Tài liệu Credit services quality of vietnam joint stock commercial bank for industry and trade - vietinbank

Dong Trung Chinh Erich DEED OF DECLARATION I, Chinh DONG TRUNG, hereby submit my thesis for oral examination, entitled “Credit services quality of Vietnam Joint stock commercial bank for industry and trade - VietinBank”, truthfully declare that the said paper is a product of my original research investigation. The data presented in the paper have clear origin. PhD candidate Chinh DONG TRUNG - ERICH Thai Nguyen University i Southern Luzon State University Dong Trung Chinh Erich ACKNOWLEDGMENT This research was a process of learning that asked for the involvement of individuals, companies and institutions. During my research period, I received unconditional co-operation from many individuals/organizations, and their support was a key factor in successfully completing the thesis. I greatly appreciate the contribution of everyone involved and I apologize to those I do not mention by name. First of all, I am especially grateful to my supervisors, Profssor, DR. Conrdo L. Abraham, who provided me with valuable guidance and comments throughout the research period. I also thank my supervisor for giving me the opportunity to work in the area of my interest. I would also like to thank the members of the reading for reading the manuscript and for providing me with constructive comments. I would also like to thank: Professor, Dr. Do Anh Tai, Dr. Pham Hong Manh has dedicated help me during this research, read the manuscript and provided me with constructive comments. I extend especial thanks to the board of Rectors of Hanoi University of Industry for permiting me to follow the doctoral course and creat favorable conditions for me to accomplish this dotor course. I would also like to express my gratitude to Thai Nguyen University, Southern Luzon State University and their professors for organization, support and help during the dotoral course. The Manager and Staff of accounting companies as customer VietinBank my interview, the patience and their cooperation in answering these questions and other data are given; I wish to express my sincere thanks to my families and friends, who were dedicated to helping me to complete this study, and all those who have contributed to make this study a success. Hanoi, 9th Augus 2013 Dong Trung Chinh – Erich Thai Nguyen University ii Southern Luzon State University Dong Trung Chinh Erich TABLE OF CONTENTS Content Page DEED OF DECLARATION :.......................................................................... i ACKNOWLEDGMENT.................................................................................. ii TABLE OF CONTENTS................................................................................. iii LIST OF TABLES........................................................................................... v LIST OF FIGURES......................................................................................... vi LIST OF CHARTS............................................................................................ vii Rating Sheet...................................................................................................... ix PUBLICATIONS RELATED TO THE THESIS ............................................ x CHAPTER I: INTRODUCTION.................................................................... 1 1.1. Background of the Study........................................................................... 1 1.2. Statement of the Purpose............................................................................ 3 1.3. Significance of the Study........................................................................... 4 1.4. Scope and Limitations ............................................................................. 5 1.5. The structure of the thesis......................................................................... 6 Chapter 2: REVIEW OF RELATED LITERATUES AND STUDIES ........... 7 2.1. Review of related literature and studies ................................................ 7 2..2. Conceptual Framework............................................................................ 16 2.3. Hypothesis .............................................................................................. 26 2.4. Definition of Terms and Variable............................................................. 28 CHAPTER 3: METHODOLOGY .................................................................. 29 3.1. Research Design...................................................................................... 29 3.2. Research Locals........................................................................................ 30 3.3. Samples and Sampling Techniques Used................................................ 31 3.4. The analytical tools and data processing (Instrumentation).................... 33 3.5. Procedure................................................................................................. 33 3.6. Statistical analysis of the data................................................................. CHAPTER 4: RESULTS AND DISCUSSION.............................................. 36 4.1. Research Results....................................................................................... 36 4.2. Discussion research ................................................................................ 52 CHAPTER 5: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 66 Thai Nguyen University iii Southern Luzon State University Dong Trung Chinh Erich 5.1. Summary........................................................................................................ 