YOM POST GRADUATE COLLEGE

MASTERS OF SCIENCE IN DEVELOPMENT ECONOMICS (DEC)

THE EFFECT OF E-BANKING SERVICE QUALITY ON CUSTOMER

SATISFACTION (THE CASE OF COMMERCIAL BANK OF ETHIOPIA,
SELECTED BAHIR DAR BRANCHES)

A THESIS:

SUBMITTED TO YOM POSTGRADUATE COLLEGE, FOR THE PARTIAL

FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF MASTERS
OF SCIENCE IN DEVELOPMENT ECONOMICS

BY:

BIRHAN FENTA

ADVISOR:
BELAYNEH KASSA (PhD)

SEPTEMBER, 2022
BAHIR DAR, ETHIOPIA

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 YOM POST GRADUATE COLLEGE

MASTERS OF SCIENCE IN DEVELOPMENT ECONOMICS (DEC)

By: Birhan Fenta

Approved by Board of Examiners

Belayneh Kassa (PhD.) _________________ ____________________

Advisor Signature Date

__________________ __________________ ___________________

Internal Examiner Signature Date

__________________ __________________ ___________________

External Examiner Signature Date

II
 DECLARATION

I, Birhan Fenta declare that “The effect of E-banking service quality on customer satisfaction in
the Commercial Bank of Ethiopia, Selected Bahir Dar Branches, is my own work, that has not
been submitted for any degree or any other examination in any other university, and that all the
sources I have used or quoted have been indicated and acknowledged as complete reference. It is
submitted for the degree of Masters Development Economics to Yom Post Graduate College.

----------------------------------

Signature

-----------------------------------

Name of the student

------------------------------------

Date of submission

Advisor‟s Approval: This thesis is submitted for examination with my approval as Yom Post
Graduate College.

Advisor: Name--------------------------------------signature--------------------date--------------------

III
 CERTIFICATION

This is to certify that the thesis work entitled “The effect of E-banking service quality on
customer satisfaction in the Commercial Bank of Ethiopia, Selected Bahir Dar Branches”
submitted in partial fulfillment of the requirements for the award of the degree of Masters of
Science in Development Economics to Yom Post Graduate College; through the Department of
Development Economics, done by Mr. Birhan Fenta

Research Advisor: Belayneh Kassa (PhD.)

Signature ________________________________

Date____________________________________

Place: Yom Post Graduate College

IV
 ACKNOWLEDGMENT

First of all, I would like to thank the Almighty God, who gave me the commitment and stamina
to pass various obstacles and come up to the accomplishment of this thesis.

I would like to express my deepest appreciation to my advisor, Belayneh Kassa (PhD), for his
supervision, guidance and excellent advice and also for spending precious time for improving the
quality of this research.

I would like to express my appreciation to Commercial Bank of Ethiopia, Selected Bahir Dar
Branches that contributed directly or indirectly to this thesis and provided the necessary
materials and support for realization of this thesis. Especial thanks are forwarded to Commercial
Bank of Ethiopia, Selected Bahir Dar Branches E-Banking customers who sacrificed their time
in filling the questionnaires.

Finally, I want to thank my family members who are eager to see my success. I am forever
indebted to my family in the last three years, who has encouraged and created a conducive
environment. They have been the greatest source of support throughout my education.

V
Table of Contents
CERTIFICATION ....................................................................................................................................... IV
ACKNOWLEDGMENT............................................................................................................................... V
List of Tables ................................................................................................................................................ X
List of Figures .............................................................................................................................................. XI
ACRONYMS ................................................................................................................................................ 1
ABSTRACT.................................................................................................................................................. 2
CHAPTER ONE: INTRODUCTION ........................................................................................................... 3
1.1. Background and Justification of the Study ................................................................................... 3
1.2. Statement of the Problem ................................................................................................................... 5
1.3. The Objective of the Study ................................................................................................................ 7
1.3.1. General Objective ....................................................................................................................... 7
1.3.2. The Specific Objectives .............................................................................................................. 7
1.4. Research Hypothesis .......................................................................................................................... 8
1.5. Significance of the study .................................................................................................................... 8
1.6. Scope of the study .............................................................................................................................. 8
1.7. Organization of the paper................................................................................................................... 9
CHAPTER TWO: REVIEW OF RELATED LITERATURE .................................................................... 10
2.1. Introduction ...................................................................................................................................... 10
2.2. History of Commercial Bank of Ethiopia ........................................................................................ 10
2.3. Introduction of E-banking in Ethiopia ............................................................................................. 11
2.4. Theoretical Literature Review ......................................................................................................... 13
2.4.1. Definition of E-banking ............................................................................................................ 13
2.4.2. Evolution of E-Banking ............................................................................................................ 14
2.4.3. Common forms of E-Banking Technologies ............................................................................ 15
2.4.4 Benefits of E-Banking ................................................................................................................ 17
2.4.5 Challenges of E-Banking ........................................................................................................... 19
2.4.6. E-Banking Trend in Ethiopia .................................................................................................... 19
2.4.7. E-Banking Trend in CBE .......................................................................................................... 20
2.4.8 Service Concept ......................................................................................................................... 20
2.4.9 E-Banking Service Quality Concept .......................................................................................... 21
2.4.10 E-Banking Service Quality Dimensions .................................................................................. 21
2.4.11. Customer Satisfaction ............................................................................................................. 24
VI
 2.4.12. Relationship between E-Banking Service Quality and Customer Satisfaction ....................... 24
2.5 Empirical Literature Reviews ........................................................................................................... 26
2.6 Conceptual Framework of the Study ................................................................................................ 28
CHAPTER THREE: RESARCHE METHODOLOGY.............................................................................. 29
3.1. INTRODUCTION ........................................................................................................................... 29
3.2. Research Philosophy ........................................................................................................................ 29
3.3. Research Approach .......................................................................................................................... 30
3.4. Research method .............................................................................................................................. 30
3.5. Research Design............................................................................................................................... 31
3.6. Target Population of the study ......................................................................................................... 31
3.7. Sampling Framework ....................................................................................................................... 32
3.8. Sample Size Determination.............................................................................................................. 32
3.9. Sources of Data ................................................................................................................................ 36
3.9.1. Primary Data Sources................................................................................................................ 36
3.9.2. Secondary Data Sources............................................................................................................ 36
3.10. Research Instrument....................................................................................................................... 36
3.11. Data Collection Procedures............................................................................................................ 37
3.12. Data Analysis Method.................................................................................................................... 37
3.13. Validity and Reliability .................................................................................................................. 38
3.13.1. Validity ................................................................................................................................... 38
3.13.2. Reliability ................................................................................................................................ 39
3.14. Ethical Considerations ................................................................................................................... 41
3.15. Conclusion ..................................................................................................................................... 41
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS ............................................................ 42
4.1. Introduction ...................................................................................................................................... 42
4.2. Response Rate .................................................................................................................................. 42
4.3. Demographic Characteristics of the Respondents............................................................................ 43
4.3.1. Sex of the Respondents ............................................................................................................. 43
4.3.2. Age of the Respondents ............................................................................................................ 43
4.3.3. Educational Level of the Respondents ...................................................................................... 44
4.4. Type of Electronic banking the Respondents uses ........................................................................... 45
4.5. Customer Type of the respondents................................................................................................... 45
4.6 Period of using the E-banking services of the respondents............................................................... 46
VII
 4.7. Descriptive Statistical Analysis of E-Banking Service Quality Dimensions and Customer
Satisfaction.............................................................................................................................................. 46
4.8. Mean Score and Standard Deviation of E-Banking Service Quality and Customer Satisfaction .... 47
4.8.1. Mean and Standard Deviation Result of Tangibility Response ................................................ 48
4.8.2. Mean and Standard Deviation Result of Reliability Response ................................................. 48
4.8.3. Mean and Standard Deviation Result of Responsiveness Response ......................................... 48
4.8.4. Mean and Standard Deviation Result of Assurance Response ................................................. 49
4.8.5. Mean and Standard Deviation Result of Empathy Response.................................................... 49
4.8.6. Mean and Standard Deviation Result of Customer Satisfaction Response ............................... 49
4.9. Correlation Analysis of E-Banking Service Quality Dimensions and Customer Satisfaction ......... 50
4.9.1. Correlation Result of Tangibility and customer satisfaction..................................................... 51
4.9.2. Correlation Result of reliability and customer satisfaction ....................................................... 52
4.9.3. Correlation Result of Responsiveness and customer satisfaction ............................................. 52
4.9.4. Correlation Result of pattern of Assurance and Customer Satisfaction .................................... 52
4.9.5. Correlation Result of Empathy and Customer satisfaction ....................................................... 52
4.10. Multiple Regression Assumption Tests ......................................................................................... 53
4.10.1. Normality Test ........................................................................................................................ 53
4.10.2. Multicollinearity Test .............................................................................................................. 55
4.10.3. Test of linearity ....................................................................................................................... 56
4.11. Multiple Linear Regression Analysis ............................................................................................. 57
4.11.1. ANOVA Model of Effect of E-Banking Service Quality on Customer Satisfaction .............. 58
4.11.2. Multiple Linear Regression on Effect of E-Banking (SQCS) ................................................. 59
4.12. Hypothesis Testing......................................................................................................................... 61
4.13. Discussion of Results ..................................................................................................................... 63
4.14. Conclusion ..................................................................................................................................... 66
CHAPTER FIVE: SUMMARY, RECOMMENDATIONS, AND CONCLUSION .................................. 67
5.1. Introduction ...................................................................................................................................... 67
5.2. Summary of Main Findings ............................................................................................................. 67
5.3. Conclusion ....................................................................................................................................... 70
5.4. Recommendations ............................................................................................................................ 71
5.5. Limitation of the Study .................................................................................................................... 72
5.6. Direction for Future Research .......................................................................................................... 72
5.7. Ethical consideration ........................................................................................................................ 72

VIII
6. References ............................................................................................................................................... 73
7. APPENDIX ............................................................................................................................................. 81

IX
 List of Tables

Table 1: Sample size for each target CBE branches ..................................................................... 34

Table 2: Summary on the reliability of items ............................................................................... 40

Table 3: Response rate .................................................................................................................. 42

Table 4: Sex characteristics of respondent.................................................................................... 43

Table 5: Age characteristics of respondent ................................................................................... 44

Table 6: Education characteristics of respondent ......................................................................... 44

Table 7: Type of Electronic banking the Respondents use ........................................................... 45

Table 8: Customer Type of the respondents ................................................................................. 46

Table 9: Period of using the E-banking services of the respondents ............................................ 46

Table 10: Comparison cut-points of Mean Score of Five Point Likert Scale Instrument............. 47

Table 11: Mean Score and Standard Deviation of QS and Customer Satisfaction ....................... 47

Table 12: Correlation Analysis of QS Dimensions and Customer Satisfaction ........................... 51

Table 13: Multicollinearity Test of Multiple Linear Regression Analysis ................................... 56

Table 14: Model Summaries ......................................................................................................... 58

Table 15:ANOVA Model of Effect of OS on Customer Satisfaction .......................................... 59

Table 16: Multiple Linear Regression Result of Effect of QS on Customer Satisfaction ............ 60

Table 17: Summary of Hypothesis Testing Results ...................................................................... 62

X
 List of Figures
Figure 1: The theoretical framework .......................................................................................................... 28

Figure 2: The process of deduction ............................................................................................................. 30

Figure 3: Normal Distribution Plot ............................................................................................................. 54

Figure 4: Normal P-P Plot of Regression Standardized Residual ............................................................... 55

Figure 5: Test of Linearity .......................................................................................................................... 57

XI
ACRONYMS
E-Banking Electronic banking,

CS Customer satisfaction
TAN Tangibility
REL Reliability
RESP Responsiveness
ASSU Assurance
EMP Empathy
SERVQUAL Service Quality
SQCS Service Quality on Customer Satisfaction

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 ABSTRACT
The research is undertaking on the effect of E-banking service quality on customer satisfaction in
the Commercial Bank of Ethiopia, Selected Bahir Dar Branches. Since customer satisfaction is a
high priority as one of the goals of banks, this study aims to investigate the effect of e-banking
service quality on customer satisfaction. This study has been explanatory research regarding
purpose and/or research design. Qualitative and quantitative research approach was used. The
spatial scope of the study was limited in five CBE branches of Bahir Dar district including Bahir
Dar Main Branches, Tana, Zembaba, Belay Zeleke and Beg Tera since these branches have
large numbers of E-bank customers and good efficiency of customers. Primary and secondary
data were the type of data for this research and the sources of data for this study were E-bank
customers and bank officials. Interview, questionnaire, and secondary documents were the
methods of data collection for this study. For this research, 8265 E-bank customers and 10 bank
professionals were used as the target population of the study, and a stratified sampling technique
was used to get a representative sample in each sample branches. Therefore, 210 respondents
were selected for this research as a sample, and data were collected from this sample. Inferential
and descriptive data analysis technique has been used to analyze the collected data. The validity
of the questionnaire was confirmed by a group of experts. Furthermore, SPSS version 26
software has used to analyze the data. The major findings of this study were, all service quality
dimensions has been significant factor on customer satisfaction. The researcher concludes that
there was a linear relationship between e-banking service quality and customer satisfaction.
There is the need to create awareness and educate majority of the banking population or users
on e-banking especially in mobile and internet banking as a recommendation.

Keywords: electronic banking, customer satisfaction, tangible’s dimension, reliability dimension,

responsiveness dimension, assurance dimension, empathy dimension

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 CHAPTER ONE: INTRODUCTION

1.1. Background and Justification of the Study

Globalization have increased competition in the market place, as today it has become much
easier for companies to cross borders and compete internationally. The increased competition, on
its behalf, has made organizations to constantly try to increase their productivity and decrease
their costs. One way for them to achieve that is by investing in information technology, the
recent development of information technology has led to major changes in the way services are
delivered to the customers (Frederickson, 2003).

Services are an important segment of all economies and have become an important part of our
daily lives. In the service sector, technologies were used to standardize service by reducing the
employee/ customer interface (Quinn, 1996). Financial services particularly banks are competing
in similar products therefore E-Banking Service Quality grows to be a main competitive weapon
(Stafford, 2008). Better quality of services provided by the bank has a positive influence on the
satisfaction of its customers and it directly contributes to the profitability of the banking industry
(Ladhari et al., 2011). Good quality of service provides numerous benefits to banking industry
like better corporate image, enhancement in customer satisfaction, cross-selling opportunities,
decreased customers defection, increased chances of the word to mouth recommendation and
facilitates the maintenance of long term and good customer relationships (Bauman et al., 2007;
Ehigie, 2006; Hawke and Heffernan, 2006; Wang et al., 2003).

Technology has succeeded in making various aspects of life easier for the societies of today
(Rust & Oliver, 1994). More importantly, it's become a fundamental element in improving the
standard of services generally and electronic banking (E-Banking) services particularly (Joseph
& Stone, 2003). E-Banking service is claimed to depend upon the exchange of data between
customers and providers using technological methods barren of face-to-face interaction (Darwish
& Lakhtaria, 2011). Banking sectors in most developed countries have pioneered the realm of E-
services and are actively involved in its continuous improvement. The target will to do to satisfy
the ever-changing needs and lifestyles of contemporary clients. The availability of several E-
banking countries wide has greatly improved the standard and convenience of service delivery

3
however researchers have stated that user satisfaction is an important determinant of the success
of the technology-based delivery channels (Tong, 2009; Wu & Wang, 2007).

At present, Ethiopian banks face stiff competition (Melaku, 2016). Hence, delivering quality
service within new technology and creating customer satisfaction is going to be expected of them
to win this competition. Ethiopia doesn't embrace electronic banking early compared to other
countries (Getachew, 2009). Certainly, the industry in Ethiopia is underdeveloped that is the
introduction of electronic banking also too late within the country. The history of E-banking in
Ethiopia is traced back to the introduction of an automated teller machine (ATM) within the
country. The biggest state-owned bank CBE introduced ATM service for local users in 2001 E.C
with its eight ATM located in the capital Addis Ababa. Following the banking concern of
Ethiopia (CBE), Dashen bank SC also introduced ATM to its customer and move aggressively in
expanding the service. Despite CBE is a pioneer in introducing E-banking within the country, the
proportion of E-banking users to its total customer remain unsatisfactory (Worku, 2010).

In the modern banking system, maintaining and developing long term customer relationships is
essential for a competitive business (Camarero, 2007). SERVQUAL is a well-known research
instrument for evaluating E-Banking Service Quality in the banking industry. SERVQUAL
perfectly covers the dimensions that are considered by a customer in evaluating the quality of
service in a bank. SERVQUAL can generally be applied for evaluating E-Banking Service
Quality in any service sector (Parasuaman et al., 1988). Most of the studies have utilized
SERVQUAL for evaluating E-Banking Service Quality of the banking industry (Arasli et al.,
2005; Zhou 2004; Chi Cui et al., 2003; Lam, 2002; Zhou et al., 2002; Othman and Owen, 2001).
Many alternative instruments to SERVQUAL have also been applied in the banking sector (Guo
et al., 2008; Karapte et al., 2005; Jabnoun and Al-Tamimi, 2003; Aldlaigan and Buttle, 2002;
Bahia & Nantel, 2000).

Many studies have investigated how E-Banking Service Quality is measured, but few have
studied the connection between the standard of E-Banking services and customer satisfaction in
Ethiopia. This study fills a spot within the literature because it addresses the E-Banking issue in
its entirety without making any exclusion and in Ethiopia a developing country where, to the
knowledge of the authors, no similar studies were conducted before. The implications of this

4
study will emphasize the numerous influences of E-Banking Service Quality on customer
satisfaction.

1.2. Statement of the Problem

In the past, customers demand for banking services was driven basically by safety of their
monies as well as interest subsequent from such savings. However, the present-day customers‟
demand has shifted from just safety of money to how banks deliver their services. The reason is
that the present-day customer requires efficient, fast and convenient services (Kwashie, 2012).
The Ethiopian banking sector has functioned recently the e- banking service however, with the
start of e-banking service; the sector is characterized by intensely aggressive competition to
solicit the customer more. This technological advancement has made to make the banking
process faster and easier whilst satisfying the needs of the customers. The argument has been that
some of the product and services offered by the e-banking technology does not meet customers‟
need with quality.

