A Structural Equation Modelling Approach to Validate the Dimensions of SERVPERF Model in Private Sector Banks

Abstract

This research paper aims to validate the model of performance of the private sector banks from the perspectives of rural areas of Punjabs clients by replicating the factors used in an earlier study by Cronin and Taylor. The selection criteria examined in this study were the items included in the SERVPERF measurement and the relative importance of the dimensions of tangibility, reliability, responsiveness, assurance, and empathy were examined along with other preferences. Apparently, data was collected through convenience sampling from 200 rural areas clients across the four districts of Punjab. The results confirmed that the model of performance criteria is multidimensional; tangibility, reliability, responsiveness, assurance, and empathy. Researcher also found significant positive interrelationships among the constructs of the proposed framework. In this study, five-common factor measurement model was found to be valid and reliable to be used in determining performance of the private sector banks. Out of these five factors, three factors (reliability, empathy, & responsiveness) resulted in strong significance while assurance and tangibility were weak significant. This paper attempted to validate a model based on the perception of rural clients pertaining to the performance of the private sector banks which will give an insight towards better understanding their attitudes. Further, it will also help the private sector banking industries in designing marketing strategies according to their clients preferences in a different rural background. Finally, the use of SEM in validating the model is also a valuable contribution to this study.

Keywords: SERVPERF Model, Rural Clients, Structural Equation Modelling

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