQUAL (tangibles empathy reliability andsecurity convenience and internet banking)

According to Lee and Moghavvemi (2015) many researchers (ie Behara et al 2002Ladhari et al 2011) found that SERVQUAL model and its measurement scales are changingin conformity to the different types of service or country Due to those reasons we followBahia and Nantel (2000) and Lee and Moghavvemirsquos (2015) study who identified dimensionsbased on the most cited and most applicable dimensions of SERVQUAL in the context ofbanking in Malaysia such as tangibles empathy reliability and security convenience andinternet banking These dimensions are identified from our exploratory study which wasconducted previously Additionally the five dimensions (tangibles reliabilityresponsiveness assurance and empathy) of the SERVQUAL approach developed byParasuraman et al (1988) appears to be less universally applicable (Gilmore 2003)Thus based on literature the SERVQUAL model is further modified to assess the level ofSERVQUAL in the Malaysian banking sector The research model and the hypothesesrelationship between the constructs in this study is presented in Figure 1

Earlier literature suggests that SERVQUAL incorporates a number of dimensionsFor the purpose of this study the SERVQUAL model includes tangibles empathyreliability and security convenience and internet banking Tangibles comprise the physicalfacilities equipment and the appearance of personnel Bank customers usually look for anytangibles as the indicators of a bankrsquos overall SERVQUAL Customers can assess thepremises of the bank or the appearance of the bankrsquos staff Physical facilities availabilitythe adequacy of equipment and the appearance of a bankrsquos employees are viewed as

786

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

important factors in terms of tangibility amongst customers in Hong Kong (Lau et al 2013)Therefore the number of counters the design of the transaction form and the availability ofa water dispenser might increase the perception of SERVQUAL being received Moreoverbank users in India (Ravichandran et al 2010) and Bangladesh (Rahman 2013) also rankedtangibles dimension as highly important in increasing customer satisfaction and loyaltyTherefore the following hypothesis is developed

H1 There is a positive relationship between tangibles and perceived overall SERVQUAL

Empathy is customersrsquo expectations with regard to the extent to which the serviceprovider appears to understand and is concerned about their individual needs and wantsThe concept of empathy is to understand the needs of the customers and provideindividual attention (Siddiqi 2011) Researchers revealed that empathy plays a vital role ininfluencing customer satisfaction with regard to the value of the SERVQUAL provided byfrontline staff (Annamalah et al 2011 Kamal et al 2013 Shanka 2012 Siddiqi 2011Estiri et al 2011) Bank staff and customer interactions are reflected in the dimension ofempathy This means that bank customers perceive good overall SERVQUAL in terms ofbanking hours and personal attention given to them by the bankrsquos staff Therefore thefollowing hypothesis is proposed

H2 There is a positive relationship between empathy and perceived overall SERVQUAL

Reliability and security is the extent to which customers can rely on the service provider tokeep promises and perform in the best interests of the customers (Lee and Moghavvemi2015) Reliability has been identified as an influential component in determining thecustomer loyalty in previous studies (Estiri et al 2011 Kumar et al 2010 Lau et al 2013Mistry 2013) Zafar et al (2012) surveyed 192 bank users in Pakistan and the results of theirstudy showed that reliability is positively correlated to customer loyalty because customersexpect bank employees to have zero error records and fulfil their promise of delivering acertain service within a stipulated time frame Customers will not be satisfied with theoverall SERVQUAL if they do not feel reliable and secure about the competence of theservice provider Thus banks need to instil feelings of confidence in customers and banksrsquostaff are expected to handle customers in a professional and competent manner In thisstudy security refers to the physical reliability at the bank such as adequate securityguards and CCTVs ATM machine or bank located at a secure location etc As suchreliability and security of the bank service is an important factor for customers in evaluatingthe overall SERVQUAL (Lee and Moghavvemi 2015) The hypothesis is as follows

H3 There is a positive relationship between reliability and security and perceivedoverall SERVQUAL

Internet banking

Tangibility

Empathy

Reliability andsecurity

Convenience

Perceivedoverall service

quality

Customersatisfaction

H7

H8

TrustH6

Bankreputation

H1

H2

H3

H4

H5 Figure 1The conceptual

research framework

787

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Kumar et al (2009) included an additional dimension convenience to the SERVQUAL modelTheir findings indicated that the convenience factor plays a significant role in delivering theSERVQUAL of banks in Malaysia Therefore the convenience dimension was also added tothe modified SERVQUAL model for the banksrsquo customers Similarly Awan et al (2011)found that the convenient availability of financial services is ranked high on the list of priorityby customers for SERVQUAL in the banking sector of Pakistan This implies that the greaterthe level of convenience the greater the perceived overall SERVQUAL The convenience ofservice remains the responsibility of the service provider indicating the full range of availableservices convenience and ease-of-access via its location operating hours employees andoperation systems Hence the following hypothesis is formulated

H4 There is a positive relationship between convenience and perceivedoverall SERVQUAL

Internet banking distinguishes itself from its competitors (Abdullah and Kassim 2009)Internet banking is the use of the internet as a delivery channel for banking services such asopening a deposit account or transferring funds between different accounts and newbanking services ie electronic bills and payments ( Jun and Cai 2001) The internet hasbeen accepted as a new channel of banking transactions With the high growth of newtechnology the increased use of the internet has a great impact on the characteristics ofsubsequent services Studies have shown that the provision of internet banking services isimportant in attracting more customers (Hamzah et al 2014) Rod et al (2009) and Jun andCai (2001) found that the more positive the customer perception of the SERVQUAL ofinternet banking the greater the likelihood that overall SERVQUAL will be perceivedTherefore we include the provision of high-quality internet banking as being influential tothe overall SERVQUAL of the banking sector The developed hypothesis is as follows

H5 There is a positive relationship between internet banking and perceivedoverall SERVQUAL

In the banking industry trust is regarded as one of the relevant collaborative relationshipsbetween a customer and a bank and as a channel to enhance competitiveness (Barney andHansen 1994 Levy and Hino 2016) Trust is conceptualised as the customersrsquo expectationsand beliefs that their service provider will carry out actions as promised (Levy and Hino2016) Singh and Sirdeshmukh (2000) found that trust is essential for building andmaintaining long-term relationships They are of the belief that if one party can bringpositive outcomes to the other party trust can therefore be developed A high level of trustleads to the future potential of the relationship between customers and service providers(Amin et al 2013) The way in which perceived overall SERVQUAL (such as speed andefficiency of transactions employees of bank are polite and friendly and willingness to help)affects trust has yet been adequately investigated For this reason one of the objectives ofthis study is to investigate the overall perceived SERVQUAL of customer trust in a bankBased on the above discussion the following hypothesis is proposed

H6 There is a positive relationship between perceived overall SERVQUAL andcustomer trust

The relationship between SERVQUAL and customer satisfaction has received considerableacademic attention in the past few years (Cronin et al 2000 Sureshchandar et al 2002)SERVQUAL and customer satisfaction are widely recognised as key influences in theformation of consumersrsquo purchase intentions in a service environment (Taylor and Baker1994) Perceived SERVQUAL and satisfaction have generally been conceptualised to bedistinct constructs (Spring and Mackoy 1996) As such greater understanding of therelationship between perceived overall SERVQUAL and customer satisfaction is required

788

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

(Spring and Mackoy 1996) Gonzaacutelez et al (2007) found that perceived SERVQUALinfluences customer satisfaction in behavioural intention of tourism industry Maumlgi andJulander (1996) indicate that perceived SERVQUAL influences customer satisfaction inSwedish grocery retailing Based on earlier studies this study hypothesises that perceivedoverall SERVQUAL has a significantly positive effect on customer satisfaction Higherlevels of perceived overall SERVQUAL will lead to higher customer satisfaction As suchthe hypothesis is developed

H7 There is a positive relationship between perceived overall SERVQUAL andcustomer satisfaction

It has been suggested that SERVPERF is essential in building a good reputation(Wang et al 2003) Zeithaml and Shappiro stated that perceived SERVQUAL is associatedwith the reputation of brand name Selnes (1993) found that the reputation of a brand isinfluenced by how consumer experiences performance of quality of services or productCustomers form a general overall evaluation of services based on their sum of beliefs orexpectations of a set of attributes Their perceptions of quality of service are influenced bytheir respective experiences on high- or low-quality performances For example when theyexperience high-quality services the reputation of a bank will increase vis-agrave-vis customersThus the hypothesis is proposed as follows

H8 There is a positive relationship between perceived overall SERVQUAL andbank reputation

Research methodologyThis study aims to examine the dimensions of SERVQUAL in the banking sector It will alsolook into how the dimensions will influence the perceived overall SERVQUAL which resultsin the building of trust customer satisfaction and bank reputation A questionnaire surveywas conducted to examine the quality of services among local banks in Malaysiaparticularly in the Klang Valley area Malaysia Currently there are 27 commercial banks16 Islamic banks and 11 investment banks offering various products and servicesto the public (Bank Negara Malaysia 2015b) Since the pricing in Malaysian banks isregulated the SERVQUAL being delivered becomes important if the banks want to retainand attract customers With the increasing number of international banks local banks arecompeting in a highly competitive environment for the provision of quality services basedon customer expectations

The judgement sampling method was used to collect data Respondents were first askedwhether they had bank accounts with local banks if they replied in the affirmative theywere asked to participate in the survey For each question the respondents were asked totick the response that best described their degree of agreementdisagreement Most of thequestionnaire items were adapted from previous studies on banking and a few moreconstructs were introduced in our study in order to obtain adequate measures of thedimensions of interest (see Figure 1) All items were measured using a seven-point Likertscale ndash ranging from 1 indicating strongly disagree to 7 indicating strongly agree Wemeasured the antecedents of perceived overall SERVQUAL (ie tangibles empathyconvenience reliability and security and internet banking) and the consequences ofperceived overall SERVQUAL on customer satisfaction trust and bank reputation

In total 400 questionnaires were gathered over a six-week period However only 375 wereusable for further data analysis The two-step approach of structural equation modelling(SEM) using AMOS 180 (maximum likelihood estimation) was employed to predict therelationships between the constructs This approach was selected due to its capability oftesting the causal relationships between the constructs with multiple measurement items

789

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

ResultsProfile of respondentsThe demographic profile of the respondents is presented in Table I Based on the results61 per cent of the respondents were females while 39 per cent (229) were males Thesmaller percentage of the latter is due to difficulties in approaching them The majority ofthe respondents (754 per cent) were between 21 and 40 years old The largest group ofrespondentsrsquo works for the public and private sectors was 68 per cent while those who areself-employed were 10 per cent and students housewife or others (investmentconsultants insurance agents) made up of 22 per cent of the total respondents Personalincome was measured in Malaysian Ringgit (RM) In total 30 per cent of the respondentshad a monthly income of between RM2001 and RM4000 Most of the respondents preferinternet banking (68 per cent) and use ATMs (79 per cent) while a lower percentage(40 per cent) prefer tellers at the bank These results are consistent with the statisticspublished by the central bank which indicated that online banking has become verypopular in Malaysia Currently 31 banks in Malaysia offer internet banking and nearly198 million internet banking subscribers (penetration to population of 637 per cent)conducted more than 210 million banking transactions valued at 233 billion Ringgit as ofJune 2015 (Bank Negara Malaysia 2015a)

Exploratory factor analysisTable II presents the mean scores standard deviations Cronbachrsquos α value and the results ofthe exploratory factor analysis of the constructs in this study The mean scores have been

Profile Description Frequency Percentage ()

Gender Male 146 389Female 229 611

Age Below 20 years 5 1321-30 years 153 40831-40 years 129 34441-50 years 61 16351 years above 27 72

Profession Salaried-private sector 169 451Salaried-government 88 235Student 59 157Businessself-employment 37 99Housewife 12 32Others 10 27

Monthly income Below RM2000 53 141RM2001-RM4000 113 301RM4001-RM6000 63 168RM6001-RM8000 28 75RM8001-RM10000 41 109RM10001 and above 77 205

Preferred transaction Automated teller machines 294 784Internet banking 255 680Tellers at bank 150 400Phone banking 19 51

Duration of being bank customer Less than 1 year 14 371-5 years 149 3976-10 years 110 293More than 10 years 102 272

Note nfrac14 375

Table IDemographic profileof respondents

790

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Constructs Item statements Mean SD αFactorloading

Tangibles Infrastructure and facilities such as parking space andATMs are adequate 446 014 0802 0579Equipment in the bank is modern-looking 0780Printed materials such as brochures and statementsare attractive 0758Maintain clean and pleasant branch facilities 0831The lobby area is comfortable while waiting for services 0817Provide easy-to-read and understandable bank statement 0719

Empathy Bank gives customers individual attention 474 091 0832 0754Bank staff never too busy to respond to my requests 0608Bank staff understand customerrsquos specific needs 0777Bank staff are friendly and polite 0667Bank is very responsive to customer complaints 0831Bank staff are polite when handling customer complaints 0828Bank staff willing to help elderly and disabled customers andgive them special attention 0599

Reliability andsecurity

Bank maintains error-free records (eg accurate bills andstatements) 511 089 0894 0791Bank keeps confidentiality of account and privacy ofcustomers 0746Bank delivers up-to-date records 0711Physical security at bank is adequate (eg security guardsCCTVs) 0633ATM machine is located at a secure location 0775Bank is located in secure location 0825Bank is quick to alert customers to any suspicious orfraudulent transaction 0686Bank always asks questions for verification in phone banking 0564

Convenience Bank branches are located in a convenient location 453 095 0817 0729Bank extends its working hours in order to meet customer needs 0639Number of open tellers during peak hours is adequate 0655Waiting time for receiving services is not too long 0685Bank provides the necessary convenience for customers(eg parking area and special counters for elderlydisabledcustomers) 0644ATMs are conveniently located (eg shopping mallsgovernment departments etc) 0732Bank service is easily accessible by telephone 0595

Internetbanking

The online banking has adequate security features 519 102 0929 0844The online banking is fast for making transactions 0901It is easy to learn how to operate online system 0902The online system makes appropriate confirmationconcerning the completion of transactions 0890I received confirmation of every online transaction by SMS 0766The online banking system has a user-friendly interface 0887

Overall servicequality

My bank always delivers excellent overall service 495 087 0915 0849The services offered by my bank are high quality 0878My bank delivers superior service in every way 0861My bank offers me a complete range of products 0789The personnel provide a friendly atmosphere 0831The bank insists on error-free records 0831

(continued )

Table IIMean scores

Cronbachrsquos α andfactor loading

791

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

computed by equally weighing the mean scores of all of the items The analysis shows that ona seven-point scale the mean scores of the independent variables range from 453 to 519which indicates that customers perceive that the quality of service being offered by the banksis moderate The mean score for internet banking is 519 (SDfrac14 102) which suggests thatcustomers find the service provided by the internet as highly important The mean score foroverall SERVQUAL is 495 (SDfrac14 087) which implies that the customers of banks indicatethat the overall SERVQUAL is moderate The mean score for trust is 525 (SDfrac14 086)suggesting that the customers find the service provider trustworthy The results of theexploratory factor analysis show that the factor loadings for all items are greater than 050and each of these items load strongly onto their respective associated factors

Measurement modelIn order to achieve an adequate goodness of fit on the measurement model and identifypossible problems this study assessed the path estimates standardised residuals andmodification indices of the measurement model (Hair et al 2006) The assessment of thestandardised regression weight indicates that all items were loaded high within theirconstructs which was within the acceptable values of 070 and above except for threeitems thus these items were deemed unsatisfactory (Hair et al 2006) and deleted from themeasurement model In terms of the assessment of the standardised residual values theresults indicated that all of the items have standardised residual values of less than 25with the exception of one item from reliability and security which was deleted from themodel The modification indices assessment shows the co-variance between some of theitems in the tangibility and empathy construct with high error co-variance betweenthese indicators The estimation of a coefficient may be considered removed fromthe measurement model if the modification indices value is equal to 4 or greater(Hair et al 2006) The substantial modification indices value is assumed to be 788 for a

Constructs Item statements Mean SD αFactorloading

Trust The bank staff are trustworthy 525 086 0918 0839The bank treats me in an honest way in every transaction 0840I feel safe in my transactions with the bank 0865The bank will not let other people know my account balance 0817Bank tellers accurately verify all transaction requests 0842Overall I have complete trust in my bank 0855

Customersatisfaction

The services of this bank meet my expectations 501 085 0883 0827I did the right thing when I chose this bank for its services 0861I am satisfied with the quality of the bankrsquos services 0859I am satisfied with the various bonus link programmes ofthe bank 0614I am satisfied with the interactions that I have had with the bank 0818The bank satisfies my needs 0830

Bankreputation

I will continue to patronize this bank even if the servicecharges are increased 459 099 0874 0769I am willing to pay more for using the services of this bank 0832To me this bank would rank first among the other banks 0828The bank I patronize reflects a lot about who I am 0845This bank has a good reputation in this industry 0692The bank does what it promises for its customers 0736

Note Scores based on a seven-point scale ranging from 1frac14 strongly disagree to 7frac14 strongly agreeTable II

792

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

significant model improvement Based on the results of the aforementioned assessmentthese items were dropped from the initial measurement model in order to improve themodelrsquos fit Furthermore these items add very little explanatory power to themeasurement model and thus they were removed from further analysis The estimatedparameters were all statistically significant between the latent and measured variablesThe results of the measurement model ndash χsup2df (253) TLI (091) CFI (091) IFI (091)RMSEA (006) and GFI (082) ndash indicate the acceptable model fit of the data

Convergent and discriminant validityAccording to Hair et al (1995) uni-dimensionality should always be assessed prior toexamining validity This is due to the fact that the analysis of validity is based on theassumption of uni-dimensionality (Nunnally and Bernstein 1994) In order to test foruni-dimensionality the confirmatory factor analysis (CFA) was conducted (Anderson andGerbing 1991) through SEM AMOS 180 to ascertain that each item in the model representsthe same measure (Ahire et al 1996) SEM takes a confirmatory approach rather than anexploratory approach to analyse data and provide a confirmatory test of measurement theoryfor the constructs SEM explains how measured variables logically and systematicallyrepresent the constructs involved in the theoretical model This study applied thepre-validated measurement to prior studies thus CFA is the most appropriate approach inassessing a constructrsquos validity (Hair et al 2006) CFA describes the extent to which a set ofmeasured items actually reflects the theoretical latent construct

The construct validity test was performed to determine to what extent the items appearto measure the construct of interest instead of other constructs The convergent validity ofthe measurement items can be assessed by composite reliability and the variance extractedmeasure Composite reliability depicts the degree to which the item indicates a commonconstruct The variance extracted measure reflects the amount of variance in the itemscaptured by the construct

The CFA results showed that the standardised parameter estimates were higher than070 and the signs of parameter estimation were all in the same direction to measure specificlatent variables

The composite reliability correlation average variance extracted (AVE) and square root ofthe AVE were calculated and presented in Table III The results revealed that the compositereliability of all of the constructs was greater than 072 and the output of AVE for themodel with independent and dependent variables exceeded 050 (Fornell and Larcker 1981)Hair et al (1995) and Carmines and Zeller (1988) recommended that composite reliability should

Construct CR AVE 1 2 3 4 5 6 7 8 9

Tangibles 080 082 090Empathy 081 082 0587 090Reliability andSecurity 072 067 0533 0429 081Convenience 078 079 0592 0716 0361 088Internet banking 093 085 0437 0355 0720 0305 092Overall servicequality 092 083 0505 0435 0698 0320 0666 091Trust 090 082 0467 0383 0713 0282 0626 0772 090Customersatisfaction 088 080 0500 0409 0594 0320 0571 0822 0744 089Bank reputation 082 073 0403 0234 0580 0222 0517 0641 0596 0587 085Notes CR composite reliability The values in the diagonal are the square root of the AVE po001

Table IIIComposite reliability

average varianceextracted correlation

793

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

be greater than 070 and AVE should be greater than 050 to indicate construct validity In orderto evaluate discriminant validity this study compared the square root of each constructrsquos AVEsto its correlation with other variables (Chin 1998) The results showed that all items were loadedsignificantly on their predefined constructs and that the construct correlations were all belowthe square root of AVE for each construct If the square root of the AVE for each construct islarger than the correlation between the construct and any other construct in the model then themeasures should be considered to possess adequate discriminant validity (Fornell and Larcker1981) Thus our results proved the reliability of the data and convergent validity

