Abstract:
The competitiveness of commercial banks is of vital importance for a developing country that is striving to enhance
the standard of living of its citizens by ensuring an expansion of banking services. This study compared service
performance and customer satisfaction as antecedents of corporate reputation between foreign and local banks in
Tanzania. The study had a sample size of 380 respondents who were the customers of these banks. The structural
equation modelling was carried out so as to examine the interrelationships of the constructs and how the findings can
be inferred on the entire population. Chi-square statistical values, Incremental Fit Index, the Tucker-Lewis Fit Index,
the Comparative Fit Index, the Parsimony Normed Fit Index and the Root Mean Square Error Approximation were
applied to examine the models’ fit. While the mean values were applied to compare customers’ perceptions of service
performance, customer satisfaction and corporate reputation between local and foreign banks.
The main findings from the study indicate that, service performance levels were perceived relatively positively;
customer satisfaction on corporate reputation was slightly stronger for the foreign banks than the local banks and
there are very strong positive relationships between service performance and customer satisfaction in the Tanzanian
banking industry. The study recommends that managers of the banks need to understand that customers’ perceptions
on the banks’ service performance have a significant influence on the perceived banks’ reputation.
