The Study of Service Quality in Libyan Commercial Banks

Banking services are perhaps the largest industry that caters to -the needs of various segments of the population reflecting the diverse Diasporas of the society. Moreover perceived service quality tends to play a significant role in high involvement (high, interaction between customers and service providers) industries like banks. Also, banks often have long-term business relationships with customers. In addition, the banking sector is large enough to capture and represent almost all the critical features of the customer-perceived service quality and the critical dimensions of excellence that the management may have to encounter, in order to effectively manage a service organisation.
However, there is considerable lack of literature with respect to service industry management, especially in the banking industry of developing economies. Therefore an analysis of banks in the Libya from a 'service-quality perspective' may sound interesting at this juncture. Such an investigation is vital for the bankers in order to enhance their business performance.
Service quality plays an important role in the success of any organization generally but especially in the banking sector. This importance increased after a link was found between service quality and customer satisfaction, customer loyalty and financial performance.
In the Libyan economy, the banking sector is one of the most important. Its significance increased after the 2003 lifting of the United Nations sanction. This was followed by entry to the sector of a number of domestic and multinational firms. Despite this increased competition, domestic banks are still widely considered to suffer from low levels of service quality. Therefore, the main purpose of this study is to examine and compare expectations and perceptions from customers and bankers regarding the service quality provided by the commercial public and private banks in Libya.
After an extensive review of the extant literature related to the Parasurman, Berry and Zeithaml (1985) Gap Model and the use of the SERVQUAL instrument to measure service quality, this study found that there was a gap in the literature regarding empirical research using the extended Gap Model to evaluate service quality in the banking sector. Therefore, the extended Gap Model has been used to examine service quality in Libyan commercial banks and SERVQUAL used to measure the service gaps.The resulting instrument is intended to help these banks to measure their service quality and focus on the service quality dimensions of most importance to their customers. It is also expected that this instrument, and its results, will contribute to future research into service quality.
Both questionnaires and semi-structured interviews were employed to fulfil the study objectives. The questionnaire aimed to investigate the implementation of service quality in the Libyan banks sector, while, semi-structured interviews with managers aimed to gain an understanding of themes which had emerged from the questionnaire.
The findings of the present study have produced some important results. Firstly, there are significant differences between the Libyan private and public banking sectors in terms of customer and bankers' standpoints of service quality. Secondly, customers' expectations of banks services were higher in the private banks than in the public banks. Thirdly, customers' perceptions of the banks services were higher in the public banks compared with the private banks. Forthly, the gap between customers' expectations and perceptions of services provided by public and private banks is generally widest in public banks in the majority of the 22 items. Fifthly, employees' perceptions of customers' expectations in both banks had high scores in the bank's service quality. Finaly, the results also show that the interviews provided another layer of information that contributed extremely well to the overall understanding of the service quality in Libyan commercial banks.
The study has made an original contribution to the academic and practical knowledge of service quality.This study contributes to the understanding of service quality in terms of the Libyan banking context. The added value of this study emanates from the fact the research was conducted in Libya (a developing country with an extremely limited amount of service quality research conducted therein), and the fact it measured and assessed the service quality in both Libyan private and public banking sectors which form, along with the central bank, the entire Libyan banking system.