Structural model and hypothesis testingAfter conducting the validity and reliability tests for all the constructs through themeasurement model it is also necessary to demonstrate the overall fit of the structuralmodel (see Figure 2) In this study the hypothesised model was assessed using multiplemodel-fit measures to assess its overall goodness of fit

The structural model revealed an adequate model fit with the data The results in Table IVshow that χsup2df (246) TLI (091) CFI (092) IFI (092) RMSEA (006) and GFI (082) were aboveor quite close to the cut-off criteria The table also shows the recommended level of each index(Hair et al 2006 Meyers et al 2005) In this study the GFI values of 070 and 082 were lowerthan the commonly cited thresholds of 090 however they were within range of therecommended levels Yen and Lu (2008) argued that a GFI ranging from 080 to 090 could beinterpreted as a reasonable fit In Table IV all the model-fit indices on the measurement andstructural model were above or quite close to the cut-off criteria suggested by Hair et al (2006)This indicates that all the data fit reasonably well with the proposed model Thus it can beconcluded that the models are valid and we can continue to analyse the outcome of thehypothesised effects

Results of hypotheses testingThe relationship between the independent variables and overall SERVQUAL wasinvestigated Table V summarises the results of the hypothesised relationships As shown in

Figure 2Structural model

794

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

important factors in terms of tangibility amongst customers in Hong Kong (Lau et al 2013)Therefore the number of counters the design of the transaction form and the availability ofa water dispenser might increase the perception of SERVQUAL being received Moreoverbank users in India (Ravichandran et al 2010) and Bangladesh (Rahman 2013) also rankedtangibles dimension as highly important in increasing customer satisfaction and loyaltyTherefore the following hypothesis is developed

H1 There is a positive relationship between tangibles and perceived overall SERVQUAL

Empathy is customersrsquo expectations with regard to the extent to which the serviceprovider appears to understand and is concerned about their individual needs and wantsThe concept of empathy is to understand the needs of the customers and provideindividual attention (Siddiqi 2011) Researchers revealed that empathy plays a vital role ininfluencing customer satisfaction with regard to the value of the SERVQUAL provided byfrontline staff (Annamalah et al 2011 Kamal et al 2013 Shanka 2012 Siddiqi 2011Estiri et al 2011) Bank staff and customer interactions are reflected in the dimension ofempathy This means that bank customers perceive good overall SERVQUAL in terms ofbanking hours and personal attention given to them by the bankrsquos staff Therefore thefollowing hypothesis is proposed

H2 There is a positive relationship between empathy and perceived overall SERVQUAL

Reliability and security is the extent to which customers can rely on the service provider tokeep promises and perform in the best interests of the customers (Lee and Moghavvemi2015) Reliability has been identified as an influential component in determining thecustomer loyalty in previous studies (Estiri et al 2011 Kumar et al 2010 Lau et al 2013Mistry 2013) Zafar et al (2012) surveyed 192 bank users in Pakistan and the results of theirstudy showed that reliability is positively correlated to customer loyalty because customersexpect bank employees to have zero error records and fulfil their promise of delivering acertain service within a stipulated time frame Customers will not be satisfied with theoverall SERVQUAL if they do not feel reliable and secure about the competence of theservice provider Thus banks need to instil feelings of confidence in customers and banksrsquostaff are expected to handle customers in a professional and competent manner In thisstudy security refers to the physical reliability at the bank such as adequate securityguards and CCTVs ATM machine or bank located at a secure location etc As suchreliability and security of the bank service is an important factor for customers in evaluatingthe overall SERVQUAL (Lee and Moghavvemi 2015) The hypothesis is as follows

H3 There is a positive relationship between reliability and security and perceivedoverall SERVQUAL

Internet banking

Tangibility

Empathy

Reliability andsecurity

Convenience

Perceivedoverall service

quality

Customersatisfaction

H7

H8

TrustH6

Bankreputation

H1

H2

H3

H4

H5 Figure 1The conceptual

research framework

787

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Kumar et al (2009) included an additional dimension convenience to the SERVQUAL modelTheir findings indicated that the convenience factor plays a significant role in delivering theSERVQUAL of banks in Malaysia Therefore the convenience dimension was also added tothe modified SERVQUAL model for the banksrsquo customers Similarly Awan et al (2011)found that the convenient availability of financial services is ranked high on the list of priorityby customers for SERVQUAL in the banking sector of Pakistan This implies that the greaterthe level of convenience the greater the perceived overall SERVQUAL The convenience ofservice remains the responsibility of the service provider indicating the full range of availableservices convenience and ease-of-access via its location operating hours employees andoperation systems Hence the following hypothesis is formulated

H4 There is a positive relationship between convenience and perceivedoverall SERVQUAL

Internet banking distinguishes itself from its competitors (Abdullah and Kassim 2009)Internet banking is the use of the internet as a delivery channel for banking services such asopening a deposit account or transferring funds between different accounts and newbanking services ie electronic bills and payments ( Jun and Cai 2001) The internet hasbeen accepted as a new channel of banking transactions With the high growth of newtechnology the increased use of the internet has a great impact on the characteristics ofsubsequent services Studies have shown that the provision of internet banking services isimportant in attracting more customers (Hamzah et al 2014) Rod et al (2009) and Jun andCai (2001) found that the more positive the customer perception of the SERVQUAL ofinternet banking the greater the likelihood that overall SERVQUAL will be perceivedTherefore we include the provision of high-quality internet banking as being influential tothe overall SERVQUAL of the banking sector The developed hypothesis is as follows

H5 There is a positive relationship between internet banking and perceivedoverall SERVQUAL

In the banking industry trust is regarded as one of the relevant collaborative relationshipsbetween a customer and a bank and as a channel to enhance competitiveness (Barney andHansen 1994 Levy and Hino 2016) Trust is conceptualised as the customersrsquo expectationsand beliefs that their service provider will carry out actions as promised (Levy and Hino2016) Singh and Sirdeshmukh (2000) found that trust is essential for building andmaintaining long-term relationships They are of the belief that if one party can bringpositive outcomes to the other party trust can therefore be developed A high level of trustleads to the future potential of the relationship between customers and service providers(Amin et al 2013) The way in which perceived overall SERVQUAL (such as speed andefficiency of transactions employees of bank are polite and friendly and willingness to help)affects trust has yet been adequately investigated For this reason one of the objectives ofthis study is to investigate the overall perceived SERVQUAL of customer trust in a bankBased on the above discussion the following hypothesis is proposed

H6 There is a positive relationship between perceived overall SERVQUAL andcustomer trust

The relationship between SERVQUAL and customer satisfaction has received considerableacademic attention in the past few years (Cronin et al 2000 Sureshchandar et al 2002)SERVQUAL and customer satisfaction are widely recognised as key influences in theformation of consumersrsquo purchase intentions in a service environment (Taylor and Baker1994) Perceived SERVQUAL and satisfaction have generally been conceptualised to bedistinct constructs (Spring and Mackoy 1996) As such greater understanding of therelationship between perceived overall SERVQUAL and customer satisfaction is required

788

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

(Spring and Mackoy 1996) Gonzaacutelez et al (2007) found that perceived SERVQUALinfluences customer satisfaction in behavioural intention of tourism industry Maumlgi andJulander (1996) indicate that perceived SERVQUAL influences customer satisfaction inSwedish grocery retailing Based on earlier studies this study hypothesises that perceivedoverall SERVQUAL has a significantly positive effect on customer satisfaction Higherlevels of perceived overall SERVQUAL will lead to higher customer satisfaction As suchthe hypothesis is developed

H7 There is a positive relationship between perceived overall SERVQUAL andcustomer satisfaction

It has been suggested that SERVPERF is essential in building a good reputation(Wang et al 2003) Zeithaml and Shappiro stated that perceived SERVQUAL is associatedwith the reputation of brand name Selnes (1993) found that the reputation of a brand isinfluenced by how consumer experiences performance of quality of services or productCustomers form a general overall evaluation of services based on their sum of beliefs orexpectations of a set of attributes Their perceptions of quality of service are influenced bytheir respective experiences on high- or low-quality performances For example when theyexperience high-quality services the reputation of a bank will increase vis-agrave-vis customersThus the hypothesis is proposed as follows

H8 There is a positive relationship between perceived overall SERVQUAL andbank reputation

Research methodologyThis study aims to examine the dimensions of SERVQUAL in the banking sector It will alsolook into how the dimensions will influence the perceived overall SERVQUAL which resultsin the building of trust customer satisfaction and bank reputation A questionnaire surveywas conducted to examine the quality of services among local banks in Malaysiaparticularly in the Klang Valley area Malaysia Currently there are 27 commercial banks16 Islamic banks and 11 investment banks offering various products and servicesto the public (Bank Negara Malaysia 2015b) Since the pricing in Malaysian banks isregulated the SERVQUAL being delivered becomes important if the banks want to retainand attract customers With the increasing number of international banks local banks arecompeting in a highly competitive environment for the provision of quality services basedon customer expectations

The judgement sampling method was used to collect data Respondents were first askedwhether they had bank accounts with local banks if they replied in the affirmative theywere asked to participate in the survey For each question the respondents were asked totick the response that best described their degree of agreementdisagreement Most of thequestionnaire items were adapted from previous studies on banking and a few moreconstructs were introduced in our study in order to obtain adequate measures of thedimensions of interest (see Figure 1) All items were measured using a seven-point Likertscale ndash ranging from 1 indicating strongly disagree to 7 indicating strongly agree Wemeasured the antecedents of perceived overall SERVQUAL (ie tangibles empathyconvenience reliability and security and internet banking) and the consequences ofperceived overall SERVQUAL on customer satisfaction trust and bank reputation

In total 400 questionnaires were gathered over a six-week period However only 375 wereusable for further data analysis The two-step approach of structural equation modelling(SEM) using AMOS 180 (maximum likelihood estimation) was employed to predict therelationships between the constructs This approach was selected due to its capability oftesting the causal relationships between the constructs with multiple measurement items

789

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

ResultsProfile of respondentsThe demographic profile of the respondents is presented in Table I Based on the results61 per cent of the respondents were females while 39 per cent (229) were males Thesmaller percentage of the latter is due to difficulties in approaching them The majority ofthe respondents (754 per cent) were between 21 and 40 years old The largest group ofrespondentsrsquo works for the public and private sectors was 68 per cent while those who areself-employed were 10 per cent and students housewife or others (investmentconsultants insurance agents) made up of 22 per cent of the total respondents Personalincome was measured in Malaysian Ringgit (RM) In total 30 per cent of the respondentshad a monthly income of between RM2001 and RM4000 Most of the respondents preferinternet banking (68 per cent) and use ATMs (79 per cent) while a lower percentage(40 per cent) prefer tellers at the bank These results are consistent with the statisticspublished by the central bank which indicated that online banking has become verypopular in Malaysia Currently 31 banks in Malaysia offer internet banking and nearly198 million internet banking subscribers (penetration to population of 637 per cent)conducted more than 210 million banking transactions valued at 233 billion Ringgit as ofJune 2015 (Bank Negara Malaysia 2015a)

Exploratory factor analysisTable II presents the mean scores standard deviations Cronbachrsquos α value and the results ofthe exploratory factor analysis of the constructs in this study The mean scores have been

Profile Description Frequency Percentage ()

Gender Male 146 389Female 229 611

Age Below 20 years 5 1321-30 years 153 40831-40 years 129 34441-50 years 61 16351 years above 27 72

Profession Salaried-private sector 169 451Salaried-government 88 235Student 59 157Businessself-employment 37 99Housewife 12 32Others 10 27

Monthly income Below RM2000 53 141RM2001-RM4000 113 301RM4001-RM6000 63 168RM6001-RM8000 28 75RM8001-RM10000 41 109RM10001 and above 77 205

Preferred transaction Automated teller machines 294 784Internet banking 255 680Tellers at bank 150 400Phone banking 19 51

Duration of being bank customer Less than 1 year 14 371-5 years 149 3976-10 years 110 293More than 10 years 102 272

Note nfrac14 375

Table IDemographic profileof respondents

790

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Constructs Item statements Mean SD αFactorloading

Tangibles Infrastructure and facilities such as parking space andATMs are adequate 446 014 0802 0579Equipment in the bank is modern-looking 0780Printed materials such as brochures and statementsare attractive 0758Maintain clean and pleasant branch facilities 0831The lobby area is comfortable while waiting for services 0817Provide easy-to-read and understandable bank statement 0719

Empathy Bank gives customers individual attention 474 091 0832 0754Bank staff never too busy to respond to my requests 0608Bank staff understand customerrsquos specific needs 0777Bank staff are friendly and polite 0667Bank is very responsive to customer complaints 0831Bank staff are polite when handling customer complaints 0828Bank staff willing to help elderly and disabled customers andgive them special attention 0599

Reliability andsecurity

Bank maintains error-free records (eg accurate bills andstatements) 511 089 0894 0791Bank keeps confidentiality of account and privacy ofcustomers 0746Bank delivers up-to-date records 0711Physical security at bank is adequate (eg security guardsCCTVs) 0633ATM machine is located at a secure location 0775Bank is located in secure location 0825Bank is quick to alert customers to any suspicious orfraudulent transaction 0686Bank always asks questions for verification in phone banking 0564

Convenience Bank branches are located in a convenient location 453 095 0817 0729Bank extends its working hours in order to meet customer needs 0639Number of open tellers during peak hours is adequate 0655Waiting time for receiving services is not too long 0685Bank provides the necessary convenience for customers(eg parking area and special counters for elderlydisabledcustomers) 0644ATMs are conveniently located (eg shopping mallsgovernment departments etc) 0732Bank service is easily accessible by telephone 0595

Internetbanking

The online banking has adequate security features 519 102 0929 0844The online banking is fast for making transactions 0901It is easy to learn how to operate online system 0902The online system makes appropriate confirmationconcerning the completion of transactions 0890I received confirmation of every online transaction by SMS 0766The online banking system has a user-friendly interface 0887

Overall servicequality

My bank always delivers excellent overall service 495 087 0915 0849The services offered by my bank are high quality 0878My bank delivers superior service in every way 0861My bank offers me a complete range of products 0789The personnel provide a friendly atmosphere 0831The bank insists on error-free records 0831

(continued )

Table IIMean scores

Cronbachrsquos α andfactor loading

791

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

computed by equally weighing the mean scores of all of the items The analysis shows that ona seven-point scale the mean scores of the independent variables range from 453 to 519which indicates that customers perceive that the quality of service being offered by the banksis moderate The mean score for internet banking is 519 (SDfrac14 102) which suggests thatcustomers find the service provided by the internet as highly important The mean score foroverall SERVQUAL is 495 (SDfrac14 087) which implies that the customers of banks indicatethat the overall SERVQUAL is moderate The mean score for trust is 525 (SDfrac14 086)suggesting that the customers find the service provider trustworthy The results of theexploratory factor analysis show that the factor loadings for all items are greater than 050and each of these items load strongly onto their respective associated factors

Measurement modelIn order to achieve an adequate goodness of fit on the measurement model and identifypossible problems this study assessed the path estimates standardised residuals andmodification indices of the measurement model (Hair et al 2006) The assessment of thestandardised regression weight indicates that all items were loaded high within theirconstructs which was within the acceptable values of 070 and above except for threeitems thus these items were deemed unsatisfactory (Hair et al 2006) and deleted from themeasurement model In terms of the assessment of the standardised residual values theresults indicated that all of the items have standardised residual values of less than 25with the exception of one item from reliability and security which was deleted from themodel The modification indices assessment shows the co-variance between some of theitems in the tangibility and empathy construct with high error co-variance betweenthese indicators The estimation of a coefficient may be considered removed fromthe measurement model if the modification indices value is equal to 4 or greater(Hair et al 2006) The substantial modification indices value is assumed to be 788 for a

Constructs Item statements Mean SD αFactorloading

Trust The bank staff are trustworthy 525 086 0918 0839The bank treats me in an honest way in every transaction 0840I feel safe in my transactions with the bank 0865The bank will not let other people know my account balance 0817Bank tellers accurately verify all transaction requests 0842Overall I have complete trust in my bank 0855

Customersatisfaction

The services of this bank meet my expectations 501 085 0883 0827I did the right thing when I chose this bank for its services 0861I am satisfied with the quality of the bankrsquos services 0859I am satisfied with the various bonus link programmes ofthe bank 0614I am satisfied with the interactions that I have had with the bank 0818The bank satisfies my needs 0830

Bankreputation

I will continue to patronize this bank even if the servicecharges are increased 459 099 0874 0769I am willing to pay more for using the services of this bank 0832To me this bank would rank first among the other banks 0828The bank I patronize reflects a lot about who I am 0845This bank has a good reputation in this industry 0692The bank does what it promises for its customers 0736

Note Scores based on a seven-point scale ranging from 1frac14 strongly disagree to 7frac14 strongly agreeTable II

792

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

significant model improvement Based on the results of the aforementioned assessmentthese items were dropped from the initial measurement model in order to improve themodelrsquos fit Furthermore these items add very little explanatory power to themeasurement model and thus they were removed from further analysis The estimatedparameters were all statistically significant between the latent and measured variablesThe results of the measurement model ndash χsup2df (253) TLI (091) CFI (091) IFI (091)RMSEA (006) and GFI (082) ndash indicate the acceptable model fit of the data

Convergent and discriminant validityAccording to Hair et al (1995) uni-dimensionality should always be assessed prior toexamining validity This is due to the fact that the analysis of validity is based on theassumption of uni-dimensionality (Nunnally and Bernstein 1994) In order to test foruni-dimensionality the confirmatory factor analysis (CFA) was conducted (Anderson andGerbing 1991) through SEM AMOS 180 to ascertain that each item in the model representsthe same measure (Ahire et al 1996) SEM takes a confirmatory approach rather than anexploratory approach to analyse data and provide a confirmatory test of measurement theoryfor the constructs SEM explains how measured variables logically and systematicallyrepresent the constructs involved in the theoretical model This study applied thepre-validated measurement to prior studies thus CFA is the most appropriate approach inassessing a constructrsquos validity (Hair et al 2006) CFA describes the extent to which a set ofmeasured items actually reflects the theoretical latent construct

The construct validity test was performed to determine to what extent the items appearto measure the construct of interest instead of other constructs The convergent validity ofthe measurement items can be assessed by composite reliability and the variance extractedmeasure Composite reliability depicts the degree to which the item indicates a commonconstruct The variance extracted measure reflects the amount of variance in the itemscaptured by the construct

The CFA results showed that the standardised parameter estimates were higher than070 and the signs of parameter estimation were all in the same direction to measure specificlatent variables

The composite reliability correlation average variance extracted (AVE) and square root ofthe AVE were calculated and presented in Table III The results revealed that the compositereliability of all of the constructs was greater than 072 and the output of AVE for themodel with independent and dependent variables exceeded 050 (Fornell and Larcker 1981)Hair et al (1995) and Carmines and Zeller (1988) recommended that composite reliability should

Construct CR AVE 1 2 3 4 5 6 7 8 9

Tangibles 080 082 090Empathy 081 082 0587 090Reliability andSecurity 072 067 0533 0429 081Convenience 078 079 0592 0716 0361 088Internet banking 093 085 0437 0355 0720 0305 092Overall servicequality 092 083 0505 0435 0698 0320 0666 091Trust 090 082 0467 0383 0713 0282 0626 0772 090Customersatisfaction 088 080 0500 0409 0594 0320 0571 0822 0744 089Bank reputation 082 073 0403 0234 0580 0222 0517 0641 0596 0587 085Notes CR composite reliability The values in the diagonal are the square root of the AVE po001

Table IIIComposite reliability

average varianceextracted correlation

793

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

be greater than 070 and AVE should be greater than 050 to indicate construct validity In orderto evaluate discriminant validity this study compared the square root of each constructrsquos AVEsto its correlation with other variables (Chin 1998) The results showed that all items were loadedsignificantly on their predefined constructs and that the construct correlations were all belowthe square root of AVE for each construct If the square root of the AVE for each construct islarger than the correlation between the construct and any other construct in the model then themeasures should be considered to possess adequate discriminant validity (Fornell and Larcker1981) Thus our results proved the reliability of the data and convergent validity

