The impact of corporate fairness on the bank‐SME relationship

Abstract

Purpose -The United Kingdom Financial Services Authority's treating customers fairly initiative has drawn attention to a current trend that involves regulators using regulatory principles to enhance the relationship between financial institutions and customers. The term corporate fairness is introduced to facilitate the understanding of the construction of fairness. The purpose of this study is to investigate corporate fairness as a means of achieving customer satisfaction. Design/methodology/approach -This study is based on a sample of 359 small and medium-sized enterprises (SMEs) in Sweden. LISREL, a structural equation modelling technique, is used to analyse the empirical data. Findings -The present study emphasises the importance of treating customers fairly in the financial sector. By being embedded in the strategy and structure of the bank organisation, corporate fairness enables individual bankers to act in a relational manner towards their customers, thereby resulting in higher customer satisfaction. Originality/value -Corporate fairness is a topic usually reserved for consumer research, this study shows the impact of corporate fairness on the SME community. The study shows how corporate fairness is linked to customer satisfaction, and how perceived fairness can be improved.

Exploring the Relationship between Ethical Sales Behavior, Relationship Quality, and Customer Loyalty

“…These findings are in line with the finding of Vegholm and Silver (2008) and Llewellyn (2005), who argues that it is important for financial institutions to set guidelines for individual bankers on how to act fairly, and to develop appropriate training and reward mechanisms. The finding is also consistent with those of Seal (1998), who argues that a trustworthy organization starts by building confidence into its internal processes, through training and educating its own employees.…”

“…Building upon Llewellyn's (2005) proposed model, the present study has shown that it is indeed in the best interest of financial institutions to strive for corporate fairness. Although this study finding partially replicates previous research (e.g., Hansen & Riggle, 2009;Chen & Mau, 2009;Roma´n, 2003;Vegholm & Silver, 2008;Roma´n & Munuera, 2005;Llewellyn, 2005;Lagace et al, 1991;Román & Ruiz 2005), but the other one represent new contributions to the research body. However, it is an attempt to occupy the gab in interrelationships that were uncovered between ethical sales behavior, relationship quality (customer trust and customer commitment) and customer loyalty.…”

“…The objective of financial institutions is, therefore, to convey trust to their customers so as to comply with regulatory standards (Ferna´ndez-Laviada, 2007;Vegholm and Silver, 2008). The majority of definitions for trust describe it as the belief by one firm that a partner will perform actions producing positive results for the former (Alrubaiee & Alkaa'ida, 2011).…”

Export experience and key success factors in cross-border trade: Evidence from Southern Africa

“…The reasons advanced for this include the programmes being irrelevant or the SMMEs not being aware of the existence of such programmes. Vegholm and Silver (2008) note that most traders favour networking with financial institution managers who are most likely to assist them during times of trouble instead of the government programmes.…”

“…Temtime, Chinyoka and Shenda (2004) point out that banks have been criticised for being insensitive to the SMME sector. They are accused of demanding strict collateral security and charging punitive interests rates (Vegholm & Silver 2008). …”