66 5.2. Conclusion..................................................................................................... 68 5.3. Recommendatio........................................................................................... 69 BIBLIOGRAPHY.............................................................................................. 74 APPENDICES 1................................................................................................. 80 APPENDICES 2................................................................................................... 85 APPENDICES 3 ................................................................................................. 92 APPENDICES 4.................................................................................................... 97 CURRICULUM VITAE 104............................................................................... 104 Thai Nguyen University iv Southern Luzon State University Dong Trung Chinh Erich LIST OF TABLES Content Page Table 3.1: Distribution of the sample in the study area......................................... 30 Table 4.1: Business objects to the transaction at VietinBank............................... 39 Table 4.2: Table of Customer interest rate............................................................ 41 Table 4.3: Status of the duly repaid for the credit loans......................................... 42 Table 4.4: The ease of approaching business credit in bank loans VietinBank..... 43 Table 4.5: The difficulty of accessing credit business loans at banks VietinBank.. 43 Table 4.6: Reliability Analysis – Scale: “Tangible”.............................................. 44 Table 4.7: Reliability analysis – Scale: “Reliability”............................................ 44 Table 4.8: Reliability analysis – Scale: “Responsiveness”................................... 45 Table 4.9: Reliability analysis – Scale: “Empathy”............................................. 45 Table 4.10: Reliability analysis – Scale: “Assurance”........................................ 46 Table 4.11: Reliability analysis - Scale: “Profile”.............................................. 46 Table 4.12: Reliability analysis – Scale: “Satisfaction”...................................... 47 Table 4.13: Factor Analysis (EFA)..................................................................... 47 Table 4.14: “Results extracted factor "satisfaction"............................................... 48 Table 4.15: Correlations Analysis.......................................................................... 49 Table 4.16: Results regression analysis................................................................. 50 Table 4.17: Results summary components factor analysis after discovery............ 53 Table 4:18: Statistical average component "Tangible".......................................... 56 Table 4:19: Statistical average composition "Credibility".................................... 57 Table 4:20: Statistical average composition "Empathy"....................................... 58 Table 4:21: Statistical average composition "Response"....................................... 58 Table 4:22: Statistical average component "Assurance”....................................... 59 Table 4.23: Statistics of the average "profile"........................................................ 60 Table 4.24: Nonparametric Correlations................................................................ 61 Table 4.25: Results of ANOVA analysis between qualities of service by gender.. 63 Table 4:26: Anova analysis results between qualities of service by gender.......... 63 Table 4:27: Anova analysis results between quality of service and level of.......... 64 Table 4:28: Anova analysis results between service quality by types of enterprise 65 Thai Nguyen University v Southern Luzon State University Dong Trung Chinh Erich LIST OF FIGURES Content Page Figure 2.1: Model of customer satisfaction Teboul................................................ 17 Figure 2.2: Model technical and functional quality model..................................... 18 Figure 2.3: Model quality service 'based distance (GAP model).......................... 19 Figure 2.4: model of causal relationships between perceived qualities with ........ 21 Figure 2.5: Model of cause and effect between the perceived qualities of .......... 22 Figure 2.6: Model customer satisfaction index of the United States.................... 23 Figure 2.7: The research model with hypotheses based on five dimensions by 27 Parasuraman et al (1988)...................................................................................... Figure 3.1: The process of conducting research..................................................... Thai Nguyen University vi Southern Luzon State University 30 Dong Trung Chinh Erich LIST OF GRAPH Content Page Graph 4.1: Gender of clients in the study sample.................................................. 36 Graph 4.2: Age group of Customer in transactions in VietinBank........................ 37 Graph 4.3: The level of education of the Customer transaction VietinBank........... 38 Graph 4.4: The position of the Customer in the transaction of business with ........ 38 Graph 4.5: The object to business transactions VietinBank.................................. 39 Graph 4.6: Characteristics of customer transactions at banks VietinBank............ 40 Graph 4.7: Structure of credit loan companies in the survey sample..................... 40 Graph 4.8: Loan Purpose of businesses................................................................. 41 Graph 4.9: Evaluate approaching credit services................................................. 