EuroMed Journal of Business

Impact of trust on the relationship of e-service quality and customer satisfaction

Sukanya Kundu, Saroj Kumar Datta,
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Impact of trust on the Impact of

trust on the
relationship of e-service quality relationship
of e-service
and customer satisfaction
Sukanya Kundu 21
Alliance School of Business, Alliance University, Bangalore, India, and Received 30 October 2013
Saroj Kumar Datta Revised 6 January 2014
27 March 2014
Galgotia School of Business, Galgotia University, Greater Noida, India 2 May 2014
10 May 2014
Accepted 22 May 2014
Abstract
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Purpose – The purpose of this paper is to find the role of trust as a mediating variable between
e-service quality and customer satisfaction in internet banking.
Design/methodology/approach – The paper opted for an exploratory study using closed
ended questionnaire. The empirical data are drawn from 367 customers of internet banking. Factor
structure of e-SQ, customer satisfaction and trust has been tested using EFA and CFA by gap
values and perception values. Structure equation modeling has been used to analyze the effects of
independent variable e-service quality on customer satisfaction and the role of mediating variable
trust. Stepwise analysis has been done to examine the effect of trust on customer satisfaction. Sobel
test has been used to measure the indirect effect.
Findings – e-SQ was found to be strongly correlated with customer satisfaction. The results confirm
trust as a mediating variable between e-service quality while analyzing the same model with gap value
and perception value.
Research limitations/implications – The research implies that banking service providers should
focus on improvement of trust parameters as well as those e-SQ dimensions which affects trust,
to retain the customers and to get more customers for internet banking.
Originality/value – The reliable and valid instrument confirmed in this research can be used by
further studies detecting the relationships among these constructs in an extended context. The
fundamental premise of the proposed research work model was to make banking service providers
understand comprehensively the factors necessary to achieve high service quality that will
significantly impact on customers’ trust, satisfaction.
Keywords Trust, Customer satisfaction, Mediation, Customer perception
Paper type Research paper

Introduction
Banking customers are becoming less loyal and increasing the number of banks they use
(Global Consumer Banking Survey 2012 by Ernst and Young). The report of year 2012
reveals that the overall proportion of customers planning to change banks has increased
from 7 to 12 percent since 2011. Customers with only one bank have fallen from 41 to 31
percent, while those with three or more have increased from 21 to 32 percent; 83% of
customers have two or more banking providers, although those with only one bank have
grown by 5 percent since 2010 to 17 percent. Of customers who multi-bank, 48 percent do
so to find the best products or services, and 47 percent to obtain the best rates and fees.
Customers prefer online channels for simple transactions, but they also demand high-
quality, personal service for more complex transactions and advice. The survey results
show that pricing and service quality are critical for gaining customer satisfaction. EuroMed Journal of Business
Service quality and customer satisfaction are the two core concepts that are at Vol. 10 No. 1, 2015
pp. 21-46
the center of the marketing theory and practice (Spreng and Mackoy, 1996). The © Emerald Group Publishing Limited
1450-2194
relationship between service behavior and service quality has proven its role and DOI 10.1108/EMJB-10-2013-0053
 EMJB importance in management/marketing (Zeithaml et al., 1996; Heskett and Sasser, 2010;
10,1 Hutchinsona et al., 2009). Marketing researchers have praised the advantages of
satisfaction and quality, and have mentioned them as indices of an organization’s
competitive benefit (Ruyter, 1997). In today’s world of intense competition, the key
to sustainable competitive advantage lies in delivering high-quality services that
will in turn result in satisfied customers (Shemwell et al., 1998). In an era of intense
22 global competition many organizations have shifted the paradigm of service quality to
customer’s perspective (Parasuraman et al., 1985). Based on this paradigm, a customer
will judge the quality of service accorded and determine whether it met his/her
expectations (Grönroos, 1984; Parasuraman et al., 1985, 1988).
But an observed relationship may be part of a more complex chain of effects. These
complex relationships are described in terms like indirect influences, distal vs. proximal
causes, intermediate outcomes, and ultimate causes; all of which share the concept of
mediation. Like Khare et al. (2010) found out certain personality factors – such as those who
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are more imaginative, reliable, intelligent, up-to-date and charming – affect the consumers’
evaluation of online banking in India. Surprisingly, a thorough investigation of
relationships reveals that the effect of service quality features on customer satisfaction is
also not consistent. There are various influencers that work significantly in the relationship
of service quality and customer satisfaction. A mediator can be thought of as the carrier or
transporter of information along the causal chain of effects. According to Singh and
Sirdeshmukh (2000) trust is a crucial variable that determines outcomes at different points
in the process and serves as glue that holds the relationship together. In the electronic
commerce context, customers who do not trust an e-business will not be loyal to it even
though they are generally satisfied with the e-business (Anderson and Srinivasan, 2003).
This study investigates and measures the mediating role of trust as attributed by a
customer to service quality of internet banking and customer satisfaction.
The current study has three major research questions: first, which features of e-service
quality of internet banking may affect customer satisfaction? Second, which features of
e-service quality may affect trust? Finally, does trust affect the relationship between
e-service quality features and customer satisfaction in the context of internet banking?
There are three objectives of this research paper. First objective is to find out the
quality attributes customers consider to be important while evaluating e-service
quality of internet banking. Second, whether the identified e-service quality attributes
affects their satisfaction with internet banking also. Third, whether trust also affects
the satisfaction. Fourth objective is to find out impact of trust as a mediator between
e-service quality and customer satisfaction.
This research paper contributes to the literature of the service marketing by
establishing relationship among electronic service quality, trust and customer
satisfaction. It also contributes to the theories of electronic banking highlighting
various factors that effects customer satisfaction. An in depth analysis with the help of
perception values and gap value between customer expectation and perception has been
done. This two way approach has made the mediation model more reliable. This research
also contributes to the banking industry by pinpointing the service quality attributes that
are important to build trust among its customers and to gain customer satisfaction.