Structural model and hypothesis testingAfter conducting the validity and reliability tests for all the constructs through themeasurement model it is also necessary to demonstrate the overall fit of the structuralmodel (see Figure 2) In this study the hypothesised model was assessed using multiplemodel-fit measures to assess its overall goodness of fit

The structural model revealed an adequate model fit with the data The results in Table IVshow that χsup2df (246) TLI (091) CFI (092) IFI (092) RMSEA (006) and GFI (082) were aboveor quite close to the cut-off criteria The table also shows the recommended level of each index(Hair et al 2006 Meyers et al 2005) In this study the GFI values of 070 and 082 were lowerthan the commonly cited thresholds of 090 however they were within range of therecommended levels Yen and Lu (2008) argued that a GFI ranging from 080 to 090 could beinterpreted as a reasonable fit In Table IV all the model-fit indices on the measurement andstructural model were above or quite close to the cut-off criteria suggested by Hair et al (2006)This indicates that all the data fit reasonably well with the proposed model Thus it can beconcluded that the models are valid and we can continue to analyse the outcome of thehypothesised effects

Results of hypotheses testingThe relationship between the independent variables and overall SERVQUAL wasinvestigated Table V summarises the results of the hypothesised relationships As shown in

Figure 2Structural model

794

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Kumar et al (2009) included an additional dimension convenience to the SERVQUAL modelTheir findings indicated that the convenience factor plays a significant role in delivering theSERVQUAL of banks in Malaysia Therefore the convenience dimension was also added tothe modified SERVQUAL model for the banksrsquo customers Similarly Awan et al (2011)found that the convenient availability of financial services is ranked high on the list of priorityby customers for SERVQUAL in the banking sector of Pakistan This implies that the greaterthe level of convenience the greater the perceived overall SERVQUAL The convenience ofservice remains the responsibility of the service provider indicating the full range of availableservices convenience and ease-of-access via its location operating hours employees andoperation systems Hence the following hypothesis is formulated

H4 There is a positive relationship between convenience and perceivedoverall SERVQUAL

Internet banking distinguishes itself from its competitors (Abdullah and Kassim 2009)Internet banking is the use of the internet as a delivery channel for banking services such asopening a deposit account or transferring funds between different accounts and newbanking services ie electronic bills and payments ( Jun and Cai 2001) The internet hasbeen accepted as a new channel of banking transactions With the high growth of newtechnology the increased use of the internet has a great impact on the characteristics ofsubsequent services Studies have shown that the provision of internet banking services isimportant in attracting more customers (Hamzah et al 2014) Rod et al (2009) and Jun andCai (2001) found that the more positive the customer perception of the SERVQUAL ofinternet banking the greater the likelihood that overall SERVQUAL will be perceivedTherefore we include the provision of high-quality internet banking as being influential tothe overall SERVQUAL of the banking sector The developed hypothesis is as follows

H5 There is a positive relationship between internet banking and perceivedoverall SERVQUAL

In the banking industry trust is regarded as one of the relevant collaborative relationshipsbetween a customer and a bank and as a channel to enhance competitiveness (Barney andHansen 1994 Levy and Hino 2016) Trust is conceptualised as the customersrsquo expectationsand beliefs that their service provider will carry out actions as promised (Levy and Hino2016) Singh and Sirdeshmukh (2000) found that trust is essential for building andmaintaining long-term relationships They are of the belief that if one party can bringpositive outcomes to the other party trust can therefore be developed A high level of trustleads to the future potential of the relationship between customers and service providers(Amin et al 2013) The way in which perceived overall SERVQUAL (such as speed andefficiency of transactions employees of bank are polite and friendly and willingness to help)affects trust has yet been adequately investigated For this reason one of the objectives ofthis study is to investigate the overall perceived SERVQUAL of customer trust in a bankBased on the above discussion the following hypothesis is proposed

H6 There is a positive relationship between perceived overall SERVQUAL andcustomer trust

The relationship between SERVQUAL and customer satisfaction has received considerableacademic attention in the past few years (Cronin et al 2000 Sureshchandar et al 2002)SERVQUAL and customer satisfaction are widely recognised as key influences in theformation of consumersrsquo purchase intentions in a service environment (Taylor and Baker1994) Perceived SERVQUAL and satisfaction have generally been conceptualised to bedistinct constructs (Spring and Mackoy 1996) As such greater understanding of therelationship between perceived overall SERVQUAL and customer satisfaction is required

788

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

(Spring and Mackoy 1996) Gonzaacutelez et al (2007) found that perceived SERVQUALinfluences customer satisfaction in behavioural intention of tourism industry Maumlgi andJulander (1996) indicate that perceived SERVQUAL influences customer satisfaction inSwedish grocery retailing Based on earlier studies this study hypothesises that perceivedoverall SERVQUAL has a significantly positive effect on customer satisfaction Higherlevels of perceived overall SERVQUAL will lead to higher customer satisfaction As suchthe hypothesis is developed

H7 There is a positive relationship between perceived overall SERVQUAL andcustomer satisfaction

It has been suggested that SERVPERF is essential in building a good reputation(Wang et al 2003) Zeithaml and Shappiro stated that perceived SERVQUAL is associatedwith the reputation of brand name Selnes (1993) found that the reputation of a brand isinfluenced by how consumer experiences performance of quality of services or productCustomers form a general overall evaluation of services based on their sum of beliefs orexpectations of a set of attributes Their perceptions of quality of service are influenced bytheir respective experiences on high- or low-quality performances For example when theyexperience high-quality services the reputation of a bank will increase vis-agrave-vis customersThus the hypothesis is proposed as follows

H8 There is a positive relationship between perceived overall SERVQUAL andbank reputation

Research methodologyThis study aims to examine the dimensions of SERVQUAL in the banking sector It will alsolook into how the dimensions will influence the perceived overall SERVQUAL which resultsin the building of trust customer satisfaction and bank reputation A questionnaire surveywas conducted to examine the quality of services among local banks in Malaysiaparticularly in the Klang Valley area Malaysia Currently there are 27 commercial banks16 Islamic banks and 11 investment banks offering various products and servicesto the public (Bank Negara Malaysia 2015b) Since the pricing in Malaysian banks isregulated the SERVQUAL being delivered becomes important if the banks want to retainand attract customers With the increasing number of international banks local banks arecompeting in a highly competitive environment for the provision of quality services basedon customer expectations

The judgement sampling method was used to collect data Respondents were first askedwhether they had bank accounts with local banks if they replied in the affirmative theywere asked to participate in the survey For each question the respondents were asked totick the response that best described their degree of agreementdisagreement Most of thequestionnaire items were adapted from previous studies on banking and a few moreconstructs were introduced in our study in order to obtain adequate measures of thedimensions of interest (see Figure 1) All items were measured using a seven-point Likertscale ndash ranging from 1 indicating strongly disagree to 7 indicating strongly agree Wemeasured the antecedents of perceived overall SERVQUAL (ie tangibles empathyconvenience reliability and security and internet banking) and the consequences ofperceived overall SERVQUAL on customer satisfaction trust and bank reputation

In total 400 questionnaires were gathered over a six-week period However only 375 wereusable for further data analysis The two-step approach of structural equation modelling(SEM) using AMOS 180 (maximum likelihood estimation) was employed to predict therelationships between the constructs This approach was selected due to its capability oftesting the causal relationships between the constructs with multiple measurement items

789

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

ResultsProfile of respondentsThe demographic profile of the respondents is presented in Table I Based on the results61 per cent of the respondents were females while 39 per cent (229) were males Thesmaller percentage of the latter is due to difficulties in approaching them The majority ofthe respondents (754 per cent) were between 21 and 40 years old The largest group ofrespondentsrsquo works for the public and private sectors was 68 per cent while those who areself-employed were 10 per cent and students housewife or others (investmentconsultants insurance agents) made up of 22 per cent of the total respondents Personalincome was measured in Malaysian Ringgit (RM) In total 30 per cent of the respondentshad a monthly income of between RM2001 and RM4000 Most of the respondents preferinternet banking (68 per cent) and use ATMs (79 per cent) while a lower percentage(40 per cent) prefer tellers at the bank These results are consistent with the statisticspublished by the central bank which indicated that online banking has become verypopular in Malaysia Currently 31 banks in Malaysia offer internet banking and nearly198 million internet banking subscribers (penetration to population of 637 per cent)conducted more than 210 million banking transactions valued at 233 billion Ringgit as ofJune 2015 (Bank Negara Malaysia 2015a)

Exploratory factor analysisTable II presents the mean scores standard deviations Cronbachrsquos α value and the results ofthe exploratory factor analysis of the constructs in this study The mean scores have been

Profile Description Frequency Percentage ()

Gender Male 146 389Female 229 611

Age Below 20 years 5 1321-30 years 153 40831-40 years 129 34441-50 years 61 16351 years above 27 72

Profession Salaried-private sector 169 451Salaried-government 88 235Student 59 157Businessself-employment 37 99Housewife 12 32Others 10 27

Monthly income Below RM2000 53 141RM2001-RM4000 113 301RM4001-RM6000 63 168RM6001-RM8000 28 75RM8001-RM10000 41 109RM10001 and above 77 205

Preferred transaction Automated teller machines 294 784Internet banking 255 680Tellers at bank 150 400Phone banking 19 51

Duration of being bank customer Less than 1 year 14 371-5 years 149 3976-10 years 110 293More than 10 years 102 272

Note nfrac14 375

Table IDemographic profileof respondents

790

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Constructs Item statements Mean SD αFactorloading

Tangibles Infrastructure and facilities such as parking space andATMs are adequate 446 014 0802 0579Equipment in the bank is modern-looking 0780Printed materials such as brochures and statementsare attractive 0758Maintain clean and pleasant branch facilities 0831The lobby area is comfortable while waiting for services 0817Provide easy-to-read and understandable bank statement 0719

Empathy Bank gives customers individual attention 474 091 0832 0754Bank staff never too busy to respond to my requests 0608Bank staff understand customerrsquos specific needs 0777Bank staff are friendly and polite 0667Bank is very responsive to customer complaints 0831Bank staff are polite when handling customer complaints 0828Bank staff willing to help elderly and disabled customers andgive them special attention 0599

Reliability andsecurity

Bank maintains error-free records (eg accurate bills andstatements) 511 089 0894 0791Bank keeps confidentiality of account and privacy ofcustomers 0746Bank delivers up-to-date records 0711Physical security at bank is adequate (eg security guardsCCTVs) 0633ATM machine is located at a secure location 0775Bank is located in secure location 0825Bank is quick to alert customers to any suspicious orfraudulent transaction 0686Bank always asks questions for verification in phone banking 0564

Convenience Bank branches are located in a convenient location 453 095 0817 0729Bank extends its working hours in order to meet customer needs 0639Number of open tellers during peak hours is adequate 0655Waiting time for receiving services is not too long 0685Bank provides the necessary convenience for customers(eg parking area and special counters for elderlydisabledcustomers) 0644ATMs are conveniently located (eg shopping mallsgovernment departments etc) 0732Bank service is easily accessible by telephone 0595

Internetbanking

The online banking has adequate security features 519 102 0929 0844The online banking is fast for making transactions 0901It is easy to learn how to operate online system 0902The online system makes appropriate confirmationconcerning the completion of transactions 0890I received confirmation of every online transaction by SMS 0766The online banking system has a user-friendly interface 0887

Overall servicequality

My bank always delivers excellent overall service 495 087 0915 0849The services offered by my bank are high quality 0878My bank delivers superior service in every way 0861My bank offers me a complete range of products 0789The personnel provide a friendly atmosphere 0831The bank insists on error-free records 0831

(continued )

Table IIMean scores

Cronbachrsquos α andfactor loading

791

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

computed by equally weighing the mean scores of all of the items The analysis shows that ona seven-point scale the mean scores of the independent variables range from 453 to 519which indicates that customers perceive that the quality of service being offered by the banksis moderate The mean score for internet banking is 519 (SDfrac14 102) which suggests thatcustomers find the service provided by the internet as highly important The mean score foroverall SERVQUAL is 495 (SDfrac14 087) which implies that the customers of banks indicatethat the overall SERVQUAL is moderate The mean score for trust is 525 (SDfrac14 086)suggesting that the customers find the service provider trustworthy The results of theexploratory factor analysis show that the factor loadings for all items are greater than 050and each of these items load strongly onto their respective associated factors

Measurement modelIn order to achieve an adequate goodness of fit on the measurement model and identifypossible problems this study assessed the path estimates standardised residuals andmodification indices of the measurement model (Hair et al 2006) The assessment of thestandardised regression weight indicates that all items were loaded high within theirconstructs which was within the acceptable values of 070 and above except for threeitems thus these items were deemed unsatisfactory (Hair et al 2006) and deleted from themeasurement model In terms of the assessment of the standardised residual values theresults indicated that all of the items have standardised residual values of less than 25with the exception of one item from reliability and security which was deleted from themodel The modification indices assessment shows the co-variance between some of theitems in the tangibility and empathy construct with high error co-variance betweenthese indicators The estimation of a coefficient may be considered removed fromthe measurement model if the modification indices value is equal to 4 or greater(Hair et al 2006) The substantial modification indices value is assumed to be 788 for a

Constructs Item statements Mean SD αFactorloading

Trust The bank staff are trustworthy 525 086 0918 0839The bank treats me in an honest way in every transaction 0840I feel safe in my transactions with the bank 0865The bank will not let other people know my account balance 0817Bank tellers accurately verify all transaction requests 0842Overall I have complete trust in my bank 0855

Customersatisfaction

The services of this bank meet my expectations 501 085 0883 0827I did the right thing when I chose this bank for its services 0861I am satisfied with the quality of the bankrsquos services 0859I am satisfied with the various bonus link programmes ofthe bank 0614I am satisfied with the interactions that I have had with the bank 0818The bank satisfies my needs 0830

Bankreputation

I will continue to patronize this bank even if the servicecharges are increased 459 099 0874 0769I am willing to pay more for using the services of this bank 0832To me this bank would rank first among the other banks 0828The bank I patronize reflects a lot about who I am 0845This bank has a good reputation in this industry 0692The bank does what it promises for its customers 0736

Note Scores based on a seven-point scale ranging from 1frac14 strongly disagree to 7frac14 strongly agreeTable II

792

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

significant model improvement Based on the results of the aforementioned assessmentthese items were dropped from the initial measurement model in order to improve themodelrsquos fit Furthermore these items add very little explanatory power to themeasurement model and thus they were removed from further analysis The estimatedparameters were all statistically significant between the latent and measured variablesThe results of the measurement model ndash χsup2df (253) TLI (091) CFI (091) IFI (091)RMSEA (006) and GFI (082) ndash indicate the acceptable model fit of the data

Convergent and discriminant validityAccording to Hair et al (1995) uni-dimensionality should always be assessed prior toexamining validity This is due to the fact that the analysis of validity is based on theassumption of uni-dimensionality (Nunnally and Bernstein 1994) In order to test foruni-dimensionality the confirmatory factor analysis (CFA) was conducted (Anderson andGerbing 1991) through SEM AMOS 180 to ascertain that each item in the model representsthe same measure (Ahire et al 1996) SEM takes a confirmatory approach rather than anexploratory approach to analyse data and provide a confirmatory test of measurement theoryfor the constructs SEM explains how measured variables logically and systematicallyrepresent the constructs involved in the theoretical model This study applied thepre-validated measurement to prior studies thus CFA is the most appropriate approach inassessing a constructrsquos validity (Hair et al 2006) CFA describes the extent to which a set ofmeasured items actually reflects the theoretical latent construct

The construct validity test was performed to determine to what extent the items appearto measure the construct of interest instead of other constructs The convergent validity ofthe measurement items can be assessed by composite reliability and the variance extractedmeasure Composite reliability depicts the degree to which the item indicates a commonconstruct The variance extracted measure reflects the amount of variance in the itemscaptured by the construct

The CFA results showed that the standardised parameter estimates were higher than070 and the signs of parameter estimation were all in the same direction to measure specificlatent variables

The composite reliability correlation average variance extracted (AVE) and square root ofthe AVE were calculated and presented in Table III The results revealed that the compositereliability of all of the constructs was greater than 072 and the output of AVE for themodel with independent and dependent variables exceeded 050 (Fornell and Larcker 1981)Hair et al (1995) and Carmines and Zeller (1988) recommended that composite reliability should

Construct CR AVE 1 2 3 4 5 6 7 8 9

Tangibles 080 082 090Empathy 081 082 0587 090Reliability andSecurity 072 067 0533 0429 081Convenience 078 079 0592 0716 0361 088Internet banking 093 085 0437 0355 0720 0305 092Overall servicequality 092 083 0505 0435 0698 0320 0666 091Trust 090 082 0467 0383 0713 0282 0626 0772 090Customersatisfaction 088 080 0500 0409 0594 0320 0571 0822 0744 089Bank reputation 082 073 0403 0234 0580 0222 0517 0641 0596 0587 085Notes CR composite reliability The values in the diagonal are the square root of the AVE po001

Table IIIComposite reliability

average varianceextracted correlation

793

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

be greater than 070 and AVE should be greater than 050 to indicate construct validity In orderto evaluate discriminant validity this study compared the square root of each constructrsquos AVEsto its correlation with other variables (Chin 1998) The results showed that all items were loadedsignificantly on their predefined constructs and that the construct correlations were all belowthe square root of AVE for each construct If the square root of the AVE for each construct islarger than the correlation between the construct and any other construct in the model then themeasures should be considered to possess adequate discriminant validity (Fornell and Larcker1981) Thus our results proved the reliability of the data and convergent validity

Structural model and hypothesis testingAfter conducting the validity and reliability tests for all the constructs through themeasurement model it is also necessary to demonstrate the overall fit of the structuralmodel (see Figure 2) In this study the hypothesised model was assessed using multiplemodel-fit measures to assess its overall goodness of fit

The structural model revealed an adequate model fit with the data The results in Table IVshow that χsup2df (246) TLI (091) CFI (092) IFI (092) RMSEA (006) and GFI (082) were aboveor quite close to the cut-off criteria The table also shows the recommended level of each index(Hair et al 2006 Meyers et al 2005) In this study the GFI values of 070 and 082 were lowerthan the commonly cited thresholds of 090 however they were within range of therecommended levels Yen and Lu (2008) argued that a GFI ranging from 080 to 090 could beinterpreted as a reasonable fit In Table IV all the model-fit indices on the measurement andstructural model were above or quite close to the cut-off criteria suggested by Hair et al (2006)This indicates that all the data fit reasonably well with the proposed model Thus it can beconcluded that the models are valid and we can continue to analyse the outcome of thehypothesised effects

Results of hypotheses testingThe relationship between the independent variables and overall SERVQUAL wasinvestigated Table V summarises the results of the hypothesised relationships As shown in

Figure 2Structural model

794

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

(Spring and Mackoy 1996) Gonzaacutelez et al (2007) found that perceived SERVQUALinfluences customer satisfaction in behavioural intention of tourism industry Maumlgi andJulander (1996) indicate that perceived SERVQUAL influences customer satisfaction inSwedish grocery retailing Based on earlier studies this study hypothesises that perceivedoverall SERVQUAL has a significantly positive effect on customer satisfaction Higherlevels of perceived overall SERVQUAL will lead to higher customer satisfaction As suchthe hypothesis is developed

H7 There is a positive relationship between perceived overall SERVQUAL andcustomer satisfaction

It has been suggested that SERVPERF is essential in building a good reputation(Wang et al 2003) Zeithaml and Shappiro stated that perceived SERVQUAL is associatedwith the reputation of brand name Selnes (1993) found that the reputation of a brand isinfluenced by how consumer experiences performance of quality of services or productCustomers form a general overall evaluation of services based on their sum of beliefs orexpectations of a set of attributes Their perceptions of quality of service are influenced bytheir respective experiences on high- or low-quality performances For example when theyexperience high-quality services the reputation of a bank will increase vis-agrave-vis customersThus the hypothesis is proposed as follows

H8 There is a positive relationship between perceived overall SERVQUAL andbank reputation

