Marketing Determinants and Potential Effects of Banking Service Quality: The Case of Egypt

Abstract

Service is created when it’s marketed, and this is why we try to measure “service quality” through “marketing mix”. This paper analyzes the Egyptian banking performance, and measures the effect of the marketing mix on service quality and the effect of service quality on performance indicators. Banking performance is measured, using Return On Assets (ROA) and Return On Equity (ROE) as measures of profitability performance, and Market Share of Assets (MSA), Market Share of Deposits (MSD) and Market Share of Loans (MSL) as measures of marketing performance. Service quality is measured by retention of old customers and attraction of new customers. Banking marketing mix, to be examined, are variables related to the banking marketing mix, concerning with 4P’s: Product, Price, Place, and Promotion. We use a sample of 14 banks (out of 33 banks in Egypt) at the end of June 2010. Tests indicated that we could accept hypotheses regarding the effects of "bank age", "credit interest rate", "debit interest rate" and "number of tellers" on service quality of Egyptian banks. Also, they refer to the need to reject the effects of "number of services", "number of branches”, "number of ATMs" and "budget of salaries".