A study undertaken by Philipos (2013) entitled with “customer satisfaction and electronic
banking service on some selected banks of Ethiopia” listed that presently there are some factors
which affect customer satisfaction in electronic banking service in the surveyed banks
(commercial banks of Ethiopia, Wegagen bank, and Zemen bank) of Ethiopia. As noted in the
result section among the factors which affect customer satisfaction were ATM machine out of
cash, no printing recite, cards get blocked, frequent breakdown of ATM service, unreliability of
ATM service, lack of sufficient technicians in all bank who solve breakdown of ATM machine,
lack of sufficient alternative system which substitute ATM service for the customer when
temporary problem happen in the machine, lack of mobile banking service, lack of reliable
telebanking, lack of credit card service, under-development of technological infrastructure, low
level of relevant knowledge creation and innovation, interruption of network, limit of fair
distribution of E-banking service in all over Ethiopia during based on the survey of this study.
Here the study found that customer satisfaction in e-banking has significant relationship with
convenience, reasonable and fair fees (charges) during transaction, efficient service of e-banking,
privacy, security, reliability and responsiveness of customers to solve e-banking service failure
and these variable determined 84% customer satisfaction in e-banking and also recommended for

5
future researcher to investigate the impact of e-banking Service Quality on customer satisfaction,
customer loyalty and customer retention. As we seen the above study analysis result that it
mainly focuses on factors affecting-banking service which causes customer satisfaction and the
researcher more emphasized on ATM and Mobile E-banking service it ignores other E-banking
service types such like POS and internet banking service and it also forget level of customer
satisfaction obtained from using E-banking service.

According to, Belay and Deribie (2012) in the study of “evaluation of customer satisfactions on
bank services in Jimma city in Commercial bank of Ethiopia” found that 25% of the sample
respondents answered that there was no any change the benefits they acquired from e-banking in
comparison with ordinary banking and 17% of the respondents replied that they got best benefits
at best level through e-banking service than ordinary banking. As we understand from the study
of Belay and Ebisa that more of the respondents were not satisfied with the E-banking service
offered by commercial bank of Ethiopia. So, the results indicated that E-banking services
provided by the bank are not well qualified. The limitation of this study was more focus on
traditional banking service and they ignored the E-banking service qualities against the
customers.

Based on the study of Yohannis (2010) noted that on the title of “ key factors that determine
adoption of internet banking in Ethiopia”; 85% the respondents answered that internet banking
enables them to manage their account better than the ordinary banking, occupation has an impact
on the adoption of internet banking, demographic factors have a relationship with the adoption of
internet banking and education levels are regarded as an influential factor in consumers, use of
internet banking services with high education levels being particularly significant. The survey
result implies that customer support for and reaction to a particular product depends on their
level of understanding of what the product can do and how they stand on to benefited from the
service provided. The limitation here also not differs from the previous researchers that it gives
more emphasis on the adoption of internet banking and it also not assessed the customer‟s side
view about the given service. He also recommended that shall be studied on “the effect of E-
banking Service Quality on customers satisfaction” the future researchers. In spite of the
increasing adoption of e- banking and its relevance towards customer satisfaction in the
Ethiopian banking industry, the above-mentioned empirical study or research has been conducted

6
in understanding factors of e-banking service provision that prime to customer satisfaction.
Although, there are some empirical researches which focus on the challenges and opportunities
of e-banking to adopted; they have not been assessed the customer side effect of e-banking in
Ethiopia. The researcher here want to answer the above problems mentioned and findings
touching them that was to investigate the “impact of e-banking Service Quality on customer
satisfaction” have been recommended by previous researchers for future study, this research
mainly focus on to know customer view about E-banking Service Quality, and to see the
affiliation of e-banking variables listed by other researchers which causes customer satisfaction
in e-banking would look like in the study area and the researcher believes that previously no
research has been done in this specific topic in the city to provide empirical evidence of the
effect on customer satisfaction of e-banking. Therefore, this study tries to fill the gap of
empirical research by conducting a study on effect of electronic banking E-Banking Service
Quality on customer satisfaction in the banking sector of Ethiopia. Thus, in this study, an effort
was made to address these aspects, it becomes important for banks to assess the effectiveness of
E-banking banking E-Banking Service Quality based on customer satisfaction generally the
study aims to answer the subsequent basic questions.

1.3. The Objective of the Study

1.3.1. General Objective
The general objective of the study was to investigating the effect of E-banking Service Quality
on customer satisfaction in the Commercial Bank of Ethiopia, Selected Bahir Dar Branches.
1.3.2. The Specific Objectives
From the above general objective, the researcher developed the following specific objectives:
1. To determine the dominate E-Banking Service Quality dimensions on customer
satisfaction in commercial bank of Ethiopia.
2. To determine the relationship between E-banking Service Quality and customer
satisfaction.
3. To determine the effect of E-banking Service Quality on customer satisfaction.

7
1.4. Research Hypothesis
Based on the literature review, the following hypotheses are developed and were tested in this
study:
H1: Tangible‟s dimension of E-Banking Service Quality has a significant positive effect on
customer satisfaction.
H2: Reliability dimension of E-E-Banking Service Quality has a significant positive effect on
customer satisfaction.
H3: Responsiveness dimension of E-E-Banking Service Quality has a significant positive effect
on customer satisfaction.
H4: Assurance dimension of E-E-Banking Service Quality has a significant positive effect on
customer satisfaction
H5: Empathy dimension of E-E-Banking Service Quality has a significant positive effect on
customer satisfaction.

1.5. Significance of the study

First, it will serve as source of reference for further studies in the area of electronic banking and
customer satisfaction. Hopefully, it will inspire other students to further deepen their research
knowledge while opening the doors to investigate or reference who wants to study further in this.
Second, the study was useful for decision-makers both the districts and branches on Commercial
Bank of Ethiopian to see the impacts of E-banking on customer's satisfaction and it helps to
understand what attitude customers have towards E-banking and what actions should the banks
take to benefits from the opportunities and how to overcome the challenges.
Third, this research will alert bankers tomorrow's problems today to get the intended customers
satisfaction as this service can be said it is at an infant stage in the country. Moreover, as
customers are one of the stakeholders, it will help them to evaluate their service deliveries
through the eyes of the customer.

1.6. Scope of the study

The study will focus on the Commercial Bank of Ethiopia Selected Bahir Dar Branches about the
Effect of E-banking Service Quality on customer satisfaction, particularly at Bahir Dar city. This
study will undertake with in the count CBE were chosen for the following reason. Firstly, CBE
has more than 22 million account holders and the number of Mobile and Internet Banking users

8
also reached more than 2.5 million as of June 30th 2021. Active ATM card holders reached more
than 8 million.
Secondly, Bahir Dar city is selected since it has a heterogeneous population, which ensures a
wide spread of potential respondents to the study. Thirdly, the study will target on those
customers who are using any of E-banking products because customers may deliver real facts of
their feelings about E-banking than customers.

Further mobile banks, internet bank, and card banking have been considered as E-banking
services as these services are the main E-banking services of the bank during the study. The
study were delimited to see the effect of E-banking Service Quality on customer satisfaction by
using the five dimensions of E-Banking Service Quality; these are reliability, responsiveness,
assurance, empathy, and tangibles (Parasuaman & Zeithmal, 1988). Those were independent
variable and satisfaction is dependent variable for this study.

1.7. Organization of the paper

This study is organized in five chapters. The first chapter deals with the introduction aspects of
the study, namely: background of the study, statement of the problem, research questions, the
objective of the study, the scope of the study, and the significance of the study. The second
chapter focuses on a review of related literature. The research methodology used in this study
receives attention in the third chapter. The fourth chapter deals with the result analysis and
interpretation of the data. Finally, the fifth chapter provides conclusions and recommendations
for the study.

9
CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1. Introduction

In this chapter, the study presents a review of past literature to clarify the various terms used in
this study that constitute the variables tested. Firstly, it looks into the term E-banking Service
Quality and its characteristics followed by dimensions of E-Banking Service Quality. Then, the
definition and explanation of the concepts of customer satisfaction as a dependent variable of the
study are discussed in detail.

2.2. History of Commercial Bank of Ethiopia

Commercial Bank of Ethiopia is government owned bank, established in 1942 and now a days
the bank become the leading bank in Ethiopia by introducing modern banking practices, such as
branch number, number of customers, capital base and so on as compared to other banks in
Ethiopia. It has more than 904 branches stretched across the country with more than twenty
thousand talented and committed customers. Currently the bank has more than 8.5 million
account holders and become leading African bank with assets of 242.72 billion birr as own June
30th 2014. Commercial bank of Ethiopia plays catalytic role in economic progress and
development of the country. It has strong correspondent relationship with more than 50
renowned foreign banks like commerz bank A.G, Royal bank of Canada, City Bank, HSC BC
Bank etc... Commercial Bank of Ethiopia has a swift bilateral arrangement with more than 700
other banks across the world, so it has reliable and long-standing relationship with money
internationally acclaimed banks throughout the world. CBE is pioneer to introduce western union
money transfer services in Ethiopia early 1990‟s and currently working with others 20 other
money transfer agents like; Money Gram, Atlantic international (BOLE), Xpress money etc.
(profile of the bank).

10
2.3. Introduction of E-banking in Ethiopia

The presence of E-banking in Ethiopia emerged back to the late 2001; hence the largest state
possessed, commercial bank of Ethiopia (CBE) announced e-banking service such like ATM to
deliver service to the local users. In addition to eight ATM Located in Addis Ababa, CBE has
had Visa membership since November 14, 2005. But, due to lack of appropriate infrastructure it
failed to reap the fruit of its membership. Despite being the pioneer in introducing ATM based
payment system and acquired visa membership, CBE Lagged behind Dashen bank, which
worked aggressively to maintain its lead in E-payment system. As CBE continues to move at a
snail's pace in its turnkey solution for Card Based Payment system, Dashen Bank remains so far,
the sole player in the field of E-Banking since 2006. (Gardachew, 2010)

Dashen bank, a harbinger in introducing E-banking in Ethiopia, has installed ATMs at

convenient locations for its own cardholders. Dashen‟s ATM is available 24 hours a day, seven
days a week and 365 days a year providing service to Debit Cardholders and International Visa
Cardholders coming to the country. At the end of June 2009, Dashen bank has installed more
than 40 ATMs in its area branches, university compounds, shopping malls, restaurants and
hotels. In the year 2011 the payment card services have witnessed significant strides, Dashen‟s
ATM service expanded to 70 and 704 POS terminals (Annual report of the bank, 2011).
Available services on Dashen Bank ATMs are: Cash withdrawal, Balance Inquiry, Mini
statement, Fund transfer between accounts attached to a single card and Personal Identification
Number (PIN) change. Currently, the bank gives debit card service only for Visa cards. Dashen
bank clients can withdraw up to 5,000 birr in cash and can buy goods and services up to 8,000 to
13000 birr per day. Expanding its leadership, Dashen Bank has begun accepting MasterCard in
addition to Visa cards. Dashen won the membership license from MasterCard in 2008.
Harnessing its leadership with advanced banking technology, Dashen Bank signed an agreement
with iVery, a South African E-payment technology company, for the introduction of mobile
commerce in April 21, 2009.

According to the agreement, iVery Payment Technologies has licensed its Gateway and MI Card
E-payment processing solution to Dashen Bank. Dashen‟s Mod birr users can transfer 500 birrs
to other Mod birr users in 24 hours a day. This would make Dashen Bank the first 11 private
banks in Ethiopia to acquire E-commerce and mobile merchant transactions (Amanyehun, 2011).

11
Although Dashen‟s new technology is one step ahead in that it allows transfer of funds from
one‟s account to others, the first ever E-banking gateway was signed between Ethiopian
Commodity Exchange (ECX) and Dashen Bank and CBE. The E-banking system being
developed with both banks is designed to give a secure electronic data sharing gateway between
clients, banks and ECX, by facilitating a smooth transaction (Abiy 2008) By the end of 2008
Wegagen Bank has signed an agreement with Technology Associates (TA), a Kenyan based
information technology (IT) firm, for the development of the solutions for the payment system
and installation of a network of ATMs on December 30, 2008.

Zemen Bank, the only Ethiopian bank attached in the idea of single branch banking, by
launching full-scale internet banking, a service which is new to Ethiopian banking industry in the
year 2010. The bank tested the venture through its first phase of the online service, and now it is
already started the full-fledged version, which enable customers to make online money transfer
freely. Previously, the online banking service, delivered by the bank, only gave access to bank
statements and exchange rate information. The new and never-been-tried service proposed by the
bank is to include free account money transfer, corporate payroll uploading system where
employers could upload payroll to the system and make payments to individual worker‟s
accounts online and online utility bill settlement system, when utility companies are ready(Asrat,
2010). The agreement signed by three private commercial banks to launch ATM and POS
terminal network, in February 2009 is welcoming strategy to improve electronic card payment
system in Ethiopia.

Three private commercial banks Awash International Bank S.C., Nib International Bank S.C.
and United Bank S.C. have agreed in principle to establish an ATM network called Fettan ATM
network. If everything goes as planned, fast ATM will install over 140 ATM machines and over
340 POSs across Ethiopia. There were one ATM at every branch of the grouping banks, all
domestic airports serviced by Commercial service, shopping complexes and merchants. The
agreement is the first significant cooperation between competing banks in Ethiopia, which others
should be encouraged to follow as there is no single bank in Ethiopia that can afford to provide
Extensive geographical coverage and access (Binyam, 2009)

12
2.4. Theoretical Literature Review

2.4.1. Definition of E-banking

The concept of electronic banking was defined in many ways; Sathye, M., (1999) defines
electronic banking as the delivery of banks information and services by banks to customers via
different delivery platforms that can be used with different terminal devices such as personal
computers and mobile phone with browser or desktop software, telephone or digital television.
According to Mohamud, J.A. (2017) electronic banking defined as any use of information and
communication technology and electronic means by a bank to conduct transactions and have
interaction with stakeholders.
Oyewole, O.S et.al (2013) also defined electronic payment as a system of payment whereby
transaction takes place electronically without the use of cash. They Defined electronic banking
(E-banking) is nothing but E-business in the banking industry. E-banking is a generic term for
the delivery of banking services and products through electronic channels, such as the telephone,
the internet, the cell phone, etc. The concept and scope of e-banking are still evolving. It
facilitates an effective payment and accounting system thereby enhancing the speed of delivery
of banking services considerably (Ovia, 2001).argues that electronic banking is a product of e-
commerce in the field of banking and financial services. In what can be described as business to
consumer domain for balance inquiry request for Cheek books recording stop payment
instruction balance transfer instruction account opening and other forms of traditional banking
service. Banks are also offering payment services on behalf of their customer who shops
indifferent E-shops.
Electronic banking was around for quite some time in the form of automatic teller machines
(ATMs) and telephone transactions. In more recent times, it were transformed by the internet a
new delivery channel that has facilitated banking transactions for both customers and banks
(R.Nitsure, 2003).

13
2.4.2. Evolution of E-Banking

Since the late 1990s E-Banking has developed from virtual insignificance to tens of millions of
users worldwide Organization for economic cooperation and development (R.Nitsure, 2003).
However, E-Banking is the product of different generations of electronic transactions. The
current web-based internet is the latest of several generations of systems: Automated Teller
machine (ATMs), Phone Banking, PC, or House Banking. Automated teller machines (ATMs)
were the first well-known machines to provide electronic access to customers whereas, in phone
banking, users call their bank's computer system on their ordinary phone and use the phone
keypad to perform banking transactions. PC banking superseded phone banking and allowed
users to interact with their bank through a computer with a dial-up modem connection to the
phone network. Phone and PC banking entailed maintenance costs associated with keeping up to
date with diverse modems and with avoiding prohibitively complex installation procedures.
After those generations Deutsche Bank launched the very first Internet banking project in Latin
America in 1996 and Citibank has developed a special "e-toolkit" across all its branches 9
worldwide United Nations Conference on Trade and Development (UNCTAD, 2002). E-
Banking uses the web browser for the user interface and the Internet for data transfer and
download of software, and so has the potential for reducing maintenance costs. For users, E-
Banking provides current information, 24hours-a-day access to banking services. The primary
services provided by e-banks are transferring money among one's accounts, paying bills, and
checking account balances. Loans, brokering, share trading, service bundling, and host branches
9 of other financial services are being added to these primary services (Dewan & Seidmann,
2001).
According to the worldwide United Nations Conference on Trade and Development (UNCTAD,
2002) E-Banking uses the web browser for the user interface and the Internet for data transfer
and download of software, and so has the potential for reducing maintenance costs. For users, E-
Banking provides current information, 24-hours-a-day access to banking services. The primary
services provided by E-banks are transferring money among one's accounts, paying bills, and
checking account balances. Loans, brokering, share trading, service bundling, and hosts of

14
2.4.3. Common forms of E-Banking Technologies
The most important electronic channels in E-banking are internet banking, mobile banking,
Automatic Teller Machines (ATMs) and Point of Sales (POS).
 Internet Banking
Internet banking involves conducting banking transactions such as account inquiry, the printing
of statement of account; funds transfer payments for goods and services, etc. on the internet
(World Wide Web) using electronic tools such as the computer without visiting the banking hall.
Internet Banking lets clients handle many banking transactions via their personal computers. For
instance, one may use his/her computer/laptop/smart-phone to view his/her account balance,
request transfer between accounts, and pay bills electronically (Onodugo & Chris, 2015).
 Mobile Banking
In phone banking, banking transaction is done over the telephone. Customers of banks can get
information about their accounts; make banking transactions like fixed deposits, money transfer,
demand draft, collection and payment of bills, etc. by using telephones. Telephone banking
satisfies the customer with fast, anytime transaction and account information via telephone
access. With a simple push of a button, customers can check a deposit, account information,
transfer funds as well as perform several other functions. The telephone banking system uses
technology that keeps the cost of delivering the service very low. Moreover, customers can do
the banking work directly from their homes or their office desk, without being stuck in traffic
and without standing in queue for hours and without the need to visit a bank branch or automated
teller machine (Barnes & Corbett, 2003).
 Card Banking
Card Banking allows customers to withdraw and/or send cash, inquire a balance, get mini
statement, do fund transfer, purchase an item using their debit cards over an ATM/POS Terminal
24 hours a day and 7 days a week.

