Ethical Factors and Customer Commitment: An Empirical Analysis

The rapid reforms and changes in the banking industry have significantly reshaped the financial landscape by improving efficiency and delivering customised customer service. Ethics in banking and financial services has emerged as a central concern in academic and policy discourse, particularly in the aftermath of repeated financial crises, misconduct scandals, and declining public trust. A bank, being a fiduciary agent, owes a contractual responsibility and is liable to protect and safeguard its stakeholders from any risks and to resolve any grievances that arise. The core problem lies in the gaps between existing ethical standards and prevailing practices in the Banking sector. Gaining stakeholders’ perspectives on ethical practice is crucial. A sample size of 400 was taken for the study, considering incomplete responses. This study seeks to examine the association between the identified ethical factors and their influence on customer commitment. For this study, primary data were collected from Guwahati, Assam, to get a more representative sample of the population, and a comparatively larger sample size was taken. Structural Equation Modelling (SEM) results revealed that all five ethical dimensions – Transperancy and Disclosure (TD), Customer Protection and Welfare (CPW), Social Responsibility and Sustainability (SRS), Governance and Risk Management (GRM), and Customer Experience on Ethical Conduct (CEEC) significantly and positively influence Customer Satisfaction and Commitment (CSC). Among these, Customer Protection and Welfare and Customer Experience of Ethical Conduct emerged as particularly strong predictors, highlighting the importance of fair treatment, grievance handling, and ethical service encounters. The findings demonstrate that ethical practices are not symbolic or merely policy-driven but are operationalised in ways that shape customer trust, satisfaction, and long-term commitment.