Final Draft

TABLE OF FIGURES
Figure 1: Conceptual Framework……………………………………………………………………………………

Figure 2: Research Onion…………………………………………………………………………………………………
Figure 3: The basic and net pay influence for your decision to take a bank loan…….
Figure 4: Your salary reflects the ability to pay for the loan………………………....
Figure 5: Bank collateral requirement influence the decision to request for a loan….
Figure 6: The net property you own influence your decision to request for a bank
loan………………………………………………………………………....
Figure 7: Prompt services provided in the bank loan request process affect the
decision to request a bank loan…………………………………………….
Figure 8: Banks interest in solving customer problem in the bank loan process
affect the decision to request a bank loan………………………………….
Figure 9: A wide spread of branch networks throughout the country affect the
decision to request a bank loan…………………………………………….
Figure 10: Banks’ customer interest in providing the loans affect the decision to
request a bank loan…………………………………………………………
Figure 11: I am satisfied with service quality, in terms of staff conduct, reliability
and responsiveness of the bank when requesting a bank loan…………......
Figure 12: It is likely that I will be a customer of the same bank in the future to
request a bank loan…………………………………………………………
Figure 13: I am satisfied with the cooperation of the bank with taking care of
immediate and effective solutions for the problems encountered when
requesting for a bank loan………………………………………………….
Figure 14: I am satisfied with product attributes including interest rate, loan amount,
and commissions to request for a bank loan……………………………….
Figure 15: I am satisfied with the variety of products/services provided by the bank
that I cooperate with when requesting for a bank loan…………………….
Figure 16: Your satisfaction towards the bank is increased…………………………...
Figure 17: Service quality of the bank is increased……………………………………
Figure 18: Loan covenants are made favorable to customer…………………………..
Figure 19: Installment is determined by the consent of both bank and customer……..
LIST OF TABLES
Table 1: The basic and net pay influence for your decision to take a bank loan……..
Table 2: Your salary reflects the ability to pay for the loan………………………….
Table 3: Bank collateral requirement influence the decision to request for a
Loan……………………………………………………………………….....
Table 4: The net property you own influence your decision to request for a bank
loan…………………………………………………………………………..
Table 5: Prompt services provided in the bank loan request process affect the
decision to request a bank loan……………………………………………...
Table 6: Banks interest in solving customer problem in the bank loan process affect
the decision to request a bank loan………………………………………….
Table 7: A wide spread of branch networks throughout the country affect the
decision to request a bank loan……………………………………………...
Table 8: Banks’ customer interest in providing the loans affect the decision to
request a bank loan…………………………………………………………..
Table 9: I am satisfied with service quality, in terms of staff conduct, reliability and
responsiveness of the bank when requesting a bank loan…………………...
Table 10: It is likely that I will be a customer of the same bank in the future to
request a bank loan…………………………………………………………..
Table 11: I am satisfied with the cooperation of the bank with taking care of
immediate and effective solutions for the problems encountered when
requesting for a bank loan…………………………………………………...
Table 12: I am satisfied with product attributes including interest rate, loan amount,
and commissions to request for a bank loan………………………………...
Table 13: I am satisfied with the variety of products/services provided by the bank
that I cooperate with when requesting for a bank loan……………………...
Table 14: Your satisfaction towards the bank is increased…………………………….
Table 15: Service quality of the bank is increased……………………………………..
Table 16: Loan covenants are made favorable to customer……………………………
Table 17: Installment is determined by the consent of both bank and customer………
Table 18: Correlation analysis between customer demographic factors and the
customer’s decision for requesting a bank loan……………………………..
Table 19: Correlation analysis between service quality and the customer’s decision
for requesting a bank loan…………………………………………………...
Table 20: Correlation analysis between customer’s satisfaction and the customer’s
decision for requesting a bank loan………………………………………….
Table 21: Case processing summary (Customer’s Demographic Factors)…………….
Table 22: Square test results (Customer’s Demographic Factors)……………………..
Table 23: Case processing summary (Bank’s Service Quality)………………………..
Table 24: Square test results (Bank’ Service Quality)…………………………………
Table 25: Case processing summary (Customer’s Satisfaction)……………………….
Table 26: Square test results (Customer’s Satisfaction)………………………………..
Table 27: Descriptive statistical analysis………………………………………………
Table 28: Inferential statistical analysis………………………………………………..
ABSTRACT
CHAPTER ONE: INTRODUCTION
1.1 Background Study of the Research
The title of the research as decided by the author is as follows.
Research on the ‘Factors affecting on customer’s decision for requesting for bank loans in Sri
Lanka; with special reference to Colombo district’.
Hence, the author is focusing on conducting the research on how certain factors affect the
customer’s decision for requesting for bank loans have made an impact to banking industry in Sri
Lanka. Here, the researcher has selected the citizens of Colombo district to conduct the research
on.
In the history, the people engaged in the barter system by trading their goods and services to
meet their needs (Weatherford, 2009). Progressively, the monetary system substituted the barter
system. In the modern days, money is used as means of performing the business-related and
other transactions.
With the globalization and financial development, banks and other financial institutions compete
with each other in order to be successful. Customers on the other hand have a large number of
choices and use various criteria to examine and select a bank of their choice to conduct the
financial activities. As a result, the bank selection process has been enriched with new
methodologies and recommendations for customers as well as banks. Some banks and financial
institutions nowadays have lost their reputation and credibility due to the irrational and immoral
financial activities practiced. This has led to the financial crises of many institutions and banks in
Sri Lanka and all over the world (Hemachandra, 2011). Hence, there is a need to assess crucial
factors that helps banks to maintain the existing customers and the new ways to attract new
customers. Accordingly, the total customer satisfaction with regards to loans by banking
management is crucial in this context (Karatepea et al., 2005; Sharma & Rao, 2010).
“How customers select banks of their choice to obtain loans” has been a major topic in the past
literature (Anderson et al., 1976; Evans, 1979) as loans can lead to sustainability or collapse of
the banking system. On the other hand, it can be having either a positive or negative impact on
the part of the customers. Sri Lanka is not an exception with regards to customer loan acquisition
issues. Customers’ loan acquisition has always been a concern for the banking and financial
institutions. This is because the loans given by the banks subjected to the customer’s need after
analyzing the customer’s capability to repay the loan (Bai, Lu and Tao, 2006). With 24 licensed
commercial banks, 6 licensed specialized banks, financial companies, and co-operatives, the
competition is extremely high in Sri Lanka (Central Bank of Sri Lanka, 2021). In order to
provide the financial solutions at their best, these financial institutions should know the factors
that influence the loan purchase decision of the Sri Lankan customers and their preferences.
Hence, this research study is intended to generate an insight to the banks in Sri Lanka on factors
that effect on customer’s decision for requesting for bank loans with special reference to
Colombo district.
1.2 Rationale of the Study
The goal of this research study is to empirically examine about the factors considered by the
customers that guide them to make such loan purchase decisions in Sri Lanka. Many of the banks
in Sri Lanka are not able to cater the financial needs of the customers’ and are not able to tailor
the loan product that meets both the customers demand and the organizations motive.
Many research studies have been conducted to clarify the reasons why and how people choose
their bank to obtain financial services including loans. Majority of these studies have been
conducted in the USA and European region (Parasuraman et al., 1988; Newman and Cowling,
1996; Drake et al. 1998; Oldfield and Baron 2000; Lee and Marlowe 2003). However, in Sri
Lankan context there are minimal researches that have been executed and provided empirical
data pertaining to the above topic. Therefore, the researcher has properly identified the research
gap and will effectively identify the factors that affect customer decisions in Colombo district to
get a loan, which can be crucial for banks to market new customers or enlarge and preserve
relationship with their existing customers. Therefore, this study is conducted to bridge the
literature gap between international context and Sri Lankan context which is directly related with
the banking sector of Sri Lanka.
Through the research study, the researcher will be able to enhance the knowledge, build proper
personal contacts, improve the academic writing and reading, get an exposure to the banking
sector and gain sufficient experience that will help in conducting this research successfully.
Finally, in terms of Sri Lankan economy, this research will help banks to understand the
customers better and to create more favorable environments for the customers to obtain bank
loans thus generating economic growth.
1.3 Background to the Industry
Banks were foreign to Sri Lankan culture under the rule of the Sinhalese Kings and even the
Portuguese (1505-1656) and Dutch (1656-1796). Banking was introduced to Sri Lanka during
the British colony (1802-1948), with most branches of foreign banks been established. Sri
Lankan financial system underwent radical reforms since 1977. As a result of relaxation of entry
barriers, many foreign banks entered into the country. As a result, the market structure of the
banking system dramatically changed together with the enhancement of performance. The
Central Bank of Sri Lanka which was established in 1949 through MLA No.58 of 1949 marked a
turning point in Sri Lanka's economics. The Central Bank of Sri Lanka (CBSL) is the sole
regulator of the banking system in Sri Lanka up to the present.
Banks that are classified as a part of service sector in Sri Lanka play a crucial role in the
country's economy, accounting for roughly 60 percent of GDP and recruiting roughly 40 percent
of the working population. Around 55 percent of financial sector reserves are owned by banks,
with the rest held by insurance and real estate firms. In contrast towards the stiff competition,
new laws have been implemented both locally and globally, forcing banks to comply with them.
The BASEL II is one similar global regulation, with Sri Lanka Accounting Standards No. 44
mostly on information contained in financial instruments and No. 45 on the identification and
calculation of financial products that will go into effect in January 2011 and impose further strict
regulatory regulations. Sri Lanka faced problems as a result of the recent global financial and
economic crisis, including decreased demand for loans, decreased exports, decreased foreign
exchange earnings, and so on, as Sri Lankan businesses were partially impacted by the recession.
Despite the adverse consequences of prevailing COVID-19 pandemic outbreak, the banking
industry of Sri Lanka has to perform at their best to maintain the economic activities within the
country. However, COVID-19 credit facilities were given to the citizens by reducing the interest
rates under the supervision of CBSL. As a result, it was expected to increase the lending by
financial institutions to the people (Samsudeen, Selvaratnam and Mohamed, 2020).
1.4 Location of the Research
As the research is about the factors that are affecting on customer’s decision for requesting for
bank loans in Sri Lankan context, the population will be the Sri Lankan citizens. Yet the sample
will be selected around the Western province as it is the most densely populated province in the
country. Hence the location of the research study will be the Colombo District in the Western
province.
1.5 Aims and Objectives
Main Aim: To identify the factors affecting on customer’s decision for requesting for bank loans
in Sri Lanka with special reference to Colombo district and to make appropriate
recommendations to the industry.
Specific objectives:
1. To identify the relationship between the customers’ demographic factors and the
customer’s decision for requesting bank loan in Colombo District.
2. To identify the relationship between the bank’s service quality and the customer’s
decision for requesting bank loan in Colombo District.
3. To identify the relationship between the customer’s satisfaction and the customer’s
decision for requesting bank loan in Colombo District.
1.6 Chapter Profiles
Chapter 01: Introduction- This section discusses the introduction to the selected topic. It
includes the background study of the research, rationale of the study, background to the industry,
location of the research, aims and objectives of the research and finally the chapter outlines of
the report.
Chapter 02: Critical review of Literature Review- Chapter 3 reviews related literature on
bank loans and the factors that the customers consider when taking loans by using the most
relevant and frequently cited studies. It includes the different school of thoughts from various
authors about the factors that affect the customers’ decision to request for loans and development
of research questions and conceptual framework through the critical analysis. In addition to that,
the research hypothesis is also included.
Chapter 03: Research Methodology- Chapter 4 explores the methods used in analyzing the
factors that affect the customers’ decision to request for loans. This section discusses the
methodologies of the research that includes theoretical stance, sampling framework, data
analysis, validity, reliability, generalizability, ethical considerations and finally the constraints of
this research.
Chapter 04: Data Presentation and Analysis- This section presents the data presentation and
analysis which was collected through the survey and it was analyzed using the IBM SPSS
software.
Chapter 05: Conclusion and Recommendations- The fifth and final chapter summarizes the
major findings of the research study and highlights its key contributions. This section discusses
the conclusions and recommendations of the particular research. It includes the revisiting of the
objectives as in whether the original purpose of the study was met, summary of the findings, then
a note on the contribution to the knowledge, limitations of the research and suggestions for
further studies and finally the recommendations based on the research findings on factors
affecting on customer’s decision for requesting for bank loans.
CHAPTER TWO: CRITICAL REVIEW OF LITERATURE
2.1 Literature Review