15
  Automated teller machine
It is an electronic computerized device that allows banks customers to directly use a secure
method of communication to access their bank accounts. The entry of Automated teller machines
(ATM) has changed the office atmosphere of the branches of banks. There is no need for a
customer to visit branches for their day to day banking transactions like cash deposits, cash
withdrawals, balance inquiry, dropping cheek. The customer can be served by himself by using
his/her unique ATM card given by the bank (Okeci & Oruan, 2013).
 POS Point of Sale (POS)
It is an electronic channel to manage the selling process by providing an interface for a
salesperson most commonly in hotels, shops, gasoline stations, or any other merchants who have
links with the banks (Eshittu, 2010). POS terminals are used to accept payment cards like ATMs,
but they are very portable and convenient to use unlike ATMs which need much space and are
stagnant in relative permanent places.
However, since they require the interaction between the merchant personnel and the customer,
they are not as such fully self-service like ATMs. In the case of transactions using POS
machines, there is no need of carrying the actual cash notes. Hence, POS terminals are much
preferable than ATM to create a cashless society and increase deposit mobilization. It is also
used to shorten the transaction process since the customer can pay its bills directly to the
merchant on the spot. Especially for ON-US3 transactions the bank was more benefited from
deposit mobilization without losing the actual cash notes from the bank's treasury through
ATMs. Besides, in case of ON-US transactions, since both the customer and the merchant are the
same bank account holder, the bank were beneficiary from service charges of such payment
circulations that make it much preferred deposit mobilization without losing the actual cash.
Though POS terminals are much common to see everywhere in developed countries and some
African cities like Nairobi, it seems restricted to big Hotels and Supermarkets in Ethiopia.
Moreover, mostly they are seen giving service for foreigners while most Ethiopians prefer to pay
cash instead of using them the 3ON-US transaction is a transaction where the card issuing and
acquiring bank is the same.

16
2.4.4 Benefits of E-Banking

E-banking helps the customers as well as banks by overcoming the drawbacks of the manual
system as computers are capable of storing, analyzing, consolidating, searching, and presenting
the data as per the requirement of customers and banks with a lot of speed and accuracy.

2.4.4.1 E-Banking Benefits to the Bank

A bulk of literature states that the bank benefits by adopting E-banking in its operation. The main
benefits to banks are cost savings, reaching new segments of the population, efficiency,
enhancement of the bank's reputation, and better customer service and satisfaction. The idea is
the more transactions can be converted online, the more money was saved (Brogdon, 1999).
According to Robinson (2000), the cost of an electronic transaction is dramatically less when
done online compare to at a branch. He adds that online banking strengthens the relationship
between the service provider (e.g. bank) and the customer because it brings banking services
directly to a customer's home or office, or in the mobile phone this creates customer loyalty.
A reduction in the percentage of customers visiting banks with an increase in alternative
channels of distribution will also minimize the queues in the branches and also increased
availability and accessibility of more self-service distribution channels help bank administration
in reducing the expensive branch network and its associate staff overheads. Bank customers and
office space that are released in this way may be used for some other profitable ventures (Birch
& Young, 1997).

2.4.4.2 E-Bank Benefits to the Customers

The main benefit of E-banking from the bank customer's point of view is a significant saving of
time by the automation of banking services processing and also enabling the customers to access
the banking service any time at anywhere. According to Gurau, (2002) the major benefits of E-
banking from customer's point of view is Reduced costs in accessing and using the banking
services, Increased comfort and time saving, Transactions can be made 7x24, without requiring
the physical interaction with the bank, Quick and continuous access to information and better
cash management. Generally, there are plenty of perks offered by banks to customers who adopt
internet banking over the traditional visit physically to the nearest branch office.

17
Convenience: This is the single most important benefit that outweighs any shortcomings of E-
banking. Making transactions and payments right from the comfort of home or office at the click
of a button without even having to step out is a facility none would like to forego. Keeping a
track of accounts through the internet is much faster and convenient as compared to going to the
bank for the same. Even non-transactional facilities like ordering check books online, updating
accounts, enquiring about interest rates of various financial products, etc. become much simpler
on the internet (Johnson, 2005).

Better Rates: The banks stand to gain significantly by the use of internet banking as it implies
lesser physical effort from their end. The need to acquire larger spaces for offices and employ
more staff to deal with the customers is significantly reduced making it financially beneficial to
the banks. This means that a portion of savings accrued can be passed on to the customers in
terms of higher rates on deposits and lower rates on loans. To encourage E-banking most banks
offer minimum or no deposit accounts for online banking and lower penalties on early
withdrawal of Fixed Deposits (Ozuru, H. N; Chikwe, J. E, & Idika duma, 2010).

Services: Technology has made it extremely convenient for the bank as well as the customer to
access a host of wonderful services by simply logging in. These services include financial
planning capabilities, functional budgeting, and forecasting tools, loan calculators, investment
analysis tools, and equity trading platforms which are available as simple applications on the
bank's website. Additionally, most banks also provide the facility of online tax forms and tax
preparation.

Mobility: E-banking has a step further in the last few years in the form of mobile internet
banking which accords unlimited mobility to the customer who can now handle financial
transactions even while on the move (Chaffey, D; Mayer, R; Johnson, K, & Ellis Chadwick, F,
2006). Another important benefit of the concept of E-banking is that it is good for the
environment as it cuts down the usage of paper, reduces pollution as people do not have to travel
physically and also does not add emissions. The other main benefit from the bank customers'
point of view is a significant saving of time by the automation of banking services processing
and the introduction of easy maintenance tools for managing customer's money. The main
advantages of E-banking are the following (Bank Away, 2001; Gurău, 2002).

18
2.4.5 Challenges of E-Banking

Although opportunities to banks, there are various difficulties such as the innovation of IT
applications, the obscuring business sector limits, breaking modern boundaries, the passage of
emerging competitors, and the development of new plans of action (Liao &Cheung, 2003).
Another security issue associated with E-banking as introduced by the Economist journal (1999)
recounts that E-banking insecurities are classified into three categories, firstly those associated
with fraud and theft secondly those by hackers and lastly flaws in systems design or set up
leading to security breaches (genuine users seeing being able to transact on other users accounts).
All of these insecurities have financial and legal reputations. According to, Earl (2000) other
challenges in line with electronic banking spans from the type of technology selected, lack of
knowledge, and lastly implementation. In this regard, we understand that bank managers know
very well their business operation, its process and behavior of customers and their experience as
well as educate the customers.

2.4.6. E-Banking Trend in Ethiopia

The history of E-banking in Ethiopia was starting by the giant state-owned bank called CBE in
2001E.c by starting ATM banking. However, the service will not successful and had been
interrupted for years until the famous Dashen bank gives life for it in 2006 ( Worku, 2010).
Dashen Bank has paid a lot of sacrifices to introduce ATM banking to society though it will also
acquire the competitive advantage of having such technologies that were almost not known
before (Bultum, A.G., 2014). Afterward, other private banks start to deploy such innovations
with different varieties to compute for the market share. According to (Wondessen & Tsegai,
2005) the challenges and prospects of electronic payment in Ethiopia were lack of customer trust
in the initiatives, unavailability of electronic payment regulations and laws, frequent power
disruption, and lack of skilled manpower. The authors found these investigations through
applying interview and observation right on the place while customers have been served. And
they came up to the conclusion and recommendations of Emphasizing on the enhancement of
adequate legal and security framework to improve the use of electronic payment.

19
2.4.7. E-Banking Trend in CBE

The Commercial Bank of Ethiopia, which is mentioned repeatedly as a pioneer bank in Ethiopia,
is legally established in 1963 (Bultum, A.G., 2014). Currently, it is the only state-owned
commercial bank that plays a significant role in the country's financial economy. The bank is
known for its variety of banking services from which E-banking is among the core banking
services offered to its customers. Many studies showed that while the bank will a pioneer in E-
banking technology by deploying few ATMs during early 2001, it will stagnant for several years
without successful enhancement (Bultum, A.G., 2014; Worku, 2010).

However, after privately owned commercial banks like Dashen and Wegagen banks started to
compute in E-banking services, CBE turns to pay more attention to its E-banking development.
Currently, it is a leading bank in terms of the number of ATMs, POS, and Payment card users.
In CBE, the E-banking service is governing by the E-payment directorate level under the direct
supervision of the bank president. According to the bank's structure, there are three divisions for
Mobile and Internet banking, ATM banking, and POS channel management. This shows how
much the bank is giving focus to its E-banking service in general. According to its official
website, the bank is adopting the following technologies for corresponding E-banking services:
Payment Cards: CBE issues different types of payment cards with a generic name called
'Reliable Card'. These cards include a debit card for the bank account holders and pre-paid cards
for non-account holders. According to the bank's communication publication, there were 2.8
million payment cardholders to use 889 deployed ATMs and 6,269 POS terminals as of
September 30, 2016.

2.4.8 Service Concept

A lot of definitions have been given to service by different scholars. Two decades ago,
According to Berry, L.L.( 2002) cited in (Nukpezah & Nyumuyo, 2009) service is defined as
"Anything provided by a dealer or manufacturer, that is helpful for people who have bought
things from him like maintenance, supplies installation, assemblies, repairs, etc., ". But now, this
definition is not sufficient to explain what service means. Currently, many scholars are
modifying the definition of service which makes it compatible with today's business world.
According to Armstrong, G & Kotler (2011) service is "Any activity or benefit that one party can

20
offer to another that is essentially intangible and does not result in the ownership of anything".
Quinn and Gagnon (1986) mention that services have different characteristics and they differ
based on the nature of the service. The main purpose of the service industry is to manage
customer satisfaction. According to Gronroos (2000) services are provided with high customer
involvement and it is intangible. According to Parasuraman, Berry, & Zeithaml (1985) services
are characterized by inseparability, intangibility, heterogeneity, and Perishability.

2.4.9 E-Banking Service Quality Concept

The customer judgment of overall excellence about the E-Banking Service Quality of a service
sector is termed as perceived E-Banking Service Quality (Parasuraman et al., 1988). This
judgment is based on the difference that what a customer expects from his service provider and
what the actual service he receives from it (Parasuraman et al., 1988). Numerous research
instruments exist for the measurement of E-Banking Service Quality and SERVQUAL is a well-
known model (Ladahri, 2009) and it is an assumption based that comparison between the
customer belief that what quality of service should be provided by service delivery and the actual
service received will give us the perceived E-Banking Service Quality of customer (Gronroos,
1984). SERVQUAL deals with five E-Banking Service Quality dimensions (Tangibles,
Reliability, Responsiveness, Assurance, and Empathy). The tangible elements deal with the
availability of physical facilities, equipment, and personnel. Reliability is the ability of the
service provider to perform a service dependably and accurately. Responsiveness is concerned
with the willingness of service providers to assist customers and deliver prompt services.
Assurance means that customers can put their trust in service provider customers and Empathy is
individualized care and attention that customer receives from service deliver (Parasuraman et al.,
1988).
2.4.10 E-Banking Service Quality Dimensions
Exploratory research by Parasuraman, Berry, & Zeithaml (1985), first identified ten overlapping
dimensions of E-Banking Service Quality that consumers use to assess the quality of service.
The dimensions were responsiveness, reliability, competence, courtesy, communication, access,
credibility, understanding, security, and tangibles. In their 1988 work, the ten dimensions
reduced to five: reliability, tangibles, responsiveness, remained the same, but the other seven

21
components merged into two aggregate dimensions called empathy and assurance. Kotler &
Keller, (2012) in their book defined the five E-Banking Service Quality dimensions as follows,
Reliability: - the ability to perform the promised service dependably and accurately. This
dimension is critical as all customers want to deal with firms that keep their promises and this is
generally implicitly communicated to the firm's customers (Andaleeb & Conway, 2006)
Responsiveness: - willingness to help customers and provide prompt service. This dimension is
concerned about dealing with the customer's questions, requests, and complaints attentively and
promptly (Andaleeb & Conway, 2006).
Assurance: - the Knowledge and courtesy of customers and their ability to convey trust and
confidence. The trust and confidence may be represented in the personnel who link the customer
to the organization (Bolton & Saxena-Iyer, 2009).
Empathy: - the provision of individualized attention and care to customers. There are numerous
ways that empathy can be provided: knowing the customer's preference, his name, and his needs.
Many small companies use this approach to render customized services as a competitive
advantage over larger firms (Zeithaml, V, A .2002).
Tangibles: - the appearance of the equipment, physical facilities, personal and communication
materials. It translates to the restaurant's appearance and condition of the cutlery, interiors,
uniform of the staff, the appearance and tableware, and design of the menu, restaurant signage,
and promotion system (Andaleeb & Conway, 2006).
E-Banking Service Quality is an elusive and abstract construct that is difficult to define and
measure (Parasuaman & Zeithmal, 1988). As a result of the difficulty in defining quality, the E-
Banking Service Quality measurement has also turned out to be a debating issue. In terms of
methodologies and measurement, some authors recommended that the E-Banking Service
Quality concept results from the comparison of performance perceptions with expectations
(Cronin & Taylor, 1992). While others argue that it is derived from perceptions of performance
alone (Parasuaman & Zeithmal, 1988). And that the expectations are irrelevant and even provide
misleading information for a model intended to evaluate perceived E-Banking Service Quality.
Thus, the inclusion or not of the expectations as a determinant of the service has led to two
distinct paradigms: the disconfirmation paradigm and the perception paradigm.
There have been a variety of E-Banking Service Quality models SERVQUAL will one of the
widely used models, which will developed by (Parasuraman, Berry, & Zeithaml, 1985). The

22
model proposed that E-Banking Service Quality is measured by five dimensions: assurance,
reliability, empathy, tangibles, and responsiveness. Each dimension is measured with four to five
items. SERVQUAL consists of 22 pairs of items: one member of each pair assessing the
customer's expectations, while the other assesses perceptions of E-Banking Service Quality. E-
Banking Service Quality is determined by calculating the difference between expectations and
perceptions for each item (Jain & Gupta, 2004).
These aspects of the administration of SERVQUAL were criticized because there is a lack of
evidence supporting the expectation-performance gap as a predictive measure of E-Banking
Service Quality (Cronin & Taylor, 1992). Other researchers suggested that the calculation of
difference scores could result in poor reliability, especially if the expectations scale were
truncated by ceiling effects (Jain & Gupta, 2004). This would occur if customer expectations of
service were very high. However, one serious trouble with the SERVQUAL scale is that it
entails enormous data gathering tasks. Employing a long questionnaire, one is necessary to
collect data about consumers' expectations as well as perceptions of the performance on each of
the 22 E-Banking Service Quality scale attributes (Jain & Gupta, 2004). Cronin and Taylor
(Cronin & Taylor, 1992) found that the performance element out-performed SERVQUAL in
case of reliabilities, providing some proof to sustain these concerns.

Customer is the key player for the development of trade, industry, and service sector, particularly
in financial services. So, the significance of customer service in the banking sector came to force
to compete in a market-driven environment. Measuring E-Banking Service Quality in the service
sector particularly in the banking sector is more difficult than measuring the quality of
manufactured goods. The service sector as a whole is very heterogeneous and what is
heterogeneous may hold for one service and may not hold for another service sector. For
example, the nature of banking services is very different provided by a hospital and hotel. In fact,
in the banking industry, there are a variety of services like retail banking, corporate banking,
investment banking, commercial banking, personnel banking, wholesale banking, internet
banking, etc.; each banking having a variety of services. Due to this differentiation, services in
this industry could not be standardized, moreover, these services are intangible which could not
be compared or seen.

23
2.4.11. Customer Satisfaction

Although there are numerous articles on customers' satisfaction, there is no unique or common
definition in the theoretical literature. According to Jamal, (2004) noted that during the last four
decades, satisfaction were considered as one of the most important theoretical and practical
subjects for most of the marketers in this field. Generally, there are two different perceptions of
customer satisfaction: cumulative satisfaction and exchange satisfaction (Olsen & Johnson,
2003). Cumulative satisfaction means that customers' satisfaction is not only based on recent
shopping experiences but also customer evaluation on all of his/her shopping experiences
(Johnson & Fornell, 1991). Exchange satisfaction refers to customers' satisfaction with product
evaluation based on recent experiences (Oliver, 1997). Today, cumulative satisfactions were
used in most customer satisfaction research (Gupta & Zeithaml, 2006).
Cumulative satisfaction has more influence on the bank's performances and services and is
necessary for predicting the behavior of customer shopping (Parasurman, 1998). By considering
these two perceptions, there are many definitions of customer's satisfaction. In academic
literature, customer's satisfaction is defined as a function of the difference between past
experiences and current perceptions based on shopping (Churchill & Surprenant, 1982). Based
on (Jamal & Nasser, 2003). It also defined customer satisfaction as a feeling or attitude in the
customer related to one service or product after using it. Customer satisfaction can be defined as
evaluating one product or service based on customer needs and perceptions (Oliver, 1980). As
such, customer satisfaction is the customer perception of meeting his/her expectations after using
the product which influences future behavior (Adamson, 2003).
2.4.12. Relationship between E-Banking Service Quality and Customer Satisfaction
Pleased customers tend to be devoted to the company and more likely to return. Understanding
satisfaction is vital in the sense that dissatisfied customers hardly ever complain, but rather
simply purchase from another service provider Chang, et al., (2007).
Satisfaction is most commonly described in terms of the disconfirmation approach, which
describes it as the difference between a customer's pre-purchase expectations and post-purchase
perceptions of the concrete service performed Chang, et al., (2007). The general thought is that
satisfaction mediates the relationship among perceived E-Banking Service Quality and firm
performance Chang, et al, (2007), However, some researches propose that satisfaction is a
precursor to E-Banking Service Quality (Millán & Esteban, 2004).

