Acta Universitatis Danubius. Œconomica, Vol 14, No 6 (2018)

Mediating Effect of Switching Cost on Generation Y Customers’ Bank Commitment

Marko Van Deventer, Ephrem Habtemichael Redda

Abstract


Committed customers who value their relationship with their bank are a great asset for a bank. As such, the purpose of this paper is to examine the mediating effect of switching costs on the influence of service quality, bank image and customer satisfaction on Generation Y customers’ commitment to their bank. A descriptive research design and a quantitative research approach were employed in the study. Using self-administered questionnaires, data was collected from a sample of 271 Generation Y banking customers registered at two public university campuses in Gauteng, South Africa. The analysis included descriptive statistics, reliability measures, correlation analysis and multivariate regression and mediation analyses. The results indicate that high switching costs directly influence Generation Y customers’ commitment to their bank, and partially mediate the impact of service quality and bank image on their commitment to their bank. In addition, high switching costs played a full mediating role on the influence of satisfaction on Generation Y customers’ commitment to their bank. The findings of the study provide empirical evidence of the mediating effects of high switching costs on the influence of service quality, bank image and customer satisfaction on Generation Y customers’ commitment to their bank, a field largely under-researched within the South African context.

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