Literature
Service quality and e-service quality
Rust and Oliver (1994) identified service quality as one of the key driving forces for
business sustainability and found it crucial for firms’ accomplishment. The research on
 internet service quality mainly originates from earlier work on services marketing Impact of
which led to the concept of service quality, by scholars such as Parasuraman et al. trust on the
(1986, 1988, 1991, 1993, 1994a, b), Cronin and Taylor, 1992 and Cronin and Taylor,
1994), Boulding et al. (1993), Brown and Bond (1995), Dabholkar et al. (2000), Zeithaml
relationship
(2000), Jiang et al. (2000) and Joseph and Stone (2003). Studies on internet service quality of e-service
started when Watson and Goodhue presented WebQual, a scale for rating the quality of
web sites. In the year 2000 itself e-SQ and e-SERVQUAL models were developed by 23
Zeithaml, Parasuraman and Malhotra . In the year 2001, Yoo and Donthu developed the
SITEQUAL scale for measuring web site quality which was measured on four
dimensions: ease of use, aesthetic design, processing speed and security. Barnes and
Vigden (2002) developed a completely different scale to measure the quality of an
organization’s e-commerce offering called WebQual. Wolfinbarger and Gilly (2003)
developed eTailQ that incorporated constructs like design, personalization, fulfillment,
reliability, privacy/security and customer service.
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In 2005 Parasuraman et al. further developed E-S-QUAL, a Multiple-Item Scale

for Assessing Electronic Service Quality. The basic E-S-QUAL scale developed in the
research was a 22-item scale of four dimensions: efficiency, fulfillment, system
availability, and privacy. The constructs were defined like:
(1) efficiency: the ease and speed of accessing and using the site;
(2) fulfillment: the extent to which the site’s promises about order delivery and item
availability are fulfilled;
(3) system availability: the correct technical functioning of the site;
(4) privacy: the degree to which the site is safe and protects customer information.
The second scale, E-RecS-QUAL, is salient only to customers who had non-routine
encounters with the sites and contains 11 items in three dimensions: responsiveness,
compensation, and contact.
Reference of the four constructs of E-S-QUAL can also be found in many other
recent researches that have been found in the Table I. The definition of efficiency in
E-S-QUAL encompasses both ease and speed of accessing and using the web site
whereas various other researches have considered ease and speed as separate
construct.
In this research the efficiency construct has been divided into efficiency1 and
efficicency2. Efficiency1 relates to speed and efficiency 2 relates to ease aspect of
E-S-QUAL. Because of the non-routine characteristics of E-RecS-QUAL constructs
they have been kept outside the scope of the research.

Customer satisfaction
Satisfaction is a person’s feeling of the pleasure or disappointment arising from
comparing products’ perceived performance in relation to expectation. It is a state of
experience that might vary in intensity but not in quality (Stauss and Neuhaus, 1997).
Various authors reflect the notion that satisfaction is a feeling which results from
a process of evaluating what has been received against what was expected, including
the purchase decision itself and the needs and wants associated with the purchase
(Armstrong and Kotler, 1996). Customer satisfaction is the primary mental state of
customer which comprise by two thing (1) expectation before purchase (2) perception
about performance after purchase (Oliver, 1997; Westbrook and Oliver, 1991). Bitner
and Zeithaml (2003) stated that satisfaction is the customers’ evaluation of a product or
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24
10,1
EMJB

Table I.

e-SQ used in
this research
Research evidences
of the five constructs
Sources along with the respective construct name
Constructs Description Internet service quality (non-banking) e-Banking service quality

System availability Promptness to access the site and
the contents with all the options
working
Efficiency 1 Time to get service e.g., web site
load time, time to maneuver back
and forth through the pages, link
stability etc.
Cox and Dale (2001): accessibility
Zeithaml et al. (2002): information
availability and content
Yang and Jun (2002): accessibility
Yang et al. (2003): access
Fang and Fang: access
Barnes and Vigden: information
Parasuraman et al. (2005): system
availability
Sohn and Tadisina (2008): web site content
and functionality
Kim and Stoel (2004): system availability
Udo et al. (2010): web content and service
Yoo and Donthu (2001): processing speed
Madu and Madu (2002): performance
Santos (2003): linkage
Jayawardhena (2004): interaction
Parasuraman et al. (2005): efficiency
Fassnacht and Koese (2006): technical
quality
Sohn and Tadisina (2008): speed of
delivery
Li and Suomi (2009)
Kim and Stoel (2004): efficiency
Jayawardhena and Foley (2000): speed to
download and content
Jun and Cai (2001): access
Ho and Lin (2010): information provision
Khan and Mahapatra (2009): accessibility
Hamadi (2010): information
Kumbhar (2012): system availability
Jayawardhena and Foley (2000):
navigation
Bauer et al. (2005): convenience in
transaction processing (sub-parameter of
transaction support)
Siu and Mou (2005): efficiency
Khan and Mahapatra (2009): efficiency
Wu et al. (2012): efficiency
Gupta and Bansal (2011): efficiency
Gupta and Bansal (2012): efficiency
Kumbhar (2012): efficiency
Salarzehi et al. (2012): efficiency
Atallah Al-Tarawneh (2012)

(continued )
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Sources along with the respective construct name