24
Substantial confusion continues to exist concerning the relationship between customer
satisfaction and E-Banking Service Quality. Millán and Esteban (2004), maintain that E-Banking
Service Quality and satisfaction have frequently been used interchangeably. Differences between
customer satisfaction and E-Banking Service Quality include a) satisfaction is a post-experience
decision customer experience while quality is not; b) in the satisfaction literature "expectations
reflect anticipated performance" made by customers about levels of performance during their
contact (Swaid, S.I. and Wigand, R.T., 2007).

According to Swaid, S.I. and Wigand, R.T (2007), there is no obvious definition of satisfaction,
although most definitions would include "affective, evaluative or emotional response." The
distinction between perceived E-Banking Service Quality and satisfaction is important because
higher officials need to know whether their purpose is to present the maximum level of perceived
E-Banking Service Quality or to have satisfied customers. The standard of contrast in forming
satisfaction is predictive expectations, or what the consumers consider will happen.

Perceived E-Banking Service Quality is the consequence of a comparison of performance and

what the consumer senses a firm should provide. Swaid, S.I. & Wigand, R.T., (2007), explains
negative disconfirmation as a happening when performance is less than expectations. Positive
disconfirmation is obvious when performance is greater than expectations. Customer satisfaction
results in the disconfirmation of prior expectation that is if the service provider meets or exceeds
expectations then the customer is more likely to be pleased (Laroche, Ueltschy, Shuzo, &
Cleveland, 2004).

Millán & Esteban (2004) assert that satisfaction is perceived as the final result of all actions
carried out during the process of purchase and consumption. All evaluated definitions entail a)
the existence of an objective that the consumer wishes to reach; 2) the attainment (satisfaction)
of this objective can only be judged by taking a standard of comparison as a reference; and c) the
evaluation process of satisfaction involves the intervention of at least two stimuli; a result and a
reference or standard of comparison (Kandampully & Hui-Hu, 2007).
Satisfaction is related to size and direction of "no confirmatory: experience defined by the
difference between initial expectations of the individual and the real outcome resulted." While
expectations are the needs or desires of the consumer, based on what the consumer senses should

25
be delivered before receiving it. Perceptions are the viewpoints of the consumer relative to the
service received. The consumer's judgment of satisfaction or dissatisfaction relay on how the
consumer perceives the real result obtained relative to what will anticipate (Bakr, Mustafa, & al-
Din, 2005).
2.5 Empirical Literature Reviews

Munusamy et al., (2010) conducted a study to assess E-Banking Service Quality delivery and its
impact on customer satisfaction in the banking sector in Malaysia. The study uses the five
dimensions of E-Banking Service Quality (tangibility, reliability, responsiveness, assurance, and
empathy). The result of the study showed that the three E-Banking Service Quality dimensions
(assurance, empathy, and responsiveness) have a positive and insignificant effect on customer
satisfaction. Tangibility has a positive and significant impact on customer satisfaction. However,
reliability has a negative and insignificant effect on customer satisfaction.

Al-Hawary et al., (2011) in his study of Banking E-Banking Service Quality provided by
commercial banks and customer satisfaction using the five dimensions of SERVQUAL
(tangibility, reliability, responsiveness, assurance, and empathy examined that four E-Banking
Service Quality dimensions (tangibility, reliability, assurance, and responsiveness) have a
positive and significant effect on customer satisfaction. Empathy has a negative and significant
effect on customer satisfaction.

Similarly, the study of Malik et al., (2011) tried to investigate an answer for how do E-Banking
Service Quality perceptions contribute to satisfying banking customers? By using the five
dimensions of SERVQUAL (tangibility, reliability, responsiveness, assurance, and empathy) and
concluded the two dimensions of E-Banking Service Quality (reliability, assurance) have a
significant and positive effect on customer satisfaction. However, the rest three E-Banking
Service Quality dimensions (tangibility and responsiveness and empathy) have no contribution to
customer satisfaction.

The study of Kassa (2012) aimed at examining the effect of customer E-Banking Service Quality
on customer satisfaction in selected private banks in Addis Ababa. The results of this study
indicate that, except responsiveness, the four E-Banking Service Quality dimensions (tangibility,

26
assurance, empathy, and reliability) have a positive and significant relationship with customer
satisfaction. The finding of this study also indicates that customers were most satisfied with the
assurance dimensions of E-Banking Service Quality. On the contrary, customers were less
satisfied with reliability and empathy dimensions of E-Banking Service Quality

In his study also Nupur (2010) consider Reliability, responsiveness, assurance, empathy, and
tangibility are core E-Banking Service Quality dimensions for customer satisfaction in E-
banking. Mohammad & Alhamadani (2011) in their study in Jordan commercial bank they
revealed that five dimensions of E-Banking Service Quality viz. reliability, responsiveness,
empathy, assurance, and tangibles are important antecedents of customer satisfaction.

An empirical study of automated teller machine E-Banking Service Quality on customer

satisfaction will conduct by Idowu & Fadiya (2015). The purpose of this paper will to measure
customer satisfaction as regards E-banking services. The research were carried through survey
design which questioned respondents on E-banking services. The population of study mainly
constituted of customers of united bank for Africa within Lagos. The sample in this study
consisted of 200 respondents who are users of E-banking services. The data collected will
analyzed by the use of multiple logistic regression analysis and Pearson correlation. The findings
revealed that necessary input to the bank management to increase customer's satisfaction through
improving the E-banking Service Quality. The focus should not be on E-banking Service Quality
dimensions only. This aspect should be augmented and integrated with other aspects of the E-
Banking Service Quality of banks for the satisfaction of customers. They concluded that among
the E-banking Service Quality dimensions, reliability, responsiveness, and empathy are the most
important factors to increase the satisfaction level. Whereas in measuring customer satisfaction
as regards to E-banking services, assurance dimension shows insignificant in comparison to
other dimensions.

A study of Narteh (2013) will on "E-Banking Service Quality in automated teller machines: an
empirical investigation", managing E-Banking Service Quality. This paper aims to identify the
dimensions of E-banking Service Quality and to evaluate customers' perceptions of the relative
importance of these dimensions. A structured questionnaire gleaned from the literature and
focused group studies were used to collect data from 530 E-banking customers of 15 banks in

27
Ghana. Descriptive statistics, exploratory and confirmatory factor analysis, as well as multiple
regression, were used to identify the relative importance of the dimensions of E-banking Service
Quality the paper identified five dimensions of the "E-banking QUAL" model. In order of
importance, these dimensions are reliability, convenience, responsiveness, ease of use, and
fulfillment.

2.6 Conceptual Framework of the Study

The conceptual framework indicates the crucial process, which is useful to show the direction of
the study. The study will show the effectiveness of the five E-Banking Service Quality
dimensions in terms of the customer of satisfaction in the E-banking service.
The researcher was used the customer satisfaction as the dependent variable and the five
dimensions of E-Banking Service Quality are namely tangibles, reliability, responsiveness,
assurance, and empathy, as the independent variables.

Figure 1: The theoretical framework

Source: Zeithaml et al. (1985)

The framework above shows the proposed framework to serve as the foundation of this study. It
is from the Zeithaml et al. (1985). The purpose of this study is to examine how tangibility,
reliability, responsiveness, assurance, and empathy of service which are the independent
variables can bring impact on the dependent variables, customer satisfaction towards the E-
Banking Service Quality on E-banking.

28
 CHAPTER THREE: RESARCHE METHODOLOGY

3.1. INTRODUCTION

This chapter explains the research methodology, research purpose, research approach, and design
used to answer the research questions and test the hypotheses regarding customer satisfaction in
E-banking. The chapter was discussed how the sample should be derived, data source, the
sample size, the research instrument, data collection procedures, the data analysis tools, and the
ethical considerations.

3.2. Research Philosophy

According to Quinlan (2011), each aspect of the research project should „fit‟ within the
philosophical framework within which the research project is positioned. The first outer area of
the research framework intends to narrow the scope and determine the research philosophy.
Ontologically, the researcher believes that there is a reality that can be apprehended or perceived;
customer satisfaction and E-Banking Service Quality do exist out there and are external to the
consumers that perceive these realities. Epistemologically, the researcher believes that
understanding knowledge as objective proof of hypothetical statements/assumptions (the
research hypotheses). Moreover, the area under research is based on the opinions of the bank‟s
customers (E-Banking Service Quality assessment), and this clearly suggests that the researcher
is indeed separated from the area under research; hence his opinions and views cannot influence
the research. Accordingly, the researcher believes that objectivism is the appropriate
epistemological stance that could help him to effectively understand the research and thus
address the research objectives.

Furthermore, people‟s views were regarded as acceptable knowledge and were considered as
necessary information for the research. Therefore, several elements of the research „fit‟ well
together. The research philosophy that was adopted for this research were positivism, it is an
epistemological approach that supports the implementation of the process of the natural sciences
to the study of social reality (Bryman & Bell, 2015). Furthermore, it implies epistemological
assumptions in relation to the nature of knowledge and regarding the type of knowledge being
established by this research. Therefore, this study provided knowledge regarding the individual
satisfaction level in E-banking attributes in CBE.

29
3.3. Research Approach

As a scientific approach that emphasizes structure, quantification, generalizability, and testable

hypotheses, the deductive approach is most likely to be underpinned by the positivist research
philosophy (Blaikie, 2010). In this study, the research questions were developed. Research
strategies were designed. So, it can be concluded that the research approach is deductive.

Figure 2: The process of deduction

Source: Bryman&Bell, 2015, p.23

3.4. Research method

In research there are three basic methods, these are qualitative, quantitative, and mixed methods.
The quantitative research method makes use of statistics and numbers which are mostly
presented in figures whiles the qualitative method relies on describing an event with the use of
words, mages, and similar others. According to Yin (1994), a research method chosen should be
done according to the research questions in that particular situation since each method has its
merit and demerit and how empirical data is collected and analyzed. Therefore, this study was
used quantitative methods to study the effect of E-banking Service Quality on customer
satisfaction. As to Creswell (2015), quantitative research is a means for testing objective theories
by examining the relationship among variables.

30
3.5. Research Design
A cross-sectional research design was used in this study as data were collected once at a specific
point in time (Bryman & Bell 2011). The research was quantitative and data were collected on
the E-Banking Service Quality dimensions using the SERVQUAL model. An explanatory study
was used to explain the relationship between the independent variables (E-Banking Service
Quality dimensions) and the dependent variable (customer satisfaction). The questionnaire was
designed in a five-point Likert-type scale. An 18-item measure was used to indicate the
customer‟s degree of agreement, based on their assessments of the service provided by the bank
adopted from the SERVQUAL model. The variables were measured using a Likert scale with
five response categories (strongly disagree; Disagree; neither agree nor disagree; Agree; strongly
agree). The Likert scale method were refereed to make the questions interesting to the
respondents and to ensure maximum response rate. Customer satisfaction were measured with
one scale adopted from Lovelock & Wright (1999) with response ranging from “very satisfied”
to “very dissatisfied”

3.6. Target Population of the study

In other words, the study would be interested in assessing the effects of electronic banking on
satisfactions of all customers in CBE, Bahir Dar city branches. It is because of the fact that
CBE branches are quite many in Bahir Dar and thus due to budget and time constraints the
researcher should not have addressed all customers in this study. For this reasons customer in
five CBE branches (Bahir Dar Main branch, Tana, Zembaba, Belay Zeleke, and Beg Tera)
selected branches formed the study or target population. The total population for this study was
8265. The reason why the researcher choice these branches are that their capacity of serving a
large number of customers and their performance grade is higher than other branches here in
Bahir Dar town. This implied that the study concentrated on the customers of commercial bank
of Ethiopia in the selected branches, Bahir Dar city branches as a whole.

31
3.7. Sampling Framework
According to Cooper et al. (2003), a sampling frame is a list of elements from which the sample
is actually drawn and closely related to the population. Based on this, as it has been pointed out
previously, the study was included the total E-bank customers from the five CBE branches
through representation. Thus, the required data were collected from E-bank customer‟s branch
managers and experts. Since it is difficult to collect data from the entire population of E-bank
customers, thus a representative sample was taken from the population of E-bank customers in
the district to realize the objectives of the study. The study was targeted on the customers who
are using E-banking services because customers may deliver real facts of their feelings about E-
banking services than employees. For these reasons five branches would be selected out of 19
CBE branches under Bahir Dar city to the study by using systematic sampling techniques based
on capacity of serving a large number of customers and their performance grade (Bahir Dar Main
branch, Tana, Zembaba, Belay Zeleke, and Beg Tera).

3.8. Sample Size Determination

A sample is a set of respondents selected from a larger population for collecting information
(Kothari, 2004). In this study, sample respondents were taken from the E-bank customers‟
population of the study area through a stratified sampling technique. All the target population of
the study was 8265 which is the sum of the five CBE Branches E-banking customers. In addition
to this, 10 experts were part of the study i.e.one expert and branch manager were selected from
each branches. Totally 8275 target populations were the sampling units of the research. Thus
relevant information would be gathered from these target populations but all total target
populations were not part of the respondents. In this case, the representative sample size was
determined and respondents were selected.

To meet the objectives of the study, the researcher makes use of the statistical formula method of
sample size determination. In the statistical method of sample size determination, the study
makes assumptions about the degree of confidence usually 93% (or the number of errors 7%)
that is acceptable and the degree of variation in the population (Neumann, 2007). Based on this,
Yamane (1967) provides a simplified formula to calculate sample sizes. The formula developed
by Mr. Yamane to determine the sample size is given below.

32
 ------------------------------------------------------- (1)

Where: n = the desired sample size

N = total number of E-bank users from the study area

e = level of significance (accepted error limit) 7% (0.07) based on 93% degrees of confidences.

n = 8,265

1+8,265(0.07)2

n = 8,265

41.4985 = 199.5≈ 200. So, based on these result 200 respondents from E-bank customers
were sample sizes for this study.

In this study, the sample of 210 respondents was selected from an 8275 sampling frame that was
considered to represent a studied population. The research selected a sample of 210 samples due
to limited time and insufficient funds to analyze large samples. The 210 respondents involved in
this study comprised of:-

i). 10 respondents from the purposive sample comprised of 5 branch managers and 5 expert
were parts of the research.

ii). 200 respondents from probability sampling as calculated and shown in Table 1 below:-To
determine the sample sizes of each branches E-bank customers, we usually follow a stratified
sampling technique (proportional allocation). That is the sample size from each stratum is
proportional to the size of the stratum.

nj= (Nj/N)*n

Where:

nj = size of the sample from a jth stratum

Nj = total population in jth stratum

33
 N = total population size

n = total sample size

Table 1: Sample size for each target CBE branches

Sampling
Total Target
S/N Name of Districts Name of Branches Sub Sample(n) Interval(K)
Population(N)
=N/n
41.1
1 Bahir Dar District Bahir Dar Main Branches 2585 (2585/8265)*200 = 63
41.1
2 Bahir Dar District Tana 1850 (1850/8265)*200 =45
41.1
3 Bahir Dar District Zembaba 1500 (1500/8265)*200=36
41.1
4 Bahir Dar District Belay Zeleke 1170 (1170/8265)*200 = 28
41.1
5 Bahir Dar District Beg Tera 1160 (1160/8265)*200 = 28
Total Sample Size 8265 (8265/8265) *200=200

To calculate the desired sampling interval, the following formula was employed.

------------------------------------------------------- (2)
K = N/n

Where N= target population

n = required sample size

k = fractional sample/sampling interval

Thus, based on the above formula, we can select every k's item from the list of E-bank
customers.

Therefore, K=41.1 =≈ 41st .Thus, we can select the required sample size with every 41st item
from the list of E-bank customers of the five CBE districts.

The sampling selection technique for this study has been the non-probability sampling. Non-
probability sampling may be defined as any sampling method where some elements of the
population have no chance of selection, or where the probability of selection cannot be
accurately determined. According to Twumasi (2002) writes “as the name implies, the

34
researcher, adhering to the objectives of the study, selects respondents who can answer his
research questions. With good calculation and a relevant research strategy he picks the
respondents he wants to be included in his sample‟. Convenience sampling is a non-probability
sampling technique where subjects are selected because of their convenient accessibility and
proximity to the researcher (Black et al, 1999). From which the types of non-probability
sampling the researcher was used purposive (convenience) sampling technique. Because of the
following reason; first, as the researcher observed through many previous visits to the selected
branches that not all individuals present at the banking halls are necessarily the banks customers.
Some indeed passer byes either sent to clear cheques or deposit cash as well as other purposes.
Second, as the researcher read other related journals which conducted previously used this type
of sampling technique. For instance, Prince Adiyia Kwarteng (2015), Martin Otu Offei and
Kwaku Nuamah-Gyambrah (2016) etc. were used purposive sampling technique. For this reason,
the researcher could be intended to purposively select participants who are active customers of
the selected bank branches. Therefore, the sample size of this study was 200 customers of the
bank with purposively selected among the whole customers of the population universe. Why the
researcher is taking 200 customers as a sample? Because, even if the electronic banking is
operated by the persons, the customers are not giving the service to the customers directly; rather
the customers are obtaining the e-banking service directly from the machine or/and internet
system. If the machine is not working properly for the time being, the customers might not get
money through ATM and POS. For this reason, the customers become dissatisfied. The same is
true that if the internet connection is not working while the customers need the service it will
cause for their dissatisfaction. So, the machine improper working and system fail will have an
influence on satisfaction for all customers of E-banking service and it‟s E-Banking Service
Quality. Due to this whether you use all the customers or 200 samples will not have an effect on
the research because their responses were the same for using e-banking service. 200 customers
can the representative for all customers of e-banking service.