42 Graph 4.10: The relationship between standardized residuals and standardized .. 61 Graph 4.11: Distribution of the estimated residuals from the regression model... 62 Thai Nguyen University vii Southern Luzon State University Dong Trung Chinh Erich PUBLICATIONS RELATED TO THE THESIS Dong Trung Chinh (2012). Solutions to reduce the credit risk of commercial banks. Research Journal of Finance and Accounting No. 05 (106) 2012 ISSN 1859 4093. http://www.hvtc.edu.vn Pham Hong Manh, Dong Trung Chinh (2013). Restructuring of the state owner corporations: Some recommendations. Economy and Forrecast Review No. 06, 3/2013 (542) ISSN 0866.7120. http://kinhtevadubao.com.vn Pham Hong Manh, Dong Trung Chinh (2013). What effects the household businesses’ intention to ask for loans. Economy and Forrecast Review No. 08, 4/2013 (544) ISSN 0866.7120. http://kinhtevadubao.com.vn Dong Trung Chinh (2013). About the credit servicing quality at Vietinbank. Economy and Forrecast Review No. 09, 5/2013 (545) ISSN 0866.7120. http://kinhtevadubao.com.vn Thai Nguyen University viii Southern Luzon State University Dong Trung Chinh Erich CHAPTER I INTRODUCTION 1.1. Background of the Study The commercial banks are increasingly shows and demonstrated its important role in the economy of each country, in which Vietnam is not an exception. During the past time, Vietnam's economy has been rapidly the integration with the world economy has created many opportunities but also many challenges to every field, all economic sectors, which has banks commercial. Credit activity is one of the main functions of the commercial banks, and this activity is to create the largest source of income for banks in Vietnam. The prosperity of the commercial banks will depend on the quality of services, especially credit services. Put in the context of the increasingly fierce competition today, improving credit quality to satisfy increasingly higher demands from customers are becoming major concerns of the commercial banks today. The emergence of the joint-stock commercial banks, innovation and strong advance of the big state-owned banks has brought better quality services, helping businesses and individual’s conditional selection banking transactions and access to banking services more easily. This has making competition between banks already fierce and now is fiercer. Do not stop at the same attract talent, enough banks are always looking for ways to entice customers to their dealings with banks, even banks are subject to the preferential policies on interest rates, insurance for customers "VIP" my clients have sales if large transactions, the demand for more credit, .... With the fierce competition takes place thus improving the quality of services is matter of survival for the competitiveness of the Bank. The fact that banking is highly the synchronism, so the problem is that banks do make a difference in service, high usability, the banks will have strong competitive advantages. VietinBank bank is one of the most large scale operations in Vietnam, with a wide branch network, have meet the demands investment from all economic sectors. Activity VietinBank credit is the main source of income, have created a large volume of asset for the bank. The total revenue, interest income and other expenses directly related to credit Thai Nguyen University 1 Southern Luzon State University Dong Trung Chinh Erich operations, representing 65% - 75%. However, the service quality of bank credit are still many limitations, such as the procedures are still frills loan, the loan the conditions still need the collateral,... All of these problems are obstacles for customers in approaching services at the bank credit. If these problems are not be resolved soon be potential risks for VietinBank in raising the competitiveness of the economy as well as enhance the reputation of VietinBank on the domestic market and internationally. Over the years, the general quality of service and service quality in commercial banks in particular have been many authors in the world research, such as: studies of Guo et al (2008) for measuring service quality in the banking market share in China, the study of Aldlaigan & Buttle (2002) for measuring the quality of banking services, and research research of Sureshchandar et al (2002) on the relationship between service quality and customers satisfaction. Most of the research on quality of service is based on the theoretical foundation for the quality of service Parasuraman et al (1985, 1988) proposes to develop and scale models in his studies. In Vietnam, access to credit and the quality of banking services is also quite a lot interested in studies author. These typical researches such as: Le Van Huy and Pham Thi Thanh Thao (2008) has assessed and consolidated measurement and indicators setting priorities to improve quality of service, a case study in the banking sector. Measuring customer satisfaction with the quality of banking services in Saigon Joint Stock Bank (2009) ... Just like the research world, the works are studied using the theory of quality SERVQUAL service and scale of Parasuraman (1988) for applications in the banking sector. Meanwhile, research by Pham Hong Manh, Ha Thi Thieu Dao (2010) on access to credit services to use the theory TDP to assess the accessibility of credit services fisherman. Consciousness keenly this problem, leadership of VietinBank has many solutions, such as: raise charter capital and improve technology, product diversification and especially improve the quality of service in stages, including credit services to improve the quality of banking services to fast market share