Constructs Description
Efficiency 2 Easy directions to use the site, how
easily customers find what they
need, amount of information to be
typed in to get a particular service
etc.
Fulfillment Accuracy of service promises;
delivery of the banking services
as stated
Internet service quality (non-banking)
Dabholkar (1996): ease of use
Zeithaml et al. (2002): ease of use
Loiacono et al. (2002): intuitiveness
Yoo and Donthu (2001): ease of use
Barnes and Vigden (2002): usability
Santos (2003): ease of use
Yang et al.: ease of use
Fassnacht and Koese (2006): ease of use
Colier and Bienstock (2006): ease of use
Sohn and Tadisina (2008): ease of use
Kassim and Abdullah (2010): ease of use
Alanezi, et al. (2010): ease of use
Udo et al. (2010): convenience
Dabholkar (1996): reliability
Zeithaml et al. (2002): reliability
Wolfinbarger and Gilly (2002, 2003):
reliability
Madu and Madu (2002): reliability
Loiacono et al. (2002): reliability
Yang and Jun (2002): reliability
Surjadaja et al. (2003): reliability
Santos (2003): reliability
Yang et al.: reliability
Field et al. (2004): reliability
Yang and Fang (2004): reliability
Jayawardhena (2004): reliability
Lee and Lin (2005): reliability
Bauer et al. (2005): reliability
Fassnacht and Koese (2006): reliability
e-Banking service quality
Jun and Cai (2001): ease of use
Rod et al. (2009): ease of use
Raman (2008): ease of use
Zeng et al. (2009): ease of use
Khan and Mahapatra (2009): user
friendliness
Hamadi (2010): ease of use
Kumbhar (2012): ease of use
Atallah Al-Tarawneh (2012): ease of use
Gerrard and Cunningham
Jun and Cai (2001): reliability
Han and Beak (2004): reliability
Rod et al. (2009): reliability
Raman (2008): reliability
Khan and Mahapatra (2009): reliability
Zeng et al. (2009): fulfillment/reliability
Salarzehi et al. (2012): reliability
Wu et al. (2012): reliability
Gupta and Bansal (2012): reliability
Khaled Atallah Al-Tarawneh (2012):
reliability

(continued )
relationship
of e-service
trust on the
Impact of

Table I.
25
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Table I.
Sources along with the respective construct name
Constructs Description Internet service quality (non-banking)
Sohn and Tadisina (2008): reliability
Kim and Stoel (2004): fulfillment
Alanezi, et al. (2010): reliability
Privacy Degree to which the customer Zeithaml et al. (2002): Security/privacy
believes the site is safe from Szymanski and Hise (2000): security of
intrusion and personal information financial transactions
is protected. Yang: security
Yoo and Donthu (2001): security
Madu and Madu (2002): security/system
integrity
Loiacono et al. (2002): security
Yang and Jun (2002): security
Surjadaja et al. (2003): security
Santos (2003): security
Yang et al.: security
Field et al. (2004): security
Parasuraman et al. (2005): privacy
Colier and Bienstock (2006): privacy
Kim and Stoel (2004): privacy
Alanezi et al. (2010): security/privacy
Udo et al. (2010): perceived risk
26
10,1
EMJB
e-Banking service quality
Jayawardhena and Foley (2000): security
Jun and Cai (2001): security
Bauer et al. (2005): security/
trustworthiness
Siu and Mou (2005): security
Rod et al. (2009): security/privacy
Hamadi: security and privacy
Khan and Mahapatra (2009): privacy/
security
Zeng et al. (2009): security/privacy
Ho and Lin (2010): assuarance
Salarzehi et al. (2012): security/privacy
Gupta and Bansal (2011) : security/privacy
Gupta and Bansal (2012): security/privacy
Kumbhar (2012): security
Khaled Atallah Al-Tarawneh (2012):
security
Wu et al. (2012): security/privacy
 service in terms of whether that product or service has met their needs and Impact of
expectations. According to Boeselie et al. (2002) satisfaction is a positive, affective state trust on the
resulting from the appraisal of all aspects of a party’s working relationship with
another. Customer satisfaction is defined as a result of comparison between what a
relationship
customer expects about services provided by a service provider and what the customer of e-service
receives in actual terms (Caruana et al., 2000; Parasuraman et al., 1988). If the service
provided by an organization does meet a customer’s needs and expectations, then this 27
may subsequently lead to higher customer satisfaction (Foster, 2004; Parasuraman
et al., 1988; Walker et al., 2006).
Anderson and Srinivasan (2003) have shown e-satisfaction to be consisting
of six parameters. Alhassan G. Abdul-Muhmin, Christodoulides and Michaelidou,
Oldenburger et al. has considered only one parameter to denote
e-satisfaction. In this study the construct satisfaction consists of four items.
Respondents were asked to mark the following statements: your overall satisfaction
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level with your bank’s internet banking services; your overall satisfaction level with
informational part of your bank’s internet banking services; your overall satisfaction
level with transactional part of your bank’s internet banking services; and “after
using of the internet banking my satisfaction level in my bank operation has improved
very much”.

