Customer Loyalty Analysis Of A Commercial
Bank Based On A Structural Equation Model
Author(s)
H. Chi, Y. Zhang & J.-J. Wang
Abstract
Customer Relationship Management (CRM) enjoys increasing attention since
customers are known to be of pivotal importance to the long-term profitability
and development of enterprises as well as commercial banks. With the
competition among banks being more and more severe, customers’ loyalty has
become the decisive factor of a bank’s profitability, as an increase in customer
retention rate can be very profitable. In this paper, a structural equation model
(SEM) is used to research into the measurement of customer loyalty and the
factors that influence it. Based on an American Customer Satisfaction Index
(ACSI) model, this model takes into consideration Chinese commercial banks’
specific situations and improves the latent variables, manifest variables and the
structure of the ACSI model. Then a partial least squares (PLS) approach is
adopted to estimate the parameters in SEM. By using this model, further analysis
can be conducted. A numerical example has been offered with the data deriving
from a practical survey of a Chinese commercial bank. The results of the
example have been analyzed and corresponding measures can be taken to
improve services, thus increasing customer loyalty.
Keywords: customer loyalty, structural equation model (SEM), partial least
squares (PLS) estimation procedure.
1 Introduction
Since China entered the World Trade Organization (WTO) in the year 2001, the
opening pace of the Chinese financial industry has been much quicker. As a part
Keywords
customer loyalty, structural equation model (SEM), partial least
squares (PLS) estimation procedure.
Related Book
Other papers in this volume
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