The Relationship between Customer Satisfaction and Return on Equity in Banking Sector

摘要

Organization in a service sector believed that customer satisfaction is a building block of increasing financial performance. Financial performance is measured through return on equity. Return on equity can be increased by providing quality of products & services to the customers. This paper studies the relationship between customer satisfaction and return on equity in banking sector. Data on customer satisfaction is taken from the American customer satisfaction index and data on return on equity is taken from the bank’s annual published financial reports. The quantitative method is used to analyze the relationship between both the variables. As this research focuses on panel data therefore, STATA software is used to augment the validity of the results. Data is described through graphic, correlation and panel regression test. The result of the research predict that there is a significant positive relationship exist between customer satisfaction and return on equity in banking sector.