Abstract:
Bank selection by a customer is a principal component of banking strategy in today’s
increasingly competitive environment. To keep existing customers and attract new ones,
commercial banks must identify the main factors that determine bank selection decision by
customers. The central objective of this study is to examine determinants of customers’ bank
selection decisions in the case of Bahir Dar City. This study focused on four commercial banks
operating in Bahir Dar City: Commercial Bank of Ethiopia, Bank of Abyssinyia, Dashen Bank,
and Abay Bank. The total target population of this study is customers of four selected banks.
Through a non-probability convenience sampling technique selected 400 samples from total
target population. In this study mixed approach is used. This study also used both descriptive
and explanatory research designs. Primary and secondary data were consumed to conduct this
study. This employs a cross-sectional survey design and mainly conducted based on data
collected from questionnaires and interviews. Nine factors, including 18 attributes on a fivepoint
Likert scale were used to measure the customer bank choice. With the help of Statistical
Packages for Social Scientists (SPSS v.21), data was analyzed by using descriptive and
inferential statistics. Multiple linear regression was used as a model. This study revealed that the
significant factors determining customers’ bank selections are: ATM service, number of
branches, E-banking, safety of funds, provision of customer-based service, providing of loan,
and interest. While service charges and initial deposit are insignificant factors of customers’
bank selection decisions. Based on the findings it was recommended that the banks should focus
on Increase the numbers of branch and ATM machines. Additionally raise customer awareness
of safety of funds, E-banking, as well as improve the interest, enhance skill and knowledge of
staff relation with loan provision, the provision of more customer-based service, and invited for
future research.