rapidly. Apparently, evaluation of credit quality service to more responsive customer satisfaction is a regular operation of VietinBank to know the quality of their service credit where there are gaps what with the customer's expectations for improved measures to improve service quality and its competitiveness is very necessary problem. Thai Nguyen University 2 Southern Luzon State University Dong Trung Chinh Erich Stemming from the above problems have motivated the authors to choose research topics: "Credit quality services at Viet Nam joint-stock commercial bank of industry and trade - VietinBank". The research results will be the basis of practical importance to leadership of VietinBank see where the problem needs attention, improve public issues to enhance the quality of our services that is adaptable to the satisfying the customers better in the the next time. 1.2. Statement of the Purpose 1.2.1. Overall object Study level of customer satisfaction with service quality of VietinBank - Red River Delta region - Vietnam, then to propose solutions to improve the quality of service credit VietinBank, while improving the competitiveness and efficiency of the business VietinBank. 1.2.2. Special objects With the above general objectives, the thesis aims to: 1. Identify the components of quality service credit of VietinBank; 2. Build scale components of service quality credit for VietinBank; 3. Know the significant relationship between qualities of service composition, demographic characteristics to satisfaction of customers on credit quality of VietinBank; 4. Propose model that influence the customer satisfaction about credit quality of VietinBank; and, 5. Give recommendations necessary for the management of VietinBank based on the results. 1.2.3. The study questions From the thesis objectives on will concentrate the content the answer to the following research questions: 1.What is the composition of the quality of service of VietinBank? 2.What are the scale components of service quality credit for VietinBank? 3.What are the significant relationships between qualities of service composition, demographic characteristics to satisfaction of customers on credit quality of VietinBank? 4. What are the possible models that influence the customer satisfaction about credit quality of VietinBank? 5.What are the recommendations necessary for the management of VietinBank based on the results? Thai Nguyen University 3 Southern Luzon State University Dong Trung Chinh Erich 1.3. Significance of the Study 1.3.1. In scientific terms: First, the thesis system theoretical basis of quality and service in general banking and credit services in particular. Second, from the theoretical foundations for quality of service, the subject has built research models and theories of the component factors of service quality for customer satisfaction for financial services VietinBank use in Vietnam. 1.3.2. About is practicable: About a practical level, the thesis gives a sense of the following: First, services are difficult to measure, identify the elements of a quality characterized by customer service evaluation, especially credit services is essential. Understanding the expectations and perceptions of customers towards banks help managers better understand, more sympathetic, more enthusiasm for serving his audience. Second, the level of quality of service credit provided by the Bank and its degree of influence to the satisfaction of bank customers have the opportunity to help look at ourselves from the perspective of the customer. From there, make policy management, appropriate operational measures to improve service quality, better serve our customers well, as follows: For banks: Bank helps to capture the reality of quality products and services at their banks are managed, and in particular to measure the satisfaction level of the customers are, which easily easy building strategies, action plans towards achieving each target customer satisfaction and customer loyalty, thereby retain customers and increase profits. The level of quality of services provided by the Bank and its degree of influence to the satisfaction of bank customers has the opportunity to help look at ourselves from the perspective of the customer. From there, make policy management, appropriate operational measures to improve service quality, customer service better. - For bank staff: Services are difficult to measure, identify the elements of a quality characterized by customer service evaluation, and especially credit services are essential. Helping clients assess satisfaction to meet the expectations and perceptions of Thai Nguyen University 4 Southern Luzon State University Dong Trung Chinh Erich customers through bank staff help bankers better understand, more sympathetic, more enthusiasm for serving his subjects. - For the Customer: Once customers see no quality difference between their expectations and their quality is perceived as a consumer service, the quality of service that is considered perfect. These problems are closely related to the satisfaction and loyalty of customers, and then indirectly affect the Bank's income. - For study: thesis done in the hope of contributing to the system part of the rationale for assessing service quality satisfaction measurement of credit quality and in particular quality banking services in general. In addition, the study results can be the basis for other units of the system VietinBank application forms or other similar services may also apply, such as telephone service, transportation service passenger, courier services... 