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Keywords
Banking, Information searches, Experience, Consumer research, United States of America, Consumer behaviour
Abstract
The study proposes and tests a model of consumer bank choice behavior in a south eastern city in the USA, based on the economics of information theory. The model expands the domain of inquiry beyond the initial level attributes to the first-order latent construct and the second-order (composite) levels. Results suggest that consumer bank choice behavior can be represented as a global construct with three viable components (search, credence and experience) and provide implications for bank managers.
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Introduction
Understanding buying behavior for financial services and choice of retail financial institutions has long intrigued the minds of scholars and practitioners. Financial services offered by banks and other institutions are not only intangible and fairly complex, but many consumers can also perceive them as high-risk purchases. McKechnie (1992) argues that, despite many attempts, a generalizable conceptual framework which adequately captures the dynamics of consumer decision making for financial services and financial institutions is yet to be developed. There seems to be a consensus that the buyer behavior models developed earlier examine this behavior solely as a decision process, which consists of a number of discrete but interlinked stages (Devlin, 2001; McKechnie, 1992). While a substantial number of studies recognize the importance of choice criteria determination and evaluation in bank patronage decisions, most focus only on the initial attribute level (Kaynak and Yavas, 1985; Yavas, 1988; Dudley et al., 1985; Erol and El-Bdour, 1989; Anderson et al., 1976). As such, they tend to identify the importance ratings/rankings of individual attributes consumers use in their decisions or employ exploratory factor analysis to determine the underlying dimensions of bank choice behavior. This approach, while useful at the beginning stages of the investigation, neither adequately captures the important higher-level abstractions nor provides managers with actionable strategic directions.
The present study addresses this void and responds to the call of Tyler and Stanley (1999) for models which offer a deeper analysis of evaluation decisions in the financial services sector by developing and testing a model that expands the domain of...