Research methodologyThis study aims to examine the dimensions of SERVQUAL in the banking sector It will alsolook into how the dimensions will influence the perceived overall SERVQUAL which resultsin the building of trust customer satisfaction and bank reputation A questionnaire surveywas conducted to examine the quality of services among local banks in Malaysiaparticularly in the Klang Valley area Malaysia Currently there are 27 commercial banks16 Islamic banks and 11 investment banks offering various products and servicesto the public (Bank Negara Malaysia 2015b) Since the pricing in Malaysian banks isregulated the SERVQUAL being delivered becomes important if the banks want to retainand attract customers With the increasing number of international banks local banks arecompeting in a highly competitive environment for the provision of quality services basedon customer expectations

The judgement sampling method was used to collect data Respondents were first askedwhether they had bank accounts with local banks if they replied in the affirmative theywere asked to participate in the survey For each question the respondents were asked totick the response that best described their degree of agreementdisagreement Most of thequestionnaire items were adapted from previous studies on banking and a few moreconstructs were introduced in our study in order to obtain adequate measures of thedimensions of interest (see Figure 1) All items were measured using a seven-point Likertscale ndash ranging from 1 indicating strongly disagree to 7 indicating strongly agree Wemeasured the antecedents of perceived overall SERVQUAL (ie tangibles empathyconvenience reliability and security and internet banking) and the consequences ofperceived overall SERVQUAL on customer satisfaction trust and bank reputation

In total 400 questionnaires were gathered over a six-week period However only 375 wereusable for further data analysis The two-step approach of structural equation modelling(SEM) using AMOS 180 (maximum likelihood estimation) was employed to predict therelationships between the constructs This approach was selected due to its capability oftesting the causal relationships between the constructs with multiple measurement items

789

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

ResultsProfile of respondentsThe demographic profile of the respondents is presented in Table I Based on the results61 per cent of the respondents were females while 39 per cent (229) were males Thesmaller percentage of the latter is due to difficulties in approaching them The majority ofthe respondents (754 per cent) were between 21 and 40 years old The largest group ofrespondentsrsquo works for the public and private sectors was 68 per cent while those who areself-employed were 10 per cent and students housewife or others (investmentconsultants insurance agents) made up of 22 per cent of the total respondents Personalincome was measured in Malaysian Ringgit (RM) In total 30 per cent of the respondentshad a monthly income of between RM2001 and RM4000 Most of the respondents preferinternet banking (68 per cent) and use ATMs (79 per cent) while a lower percentage(40 per cent) prefer tellers at the bank These results are consistent with the statisticspublished by the central bank which indicated that online banking has become verypopular in Malaysia Currently 31 banks in Malaysia offer internet banking and nearly198 million internet banking subscribers (penetration to population of 637 per cent)conducted more than 210 million banking transactions valued at 233 billion Ringgit as ofJune 2015 (Bank Negara Malaysia 2015a)

Exploratory factor analysisTable II presents the mean scores standard deviations Cronbachrsquos α value and the results ofthe exploratory factor analysis of the constructs in this study The mean scores have been

Profile Description Frequency Percentage ()

Gender Male 146 389Female 229 611

Age Below 20 years 5 1321-30 years 153 40831-40 years 129 34441-50 years 61 16351 years above 27 72

Profession Salaried-private sector 169 451Salaried-government 88 235Student 59 157Businessself-employment 37 99Housewife 12 32Others 10 27

Monthly income Below RM2000 53 141RM2001-RM4000 113 301RM4001-RM6000 63 168RM6001-RM8000 28 75RM8001-RM10000 41 109RM10001 and above 77 205

Preferred transaction Automated teller machines 294 784Internet banking 255 680Tellers at bank 150 400Phone banking 19 51

Duration of being bank customer Less than 1 year 14 371-5 years 149 3976-10 years 110 293More than 10 years 102 272

Note nfrac14 375

Table IDemographic profileof respondents

790

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Constructs Item statements Mean SD αFactorloading

Tangibles Infrastructure and facilities such as parking space andATMs are adequate 446 014 0802 0579Equipment in the bank is modern-looking 0780Printed materials such as brochures and statementsare attractive 0758Maintain clean and pleasant branch facilities 0831The lobby area is comfortable while waiting for services 0817Provide easy-to-read and understandable bank statement 0719

Empathy Bank gives customers individual attention 474 091 0832 0754Bank staff never too busy to respond to my requests 0608Bank staff understand customerrsquos specific needs 0777Bank staff are friendly and polite 0667Bank is very responsive to customer complaints 0831Bank staff are polite when handling customer complaints 0828Bank staff willing to help elderly and disabled customers andgive them special attention 0599

Reliability andsecurity

Bank maintains error-free records (eg accurate bills andstatements) 511 089 0894 0791Bank keeps confidentiality of account and privacy ofcustomers 0746Bank delivers up-to-date records 0711Physical security at bank is adequate (eg security guardsCCTVs) 0633ATM machine is located at a secure location 0775Bank is located in secure location 0825Bank is quick to alert customers to any suspicious orfraudulent transaction 0686Bank always asks questions for verification in phone banking 0564

Convenience Bank branches are located in a convenient location 453 095 0817 0729Bank extends its working hours in order to meet customer needs 0639Number of open tellers during peak hours is adequate 0655Waiting time for receiving services is not too long 0685Bank provides the necessary convenience for customers(eg parking area and special counters for elderlydisabledcustomers) 0644ATMs are conveniently located (eg shopping mallsgovernment departments etc) 0732Bank service is easily accessible by telephone 0595

Internetbanking

The online banking has adequate security features 519 102 0929 0844The online banking is fast for making transactions 0901It is easy to learn how to operate online system 0902The online system makes appropriate confirmationconcerning the completion of transactions 0890I received confirmation of every online transaction by SMS 0766The online banking system has a user-friendly interface 0887

Overall servicequality

My bank always delivers excellent overall service 495 087 0915 0849The services offered by my bank are high quality 0878My bank delivers superior service in every way 0861My bank offers me a complete range of products 0789The personnel provide a friendly atmosphere 0831The bank insists on error-free records 0831

(continued )

Table IIMean scores

Cronbachrsquos α andfactor loading

791

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

computed by equally weighing the mean scores of all of the items The analysis shows that ona seven-point scale the mean scores of the independent variables range from 453 to 519which indicates that customers perceive that the quality of service being offered by the banksis moderate The mean score for internet banking is 519 (SDfrac14 102) which suggests thatcustomers find the service provided by the internet as highly important The mean score foroverall SERVQUAL is 495 (SDfrac14 087) which implies that the customers of banks indicatethat the overall SERVQUAL is moderate The mean score for trust is 525 (SDfrac14 086)suggesting that the customers find the service provider trustworthy The results of theexploratory factor analysis show that the factor loadings for all items are greater than 050and each of these items load strongly onto their respective associated factors

Measurement modelIn order to achieve an adequate goodness of fit on the measurement model and identifypossible problems this study assessed the path estimates standardised residuals andmodification indices of the measurement model (Hair et al 2006) The assessment of thestandardised regression weight indicates that all items were loaded high within theirconstructs which was within the acceptable values of 070 and above except for threeitems thus these items were deemed unsatisfactory (Hair et al 2006) and deleted from themeasurement model In terms of the assessment of the standardised residual values theresults indicated that all of the items have standardised residual values of less than 25with the exception of one item from reliability and security which was deleted from themodel The modification indices assessment shows the co-variance between some of theitems in the tangibility and empathy construct with high error co-variance betweenthese indicators The estimation of a coefficient may be considered removed fromthe measurement model if the modification indices value is equal to 4 or greater(Hair et al 2006) The substantial modification indices value is assumed to be 788 for a

Constructs Item statements Mean SD αFactorloading

Trust The bank staff are trustworthy 525 086 0918 0839The bank treats me in an honest way in every transaction 0840I feel safe in my transactions with the bank 0865The bank will not let other people know my account balance 0817Bank tellers accurately verify all transaction requests 0842Overall I have complete trust in my bank 0855

Customersatisfaction

The services of this bank meet my expectations 501 085 0883 0827I did the right thing when I chose this bank for its services 0861I am satisfied with the quality of the bankrsquos services 0859I am satisfied with the various bonus link programmes ofthe bank 0614I am satisfied with the interactions that I have had with the bank 0818The bank satisfies my needs 0830

Bankreputation

I will continue to patronize this bank even if the servicecharges are increased 459 099 0874 0769I am willing to pay more for using the services of this bank 0832To me this bank would rank first among the other banks 0828The bank I patronize reflects a lot about who I am 0845This bank has a good reputation in this industry 0692The bank does what it promises for its customers 0736

Note Scores based on a seven-point scale ranging from 1frac14 strongly disagree to 7frac14 strongly agreeTable II

792

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

significant model improvement Based on the results of the aforementioned assessmentthese items were dropped from the initial measurement model in order to improve themodelrsquos fit Furthermore these items add very little explanatory power to themeasurement model and thus they were removed from further analysis The estimatedparameters were all statistically significant between the latent and measured variablesThe results of the measurement model ndash χsup2df (253) TLI (091) CFI (091) IFI (091)RMSEA (006) and GFI (082) ndash indicate the acceptable model fit of the data

Convergent and discriminant validityAccording to Hair et al (1995) uni-dimensionality should always be assessed prior toexamining validity This is due to the fact that the analysis of validity is based on theassumption of uni-dimensionality (Nunnally and Bernstein 1994) In order to test foruni-dimensionality the confirmatory factor analysis (CFA) was conducted (Anderson andGerbing 1991) through SEM AMOS 180 to ascertain that each item in the model representsthe same measure (Ahire et al 1996) SEM takes a confirmatory approach rather than anexploratory approach to analyse data and provide a confirmatory test of measurement theoryfor the constructs SEM explains how measured variables logically and systematicallyrepresent the constructs involved in the theoretical model This study applied thepre-validated measurement to prior studies thus CFA is the most appropriate approach inassessing a constructrsquos validity (Hair et al 2006) CFA describes the extent to which a set ofmeasured items actually reflects the theoretical latent construct

The construct validity test was performed to determine to what extent the items appearto measure the construct of interest instead of other constructs The convergent validity ofthe measurement items can be assessed by composite reliability and the variance extractedmeasure Composite reliability depicts the degree to which the item indicates a commonconstruct The variance extracted measure reflects the amount of variance in the itemscaptured by the construct

The CFA results showed that the standardised parameter estimates were higher than070 and the signs of parameter estimation were all in the same direction to measure specificlatent variables

The composite reliability correlation average variance extracted (AVE) and square root ofthe AVE were calculated and presented in Table III The results revealed that the compositereliability of all of the constructs was greater than 072 and the output of AVE for themodel with independent and dependent variables exceeded 050 (Fornell and Larcker 1981)Hair et al (1995) and Carmines and Zeller (1988) recommended that composite reliability should

Construct CR AVE 1 2 3 4 5 6 7 8 9

Tangibles 080 082 090Empathy 081 082 0587 090Reliability andSecurity 072 067 0533 0429 081Convenience 078 079 0592 0716 0361 088Internet banking 093 085 0437 0355 0720 0305 092Overall servicequality 092 083 0505 0435 0698 0320 0666 091Trust 090 082 0467 0383 0713 0282 0626 0772 090Customersatisfaction 088 080 0500 0409 0594 0320 0571 0822 0744 089Bank reputation 082 073 0403 0234 0580 0222 0517 0641 0596 0587 085Notes CR composite reliability The values in the diagonal are the square root of the AVE po001

Table IIIComposite reliability

average varianceextracted correlation

793

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

be greater than 070 and AVE should be greater than 050 to indicate construct validity In orderto evaluate discriminant validity this study compared the square root of each constructrsquos AVEsto its correlation with other variables (Chin 1998) The results showed that all items were loadedsignificantly on their predefined constructs and that the construct correlations were all belowthe square root of AVE for each construct If the square root of the AVE for each construct islarger than the correlation between the construct and any other construct in the model then themeasures should be considered to possess adequate discriminant validity (Fornell and Larcker1981) Thus our results proved the reliability of the data and convergent validity

Structural model and hypothesis testingAfter conducting the validity and reliability tests for all the constructs through themeasurement model it is also necessary to demonstrate the overall fit of the structuralmodel (see Figure 2) In this study the hypothesised model was assessed using multiplemodel-fit measures to assess its overall goodness of fit

The structural model revealed an adequate model fit with the data The results in Table IVshow that χsup2df (246) TLI (091) CFI (092) IFI (092) RMSEA (006) and GFI (082) were aboveor quite close to the cut-off criteria The table also shows the recommended level of each index(Hair et al 2006 Meyers et al 2005) In this study the GFI values of 070 and 082 were lowerthan the commonly cited thresholds of 090 however they were within range of therecommended levels Yen and Lu (2008) argued that a GFI ranging from 080 to 090 could beinterpreted as a reasonable fit In Table IV all the model-fit indices on the measurement andstructural model were above or quite close to the cut-off criteria suggested by Hair et al (2006)This indicates that all the data fit reasonably well with the proposed model Thus it can beconcluded that the models are valid and we can continue to analyse the outcome of thehypothesised effects

Results of hypotheses testingThe relationship between the independent variables and overall SERVQUAL wasinvestigated Table V summarises the results of the hypothesised relationships As shown in

Figure 2Structural model

794

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

ResultsProfile of respondentsThe demographic profile of the respondents is presented in Table I Based on the results61 per cent of the respondents were females while 39 per cent (229) were males Thesmaller percentage of the latter is due to difficulties in approaching them The majority ofthe respondents (754 per cent) were between 21 and 40 years old The largest group ofrespondentsrsquo works for the public and private sectors was 68 per cent while those who areself-employed were 10 per cent and students housewife or others (investmentconsultants insurance agents) made up of 22 per cent of the total respondents Personalincome was measured in Malaysian Ringgit (RM) In total 30 per cent of the respondentshad a monthly income of between RM2001 and RM4000 Most of the respondents preferinternet banking (68 per cent) and use ATMs (79 per cent) while a lower percentage(40 per cent) prefer tellers at the bank These results are consistent with the statisticspublished by the central bank which indicated that online banking has become verypopular in Malaysia Currently 31 banks in Malaysia offer internet banking and nearly198 million internet banking subscribers (penetration to population of 637 per cent)conducted more than 210 million banking transactions valued at 233 billion Ringgit as ofJune 2015 (Bank Negara Malaysia 2015a)

Exploratory factor analysisTable II presents the mean scores standard deviations Cronbachrsquos α value and the results ofthe exploratory factor analysis of the constructs in this study The mean scores have been

Profile Description Frequency Percentage ()

Gender Male 146 389Female 229 611

Age Below 20 years 5 1321-30 years 153 40831-40 years 129 34441-50 years 61 16351 years above 27 72

Profession Salaried-private sector 169 451Salaried-government 88 235Student 59 157Businessself-employment 37 99Housewife 12 32Others 10 27

Monthly income Below RM2000 53 141RM2001-RM4000 113 301RM4001-RM6000 63 168RM6001-RM8000 28 75RM8001-RM10000 41 109RM10001 and above 77 205

Preferred transaction Automated teller machines 294 784Internet banking 255 680Tellers at bank 150 400Phone banking 19 51

Duration of being bank customer Less than 1 year 14 371-5 years 149 3976-10 years 110 293More than 10 years 102 272

Note nfrac14 375

Table IDemographic profileof respondents

790

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Constructs Item statements Mean SD αFactorloading

Tangibles Infrastructure and facilities such as parking space andATMs are adequate 446 014 0802 0579Equipment in the bank is modern-looking 0780Printed materials such as brochures and statementsare attractive 0758Maintain clean and pleasant branch facilities 0831The lobby area is comfortable while waiting for services 0817Provide easy-to-read and understandable bank statement 0719

Empathy Bank gives customers individual attention 474 091 0832 0754Bank staff never too busy to respond to my requests 0608Bank staff understand customerrsquos specific needs 0777Bank staff are friendly and polite 0667Bank is very responsive to customer complaints 0831Bank staff are polite when handling customer complaints 0828Bank staff willing to help elderly and disabled customers andgive them special attention 0599

Reliability andsecurity

Bank maintains error-free records (eg accurate bills andstatements) 511 089 0894 0791Bank keeps confidentiality of account and privacy ofcustomers 0746Bank delivers up-to-date records 0711Physical security at bank is adequate (eg security guardsCCTVs) 0633ATM machine is located at a secure location 0775Bank is located in secure location 0825Bank is quick to alert customers to any suspicious orfraudulent transaction 0686Bank always asks questions for verification in phone banking 0564

Convenience Bank branches are located in a convenient location 453 095 0817 0729Bank extends its working hours in order to meet customer needs 0639Number of open tellers during peak hours is adequate 0655Waiting time for receiving services is not too long 0685Bank provides the necessary convenience for customers(eg parking area and special counters for elderlydisabledcustomers) 0644ATMs are conveniently located (eg shopping mallsgovernment departments etc) 0732Bank service is easily accessible by telephone 0595

Internetbanking

The online banking has adequate security features 519 102 0929 0844The online banking is fast for making transactions 0901It is easy to learn how to operate online system 0902The online system makes appropriate confirmationconcerning the completion of transactions 0890I received confirmation of every online transaction by SMS 0766The online banking system has a user-friendly interface 0887

Overall servicequality

My bank always delivers excellent overall service 495 087 0915 0849The services offered by my bank are high quality 0878My bank delivers superior service in every way 0861My bank offers me a complete range of products 0789The personnel provide a friendly atmosphere 0831The bank insists on error-free records 0831

(continued )

Table IIMean scores

Cronbachrsquos α andfactor loading

791

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

computed by equally weighing the mean scores of all of the items The analysis shows that ona seven-point scale the mean scores of the independent variables range from 453 to 519which indicates that customers perceive that the quality of service being offered by the banksis moderate The mean score for internet banking is 519 (SDfrac14 102) which suggests thatcustomers find the service provided by the internet as highly important The mean score foroverall SERVQUAL is 495 (SDfrac14 087) which implies that the customers of banks indicatethat the overall SERVQUAL is moderate The mean score for trust is 525 (SDfrac14 086)suggesting that the customers find the service provider trustworthy The results of theexploratory factor analysis show that the factor loadings for all items are greater than 050and each of these items load strongly onto their respective associated factors

Measurement modelIn order to achieve an adequate goodness of fit on the measurement model and identifypossible problems this study assessed the path estimates standardised residuals andmodification indices of the measurement model (Hair et al 2006) The assessment of thestandardised regression weight indicates that all items were loaded high within theirconstructs which was within the acceptable values of 070 and above except for threeitems thus these items were deemed unsatisfactory (Hair et al 2006) and deleted from themeasurement model In terms of the assessment of the standardised residual values theresults indicated that all of the items have standardised residual values of less than 25with the exception of one item from reliability and security which was deleted from themodel The modification indices assessment shows the co-variance between some of theitems in the tangibility and empathy construct with high error co-variance betweenthese indicators The estimation of a coefficient may be considered removed fromthe measurement model if the modification indices value is equal to 4 or greater(Hair et al 2006) The substantial modification indices value is assumed to be 788 for a

Constructs Item statements Mean SD αFactorloading

Trust The bank staff are trustworthy 525 086 0918 0839The bank treats me in an honest way in every transaction 0840I feel safe in my transactions with the bank 0865The bank will not let other people know my account balance 0817Bank tellers accurately verify all transaction requests 0842Overall I have complete trust in my bank 0855

Customersatisfaction

The services of this bank meet my expectations 501 085 0883 0827I did the right thing when I chose this bank for its services 0861I am satisfied with the quality of the bankrsquos services 0859I am satisfied with the various bonus link programmes ofthe bank 0614I am satisfied with the interactions that I have had with the bank 0818The bank satisfies my needs 0830

Bankreputation

I will continue to patronize this bank even if the servicecharges are increased 459 099 0874 0769I am willing to pay more for using the services of this bank 0832To me this bank would rank first among the other banks 0828The bank I patronize reflects a lot about who I am 0845This bank has a good reputation in this industry 0692The bank does what it promises for its customers 0736

Note Scores based on a seven-point scale ranging from 1frac14 strongly disagree to 7frac14 strongly agreeTable II

792

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

significant model improvement Based on the results of the aforementioned assessmentthese items were dropped from the initial measurement model in order to improve themodelrsquos fit Furthermore these items add very little explanatory power to themeasurement model and thus they were removed from further analysis The estimatedparameters were all statistically significant between the latent and measured variablesThe results of the measurement model ndash χsup2df (253) TLI (091) CFI (091) IFI (091)RMSEA (006) and GFI (082) ndash indicate the acceptable model fit of the data