1.4. Scope and Limitations To make the thesis, the author uses the model components Parasuraman quality of services to assess client satisfaction with services VietinBank credit. Although there have been many efforts in the implementation process, but the thesis remains certain limits: First, in the process of collecting documents and data investigation on the use of credit services to customers VietinBank still difficult. Therefore, the sample size is small compared to investigate the number of customers using the services of VietinBank in the Red River Delta region due to the limitation of time and financial resources. Second, stratified sampling method for the local study area can not represent many different customers. Third, with a large credit institution as VietinBank many different services, such as loans, receiving deposits, ATM, cash...However, a new study stopped just in financial services research of this bank. Fourth, from analysis the quality service composition in thesis primarily based on the theory of service quality, namely that model is of Parasuraman SERVQUAL adjusted for the characteristics of VietinBank in the region Red River Delta, Vietnam. 1.5. The structure of the thesis: In addition to the references and appendices, the thesis is designed with 5 chapters, including: Thai Nguyen University 5 Southern Luzon State University Dong Trung Chinh Erich Chapter 1: Introduction In this chapter, the subject matter presented, including: the need for research, research objectives, and the contribution of the research, study and limitations of the thesis structure. Chapter 2: Review of related literatues studies The content of this chapter, the topic will present the theory of quality of service and quality of credit services, such as service, service quality, customer satisfaction; service quality models Parasuraman's... and finally present the theoretical framework, the research hypotheses about the factors affecting customer satisfaction with quality of service credit VietinBank Chapter 3: Research Methodology In Chapter 3, the thesis focuses on the study design to achieve the objectives of the thesis. The contents of Chapter 3 presents the basic issues such as research design, survey questionnaire, sample and sampling methods research, analysis methods and data processing statistics. Chapter 4: Results and Discussion The main content is presented in Chapter 4 is the result of the thesis research, including descriptive statistics on the characteristics of the sample of customer transactions, loan characteristics, loan purpose, the difficulties customers' access to bank credit VietinBank ... Besides, the content of this chapter, the thesis presents the results of analysis scale, factor analysis to explore (EFA), the analysis results of the regression model component quality financial services the use of customer satisfaction in VietinBank. Chapter 5, Summary, Conclusion and recommendations Thai Nguyen University 6 Southern Luzon State University Dong Trung Chinh Erich Chapter 2: REVIEW OF RELATED LITERATUES AND STUDIES In chapter 2, the subject will present the theoretical background to form a theoretical framework for the study. The content presented solution includes: Services and characteristics of services and service quality, service quality of bank credit, customer satisfaction and the relationship between service quality customer satisfactions. In addition, an overview of the research model represents the quality of the service; the components of service quality are also presented. Finally, the proposed topic model into the study of the quality of service credit for customer satisfaction is also presented in the chapter content. 2.1. Reviw of Related Literature and Studies 2.1.1. The service The concept of service: According to modern marketing research Kotler and Armstrong (2004) service definition as follows: "Service is any act or benefit one party can offer to another party that is basically very and the owner does not bring any” Services are 04 properties below: - Invisibility (intangibility): a pure service can not be evaluated using any public body senses before it is purchased. Therefore, to reduce uncertainty, people will search for evidence of the quality of service from their audience exposure, equipment that they see. - The inseparable (inseparability): specific services are produced and consumed simultaneously at the same time. If someone is hired, the service provider side will be part of the service, whether the service provider is the real person or machine. Because customers will also be present at the services offered to the interaction between the service provider and the customer is a special feature of services marketing. - Calculate or change (variability): characteristics reflected in the quality of service depend on the service provider, time, location and the way services are provided. - The fragile (perishability): other services to the common goods in that it can not be stored. In other words, services are more sensitive to common goods before the change and the diversity of needs. When demand changes, the service company always Thai Nguyen University 7 Southern Luzon State University Dong Trung Chinh Erich looking to match supply and demand together, such as the travel companies always hire car to serve tourists in the peak season. In addition to the above properties, the service can be described with the following attributes: - Lack of transport properties can be: services must be consumed in place of "production" services. - Lack of uniformity: almost impossible to provide services with the same quality finish. - Need more manpower: services typically include significant human activity, rather than the process of being set up correctly. Therefore, human resource management is very important. Human factor is often a key factor to the success in the service sector. - Fluctuations needs: it is difficult to predict demand. Demand can vary by season, time of day, the business cycle. - No refund if customers are not satisfied, they can return the money, but services can not be refunded. - Through human relations: the role of man in the service is generally very high and customers when evaluating appraisal services. - The individual: customer service evaluation based on his personal experience a lot. - Psychology: service quality is evaluated according to the psychological state of the client. 