Strengthening customer loyalty through financial satisfaction in the banking industry

Abstract

Purpose This study aims to investigate the effect of financial satisfaction (FS) on customer loyalty in the banking industry. Design/methodology/approach The study followed an explanatory research design using responses from 334 respondents from commercial banks in Tanzania. A stepwise regression analysis was used to validate the relevance of the study model. Findings The results indicate a positive and statistically significant association between customer loyalty and FS with levels of assets ( β = 0.598, p < 0.001), savings ( β = 0.186, p < 0.001) and debts ( β = 0.065, p < 0.001). Of the three dimensions of FS, the level of assets had the strongest contribution to customer loyalty, followed by the level of savings and debts, in that order. Research limitations/implications The study used a model of FS that was linked to customer loyalty in the Tanzanian banking industry. It is recommended that the model be tested in other environments to increase the generalizability of the findings. Practical implications This study provides an alternative way for banks to strengthen customer loyalty by enhancing FS. Originality/value The FS model (Joo and Grable, 2004) and the social exchange theory (Blau, 1964) are used in this study to propose a model of customer loyalty in the banking industry. Customer loyalty and FS have not been connected in prior studies.