Factors Affecting Customer Loyalty in Banks: The Case of Commercial Bank of Ethiopia

Abstract

Customer loyalty has become more important due to significant increase in competition in banking industry. Banks need to identify factors that affect customer loyalty to become more profitable. Identification and understanding of this factor is important for bank management to design various strategies to the factor that have significant impact on customer loyalty. The purpose of present study is to examine factors affecting customer loyalty in Commercial bank of Ethiopia. In this study five independent variables (trust, commitment, satisfaction, image and switching cost) are considered and their influence on customer loyalty is tested by using regression analysis. The result of regression analysis shows that H1which states that Bank trust has a positive influence on customer loyalty, H2 which states that Bank commitment has a positive influence on customer loyalty, H3 which states that satisfaction with Bank service has a positive influence on customer loyalty, H5 switching cost have a positive influence on customer loyalty are supported while, H4 which states that Bank image has a positive influence on customer loyalty is not supported.