Convergent and discriminant validityAccording to Hair et al (1995) uni-dimensionality should always be assessed prior toexamining validity This is due to the fact that the analysis of validity is based on theassumption of uni-dimensionality (Nunnally and Bernstein 1994) In order to test foruni-dimensionality the confirmatory factor analysis (CFA) was conducted (Anderson andGerbing 1991) through SEM AMOS 180 to ascertain that each item in the model representsthe same measure (Ahire et al 1996) SEM takes a confirmatory approach rather than anexploratory approach to analyse data and provide a confirmatory test of measurement theoryfor the constructs SEM explains how measured variables logically and systematicallyrepresent the constructs involved in the theoretical model This study applied thepre-validated measurement to prior studies thus CFA is the most appropriate approach inassessing a constructrsquos validity (Hair et al 2006) CFA describes the extent to which a set ofmeasured items actually reflects the theoretical latent construct

The construct validity test was performed to determine to what extent the items appearto measure the construct of interest instead of other constructs The convergent validity ofthe measurement items can be assessed by composite reliability and the variance extractedmeasure Composite reliability depicts the degree to which the item indicates a commonconstruct The variance extracted measure reflects the amount of variance in the itemscaptured by the construct

The CFA results showed that the standardised parameter estimates were higher than070 and the signs of parameter estimation were all in the same direction to measure specificlatent variables

The composite reliability correlation average variance extracted (AVE) and square root ofthe AVE were calculated and presented in Table III The results revealed that the compositereliability of all of the constructs was greater than 072 and the output of AVE for themodel with independent and dependent variables exceeded 050 (Fornell and Larcker 1981)Hair et al (1995) and Carmines and Zeller (1988) recommended that composite reliability should

Construct CR AVE 1 2 3 4 5 6 7 8 9

Tangibles 080 082 090Empathy 081 082 0587 090Reliability andSecurity 072 067 0533 0429 081Convenience 078 079 0592 0716 0361 088Internet banking 093 085 0437 0355 0720 0305 092Overall servicequality 092 083 0505 0435 0698 0320 0666 091Trust 090 082 0467 0383 0713 0282 0626 0772 090Customersatisfaction 088 080 0500 0409 0594 0320 0571 0822 0744 089Bank reputation 082 073 0403 0234 0580 0222 0517 0641 0596 0587 085Notes CR composite reliability The values in the diagonal are the square root of the AVE po001

Table IIIComposite reliability

average varianceextracted correlation

793

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

be greater than 070 and AVE should be greater than 050 to indicate construct validity In orderto evaluate discriminant validity this study compared the square root of each constructrsquos AVEsto its correlation with other variables (Chin 1998) The results showed that all items were loadedsignificantly on their predefined constructs and that the construct correlations were all belowthe square root of AVE for each construct If the square root of the AVE for each construct islarger than the correlation between the construct and any other construct in the model then themeasures should be considered to possess adequate discriminant validity (Fornell and Larcker1981) Thus our results proved the reliability of the data and convergent validity

Structural model and hypothesis testingAfter conducting the validity and reliability tests for all the constructs through themeasurement model it is also necessary to demonstrate the overall fit of the structuralmodel (see Figure 2) In this study the hypothesised model was assessed using multiplemodel-fit measures to assess its overall goodness of fit

The structural model revealed an adequate model fit with the data The results in Table IVshow that χsup2df (246) TLI (091) CFI (092) IFI (092) RMSEA (006) and GFI (082) were aboveor quite close to the cut-off criteria The table also shows the recommended level of each index(Hair et al 2006 Meyers et al 2005) In this study the GFI values of 070 and 082 were lowerthan the commonly cited thresholds of 090 however they were within range of therecommended levels Yen and Lu (2008) argued that a GFI ranging from 080 to 090 could beinterpreted as a reasonable fit In Table IV all the model-fit indices on the measurement andstructural model were above or quite close to the cut-off criteria suggested by Hair et al (2006)This indicates that all the data fit reasonably well with the proposed model Thus it can beconcluded that the models are valid and we can continue to analyse the outcome of thehypothesised effects

Results of hypotheses testingThe relationship between the independent variables and overall SERVQUAL wasinvestigated Table V summarises the results of the hypothesised relationships As shown in

Figure 2Structural model

794

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Constructs Item statements Mean SD αFactorloading

Tangibles Infrastructure and facilities such as parking space andATMs are adequate 446 014 0802 0579Equipment in the bank is modern-looking 0780Printed materials such as brochures and statementsare attractive 0758Maintain clean and pleasant branch facilities 0831The lobby area is comfortable while waiting for services 0817Provide easy-to-read and understandable bank statement 0719

Empathy Bank gives customers individual attention 474 091 0832 0754Bank staff never too busy to respond to my requests 0608Bank staff understand customerrsquos specific needs 0777Bank staff are friendly and polite 0667Bank is very responsive to customer complaints 0831Bank staff are polite when handling customer complaints 0828Bank staff willing to help elderly and disabled customers andgive them special attention 0599

Reliability andsecurity

Bank maintains error-free records (eg accurate bills andstatements) 511 089 0894 0791Bank keeps confidentiality of account and privacy ofcustomers 0746Bank delivers up-to-date records 0711Physical security at bank is adequate (eg security guardsCCTVs) 0633ATM machine is located at a secure location 0775Bank is located in secure location 0825Bank is quick to alert customers to any suspicious orfraudulent transaction 0686Bank always asks questions for verification in phone banking 0564

Convenience Bank branches are located in a convenient location 453 095 0817 0729Bank extends its working hours in order to meet customer needs 0639Number of open tellers during peak hours is adequate 0655Waiting time for receiving services is not too long 0685Bank provides the necessary convenience for customers(eg parking area and special counters for elderlydisabledcustomers) 0644ATMs are conveniently located (eg shopping mallsgovernment departments etc) 0732Bank service is easily accessible by telephone 0595

Internetbanking

The online banking has adequate security features 519 102 0929 0844The online banking is fast for making transactions 0901It is easy to learn how to operate online system 0902The online system makes appropriate confirmationconcerning the completion of transactions 0890I received confirmation of every online transaction by SMS 0766The online banking system has a user-friendly interface 0887

Overall servicequality

My bank always delivers excellent overall service 495 087 0915 0849The services offered by my bank are high quality 0878My bank delivers superior service in every way 0861My bank offers me a complete range of products 0789The personnel provide a friendly atmosphere 0831The bank insists on error-free records 0831

(continued )

Table IIMean scores

Cronbachrsquos α andfactor loading

791

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

computed by equally weighing the mean scores of all of the items The analysis shows that ona seven-point scale the mean scores of the independent variables range from 453 to 519which indicates that customers perceive that the quality of service being offered by the banksis moderate The mean score for internet banking is 519 (SDfrac14 102) which suggests thatcustomers find the service provided by the internet as highly important The mean score foroverall SERVQUAL is 495 (SDfrac14 087) which implies that the customers of banks indicatethat the overall SERVQUAL is moderate The mean score for trust is 525 (SDfrac14 086)suggesting that the customers find the service provider trustworthy The results of theexploratory factor analysis show that the factor loadings for all items are greater than 050and each of these items load strongly onto their respective associated factors

Measurement modelIn order to achieve an adequate goodness of fit on the measurement model and identifypossible problems this study assessed the path estimates standardised residuals andmodification indices of the measurement model (Hair et al 2006) The assessment of thestandardised regression weight indicates that all items were loaded high within theirconstructs which was within the acceptable values of 070 and above except for threeitems thus these items were deemed unsatisfactory (Hair et al 2006) and deleted from themeasurement model In terms of the assessment of the standardised residual values theresults indicated that all of the items have standardised residual values of less than 25with the exception of one item from reliability and security which was deleted from themodel The modification indices assessment shows the co-variance between some of theitems in the tangibility and empathy construct with high error co-variance betweenthese indicators The estimation of a coefficient may be considered removed fromthe measurement model if the modification indices value is equal to 4 or greater(Hair et al 2006) The substantial modification indices value is assumed to be 788 for a

Constructs Item statements Mean SD αFactorloading

Trust The bank staff are trustworthy 525 086 0918 0839The bank treats me in an honest way in every transaction 0840I feel safe in my transactions with the bank 0865The bank will not let other people know my account balance 0817Bank tellers accurately verify all transaction requests 0842Overall I have complete trust in my bank 0855

Customersatisfaction

The services of this bank meet my expectations 501 085 0883 0827I did the right thing when I chose this bank for its services 0861I am satisfied with the quality of the bankrsquos services 0859I am satisfied with the various bonus link programmes ofthe bank 0614I am satisfied with the interactions that I have had with the bank 0818The bank satisfies my needs 0830

Bankreputation

I will continue to patronize this bank even if the servicecharges are increased 459 099 0874 0769I am willing to pay more for using the services of this bank 0832To me this bank would rank first among the other banks 0828The bank I patronize reflects a lot about who I am 0845This bank has a good reputation in this industry 0692The bank does what it promises for its customers 0736

Note Scores based on a seven-point scale ranging from 1frac14 strongly disagree to 7frac14 strongly agreeTable II

792

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

significant model improvement Based on the results of the aforementioned assessmentthese items were dropped from the initial measurement model in order to improve themodelrsquos fit Furthermore these items add very little explanatory power to themeasurement model and thus they were removed from further analysis The estimatedparameters were all statistically significant between the latent and measured variablesThe results of the measurement model ndash χsup2df (253) TLI (091) CFI (091) IFI (091)RMSEA (006) and GFI (082) ndash indicate the acceptable model fit of the data

Convergent and discriminant validityAccording to Hair et al (1995) uni-dimensionality should always be assessed prior toexamining validity This is due to the fact that the analysis of validity is based on theassumption of uni-dimensionality (Nunnally and Bernstein 1994) In order to test foruni-dimensionality the confirmatory factor analysis (CFA) was conducted (Anderson andGerbing 1991) through SEM AMOS 180 to ascertain that each item in the model representsthe same measure (Ahire et al 1996) SEM takes a confirmatory approach rather than anexploratory approach to analyse data and provide a confirmatory test of measurement theoryfor the constructs SEM explains how measured variables logically and systematicallyrepresent the constructs involved in the theoretical model This study applied thepre-validated measurement to prior studies thus CFA is the most appropriate approach inassessing a constructrsquos validity (Hair et al 2006) CFA describes the extent to which a set ofmeasured items actually reflects the theoretical latent construct

The construct validity test was performed to determine to what extent the items appearto measure the construct of interest instead of other constructs The convergent validity ofthe measurement items can be assessed by composite reliability and the variance extractedmeasure Composite reliability depicts the degree to which the item indicates a commonconstruct The variance extracted measure reflects the amount of variance in the itemscaptured by the construct

The CFA results showed that the standardised parameter estimates were higher than070 and the signs of parameter estimation were all in the same direction to measure specificlatent variables

The composite reliability correlation average variance extracted (AVE) and square root ofthe AVE were calculated and presented in Table III The results revealed that the compositereliability of all of the constructs was greater than 072 and the output of AVE for themodel with independent and dependent variables exceeded 050 (Fornell and Larcker 1981)Hair et al (1995) and Carmines and Zeller (1988) recommended that composite reliability should

Construct CR AVE 1 2 3 4 5 6 7 8 9

Tangibles 080 082 090Empathy 081 082 0587 090Reliability andSecurity 072 067 0533 0429 081Convenience 078 079 0592 0716 0361 088Internet banking 093 085 0437 0355 0720 0305 092Overall servicequality 092 083 0505 0435 0698 0320 0666 091Trust 090 082 0467 0383 0713 0282 0626 0772 090Customersatisfaction 088 080 0500 0409 0594 0320 0571 0822 0744 089Bank reputation 082 073 0403 0234 0580 0222 0517 0641 0596 0587 085Notes CR composite reliability The values in the diagonal are the square root of the AVE po001

Table IIIComposite reliability

average varianceextracted correlation

793

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

be greater than 070 and AVE should be greater than 050 to indicate construct validity In orderto evaluate discriminant validity this study compared the square root of each constructrsquos AVEsto its correlation with other variables (Chin 1998) The results showed that all items were loadedsignificantly on their predefined constructs and that the construct correlations were all belowthe square root of AVE for each construct If the square root of the AVE for each construct islarger than the correlation between the construct and any other construct in the model then themeasures should be considered to possess adequate discriminant validity (Fornell and Larcker1981) Thus our results proved the reliability of the data and convergent validity

Structural model and hypothesis testingAfter conducting the validity and reliability tests for all the constructs through themeasurement model it is also necessary to demonstrate the overall fit of the structuralmodel (see Figure 2) In this study the hypothesised model was assessed using multiplemodel-fit measures to assess its overall goodness of fit

The structural model revealed an adequate model fit with the data The results in Table IVshow that χsup2df (246) TLI (091) CFI (092) IFI (092) RMSEA (006) and GFI (082) were aboveor quite close to the cut-off criteria The table also shows the recommended level of each index(Hair et al 2006 Meyers et al 2005) In this study the GFI values of 070 and 082 were lowerthan the commonly cited thresholds of 090 however they were within range of therecommended levels Yen and Lu (2008) argued that a GFI ranging from 080 to 090 could beinterpreted as a reasonable fit In Table IV all the model-fit indices on the measurement andstructural model were above or quite close to the cut-off criteria suggested by Hair et al (2006)This indicates that all the data fit reasonably well with the proposed model Thus it can beconcluded that the models are valid and we can continue to analyse the outcome of thehypothesised effects

Results of hypotheses testingThe relationship between the independent variables and overall SERVQUAL wasinvestigated Table V summarises the results of the hypothesised relationships As shown in

Figure 2Structural model

794

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

computed by equally weighing the mean scores of all of the items The analysis shows that ona seven-point scale the mean scores of the independent variables range from 453 to 519which indicates that customers perceive that the quality of service being offered by the banksis moderate The mean score for internet banking is 519 (SDfrac14 102) which suggests thatcustomers find the service provided by the internet as highly important The mean score foroverall SERVQUAL is 495 (SDfrac14 087) which implies that the customers of banks indicatethat the overall SERVQUAL is moderate The mean score for trust is 525 (SDfrac14 086)suggesting that the customers find the service provider trustworthy The results of theexploratory factor analysis show that the factor loadings for all items are greater than 050and each of these items load strongly onto their respective associated factors

Measurement modelIn order to achieve an adequate goodness of fit on the measurement model and identifypossible problems this study assessed the path estimates standardised residuals andmodification indices of the measurement model (Hair et al 2006) The assessment of thestandardised regression weight indicates that all items were loaded high within theirconstructs which was within the acceptable values of 070 and above except for threeitems thus these items were deemed unsatisfactory (Hair et al 2006) and deleted from themeasurement model In terms of the assessment of the standardised residual values theresults indicated that all of the items have standardised residual values of less than 25with the exception of one item from reliability and security which was deleted from themodel The modification indices assessment shows the co-variance between some of theitems in the tangibility and empathy construct with high error co-variance betweenthese indicators The estimation of a coefficient may be considered removed fromthe measurement model if the modification indices value is equal to 4 or greater(Hair et al 2006) The substantial modification indices value is assumed to be 788 for a

Constructs Item statements Mean SD αFactorloading

Trust The bank staff are trustworthy 525 086 0918 0839The bank treats me in an honest way in every transaction 0840I feel safe in my transactions with the bank 0865The bank will not let other people know my account balance 0817Bank tellers accurately verify all transaction requests 0842Overall I have complete trust in my bank 0855

Customersatisfaction

The services of this bank meet my expectations 501 085 0883 0827I did the right thing when I chose this bank for its services 0861I am satisfied with the quality of the bankrsquos services 0859I am satisfied with the various bonus link programmes ofthe bank 0614I am satisfied with the interactions that I have had with the bank 0818The bank satisfies my needs 0830

Bankreputation

I will continue to patronize this bank even if the servicecharges are increased 459 099 0874 0769I am willing to pay more for using the services of this bank 0832To me this bank would rank first among the other banks 0828The bank I patronize reflects a lot about who I am 0845This bank has a good reputation in this industry 0692The bank does what it promises for its customers 0736

Note Scores based on a seven-point scale ranging from 1frac14 strongly disagree to 7frac14 strongly agreeTable II

792

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

significant model improvement Based on the results of the aforementioned assessmentthese items were dropped from the initial measurement model in order to improve themodelrsquos fit Furthermore these items add very little explanatory power to themeasurement model and thus they were removed from further analysis The estimatedparameters were all statistically significant between the latent and measured variablesThe results of the measurement model ndash χsup2df (253) TLI (091) CFI (091) IFI (091)RMSEA (006) and GFI (082) ndash indicate the acceptable model fit of the data

Convergent and discriminant validityAccording to Hair et al (1995) uni-dimensionality should always be assessed prior toexamining validity This is due to the fact that the analysis of validity is based on theassumption of uni-dimensionality (Nunnally and Bernstein 1994) In order to test foruni-dimensionality the confirmatory factor analysis (CFA) was conducted (Anderson andGerbing 1991) through SEM AMOS 180 to ascertain that each item in the model representsthe same measure (Ahire et al 1996) SEM takes a confirmatory approach rather than anexploratory approach to analyse data and provide a confirmatory test of measurement theoryfor the constructs SEM explains how measured variables logically and systematicallyrepresent the constructs involved in the theoretical model This study applied thepre-validated measurement to prior studies thus CFA is the most appropriate approach inassessing a constructrsquos validity (Hair et al 2006) CFA describes the extent to which a set ofmeasured items actually reflects the theoretical latent construct

The construct validity test was performed to determine to what extent the items appearto measure the construct of interest instead of other constructs The convergent validity ofthe measurement items can be assessed by composite reliability and the variance extractedmeasure Composite reliability depicts the degree to which the item indicates a commonconstruct The variance extracted measure reflects the amount of variance in the itemscaptured by the construct

The CFA results showed that the standardised parameter estimates were higher than070 and the signs of parameter estimation were all in the same direction to measure specificlatent variables

The composite reliability correlation average variance extracted (AVE) and square root ofthe AVE were calculated and presented in Table III The results revealed that the compositereliability of all of the constructs was greater than 072 and the output of AVE for themodel with independent and dependent variables exceeded 050 (Fornell and Larcker 1981)Hair et al (1995) and Carmines and Zeller (1988) recommended that composite reliability should

Construct CR AVE 1 2 3 4 5 6 7 8 9

Tangibles 080 082 090Empathy 081 082 0587 090Reliability andSecurity 072 067 0533 0429 081Convenience 078 079 0592 0716 0361 088Internet banking 093 085 0437 0355 0720 0305 092Overall servicequality 092 083 0505 0435 0698 0320 0666 091Trust 090 082 0467 0383 0713 0282 0626 0772 090Customersatisfaction 088 080 0500 0409 0594 0320 0571 0822 0744 089Bank reputation 082 073 0403 0234 0580 0222 0517 0641 0596 0587 085Notes CR composite reliability The values in the diagonal are the square root of the AVE po001

Table IIIComposite reliability

average varianceextracted correlation

793

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

be greater than 070 and AVE should be greater than 050 to indicate construct validity In orderto evaluate discriminant validity this study compared the square root of each constructrsquos AVEsto its correlation with other variables (Chin 1998) The results showed that all items were loadedsignificantly on their predefined constructs and that the construct correlations were all belowthe square root of AVE for each construct If the square root of the AVE for each construct islarger than the correlation between the construct and any other construct in the model then themeasures should be considered to possess adequate discriminant validity (Fornell and Larcker1981) Thus our results proved the reliability of the data and convergent validity

Structural model and hypothesis testingAfter conducting the validity and reliability tests for all the constructs through themeasurement model it is also necessary to demonstrate the overall fit of the structuralmodel (see Figure 2) In this study the hypothesised model was assessed using multiplemodel-fit measures to assess its overall goodness of fit