2.1.2. Quality of service Quality service is what customers perceive through feel the perception or customer related to their individual demand. According to Parasuraman, Zeithaml and Berry (1985), the quality of service as perceived by customers as a value-creating services worthy of their previous expectations. According to Parasuraman (1988), expectations of service quality is the desire of the customer, which means they feel providers to perform will not perform the requested service. Other quality goods are tangible and can be measured by objective criteria such as functionality, features, and durability. However, service quality is intangible. Therefore, the document defined service quality based on: subjective, attitude, and ability to Thai Nguyen University 8 Southern Luzon State University Dong Trung Chinh Erich identify. Zeithaml (1987) explains: "Quality of service is the customer's evaluation of the ultra Vietnam and the great general of an entity. It is a form of behavior and consequences from a comparison between what is expected and awareness of what we receive. " But Lewis and Booms said: "Service is a measure of the level of service given to customers with adequate customer expectations of to where. Creating a quality service that is expected to meet customer a consistent manner. "This comment clearly demonstrates that the quality of service related to customer expectations and their perceptions of the service. In the banking sector, quality of credit services is the ability to satisfy the credit services for the expectations of borrowers, In other words, it is the gap between the expectations of borrowers with their feelings about the results they get after transactions loans Bank. About the characteristics of service quality, by Kotler, P., (2004), service quality has the following basic characteristics First, outstanding For customers with quality service is a service that demonstrates its superiority over other products. The advantages of this makes Vietnam service quality becomes a competitive advantage of the service provider and this depends largely on the perception of the service received. This relationship has great significance in evaluating the quality of service from the client side in marketing activities and research of customer satisfaction. Second, specificity of the product: Quality of service is the sum of the core and the essence crystallized in creating products and services of the particular characteristics of products and services. These high quality products will contain more "dominant characteristic" of tangible and intangible assets that customers can feel and choice. However, in practice very difficult to determine the dominant characteristic absolute accuracy and completeness. Third, supply: Quality of service associated with the service delivery process to customers, the internal factors of the service providers, such as service deployment, service style and service providers will decide good quality or bad service. Therefore, to improve service quality, service providers must first improve intrinsic factor to form long-term strengths of themselves in service activities provided to customers. Thai Nguyen University 9 Southern Luzon State University Dong Trung Chinh Erich Fourth, the satisfying: Services designed to meet the demands of customers. Therefore, the quality of service necessary to meet customer needs and requirements of customers taking as a basis to improve service quality. If customers feel that the service does not meet their needs, they will not be satisfied with the quality of service they receive or otherwise valuable service to customers. This is really important because providers are now geared towards customer needs and try to meet those requirements in an optimal way possible. This feature is driven by external impact more. Fifth, the create value: Quality of service associated with the value created for the customer service. Businesses create customer value and the object that receives the value. So, consider the quality of service or more specifically, the value brought to customers depends on the customer's evaluation, not businesses. Customers typically receive these services bring value and compare them with what they expect to receive. Therefore, the value creation is the basic feature and is the foundation for the construction and development of quality business services. 