The main objective of this paper is to identify the key factors that influence

the extent to which customers are loyal towards their banks. The customers of
market leaders in retail banking will form the subject of our research. To this
end, we have carried out empirical analyses of the complex interdependence
relationships that exist among the different variables, or factors, which explain
customer loyalty in the retail banking market, using a methodology based on
structural equation models.
Prior to developing the model, we carried out a review of the most important
contributions to academic literature about causal relationships between loyalty
and its antecedents. We reached the conclusion that customer satisfaction
together with barriers or the switching costs were the key factors affecting
loyalty. Similarly, there is a theoretical framework which considers that
perceived quality is one of the indirect antecedents of loyalty that has a direct
influence on customer satisfaction, although the nature of the causal
relationship between quality and customer satisfaction is the subject of great
academic debate. While quality researchers claim that satisfaction is an
antecedent of quality (Carman, 1990; Parasuraman et al., 1988; Bitner, 1990),
researchers in the field of customer satisfaction have exactly the opposite point
of view (Woodside et al., 1989; Reidenbach and Sandifer-Smallwood, 1990;
Cronin and Taylor, 1992; Fornell, 1992; Anderson and Sullivan, 1993). In the
light of this, several authors stress the desirability of further comparison of the
causal relationships between these two concepts, all of which has led us to
explore, as an additional objective of this paper, the direction of this
relationship with new empirical evidence.
Loyal customers not only increase the value of the business, but they also
enable it to maintain costs lower than those associated with attracting new
customers (Barroso Castro and Martn Armario, 1999).
Therefore, loyalty is a concept that goes beyond simple purchase repetition
behaviour since it is a variable which basically consists of one dimension
related to behaviour and another related to attitude, where commitment is the
essential feature (Day, 1969; Jacoby and Kyner, 1973; Berne, 1997). According
to Jacoby and Chestnut (1978), Solomon (1992) and Dick and Basu (1994), the
combination of these two components enables us to distinguish two types of
customer loyalty concepts:
(1) loyalty based on inertia, where a brand is bought out of habit merely
because this takes less effort and the consumer will not hesitate to switch
to another brand if there is some convenient reason to do so; and
(2) true brand loyalty, which is a form of repeat purchasing behaviour
reflecting a conscious decision to continue buying the same brand, and it
must be accompanied by an underlying positive attitude and a high
degree of commitment toward the brand.