The antecedents and consequences of commitment in bank–corporate relationships: evidence from the Chinese banking market

Abstract

This study draws on the exchange relationships literature to create a model of what motivates corporate customers to continue their relationships with their primary banking services providers. The study reports the results of a questionnaire survey administered to financial managers (N = 259) in China. Results provide evidence for the existence of a number of antecedents and consequences of commitment in bank–corporate relationships. Notably, service quality is found to be a significant antecedent of affective commitment, which in turn leads to cooperation and continuance intentions. Implications for bank management are discussed along with avenues for future research.

Keywords:

• bank–corporate relationships
• China
• commitment
• finance
• structural equation modelling
• survey

Notes

1. The four specialized state-owned banks include Agricultural Bank of China, providing banking services for agricultural and rural industrial projects, Bank of China, conducting foreign exchange operation, China Construction Bank, providing loans for fixed assets investment, and Industrial and Commercial Bank of China, majoring in industrial and commercial business.

2. The three policy banks include State Development Bank for infrastructure financing, Export–Import Bank for trade financing, and Agricultural Development Bank for agricultural financing.

3. China accessed the World Trade Organization (WTO) in December 2001. According to the WTO timetable, the entrance impediments of the Chinese banking market were fully removed in December 2006, and foreign and domestic banks should be able to provide the same products to all customers throughout the country.

4. The stratified sampling was based on both company size (that is, small company, medium company and large company) and geographic location (urban area and suburban area).

5. The classification criterion of company location, size and industry was enacted by the Statistics Bureau of Beijing in 2002.

Urban area: Within the 4th Ring Road (Beijing)

Suburb area: Beyond the 4th Ring Road (Beijing)

Small company: Less than 50 people

Medium company: Between 51–100 people

Large company: More than 101 people

The first industry: Agriculture, forestry, stock raising and fishery

The second industry:  Mining, manufacturing, construction, production and distribution of electricity, gas and water

The third industry: All the rest industries apart from first and second industries, including transport, communication, wholesale and retail, eating and drinking, finance and insurance, real estate, services and government, etc.

6. The questionnaire is attached in the Appendix.

7. AMOS is a statistical program to perform structural equation modelling, a form of multivariate analysis.

8. The combinational rule of RMSEA < 0.06 and SRMR < 0.08 for samples (N < 500) was used, as it is ‘extremely sensitive in detecting models with mispecified factor covariances’ (Hu and Bentler 1999, p. 26).

9. Many authors (Marsh et al. 1998, Hu and Bentler 1999) warn against use of more common goodness-of-fit indices such as the goodness-of-fit index (GFI) and adjusted goodness-of-fit index (AGFI) which are widely used in the structural equation modelling literature.