Perceived Service Quality of Small and Medium Enterprises (SMEs) on Banks’ Lending and Loan Service Quality in Malacca

Abstract

Small and medium enterprises (SMEs) in Malaysia have been playing an important role in the development of Malaysian economy since the 1970s. They are now considered as the new engine for economic growth and development. In support to the government’s effort to help the SMEs, banks offer lending and loan facilities to finance the businesses. Being in the service industry, quality is considered as the key element to maintain a positive public image and customer loyalty. Setting customer service standards help to ensure that companies reach, and exceed, customers’ expectations. The main objective of the study is to assess the perceived service quality on banks’ lending and loan services among the 93 selected SMEs located in Malacca based on the service quality dimensions of SERVQUAL. The result of the study indicated that the overall service quality provided did not meet customers’ expectations even though a significant difference between perceptions and expectations for all dimensions does exist, except for the neat appearance of staff which did meet customers’ expectation. The reliability dimension was rated as the most important dimension that requires serious attention in meeting the customers’ expectation followed by responsiveness, empathy, assurance and tangibility. The findings are hoped to provide a direction for service quality improvement to the banks and the service industry in general. In addition, the findings of this study could also be used for future research in the subject of customer satisfaction and customer loyalty.