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The viability of the bank advisory service business model - effects of customers' trust, satisfaction and loyalty on client-level performance
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Banking and Finance.
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Building and Real Estate Economics.ORCID iD: 0000-0001-7106-4827
(English)Manuscript (preprint) (Other academic)
Abstract [en]

This paper investigates the viability of the relationship-oriented business model of the bank advisory service function and tests its viability considering differences in clients’ risk tolerance and financial literacy. Specifically, it investigates the effects of bank customers’ satisfaction, loyalty, and trust in bank advisors on two client level performance measures; client level non-interest revenue and client-level revenue on net interest spread. It further investigates how effects are moderated by differences in clients’ risk tolerance and financial literacy. The findings are based on analyzes of a data set that combines survey data (collected from 13,525 bank clients in 2013) with bank record data from each respondent. The cross sectional data is analyzed using OLS- regression and structural equation modeling. Findings show that trust has a positive direct effect on client level non-interest revenue. Further, trust mediates the entire impact of satisfaction and loyalty on client-level non-interest revenue. Customer satisfaction and loyalty do not lead to enhanced client-level non-interest revenue if there is limited trust in bank advisors. Findings further show that the relevance of trust for non-interest revenue is higher for clients with high risk tolerance and high financial literacy. Satisfaction, loyalty, and trust have no effect, however, on client-level revenue on net interest rate spread.

National Category
Economics and Business
Research subject
Business Studies
Identifiers
URN: urn:nbn:se:kth:diva-262718OAI: oai:DiVA.org:kth-262718DiVA, id: diva2:1362353
Available from: 2019-10-21 Created: 2019-10-18 Last updated: 2019-10-21Bibliographically approved

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CiteExportLink to record
Permanent link

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Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
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  • asciidoc
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