35
3.9. Sources of Data

3.9.1. Primary Data Sources

The sources of the primary data for this study were E-banking customers of CBE in selected
branches. The required data were obtained from the sample respondents via structured
questionnaires. According to Quinlan et al., (2019), the major source of quantitative data
collection techniques are surveys, which were employed in this research, and the questionnaire
instrument were used to collect the quantitative data. The main reason for this is primarily
because each respondent is needed to answer the same set of questions to gain information from
a large sample population.

3.9.2. Secondary Data Sources

The secondary data were used for supporting the study and to get the findings of other
researchers in the area (empirical study). The sources of secondary data were library books,
journals, newspapers on business, and magazines on business; from these secondary sources, the
related concepts of the study were obtained, such like definitions of E-banking, history of E-
banking, benefits of E-banking, the relation between E-banking and customer satisfaction and
etc. annual reports of different commercial banks, reports of national bank of Ethiopia, internet
sources, and other related materials wear used.

3.10. Research Instrument

The main research instruments that were used for this study were the questionnaire survey. This
means the type of questionnaires would be close-ended. The questionnaire that was used for the
study was divided broadly into two sections. These were the demographic section or general
questions and Questions Directly related with the Study. Under the demographic section variables
such as age of the respondent, gender, educational status, and occupation were asked. Under The
section of Questions Directly related with the Study has also sub-divide into two subsections. The
two subsections will also group into the various dimension of E-banking service outlined in the
conceptual framework. These subsections are Tangibility, Reliability, Responsiveness,
Assurance, and Empathy. The five subsections could be used a five-point Likert Scale where

36
respondents were asked to indicate the extent to which they agree/disagree with various
statements. Each the five dimensions of E-banking service would be consisting of totally 18
questions. The Five-Point Likert‟s scale having the ratings of “strongly disagree” (1) and
“strongly agree” (5) were used.

3.11. Data Collection Procedures

A self-administered, structured questionnaire was used to gather data from respondents to the
study (Malhotra & Mukherjee, 2004). The researcher first was required permission from the
Branch Manager of all the selected bank branches used for the study. The permission would
allow their premises to be used for this study. Each respondent to the study were made to fill a
questionnaire after a brief introduction and objective of the study has explained. The research
questionnaires were distributed in front of the branches during business hours while customers
get in the bank hall. And then the questionnaire was immediately returned after they fill the
appropriate choice of their respect. A complete of 200 questionnaires was distributed to potential
respondents.

3.12. Data Analysis Method

Both descriptive and inferential statistics were used to analyze and interpret the findings.
Demographic variables of the respondents and mean scores of the E-Banking Service Quality
dimensions are interpreted using descriptive statistics whereas inferential statistics were used to
find out the relationship between E-Banking Service Quality dimensions and customer
satisfaction using correlation and regression analysis via SPSS Version 26.

For this study quantitative data analysis methods have been used. The Data analysis have used
(SPSS 26) model. The following statistical tools were utilized:

1) Cronbach's Alpha for Reliability Statistics.

2) To determine the relationship between dependent and independent variables, Pearson

correlations have been computed.

4) Frequency and Descriptive analysis.

37
5) Multiple Regression Analysis: Multiple regression analysis is a statistical method that
relates one dependent variable to a linear combination of one or more independent variables.
An important output of Multiple Regression is the multiple correlation coefficients, R,
which is the proportion of the variance in the dependent variable explained uniquely or
jointly by the independent variables.

Yi = β0+ β1X1 + β2X2 + β3 X3+ β4 X4 + β5 X5

Where Y is the response of dependent variable – customer satisfaction, X1= Tangible‟s

dimension, X2= Reliability dimension, X3= Responsiveness dimension, X4= Assurance
dimension, X5= Empathy dimension. Β0 is the intercept term- constant which would be equal to
the mean if all slope coefficients are 0.

3.13. Validity and Reliability

The ultimate goal of any research study is to obtain high-quality, trusted, valid and Reliable
results (Yilmaz, 2013). Therefore, researchers should ensure that the adopted research
methodology meets the defined standards and criteria. Common criteria used to achieve these
standards in research methodology are validity and reliability.

3.13.1. Validity

Yilmaz (2013) & Denscombe (2014) described the term „validity‟ as the appropriateness and
accuracy of collected data. Yilmaz (2013) defined reliability as „consistency or the degree to which
a research instrument measures a given variable consistently every time it was used under the same
conditions. Accordingly, to maximize the quality of the research, Yin (2014) suggested three tests
for validity that are commonly used in social research regardless of the data collection technique.
The tests include Construct validity, internal validity and Construct and External validity.
 Construct validity
Construct validity is referred to as the establishment of the correct operational measures or the
research topic under study (Yin, 2014). Yilmaz, (2013) stated that this type of validation is largely
based on testing proper instruments during the data collection phase. This ensures that the most
accurate and rich information were collected after a rigorous review of previous documents, an

38
academic literature review, and the conducted interviews; however, accuracy can be achieved
through the focused use of different techniques/tactics, which include referring to multiple sources
of evidence and establishing a chain of selections. The establishment of a rich chain can help
immensely in producing a complete draft of evidence for further validity evaluations. For this
research, construct validity were achieved through the triangulation of research techniques using
different sources of evidence.
 Internal Validity
This criterion refers to the appropriateness of the data analysis techniques were utilized to analyze
the collected data. It is therefore important that the theoretical propositions were linked with the
data accurately in addition to the appropriate application of the analytical strategies. For this
research, to increase the internal validity, a careful and comprehensive review of the literature
related to the topic of choosing a research design to enable the selection of an accurate data
analysis technique were conducted, and the analysis steps were followed precisely.
 External validity
External validity refers to the degree to which the research findings can be generalized or stratified
in other research studies. For quantitative research, the generalization of results is applicable, as
generalization can only occur for theoretical propositions. The findings of this research were
generalized or transferred to a similar Ethiopia context. Therefore, this research involves the study
of customer satisfaction and E-banking Service Quality within the districts of CBE in Bahir Dar,
the findings of this study could be generalized to other regional CBE branches within the same
country which is prone to the same E-banking service rendering.

3.13.2. Reliability

In order to assure the reliability of this study, a reliability test was carried out. In doing so, some
respondents were select for pre-testing and piloting. The rationale to utilize pretesting and
piloting is, it can help to identify questions that don‟t make sense to participants/feel
uncomfortable or problems with the questionnaire that might lead to biased answers. In
accordance with this, Isaac and Michael, (1995) noted that pre-testing and piloting are helpful to
test hypotheses, allowance for checking statistical and analytical procedures, a chance to reduce
problems and mistakes in the study as well as the reduction of costs incurred by inaccurate
instruments. Besides, Cronbach‟s alpha was employed since it measures the internal consistency

39
of the instrument and it is suitable for the instruments that was not have standardizedprior to the
research. It increases the intercorrelations among test items. Thus, as a rule of the thumb,
acceptable alpha value at least 0.60 or above was used in this study (Cronbach‟s, 1951).
Moreover, to ensure the reliability and validity of the result of this research, the study was
triangulated through interpreting findings and results of this study in relation to there view of the
related literature and previous research studies for the purpose of analytical generalization.
Generally, the reliability of each item used in this study is depicted in Table 2 below.

Table 2: Summary on the reliability of items

Item-Total Statistics
Scale Mean if Item Scale Variance if Item Corrected Item-Total Cronbach's Alpha if
Deleted Deleted Correlation Item Deleted

TAN 85.9100 335.499 0.284 0.756

REL 85.7700 280.108 0.509 0.703
RESP 86.5050 243.317 0.641 0.659
ASSU 86.4950 235.518 0.666 0.650
EMP 86.2950 286.943 0.492 0.708
CS 86.4750 337.939 0.300 0.752

Source: survey result (2022)

As we have seen from Table 2 Cronbach‟s alpha coefficients of each independent and dependent
variable are as follows: 0.756, 0.703, 0.659, 0.650, 0.708 and 0.752 for Tangibility, Reliability,
Responsiveness, Assurance, and Empathy and customer satisfaction respectively. Thus, as a rule
of the thumb, acceptable alpha value at least 0.60 or above was used in this study (Cronbach,
1951). For instance, the result indicates that all variables were better reliability because these
alpha coefficients are greater than 0.6. Similarly, Thus, the result of Cronbach‟s alpha
coefficients indicates that all variables were better reliability because these alpha coefficients are
greater than 0.6.

40
 3.14. Ethical Considerations
Concerning Ethical considerations, the researcher was taken in account the Ethics of
organization by keeping the secret of the organization as well as keeps the confidentiality of the
respondents. In order to maintain the ethical issue of this study, before data collection is
performed, the negotiation was made with participants and respondents to gain permission to
conduct discussions and fill questionnaire ethically. Moreover, the researcher was informed that
a statement of confidential, need of conducting this study, refraining from deceptive practices as
well as reciprocity. Then, it was attached on the cover page of the survey questionnaire. Besides,
no identity (anonymity of participants) was attached to the survey structured questionnaire and
the data was handled confidential. The information provides by participants and respondents
were not use for any other purpose. Notably, the researcher was articulate that participants based
on their free was to provide relevant data accordingly.

3.15. Conclusion

This chapter presented the overall research methodology of the study which comprised of the,
research approach, research design, source of data, the population of the study, data collection
methods, and sample size to gather with sampling technique, measurement variables, and
methods of data collection, data analysis, reliability and validity of data collection tools and
ethical considerations are briefly stated.

41
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1. Introduction

This chapter presents the result and discussion of empirical and qualitative findings. The research
instrument used was a survey questionnaire. A fairly representative sample was obtained by
employing a stratified sampling technique‟s section is divided in to subsections such as the
response rate, demographic characteristics of the respondent, descriptive statistics analysis of
research variables, and correlation test, normality of data test, multicollinearity and linearity of
data test. Finally, the result was analyzed using descriptive presented first followed by the
inferential statistics models were applied by the help of statistical software packages (SPSS). The
descriptive statistics analysis that was employed using table, mean, standard deviations in
examining E-Banking Service Quality dimensions as well as customer satisfaction. The
inferential statistics model was used to identify the relationship between the five E-Banking
Service Quality dimensions with customer satisfaction.

4.2. Response Rate

To conduct this study the researcher in total present, 200 questionnaires were distributed to the
research participants of E-banking customers of CBE in selected branches.

Table 3: Response rate

Questionnaire Total Percent

Distributed 200 100%
Collected 200 100%

Source: survey result (2022)

As a result, in Table 3 indicates that, from the questionnaires distributed 200 were filled correctly
and returned. In general, the response rate was 100% and it was substantially sufficient for the
study.

42
 4.3. Demographic Characteristics of the Respondents

Before proceeding directly to a discussion of the result, it would be better to introduce the
respondent's profile. This is because having an understanding of the respondents may help to
estimate the accuracy of the information provided by them. Therefore, for this study
demographic characteristics of the respondents such as sex, age, level of educational, Type of
customer, period of using the E-banking services and type of electronic banking the customer using
were presented as follows.

4.3.1. Sex of the Respondents

As it is shown in Table 4 below, the data provides the sex profile of respondents by frequency
and percent. The results show that out of 225 respondents, 82 (41.0%) of the respondents are
males and 118 (59.0%) are female respondents.

Table 4: Sex characteristics of respondent

Sex
Cumulative
Frequency Percent Valid Percent Percent
Male 82 41.0 41.0 41.0
Female 118 59.0 59.0 100.0
Total 200 100.0 100.0

Source: survey result (2022)

4.3.2. Age of the Respondents

From the data represented in Table 5 below, 99(44.0%) of the respondents are below the age 25,
102(45.3%) are between the age group of 25-35 years old, 4 (1.8%) of the respondents are
between the age group of 36-46 years, 1(.4%) of respondents are between the age group of 47-
57, 19(8.4%) of the respondents are the age group of 58 and above years old.

43
 Table 5: Age characteristics of respondent

Frequency Percent Valid Percent

Less than 25 99 44.0 44.0

25-35 102 45.3 45.3

36-46 4 1.8 1.8

47-57 1 .4 .4

58 and above 19 8.4 8.4

Total 225 100.0 100.0

Source: survey result (2022)

4.3.3. Educational Level of the Respondents

The education level of respondents in the below Table 6 shows that from 200 respondents
161(80.5%) of the respondents are first-degree holder customers, 39(19.5%) of the respondents
are master‟s degree holder.

Table 6: Education characteristics of respondent

education

Frequency Percent Valid Percent

First Degree 161 80.5 80.5

MASTERS 39 19.5 19.5

Total 200 100.0 100.0

Source: survey result (2022)

44
4.4. Type of Electronic banking the Respondents uses

As Table 7 below shows that 49 (24.5%) respondents use card banking, 42 (21.0%) of the
respondents uses mobile banking, 33 (16.5%) of the respondents use internet banking, 25(12.5%)
of the respondents use Card Banking and Mobile banking, 21(10.5%) of the respondents use
Card Banking and Internet banking, 18(9%) of the respondents use Mobile banking and Internet
banking and the remaining 12(6%) of the respondents use all kinds of platform.

Table 7: Type of Electronic banking the Respondents use

Type of Electronic banking you use

Frequency Percent Valid Percent

Card Banking 49 24.5 24.5

Mobile banking 42 21.0 21.0

Internet banking 33 16.5 16.5

Card Banking and Mobile banking 25 12.5 12.5

Card Banking and Internet banking 21 10.5 10.5

Mobile banking and Internet banking 18 9.0 9.0

All 12 6.0 6.0

Total 200 100.0 100.0

Source: survey result (2022)

4.5. Customer Type of the respondents

As Table 8 indicated below the customers types of the respondents, 168(84%) of the sample are
personal customers of the bank and 32(16%) of the respondent are company customers.

45
 Table 8: Customer Type of the respondents

Frequency Percent
personal 168 84.0
company 32 16.0
Total 200 100.0

Source: survey result (2022)

4.6 Period of using the E-banking services of the respondents

As Table 9 below indicated, the period of using E-banking service of the respondents, 63(61.5%)
of the sample uses the service for less than a year, 60(30.0%) of the sample uses the service
between 1-3 years, 41(50.5%) of the sample uses the service between 4-6 years and 36(18%) of
the sample uses the service over 6 years.

Table 9: Period of using the E-banking services of the respondents

How long using e-baking

Frequency Percent Valid Percent
Under 1years 63 31.5 31.5
1–3 years 60 30.0 30.0
4–6 years 41 20.5 20.5
Over 6 years 36 18.0 18.0
Total 200 100.0 100.0
Source: survey result (2022)

4.7. Descriptive Statistical Analysis of E-Banking Service Quality Dimensions and

Customer Satisfaction
Descriptive statistical analysis was used to summarize the responses of respondent and to know
the effect of each quality service dimensions on customer satisfaction of E-banking customers of
CBE in selected branches, based on the response the respondents for each item the present
researcher analyzed and comparing the “mean” and “standard deviation” score of each variable.
Therefore, descriptive statistics for both dependent and independent variables were performed
and their results are as detailed in subsection 4.8.

46
4.8. Mean Score and Standard Deviation of E-Banking Service Quality and
Customer Satisfaction

According to Zaidaton and Bagheri (2009), the mean score below 3.39 was considered as low;
the mean score from 3.40 up to 3.79 was considered as moderate and mean score above 3.79 was
considered as high as illustrated in Table 10 below.

Table 10: Comparison cut-points of Mean Score of Five Point Likert Scale Instrument

Mean Score Description

Below 3.39 Low

3.40-3.79 Moderate

Above 3.79 High

Source: Zaidaton & Bagheri (2009)

Table 11: Mean Score and Standard Deviation of QS and Customer Satisfaction

Research Variables Number of Number of Mean score Standard

items Respondents Deviation

Tangibility 4 200 4.17 0.552

Reliability 3 200 4.12 0.550

Responsiveness 4 200 3.99 0.793

Assurance 4 200 4.16 0.624
Empathy 3 200 4.1 0.541
Customer Satisfaction 7 200 4.19 0.505

Source: survey result (2022)

In general, the present researcher presents and summarized the mean score and standard
deviation of each variable in detail in subsection 4.8.1 to 4.8.6 and make a conclusion for each
variables using the mean result discussed in Table 11 based on mean range value discussed in
Table 11.

47
4.8.1. Mean and Standard Deviation Result of Tangibility Response

As the results in Table 11 indicate that the mean response for Tangibility was 4.17. This implies
that most of the respondents agreed with most of the statements explaining Tangibility and also it
indicates the existence of a few levels of Tangibility in the CBE in selected branches. And also,
the standard deviation of this variable was 0.552 which was low 1, it implies that most of the
respondents had the same view or agreed relating to the measures of Tangibility. So, it is noted
that the CBE in selected branches needs to maintain this good Tangibility to continue using the
service. Generally, using the results reported in Table 11, the present researcher can conclude
that there is a few Tangibility in CBE in selected branches.

4.8.2. Mean and Standard Deviation Result of Reliability Response

As the results in Table 11 indicate that the mean response for formalization was 4.12. This
implies that respondents agreed with most of the statements explaining Reliability of the service
and also it indicates there is no too much existence of rules and regulations in the CBE in
selected branches. And also, the standard deviation of this variable was 0.550 which was low 1,
it implies that most of the respondents had the same view or agreed relating to the measures of
formalization. So, it is noted that the CBE in selected branches needs to keep it up and
maintain this good Reliability to continue in their future work life. In general, using the results
reported in table 4.9, the present researcher can conclude that there is no too much rules and
regulations in CBE in selected branches.