The literature review is a report that evaluates the literature on selected studies. The review must
describe, summarize, rate, and clarify relevant documents. It should provide a theoretical basis
for research and help to define the nature of the studies. The literature review explains all the
relevant information concerning the selected topic. The literature review discusses and
investigating information in a particular area.
2.1.1 Concept of Loan Acquisition in the Banking Sector

In the context of banking sector, the loans have been considered as a major way of generating the
necessary income to the bank through the interest which will be paid by the customers who
obtained the loans (Claudia et al., 2014). Acquisition of bank loans has been in the financial
industry for many decades. Bank loans are more distinctive for both individuals and businesses,
as per empirical investigations. Particularly, the organizations as well as individuals are
interested on taking loans as the economic system always provide lot of alternatives to be
consumed by the people in the society (Minna et al., 2009). Intention of obtaining a loan may not
be always inspired with the consumption desire; instead it could be used to take medical
treatments in an emergency, used for educational purposes or personal expenses like weddings.
Moreover, there are housing loans, loans obtained for purchasing lands, vehicles or any other
capital acquisition (Minna et al., 2009). However, in each of these loan schemes, the customer
has a certain desire which has inspired him or her throughout process to make the decision for
obtain the bank loan.
Moreover, the number of financial institutions which can give bank loans are getting increased
day by day where each of the financial institution need to compete with each other by
differentiating themselves. As identified by Christos, Konstantinos, Ioannis and Giannis (2012),
the target market segment of the financial institutions has been changed frequently because of the
competition. Even the university students have been given opportunities to give loans and credit
facilities like credit cards after considering their future profitability. All these scenarios would
lead to a specific question; why an individual select a particular bank to obtain a loan facility
given the set of alternative banks are available? In this context, the banks need to identify the
factors which attract the customers towards their bank and they need to develop on those areas.
Past studies reveal factors that the customer considers in selecting a bank. (Anderson et al., 1976;
Evans, 1979; Kaynak and Yavas, 1985; Kazeh and Decker, 1993; Hegazi, 1995). This
information is important for banks to establish successful marketing strategies that would be
useful to attract new customers while retaining the existing customers (Kaynak and
Kucukemiroglu, 1992). According to Kamal et al. (1999), the quality of service features such as
convenience, competitiveness, and location of the service provider are positively associated with
customer satisfaction. As identified by Yue and Tom (1995), and the scholars (Ali et al., 2015),
there are certain factors that could have a positive impact towards a customer requesting a bank
loan. These potential factors that could affect customers’ decision are efficiency of services,
reputation of the bank, bank fees, convenient location and favorable interest rates on loans.
Lending rates is crucial for bank profitability, but loan rates that are high as barriers while having
a negative impact on the economy (Ngumi, 2014). The loan rate is a major variable that
influences a client’s decision to select banks to fulfil loan needs (Christos, 2012). According to
Boyd et al. (1994), the factors that determine younger generation’s bank selection is the bank’s
reputation; location; hours of operation; interest of saving accounts; and the convenience. Some
less important factors were identified that they were the bank staff friendliness and the modern
technological facilities.
Banks offer different types of loans to fulfill customer needs such as school loans, farm loans,
housing loans, personal loans, etc. The consumers are aware of their fund requirements, so they
expect banks to respond to their desired needs with favorable features. Services can be identified
as the primary source of satisfaction that can attract potential clients to increase banking profits.
Since this particular study is focused factors that are affecting on customer’s decision for
requesting for bank loans in Sri Lankan context, literature pertaining to the factors that are
affecting on customer’s decision for requesting for bank loan are emphasized though this
segment. Because of these statements of the authors, the researcher of this study has considered
the factors such as the Customer’s Demographic Factors, Bank’s Service Quality and Customer’s
Satisfaction as the main factors that affect the customer’s decision for requesting bank loan.
2.1.2 Factors affecting the customer’s decision for requesting bank loan in Colombo
District
Javalgi et al. (1989) conducted a study in the USA and found that financial factor such as interest
for saving accounts, fund safety, and loan availability play a leading role in customers’ decision
to request for a loan from a particular bank. Furthermore, a study executed by Erol et al. (1990)
on customers of conventional and Islamic banks in Jordan, found that bank confidentiality affects
customers’ decision to choose a bank for loan request. Above findings were further supported by
Haron et al. (1994) and Holstius and Kaynak (1995). Haron et al. (1994) conducted a survey on
301 Muslim and non-Muslim commercial bank customers in Malaysia with a purpose of finding
factors that affect customer’s selection of a bank. They further found that fast and efficient
services, speed of transactions and friendliness of bank staff are some other factors that affect
other than bank confidentiality. Holstius and Kaynak (1995) conducted their research on 258
samples of Finnish customers and investigated the importance of selected factors in Finland. The
results showed that bank customer service, bank service quality, personnel openness by bank
staff and bank confidentiality were the key factors that affect customer decision in bank
selection.
Furthermore, Kaynak and Kucukemiroglu (1992) investigated customers from domestic and
foreign banks in Hong Kong to recognize the factors that affect customer’s bank selection. The
research findings found that suitable bank location, a near parking lot to the bank, existence of a
wide range of loans, existence of a wide range of mortgages were the main factors.
Moreover, a study conducted on students in the universities shown similar results. For instance,
Kazeh and Decker (1993) asked 209 university students in Maryland, USA their opinion about
factors influencing customers’ decision to choose a bank with the main findings being not
surprisingly different from the aforementioned. Specifically, students reported that service
charges, reputation, interest charged on loans, quick loan approval and friendly bank staff were
the major reasons.
2.1.2.1 Customer’s Demographic Factors
The literature has given a higher attention towards investigating bank selection criteria from
different segments (Yue and Tom, 1995). According to Berger and Udell (2006), there is a
connection between the demographics of the borrower and access to loans as well as repayment
of loans. Thus customer demographic characteristics are considered important for banks when
advancing loans to their customers. Customer demographic features such as age group are one
of the most important factors have been investigated in several research studies (Almossawi,
2001). Demographic factors are considered as the unique identities which can be used to
differentiate the individuals from each other. The demographic factors which have been used by
the scholars in different research studies can be identified. Some of the examples for the
demographic factors are age, sex, income level, marital status, employment, location,
homeownership and level of education (Constantine et al.,2006). Depending on each of these
factors, the need for a loan and the capability of the person to repay the loan vary. Hence,
different demographic factors may have an impact on requesting for a bank loan whereas some
demographic factors may not inspire customers to obtain any loans. Depending on the age, there
is a tendency among the people who are 30-50 years of age to obtain loans. Even the income
level is a significant factor which is being considered even by the banks when lending loans
(Christos et al., 2012) Hence, the income level will determine the amount of the loan that can be
obtained by an individual while the lower and medium income level people tend to obtain loans
from the banks compared to others. Marital status is a determinant of the decision of obtaining a
loan starting from the wedding, people tends to obtain loans. Even after the marriage, the people
tend to obtain loans for purchasing lands, vehicles, and houses because they have to build their
family.
Banks also provide banking services to clients who are even below minimum wage level that
cannot afford their costs of living and higher education. In this manner, the banks engage in
fulfilling customer class's dream while contributing to the GDP of the country. The customers
also look for efficiency, convenience, less processing time, application approvals, low
installments, etc (Mahalingam,1995). These attributes prominent among bank customers in
selecting the bank those are in a middle family or upper middle family for housing loans. They
measure these bank services in the form of low interest rates, accessibility and credibility of
banks (Gupta and Sinha, 2015).
Level of education is also inspiring an individual to obtain loans. As obtaining education can be
costly, an individual may request loans for higher education purpose. After getting a proper
education, they may enter in to a certain job or they may start a business. Either way, they are
educated and they may request loans as they know about the financial facilities they can obtain
(Christos et al., 2012). According to Nguyen (2007), majority of the banks give priority to
borrowers who are educated as they are well verse with communication than borrowers who are
not educated. Banks prefer educated borrowers as they are able to deal with bank documentation
and requirements more effectively and can reschedule loans in cases of scenarios that affect their
ability to service their loans.
It is found that male borrowers tend to receive loans when compared to women. Female
entrepreneurial businesses are likely to be denied to receive loans even after controlling for
differences in creditworthiness and other financial performance factors (Blanchfloweret al.,
2003). Thereby, due to these statements of the authors, the researcher considers the salary,
purchasing power, bank collateral requirement and the net property as the facets of demographic
factors in order to prepare the questions for the Customer’s Demographics Variable.
It can conclude as above discussion, the first hypothesis is:
H1: There is a relationship between Customer’s Demographic factors and the Customer’s
Decision for Requesting Bank Loan in Colombo District.
2.1.2.2 Bank’s Service Quality

