EFFECT OF SERVICE QUALITY ON CUSTOMER SATISFACTION IN NEPALESE BANKING INDUSTRY

Abstract

The banking industry in Nepal has experienced rapid growth in recent years, leading to increased competition and the need for service excellence to retain customers. This study explores the effect of service quality on customer satisfaction in the Nepalese banking industry. The research focuses on five key dimensions of service quality—Tangibility, Reliability, Responsiveness, Assurance, and Empathy—analyzing their individual and collective impacts on customer satisfaction. A multiple regression analysis was conducted based on survey data collected from bank customers across various regions of Nepal. The findings reveal that all dimensions of service quality have a significant influence on customer satisfaction, with Assurance and Responsiveness showing the strongest positive impacts. Additionally, the results highlight the areas where Nepalese banks need improvement, particularly in enhancing reliability and empathy to ensure better customer experiences. This study provides valuable insights for bank managers aiming to develop strategies that improve service quality and foster customer loyalty in a highly competitive market. The research concludes with recommendations for the banking sector in Nepal to maintain a high level of service quality, ultimately enhancing customer satisfaction and long-term profitability.