4.8.3. Mean and Standard Deviation Result of Responsiveness Response

As the results in Table 11 indicate that the mean responsiveness was 3.99 this implies that most
of the respondents agreed with most of the statements explaining Responsiveness and also it
indicates the existence of Responsiveness of the service in the CBE in selected branches. And
also, the standard deviation of this variable was 0.793 which was low 1, it implies that most of
the respondents had the same view or agreed relating to the measures of Responsiveness. So, it
is noted that the CBE in selected branches needs to increase the Responsiveness of the service
they are giving in their future strategies. Generally, using the results reported in Table 4.11, the
present researcher can conclude that there is Responsiveness in CBE in selected branches

48
4.8.4. Mean and Standard Deviation Result of Assurance Response

As the results in Table 11 indicate that the mean response for Assurance was 4.16 this implies
that most of the respondents agreed with most of the statements explaining Assurance variable
and also it indicates the existence of a high level of assurance in the CBE in selected branches.
And also, the standard deviation of this variable was 0.624 which was low 1, it implies that most
of the respondents had the same view or agreed relating to the measures of Assurance. So, it is
noted that the CBE in selected branches needs to increase and maintain Assurance to continue in
their future work life. Generally, using the results reported in Table 11, the present researcher
can conclude that there is a high level of Assurance facilitated the speed and accuracy of
execution of tasks and customer satisfaction.

4.8.5. Mean and Standard Deviation Result of Empathy Response

As the results in Table 11 indicate that the mean response for technology was 4.1 this implies
that most of the respondents agreed with most of the statements explaining Empathy and also it
indicate the existence and there is Empathy in the CBE in selected branches. And also, the
standard deviation of this variable was 0.541 which was low 1, it implies that most of the
respondents had the same view or agreed relating to Empathy. Generally, using the results
reported in Table 4.11.

4.8.6. Mean and Standard Deviation Result of Customer Satisfaction Response

The present researcher was measured using nine items of a five-point Likert scale (with
5=Strongly Agree, to 1=Strongly Disagree) that aim at measuring customer satisfaction related
with quality service.

Regarding customer satisfaction, as depicted in the above Table 11 mean value of Customer
Satisfaction response was 4.19 which is above 3.79 considers as high. This evidence that most of
the respondents agreed with most of the statements explaining customer satisfaction and also it
indicates the existence of a high level of Customer Satisfaction in the CBE in selected branches.
Furthermore, the standard deviation of this variable was 0.505 which was low 1, it implies that
most of the respondents had the same view or agreed relating to the measures of customer

49
satisfaction. Therefore, the present researcher can conclude that this high level of Customer
Satisfaction is manifested through high level of quality in CBE in selected branches customer in
fulfilling their duties and responsibilities at the work place due to the existence E-Banking
Service Quality among the customers of CBE in selected branches.

4.9. Correlation Analysis of E-Banking Service Quality Dimensions and Customer

Satisfaction
Correlations are the measure of the linear relationship between two variables. It measures the
degree to which two sets of data are related. Correlation (r) is a parametric technique which gives
a measure of the strength of association between any two variables. The standard correlation
coefficient is (Pearson's r) which applies primarily to variables distributed more or less along
with interval or ratio scales of measurement (Andy, F., 2006).

In this section, correlation analysis was conducted in the light of each research objectives and
hypotheses developed. To determine the relationship between quality service dimensions
(Tangibility, Reliability, Responsiveness, Assurance, and Empathy) and customer satisfaction
were investigated using correlation analysis. This provided correlation coefficients, which
indicated the strength and direction of the relationship. The p-value also indicated the probability
of these relationships‟ significant. Table 4.10 below shows the result of Pearson correlation on
the relationship between quality service dimensions (Tangibility, Reliability, Responsiveness,
Assurance, and Empathy) and customer satisfaction.

50
Table 12: Correlation Analysis of QS Dimensions and Customer Satisfaction

Correlations
TAN REL RESP ASSU EMP CS
** **
TAN Pearson Correlation 1 .575 .383 -.022 .014 .068
Sig. (2-tailed) .000 .000 .760 .843 .341
N 200 200 200 200 200 200
** ** **
REL Pearson Correlation .575 1 .726 .320 .002 .031
Sig. (2-tailed) .000 .000 .000 .982 .665
N 200 200 200 200 200 200
** ** ** **
RESP Pearson Correlation .383 .726 1 .568 .298 .015
Sig. (2-tailed) .000 .000 .000 .000 .831
N 200 200 200 200 200 200
** ** ** **
ASSU Pearson Correlation .022 .320 .568 1 .779 .421
Sig. (2-tailed) .760 .000 .000 .000 .000
N 200 200 200 200 200 200
** ** **
EMP Pearson Correlation .014 .002 .298 .779 1 .543
Sig. (2-tailed) .843 .982 .000 .000 .000
N 200 200 200 200 200 200
** **
CS Pearson Correlation .068 .031 .015 .421 .543 1
Sig. (2-tailed) .341 .665 .831 .000 .000
N 200 200 200 200 200 200
**. Correlation is significant at the 0.01 level (2-tailed)

Source: survey result (2022)

The above findings (in Table 12) would be strengthened or supported by a correlation matrix,
which created by using the Pearson correlation coefficient (r). It demonstrates how each quality
service dimensions (Tangibility, Reliability, Responsiveness, Assurance, and Empathy)
correlated with customer satisfaction. The results are demonstrated in detailed in sub-section
4.9.1 to 4.9.5 as follow

4.9.1. Correlation Result of Tangibility and customer satisfaction

Tangibility Include the physical facilities, equipment and the appearance of the personnel. There
is a significant positive relationship between Tangibility and Customer Satisfaction (r=0.068 p
<0.01).

51
4.9.2. Correlation Result of reliability and customer satisfaction

Reliability: The ability of a service provider to provide the given service in a dependable and
accurate way. The correlation matrix Table 12 illustrates that reliability and customer satisfaction
has a significant positive relationship (r=0.031, p<0.01).

4.9.3. Correlation Result of Responsiveness and customer satisfaction

Responsiveness: It is the will and the promptness with which a service provider provides the
service. As the above correlation matrix Table (12) illustrates that Responsiveness and customer
satisfaction has a significant and negative relationship (r=0.015, p<0.01). Therefore, the third
hypothesis was also confirmed that is as we move toward Responsiveness of E-Banking Service
Quality, customer satisfaction is reduced.

4.9.4. Correlation Result of pattern of Assurance and Customer Satisfaction

Assurance: The ability of the customers to command trust and confidence from the customers
based on their knowledge in the area in which the service is being provided. As a table shows
there is a significant positive relationship between Assurance and Customer Satisfaction
(r=0.421, p<.01).

4.9.5. Correlation Result of Empathy and Customer satisfaction

Empathy: Is the caring and loving attitude of the workers towards the client (Zeithaml et al.,
1990). As table shows above there is a significant positive relationship between technology and
customers‟ performance (r= 0.543, p<0.01)

Generally, the table shows that there is a significant positive relationship between the four
dimensions of QS Tangibility, reliability, Empathy, and Assurance, and there is significant and
negative relationship between Responsiveness and Customer Satisfaction. However, from the
five dimensions of QS, the highest positive coefficient of correlation was Empathy, Assurance
and customer satisfaction. Furthermore, according to Bryman and Cramer, (1997), the Pearson‟s
between each pair of independent variables should not exceed 0.80, otherwise, the independent
variables that show a relationship at or in excess of 0.80 may be suspected of exhibiting

52
multicollinearity. As illustrated in the above Table 12 the Pearson‟s between each pair of
independent variables are below the cut point of 0.80. Therefore, there is no multi-collinearity
problem across each independent variable. Moreover, the above findings of this study supported
by the finding of Macduffie et al, (1995); Miner (1982), Mismar B (2018); shabbier (2017); that
shows (Tangibility, Reliability, Assurance, and Empathy) were positively and significantly
correlated and, Responsiveness was negatively and significantly correlated with Customer
Satisfaction.

4.10. Multiple Regression Assumption Tests

Gujarati, D., (2003) stated that the main assumption tested to use multiple regression are
normality test, multi-co-linearity test and linearity test. Therefore, the present researcher in this
study tests the above three assumptions and test results on the above assumptions of regression
are summarized and presented in detailed in sub-section 4.10.1 to 4.10.3.

4.10.1. Normality Test

Ghozali, (2006) states the normality can be seen on the data distribution when the curve does not
pass through either the left or the right. In order to test the normality of the data, kurtosis and
skewness measurement are critical. Kurtosis measure the level of Preakness in a histogram. High
peak has positive kurtosis, while flatter distribution has negative kurtosis. For a normal
distribution, the value of the kurtosis is zero. Positive kurtosis indicates that, relative to a normal
distribution, the observation is more clustered about the center of the distribution and has thinner
tails until the extreme value of the distribution at which point the tails of the leptokurtic
distribution are thicker relative to a normal distribution. Negative kurtosis indicates that relative
to the normal distribution the observations are cluster less and have thicker tails, until the
extreme value of the distribution at which point the tails of the platykurtic distribution are a
thicker relative of normal distribution. On the other hand, skewness measures the degree to
which cases are clustered towards one end of an asymmetry distribution. Skewness is the
measures of the asymmetric. The normal distribution is symmetric has a skewness zero.
Distribution with a significant positive skewness has a right tail. Distribution with a significant
negative skewness has a left tail (Ghozali, 2006). In order to test the normality of the data,
kurtosis and skewness value was checked and illustrated in Figure 3, and figure 4.

53
 Figure 3: Normal Distribution Plot
Source: survey result (2022)
Frequency distributions come in many different shapes and sizes. It is quite important, therefore,
to have some general descriptions for common types of distributions. In the above figure
revealed that the data would be distributed symmetrically around the center of all scores. As
such, if we drew a vertical line through the center of the distribution, then it should look the same
on both sides. This is known as a normal distribution and is characterized by the bell-shaped
curve. This shape basically implies that the majority of scores lie around the center of the
distribution (so the largest bars on the histogram are all around the central value). Therefore, in
the population, the data on the dependent variable is normally distributed for each of the possible
combinations of the level of the independent variables; each of the variables is normally
distributed.

54
 Figure 4: Normal P-P Plot of Regression Standardized Residual
Source: researcher„s computation with SPSS

Generally, as depicted in Figure 3, and 4 it shows that the data output was normally distributed.
Thus, the present can conclude that the normality assumption of multiple linear regression
analysis was satisfied base on the figure illustrated above.

4.10.2. Multicollinearity Test

One of the assumptions of multiple linear regressions is that the independent variables should not
have a very high association or correlation. When the independent variables are highly
correlated, it is regarded as a problem in the model and this problem is called multicollinearity.
Gujarati, D. (2003) stated that the existence of multicollinearity can be tested by analyzing the
values of tolerance and Variance Inflation Factors (VIF). As most authors have suggested, a
tolerance of < 0.10 and/or a VIF >10 indicates a multicollinearity problem. The results regarding
this were summarized and presented in table 13 below.

55
 Table 13: Multicollinearity Test of Multiple Linear Regression Analysis

Independent variables Collinearity Statistics

Tolerance VIF

TAN (Tangibility) 0.535 1.868

REL 0.295 3.387

RESP 0.343 2.907

ASSU 0.210 4.750

EMP 0.280 3.558

Source: survey result (2022)

In statistical conversation, tolerance is a statistic used to indicate the variability of the specified
independent variable not explained by the other independent variables in the model and as
examined in the multicollinearity matrix of independent variables in Table 13 above, the results
of tolerance for all independent variables were above 0.1 and below 1. Similarly, the results in
table 4.6 revealed that all-variable variance inflation factors (VIF) values were above one and
below 10. Therefore, using the results reported in Table 13, the present researcher can conclude
that there was no multicollinearity problem means there was no strong correlation between two
or more predictors in a regression model.

4.10.3. Test of linearity

According to Gujarati, D. (2003), linearity means that the amounts of the rate of change, between
scores on two variables, are constant for the entire range of scores for the variables. An
underlying assumption of regression analysis is that the relationship between the variables is
linear, meaning that the points in the scatter plot must form a pattern that can be approximated
with a straight line.

56
 Figure 5: Test of Linearity
Source: survey result (2022)
An underlying assumption of regression analysis is that the relationship between the variables is
linear, meaning that the points in the scatter plot must form a pattern that can be approximated
with a straight line. Thus, the above scatter plots are for data on Customer Satisfaction and the
points are evenly distributed on either side of the regression line. Therefore, the plots above
figure show that strong linear relationship and the present researcher can conclude that the
assumption of linearity was satisfied.

Generally, as illustrated from above analysis, the present researcher can conclude that the above
three assumptions namely normality, multicollinearity, and linearity were tested and satisfied the
requirement.

4.11. Multiple Linear Regression Analysis

Multiple regressions are the most common and widely used to analyze the relationship between a
single continues dependent variable and multiple continues on categorical independent variable
(George et al, 2003). In this study multiple regression analysis was employed to examine the

57
effect of E-Banking Service Quality dimensions on Customer Satisfaction. The following table
presents the results of multiple regressions analysis.

Here the squared multiple correlation coefficients (R2) which tells the level of variance in the
dependent variable (Customer Satisfaction) that is explained by the model.

Table 14: Model Summaries

Model R R Square Adjusted R Square Std. Error of the Estimate

645a .415 .400 1.314

Predictors: (Constant), EMP, REL, TAN, RESP, ASSU
Dependent Variable: CS

Source: survey result (2022)

The results of multiple regressions, as presented in Table 14, above, revealed that the E-Banking
Service Quality dimensions (Tangibility, Reliability, Responsiveness, Assurance, and Empathy)
combined significantly influence the Customer Satisfaction. The adjusted R2 of 0.415 indicates
41.5% of the variance in customer satisfaction can be predicted by the E-Banking Service
Quality offered by the organization. Therefore, four E-Banking Service Quality dimensions have
a positive and one dimension has negative and significant effect on Customer Satisfaction.

4.11.1. ANOVA Model of Effect of E-Banking Service Quality on Customer Satisfaction

The present researcher in this research produced the ANOVA model to determine whether the
model used for research purpose is fit/appropriate or not. The result regarding this is summarized
and presented in Table 15 below.

58
Table 15:ANOVA Model of Effect of OS on Customer Satisfaction

ANOVAa
Model Sum of Squares df Mean Square F Sig.
Regression 1141.045 5 228.209 27.569 .000b
Residual 1605.910 194 8.278
Total 2746.955 199
a. Dependent Variable: CS
b. Predictors: (Constant), EMP, REL, TAN, RESP, ASSU
Source: survey result (2022)
The study finding in ANOVA Table 15 indicated that the above-discussed coefficient of
determination was significant as evidence of F ratio 27.569 with p-value 0.000 < 0.01 (level of
confidence). Therefore, the model was fit/ appropriate to predict customer satisfaction using
(Tangibility, Reliability, Responsiveness, Assurance, and Empathy) in the case of CBE in
selected branches.

4.11.2. Multiple Linear Regression on Effect of E-Banking (SQCS)

As indicated by Kotari, C., (2004) and Jullie, P., (2005), standard multiple linear regressions is
used to explore the relationship between one continuous dependent variable and a number of
independent variables or predictors and also it enables to get answers regarding how well a set of
variables is able to predict a particular outcome and which variable in a set of variables is the
best predictor of an outcome. Thus, the present researcher was used multiple regression analysis
to examine the effect of E-Banking Service Quality dimensions (Tangibility, Reliability,
Responsiveness, Assurance, and Empathy) on Customer Satisfaction and the results were
summarized in Table 16 below.

59
Table 16: Multiple Linear Regression Result of Effect of QS on Customer Satisfaction

Coefficients
Unstandardized Standardized Collinearity
Coefficients Coefficients Correlations Statistics
Tolera
Model B Std. Error Beta t Sig. Zero-order Partial Part nce VIF
(Constant) 7.893 1.212 6.514 .000
TAN .126 .070 .135 1.805 .003 .068 .129 .099 .535 1.868
REL .210 .074 .288 2.850 .005 .031 .200 .156 .295 3.387
RESP -.369 .060 -.576 -6.151 .000 -.015 -.404 -.338 .344 2.908
ASSU .160 .075 .257 2.150 .033 .421 .153 .118 .211 4.750
EMP .391 .078 .516 4.980 .000 .543 .337 .273 .281 3.559
a. Dependent Variable: CS

Source: survey result (2022)

As shown in Table 16, all the variables included in this study namely Tangibility, Reliability,
Responsiveness, Assurance, and Empathy can significantly explain at 95% confidence level to
the variation on the dependent variable Customer Satisfaction. Further inspection of the
regression coefficients of individual predictor variables revealed that Tangibility (Beta = 0.135, p
< 0.05); this result shows one unit increase Tangibility can result in increase in Customer
Satisfaction. Reliability has (Beta = 0.288, p < 0.05); the result can be interpreted one unit
increase in Reliability can result in increase in customer satisfaction. Responsiveness has (Beta
=-0.576, p < 0.05); the result can be interpreted one unit increase in Responsiveness can result in
decrease in customer satisfaction. Assurance has (Beta = 0.257, p< 0.05); this means the
predictor significant relationship with Customer Satisfaction. Empathy (Beta= 0.516, p<0.05);
the result shows that the predictor has significant relationship with Customer Satisfaction.
Among the five independent variables all independent variables are significant predictors of
Customer Satisfaction in CBE in selected branches. This finding discovered that all independent
variables namely Tangibility, Reliability, Responsiveness, Assurance, and Empathy, had a
significant effect on customer satisfaction at 5% significance level.

Moreover, the above findings of this study supported by the finding of Macduffie et al, (1995);
Miner (1982), Mismar B(2018); shabbier(2017); that shows Tangibility, Reliability,

60
Responsiveness, Assurance, and Empathy were significantly correlated and, the study conducted
by those researchers matches with the finding of the present researcher.

4.12. Hypothesis Testing

Based on the multiple linear regression results the researcher has proved the statistical
significance and decided on accepting or rejecting the already developed hypothesis. Totally,
there were 5 hypotheses developed as explanatory variables in the regression analysis. On the
bases of the standardized coefficient of beta and p-value, the hypotheses of the study were tested
and the results have presented below.

H1: Tangibility dimension of E-E-Banking Service Quality has a significant positive effect on
customer satisfaction.
As shown in table 4.14, Tangibility had positive standardized beta coefficients and p-value less
than 0.05(Beta = .135, p < 0.05). This, therefore, led to the acceptance of hypothesis and
concluded that there is a significant positive relationship between Tangibility and customer
satisfaction in CBE in selected branches. As a result, hypothesis 1 (H1) is fully accepted.