Quality of service is increasingly essential to the success of any business in the present and
future (Parasuraman et al., 1988), and the banking industry is not exceptional (Hossain and Leo,
2009). Service quality of the bank has been identified as a vital factor which determines the
bank to obtain the loan. Service quality is a popular area of academic research as an observant
competitive advantage that brings satisfactory relationships with customers (Zeithaml, 2000).
Several service quality studies have been conducted by past scholars and service quality has been
measured using different measuring scales like four-factor item scale, seventeen item scale in the
context of Australian commercial bank (Avkiran, 1994). The study of Maswadeh (2015)
examined the service quality in Indian commercial banks using four-dimensional measures. As
per the study of Parasuraman, Zeithaml and Berry (1990), Service quality has five dimension
namely; reliability (ability to provide accurate services), responsiveness (willing to provide
services to customers), Tangibles (equipment and personnel), assurance (inspire trust and
confidence), and empathy (caring and attention towards customers).
The establishment of productive consumer relationships, especially in service industries, is
progressively recognized as an essential element of business models (David et al., 1998). In
certain instances, a service supplier's performance was determined by the consistency of its
customer relationships (Calvo and Molina, 2003). In the financial services industry, high quality
customer relationships are important as the financial services sector is characterized by increased
competition (Avkiran, 1994), a relatively mature market for retail banking, little growth in
primary demand (David et al., 1996), narrow lending spreads and focused niche players (Hislop,
2003). At the same time, financial services tend not to be one-off purchases, but they are
required on a recurring basis, generating the need for financial service suppliers to establish
relationships with their prospects and at the same time maintain and develop long-term
relationships with existing customers (Trenton and Rosenstreich, 2013).
In the study of S. M. Akterujjaman (2016) that was carried out in Bangladesh, it reveals some
important factors that influence clients to choose commercial banks to borrow are efficiency,
services to customers, speed of services, quality of services, bank reputation, bank image, and
online banking. Nawal and Safa (2012) confirmed in their case study that the role of bank
services quality in achieving customer satisfaction showed a positive relationship between
satisfaction and the quality of services provided. The higher the service quality, the higher the
customer gets confident to borrow from the bank.
According to Emin, Sevgin and Ugur (2004), the dependability, size of institution, location,
convenience, ease of transactions, professionalism of bank personnel, and availability of loans
are some of the common bank choice criteria. Khazeh and Decker (1992) investigated the
consumers’ decision-making criteria in the USA by considering the degree of dissimilarity
among banks with respect to certain criteria such as service-charge policy, bank reputation, loan
approval time, friendliness of bank staff, and loan rates competitiveness as the crucial factors in
explaining how customers choose banks to obtain a loan. In contrary, availability of financial
advice was among the lowest raking determinant attributes. According to the study of Kamakodi
and Basheer (2008), the new private sector commercial banks in India had adopted new
technologies when compared to government commercial banks. As a result, the customers have
been more attracted by the private sector banks because the customers need to obtain their
services quickly and easily than ever before. As suggested by that study further, the clients of the
private sector banks were influenced by the factors such as secured ATMs, availability of ATM
machines, reputation of the bank, personal attention from the staff, client confidentiality, and
closeness to work, prompt service, and willingness of the staff members. These are related with
the service quality aspect of the banks which are capable enough to influence the customer’s
decision for requesting a bank loan from the bank. Customers believe the quality is low if
performance does not meet up customer expectation and quality as “high” when the bank’s
performance exceeds customer expectations (Eshghi, Roy and Ganguli, 2008). The most
important feature that isolates customers is the nature of service conveyed to the customers of the
bank by attempting to cross over any barrier between the bank customers’ desires and experience
(Perera and Aruppala, 2013). Moreover, in a context where the customer already has a need of a
bank loan, the low service quality and failures of a bank may lose such a customer merely on
their failure to deliver higher service quality.
Thereby, due to these statements of the authors, Promptness, Problem Solving, Bank Branching
and Bank’s Interest are considered as the facets of Bank’s Service Quality in order to prepare the
questions for the Service Quality variable.
It can conclude as above discussion, the second hypothesis is:
H2: There is a relationship between Bank’s Service quality and the Customer’s Decision for
Requesting Bank Loan in Colombo District.
2.1.2.3 Customer’s Satisfaction

Customer satisfaction can be defined as the post-purchase evaluation of services taking into
consideration the expectations (Kotler and Armstrong, 2012). Customer need to be highly
satisfied with the bank in order to select a particular bank for obtain a loan from it. In this
context, several studies have been conducted with the aim of identifying the impact of customer
satisfaction on selecting the bank to obtain the loan. Mylonakis (2008) conducted a study using
Greece customers of a particular bank and identified that the urban consumers were seeking good
service in safe, fast and technologically driven environments. Customer satisfaction is also
determined by the factors like location convenience, attention to customers, personalized service,
no queues etc. Technology is considered as one of the most crucial aspect which determines the
customer satisfaction as it delivers the services with more speed. Also the service of the bank
staff is also considered as a factor which determines the customer satisfaction. . According to the
studies of Karatepea et al. (2005) and Sharma and Rao (2010), the total customer satisfaction can
be achieved accurately by the bank managers by searching and identifying exactly what
customers prefer.
S. M. Akterujjaman (2016) explained in his research study conducted in Bangladesh that the
banking sector plays a unique role in Bangladesh's economy. He specified that the measurement
of satisfaction of borrowers is the task of the banking sector. Due to the competitive banking and
its massive impact on the economy, customer perceptions have been given priority in the
banking sector. It is evident from the empirical studies that in the case of service delivery, some
commercial banks lack some services and supplies.
As identified by a research study, ethical behavior of business activities, the trust and the
knowledge of the staff members who interact with the customers would increase the customer
satisfaction in the industry of the financial services (David et al., 1998). Moreover, the customer
satisfaction has been studied as a determinant of customer loyalty in the long run whereas the
relationship between the bank image, service quality and the customer satisfaction were
considered as vital factors (Josée et al., 1998). Even the reliability of the business relationship
and the market position of the bank have been identified as the drivers of the bank loyalty of
customers (Josée et al., 1998).
Customer is satisfied when the bank services are efficient, bank has a good reputation, customers
are charged less amount of bank charges, bank is located in a convenient place to the customer
and customer is paid a higher interest rate for the deposits while charging a less interest on the
advances (Anayo et al., 2014). United States Court of Appeals (1999) identified in a court case
about the importance of using new technology in USA banks where the speed is mostly preferred
by the customers. Also the study further suggested about the technology based services like
ATM’s & CDM’s need to be facilitated with the effective training of staff in order to handle the
scenarios as unfolds. As the young generation is enriched with the technological developments,
they can be easily satisfied by the banks by adopting technologies which would give them
convenient access to bank services as their wish without physically visiting the bank premises
and without being on long queues (Cleopas et al., 2011). Thereby, due to these statements of the
authors, Service Quality, Bank Cooperation, Product Attributes and Product Variety were
considered as the facets of Customer’s Satisfaction in order to prepare the questions for the
Customer Satisfaction variable.
It can conclude as above discussion, the third hypothesis is:

H3: There is a relationship between Customer’s Satisfaction and the Customer’s Decision for
2.2 Research Questions
1. Is there a relationship between the customers’ demographic factors and the customer’s
decision for requesting bank loan in Colombo District?
2. Is there a relationship between the bank’s service quality and the customer’s decision for
requesting bank loan in Colombo District?
3. Is there a relationship between the customer’s satisfaction and the customer’s decision for
requesting bank loan in Colombo District?
2.3 Conceptual Framework

Through the literature review, the author has derived ‘Customer’s Decision for Requesting a
Bank Loan’ as the dependent variable and ‘Customer’s Demographic factors, Service Quality
and Customer’s Satisfaction’ as independent variables. The conceptual framework of this
research is given below:
Financial Literacy
Customer’s Demographic
factors
Customer’s Decision for

Service Quality
Requesting a Bank Loan
Customer’s Satisfaction
Figure 1: Conceptual Framework

Source: Author developed
2.4 Hypothesis
Based on the research questions, aims and objectives, the hypotheses of this research are stated
below.
Set 01:
H0: There is no relationship between Customer’s Demographic factors and the Customer’s
Set 02:
H0: There is no relationship between Bank’s Service quality and the Customer’s Decision for
Set 03:
H0: There is no relationship between Customer’s Satisfaction and the Customer’s Decision for
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Theoretical Stance [Research Philosophy]
Research Philosophy
Research Approach
Research
Strategy
Choices
Time Horizon
Techniques and
procedures
Figure 2: Research Onion
Research is merely finding answers or solutions to a specific problem. Research provides