Relationship between service quality and customer satisfaction

A number of empirical studies did indicate a link between service quality and
satisfaction (Fornel, 1992; Taylor and Baker, 1994). Extant research in this area shows
that the proper implementing and dispensing of the core service quality features
may justifiably increase customer satisfaction (Gronroos, 1984; Parasuraman et al.,
1988; Walker et al., 2006). The service quality research literature is consistent with the
notion of perceived quality models. For example, Parasuraman et al. (1985) state that
a conceptual service quality model highlights that the match between service quality
standards and customers’ standards may decrease service performance gap and
increase customer perceived value about the quality systems. Consequently, it may
lead to higher customer satisfaction.
From the above analysis of literatures it is reasonable to believe that satisfaction
with online service providers would be positive when gap between perception and
expectation of internet banking service is less.
H1. e-service quality has a positive significant effect on customer satisfaction.
Trust
Wilson (1995) defines trust as a fundamental relationship model building
block. Trust involves one person’s expectations that another will behave in a
certain way (Deutsch, 1958; Schurr and Ozanne, 1985). While defining trust
Moorman et al. (1993) referred to the willingness to rely on an exchange partner in
whom one has confidence. Trust is logically and experientially a critical variable
in relationships, as the marketing literature shows (Orth and Green, 2009; Moorman
et al., 1993). While the conceptualization of trust varies widely depending on a
domain of a specific study, in the business related literature trust is viewed as the
belief that the exchange party is able to fulfill its obligations, is motivated to
seek mutually beneficial gains and refrains from abusing the relationship (Morgan
and Hunt, 1994). In business trust is viewed as one of the most relevant antecedents
of stable and collaborative relationships. From the very beginning, researchers
 EMJB have identified trust as an important contributory factor for service quality and
10,1 customer satisfaction. Trust is considered to be an important element of consumer
perceptions about brands and companies (Aaker, 1997). Reichheld and Schefter
(2000) commented that to gain the loyalty of customers’, organization must first gain
their customer’s trust. Researchers have established that trust is essential
for building and maintaining long-term relationships (Rousseau et al., 1998;
28 Singh and Sirdeshmukh, 2000) also.
Researches of Grabner-Kraeuter (2002) Yousafzai et al. has revealed that in the case
of business-to-consumer services lack of trust is the principal reason for not buying on
the internet. If the information provided by the web retailer is ambiguous, inaccurate or
incomplete, it will cause doubts in the consumer’s mind about the retailer engaging in
harmful opportunistic behaviors and reduce trust (Liao et al., 2006; McKnight et al.,
1998). Trust is considered to be an essential factor in initiating and developing online
exchanges and relationships (Grabner-Kraeuter, 2002; Yoon, 2002). The research of Suh
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and Han (2002) reveals that trust is an important predictor of attitudes toward e-
banking. Thus, trust can be defined as a belief that a bank from which a consumer
obtains a loan, performs its business with a customer in a responsible, dependable and
competent manner, as well as behaves in a way that is not harmful to its customer to
pursue its own interest (Howcroft et al., 2003; Baumann et al., 2007). In the context of
internet retailing, site reliability, security and performance consistency are important in
building trust towards an online retail firm (Fassnacht and Kose, 2007). In exchange
situations involving a heavy service component, however, a consumer builds trust
towards a business institution based on the quality of interpersonal interactions
provided by an exchange party. Hsieh and Hiang (2004) found that service quality was
a significant predictor of trust in bank.
In this study the construct trust consists of four items. Respondents were asked to
indicate the extent to which they agreed to the following statements: (1) my banks’ web
site and services has good reputation, (2) past history of my bank is good, (3)
information presented by my bank is clear and (4) information presented by my
bank is truthful.

Relationship between service quality, trust and satisfaction

The quality elements of the e-service are expected to affect e-trust directly (Grönroos,
2001), because they represent trust cues that convey the trustworthiness of the site and
the system to customers. In a review of studies on online trust, Grabner-Krauter and
Kalusha even interpret e-quality determinants as trust, i.e. trusting beliefs, and
intentions to repurchase as trusting intentions. Furthermore, Corritore et al. call web
sites objects of trust and suggest that navigational architecture and design elements
have a direct effect on trust. Gefen, in examining the effect of perceived e-service
quality on customer trust, applies the SERVQUAL model and identifies three
dimensions: tangibles, empathy and a combined dimension of reliability-assurance-
responsiveness, which has a significant effect on trust, while tangibles and empathy do
not. Herington and Weaven find that e-trust is related to user-friendliness and
efficiency dimensions. Researches have revealed a positive relation between
satisfaction and trust (Ganesan, 1994). Researches have also discovered that trust is
the most significant determinant of customer satisfaction (Pavlou and Fygenson, 2006;
Ribbink et al., 2004; Kim et al., 2008). Here in this research we will investigate the effect
of trust on customer satisfaction.
 Therefore, in analogy with the arguments used to underpin the relationship between Impact of
e-service quality, trust and customer satisfaction the following hypotheses can be trust on the
formed:
relationship
H2. e-service quality has a positive significant effect on trust. of e-service
H3. Trust has a positive effect on customer satisfaction.
Mediation 29
Mediation analysis has been employed in the literature to establish the impact of
a proposed cause of some results via a proposed mediator (Preacher and Hayes, 2004;
Fairchild et al., 2009). If there is some proposed cause (X) on some outcome (Y), c is
referred to as the total effect of X on Y. One variable (M) mediates the effect of X on Y,
and c′ is the direct effect of X on Y after controlling for M. Baron and Kenny (1986) state
that variable M is said to be a predictor if:
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(1) Y is significantly predicted by X;

(2) M is significantly predicted by X;
(3) M significantly predicts Y after X is controlled; and
(4) X significantly predicts Y after M is controlled.
If, after the inclusion of M, the impact of X on Y decreases to zero, then perfect
mediation has occurred.
In an informal content analysis of the 2000, 2001, and 2002 issues of the Journal
of Applied Psychology, Preacher and Hayes (2004) found that an overwhelming
majority of mediation analysis were based on the Baron and Kenny procedure. The
journal was believed by them to be fairly representative of the major journals in
psychology, not only with respect to the frequency of mediation hypotheses but also to
the use of the Baron and Kenny criteria for assessing mediation. However some
shortcomings of Baron and Kenny method have also been reported by different
researches. The Sobel test (Sobel, 1982) is a viable method through which mediation
hypotheses are assessed (Fairchild et al., 2009). This test is carried out through
comparing the strength of the indirect effect of X on Y to the extent that the null
hypothesis is zero.
In this research trust has been tested as a mediator between e-SQ and customer
satisfaction:
H4. trust works as a mediator between e-SQ and customer satisfaction.
The hypothetical model of the research has been depicted in Figure 1.