H2: Reliability dimension of E-E-Banking Service Quality has a significant positive effect on
customer satisfaction.
Test results in table 4.14 show that formalization had positive standardized beta coefficients and
p-value less than 0.05 (Beta = 0.288, p < 0.05). For instance, the alternative hypothesis was
accepted and concluded that there is a significant positive relationship between Reliability and
customer satisfaction in CBE in selected branches.

H3: Responsiveness dimension of E-E-Banking Service Quality has a significant positive effect
on customer satisfaction.
Test results in Table 16 show that centralization had negative standardized beta coefficients and
p-value less than 0.05(Beta =-0.576, p < 0.05). Thus, the alternative hypothesis was not accepted
and concluded that there is a significant but negative relationship between Responsiveness and
customer satisfaction in CBE in selected branches. As a result of the above discussion,
hypothesis 3 (H3) is not accepted.

61
H4: Assurance dimension of E-E-Banking Service Quality has a significant positive effect on
customer satisfaction.
Test results in Table 16 show that communication had positive standardized beta coefficients and
p-value greater than 0.05(Beta = 0.257, p< 0.05). This, therefore, led to alternative hypothesis is
accepted and concluded that there is a significant relationship between Assurance dimension and
customer satisfaction in CBE in selected branches. Generally, hypothesis 4 (H4) is accepted.
H5: Empathy dimension of E-E-Banking Service Quality has a significant positive effect on
customer satisfaction.
Test results in Table 16 show that Empathy dimension had positive standardized beta
coefficients and p-value greater than 0.05(Beta= 0.516, p<0.05); This, therefore, led to
alternative hypothesis is accepted and concluded that there is a significant relationship between
Empathy dimension and customer satisfaction in CBE in selected branches. Generally,
hypothesis 5 (H5) is not accepted.

Table 17: Summary of Hypothesis Testing Results

No Hypothesis Result
1. Tangibility dimension of E-E-Banking Service Quality has a Accepted
significant positive effect on customer satisfaction.

2. Reliability dimension of E-E-Banking Service Quality has a Accepted

significant positive effect on customer satisfaction. Responsiveness
dimension of E-E-Banking Service Quality has a significant positive
effect on customer satisfaction.

3. Responsiveness dimension of E-E-Banking Service Quality has a Not Accepted

significant positive effect on customer satisfaction.

4. Assurance dimension of E-E-Banking Service Quality has a Accepted

significant positive effect on customer satisfaction

5. Empathy dimension of E-E-Banking Service Quality has a significant Accepted

positive effect on customer satisfaction

Source: survey result (2022)

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 4.13. Discussion of Results

This discussion is very important to provide more clarification on the above results. This
research is related to the effect of E-banking service quality on customer satisfaction in the
Commercial Bank of Ethiopia, Selected Bahir Dar Branches. The objective of this study is to
investigate the effect of E-banking service quality on customer satisfaction in the Commercial
Bank of Ethiopia, Selected Bahir Dar branches, by analyzing the relationship of every construct
in the conceptual framework. Demographic factors such as sex, age, level of educational, Type
of customer, period of using the E-banking services and type of electronic banking the customer
usage of research participants have been assessed so as to know the general characteristics of the
respondents. Based on the results of this research, the research was allowed 82 (41.0%) of the
respondents are males and 161 (80.5%) are female respondents. In terms of age, the majority of
respondents were in between 25-35 years old which was accounted (45.3%). With regard to the
educational level of respondents, the majority of the respondents were the first-degree holder
which was accounted 114 (50.7%)., In terms of Type of Electronic banking the Respondents uses
49 (24.5%) respondents use card banking, 42 (21.0%) of the respondents uses mobile banking,
33 (16.5%) of the respondents use internet banking, 25(12.5%) of the respondents use card
banking and mobile banking, 21(10.5%) of the respondents use Card Banking and Internet
banking, 18(9%) of the respondents use Mobile banking and Internet banking and the remaining
12(6%) of the respondents use all kinds of platform, In terms of Type Customer Type of the
respondents 168(84%) of the sample are personal customers of the bank and 32(16%) of the
respondent are company customers and finally In terms of Type Customer Type Period of using
the E-banking services 63(61.5%) of the sample uses the service for less than a year, 60(30.0%)
of the sample uses the service between 1-3 years, 41(50.5%) of the sample uses the service
between 4-6 years and 36(18%) of the sample uses the service over 6 years.

As justified in the part of the descriptive statistics of this study, the five variables indicated that
the mean score response of the participants responded for all independent variables item on five-
point Likert-scales are above 3.79. This showed that the Tangibility, Reliability, Responsiveness,
Assurance, and Empathy have a strong effect on customer satisfaction having a mean value of
4.17, 4.16 3.99, 4.16, and 4.1 respectively. On the other hand, the mean value of the Customer
Satisfaction was 4.19. This implies that the customer satisfaction in CBE in selected branches

63
was successful because of the existence of the above mentioned five dimensions of E-Banking
Service Quality.

Based on the Pearson correlation test of correlation results, the five E-Banking Service Quality
dimensions positively correlated with Customer Satisfaction. There is a significant positive
relationship between Tangibility and Customer Satisfaction (r=.068 p <.01). The correlation
matrix table (4.10) illustrates that reliability and customer satisfaction has a significant positive
relationship (r=0.031, p<.01). Correlation matrix table (4.10) illustrates that Responsiveness and
customer satisfaction has a significant and negative relationship (r=.015, p<.01). Therefore, the
third hypothesis was also confirmed that is as we move toward Responsiveness of E-Banking
Service Quality, customer satisfaction is reduced. As a table shows there is a significant positive
relationship between Assurance and Customer Satisfaction (r=0.421, p<0.01). As a table shows,
there is a significant positive relationship between technology and customers‟ performance (r=
.543, p<.01)

Prior to any statistical tests normality test was done by visualizing shape of the histogram
produced, linearity of the relationship among variables was checked using scatter plot and
multicollinearity test was undertaken on the specified model using correlation coefficient as well
as variance inflation factor (VIF) and tolerance value because all the above three should be
fulfilled as basic assumptions required for further usage of multiple linear regression analysis.
For instance, the test result indicated that all the above three as basic assumptions were fulfilled.

Finally, regression model analysis was performed and as the result reveals that the five
independent variables (Tangibility, Reliability, Responsiveness, Assurance, and Empathy have
contributed or explained 41.5 % (adjusted R square = 0.415) on the Customer Satisfaction. The
remaining 58.5% variance is explained by other variables not included in this study. This result
indicated that the explanatory variables have strongly explained the response variable.
Subsequently, the multiple linear regressions were performed and as the result indicated that the
five dimensions of E-Banking Service Quality Namely Tangibility, Reliability, Assurance, and
Empathy had a positive significant effect and Responsiveness of authority had a significant
negative effect on customer satisfaction. The result of multiple linear regressions separately
discussed below in light of empirical finding of the various researcher on similar or related
studies.

64
As shown in table 4.14, Tangibility had positive standardized beta coefficients and p-value less
than 0.05(Beta = .135, p < 0.05). This, therefore, led to the acceptance of hypothesis and
concluded that there is a significant positive relationship between Tangibility and customer
satisfaction in CBE in selected branches. As a result, hypothesis 1 (H1) is fully accepted.

Test results in Table 16 show that formalization had positive standardized beta coefficients and
p-value less than 0.05 (Beta = 0.288, p < 0.05). For instance, the alternative hypothesis was
accepted and concluded that there is a significant positive relationship between Reliability and
customer satisfaction in CBE in selected branches.

Test results in Table 16 show that centralization had negative standardized beta coefficients and
p-value less than 0.05(Beta =-0.576, p < 0.05). Thus, the alternative hypothesis was not accepted
and concluded that there is a significant but negative relationship between Responsiveness and
customer satisfaction in CBE in selected branches. As a result of the above discussion,
hypothesis 3 (H3) is not accepted.

Test results in table 4.14 show that communication had positive standardized beta coefficients
and p-value greater than 0.05(Beta = 0.257, p< 0.05). This, therefore, led to alternative hypothesis
is accepted and concluded that there is a significant relationship between Assurance dimension
and customer satisfaction in CBE in selected branches. Generally, hypothesis 4 (H4) is accepted.
Test results in Table 16 show that Empathy dimension had positive standardized beta
coefficients and p-value greater than 0.05(Beta= 0.516, p<0.05); This, therefore, led to alternative
hypothesis is accepted and concluded that there is a significant relationship between Empathy
dimension and customer satisfaction in CBE in selected branches. Generally, hypothesis 5 (H5) is
not accepted.

65
4.14. Conclusion

Generally, in this chapter, the response rate is justified and all the collected data analyzed using
descriptive statistics including means and standard deviation and presented in summary form
using tables. Inferential data analysis was done by the using coefficient to determine the strength
and the direction of the relationship between Customer Satisfaction and five E-Banking Service
Quality dimensions. Multiple regressions assumption tests namely normality, multicollinearity,
and linearity test were done so as to see the viability of the model to use in this research and then
multiple regressions were done to establish the relations between the five E-Banking Service
Quality dimensions and Customer Satisfaction. Finally, hypothesis testing was done using p-
value. If the p-value was less or equal to 0.05 the four alternative hypotheses was accepted. The
next chapter presents the summary, recommendations, and conclusion of the study.

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 CHAPTER FIVE: SUMMARY, RECOMMENDATIONS, AND
CONCLUSION
5.1. Introduction

The major objective of this study was to examine the effect of E-Banking Service Quality on
Customer Satisfaction of CBE in selected branches. This chapter summarized and discussed the
main findings obtained from each of the five research objectives. It also dealt with the
conclusions that were derived from the analysis, as well as recommendations that can be
implemented or used for future research, for each of the main research objectives.

5.2. Summary of Main Findings

The main purpose of this study was to investigate the effect of E-Banking Service Quality on customer
satisfaction of CBE in selected branches. This research study used the quantitative research method and
descriptive design in particular. The study adopted a quantitative approach to the effects of E-Banking
Service Quality on customer satisfaction. The variables for the research study included Tangibility,
Reliability, Assurance, and Empathy as independent variables while the customer satisfaction was the
dependent variable. The target population comprised of 200 customers of CBE in selected branches. The
sampling selection technique for this study has been the non-probability sampling. Nonprobability
sampling may be defined as any sampling method where some elements of the population have no chance
of selection, or where the probability of selection cannot be accurately determined. According to,
Twumasi (2002) writes “as the name implies, the researcher, adhering to the objectives of the study,
selects respondents who can answer his research questions. With good calculation and a relevant research
strategy he picks the respondents he wants to be included in his sample‟. Convenience sampling is a non-
probability sampling technique where subjects are selected because of their convenient accessibility and
proximity to the researcher (Black et al, 1999). From which the types of non-probability sampling the
researcher was used purposive (convenience) sampling technique. Because of the following reason; first,
as the researcher observed through many previous visits to the selected branches that not all individuals
present at the banking halls are necessarily the banks customers. Some indeed passer byes either sent to
clear cheques or deposit cash as well as other purposes. Second, as the researcher read other related
journals which conducted previously used this type of sampling technique. For instance, Prince Adiyia
Kwarteng (2015), Martin Otu Offei and Kwaku Nuamah-Gyambrah (2016) etc. were used purposive
sampling technique. For this reason, the researcher could be intended to purposively select participants

67
who are active customers of the selected bank branches. Therefore, the sample size of this study was 200
customers of the bank with purposively selected among the whole customers of the population universe.
Why the researcher is taking 200 customers as a sample? Because, even if the electronic banking is
operated by the persons, the customers are not giving the service to the customers directly; rather the
customers are obtaining the e-banking service directly from the machine or/and internet system. If the
machine is not working properly for the time being, the customers might not get money through ATM
and POS. For this reason, the customers become dissatisfied. The same is true that if the internet
connection is not working while the customers need the service it will cause for their dissatisfaction. So,
the machine improper working and system fail will have an influence on satisfaction for all customers of
E-banking service and its service quality. Due to this whether you use all the customers or 200 samples
will not have an effect on the research because their response was the same for using e-banking service.
200 customers can the representative for all customers of e-banking service. The system is not biased
among the customers. Therefore, sample size meant that 40 customers were conveniently selected from
each of the five (5) grade four branches.

The demographic profiles of the respondents were analyzed using percentages and frequencies.
As for inferential statistics, tools such as correlation, regression, coefficient, and ANOVA were
used to analyze and study the nature of effects between independent and dependent variables.

After analyzing the gathered information, the following major findings were identified: Based on the
results of this research, the research was allowed 82 (41.0%) of the respondents are males and 161
(80.5%) are female respondents. In terms of age, the majority of respondents were in between
25-35 years old which was accounted (45.3%). With regard to the educational level of
respondents, the majority of the respondents were the first-degree holder which was accounted
114 (50.7%)., In terms of Type of Electronic banking the Respondents uses 49 (24.5%)
respondents use card banking, 42 (21.0%) of the respondents uses mobile banking, 33 (16.5%) of
the respondents use internet banking, 25(12.5%) of the respondents use Card Banking and
Mobile banking, 21(10.5%) of the respondents use Card Banking and Internet banking, 18(9%)
of the respondents use Mobile banking and Internet banking and the remaining 12(6%) of the
respondents use all kinds of platform, In terms of Type Customer Type of the respondents
168(84%) of the sample are personal customers of the bank and 32(16%) of the respondent are
company customers and finally In terms of Type Customer Type Period of using the E-banking
services 63(61.5%) of the sample uses the service for less than a year, 60(30.0%) of the sample

68
uses the service between 1-3 years, 41(50.5%) of the sample uses the service between 4-6 years
and 36(18%) of the sample uses the service over 6 years.

As justified in the part of the descriptive statistics of this study, the five variables indicated that
the mean score response of the participants responded for all independent variables item on five-
point Likert-scales are above 3.79. This showed that the Tangibility, nature of formalizations,
centralization of authority, pattern of communication and technology have a strong effect on
customer satisfaction having a mean value of 4.17, 4.16 3.99, 4.16, and 4.1 respectively. On the
other hand, the mean value of the Customer Satisfaction was 4.19. This implies that the customer
satisfaction in CBE in selected branches was successful because of the existence of the above
mentioned five dimensions of service quality

Based on the Pearson correlation test of correlation results, the five E-Banking Service Quality
dimensions positively correlated with Customer Satisfaction. There is a significant positive
relationship between Tangibility and Customer Satisfaction (r=.068 p <.01). The correlation
matrix table (4.10) illustrates that reliability and customer satisfaction has a significant positive
relationship (r=.031, p<.01). Correlation matrix table (4.10) illustrates that Responsiveness and
customer satisfaction has a significant and negative relationship (r=.015, p<.01). Therefore, the
third hypothesis was also confirmed that is as we move toward Responsiveness of E-Banking
Service Quality, customer satisfaction is reduced. As a table shows there is a significant positive
relationship between Assurance and Customer Satisfaction (r=0.421, p<0.01). As a table shows,
there is a significant positive relationship between technology and customers‟ performance (r=
0.543, p<0.01)

Prior to any statistical tests normality test was done by visualizing shape of the histogram
produced, linearity of the relationship among variables was checked using scatter plot and
multicollinearity test was undertaken on the specified model using correlation coefficient as well
as variance inflation factor (VIF) and tolerance value because all the above three should be
fulfilled as basic assumptions required for further usage of multiple linear regression analysis.
For instance, the test result indicated that all the above three as basic assumptions were fulfilled.

Finally, regression model analysis was performed and as the result reveals that the five
independent variables (Tangibility, Reliability, Responsiveness, Assurance, and Empathy have

69
contributed or explained 41.5 % (adjusted R square = 0.415) on the Customer Satisfaction. The
remaining 58.5% variance is explained by other variables not included in this study. This result
indicated that the explanatory variables have strongly explained the response variable.
Subsequently, the multiple linear regressions were performed and as the result indicated that the
five dimensions of E-Banking service quality namely tangibility, reliability, assurance, and
empathy had a positive significant effect and responsiveness of authority had a significant
negative effect on customer satisfaction. The result of multiple linear regressions separately
discussed below in light of empirical finding of the various researcher on similar or related
studies.

5.3. Conclusion

Depending on the analysis results of this study, conclusions are made on the basis of the effect of
E-Banking service quality on customer satisfaction. The findings supported the theory that nature
of Tangibility (fewer layers in an organization) results in improved customer satisfaction. From
the correlation analysis it can be concluded that, Tangibility is positively and significantly related
to customer satisfaction. Workers who had strong coordination with their friends in an
organization were realistic in whatever choices they make and in doing their work.

According to the findings, implementing Reliability dimensions result in improved Customer

Satisfaction which then leads to the attainment of overall organizational success. From the
correlation analysis, it can be concluded that nature of reliability is positively and significantly
related to customer satisfaction.

Finally, the findings supported that responsiveness of authority results in declining customer
satisfaction. From the correlation analysis it can be concluded that, responsiveness is negatively
and significantly related to customer satisfaction. The study indicated that responsiveness incurs
to decline the customer satisfaction and it was result a negative impact on customer satisfaction
and overall organization achievement of its goals and objectives.

With regard to the regression analysis, this study concluded that E-Banking service quality
caused 41.5%% variation in customer satisfaction; however, the remaining 58.5% variation is
caused by other performance factors that have not been considered in this study

70
To sum up, based on the major findings, it is possible to conclude that the effects of E-Banking
service quality on customer satisfaction of the CBE in selected branches, the results indicated
that each independent variable except responsiveness dimensions has a positive and strong
significance effect on Customer Satisfaction.

5.4. Recommendations

In line with the above results mentioned, the study recommended that CBE in selected branches
needs to make less Tangibility if they need to improve customer satisfaction as long as less
Tangibility has a positive and strong significant effect on customer satisfaction. Organizations
need to focus on creating conducive layers of hierarchy in developing workers to have strong
integration, coordination so that they can be realistic in whatever choices they make and in doing
their work.