accurate information to people to make successful decisions when dealing with problems.
Sekaran defines research as “An organized, systematic, data-based, critical, objective,
scientific inquiry or investigation into a specific problem” (Sekaran, 2003). Thus research
design is an integral part of good research.
According to the Research Onion, ‘Positivism’ was applied in this research study. According
to Research Methodology (2019), as per positivism, the researcher is able to refer previous
research findings and develop research objectives, research questions, and hypothesis based on
those research findings. There are two categories of research approaches: inductive and
deductive approaches, where the deductive approach tests the validity of theories and
hypotheses, and the inductive approach contribute to new theories and generalizations. In this
research study, the researcher investigated based on a theory thus used the deductive approach
and then narrowed down to a specific situation. Furthermore, the research following the
positivism research paradigm mainly uses deductive reasoning, and Interpretivism heavily
utilizes inductive reasoning. Accordingly, the positivist philosophy and deductive reasoning
are more appropriate to achieve the study's research objectives and, hence, mainly utilize
quantitative research.
According to (Hair Jr. et al., 2009), the appropriate research method for non-experimental studies
assessing relationships, causes, influences, and consequences in a single sample of respondents is
a quantitative approach. This research was conducted to identify the dependency relationship
between the independent and dependent variables. Therefore the appropriate methodological
approach for this research study is quantitative. The selected research strategy to conduct the
research was ‘Survey’ with the choice as ‘Mono Method’. According to Saunders et al. (2009),
survey strategy is associated with deductive approach which is closely related to quantitative
methodology. The online survey method was selected for data collection as it was the easiest
method to conduct the research and was more appropriate to gather information for this research
during the pandemic situation. Mono method was selected as the author used quantitative method
while mixed method was not selected as the author did not conduct a qualitative method. A
cross-sectional study was conducted as data was collected from a population at one specific point
in time while longitudinal study was not selected as the researcher did not use different
respondent bases and did not collect data from different time slots.
An explanatory research was executed as the chosen research topic was not much investigated in
depth by previous researches and to gain deeper understanding about the factors that impact
customers on requesting for a bank loan in Sri Lankan context. According to Saunders et al.
(2009), an explanatory research establishes a causal relationship between the given variables.
3.2 Data Collection
In this research study, the researcher used both primary and secondary data collecting methods in
order to collect the data concerning the independent and dependent variables. The primary data
was collected from the respondents in order to find conclusions and recommendations for this.
Below are the sources of data collection used in this research other than the questionnaire.
 Primary sources - An online-based survey was administered to the respondents. Here, the
online structured questionnaire was sent to those customers of the selected banks in the
Colombo district. The questionnaire was filled by the customers of the Bank Of Ceylon,
Peoples' Bank, Hatton National Bank, Sampath Bank and Commercial Bank in Colombo
district and was self-administered by the researcher. The researcher used a structured
questionnaire for data collection as it had the advantages of speed, cost-effectiveness,
reliability and comprehensive coverage. The data was collected in the online survey using
Likert scales. Likert scales are commonly used for measuring behaviors and attitudes of
the respondents that require them to select a statement from multiple statements. These
statements usually range from “Strongly Disagree” to “Strongly Agree” (Saunders et al.,
2009). This research study used a five-point Likert scale as five-point scales reduce the
level of frustration of the respondents and increases the quality of the responses (Prayag,
2007). The data collection was based online as the customers of the bank were reluctant
to administer the questionnaires physically due to Covid-19 health measures and
restrictions.
 Secondary sources - The secondary data was gathered through articles published in
academic journals, updated websites, e-books, textbooks, and other relevant research
articles. The secondary data was helpful in gathering the background information on the
topic.
3.3 Sampling
Since this is a mono-method study, data was collected only from citizens in the Colombo district
through an online standardized questionnaire. The study's residents were inhabitants of Sri
Lanka's densely populated Colombo district, which has a population of 613,000 people in 2020.
(LLC, 2021) The sample size for the above-mentioned population in accordance with the Krejcie
and Morgan table was 384 respondents (Krejcie and Morgan , 1970). A non-random self-
selecting sampling method was used to select the sample for the research. According to LAERD
Dissertation (2012), the researcher decides the respondents who are willing to participate
voluntarily in non-random self-selecting sampling. Based on the non-random self-selecting
sampling, the researcher selected people who were able and willing to volunteer information
(Anon, 2012). The sample of the study consisted of respondents who were living in different
areas around the western province of Sri Lanka as the study is conducted with special reference
to BOC, Peoples' Bank, HNB, Sampath Bnak and Commercial Bank in Colombo district. After
the selection of respondents, an online questionnaire was used to collect the primary data in order
to examine the research questions by testing hypotheses.
3.4 Data Analysis
The data collection was online based using tools facilitated by Google Forms due to the inability
to collect data physically as customers were reluctant to participate due to health security
measures and lockdown measures during COVID 19. The participants were instructed to click on
a link provided to complete the online questionnaire. Here, the author used close ended questions
so that it will be easily understood by the respondents and it was very helpful in tabulating the
data. Thereby, the questionnaire comprised of 23 close ended questions and was prepared in
accordance with the Likert scale.
The data were analyzed through subsequent data analysis stages, including descriptive analysis
and inferential analysis. Descriptive analysis was used to summarize the data collected mainly.
In the descriptive analysis, frequencies, means, standard deviations, skewness, and kurtosis were
used to measure the distribution, central tendency, and dispersion of data included in the
analysis. Correlation coefficients were produced to examine the relationships between the
variables. Thus, in testing the hypotheses, regression analysis was employed. Hypotheses testing
were involved assessing the significant relationship between the independent variables and the
dependent variable. Using multiple regression analysis, it is possible to recognize whether there
is a significant relationship between the independent and dependent variables or not.
After data was collected, it was be analyzed using the statistical software package SPSS
Statistics (Statistical Package for the Social Sciences) produced by SPSS Inc. Before analysis,
data were screened, edited and entered. Blank or incomplete responses will be considered as
unusable for the analysis. SPSS is a comprehensive, user-friendly system that can take data and
use them to generate tabulated charts, reports, and plots of distributions and trends, descriptive
statistics and complex statistical analyses.
3.5 Role of the Researcher
Whilst doing research, the researcher must serve a variety of roles. There are a few obligatory
roles among them that should be followed without controversy. Thus, the researcher took the
authority of the entire research and the decisions were made through thorough investigation of
every situation. Throughout the research process, the researcher was assertive, effectively
forecasted the required time for completing any part of the research process, controlled the
finances, planned the tasks by developing schedules, and entrusted all research matters. The
researcher consistently monitored the progress of the research, maintained open communication
and ensured the respondents get the opportunity express their concerns (Haughey, n.d.). The
researcher also made sure that the respondents participated voluntarily through a consent clause
and never showed bias towards respondents which shows that the researcher was in complete
adherence to ethical requirements of the research process (Simon, 2011).
3.6 Reliability, Validity and Generalizability
Reliability can be defined as “the degree to which the scale produces coherent outcome if
repeated measurements can be made on that particular attributes” (Malhotra, 2010). According to
Huck (2007), reliability test is crucial as it shows the consistency across the parts of a measuring
instrument. The ‘Cronbach Alpha Coefficient’ is the most commonly used internal consistency
measure to obtain reliability evidence (Taherdoost, 2016). The researcher administered a range
of initial questionnaires to five customers (randomly selected) from the survey population to
determine the very first truth of the research, defined as the Pilot Test, in order to ensure the
clarity and soundness of the paragraph terminology and the probability of measurement. Pilot
test helps researchers in detecting weaknesses in design and instrument of the data collection
(Cooper et. al., 2006).The study carried out the following experiments to ensure that the testing
instrument (the survey) was accurate, that the calculation material was valid, and that the
findings would be the same if the analysis was repeated for the same group of consumers. The
outcome of the test is indicated in Chapter Four. The reliability of this research can also be
guaranteed by the usage of SPSS Statistics analysis tool. Finally, when conducting the research,
the author was not biased to improve the reliability of the research.
According to Ping and Robert (2004), validity represents consistency. A validity test is carried
out for the purpose of ensuring that the instrument is tapping the right concept in the study
(Cavana et al., 2001). The first step to prove the validity of this research is that the respondents
voluntarily participated in the research by agreeing with the consent clause in the online
questionnaire. The researcher used the Krejcie and Morgan Table to determine the sample size
for a given population for the research to establish validity (Krejcie & Morgan, 1970) and used
appropriate sampling techniques to minimize any sampling errors.
Moreover, the researcher collected data from updated sources to confirm validity and evaluated
the collected data through SPSS Statistics analytical tool which further confirmed the validity of
the research. Likewise, to establish validity, the questionnaire was prepared under the guidance
of the supervisor who oversaw the questionnaire making process and supported to create a
standard questionnaire that covers the full range issues relevant to the study. The researcher also
stated that the data collected through the survey questionnaire are true and valid as the
respondents were not manipulated in order to increase the level of validity of the research.
Furthermore, the researcher has used proper research methodology based on the research onion
which further confirmed the validity of this research.
This research is generalizable because when the final findings of the research was derived, the
findings drawn was valid, accurate and therefore the analyzed data can be useful for all the banks
in Sri Lanka to enhance their financial performances by identifying the factors which will make
an impact to the customers who request for bank loans. Furthermore, since the population is
high, a valid sample for data collection has been drawn to conduct the research. As a result it can
be concluded that this research study is generalizable.
3.7 Ethical Considerations
The researcher ensured ethics remained a top priority throughout the research study. Following
the methods as outlined in this chapter was paramount in ensuring the validity and reliability of
the study. All the respondents of the research were treated with due respect and unbiased. The
objectives of the research were completely conveyed to the respondents in order to obtain the
consent of the respondents to participate in the online questionnaire and the researcher obtained
the consent of the respondents through a consent clause as ‘I hereby give my full agreement that I
am participating in this survey with my own accord’ to ensure voluntary participation.
All the data were secured once those have been collected, without publishing the responses in
online platforms. Finally, the original works of the author was acknowledged without
committing plagiarism. The researcher ensured the confidentiality of the gathered information of
the respondents. Names of participants did not appear anywhere in the analysis of the results, and
their personal details were kept utterly confidential throughout the study.
In addition to the above ethical considerations, the author provided proper acknowledgements for
all the websites, journal articles, books, or any other documents that were used as secondary
sources. The researcher ensured that the research study was executed in an unbiased manner in
data collection and analysis and other aspects of the research where objectivity was expected.
The integrity of this research was protected by conducting the research study in accordance with
ethical, legal, obligations, and standards. This research was conducted in a manner that did not
harm the environment in any ways. The researcher used online survey method to ensure health
and safety of all the respondents in the Covid-19 pandemic situation. Therefore, these ethical
considerations prove that the researcher has adhered ethically throughout the research process.
3.8 Constraints
While conducting the research, the researcher had to face certain constraints. Collection of
primary data with the prevailing COVID-19 pandemic situation was difficult with the health and
safety measures that have been imposed by the Sri Lanka government and Health Authorities. As
a result, online platform was utilized to collect data from the respondents in order to overcome
these constraints by adhering to the health and safety measures.
The limitations pertaining to the questionnaire were some of the constraints to conduct the
research. As the researcher received limited experience on administering the online
questionnaire, it may lead to a reduction in the quality of the data collection. However,
researcher had intended to use structured questionnaires, which has a significant level of validity
and reliability in order to mitigate this risk. Time is a major constraint that the researcher faced in
completing the research. There was a limited amount of time to manage other academic and
non-academic commitments with the research commitments. Even though complying with the
planned time frame helped to manage the time constraint, there can be unforeseen circumstances
with the prevailing COVID-19 pandemic.
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1 Introduction
The purpose of this study was to analyze the factors affecting on customer’s decision for
requesting for bank loans in Sri Lanka with special reference to Colombo district. To achieve
this purpose, relevant literature was reviewed in Chapter Two, and Methodology was set in
Chapter Three, respectively. Chapter Four outlines the research results of data analysis obtained
from the respondents. The online questionnaire used in this study was carefully analyzed to
ensure that the data gathered was presented clearly with the aid of tables, percentages, and
graphs, where possible. Statistical package for social science (SPSS) has been used in analyzing
the processed data and the statistical tools of measure mean, standard deviation, correlation and
regression were utilized for this purpose. This chapter outlines the sections of the goodness of fit
of data, demographic characteristics, descriptive statistics and inferential statistics.
4.2 Descriptive Statistics
4.2.1 Analysis of the first Independent Variable- Demographic Factors
4.2.1.1 Basic pay and Net pay
Table 1: The basic and net pay Figure 3: The basic and net pay influence for your decision to
influence for your decision to take a bank loan
take a bank loan
N Valid 384
Missing 0
Mean 3.96
Median 4.00
Mode 4
Std. Deviation .902
According to the figure 3, the data were recorded for the question 1 (The basic and net pay
influence for your decision to take a bank loan) shows a normal distribution. Significantly, a
higher number of the respondents were in favor of ‘agree’ with a percentage of 52.6. Only 26.8%
of the respondents were strongly agreed with the statement of the basic and net pay influence the
decision to take a bank loan. The rest of the respondents voted for strongly disagreed, disagreed
and neutral and accounted for only 20% of the 384 respondents. The mean value is 3.96 and
hence, the average answer for this question is “Agree”. Subsequently, the standard deviation is
0.902 which is less than one. It depicts a less significant deviation from the mean.
Correspondingly, it is identified that from the responses that the basic and net pay influence for
the decision to take a bank loan.
4.2.1.2 Ability to pay

Figure 4: Your salary reflects the ability to pay for the loan
Table 2: Your salary reflects
the ability to pay for the loan
N Valid 384
Missing 0
Mean 3.79
Median 4.00
Mode 4
Std. Deviation .967

According to the figure 4, the data were recorded for the question 2 (Your salary reflects the
ability to pay for the loan), the participants have responded from “Strongly Agree” to “Strongly
disagree” with a percentage of 22.4% and 2.3% respectively. It is noticeable that there is a
massive difference in the contribution between Strongly Agree and Strongly Degree. However, a
majority of the respondents have voted for “Agree” with the highest contribution of 47.4%. The
mean value computed is 3.79 and the average answer for this question is “Agree”. Moreover, the
standard deviation is 0.967 which is less than 1. This reflects less deviation from the mean.
Therefore, it can be concluded that the salary reflects the ability to pay for the loan.
4.2.1.3 Bank collateral requirement
Table 3: Bank collateral Figure 5: Bank collateral requirement influence the decision
requirement influence the to request for a loan
decision to request for a loan
N Valid 384
Missing 0
Mean 3.89
Median 4.00
Mode 4
Std. Deviation .883
According to the figure 5, the data were recorded for the question 3 (Bank collateral requirement
influence the decision to request for a loan) where the highest number of responses received in
favor of “Agree” which is 49.5% of the total responses. Most importantly, only 1.3% of the
respondents strongly disagreed with the statement. Accordingly, we can draw a conclusion that
the majority of the population believes that bank collateral requirement influence the decision to
request for a loan. The mean was computed at 3.89 which are moderately closer to 4 proving the
average for this question as “Agree”. Moreover, the standard deviation is 0.967 which is less
than 1. This reflects less deviation from the mean. Therefore, it can be concluded that the bank
collateral requirement influence the decision to request for a loan.
4.2.1.4 Net property
Table 4: The net property you Figure 6: The net property you own influence your decision
own influence your decision to to request for a bank loan
request for a bank loan
N Valid 384
Missing 0
Mean 3.39
Median 4.00
Mode 4
Std. Deviation 1.026
According to the figure 06, the data were recorded for the question 4 (The net properties you
own influence your decision to request for a bank loan) shows a normal distribution.
Significantly, a higher number of the respondents were in favor of ‘Agree’ with a percentage of
43. Only 10.7% of the respondents were strongly agreed with the statement of the net property
you own influence your decision to request for a bank loan. The rest of the respondents voted for
strongly disagreed, disagreed and neutral and accounted for 46.3% of the 384 respondents. The
mean value is 3.39 and hence, the average answer for this question is “Agree”. Furthermore, the
standard deviation is 1.026 which is a significant deviation from the mean. Thus, it is identified
that from the responses that the basic and the net property you own influence your decision to
request for a bank loan.
4.2.2 Analysis of the first Independent Variable- Service Quality
4.2.2.1 Prompt services

