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Philip Gerrard: Associate Professor, Department of Accounting & Finance, Nanyang Technological University, Singapore
J. Barton Cunningham: Professor, School of Public Administration, University of Victoria, Canada
Introduction
Singapore businesses, according to The Monthly Digest of Statistics, seem to rely heavily on banks to fund their activities. The Digest shows that there is a high percentage of borrowing drawn down by businesses in comparison with consumer borrowing. Data showing the distribution of bank advances as at the end of December 1998 were used to estimate that about 66.7 per cent[1] of total borrowing in Singapore had been drawn down by the business sector.
This fact alone should result in banks viewing businesses as generators of interest income. A consequence of this is that bank marketers should be keen to establish the most important criteria which influence business proprietors/senior managers in the choice of bank for their firm. Once the key selection criteria have been established, banks can decide upon appropriate strategies which aim to attract business customers. Thereafter, having established the banker/customer relationship, banks can formulate an appropriate strategy which aims to satisfy their business customers in the context of these criteria. This action should create a more loyal customer and, consequently, one who is less likely to switch banks. A bank should also use the post-acquisition period to market its range of products. The overall aim of a bank should be to increase both interest and fee income.
A review of the literature concerning the bank patronisation process suggests that the vast majority of research has been conducted using samples of consumers (some examples being Reed, 1972; Andersen et al., 1976; Riggall, 1979; Lewis, 1982; Martenson, 1985; Hood and Walters, 1985; Kaynak, 1986; Laroche et al., 1986; Tan and Chua, 1986; Yavas, 1988; Javalgi et al., 1989; Erol and El-Bdour, 1989; Erol et al., 1990; Lewis and Bingham, 1991; Haron et al., 1994; Hon and Tom, 1994-95; Holstius and Kaynak, 1995; Thwaites and Vere, 1995; Zineldin, 1996; Gerrard and Cunningham, 1997). It is somewhat surprising, if businesses borrow to a greater extent than consumers, that far less research has been conducted on the bank patronisation decision of businesses. A similar point has been made very recently by Edris and Almahmeed (1997). These researchers cited, in their...