Factors determining bank selection decisions: the case of corporate customers in Tanzania.

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Date
1998
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Mahenya, B. J. M. (1998). Factors determining bank selection decisions: the case of corporate customers in Tanzania. Master dissertation, University of Dar es Salaam. Available at (http://41.86.178.3/internetserver3.1.2/search.aspx?formtype=advanced)
Abstract
The role of services is crucial in both developed and developing countries. Developing countries are becoming increasingly aware of the importance of efficient professional services for keeping their economies internationally competitive. Opening the domestic market to foreign service producers is a major step to ensure increased efficiency in the imported services that might not be produced domestically and or at the price and quality levels demanded by users. It is hoped that by fostering competition efficiency of domestic services producers will be enhanced. The macroeconomic and sectoral reforms that have been taking place in Tanzania for the last 10 years or so have totally transformed the business scenario. New businesses have been set up by both nationals and foreigners. The reforms in the financial sector under the Banking and Financial Institutions Act (1991) have led to the introduction of new players in the field once dominated by the state owned National Bank of Commerce (NBC) and, to a lesser extent, the Cooperative and Rural Development Bank (CRDB). This study focused on finding out the factors that determine bank selection decision by corporate customers in Tanzania now that we have several competing commercial banks. Various respondent profiles and their views were collected by administering a questionnaire. Determinant Attribute Analysis method was used to rank the fifteen decision criteria in the order of their importance as well as their determinance. The inter-sample factor ranking association was tested by the use of the Spearman's rank correlation. The study found that the four most important determining factors in bank selection decisions are full service offering, location of the bank, reputation of the bank, and overdraft privileges on current accounts. The two least determinant factors were new accounts premiums (gifts) and newness of the bank. The respondents were divided into two sub-groups (parastatals and non-parastatal companies). The Spearman's rank correlation results show that there is no difference in factor ranking by the two sub-samples implying that bank managers should adopt a standardised approach in their advertising and promotional campaigns to the two sub-groups.
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Keywords
Banks and banking, Tanzania
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