Figure 7: Prompt services provided in the bank
Table 5: Prompt services loan request process affect the decision to request a
provided in the bank loan
bank loan
request process affect the
decision to request a bank loan
N Valid 384
Missing 0
Mean 3.98
Median 4.00
Mode 4
Std. Deviation .735
The participants answered from “Strongly Disagree” to “Strongly Agree” for the question 5
(Prompt services provided in the bank loan request process affect the decision to request a bank
loan) where a significant number of participants chose “Agree” owing to 66% which is more
than half of the total number of respondents. In addition, the mean value of the data set is 3.98
which are extremely closer to 4. Similarly, the average answer for the question is “Agree”.
Furthermore, only 2 out of 384 respondents strongly disagreed with the statement. Only 19% of
the respondents strongly agreed with the statement. Resultantly, the standard deviation had not
exceeded 1 with a value of 0.735. Therefore, it is deduced to be true that, prompt services
provided in the bank loan request process has a solid contribution towards the decision to request
a bank loan
4.2.2.2 Bank’s interest in problem solving
Table 6: Banks interest in Figure 8: Banks interest in solving customer problem in the
solving customer problem bank loan process affect the decision to request a bank loan
in the bank loan process
affect the decision to
request a bank loan
N Valid 384
Missing 0
Mean 4.02
Median 4.00
Mode 4
Std. Deviation .660
As demonstrated in the figure 8, the majority of the respondents were responding from “Agree”
to “Strongly Agree” for the question 6 (Banks’ interest in solving customer problem in the bank
loan process affects the decision to request a bank loan). A total percentage of 85.1 has
distributed amongst “Agree” (65.1%) and “Strongly Agree” (20%). Only 1 out of 384
respondents strongly disagree with the statement. Further the rest of the respondents were
disagree or neutral with the statement with 2.3% and 12.2% respectively. Accordingly, the mean
value stands at 4.02 and the average answer for this question is “Agree”. The standard deviation
remained lesser than 1 which is a less deviation from the mean value. Therefore, it is deduced to
be true that, the banks’ interest in solving customer problem in the bank loan process has a
considerable contribution towards the decision of the customers to request a bank loan.
4.2.2.3 Branch network
Table 7: A wide spread of Figure 9: A wide spread of branch networks throughout the
branch networks throughout country affect the decision to request a bank loan
the country affect the
decision to request a bank
loan
N Valid 384
Missing 0
Mean 3.48
Median 4.00
Mode 4
Std. Deviation .985
Source: Author
developed
According to figure 9, the participants have responded from Strongly Agree to Strongly Disagree
for the question 7 (A wide spread of branch networks throughout the country affect the decision
to request a bank loan). A significant number of participants were in favor of the statement with
42.2% where as 28.2% is neutral about the statement. The lowest contribution reported for
“Strongly Disagree” with a percentage of 3.1% and there were no missing responses. The mean
value of the data set is 3.48 which are closer to 4 and therefore, the average answer for the
question is “Agree”. Moreover, the standard deviation is 0.985 which is closer to 1 that depicts a
significant deviation from the mean. To summarize, it is identified that a wide spread of branch
networks throughout the country positively affects the decision to request a bank loan.
4.2.2.4 Bank’s customer interest
Table 8: Banks’ customer Figure 10: Banks’ customer interest in

interest in providing the loans providing the loans affect the decision to
affect the decision to request a request a
bank loan bank loan
N Valid 384
Missing 0
Mean 3.85
Median 4.00
Mode 4 Source: Author developed

Std. Deviation .747
According to the figure 10,
the data were recorded for
the question number 8
(Banks’ customer interest in
providing the loans affect the decision to request a bank loan). Significantly, a higher number of
the respondents ‘Agree’ with 64%. Only 2 out of 384 respondents were strongly disagreed with
the statement of the banks’ customer interest in providing the loans affect the decision to request
a bank loan. The rest of the respondents disagreed, remained neutral and strongly agreed at 5.7%,
16% and 14.3% respectively. The mean value is 3.85 and the average answer for this question is
“Agree”. Furthermore, the standard deviation is 0.747 which is a less deviation from the mean.
Thus, it is identified that from the responses that the banks’ customer interest in providing the
loans positively affect the decision to request a bank loan.
4.2.3 Analysis of the first Independent Variable- Customer’s Satisfaction
4.2.3.1 Service quality
Figure 11: I am satisfied with service quality, in terms of staff

Table 9: I am satisfied with
conduct, reliability and responsiveness of the bank when
service quality, in terms of
requesting a bank loan
staff conduct, reliability and
responsiveness of the bank
when requesting a bank loan
N Valid 384
Missing 0
Mean 3.83
Median 4.00
Mode 4
Std. Deviation .754

According to the figure 11, the data were recorded for the question 9 (I am Satisfied with service
quality, in terms of staff conduct, reliability and responsiveness of the bank when requesting a
bank loan) where the highest number of responses received in favor of “Agree” which is 61% of
the total responses. Most importantly, only 2 out of 384 respondents strongly disagreed with the
statement. Accordingly, we can draw a conclusion that the majority of the population believes
that they are satisfied with service quality, in terms of staff conduct, reliability and
responsiveness of the bank when requesting a bank loan. The mean was computed at 3.83 which
is moderately closer to 4 proving the average for this question as “Agree”. Moreover, the
standard deviation is 0.754 which is less than 1. This reflects less deviation from the mean.
Therefore, it can be concluded that the customers were satisfied with service quality, in terms of
staff conduct, reliability and responsiveness of the bank when requesting a bank loan.
4.2.3.2 Future transaction
Table 10: It is likely that I Figure 12: It is likely that I will be a customer of the same bank
will be a customer of the in the future to request a bank loan
same bank in the future to
request a bank loan
N Valid 384
Missing 0
Mean 3.65
Median 4.00
Mode 4
Std. Deviation .854

As demonstrated in the figure 12, the majority of the respondents were responding from
“Neutral” to “Agree” for the question 10 (It is likely that I will be a customer of the same bank in
the future to request a bank loan). A total percentage of 77.6 has distributed amongst “Agree”
(53.7%) and “Neutral” (24%). Only 5 out of 384 respondents strongly disagreed with the
statement. Accordingly, the mean value stands at 3.65 and the average answer for this question is
“Agree”. The standard deviation of 0.854 remained lesser than 1 which is a less deviation from
the mean value. Therefore, it is deduced to be true that, it is likely that a majority of the
respondents will be customer of the same bank in the future to request a bank loan.
4.2.3.3 Bank corporation
Table 11: I am satisfied with Figure 13: I am satisfied with the cooperation of the bank with
the cooperation of the bank taking care of immediate and effective solutions for the
with taking care of immediate problems encountered when requesting for a bank loan
and effective solutions for the
problems encountered when
requesting for a bank loan
N Valid 384
Missing 0
Mean 3.87
Median 4.00
Mode 4
Std. Deviation .840

