AbstractThis master thesis seeks out to answers the question “which factors influence the choice of bank for small and medium sized businesses”. Small businesses is defined as a firm with 20 or less employees, while a medium sized firm is defined as a firm who has between 21 and 100 employees. The Norwegian banking sector is changing. Many banks are growing through mergers, or they join an alliance of banks in an attempt to obtain a competitive advantage. Because of these changes it is important to explore what matters for firms in the districts of north-western Norway when it comes to bank selection.
I sent out 943 invitations and gathered 101 responses which I then used to conduct a quantitative analysis on what the most important drivers for bank selection is among small and medium sized businesses. Results were collected for the whole sample, and for three sub-groups: independent banks, Sparebank Gruppen and commercial banks.
Results from the whole sample showed the general customer service is by far the most important factor that drives how satisfied the firms are with their main bank and competitive cost levels was found to increase customer loyalty. Interestingly, firms operating in an industry categorized by price instability was found to be less loyal to their main bank. Among the subgroup Sparebank Gruppen, international business service through the facilitation of currency hedging increased customer satisfaction. Resources put back into the local community did not increase satisfaction for firms in any bank group.