Trust

H2+ H3+

Figure 1.
e-service H1+ Customer
quality (e-SQ)
Theoretical model
satisfaction
of the study
 EMJB Method
10,1 Almost all public sector banks in India have initiated internet banking services, but
very few of them have been able to attract customers to use this comparatively new
banking channel. The PSBs which have a high volume and value of RTGS[1] and
NEFT[2] transactions were chosen for this study. Three such selected PSBs were State
Bank of India (SBI), Punjab National Bank (PNB) and Bank of Baroda (BOB). Data
30 regarding NEFT and RTGS value and volume was collected from the official web site
of Reserve Bank of India (www.rbi.org.in) for the period of March 2008 to December,
2012 to facilitate the bank selection procedure.

Sample
Convenience sampling method was adopted for collection of primary data. As per
the convenience of the researchers data was collected from the metropolitan city of
Kolkata, India. To decide the sample to be taken for each of the three PSBs, number
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of ATM outlets of the banks was checked. The assumption here was ATM users were
the prospective users of internet banking. Percentage was worked out to find out the
presence of the banks in terms of number of ATM outlets in the city. The banks were
not willing to share the list of internet banking users due to security reasons, therefore
this method was adopted to select the respondents. A structured questionnaire was
circulated to 450 respondents. 367 responses were complete and were counted for
analysis. Response rate was 77 percent. Among the respondents 69 percent were male
and 31 percent were female.

Questionnaire
Structured questionnaires had been used to collect data. The questionnaire had four
sections : Section : about your expectation on internet bank services, Section B: about
the specific bank’s performance on internet bank services, Section C: about your
satisfaction by availing services offered by internet banking, Section D: about
your trust on bank’s performance (Table II).
Following the trend of previous researches in this field five points Likert scale
was used to measure all of these variables. e-SQ had been measured by using 24 items.
A set of 24 Q (P-E ) columns were derived in the data sheet of SPSS for analysis
of the gap scores between perceived service and expected service to get the service
quality of internet banking. The idea of using difference scores has been used in
developing scales for measuring constructs such as role conflict (Ford et al., 1975).
Trust and customer satisfaction construct, each had been measured through four
items. The factor structures were tested for reliability. The values of coefficient α
ranged from 0.772 to 0.906 and there were no suggestion that deletion of
certain items from each dimension would improve the α values. So, no items were
deleted.

Dimension No of items Sources

Table II. e-SQ 24 Parasuraman et al. (2005)

Sources for Satisfaction 4 Overall satisfaction used in most of the studies
questionnaire Items Trust 4 Bauer et al. (2005)
 Data Analysis Impact of
The analysis had been done according to the following steps : trust on the
(1) The e-SQ construct of internet banking with gap (Q) value was tested with relationship
exploratory factor analysis (EFA). Researchers like Brady and Cronin have of e-service
found that performance only measurement can better explain service quality
antecedents such as satisfaction and trust. So the same factor structure of e-SQ
was also tested with perception (P) values. 31
(2) The proposed construct of customer satisfaction and trust was tested with
confirmatory factor analysis (CFA).
According to Barron and Kenny, trust can be a mediator according to this hypothesis if
it satisfies the following conditions:
• e-SQ significantly customer satisfaction (direct effect);
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• e-SQ significantly predicts trust;

• trust significantly predicts customer satisfaction after controlling for e-SQ; and
• e-SQ significantly predicts customer satisfaction after controlling for trust.
As per equations stated above, the following notations were used:
Y is the customer satisfaction; X the e-SQ; M the trust.
To check the effect of trust as a mediator the followings have been done:
(3) effect of e-SQ on customer satisfaction have been examined both by Q and P
values: b(YX);
(4) effect of e-SQ to trust has been tested both by Q and P values: b(MX);
(5) effect of trust on customer satisfaction: b(YM.X); and
(6) effect of e-SQ on customer satisfaction through trust both by Q and P values: b
(YX.M).
In addition to the Baron and Kenny method, Sobel test were performed to estimate
indirect effect.
Amos 18.0 has been used to perform these analyses.

Results
Samples profile
The profile of sample used in the research study is presented in Table III.

Variable Percentage

Age in years
o20 5
20-40 60
41-60 35
Sex Table III.
Male 69 Demographics
Female 31 of the sample
 EMJB The reliability statistics of the three constructs has been shown in Table IV. The
10,1 reliability coefficients or α’s for the different constructs were computed using the
reliability procedure in SPSS (version 19.0).
The reliabilities of all the constructs used in this study were found to be above the
standard set by Nunnally (1978), which is 0.50-0.60. The results found by exploratory
factor analysis on the three constructs are shown in Table V.
32 The data was subjected to second-order confirmatory factor analysis using AMOS
18 to test the model fit and unidimensionality of service quality scale item on all the
constructs. Maximum likelihood technique was used. The result of initial confirmatory
factor analysis on the Q values of e-SQ construct showed that R2 values of two of the
variables in efficiency1 construct and one variable of availability construct was below
0.450. These three variables were omitted from the e-SQ construct. Similarly among the
P values three variables from system availability, efficiency and privacy were dropped.
The resulting confirmatory factor analysis showed that that the data fitted the
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measurement model fairly well (refer Tables VI and VII).