According to the figure 13, the data were recorded for the question 11( I am satisfied with the
cooperation of the bank with taking care of immediate and effective solutions for the problems
encountered when requesting for a bank loan) where the highest number of responses received in
favor of “Agree” which is 56% of the total responses. Most importantly, only 4 out of 384
respondents strongly disagreed with the statement. Accordingly, we can draw a conclusion that
the majority of the population believes that they are satisfied with the cooperation of the bank
with taking care of immediate and effective solutions for the problems encountered when
requesting for a bank loan. The mean was computed at 3.87 which is moderately closer to 4
which proves that the average for this question as “Agree”. Moreover, the standard deviation is
0.840 which is less than 1reflects less deviation from the mean. Therefore, it can be concluded
that the customers are satisfied with the cooperation of the bank with taking care of immediate
and effective solutions for the problems encountered when requesting for a bank loan.
4.2.3.4 Product attributes
Table 12: I am satisfied with Figure 14: I am satisfied with product attributes including
product attributes including interest rate, loan amount, and commissions to request for a
interest rate, loan amount, bank loan
and commissions to request
for a bank loan
Source: Author
developed
N Valid 384
Missing 0
According to the figure 14, the data were recorded for the
Mean 3.80
Median 4.00 question 12 (I am satisfied with product attributes including
Mode 4 interest rate, loan amount, and commissions to request for a
Std. Deviation .911 bank loan) and a higher number of the respondents were in
favor of ‘Agree’ with a 54.5%. Only 1.5% of the respondents strongly disagreed with the
statement that they are satisfied with product attributes including interest rate, loan amount, and
commissions to request for a bank loan. The mean value is 3.80 and hence, the average answer
for this question is “Agree”. Furthermore, the standard deviation is 0.911 that is less than 1
which reflects less deviation from the mean. Thus, it is identified from the responses that the
respondents are satisfied with product attributes including interest rate, loan amount, and
commissions to request for a bank loan
4.2.3.5 Variety of products/ services
Table 13: I am satisfied with Figure 15: I am satisfied with the variety of
the variety of products/services products/services provided by the bank that I cooperate
provided by the bank that I with when requesting for a bank loan
cooperate with when requesting
for a bank loan
N Valid 384
Missing 0
Mean 3.69
Median 4.00
Mode 4
Std. Deviation .830
According to figure 15, the participants have responded from Strongly Agree to Strongly
Disagree for the question 13 (I am satisfied with the variety of products/services provided by the
bank that I cooperate with when requesting for a bank loan). A significant number of participants
agree with the statement with 57.2%. The lowest contribution reported for “Strongly Disagree”
with a percentage of 0.5% and there were no missing responses. The mean value of the data set is
3.68 which is closer to 4 and therefore, the average answer for the question is “Agree”.
Moreover, the standard deviation is 0.893 depicts less deviation from the mean. To summarize, it
is identified that the respondents are satisfied with the variety of products/services provided by
the bank that they cooperate with when requesting for a bank loan.
4.2.4 Analysis of the Dependent Variable – Customer’s Request for Bank Loan
4.2.4.1 Increase in satisfaction
Table 14: Your satisfaction Figure 16: Your satisfaction towards the bank is increased
towards the bank is increased
N Valid 384
Missing 0
Mean 3.71
Median 4.00
Mode 4
Std. Deviation .911
According to the figure 16, the respondents have answered the question from “Strongly Agree”
to “Strongly Disagree”. Higher number of respondents was in favor of the statement with a
collective contribution of 71%. Accordingly, 13.5% response rate was recorded for “Strongly
Agree” and 57.5% response rate for “Agree”. The lowest contribution reported for “Strongly
Disagree” and the percentage was 3.4%. There were no missing responses recorded as all the
questions were made mandatory. The mean value of the data set is 3.71 which is closer to 4 and
therefore, the average answer for the question is “Agree”. Moreover, the standard deviation is
0.911 which demonstrates a lower deviation from the mean. To summarize, it is identified that
the respondents would agree to take a loan from the bank if the overall customer satisfaction is
increased.
4.2.4.2 Increase in service quality
Table 15: Service quality of Figure 17: Service quality of the bank is increased
the bank is increased
N Valid 384
Missing 0
Mean 3.85
Median 4.00
Mode 4
Std. Deviation .781 According to the figure
17, the respondents have
answered the question
from “Strongly Agree” to
“Strongly Disagree”. A
higher number of
respondents agreed with the statement with a contribution of 62.5%. Lowest number of
respondents strongly disagreed with the statement with a contribution of 1.8%. There were no
missing responses since the questions were made mandatory. Having a mean value of 3.85 which
is closer to 4, it reveals that a majority of the respondents agree to request for bank loans if the
service quality of the bank is increased. The standard deviation value of 0.781 depicted that there
is less deviation from the mean and most of the respondents agree with the statement. To
conclude, it is evident that the respondents are ready to take loans if the overall service quality of
the banks are increased.
4.2.4.3 Favorable loan covenants
Table 16: Loan covenants are Figure 18: Loan covenants are made favorable to customer
made favorable to customer
N Valid 384
Missing 0
Mean 3.60
Median 4.00
Mode 4
Std. Deviation .993
to “Strongly Disagree”. A higher number of respondents agreed with the statement with a
contribution of 47.6%. Lowest number of respondents strongly disagreed with the statement with
a contribution of 3.9%. There were no missing responses since the questions were made
mandatory. Having a mean value of 3.60 which is closer to 4, it reveals that a majority of the
respondents agree to request for bank loans if the loan covenants are made favorable to customer
by the bank. The standard deviation value of 0.993 depicted that there is less deviation from the
mean and most of the respondents agree with the statement. To conclude, it is evident that the
respondents are ready to take loans if the loan covenants are made favorable to customer by the
bank.
4.2.4.4 Installment determination
Table 17: Installment is Figure 19: Installment is determined by the consent of both
determined by the consent of bank and customer
both bank and customer
N Valid 384
Missing 0
Mean 3.80
Median 4.00
Mode 4 Source: Author developed
Std. Deviation .919
to “Strongly Disagree”.
Higher number of
respondents was in favor
of the statement with a collective contribution of 74.5%. Accordingly, 19% response rate was
recorded for “Strongly Agree” and 55.5% response rate for “Agree”. The lowest contribution
reported for “Strongly Disagree” and the percentage was 1.6%. The mean value of the data set is
3.71 which is closer to 4 and therefore, the average answer for the question is “Agree”.
Moreover, the standard deviation is 0.919 which demonstrates a lower deviation from the mean.
To summarize, it is identified that the respondents would agree to take a loan from the bank if
the loan installment is determined by the consent of both bank and customer.
4.3 Inferential Statistics
4.3.1 Correlation Analysis
In this section, the two tailed, bivariate Pearson correlation has been used to measure the
strength and the direction of linear relationship between independent variables and the dependent
variable. Following section discusses the correlation analysis of each independent variable, and
the outcome will be demonstrated accordingly.
4.3.1.1 Correlation analysis between Customer Demographic factors and Customer’s

Decision for Requesting a Bank Loan
Table 18: Correlation analysis between customer demographic factors and the customer’s
decision for requesting a bank loan
Correlations
mean_demographic mean_customer_loan
_request
mean_demographic_ Pearson Correlation 1 .386**
factors Sig. (2-tailed) <.001
N 384 384
mean_customer_loan Pearson Correlation .386** 1
_request Sig. (2-tailed) <.001
N 384 384
**. Correlation is significant at the 0.01 level (2-tailed).
As depicted in the table 18, the test output of the independent variable (Demographic factors)
and the dependent variable (Customer’s decision to request for loan), the Pearson Correlation (r)
is 0.386. The standard Pearson correlation values describe the strength of the relationship.
According to Kent University (2020), the Pearson correlation value that is greater than 0
represents a positive correlation and that lies between +0.3 < |r| < +0.5 represents a moderate
relationship. This indicates that there is a moderate/medium relationship between Demographic
factors and the customer’s decision to request for loan. The double asterisk next to 0.386 (refers
to flag significant correlations) state that there is a significant relationship between the two
variables. Thus, it can be identified; the relationship between demographic factors and the
customer’s decision to request for loan has a (moderate) positive linear correlation.
4.3.1.2 Correlation analysis between Service Quality and Customer’s Decision for
Table 19: Correlation analysis between service quality and the customer’s decision for
Correlations
mean_service_ mean_customer_loan
quality _request
mean_service_quality Pearson Correlation 1 .511**
Sig. (2-tailed) <.001
N 384 384
mean_customer_loan Pearson Correlation .511 **
1
N 384 384
As depicted in the table 19, it was observed that the Pearson Correlation (r) is 0.511. Further, the
double asterisk next to 0.511 (refers to flag significant correlations) state a positive linear
significant relationship between the two variables. The standard Pearson correlation values
describe the strength of the relationship. According to Kent University (2020), the Pearson
correlation that lies between +0.5 < |r| < +1 represents a strong positive relationship. This
indicates that there is a strong relationship between service quality and the customer’s decision to
request for loan. Thus, it can be identified; the relationship between service quality and the
customer’s decision to request for loan has a (strong) positive linear correlation.
4.3.1.3 Correlation analysis between Customer’s Satisfaction and Customer’s Decision for
Table 20: Correlation analysis between customer’s satisfaction and the customer’s decision for
Correlations
mean_customer_ mean_customer_loan
satisfaction _request
mean_customer_ Pearson Correlation 1 .661**
satisfaction Sig. (2-tailed) <.001
N 384 384
mean_customer_loan Pearson Correlation .661 **
1
N 384 384
According to the table 20, the test output of the independent variable (Customer’s Satisfaction)
and the dependent variable (Customer’s decision to request for loan), the Pearson Correlation (r)
is 0.661. According to Kent University (2020), the Pearson correlation that lies between +0.5 < |
r| < +1 represents a (positive) strong relationship. This indicates that there is a strong relationship
between customer’s satisfaction and the customer’s decision to request for loan. The double
asterisk next to 0.661 (refers to flag significant correlations) state that there is a significant
relationship between the dependent and independent variable. Thus, it can be identified; the
relationship between customer’s satisfaction and the customer’s decision to request for loan has
a (strong) positive linear correlation.
4.3.2 Hypotheses Testing by Chi-Square Analysis
4.3.2.1 Testing Hypothesis 1 (Customer’s Demographic Factors) by Chi- Square Analysis
H0: There is no relationship between Customer’s Demographic factors and the Customer’s
Table 21: Case processing summary (Customer’s Demographic Factors)
Case Processing Summary

