BANKING SERVICE QUALITY, SATISFACTION, AND LOYALTY PERCEIVED BY STUDENTS: A HIERARCHICAL APPROACH

Recommendations to consider service quality as a hierarchical construct formed by its dimensions (and not reflected through them) have existed in academic literature for more than two decades, and arose simultaneously with the conclusion that even in the most valued marketing journals, the problem of model misspecification was present to a large extent. The consequences of not respecting those recommendations are studies’ inappropriate conclusions. Nevertheless, even nowadays, there is a need to embrace that approach in service quality research more broadly. In the case of banking service quality research valued from the students’ perspective, according to the authors’ knowledge, there are no other authors that implemented the recommended approach. In conditions of intense competition, banks should pay more attention to clients’ needs. Domestic banks have a number of offers for the student market segment, taking into account its potential effect on the banks’ future profitability. Therefore, this research considered banking service quality dimensions, satisfaction, and loyalty regarding the student population. Data was collected by using a questionnaire; the convenience sample consisted of 301 students from the University of Novi Sad. After performing all necessary analyses regarding constructs involved in the model, the main effects were examined in the SmartPLS4 software. Among quality dimensions, the largest contribution to banking service quality was recorded for responsiveness, followed by empathy. Banking service quality positively and significantly affected satisfaction, which, on the other hand, positively affected loyalty. Moreover, the indirect effect of banking service quality on loyalty was significant as well.