The effects of perceived value and trust on customerloyalty and mediating effects of customer satisfaction: A study of foreign banks in Kota Kinabalu Sabah

Financial sector has become more internationalised because of global economic integration, new technology development and liberalisation of financial sector. In Malaysia context, entry of new competitors has increase the competitiveness in the banking industry. Even though government has limit and control on the entry of foreign bank and restriction on opening of more branches but the entry of new foreign banks still increase in this decade. Therefore, it is important for bank to understand the consumer behaviour and enhance the marketing strategy in order to retain and maintain long-term relationship with customers and to obtain the clientele loyal to the bank as customer loyalty is considered as the foundation of competitive advantage and has strong influences on company's performance and organization profitability. The main objective of this thesis is to examine the effects of perceived value and trust on customer loyalty and mediating effects of customer satisfaction towards the foreign banks in Kota Kinabalu Sabah. A total of 239 of foreign bank customers were surveyed. Perceived value, trust and customer satisfaction were found significant influenced the customer loyalty. At the same time, customer satisfaction was found has full mediation effect on the relationship between perceived value and customer loyalty where partial mediation effect on relationship between trust and customer loyalty. This study provides both theoretical and managerial implications. It has contributed to the literature review on the variables employed and provides empirical evidence supporting the relationship between all variables. Furthermore, it also proves an important justification for implementation of customer relationship management and customer loyalty program. In future studies, it would be interesting to include more variables included both attitudinal and behavioural dimensions to represent the entire relationship on customer loyalty in banking industry.