Cases
Valid Missing Total
N Percent N Percent N Percent
mean_demographic * 384 100.0% 0 0.0% 384 100.0%
mean_customerrequest
Table 22: Square test results (Customer’s Demographic Factors)
Chi-Square Tests
Asymptotic
Significance (2-
Value df sided)
Pearson Chi-Square 830.046 a
208 <.001
Likelihood Ratio 530.062 208 <.001
Linear-by-Linear Association 57.198 1 <.001
N of Valid Cases 384
a. 219 cells (92.0%) have expected count less than 5. The minimum expected
count is .01.
The Chi-Square test has been conducted, consuming 384 valid responses where there were nil
missing cases. The independence level of null hypothesis (H0) and the alternative hypothesis
(H1) have been interpreted through Pearson Chi-Square value for Asymptotic Significance (2-
sided). As demonstrated in the table 22, the Pearson Chi-Square value (p) is< .001. Thus, in
terms of mathematics, the value can be presented as, p< .001 (Kent University, 2020). The p
value is less than the expected significance level α = 0.05 (Kent University, 2020). Resultantly,
the null hypothesis can be rejected that asserts the two variables are independent of each other.
Therefore, it can be concluded that there is a relationship between customer’s demographic

factors and customer’s decision for requesting bank loan in Colombo district. In conclusion,
there is a statistically significant association between customer’s demographic factors and
customer’s decision for requesting bank loan [X2 (1) = 830.046, p <0.001].
4.3.2.2 Testing Hypothesis 2 (Service Quality) by Chi- Square Analysis
H0: There is no relationship between Bank’s Service quality and the Customer’s Decision for
Table 23: Case processing summary (Bank’s Service Quality)

Cases
Valid Missing Total
mean_service_quality * 384 100.0% 0 0.0% 384 100.0%
mean_customerrequest
Table 24: Square test results (Bank’ Service Quality)
Chi-Square Tests
Asymptotic
Significance (2-
Value df sided)
208 <.001
a. 220 cells (92.4%) have expected count less than 5. The minimum expected
count is .01.
According to the Chi-Square test conducted on the independent variable (Bank’s Service
Quality) and the dependent variable (Customer’s decision to request bank loan), there were 384
valid responses where there were nil missing cases as all the questions were made mandatory.
The independence level of null hypothesis (H0) and the alternative hypothesis (H2) have been
interpreted through Pearson Chi-Square value for Asymptotic Significance (2-sided). As
demonstrated in the table 24, the Pearson Chi-Square value (p) is< .001. Thus, in terms of
mathematics, the value can be presented as, p< .001 (Kent University, 2020). The p value
recorded a value less than the expected significance level α = 0.05 (Kent University, 2020).
Resultantly, the null hypothesis can be rejected that asserts the two variables are independent of
each other whereas the alternative hypothesis can be accepted.
In summary, it can be concluded that there is a relationship between bank’s service quality and
customer’s decision for requesting bank loan in Colombo district. In conclusion, there is a
statistically significant association between bank’s service quality and customer’s decision for
requesting bank loan [X2 (1) = 1216.898, p <0.001].
4.3.2.3 Testing Hypothesis 3 (Customer’s Satisfaction) by Chi- Square Analysis
H0: There is no relationship between Customer’s Satisfaction and the Customer’s Decision for
Table 25: Case processing summary (Customer’s Satisfaction)

Cases
Valid Missing Total
mean_customer_satisfactio 384 100.0% 0 0.0% 384 100.0%
n * mean_customerrequest
Table 26: Square test results (Customer’s Satisfaction)
Chi-Square Tests
Asymptotic
Significance (2-
Value df sided)
256 <.001
a. 272 cells (94.1%) have expected count less than 5. The minimum expected count is
.01.
As per the Chi-Square test performed on the independent variable (Customer’s Satisfaction) and
the dependent variable (Customer’s decision to request bank loan), there were 384 valid
responses where there were nil missing cases as all the questions were made mandatory. The
independence level of null hypothesis (H0) and the alternative hypothesis (H3) have been
interpreted through Pearson Chi-Square value for Asymptotic Significance (2-sided). As
demonstrated in the table 26, the Pearson Chi-Square value (p) is< .001. Thus, in terms of
mathematics, the value can be presented as, p< .001 (Kent University, 2020). The p value
recorded a value less than the expected significance level α = 0.05 (Kent University, 2020).
Resultantly, the null hypothesis can be rejected that asserts the two variables are independent of
each other whereas the alternative hypothesis can be accepted.
In summary, it can be concluded that there is a relationship between customer’s satisfaction and
customer’s decision for requesting bank loan in Colombo district. In conclusion, there is a
statistically significant association between customer’s satisfaction and customer’s decision for
requesting bank loan [X2 (1) = 1905.443, p <0.001].
4.4 Chapter Summary
4.4.1 Summary of the descriptive statistical analysis
Table 27: Descriptive statistical analysis
Variable and Description Descriptive Analysis

Customer’s Factor 1 Factor 2 Factor 3 Factor 4 Factor 5
Demographic Factors
Mean 3.96 3.79 3.89 3.39 -
Mode 4.00 4.00 4.00 4.00 -
Median 4 4 4 4 -
Standard Deviation .902 .967 .883 1.026 -
Bank’s Service Quality Factor 1 Factor 2 Factor 3 Factor 4 Factor 5
Mean 3.98 4.02 3.48 3.85 -
Mode 4.00 4.00 4.00 4.00 -
Median 4 4 4 4 -
Standard Deviation .735 .660 .985 .747 -
Customer’s Satisfaction Factor 1 Factor 2 Factor 3 Factor 4 Factor 5
Mean 3.83 3.65 3.87 3.80 3.69
Mode 4.00 4.00 4.00 4.00 4.00
Median 4 4 4 4 4
Standard Deviation .754 .854 .840 .911 .830
Source: Developed by Author
4.4.2 Summary of the inferential statistical analysis
Table 28: Inferential statistical analysis
Causes of
customer request Inferential Statistics Priority
for bank loan
Independent Pearson Remarks Chi- Remarks Rank of
Variable Correlation Square the factor
Customer’s .386 Medium positive <.001 Alternative 3
Demographic relationship hypothesis
Factors accepted
Bank’s Service .511 Strong positive <.001 Alternative 2
Quality relationship hypothesis
accepted
Customer’s .661 Strong positive <.001 Alternative 1
Satisfaction relationship hypothesis
accepted
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TABLE OF FIGURES

Figure 1: Conceptual Framework……………………………………………………………………………………

1.1 Background Study of the Research

The title of the research as decided by the author is as follows.

1.2 Rationale of the Study

1.3 Background to the Industry

1.4 Location of the Research

1.5 Aims and Objectives

1.6 Chapter Profiles

2.1 Literature Review

2.1.1 Concept of Loan Acquisition in the Banking Sector

It can conclude as above discussion, the first hypothesis is:

2.1.2.2 Bank’s Service Quality

2.1.2.3 Customer’s Satisfaction

It can conclude as above discussion, the third hypothesis is:

2.2 Research Questions

2.3 Conceptual Framework

Customer’s Decision for

Figure 1: Conceptual Framework

3.1 Theoretical Stance [Research Philosophy]

Figure 2: Research Onion

Source: Author developed

Research is merely finding answers or solutions to a specific problem. Research provides

3.2 Data Collection

3.4 Data Analysis

3.5 Role of the Researcher

3.6 Reliability, Validity and Generalizability

4.2 Descriptive Statistics

4.2.1 Analysis of the first Independent Variable- Demographic Factors

4.2.1.1 Basic pay and Net pay

influence for your decision to take a bank loan

take a bank loan

4.2.1.2 Ability to pay

Source: Author developed

4.2.1.3 Bank collateral requirement

Source: Author developed

4.2.1.4 Net property

own influence your decision to to request for a bank loan

request for a bank loan

Source: Author developed

4.2.2 Analysis of the first Independent Variable- Service Quality

4.2.2.1 Prompt services

Source: Author developed

4.2.2.2 Bank’s interest in problem solving

Source: Author developed

4.2.2.3 Branch network

4.2.2.4 Bank’s customer interest

Table 8: Banks’ customer Figure 10: Banks’ customer interest in

Mode 4 Source: Author developed

4.2.3 Analysis of the first Independent Variable- Customer’s Satisfaction

4.2.3.1 Service quality

Figure 11: I am satisfied with service quality, in terms of staff

Source: Author developed

4.2.3.2 Future transaction

Source: Author developed

4.2.3.3 Bank corporation

Source: Author developed

4.2.3.4 Product attributes

4.2.3.5 Variety of products/ services

Source: Author developed

4.2.4.1 Increase in satisfaction

Source: Author developed

4.2.4.2 Increase in service quality