As it can be seen from Table V, the R2 values, which explain the relative variance of
the dependent variable, are satisfactory (larger than 0.450) ( Joreskog and Sorbom,
1999). So, all manifest variables are valid for further analysis through structural
equations modeling (SEM).
Goodness-of-fit of all the three constructs (with minor variation in the construct of
trust) indicated “reasonable or good fit” or RMSEA o 0.05. Brown and Cudeck
suggested that root mean square error of approximation (RMSEA) between 0.05
and 0.08 provide reasonable error of approximation. Hair et al. (2009) suggested
0.05 o RMSEA o 0.08 is for “good fit”. CFI (comparative fit index) for all the three
constructs W 0.90 denoting a good fit. Hu and Bentler (1999) suggested that a rule of
thumb for the CFI and the incremental indexes is that values greater than roughly 0.90
may indicate reasonably good fit of the researcher’s model. The GFI was the first
standardized fit index ( Joreskog and Sorbom, 1999). GFI ¼ 1.0 indicates perfect model
fit. Therefore, a GFIW 0.90 demonstrates reasonable fit for all the three constructs used
in this study. The goodness-of-fit values supports fitness of three individual constructs
namely e-SQ, trust and customer satisfaction reasonably.

Convergent validity
Convergent validity of a scale measure is used to assess whether the individual scale
items are related or not (Susarala et al., 2003). It refers to the degree to which the two
measures designed to measure the same construct are related (Netemeyer et al., 2003).
To analyze the convergent validity the factor loadings and the average variance

Cronbach’s α
Construct Sub constructs No. of items Q P

e-SQ System availability 4 0.772 0.792

Efficiency 1 4 0.773 0.799
Efficiency 2 5 0.906 0.894
Table IV. Fulfillment 4 0.814 0.857
Reliability statistic Privacy 7 0.880 0.892
of the constructs Customer satisfaction 4 0.828
used in research Trust 4 0.810
 Factor loadings Eigen values Percent of variance
Impact of
Factor labels Q P Q P Q P trust on the
relationship
e-SQ
AV1 0.793 0.768 7.918 8.542 32.990 35.59 of e-service
AV2 0.696 0.691
AV3 0.738 0.728
AV4 0.708 0.652 33
Eff21 0.719 0.726 2.629 2.338 10.953 9.741
Eff22 0.849 0.828
Eff23 0.829 0.815
Eff24 0.831 0.785
Eff25 0.836 0.820
Eff11 0.790 0.759 1.827 1.849 7.612 7.705
Eff12 0.715 0.730
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Eff13 0.702 0.747

Eff14 0.730 0.752
Ful1 0.704 0.781 1.605 1.625 6.689 6.770
Ful2 0.747 0.776
Ful3 0.664 0.774
Ful4 0.704 0.786
PR1 0.712 0.725 1.228 1.289 5.115 5.371
PR2 0.705 0.727
PR3 0.728 0.696
PR4 0.708 0.751
PR5 0.807 0.766
PR6 0.697 0.691
PR7 0.652 0.703
Customer satisfaction
SAT1 0.814 2.654 65.925
SAT2 0.824
SAT3 0.818
SAT4 0.792
Trust
PTR1 0.797 2.519 63.759 Table V.
PTR2 0.799 Factor analysis for
PTR3 0.803 e-SQ, customer
PTR4 0.795 satisfaction and trust

extracted were examined as suggested by Fornel and Larcker (1981). In this research
most of the indicators had loading from 0.6 to 0.9 which was in line with Bagozzi and Yi
(1988). With this the average variance extracted was more than 0.5 which is acceptable.
The average variance explained by each construct has been shown in Table VIII.

Discriminant validity
Discriminant validity provides the information about whether the scores from a
measure of a construct are unique rather than contaminated by other constructs
(Schwab, 2005). To assess the discriminant validity of the constructs the AVE of each
construct was compared to their corresponding inter construct correlation as
recommended by Fornel and Larcker (1981). To satisfy the requirement of the
discriminative validity, the square root of a construct’s AVE must be greater than the
 EMJB Standardized Standardized
10,1 coefficients coefficients
2
Constructs Indicators Q R Indicators P R2

e-SQ System qav4 0.696 0.484 pav4 0.745 0.486

availability qav3 0.673 0.453 pav3 0.692 0.450
qav2 Dropped pav2 Dropped
34 qav1 0.746 0.557 pav1 0.703 0.558
Efficiency1 qeff14 Dropped peff14 0.711 0.506
qeff13 0.702 0.493 peff13 0.73 0.533
qeff12 Dropped peff12 Dropped
qeff11 0.720 0.518 peff11 0.714 0.510
Efficiency2 qeff25 0.839 0.704 peff25 0.816 0.666
qeff24 0.846 0.716 peff24 0.793 0.629
qeff23 0.834 0.696 peff23 0.81 0.656
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qeff22 0.837 0.701 peff22 0.837 0.701

qeff21 0.697 0.486 peff21 0.707 0.500
Fulfillment qful4 0.675 0.456 pful4 0.721 0.520
qful3 0.717 0.514 pful3 0.795 0.632
qful2 0.731 0.534 pful2 0.785 0.616
qful1 0.735 0.540 pful1 0.795 0.632
Privacy qpr7 0.684 0.468 ppr7 0.754 0.569
qpr6 0.694 0.482 ppr6 Dropped
qpr5 0.765 0.585 ppr5 0.787 0.619
qpr4 0.686 0.471 ppr4 0.716 0.513
qpr3 0.717 0.514 ppr3 0.754 0.569
qpr2 0.684 0.468 ppr2 0.726 0.527
qpr1 0.742 0.551 ppr1 0.757 0.573
Trust ptr4 0.712 0.507
ptr3 0.728 0.530
ptr2 0.720 0.518
Table VI. ptr1 0.716 0.513
Confirmatory factor Customer sat4 0.703 0.494
analysis: satisfaction sat3 0.748 0.560
standardized sat2 0.763 0.582
coefficients sat1 0.741 0.549

correlations between the construct and other constructs in the model. Table VIII shows
the correlation of the constructs (with Q values), square root of AVE exceeded the
correlations with the all the constructs (Table IX).