Finally, the study recommends that CBE in selected branches needs to have empathy dimensions
of service in an organization. In general, that customer‟s satisfaction improves organizational
competitive advantage to promote responsiveness in enhancing overall organizational
performance has stimulated interest in identifying the antecedents to promote high customers
satisfaction.

To sum up, the low level of E-Banking service quality exhibited customer satisfaction means that
customers were neither exposed for the opportunity of clarifying objectives, method of work and
schedule, nor enjoy the privilege of using their creativity to approach their work flexibly. Hence,
to be more apparent, E-Banking service quality has a significantly positive and strong effect on
Customer Satisfaction of the CBE in selected branches. Appropriate E-Banking Service Quality
employee performed at a higher level than inappropriate E-Banking Service Quality customers.
In addition, it has been noted that the customers who have inappropriate E-Banking Service
Quality can able to perform comparatively at a lower level. Generally speaking, banks having a
good E-Banking service quality, become more success and create better interpersonal relation,
work more successfully and spend good life of its customers than those banks having
inappropriate E-Banking Service Quality.

71
5.5. Limitation of the Study

The focus of this study was to investigate the effect of E-Banking service quality on customer
satisfaction. All findings are based on the information provided by the respondents and would be
subject to the potential bias and prejudice of the people involved. Because those participants
having a personal interest in painting a glossy picture. The studies were used only questioner‟s
data collection methods because a questionnaire provides a suitable and relatively inexpensive
method for collecting data. The unavailability of secondary data (previously conducted
researches in the related to the topic and geographic limitation, confined only to CBE in selected
branches. Moreover, the result of this study might only be applicable to this particular CBE in
selected branches where the study was conducted.

5.6. Direction for Future Research

This research tried to examine the effect of E-Banking service quality on customer satisfaction.
The study only focused at CBE in selected branches customers which are inadequate to make
inference about the effect of E-Banking service quality on customer satisfaction in the CBE in
selected branches as a whole. Hence, further research needs to be carried out on the effect of E-
Banking service quality on customer satisfaction in CBE in selected branches as a whole and
other public sector. In addition, the research approach that applied for this research is mostly
quantitative type. Future researches should incorporate both quantitative and qualitative data in
order to explore more about the effects of E-Banking service quality on customer satisfaction.

5.7. Ethical consideration

Ethics is the main concern for all the research to maintain the standards of the conducted study.
According to Menih (2013), key ethical concerns for research include exclusion conditions,
recruitment methods, informed consent, the participant and researcher relationship, and the
researcher‟s safety. Horn (2009) suggests that while using a questionnaire instrument a signature
of the respondent is sufficient for obtaining the consent, which were followed by the researcher.

72
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Yasuharu, U. (2003). The effects of information system investment in banking industry.

Zeithaml, V.A. (2002) Service excellence in electronic channels. Managing E-Banking Service
Quality, 12(3), 135-138.

Zhou L., 2004, a dimension-specific analysis of performance-only measurement of E-Banking

Service Quality and satisfaction in China's retail banking, “Journal of Services
Marketing”, 18(7).

Zhou L., Zhang Y., Xu J., 2002, A critical assessment of SERVQUAL‟s applicability in the
banking context of China, “Asia Pacific Advances in Consumer Research”, 5.

80
 7. APPENDIX
APPENDIX I: QUESTIONNAIRE

YOM POSTGRADUATE COLLEGE

Questionnaire to be distributed for the Customers of Commercial Bank of Ethiopia

My Name is Birhan Fenta, This questionnaire is developed for an academic effort planned for the
collection of data to conduct a thesis paper on the title “The Effects of E-banking services
quality on customer satisfaction: the case of commercial bank of Ethiopia”, in order to fulfill
the College‟s requirement set for awarding of a Master of Development Economics. The
information obtained from this questionnaire was kept confidential and will not be used for any
other purposes. Hence, I am kindly asking respondents to give your candid information.

NB:

 It is not necessary to write your name

 Try to address the entire question given below

 Use (√) mark for your choice in the given box

PART I: Demographic and personal Information of the participant

1. Sex

1. Male 2. Female

2. Age

1. 18-25 2. 26-35 3. 36-45 4. 46-55 5. Above 56

3. What is your highest education completed?

1. College diploma 2. First Degree 3. Second Degree and above

4. What Type of customer are you?

1. Personal 2. Company

5. How long using the E-banking services?

81
1. Under 1years 2. 1–3 years 3. 4–6 years 4. Over 6 years

6. Which type of Electronic banking do you use?

1. Card Banking 2. Mobile banking 3. Internet banking

4. Card Banking and Mobile banking 5. Card Banking and Internet banking 6. Mobile
banking and Internet banking 7.All

Part II: Questions Directly Related with the Study

Here under the questions with regard to the E-banking Service Quality, therefore, you are kindly
requested to put “√” mark on the box which represents your degree of agreement. [1=strongly disagree
(SDA); 2=Disagree (DA); 3=neither agree nor disagree (N); 4=Agree (A); and 5=strongly agree
(SA)]

82
2.3 E-Banking Service Quality
N0 I. Tangibility SD DA N A SA
A
1 Commercial bank of Ethiopia has Up-to-date and enough equipment
used for its customers
2 The electronic banking facilities are visually appealing

3 The electronic banking service equipment/Website/application is

technologically up to date
4 The Appearance and the physical facilities of CBE are consistent with
the type of service industry
II. Reliability

5 I prefer using electronic banking service instead of going to branches.

6 I am satisfied with the electronic banking service charge of the bank.

7 Electronic banking performs transactions right the first time.

III. Responsiveness

8 I always get the detail of my account and transactions through SMS

and/or Email.

9 The helpline service concerning electronic banking of the bank is

efficient

10 The bank makes accurate promises about its electronic banking

service.

11 Response through electronic banking is prompt and quick

IV. Assurance

12 I feel safe/assure while making transaction using electronic banking

83
 service.

13 The behavior of electronic banking customers instills confidence

14 I am satisfied with the knowledge of the customers about electronic

banking services.
15 I am confident that the bank‟s electronic banking website does not
share my personal profile with other websites.
V. Empathy

16 The bank shows readiness to solve problems regarding electronic

banking.

17 can get personal attention regarding electronic banking, if need arises

18 Customers understand my specific needs regarding electronic banking.

2.4. Customer Satisfaction

No Regarding customer‟s perception of E-banking Service Quality SDA DA N A S

A

1 Based on my previous online experience, I feel the E-banking services

quality is good.

2 The E-banking services quality is better than I expected.

3 The E-banking services completely meet my expectations.

4 I feel absolutely delighted with the E-banking service

5 In your view, the E-banking services are customer-oriented

6 I would like to recommend the E-banking services to friends and

people I know

7 I would like to keep close relationship with the E-banking services.

Source: Adopted from Zenithal 1988

84
APPENDIX II
REGRESSION
/MISSING LISTWISE
/STATISTICS COEFF OUTS R ANOVA CHANGE ZPP
/CRITERIA=PIN(.05) POUT(.10)
/NOORIGIN
/DEPENDENT CS
/METHOD=ENTER TAN REL RESP ASSU EMP
/SCATTERPLOT=(*ZRESID ,*ZPRED)
/RESIDUALS DURBIN HISTOGRAM (ZRESID) NORMPROB (ZRESID).

Regression

Notes
Output Created 19-AUG-2022 06:24:25
Comments
Input Data C:\Users\Abu\Desktop\birhanu.s
av
Active Dataset DataSet1
Filter <none>
Weight <none>
Split File <none>
N of Rows in Working Data File 200
Missing Value Handling Definition of Missing User-defined missing values are
treated as missing.
Cases Used Statistics are based on cases
with no missing values for any
variable used.

85
 Syntax REGRESSION
/MISSING LISTWISE
/STATISTICS COEFF OUTS
R ANOVA CHANGE ZPP
/CRITERIA=PIN(.05)
POUT(.10)
/NOORIGIN
/DEPENDENT CS
/METHOD=ENTER TAN REL
RESP ASSU EMP
/SCATTERPLOT=(*ZRESID
,*ZPRED)
/RESIDUALS DURBIN
HISTOGRAM(ZRESID)
NORMPROB(ZRESID).
Resources Processor Time 00:00:00.42
Elapsed Time 00:00:00.53
Memory Required 6048 bytes
Additional Memory Required for 616 bytes
Residual Plots

Variables Entered/Removed
Variables
Model Variables Entered Removed Method
1 EMP, REL, TAN, . Enter
b
RESP, ASSU
a. Dependent Variable: CS
b. All requested variables entered.

Model Summary
Change Statistics
Adjusted R Std. Error of R Square Sig. F Durbin-
Model R R Square Square the Estimate Change F Change df1 df2 Change Watson
a
1 .645 .415 .400 2.87713 .415 27.569 5 194 .000 1.314

a. Predictors: (Constant), EMP, REL, TAN, RESP, ASSU

b. Dependent Variable: CS

86
 ANOVAa
Model Sum of Squares df Mean Square F Sig.
b
1 Regression 1141.045 5 228.209 27.569 .000
Residual 1605.910 194 8.278
Total 2746.955 199
a. Dependent Variable: CS
b. Predictors: (Constant), EMP, REL, TAN, RESP, ASSU

Coefficients
Standardized
Unstandardized Coefficients Coefficients Correlations
Model B Std. Error Beta t Sig. Zero-order Partial Part
1 (Constant) 7.893 1.212 6.514 .000
TAN .126 .070 .135 1.805 .003 .068 .129 .099
REL .210 .074 .288 2.850 .005 .031 .200 .156
RESP -.369 .060 -.576 -6.151 .000 -.015 -.404 -.338
ASSU .160 .075 .257 2.150 .033 .421 .153 .118
EMP .391 .078 .516 4.980 .000 .543 .337 .273
a. Dependent Variable: CS

Residuals Statistics
Minimum Maximum Mean Std. Deviation N
Predicted Value 6.9659 22.7056 17.0150 2.39456 200
Residual -7.10325 10.51084 .00000 2.84076 200
Std. Predicted Value -4.197 2.376 .000 1.000 200
Std. Residual -2.469 3.653 .000 .987 200
a. Dependent Variable: CS

87
Charts

88
GET
FILE='C:\Users\Abu\Desktop\birhanu.sav'.
DATASET NAME DataSet1 WINDOW=FRONT.
REGRESSION
/MISSING LISTWISE
/STATISTICS COEFF OUTS R ANOVA COLLIN TOL CHANGE ZPP
/CRITERIA=PIN(.05) POUT(.10)
/NOORIGIN
/DEPENDENT CS
/METHOD=ENTER TAN REL RESP ASSU EMP
/SCATTERPLOT=(*ZRESID ,*ZPRED)
/RESIDUALS DURBIN HISTOGRAM(ZRESID) NORMPROB(ZRESID).

89
Regression
Notes
Output Created 23-AUG-2022 00:40:22
Comments
Input Data C:\Users\Abu\Desktop\birhanu.sav

Active Dataset DataSet1

Filter <none>
Weight <none>
Split File <none>
N of Rows in Working Data File 200
Missing Value Handling Definition of Missing User-defined missing values are
treated as missing.
Cases Used Statistics are based on cases with
no missing values for any variable
used.
Syntax REGRESSION
/MISSING LISTWISE
/STATISTICS COEFF OUTS R
ANOVA COLLIN TOL CHANGE
ZPP
/CRITERIA=PIN(.05) POUT(.10)
/NOORIGIN
/DEPENDENT CS
/METHOD=ENTER TAN REL
RESP ASSU EMP
/SCATTERPLOT=(*ZRESID
,*ZPRED)
/RESIDUALS DURBIN
HISTOGRAM(ZRESID)
NORMPROB(ZRESID).

Resources Processor Time 00:00:02.94

Elapsed Time 00:00:01.69
Memory Required 6048 bytes
Additional Memory Required for 616 bytes
Residual Plots

[DataSet1] C:\Users\Abu\Desktop\birhanu.sav

90
 Variables Entered/Removeda
Variables
Model Variables Entered Removed Method
1 EMP, REL, TAN, . Enter
b
RESP, ASSU
a. Dependent Variable: CS
b. All requested variables entered.

Model Summaryb
Durbin-
Change Statistics Watson
Adjusted Std. Error R Sig. F
R R of the Square F Chang
Model R Square Square Estimate Change Change df1 df2 e
a
1 .645 .415 .400 2.87713 .415 27.569 5 194 .000 1.314
a. Predictors: (Constant), EMP, REL, TAN, RESP, ASSU
b. Dependent Variable: CS

ANOVAa
Sum of
Model Squares df Mean Square F Sig.
b
1 Regression 1141.045 5 228.209 27.569 .000
Residual 1605.910 194 8.278
Total 2746.955 199
a. Dependent Variable: CS
b. Predictors: (Constant), EMP, REL, TAN, RESP, ASSU

Coefficientsa
Standar
dized
Unstandardized Coeffici Collinearity
Coefficients ents Correlations Statistics
Std. Zero- Partia Toler
Model B Error Beta t Sig. order l Part ance VIF

91
1 (Constant) 7.893 1.212 6.514 .000
TAN .126 .070 .135 1.805 .033 .068 .129 .099 .535 1.868
REL .210 .074 .288 2.850 .005 .031 .200 .156 .295 3.387
RESP -.369 .060 -.576 -6.151 .000 -.015 -.404 -.338 .344 2.908
ASSU .160 .075 .257 2.150 .033 .421 .153 .118 .211 4.750
EMP .391 .078 .516 4.980 .000 .543 .337 .273 .281 3.559
a. Dependent Variable: CS

Collinearity Diagnosticsa
Condi Variance Proportions
Dimen Eigenvalu tion (Const
Model sion e Index ant) TAN REL RESP ASSU EMP
1 1 5.758 1.000 .00 .00 .00 .00 .00 .00
2 .121 6.903 .00 .04 .03 .01 .06 .05
3 .074 8.829 .09 .05 .02 .18 .02 .02
4 .020 17.03 .16 .20 .32 .44 .12 .10
8
5 .018 17.80 .69 .30 .11 .37 .07 .02
0
6 .009 25.22 .05 .41 .52 .00 .72 .80
3
a. Dependent Variable: CS

Residuals Statisticsa
Minimum Maximum Mean Std. Deviation N
Predicted Value 6.9659 22.7056 17.0150 2.39456 200
Residual -7.10325 10.51084 .00000 2.84076 200
Std. Predicted Value -4.197 2.376 .000 1.000 200
Std. Residual -2.469 3.653 .000 .987 200
a. Dependent Variable: CS

92
Charts

93
94
GET
FILE='C:\Users\Abu\Desktop\birhanu.sav'.
DATASET NAME DataSet1 WINDOW=FRONT.
DATASET ACTIVATE DataSet1.

SAVE OUTFILE='C:\Users\Abu\Desktop\birhanu.sav'
/COMPRESSED.
DATASET ACTIVATE DataSet1.

SAVE OUTFILE='C:\Users\Abu\Desktop\birhanu.sav'
/COMPRESSED.
DATASET ACTIVATE DataSet1.

SAVE OUTFILE='C:\Users\Abu\Desktop\birhanu.sav'
/COMPRESSED.
DATASET ACTIVATE DataSet1.

SAVE OUTFILE='C:\Users\Abu\Desktop\birhanu.sav'
/COMPRESSED.
FREQUENCIES VARIABLES=Sex age education type of Electronic banking you use
type of customer
howlongusingebaking
/ORDER=ANALYSIS.

Frequencies

Notes
Output Created 22-AUG-2022 04:31:22
Comments
Input Data C:\Users\Abu\Desktop\birhanu.
sav
Active Dataset DataSet1
Filter <none>
Weight <none>
Split File <none>
N of Rows in Working Data 200
File
Missing Value Handling Definition of Missing User-defined missing values
are treated as missing.
Cases Used Statistics are based on all
cases with valid data.

95
Syntax FREQUENCIES
VARIABLES=Sex age
education
typeofElectronicbankingyouuse
typeofcustomer
howlongusingebaking
/ORDER=ANALYSIS.
Resources Processor Time 00:00:00.02
Elapsed Time 00:00:00.02

[DataSet1] C:\Users\Abu\Desktop\birhanu.sav

Statistics
typeofElectronicb How long using
Sex age education ankingyouuse Type of customer e-baking
N Valid 200 200 200 200 200 200
Missing 0 0 0 0 0 0

Frequency Table

Sex
Cumulative
Frequency Percent Valid Percent Percent
Valid Male 82 41.0 41.0 41.0
Female 118 59.0 59.0 100.0
Total 200 100.0 100.0

age
Cumulative
Frequency Percent Valid Percent Percent
Valid 18-25 56 28.0 28.0 28.0
26-35 96 48.0 48.0 76.0
36-45 41 20.5 20.5 96.5

96
 Above 56 7 3.5 3.5 100.0
Total 200 100.0 100.0

education
Cumulative
Frequency Percent Valid Percent Percent
Valid First Degree 161 80.5 80.5 80.5
MASTERS 39 19.5 19.5 100.0
Total 200 100.0 100.0

Type of Electronic banking you use

Cumulative
Frequency Percent Valid Percent Percent
Valid Card Banking 49 24.5 24.5 24.5
Mobile banking 42 21.0 21.0 45.5
Internet banking 33 16.5 16.5 62.0
Card Banking and Mobile 25 12.5 12.5 74.5
banking
Card Banking and Internet 21 10.5 10.5 85.0
banking
Mobile banking and Internet 18 9.0 9.0 94.0
banking
All 12 6.0 6.0 100.0
Total 200 100.0 100.0

Type of customer
Cumulative
Frequency Percent Valid Percent Percent
Valid personal 168 84.0 84.0 84.0
company 32 16.0 16.0 100.0
Total 200 100.0 100.0

97
 How long using e-baking
Cumulative
Frequency Percent Valid Percent Percent
Valid Under 1years 63 31.5 31.5 31.5
1–3 years 60 30.0 30.0 61.5
4–6 years 41 20.5 20.5 82.0
Over 6 years 36 18.0 18.0 100.0
Total 200 100.0 100.0

98