Determinants of Bank Selection Preference among Customers in Gondar Town

Abstract

Bank sectors are the largest and the most important group of financial institutions in Ethiopia. They are responsible for the smooth functioning of payment mechanisms in the country. As economic environment is rapidly changing and customers are becoming more demanding and sophisticated, it has become important for financial institutions to determine the factors, which are pertinent to the customers' selection process of a particular bank. The objective of this study is determinants of Bank selection preference among customers in Gondar City. Using a sampling determination formula 399 customers   taken and probability stratified sampling design techniques to select customers from each bank. Primary data and secondary information are used. The study use explanatory research type. Questionnaires have been developed using a 5-point Likert scale. Mean, standard deviation, Pearson correlation, and multiple regressions tests are used to test the hypotheses. Financial factor, technology factor, service quality factor, and promotional factor are the independent variables and customer bank preference is dependent variable. Further reliability and validity tests are performed before conducting multiple regression and independent coefficient analyses for testing the hypotheses. The study finding shows that independent variables all namely customer bank preference had positive and significant effect on customer bank preference. The effect of promotional related factor on customer bank preference is strongest and paramount followed by technology factor, service quality factor and financial factor correspondingly. Finally the researcher recommended that banks should hold well-integrated application of technology, and current ways of delivering banking services to their customers, and it is advisable to make easy of obtaining loan, making foreign exchange resources easy to get in the bank, increasing number of branches, and paying higher rates on saving.  Banks should devote in marketing research to discover the needs and wants of their customers and be able to provide them with the service that will gratify the identified needs in a more efficient and profitable way to both the customers and the bank.

Key words: Determinant, Customer Bank Preference, Financial Factor, Technology Factor, Service Quality Factor, Promotional Factor

DOI: 10.7176/RJFA/16-5-04

Publication date: June 30^th 2025