The structural model revealed an adequate model fit with the data The results in Table IVshow that χsup2df (246) TLI (091) CFI (092) IFI (092) RMSEA (006) and GFI (082) were aboveor quite close to the cut-off criteria The table also shows the recommended level of each index(Hair et al 2006 Meyers et al 2005) In this study the GFI values of 070 and 082 were lowerthan the commonly cited thresholds of 090 however they were within range of therecommended levels Yen and Lu (2008) argued that a GFI ranging from 080 to 090 could beinterpreted as a reasonable fit In Table IV all the model-fit indices on the measurement andstructural model were above or quite close to the cut-off criteria suggested by Hair et al (2006)This indicates that all the data fit reasonably well with the proposed model Thus it can beconcluded that the models are valid and we can continue to analyse the outcome of thehypothesised effects

Results of hypotheses testingThe relationship between the independent variables and overall SERVQUAL wasinvestigated Table V summarises the results of the hypothesised relationships As shown in

Figure 2Structural model

794

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

significant model improvement Based on the results of the aforementioned assessmentthese items were dropped from the initial measurement model in order to improve themodelrsquos fit Furthermore these items add very little explanatory power to themeasurement model and thus they were removed from further analysis The estimatedparameters were all statistically significant between the latent and measured variablesThe results of the measurement model ndash χsup2df (253) TLI (091) CFI (091) IFI (091)RMSEA (006) and GFI (082) ndash indicate the acceptable model fit of the data

Convergent and discriminant validityAccording to Hair et al (1995) uni-dimensionality should always be assessed prior toexamining validity This is due to the fact that the analysis of validity is based on theassumption of uni-dimensionality (Nunnally and Bernstein 1994) In order to test foruni-dimensionality the confirmatory factor analysis (CFA) was conducted (Anderson andGerbing 1991) through SEM AMOS 180 to ascertain that each item in the model representsthe same measure (Ahire et al 1996) SEM takes a confirmatory approach rather than anexploratory approach to analyse data and provide a confirmatory test of measurement theoryfor the constructs SEM explains how measured variables logically and systematicallyrepresent the constructs involved in the theoretical model This study applied thepre-validated measurement to prior studies thus CFA is the most appropriate approach inassessing a constructrsquos validity (Hair et al 2006) CFA describes the extent to which a set ofmeasured items actually reflects the theoretical latent construct

The construct validity test was performed to determine to what extent the items appearto measure the construct of interest instead of other constructs The convergent validity ofthe measurement items can be assessed by composite reliability and the variance extractedmeasure Composite reliability depicts the degree to which the item indicates a commonconstruct The variance extracted measure reflects the amount of variance in the itemscaptured by the construct

The CFA results showed that the standardised parameter estimates were higher than070 and the signs of parameter estimation were all in the same direction to measure specificlatent variables

The composite reliability correlation average variance extracted (AVE) and square root ofthe AVE were calculated and presented in Table III The results revealed that the compositereliability of all of the constructs was greater than 072 and the output of AVE for themodel with independent and dependent variables exceeded 050 (Fornell and Larcker 1981)Hair et al (1995) and Carmines and Zeller (1988) recommended that composite reliability should

Construct CR AVE 1 2 3 4 5 6 7 8 9

Tangibles 080 082 090Empathy 081 082 0587 090Reliability andSecurity 072 067 0533 0429 081Convenience 078 079 0592 0716 0361 088Internet banking 093 085 0437 0355 0720 0305 092Overall servicequality 092 083 0505 0435 0698 0320 0666 091Trust 090 082 0467 0383 0713 0282 0626 0772 090Customersatisfaction 088 080 0500 0409 0594 0320 0571 0822 0744 089Bank reputation 082 073 0403 0234 0580 0222 0517 0641 0596 0587 085Notes CR composite reliability The values in the diagonal are the square root of the AVE po001

Table IIIComposite reliability

average varianceextracted correlation

793

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

be greater than 070 and AVE should be greater than 050 to indicate construct validity In orderto evaluate discriminant validity this study compared the square root of each constructrsquos AVEsto its correlation with other variables (Chin 1998) The results showed that all items were loadedsignificantly on their predefined constructs and that the construct correlations were all belowthe square root of AVE for each construct If the square root of the AVE for each construct islarger than the correlation between the construct and any other construct in the model then themeasures should be considered to possess adequate discriminant validity (Fornell and Larcker1981) Thus our results proved the reliability of the data and convergent validity

Structural model and hypothesis testingAfter conducting the validity and reliability tests for all the constructs through themeasurement model it is also necessary to demonstrate the overall fit of the structuralmodel (see Figure 2) In this study the hypothesised model was assessed using multiplemodel-fit measures to assess its overall goodness of fit

The structural model revealed an adequate model fit with the data The results in Table IVshow that χsup2df (246) TLI (091) CFI (092) IFI (092) RMSEA (006) and GFI (082) were aboveor quite close to the cut-off criteria The table also shows the recommended level of each index(Hair et al 2006 Meyers et al 2005) In this study the GFI values of 070 and 082 were lowerthan the commonly cited thresholds of 090 however they were within range of therecommended levels Yen and Lu (2008) argued that a GFI ranging from 080 to 090 could beinterpreted as a reasonable fit In Table IV all the model-fit indices on the measurement andstructural model were above or quite close to the cut-off criteria suggested by Hair et al (2006)This indicates that all the data fit reasonably well with the proposed model Thus it can beconcluded that the models are valid and we can continue to analyse the outcome of thehypothesised effects

Results of hypotheses testingThe relationship between the independent variables and overall SERVQUAL wasinvestigated Table V summarises the results of the hypothesised relationships As shown in

Figure 2Structural model

794

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

be greater than 070 and AVE should be greater than 050 to indicate construct validity In orderto evaluate discriminant validity this study compared the square root of each constructrsquos AVEsto its correlation with other variables (Chin 1998) The results showed that all items were loadedsignificantly on their predefined constructs and that the construct correlations were all belowthe square root of AVE for each construct If the square root of the AVE for each construct islarger than the correlation between the construct and any other construct in the model then themeasures should be considered to possess adequate discriminant validity (Fornell and Larcker1981) Thus our results proved the reliability of the data and convergent validity

Structural model and hypothesis testingAfter conducting the validity and reliability tests for all the constructs through themeasurement model it is also necessary to demonstrate the overall fit of the structuralmodel (see Figure 2) In this study the hypothesised model was assessed using multiplemodel-fit measures to assess its overall goodness of fit

The structural model revealed an adequate model fit with the data The results in Table IVshow that χsup2df (246) TLI (091) CFI (092) IFI (092) RMSEA (006) and GFI (082) were aboveor quite close to the cut-off criteria The table also shows the recommended level of each index(Hair et al 2006 Meyers et al 2005) In this study the GFI values of 070 and 082 were lowerthan the commonly cited thresholds of 090 however they were within range of therecommended levels Yen and Lu (2008) argued that a GFI ranging from 080 to 090 could beinterpreted as a reasonable fit In Table IV all the model-fit indices on the measurement andstructural model were above or quite close to the cut-off criteria suggested by Hair et al (2006)This indicates that all the data fit reasonably well with the proposed model Thus it can beconcluded that the models are valid and we can continue to analyse the outcome of thehypothesised effects

Results of hypotheses testingThe relationship between the independent variables and overall SERVQUAL wasinvestigated Table V summarises the results of the hypothesised relationships As shown in

Figure 2Structural model

794

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

the table tangibles empathy internet banking and reliability and security have a positiveand significant influence on the overall SERVQUAL thus supporting H1 H2 H3 and H5This indicates that tangibles empathy internet banking and reliability and security are allimportant factors that influence customer perception of the overall SERVQUAL receivedfrom the bank These factors accounted for 73 per cent of variance in the overallSERVQUAL Reliability and security was a stronger predictor of the overall SERVQUALThe results in Table V show that hypothesis H4 is not supported The result shows that thecoefficient from convenience to overall SERVQUAL is not statistically significant with avery weak standardised estimate ( βfrac14 0013 po078) A possible explanation is thatcustomers are more prone to utilising online services and devices making convenienceirrelevant vis-agrave-vis their perception of the quality of services offered by banks

H6-H8 are concerned with the direct effect of perceived overall SERVQUAL on trustcustomer satisfaction and a bankrsquos reputation It is observed that the overall SERVQUALhas a positive and significant effect on trust ( βfrac14 091 and po000) customer satisfaction( βfrac14 092 and po000) and bank reputation ( βfrac14 051 and po000) thus supporting H6-H8 This indicates that the overall SERVQUAL is a significant contributor in buildingcustomer trust in relation to banks and customers will be satisfied if the perceived overallSERVQUAL is high Our results also suggest that good overall SERVQUAL is an importantaspect in enhancing a bankrsquos reputation

Discussion and implicationsBased on the work of Caruana (2002) Bahia and Nantel (2000) and Lee and Moghavvemi(2015) this study presented and tested an empirical study of a model of perceived overallSERVQUAL in the banking industry particularly in the Malaysian context This researchidentified dimensions of SERVQUAL (ie tangibles empathy reliability and security

Quality-of-fit measure Recommended value Measurement model Structural model

χsup2df ⩽ 300 253 247TLI ⩾ 090 091 091CFI ⩾ 090 091 092IFI ⩾ 090 091 092RMSEA ⩽ 008 006 006GFI ⩾ 090 080 081Notes The ratio of χsup2 to degree-of-freedom (df) TLI Tucker-Lewis index CFI comparative fit indexIFI incremental fit index RMSEA root mean square error of approximation GFI goodness of fit index

Table IVGoodness of fit indices

of the measurementand structural model

Constructs Hypotheses β SE CR p-value Support

Tangibles rarr Overall service quality H1 010 006 198 004 YesEmpathy rarr Overall service quality H2 024 007 427 YesReliability and security rarr Overall service quality H3 041 007 642 YesConvenience rarr Overall service quality H4 001 003 002 078 NoInternet banking rarr Overall service quality H5 023 004 448 YesOverall service quality rarr Trust H6 091 005 1644 YesOverall service quality rarr Satisfaction H7 092 005 1511 YesOverall service quality rarr Imagereputation H8 051 006 855 YesNotes βfrac14 standardized regression weight SE standardized error CR critical ratio po001po0001

Table VHypotheses

testing results

795

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

and internet banking) that influence the overall perceived SERVQUAL and examinehow these overall perceptions will eventually influence customer trust customersatisfaction and bank reputation being valid and reliable in the retail banking industryKnowledge from the findings of this study is critical to practitioners and academics alikeespecially in the context of accurately measuring SERVQUAL in order to betterunderstand its essential antecedents and consequences for improving quality to achieve acompetitive advantage

Our findings confirm that all hypotheses (H1-H8) were supported and confirmed albeitH4 was not supported This research suggested a number of implications to the theoryFirst this study confirms that there are four dimensions (ie tangibles empathy reliabilityand security and internet banking) of SERVQUAL that influence the perceived overallSERVQUAL in banking Second this study confirms that the perceived overall SERVQUALpositively effects customer trust customer satisfaction and bank reputation This studyalso confirmed the theory of expectancy of disconfirmation on the possible relationshipbetween SERVQUAL and satisfaction and behavioural outcome This study has presented amodel of perceived overall SERVQUAL pertaining to the banking industry This researchexplains how the dimensions of SERVQUAL influence the overall perceived SERVQUALand how these overall perceptions will eventually influence customer trust customersatisfaction and reputation The significant relationship between the overall perceivedSERVQUAL and customer trust indicates that when customers perceive the overallSERVQUAL to be high they will trust the banks more which results in satisfied customersand better bank reputations The findings of this study are consistent with previous studiesFor example Cronin et al (2000) reported that SERVQUAL is an important driver of overallperceived SERVQUAL

Second our results also suggest that perceived overall SERVQUAL be represented bytangibles empathy reliability while security and internet banking is significantly related tocustomer satisfaction customer trust and bank reputation The significant relationshipbetween perceived overall SERVQUAL and customer satisfaction trust and bankreputation indicates that the quality performance of tangibles empathy reliability andsecurity and internet banking is important for banks to satisfy customer increase customertrust and enhance the perception of good bank reputation of bank The findings on thesignificant relationship between perceived overall SERVQUAL and trust also support Singhand Sirdeshmukh (2000) and Amin et al (2013) both of whom found that SERVQUAL isessential in building trust In the context of the banking industry trust is defined as a bankbeing trustworthy honest practices integrity and is reliable in delivering service to itscustomers The test results indicate that there is enough empirical evidence to state that theoverall SERVQUAL significantly enhances customer trust

The significant relationship between perceived overall SERVQUAL and customersatisfaction supporting the previous research by Spring and Mackoy (1996)Gonzaacutelez et al (2007) McDougall and Levesque (2000) and Glaveli et al (2006)The positive relationship between perceived overall perception SERVQUAL and customersatisfaction suggests that customers are more likely to be satisfied with their bank whenthe perceived overall SERVQUAL is high This finding suggests that customer will besatisfied with a bank when service performance being delivered met their needs andexpectations Finally our findings on the relationship between dimensionsrsquo overallSERVQUAL and bank reputation are supported by Wang et al (2003)

Overall our research contributes to theoretical implications Specifically it examines thespecific dimensions of SERVQUAL and its influence on the perceived overall SERVQUALWe also provide an empirical examination of the direct relationship between the perceivedoverall SERVQUAL and customer trust customer satisfaction and bank reputationThis empirical investigation forms a novel contribution to the literature

796

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

With respect to managerial implications this study help managers identify the specificdimensions of SERVQUAL (ie tangible reliability and security empathy and internetbanking) which will allow them to improve the overall SERVQUAL of bankingThis research has provided managers with a model to help them measure SERVPERFThis suggests that banks should not sacrifice personnel quality (ie staff professionalismand training etc) and tangible quality to maximise profitability

Tangibility has been shown to be one of the dimensions of SERVQUAL This means thatcustomers need more tangibility to identify services where value is created in their physicalpresence on the service process for example in the context of banking This would suggestthat banks should provide adequate infrastructure and facilities such as parking space andATMs modern-looking equipment in the bank attractive brochures and statements andcomfortable lobby area in order to gain trust increase customer satisfaction and enhanceperception of better reputation

Furthermore this study confirmed that reliability and security construct having astrong impact on the perceived overall SERVQUAL This indicates that the banks need toaddress reliability and security concerns in the context of the ability to perform servicesaccurately and without error and the banksrsquo ability to inspire feeling of securityFor example banks should maintain error-free records (eg accurate bills and statements)keep confidentiality of account and privacy of customers provide adequate physicalsecurity and alert customers quickly for any suspicious or fraudulent transaction In mostcases of services evaluation customers expect service processes to be reliable (Chowdharyand Prakash 2007)

Empathy is clearly regarded as important to the perceived overall SERVQUALCustomers expect the banks to personalise their attention For example banks should traintheir staff to always respond to customer request understand customersrsquo specific needs befriendly and polite responsive to customer complaints and maintain politeness whenhandling customers

Finally this study empirically confirmed that internet banking was found to have aconsiderable effect on the perceived overall SERVQUAL in the proposed relations This maybe due to the majority of customers searching for internet banking facilities making it a keydeterminant of overall SERVQUAL This suggests that bank management should make theeffort to promote online banking in their respective marketing strategy For example banksshould provide adequate security features quick transactions appropriate confirmationconcerning the completion of transactions and user-friendly features

Although our findings agree with the previous findings on SERVQUAL we did not findany significant support for the impact of convenience on the overall SERVQUAL The mostpossible explanation is that customers do not consider convenient location of banksworking hours the number of ATM to satisfy build trust and have a good reputation

As such these dimensions should be continuously monitored in order to build customertrust improve customer satisfaction and enhance the reputation of an organisationBy carefully focussing on these dimensions managers would be able to build enduringrelationships with their customers To strengthen competitiveness it is recommended thatbanks should not just focus on customer satisfaction but also emphasise SERVQUAL(tangibles empathy reliability and security and internet banking) in order to achieve highlevels of perceived overall SERVQUAL and trust and the reputation of the banks In mostservice industry eg banking an improvement of SERVQUAL will certainly contribute topositive reputation (Wang et al 2003)

All in all a proper understanding of the determinants and consequences of perceivedoverall SERVQUAL is essential to the organisation in order to be competitive As a result ofthis further research exploring the relationship between SERVQUAL and trust customersatisfaction and bank reputation are clearly necessary and appropriate

797

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Conclusion limitations and future researchCustomers are the core focus of banks Thus it is essential for the banksrsquo management tounderstand how customersrsquo perceive overall SERVQUAL Due to the fact that banks do notprovide tangible products their SERVQUAL is usually assessed by measures of the service-providerrsquos relationship with customers Thus the perception will affect customer trust inbanks customer satisfaction and a bankrsquos reputation SERVQUAL can be used as a tool todistinguish provide a competitive edge and increase the market size of the banks

Furthermore a high-quality bank-customer relationship can help bank serve customersin a more satisfactory manner and customers are more likely to trust a bank which willultimately enhance a bankrsquos reputation This study examines the SERVQUAL issues in theMalaysian banking industry from the perspective of customers Based on the data furnishedby bank customers in Malaysia and the subsequent analysis some important findings weremade It is therefore important for local banks to improve SERVQUAL if they are to buildand enhance customer trust satisfaction and reputation This would attract a larger shareof profitable customers and maintain a sustainable competitive advantage in the long run inthe banking industry

This study also found that customer experience on the overall SERVQUALsignificantly affects customersrsquo trust towards a bank customer satisfaction and bankreputation This suggests that customer perception of the overall SERVQUAL is anotherstrategy that banks should emphasise as high-quality service results in customer trustsatisfied customers and enhanced bank reputation This study is a preliminary attempt toexplore the dynamic relationship between service-related factors tangibles empathyreliability and security convenience internet banking overall SERVQUAL bankreputation trust and customer satisfaction There are however limitations to the currentstudy This study only identified five dimensions of SERVQUAL future research shouldconsider another dimensions of SERVQUAL that have potential to influence customersatisfaction trust and bank reputation This study also focussed on the banking industryGiven the diversity of the service industry these findings may have to be tested forapplicability in different service industries Most importantly the results indicated thatSERVQUAL might play an important role in producing a strong image and reputationtrust and satisfaction

References

Abdullah AMA and Kassim NM (2009) ldquoMeasuring perceived service quality in Qatari Islamicbanksrdquo Journal of International Business and Entrepreneurship Development Vol 4 Nos 12pp 90-106

Ahire SL Golhar DY andWaller MA (1996) ldquoDevelopment and validation of TQM implementationconstructsrdquo Decision Sciences Vol 27 No 1 pp 23-56

Akinci S Aksoy S and Atilgan E (2004) ldquoAdoption of internet banking among sophisticatedconsumer segments in an advanced developing countryrdquo International Journal of BankMarketing Vol 22 No 3 pp 212-232

Al-Hawari M and Ward T (2006) ldquoThe effect of automated service quality on Australian banksrsquofinancial performance and the mediating role of customer satisfactionrdquoMarketing Intelligence ampPlanning Vol 24 No 2 pp 127-147

Amin M Isa Z and Fontaine R (2013) ldquoIslamic banks contrasting the drivers of customersatisfaction on image trust and loyalty of Muslim and non-Muslim customers in MalaysiardquoInternational Journal of Bank Marketing Vol 31 No 2 pp 79-97

Anderson JC and Gerbing DY (1991) ldquoPredicting the performance of measures in a confirmatoryfactor analysis with a pre-test assessment of their substantive validitiesrdquo Journal of AppliedPsychology Vol 76 No 5 pp 732-740

798

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

and internet banking) that influence the overall perceived SERVQUAL and examinehow these overall perceptions will eventually influence customer trust customersatisfaction and bank reputation being valid and reliable in the retail banking industryKnowledge from the findings of this study is critical to practitioners and academics alikeespecially in the context of accurately measuring SERVQUAL in order to betterunderstand its essential antecedents and consequences for improving quality to achieve acompetitive advantage

Our findings confirm that all hypotheses (H1-H8) were supported and confirmed albeitH4 was not supported This research suggested a number of implications to the theoryFirst this study confirms that there are four dimensions (ie tangibles empathy reliabilityand security and internet banking) of SERVQUAL that influence the perceived overallSERVQUAL in banking Second this study confirms that the perceived overall SERVQUALpositively effects customer trust customer satisfaction and bank reputation This studyalso confirmed the theory of expectancy of disconfirmation on the possible relationshipbetween SERVQUAL and satisfaction and behavioural outcome This study has presented amodel of perceived overall SERVQUAL pertaining to the banking industry This researchexplains how the dimensions of SERVQUAL influence the overall perceived SERVQUALand how these overall perceptions will eventually influence customer trust customersatisfaction and reputation The significant relationship between the overall perceivedSERVQUAL and customer trust indicates that when customers perceive the overallSERVQUAL to be high they will trust the banks more which results in satisfied customersand better bank reputations The findings of this study are consistent with previous studiesFor example Cronin et al (2000) reported that SERVQUAL is an important driver of overallperceived SERVQUAL