Effect of Trust as a mediator between e-SQ and customer satisfaction

Table X shows the goodness of fit indices for each of the hypothesis individually and
the overall model consisting of all the hypotheses.
e-SQ has been found to be significantly related to customer satisfaction in the
hypothesized direction. e-SQ and trust, trust and customer satisfaction are also found to
be positively and significantly related (Table XI).
The steps proposed by Baron and Kenny (1986) and Judd and Kenny were used to
test the meditational hypothesis. Step one establishes that the criterion variable is
significantly correlated with the predictor. The criterion variable is regressed on the
predictor to estimate and test the path (c) between them. This established that there is
 Observed value
Impact of
e-SQ trust on the
Recommended Customer relationship
Fit indexes value Q P Trust satisfaction
of e-service
χ2/degrees of freedom ⩽3.0 1.8 1.4 2.29 1.0
GFI (goodness of fit ) ⩾0.90 0.938 0.950 0.993 0.998
AGFI (average goodness of fit) ⩾0.80 0.922 0.937 0.967 0.989 35
RMR (root mean square residual) ⩽0.05 0.011 0.015 0.006 0.003
CFI (comparative fit index) ⩾0.90 0.966 0.983 0.992 0.998
NFI (normed fit index) ⩾0.90 0.931 0.948 0.989 0.997
RFI (relative fit index) Close to 0.90 0.921 0.941 0.967 0.991
TLI (Tucker-Lewis index) Close to 0.90 0.961 0.980 0.977 0.999 Table VII.
RMSEA(root mean square error of ⩽0.05 0.042 0.031 0.051 0.013 Summary statistics
approximation) of model fit
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Q P
Square root of Composite Square root of Composite
AVE AVE reliability AVE AVE reliability

System
availability 0.497 0.704 0.748 0.509 0.713 0.756
Efficiency 1 0.505 0.710 0.671 0.516 0.718 0.761
Efficiency 2 0.630 0.793 0.936 0.630 0.794 0.894 Table VIII.
Fulfillment 0.511 0.714 0.806 0.600 0.775 0.856 Average variance
Privacy 0.505 0.710 0.877 0.561 0.749 0.884 extracted and
Trust 0.517 0.719 0.810 composite reliability
Customer of service quality
satisfaction 0.546 0.738 0.827 construct

System
availability Efficiency1 Efficiency2 Fulfillment Privacy Trust

With Q values
Efficiency1 0.377***
Efficiency2 0.433*** 0.331***
Fulfillment 0.465*** 0.486*** 0.523***
Privacy 0.390*** 0.529*** 0.386*** 0.695***
Trust 0.277*** −0.274*** −0.348*** −0.631*** −0.617***
Satisfaction 0.371*** −0.401*** −0.595*** −0.585*** −0.656*** 0.820***
With P values
Efficiency1 0.529***
Efficiency2 0.516*** 0.400***
Fulfillment 0.470*** 0.387*** 0.467***
Privacy 0.642*** 0.507*** 0.457*** 0.555*** Table IX.
Trust 0.504*** 0.452*** 0.417*** 0.777*** 0.820*** Correlation of the
Satisfaction 0.514*** 0.390*** 0.476*** 0.642*** 0.735*** 0.819*** constructs with Q
Note: ***p o0.001 and P values
 EMJB an effect to be mediated as the regression weight was found to be 0.734*** and
10,1 0.822*** with Q and P values, respectively.
Step two establishes that the predictor was significantly correlated with the
mediating variable. The mediator was regressed on the predictor to estimate and
test the path (a) between them and the values found for Q and P values were 0.703***
and 0.913***.
36 Step three establishes that the mediator affects the outcome variable. It is not
sufficient just to correlate the mediator with the criterion variable because the
mediator and the outcome may be related due to the joint influence of the predictor
variable. Therefore, the predictor variable must be controlled in establishing
the effect of the mediator on the criterion variable ( path b). The criterion variable is
regressed on both the predictor and mediator simultaneously in order to estimate
and test path b.
Preacher and Hayes (2004) suggest performing a formal significance test of the
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indirect effect if Baron and Kenny criteria have been met. Table XII shows the results of
Sobel test.
Step four determines whether the mediator completely mediates the relationship
between the predictor and criterion variables. In order to establish this, the effect of the
predictor on the criterion, controlling for the mediator ( path c) should be zero. Last
column of Table XI shows the values are not exactly zero, so this can be treated as
a case of partial mediation.