2.1.3. Measuring the quality of services Quality of service credit is the ability to meet the service credit for the expectations of borrowers, in other words, it is the gap between the expectations of borrowers with feelings them about the results they get after dealing with bank loans. Unlike tangible products can touch, smell, see or taste and can be evaluated quite easily by consumers, products and services are therefore invisible to assess the quality of services is difficult much. Parasuraman & the authors have studied the flow channels of quality and service for many researchers is fairly comprehensive (Svensson 2002). Accordingly, the SERVQUAL scale includes 05 components and 22 variables was observed mainly in the marketing tool to evaluate the service quality of service. Parsuraman & et al (1994) scale continuous testing and reviewing different theories and that the SERVQUAL scale was reliable and valid. This scale can be applied in different environments and services vary from different contexts such as markets, types of services... In the banking sector, many researchers have applied SERVQUAL scale in measuring the quality of services such as: Lotfollah R.Bishu Najjar and Ram (2006), Ugur Yavas (2007) ... The study these focuses on the calibration quality components are based on variables suggested by Parasuraman. SERVQUAL deals with five service quality dimensions. Thai Nguyen University 10 Southern Luzon State University Dong Trung Chinh Erich 1- Tangibles 2- Reliability 3- Responsiveness 4- Assurance 5- 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 provider to assist customers and deliver prompt services. Assurance means that customers can put their trust in service provider employees and Empathy is individualized care and attention that customer receives from service deliver (Parasuraman et al. 1988). The SERVQUAL questionnaire covers these five service quality dimensions using two portions. One portion is comprised of expectations of customer and other is based on received service quality perception. Each portion has 22 items. The use of SERVQUAL instrument has already been validated in assessing service quality of repair and maintenance service providing firm, long-distance telephone corporation, telecommunication, credit card company, information system, libraries, insurance, restaurant, health care and retail chains (Parasuramanet al. 1988; Van der Wal et al. 2002; Kilbourne et al. 2004; Lee and Ulgado 1997; Mels et al. 1997; Parasuraman et al. 1985; Jiang et al. 2000; Cook and Thompson 2001). The applicability of SERVQUAL in banking sector has revealed various results. SERVQUAL application in Cyprus banking industry has identified three dimensions influencing the service quality i.e tangibles, reliability, and responsiveness-empathy. Assurance has been eliminated due to inadequate factor loadings (Arasli et al. 2005). Use of SERVQUAL in Chinese banking sector have revealed six dimensions of service quality i.e. tangibles, reliability, responsiveness, assurance, empathy 1 (understanding of needs) and empathy 2 (convenient operating hours) (Lam 2002). The quality of the services that a bank provides is related to the satisfaction of customers and it is estimated by dissatisfying and satisfying the service provided by the bank over time. The perceived service quality has positive effect on satisfaction of customers. Previous studies have revealed that perceived service quality has positive effect on satisfaction of Thai Nguyen University 11 Southern Luzon State University Dong Trung Chinh Erich customer in four service sector i.e dry cleaning, fast food, pest control and banking (Cronin and Taylor 1992). Bei and Chiao 2006 also reported positive influence of perceived service quality on three service providers i.e. petrol station, automobile repair and banking. Significant correlations have been found between overall customer satisfaction and service quality dimensions (Aldaigam and Buttle 2002). The service quality in banking industry relates to assurance, empathy, responsiveness and reliability (Johnston 1995). Reliability and assurance has strong influence on banking sector service quality and customer satisfaction (Zhou 2004). Study carried out on USA, Netherland, Hong Kong, morocco and Australian banking sector reported direct impact of service quality on customer satisfaction (Brady et al 2005). Similar results have been reported in Greek banking industry (Arsali et al. 2005). Six dimension scales for evaluating service quality in banks have been developed by Bahia and Nantel (2000) from the original ten dimensions proposed by Parasuraman et al. (1985). The six dimensions were reliability, tangibles, access, effectiveness and assurance, range of services and prices. The application of SERVQAL in Islamic banking revealed six dimensions. An extra dimension “compliance to the Islamic law’ was added in SERVQAL five dimension scale (Othman and Owen 2001). A modified version of SERVQUAL based on three dimensions i.e. empathy, tangibles and human skill have been proposed by Jabnoun and Al-Tamimi (2003). A study on Canadian banking system revealed six service qualities dimensions i.e. reliability, tangibles, access, assurance, effectiveness, services portfolio. The reliability of data falls in range of 0.78-0.96. The study involved 115 bank customers, 31 items and seven point likert scales was used in study (Bahia and Nantel 2000). Evaluation of service quality in Australian Banks yield four dimensions of service quality i.e. communication, credibility, staff conduct and access to teller services. The study was conducted on 791 customers of bank and overall data reliability was in the range of 0.80-0.88. 17 items and five point likert scale was used (Avikaran 1994). In (2008) evaluated the quality of retail banking services in the United States and South Korea. It involved 129 respondents. Reliability was in range of 0.72-0.85. 23 items and seven point likert scale was used in study. Four dimensions of service quality were identified i.e trustworthiness, functionality, appearance and helpful employees. Service quality of corporate banking in China was evaluated by Guo et al. (2008). 259 corporate customers were involved in study. Reliability of data falls in range of 0.88- Thai Nguyen University 12 Southern Luzon State University