Second our results also suggest that perceived overall SERVQUAL be represented bytangibles empathy reliability while security and internet banking is significantly related tocustomer satisfaction customer trust and bank reputation The significant relationshipbetween perceived overall SERVQUAL and customer satisfaction trust and bankreputation indicates that the quality performance of tangibles empathy reliability andsecurity and internet banking is important for banks to satisfy customer increase customertrust and enhance the perception of good bank reputation of bank The findings on thesignificant relationship between perceived overall SERVQUAL and trust also support Singhand Sirdeshmukh (2000) and Amin et al (2013) both of whom found that SERVQUAL isessential in building trust In the context of the banking industry trust is defined as a bankbeing trustworthy honest practices integrity and is reliable in delivering service to itscustomers The test results indicate that there is enough empirical evidence to state that theoverall SERVQUAL significantly enhances customer trust

The significant relationship between perceived overall SERVQUAL and customersatisfaction supporting the previous research by Spring and Mackoy (1996)Gonzaacutelez et al (2007) McDougall and Levesque (2000) and Glaveli et al (2006)The positive relationship between perceived overall perception SERVQUAL and customersatisfaction suggests that customers are more likely to be satisfied with their bank whenthe perceived overall SERVQUAL is high This finding suggests that customer will besatisfied with a bank when service performance being delivered met their needs andexpectations Finally our findings on the relationship between dimensionsrsquo overallSERVQUAL and bank reputation are supported by Wang et al (2003)

Overall our research contributes to theoretical implications Specifically it examines thespecific dimensions of SERVQUAL and its influence on the perceived overall SERVQUALWe also provide an empirical examination of the direct relationship between the perceivedoverall SERVQUAL and customer trust customer satisfaction and bank reputationThis empirical investigation forms a novel contribution to the literature

796

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

With respect to managerial implications this study help managers identify the specificdimensions of SERVQUAL (ie tangible reliability and security empathy and internetbanking) which will allow them to improve the overall SERVQUAL of bankingThis research has provided managers with a model to help them measure SERVPERFThis suggests that banks should not sacrifice personnel quality (ie staff professionalismand training etc) and tangible quality to maximise profitability

Tangibility has been shown to be one of the dimensions of SERVQUAL This means thatcustomers need more tangibility to identify services where value is created in their physicalpresence on the service process for example in the context of banking This would suggestthat banks should provide adequate infrastructure and facilities such as parking space andATMs modern-looking equipment in the bank attractive brochures and statements andcomfortable lobby area in order to gain trust increase customer satisfaction and enhanceperception of better reputation

Furthermore this study confirmed that reliability and security construct having astrong impact on the perceived overall SERVQUAL This indicates that the banks need toaddress reliability and security concerns in the context of the ability to perform servicesaccurately and without error and the banksrsquo ability to inspire feeling of securityFor example banks should maintain error-free records (eg accurate bills and statements)keep confidentiality of account and privacy of customers provide adequate physicalsecurity and alert customers quickly for any suspicious or fraudulent transaction In mostcases of services evaluation customers expect service processes to be reliable (Chowdharyand Prakash 2007)

Empathy is clearly regarded as important to the perceived overall SERVQUALCustomers expect the banks to personalise their attention For example banks should traintheir staff to always respond to customer request understand customersrsquo specific needs befriendly and polite responsive to customer complaints and maintain politeness whenhandling customers

Finally this study empirically confirmed that internet banking was found to have aconsiderable effect on the perceived overall SERVQUAL in the proposed relations This maybe due to the majority of customers searching for internet banking facilities making it a keydeterminant of overall SERVQUAL This suggests that bank management should make theeffort to promote online banking in their respective marketing strategy For example banksshould provide adequate security features quick transactions appropriate confirmationconcerning the completion of transactions and user-friendly features

Although our findings agree with the previous findings on SERVQUAL we did not findany significant support for the impact of convenience on the overall SERVQUAL The mostpossible explanation is that customers do not consider convenient location of banksworking hours the number of ATM to satisfy build trust and have a good reputation

As such these dimensions should be continuously monitored in order to build customertrust improve customer satisfaction and enhance the reputation of an organisationBy carefully focussing on these dimensions managers would be able to build enduringrelationships with their customers To strengthen competitiveness it is recommended thatbanks should not just focus on customer satisfaction but also emphasise SERVQUAL(tangibles empathy reliability and security and internet banking) in order to achieve highlevels of perceived overall SERVQUAL and trust and the reputation of the banks In mostservice industry eg banking an improvement of SERVQUAL will certainly contribute topositive reputation (Wang et al 2003)

All in all a proper understanding of the determinants and consequences of perceivedoverall SERVQUAL is essential to the organisation in order to be competitive As a result ofthis further research exploring the relationship between SERVQUAL and trust customersatisfaction and bank reputation are clearly necessary and appropriate

797

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Conclusion limitations and future researchCustomers are the core focus of banks Thus it is essential for the banksrsquo management tounderstand how customersrsquo perceive overall SERVQUAL Due to the fact that banks do notprovide tangible products their SERVQUAL is usually assessed by measures of the service-providerrsquos relationship with customers Thus the perception will affect customer trust inbanks customer satisfaction and a bankrsquos reputation SERVQUAL can be used as a tool todistinguish provide a competitive edge and increase the market size of the banks

Furthermore a high-quality bank-customer relationship can help bank serve customersin a more satisfactory manner and customers are more likely to trust a bank which willultimately enhance a bankrsquos reputation This study examines the SERVQUAL issues in theMalaysian banking industry from the perspective of customers Based on the data furnishedby bank customers in Malaysia and the subsequent analysis some important findings weremade It is therefore important for local banks to improve SERVQUAL if they are to buildand enhance customer trust satisfaction and reputation This would attract a larger shareof profitable customers and maintain a sustainable competitive advantage in the long run inthe banking industry

This study also found that customer experience on the overall SERVQUALsignificantly affects customersrsquo trust towards a bank customer satisfaction and bankreputation This suggests that customer perception of the overall SERVQUAL is anotherstrategy that banks should emphasise as high-quality service results in customer trustsatisfied customers and enhanced bank reputation This study is a preliminary attempt toexplore the dynamic relationship between service-related factors tangibles empathyreliability and security convenience internet banking overall SERVQUAL bankreputation trust and customer satisfaction There are however limitations to the currentstudy This study only identified five dimensions of SERVQUAL future research shouldconsider another dimensions of SERVQUAL that have potential to influence customersatisfaction trust and bank reputation This study also focussed on the banking industryGiven the diversity of the service industry these findings may have to be tested forapplicability in different service industries Most importantly the results indicated thatSERVQUAL might play an important role in producing a strong image and reputationtrust and satisfaction

References

Abdullah AMA and Kassim NM (2009) ldquoMeasuring perceived service quality in Qatari Islamicbanksrdquo Journal of International Business and Entrepreneurship Development Vol 4 Nos 12pp 90-106

Ahire SL Golhar DY andWaller MA (1996) ldquoDevelopment and validation of TQM implementationconstructsrdquo Decision Sciences Vol 27 No 1 pp 23-56

Akinci S Aksoy S and Atilgan E (2004) ldquoAdoption of internet banking among sophisticatedconsumer segments in an advanced developing countryrdquo International Journal of BankMarketing Vol 22 No 3 pp 212-232

Al-Hawari M and Ward T (2006) ldquoThe effect of automated service quality on Australian banksrsquofinancial performance and the mediating role of customer satisfactionrdquoMarketing Intelligence ampPlanning Vol 24 No 2 pp 127-147

Amin M Isa Z and Fontaine R (2013) ldquoIslamic banks contrasting the drivers of customersatisfaction on image trust and loyalty of Muslim and non-Muslim customers in MalaysiardquoInternational Journal of Bank Marketing Vol 31 No 2 pp 79-97

Anderson JC and Gerbing DY (1991) ldquoPredicting the performance of measures in a confirmatoryfactor analysis with a pre-test assessment of their substantive validitiesrdquo Journal of AppliedPsychology Vol 76 No 5 pp 732-740

798

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

With respect to managerial implications this study help managers identify the specificdimensions of SERVQUAL (ie tangible reliability and security empathy and internetbanking) which will allow them to improve the overall SERVQUAL of bankingThis research has provided managers with a model to help them measure SERVPERFThis suggests that banks should not sacrifice personnel quality (ie staff professionalismand training etc) and tangible quality to maximise profitability

Tangibility has been shown to be one of the dimensions of SERVQUAL This means thatcustomers need more tangibility to identify services where value is created in their physicalpresence on the service process for example in the context of banking This would suggestthat banks should provide adequate infrastructure and facilities such as parking space andATMs modern-looking equipment in the bank attractive brochures and statements andcomfortable lobby area in order to gain trust increase customer satisfaction and enhanceperception of better reputation

Furthermore this study confirmed that reliability and security construct having astrong impact on the perceived overall SERVQUAL This indicates that the banks need toaddress reliability and security concerns in the context of the ability to perform servicesaccurately and without error and the banksrsquo ability to inspire feeling of securityFor example banks should maintain error-free records (eg accurate bills and statements)keep confidentiality of account and privacy of customers provide adequate physicalsecurity and alert customers quickly for any suspicious or fraudulent transaction In mostcases of services evaluation customers expect service processes to be reliable (Chowdharyand Prakash 2007)

Empathy is clearly regarded as important to the perceived overall SERVQUALCustomers expect the banks to personalise their attention For example banks should traintheir staff to always respond to customer request understand customersrsquo specific needs befriendly and polite responsive to customer complaints and maintain politeness whenhandling customers

Finally this study empirically confirmed that internet banking was found to have aconsiderable effect on the perceived overall SERVQUAL in the proposed relations This maybe due to the majority of customers searching for internet banking facilities making it a keydeterminant of overall SERVQUAL This suggests that bank management should make theeffort to promote online banking in their respective marketing strategy For example banksshould provide adequate security features quick transactions appropriate confirmationconcerning the completion of transactions and user-friendly features

Although our findings agree with the previous findings on SERVQUAL we did not findany significant support for the impact of convenience on the overall SERVQUAL The mostpossible explanation is that customers do not consider convenient location of banksworking hours the number of ATM to satisfy build trust and have a good reputation

As such these dimensions should be continuously monitored in order to build customertrust improve customer satisfaction and enhance the reputation of an organisationBy carefully focussing on these dimensions managers would be able to build enduringrelationships with their customers To strengthen competitiveness it is recommended thatbanks should not just focus on customer satisfaction but also emphasise SERVQUAL(tangibles empathy reliability and security and internet banking) in order to achieve highlevels of perceived overall SERVQUAL and trust and the reputation of the banks In mostservice industry eg banking an improvement of SERVQUAL will certainly contribute topositive reputation (Wang et al 2003)

All in all a proper understanding of the determinants and consequences of perceivedoverall SERVQUAL is essential to the organisation in order to be competitive As a result ofthis further research exploring the relationship between SERVQUAL and trust customersatisfaction and bank reputation are clearly necessary and appropriate

797

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Conclusion limitations and future researchCustomers are the core focus of banks Thus it is essential for the banksrsquo management tounderstand how customersrsquo perceive overall SERVQUAL Due to the fact that banks do notprovide tangible products their SERVQUAL is usually assessed by measures of the service-providerrsquos relationship with customers Thus the perception will affect customer trust inbanks customer satisfaction and a bankrsquos reputation SERVQUAL can be used as a tool todistinguish provide a competitive edge and increase the market size of the banks

Furthermore a high-quality bank-customer relationship can help bank serve customersin a more satisfactory manner and customers are more likely to trust a bank which willultimately enhance a bankrsquos reputation This study examines the SERVQUAL issues in theMalaysian banking industry from the perspective of customers Based on the data furnishedby bank customers in Malaysia and the subsequent analysis some important findings weremade It is therefore important for local banks to improve SERVQUAL if they are to buildand enhance customer trust satisfaction and reputation This would attract a larger shareof profitable customers and maintain a sustainable competitive advantage in the long run inthe banking industry

This study also found that customer experience on the overall SERVQUALsignificantly affects customersrsquo trust towards a bank customer satisfaction and bankreputation This suggests that customer perception of the overall SERVQUAL is anotherstrategy that banks should emphasise as high-quality service results in customer trustsatisfied customers and enhanced bank reputation This study is a preliminary attempt toexplore the dynamic relationship between service-related factors tangibles empathyreliability and security convenience internet banking overall SERVQUAL bankreputation trust and customer satisfaction There are however limitations to the currentstudy This study only identified five dimensions of SERVQUAL future research shouldconsider another dimensions of SERVQUAL that have potential to influence customersatisfaction trust and bank reputation This study also focussed on the banking industryGiven the diversity of the service industry these findings may have to be tested forapplicability in different service industries Most importantly the results indicated thatSERVQUAL might play an important role in producing a strong image and reputationtrust and satisfaction

References

Abdullah AMA and Kassim NM (2009) ldquoMeasuring perceived service quality in Qatari Islamicbanksrdquo Journal of International Business and Entrepreneurship Development Vol 4 Nos 12pp 90-106

Ahire SL Golhar DY andWaller MA (1996) ldquoDevelopment and validation of TQM implementationconstructsrdquo Decision Sciences Vol 27 No 1 pp 23-56

Akinci S Aksoy S and Atilgan E (2004) ldquoAdoption of internet banking among sophisticatedconsumer segments in an advanced developing countryrdquo International Journal of BankMarketing Vol 22 No 3 pp 212-232

Al-Hawari M and Ward T (2006) ldquoThe effect of automated service quality on Australian banksrsquofinancial performance and the mediating role of customer satisfactionrdquoMarketing Intelligence ampPlanning Vol 24 No 2 pp 127-147

Amin M Isa Z and Fontaine R (2013) ldquoIslamic banks contrasting the drivers of customersatisfaction on image trust and loyalty of Muslim and non-Muslim customers in MalaysiardquoInternational Journal of Bank Marketing Vol 31 No 2 pp 79-97

Anderson JC and Gerbing DY (1991) ldquoPredicting the performance of measures in a confirmatoryfactor analysis with a pre-test assessment of their substantive validitiesrdquo Journal of AppliedPsychology Vol 76 No 5 pp 732-740

798

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Conclusion limitations and future researchCustomers are the core focus of banks Thus it is essential for the banksrsquo management tounderstand how customersrsquo perceive overall SERVQUAL Due to the fact that banks do notprovide tangible products their SERVQUAL is usually assessed by measures of the service-providerrsquos relationship with customers Thus the perception will affect customer trust inbanks customer satisfaction and a bankrsquos reputation SERVQUAL can be used as a tool todistinguish provide a competitive edge and increase the market size of the banks

Furthermore a high-quality bank-customer relationship can help bank serve customersin a more satisfactory manner and customers are more likely to trust a bank which willultimately enhance a bankrsquos reputation This study examines the SERVQUAL issues in theMalaysian banking industry from the perspective of customers Based on the data furnishedby bank customers in Malaysia and the subsequent analysis some important findings weremade It is therefore important for local banks to improve SERVQUAL if they are to buildand enhance customer trust satisfaction and reputation This would attract a larger shareof profitable customers and maintain a sustainable competitive advantage in the long run inthe banking industry

This study also found that customer experience on the overall SERVQUALsignificantly affects customersrsquo trust towards a bank customer satisfaction and bankreputation This suggests that customer perception of the overall SERVQUAL is anotherstrategy that banks should emphasise as high-quality service results in customer trustsatisfied customers and enhanced bank reputation This study is a preliminary attempt toexplore the dynamic relationship between service-related factors tangibles empathyreliability and security convenience internet banking overall SERVQUAL bankreputation trust and customer satisfaction There are however limitations to the currentstudy This study only identified five dimensions of SERVQUAL future research shouldconsider another dimensions of SERVQUAL that have potential to influence customersatisfaction trust and bank reputation This study also focussed on the banking industryGiven the diversity of the service industry these findings may have to be tested forapplicability in different service industries Most importantly the results indicated thatSERVQUAL might play an important role in producing a strong image and reputationtrust and satisfaction

References

Abdullah AMA and Kassim NM (2009) ldquoMeasuring perceived service quality in Qatari Islamicbanksrdquo Journal of International Business and Entrepreneurship Development Vol 4 Nos 12pp 90-106

Ahire SL Golhar DY andWaller MA (1996) ldquoDevelopment and validation of TQM implementationconstructsrdquo Decision Sciences Vol 27 No 1 pp 23-56

Akinci S Aksoy S and Atilgan E (2004) ldquoAdoption of internet banking among sophisticatedconsumer segments in an advanced developing countryrdquo International Journal of BankMarketing Vol 22 No 3 pp 212-232

Al-Hawari M and Ward T (2006) ldquoThe effect of automated service quality on Australian banksrsquofinancial performance and the mediating role of customer satisfactionrdquoMarketing Intelligence ampPlanning Vol 24 No 2 pp 127-147

Amin M Isa Z and Fontaine R (2013) ldquoIslamic banks contrasting the drivers of customersatisfaction on image trust and loyalty of Muslim and non-Muslim customers in MalaysiardquoInternational Journal of Bank Marketing Vol 31 No 2 pp 79-97

Anderson JC and Gerbing DY (1991) ldquoPredicting the performance of measures in a confirmatoryfactor analysis with a pre-test assessment of their substantive validitiesrdquo Journal of AppliedPsychology Vol 76 No 5 pp 732-740

798

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Annamalah S Munusamy J Chelliah S Sulaiman M and Pandian S (2011) ldquoService qualitytransformation and its impact on customer satisfaction and loyalty in Malaysian retail bankingsectorrdquo World Applied Sciences Journal Vol 15 No 10 pp 1361-1368

Awan HM Bukhari KS and Iqbal A (2011) ldquoService quality and customer satisfaction in thebanking sector a comparative study of conventional and Islamic banks in Pakistanrdquo Journal ofIslamic Marketing Vol 2 No 3 pp 203-223

Babakus E and Boller GW (1992) ldquoAn empirical assessment of the SERVQUAL scalerdquo Journal ofBusiness Research Vol 24 No 3 pp 253-268

Bahia K and Nantel J (2000) ldquoA reliable and valid measurement scale for the perceived servicequality of banksrdquo International Journal of Bank Marketing Vol 18 No 2 pp 84-91

Bank Negara Malaysia (2015a) ldquoFinancial sector developmentrdquo available at wwwbnmgovmych=en_fsdamppg=en_fsd_introampac=737 (accessed 18 June 2016)

Bank Negara Malaysia (2015b) ldquoMonthly statistical bulletin May 2015rdquo available at wwwbnmgovmyindexphpch=en_publication_catalogueamppg=en_publication_msbampmth=5ampyr=2015amplang=en (accessed 18 December 2015)

Barney JB and Hansen MH (1994) ldquoTrustworthiness as a source of competitive advantagerdquoStrategic Management Journal Vol 15 No S1 pp 175-190

Behara RS Fisher WW and Lemmink JG (2002) ldquoModelling and evaluating service qualitymeasurement using neural networksrdquo International Journal of Operations amp ProductionManagement Vol 22 No 10 pp 1162-1185

Brady MK and Cronin JJJ Jr (2001) ldquoSome new thoughts on conceptualizing perceived servicequality a hierarchical approachrdquo The Journal of Marketing Vol 65 No 3 pp 34-49

Carmines EG and Zeller RA (1988) Reliability and Validity Assessment Sage Beverly Hills CA

Caruana A (2002) ldquoService loyalty the effects of service quality and the mediating role of customersatisfactionrdquo European Journal of Marketing Vol 36 Nos 78 pp 811-828

Caruana A and Ewing MT (2010) ldquoHow corporate reputation quality and value influence onlineloyaltyrdquo Journal of Business Research Vol 63 No 9 pp 1103-1110