Cmin/df GFI RMR CFI NFI RFI RMSEA

H1: b(YX) Q 1.8 0.928 0.012 0.961 0.918 0.909 0.040

P 1.4 0.942 0.017 0.981 0.940 0.933 0.029
H2: b(MX) Q 2.0 0.916 0.013 0.948 0.906 0.895 0.047
P 2.0 0.916 0.022 0.953 0.913 0.903 0.047
H3: b(YM.X) NA 2.0 0.976 0.008 0.982 0.971 0.957 0.050
Table X.
Goodness-of-fit The model with mediation
indices of the paths b(YX.M) Q 1.9 0.909 0.013 0.947 0.898 0.888 0.044
with Q and P values P 1.8 0.913 0.020 0.956 0.910 0.901 0.042

Path Proposed effect Coefficient estimate Results

Before mediation
H1: b(YX) Q + 0.734** H1 is supported
P + 0.822** H1 is supported
After mediation
H2: b(MX):a Q + 0.703*** H2 is supported
P + 0.913*** H2 is supported
Table XI. H3: b(YM.X):b Q + 0.604*** H3 is supported
Standardized path P + 0.372* H3 is supported
coefficients for H4: b(YX.M) Q + 0.308*** H4 is supported
the model with P + 0.490** H4 is supported
Q and P values Notes: ***p o0.001; **p o0.01; *p o 0.05
 The test of the indirect effect is given by dividing a  b by the square root of the Impact of
variance b2s2a+a2s2b and treating the ratio as a Z test (i.e. larger than 1.96 in absolute trust on the
value is significant at the 0.05 level).
The Sobel test is statistically significant for Q value (Z ¼ 5.52, p o 0.001) as well as
relationship
for P value (Z ¼ 2.18, p o 0.05) suggesting that a significant amount of higher customer of e-service
satisfaction associated with e-service quality is derived from increased trust.
A significant partial correlation between e-SQ and customer satisfaction remains after 37
including the mediator (trust) in the regression. This suggests that increased trust does
not fully explain the association between e-SQ and higher customer satisfaction, and
that other unmeasured factors are helping to transmit the affect.
Figures 2 and 3 shows the final model of mediation through gap values and
perception values respectively.
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Discussion
While several authors have emphasized the multidimensional nature of service
quality and the relationships between customer satisfaction and customer trust, this
research sought to establish the bridges between e-service quality, customer
satisfaction and customer trust in the context of internet banking. Using a sample of
internet banking customers this research has tried to find the mediating effect of trust
between service quality and customer satisfaction. It investigates whether the
postulated causal relationships among the e-SQ and customer satisfaction vary in two
measurement models for the same group of customers. The results of this research
confirm that e-SQ, trust and customer satisfaction are all significantly related to one
another and trust partially mediates the relation of internet banking service quality
and satisfaction.
The regression weight of e-SQ on trust is very high for the mediation model with
P value as well as with Q value which indicates that service qualities of internet
banking have a major influence on trust. Further if we go into the details of regression
weight of the five factors of service quality, we can see privacy and fulfillment is the
two major influencer of trust. All the seven privacy variables have regression weight
greater than 0.725 in the model with P values. Service providers should take more care
of the privacy of the personal and transactional information of their customers. They
should implement more levels of authentication checking to reduce the number of
fraudulent transaction and make the customers more secured in the online banking
environment. Banking service providers should also be more careful about the
fulfillment of the internet banking services. The services they promise to their
customers should be accessible and operative and should ultimately fulfill the customer
requirement. System availability and efficiency related to ease and speed of accessing
and using the site also have moderate weightage.
The effect of trust on customer satisfaction is also significant but not as high as that
of the effect of service quality on trust. This may be due to the fact that there are

c c′ c−c′ a b Sobel: a × b c−c′ ¼ a × b

Q 0.734 0.308 0.426 0.703 0.604 0.424 0.002: Y Table XII.

P 0.822 0.490 0.332 0.913 0.372 0.339 −0.007: Y Result of Sobel test
 EMJB
10,1

38
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Figure 2.
The model of e-SQ
influencing customer
satisfaction and
the mediating effect
of trust with
gap values(Q)

several other factors also that affect customer satisfaction. The 2012 Ernst and Young
survey showed 50 percent of the customers attrition was due to price factor.

Implications
Each of the three constructs (e-SQ, trust and customer satisfaction) in this research was
prepared on the basis of the past literature evidence. The constructs were tested and
refined with the dataset with help of exploratory and confirmatory factor analysis.
They were also tested for reliability and validity. The reliable and valid instrument
confirmed in this research can be used by further studies detecting the relationships
among these constructs in an extended context.
The findings also provide several managerial implications. The fundamental premise of
the proposed research work model was to make banking service providers
 Impact of
trust on the
relationship
of e-service

39
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Figure 3.
The model of e-SQ
influencing customer
satisfaction and the
mediating effect of
trust with perception
values (P)

understand comprehensively the factors necessary to achieve high service quality that
will significantly impact on customers’ trust, satisfaction. The results suggest that proper
care should be taken to fulfill the service promises of internet banking and privacy of the
customers’ informational data. As all the five factors influence trust significantly bank
personnel should understand the importance of these factors and try to improve on them
to retain the customer and to get more new customers. By recognizing and analyzing
these identified indicators, banking personnel will be better able to formulate and
implement their strategic plans. The interpretation of the research model will help service
providers to better understand how customers assess the quality of service in internet
banking and how their service influence customer satisfaction through trust.

Limitations
Nevertheless, the findings of this study have to be interpreted considering few
limitations. First, data were collected only from selected public sector banks; so the
results might not hold true for other banks providing internet banking service. Second,
data collection was limited to the customers of those banks who live in Kolkata, West
 EMJB Bengal India; so the findings should not be generalized for all the subscribers of the
10,1 entire country. Third, the current study was a cross-sectional study but to determine
the causal paths of the studied variables a longitudinal study would have been more
appropriate (Poon, 2004). In addition, the influence of other major variables like price
has not been taken under consideration of this study.

40 Notes
1. Real time gross settlement.
2. National electronic funds transfer.

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Corresponding author
Sukanya Kundu can be contacted at: sk54015@gmail.com

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