Chin WW (1998) ldquoThe partial least squares approach to structural equation modellingrdquoin Marcoulides GA (Ed) Modern Methods for Business Research Lawrence ErlbaumMahwah pp 295-358

Chowdhary N and Prakash M (2007) ldquoPrioritizing service quality dimensionsrdquo Managing ServiceQuality An International Journal Vol 17 No 5 pp 493-509

Cronin JJ Jr and Taylor SA (1992) ldquoMeasuring service quality a reexamination and extensionrdquoJournal of Marketing Vol 56 No 3 pp 55-68

Cronin JJ Brady MK and Hult GT (2000) ldquoAssessing the effect of quality value and customersatisfaction on consumer behavioural intentions in service environmentsrdquo Journal of RetailingVol 76 No 2 pp 193-218

Dawar N and Parker P (1994) ldquoMarketing universals consumersrsquo use of brand name price physicalappearance and retailer reputation as signals of product qualityrdquo The Journal of MarketingVol 58 No 2 pp 81-95

Edvardsson B (2005) ldquoService quality beyond cognitive assessmentrdquo Managing Service QualityAn International Journal Vol 15 No 2 pp 127-131

Eisingerich AB and Bell SJ (2008) ldquoPerceived service quality and customer trust does enhancingcustomersrsquo service knowledge matterrdquo Journal of Service Research Vol 10 No 3 pp 256-268

El-Manstrly D Paton R Velonstsou C and Moutinho L (2011) ldquoAn empirical investigation of therelative effect of trust and switching costs on service loyalty in the UK retail banking industryrdquoJournal of Financial Services Marketing Vol 16 No 4 pp 101-110

Estiri M Hosseini F Yazdani H and Nejad HJ (2011) ldquoDeterminants of customer satisfaction inIslamic banking evidence from Iranrdquo International Journal of Islamic and Middle EasternFinance and Management Vol 4 No 4 pp 295-307

799

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Fombrun CJ (1996) Reputation Realizing Value from the Corporate Image Harvard Business SchoolPress Boston MA

Fornell C and Larcker DF (1981) ldquoEvaluating structural equation models with unobservablevariables and measurement errorrdquo Journal of Marketing Research Vol 18 No 4 pp 39-50

Gilmore A (2003) Service Marketing and Management Sage Publications London

Glaveli N Petridou E Liassides C and Spathis C (2006) ldquoBank service quality evidence from fiveBalkan countriesrdquo Managing Service Quality Vol 16 No 4 pp 380-394

Gonzaacutelez MEA Comesantildea LR and Brea JAF (2007) ldquoAssessing tourist behavioral intentionsthrough perceived service quality and customer satisfactionrdquo Journal of Business ResearchVol 60 No 2 pp 153-160

Gotsi M and Wilson AM (2001) ldquoCorporate reputation seeking a definitionrdquo CorporateCommunications An International Journal Vol 6 No 1 pp 24-30

Graham P and Fearn H (2005) ldquoCorporate reputation what do consumers really care aboutrdquo Journalof Advertising Research Vol 45 No 3 pp 305-313

Groumlnroos C (1984) ldquoA service quality model and its marketing implicationsrdquo European Journal ofMarketing Vol 18 No 4 pp 36-44

Guo X Duff A and Hair M (2008) ldquoService quality measurement in the Chinese corporate bankingmarketrdquo International Journal of Bank Marketing Vol 26 No 5 pp 306-327

Gupta K and Stewart DW (1996) ldquoCustomer satisfaction and customer behavior the differential roleof brand and category expectationsrdquo Marketing Letters Vol 7 No 3 pp 249-263

Hair JF Jr Anderson RE Tatham RL and Black WC (1995) Multivariate Date Analysis withReadings 4th ed Prentice Hall Englewood Cliffs NJ

Hair JF Black WC Babin BJ Anderson RE and Tatham RL (2006) Multivariate Data AnalysisVol 6 Pearson Prentice Hall Upper Saddle River NJ

Hamzah ZL Alwi SFS and Othman MN (2014) ldquoDesigning corporate brand experience in anonline context a qualitative insightrdquo Journal of Business Research Vol 67 No 11 pp 2299-2310

Hu HH Kandampully J and Juwaheer TD (2009) ldquoRelationships and impacts of service qualityperceived value customer satisfaction and image an empirical studyrdquo The Service IndustriesJournal Vol 29 No 2 pp 111-125

Jamal A and Naser K (2002) ldquoCustomer satisfaction and retail banking an assessment of some of thekey antecedents of customer satisfaction in retail bankingrdquo The International Journal of BankMarketing Vol 20 Nos 45 pp 146-160

Jan MT and Abdullah K (2014) ldquoThe impact of technology CSFs on customer satisfaction and therole of trustrdquo International Journal of Bank Marketing Vol 32 No 5 pp 429-447

Joseph M McClure C and Joseph B (1999) ldquoService quality in the banking sector the impact oftechnology on service deliveryrdquo International Journal of Bank Marketing Vol 17 No 4 pp 182-193

Jun M and Cai S (2001) ldquoThe key determinants of internet banking service quality a contentanalysisrdquo International Journal of Bank Marketing Vol 19 No 7 pp 276-291

Kamal MA Ahmed Mustafi MA and Azad MM (2013) ldquoAn evaluation of factors influencing thecustomer loyalty in public banking sector of Bangladesh a case study on Agrani Janata andSonali Bank Ltdrdquo International Journal of Management Sciences Vol 1 No 5 pp 152-158

Kang GD and James J (2004) ldquoService quality dimensions an examination of Groumlnroosrsquos servicequality modelrdquo Managing Service Quality An International Journal Vol 14 No 4 pp 266-277

Karatepe O Yavas U and Babakus E (2015) ldquoMeasuring service quality of banks scale developmentand validationrdquo Journal of Retailing and Consumer Services Vol 12 No 5 pp 373-383

Kassim N and Abdullah NA (2010) ldquoThe effect of perceived service quality dimensions on customersatisfaction trust and loyalty in e-commerce settingsrdquo Asia Pacific Journal of Marketing andLogistics Vol 22 No 3 pp 351-371

800

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Koistinen K and Jaumlrvinen R (2009) ldquoConsumer observations on channel choices ndash competitivestrategies in Finnish grocery retailingrdquo Journal of Retailing and Consumer Services Vol 16No 4 pp 260-270

Korda AP and Snoj B (2010) ldquoDevelopment validity and reliability of perceived service quality inretail banking and its relationship with perceived value and customer satisfactionrdquo ManagingGlobal Transitions Vol 8 No 2 pp 187-205

Kumar M Fong TK and Charles V (2010) ldquoComparative evaluation of critical factors in deliveringservice quality of banksrdquo International Journal of Quality and Reliability Management Vol 27No 3 pp 351-377

Kumar M Fong TK and Manshor AT (2009) ldquoDetermining the relative importance of criticalfactors in delivering service quality of banks an application of dominance analysis inSERVQUAL modelrdquo Managing Service Quality Vol 19 No 2 pp 211-228

Ladhari R Ladhari I and Morales M (2011) ldquoBank service quality comparing Canadian and Tunisiancustomer perceptionsrdquo International Journal of Bank Marketing Vol 29 No 3 pp 224-246

Lau MM Cheung R Lam AYC and Chu YT (2013) ldquoMeasuring service quality in the bankingindustry a Hong Kong-based studyrdquo Contemporary Management Research Vol 9 No 3pp 263-282

Lee SP and Moghavvemi S (2015) ldquoThe dimension of service quality and its impact on customersatisfaction trust and loyalty a case of Malaysian banksrdquo Asian Journal of Business andAccounting Vol 8 No 2 pp 91-121

Lovelock CH (1996) Services Marketing 3rd ed Prentice-Hall London

Levy S and Hino H (2016) ldquoEmotional brand attachment a factor in customer-bank relationshipsrdquoInternational Journal of Bank Marketing Vol 34 No 2 pp 136-150

Liao Z and Cheung MT (2008) ldquoMeasuring consumer satisfaction in internet banking a coreframework what service-quality attributes internet banks offer to induce consumers to switch toonline transactions and keep using themrdquo Communications of the ACM Vol 51 No 4 pp 47-51

McDougall GHG and Levesque T (2000) ldquoCustomer satisfaction with services putting perceivedvalue into the equationrdquo Journal of Services Marketing Vol 14 No 5 pp 392-410

Maumlgi A and Julander CR (1996) ldquoPerceived service quality and customer satisfaction in a storeperformance framework an empirical study of Swedish grocery retailersrdquo Journal of Retailingand Consumer Services Vol 3 No 1 pp 33-41

Meyers L Pourbohloul B Newman M Skowronski D and Brunham R (2005) ldquoNetwork theory andSARS predicting outbreak diversityrdquo Journal of Theoretical Biology Vol 232 pp 71-81

Mistry SH (2013) ldquoMeasuring customer satisfaction in banking sector with special reference to banks ofSurat cityrdquo Asia Pacific Journal of Marketing amp Management Review Vol 2 No 7 pp 2319-2836

Mittal S Gera R and Batra DK (2015) ldquoAn evaluation of an integrated perspective of perceivedservice quality for retail banking services in Indiardquo International Journal of Bank MarketingVol 33 No 3 pp 330-350

Mols NP (2000) ldquoThe internet and services marketing ndash the case of Danish retail bankingrdquo InternetResearch Vol 10 No 1 pp 7-18

Monferrer-Tirado D Estrada-Guilleacuten M Fandos-Roig JC Moliner-Tena MA and Garciacutea JS (2016)ldquoService quality in bank during an economic crisisrdquo International Journal of Bank MarketingVol 34 No 2 pp 235-259

Nguyen N and LeBlanc G (2001) ldquoCorporate image and corporate reputation in customersrsquo retentiondecisions in servicesrdquo Journal of Retailing and Customer Services Vol 8 No 4 pp 227-236

Nunnally J and Bernstein I (1994) Psychometric Theory McGraw-Hill New York NY

Oliver RL (1989) ldquoProcessing of the satisfaction response in consumption a suggested frameworkand research propositionsrdquo Journal of Consumer Satisfaction Dissatisfaction and ComplainingBehavior Vol 2 No 1 pp 1-16

801

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Ou WM Abratt R and Dion P (2006) ldquoThe influence of retailer reputation on store patronagerdquoJournal of Retailing and Consumer Services Vol 13 No 3 pp 221-230

Parasuraman A Zeithaml VA and Berry L (1988) ldquoSERVQUAL a multiple-item scale formeasuring consumer perceptions of service qualityrdquo Journal of Retailing Vol 64 No 1 pp 12-40

Parasuraman A Zeithaml VA and Berry LL (1994) ldquoReassessment of expectations as a comparisonstandard in measuring service quality implications for further researchrdquo Journal of MarketingVol 58 No 1 pp 111-124

Pikkarainen K Pikkarainen T Karjaluoto H and Pahnila S (2006) ldquoThe measurement of end-usercomputing satisfaction of online banking services empirical evidence from FinlandrdquoInternational Journal of Bank Marketing Vol 24 No 3 pp 158-172

Purohit D and Srivastava J (2001) ldquoEffect of manufacturer reputation retailer reputation andproduct warranty on consumer judgments of product quality a cue diagnosticity frameworkrdquoJournal of Consumer Psychology Vol 10 No 3 pp 123-134

Rahman H (2013) ldquoCustomer satisfaction and loyalty a case study from the banking sectorrdquo CentralEuropean Business Review Vol 2 No 4 pp 15-23

Ravichandran K Bhargavi K and Kumar SA (2010) ldquoInfluence of service quality on bankingcustomersrsquo behavioural intentionsrdquo International Journal of Economics and Finance Vol 2 No 4pp 18-28

Reichheld F and Aspinall K (1993) ldquoBuilding high-loyalty business systemsrdquo Journal of RetailBanking Vol 15 No 4 pp 21-30

Reichheld FF (1996) ldquoLearning from customer defectionsrdquo Harvard Business Review Vol 74 No 2pp 56-69

Rod M Ashill NJ Shao J and Carruthers J (2009) ldquoAn examination of the relationship betweenservice quality dimensions overall internet banking service quality and customer satisfactiona New Zealand studyrdquo Marketing Intelligence amp Planning Vol 27 No 1 pp 103-126

Selnes F (1993) ldquoAn examination of the effect of product performance on brand reputationsatisfaction and loyaltyrdquo European Journal of Marketing Vol 27 No 9 pp 19-35

Shafie S Azmi WNW and Haron S (2004) ldquoAdopting and measuring customer service quality inIslamic banksrdquo Journal of Muamalat and Islamic Finance Research Vol 1 No 1 pp 1-12

Shanka MS (2012) ldquoBank service quality customer satisfaction and loyalty in Ethiopian bankingsectorrdquo Journal of Business Administration and Management Sciences Research Vol 1 No 1pp 1-9

Siddiqi KO (2011) ldquoInterrelations between service quality attributes customer satisfaction andcustomer loyalty in the retail banking sector in Bangladeshrdquo International Journal of Businessand Management Vol 6 No 3 pp 12-36

Singh J and Sirdeshmukh D (2000) ldquoAgency and trust mechanisms in customer satisfaction andloyalty judgementsrdquo Journal of Academy of Marketing Science Vol 28 No 1 pp 150-167

Spring RA and Mackoy RD (1996) ldquoAn empirical examination of a model of perceived servicequality and satisfactionrdquo Journal of Retailing Vol 72 No 2 pp 201-214

Stamenkov G and Dika Z (2015) ldquoA sustainable e-service quality modelrdquo Journal of Service Theoryand Practice Vol 25 No 4 pp 414-442

Sureshchandar GS Rajendran S and Anantharaman RN (2002) ldquoThe relationship between servicequality and customer satisfaction ndash a factor-specific approachrdquo Journal of Services MarketingVol 16 No 4 pp 363-379

Szymanski DM and Henard DH (2001) ldquoConsumer satisfaction a meta-analysis of the empiricalevidencerdquo Journal of the Academy of Marketing Science Vol 29 No 1 pp 16-35

Taylor SA and Baker TL (1994) ldquoAn assessment of the relationship between service quality andcustomer satisfaction in the formation of consumersrsquo purchase intentionsrdquo Journal of RetailingVol 70 No 2 pp 163-178

802

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Tsoukatos E and Mastrojianni E (2010) ldquoKey determinants of service quality in retail bankingrdquoEuroMed Journal of Business Vol 5 No 1 pp 85-100

Van Dyke TP Kappelman LA and Prybutok VR (1997) ldquoMeasuring information systems servicequality concerns on the use of the SERVQUAL questionnairerdquo MIS Quarterly Vol 21 No 2pp 195-208

Walsh G Mitchell VW Jackson PR and Beatty SE (2009) ldquoExamining the antecedents andconsequences of corporate reputation a customer perspectiverdquo British Journal of ManagementVol 20 No 2 pp 187-203

Wang Y Lo H-P and Hui YV (2003) ldquoThe antecedents of service quality and product quality andtheir influences on bank reputation evidence from the banking industry in Chinardquo ManagingService Quality An International Journal Vol 13 No 1 pp 72-78

Wartick SL (1992) ldquoThe relationship between intense media exposure and change in corporatereputationrdquo Business and Society Vol 31 No 1 pp 33-49

Yap BW Ramayah T and Wan Shahidan WN (2012) ldquoSatisfaction and trust on customer loyaltya PLS approachrdquo Business Strategy Series Vol 13 No 4 pp 154-167

Yen CH and Lu HP (2008) ldquoEffects of E-service quality on loyalty intention an empirical study inonline auctionrdquo Managing Service Quality Vol 8 No 2 pp 127-146

Yoon E Guffey HG and Kijewski V (1993) ldquoThe effects of information and company reputation onintentions to buy a business servicerdquo Journal of Business Research Vol 27 No 3 pp 215-228

Zafar M Zafar S Asif A Hunjra AI and Ahmad HM (2012) ldquoService quality customersatisfaction and loyalty an empirical analysis of banking sector in Pakistanrdquo InformationManagement and Business Review Vol 4 No 3 pp 159-167

Further reading

Boksberger PE and Melsen L (2011) ldquoPerceived value a critical examination of definitionsconcepts and measures for the service industryrdquo Journal of Services Marketing Vol 25 No 3pp 229-240

Byrne B (2001) Structural Equation Modelling with AMOS Lawrence Erlbaum Mahwah NJ

Camgoumlz Akdag H and Zineldin M (2011) ldquoStrategic positioning and quality determinants in bankingservicerdquo The TQM Journal Vol 23 No 4 pp 446-457

Chen TY and Chang HS (2005) ldquoReducing consumersrsquo perceived risk through banking servicequality cues in Taiwanrdquo Journal of Business and Psychology Vol 19 No 4 pp 521-539

Hair JF Black WC Babin BJ and Anderson RE (2010) Multivariate Data Analysis Prentice HallEnglewood Cliffs NJ

Levesque T and McDougall GHG (1996) ldquoDeterminants of customer satisfaction in retail bankingrdquoInternational Journal of Bank Marketing Vol 14 No 7 pp 12-20

Meyers L Gamst G and Guarino A (2006) Applied Multivariate Research Design and InterpretationSage Publications Thousand Oaks CA

Oliver RL (2010) Satisfaction A Behavioral Perspective on the Consumer ME Sharpe Armonk NY

Page G and Fearn H (2005) ldquoCorporate reputation what do consumers really care aboutrdquo Journal ofAdvertising Research Vol 45 No 3 pp 305-313

Roche ID (2014) ldquoAn empirical investigation of internet banking service quality corporate image andthe impact on customer satisfaction with special reference to Sri Lankan banking sectorrdquoJournal of Internet Banking and Commerce Vol 19 No 2 pp 1-18

Srinivasan SS Anderson R and Ponnavolu K (2002) ldquoCustomer loyalty in e-commercean exploration of its antecedents and consequencesrdquo Journal of Retailing Vol 78 No 1pp 41-50

Szymanski D and Hise R (2000) ldquoE-satisfaction an initial examinationrdquo Journal of Retailing Vol 3No 76 pp 309-322

803

Perceivedoverall service

quality

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)

Yavas U Babakus E Deitz GD and Jjha S (2014) ldquoCorrelates of customer loyalty to financialinstitutions a case studyrdquo Journal of Consumer Marketing Vol 31 No 3 pp 218-227

Zeithaml VA (1988) ldquoConsumer perceptions of price quality and value a means-end model andsynthesis of evidencerdquo Journal of Marketing Vol 52 No 3 pp 2-22

Zhu FX Wymer JR and Chem I (2002) ldquoIT-based bank services and services quality in consumerbankingrdquo International Journal of Service Management Vol 10 No 13 pp 69-90

About the authorsDr Zalfa Laili Hamzah is currently serves as the Senior Lecturer in the Marketing Department of theFaculty of Business and Accountancy at the University of Malaya Kuala Lumpur where she receivedher PhD Degree in Corporate Branding She has taught courses at postgraduate programme inMarketing Management Brand Management and Services Marketing Her research interests arecorporate brand corporate image servicebrand management consumer behaviour and onlinebranding Dr Zalfa has presented her research papers at several international conferences including theThought Leader Conference of Brand Management Academy of Marketing London ANZMACInternational Corporate Identity Group Dr Zalfa Laili Hamzah is the corresponding author and can becontacted at zalfaumedumy

Dr Siew Peng Lee is an Assistant Professor of Finance at the Faculty of Accountancy andManagement Universiti Tunku Abdul Rahman Malaysia She also served as an Ad Hoc Referee fornational and international journals Her primary research interest is in corporate finance and Islamicbanking and finance She has researched and published in national and international journals andpresented papers at conferences

Dr Sedigheh Moghavvemi is a Senior Lecturer within the Faculty of Business and AccountancyUniversity of Malaya Her primary research activities involve the area of adoption behaviour ofinnovative information systems by individuals and organisations the area of information managementand it effect on organisations and also tourism Dr Sedigheh has researched on the effect of informationtechnology on tourism industry Islamic medical tourism Halal tourism and the impact of socialnetwork on Islamic medical tourism

For instructions on how to order reprints of this article please visit our websitewwwemeraldgrouppublishingcomlicensingreprintshtmOr contact us for further details permissionsemeraldinsightcom

804

IJBM355

Dow

nloa

ded

by U

nive

rsity

of

Mal

aya

At 0

751

15

Aug

ust 2

017

(PT

)