Successful seller. A complaining behavior is, therefore, likely

Successful complaint management in
the service sector primarily depends on customers’ willingness to voice their complaints
and on service providers’ ability to effectively deal with these complaints.
Reducing the negative outcomes of service failure is a key objective of the
service provider; hence it’s essential for the provider to acquire information
on flaws in the service delivery and thereby prevent future service failures
(Evanschitzky, Brock & Blut, 2011).


In the Lebanese service sector,
Lebanese banks are basic providers of financial services and have a big
influence in the economy through 1,068 bank branches operating in Lebanon with more
than 26,000 employees (BilanBanques 2017). Despite the critical economic and
political conditions that prevailed throughout the past years, Lebanese banks
have demonstrated high levels of resilience. Not surprising that the volume of
this sector exceeds 400% of the country’s GDP; one of the highest ratios
worldwide (BilanBanques 2017).

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The central bank of Lebanon “Banque
Du Liban” or BDL represents the regulator of banks and financial institutions
operating in Lebanon. BDL practices its regulatory authority primarily through
the circulars that it issues on a regular basis. These circulars basically state
rules and procedures that banks and financial institutions should abide by. In
2015, BDL issued a circular that banks must establish a separate unit to deal
with customer complaints; the circular also set the basic logistics on how
banks deal with those complaints.




Theoretical background

Consumer Complaining Behavior – CCB –
is defined as behavioral or non-behavioral response shown by the consumer when
they perceive dissatisfaction in a shopping and/or consumption experience (Singh,
1988). This makes consumer dissatisfaction as the starting point for most
models of customer complaint behavior. CCB has been approached by many theories,
some of which:


Equity theory- it is concerned with the balance and perceived fairness of the
inputs and outputs of a particular transaction. From the perspective of either
side, there are three possible outcomes of a given transaction as prescribed by
equity theory: (1) equity, (2) positive inequity, (3) negative inequity. From
an equity perspective, consumer dissatisfaction is the result of negative inequity,
where the consumer perceives to have gained less from a transaction than the
seller. A complaining behavior is, therefore, likely if dissatisfaction is
caused by negative inequity (Boote, 1988).


Disconfirmation of expectations and
attribution theory- this theory suggests that if
perceived quality is lower than expectations, then negative disconfirmation is
said to be the resultant cognitive state, with consumer dissatisfaction conceptualized
as the resultant affective state. It has been argued that disconfirmation, in all
circumstances, may not be enough to cause dissatisfaction. Folkes and Kocsos
(1986) argue that a consumer’s perception of the attribution of product or
service failure will moderate feelings of dissatisfaction. If the cause of disconfirmation
is externally attributed (i.e. not caused by the consumer), then the consumer
is justified in feeling dissatisfied. However, if the disconfirmation is caused
internally (i.e. the fault of the consumer) then dissatisfaction ought not to
be directed at the service/product provider. That is, if negative
disconfirmation is externally attributed, a consumer is justified in engaging in
complaining behavior (Boote, 1998).


On the other hand, researchers have
addressed several types of consumer complaining behavior. Hirschman (1970) was the
first to talk about exit, voice and loyalty; exit and voice being actions as
complaining behaviors. Exit refers to a consumer who
decides not to buy a product or service again. Voice is an attempt to seek
redress from the retailer or manufacturer involved, and this is the type of
complaining behavior addressed in this paper. Loyalty refers to the decision
not to terminate the relationship with the company after any dissatisfaction. Loyalty is also
defined as a multifaceted concept that consists of attitudinal and behavioral
elements and manifests as the customer’s intention to continue the
relationship, repurchasing actions, and positive referrals (Bell et al., 2005;
Scheer et al., 2009).

Another type of consumer complaining
behavior is negative word-of-mouth which is often presented in the form of a warning
not to buy a certain product or to buy from a certain outlet. Also, third-party
action is the act of involving an outside agency to deal with a dissatisfying
episode – such as a consumer group or a legal representative (Boote, 1998).


Huefner and Hunt (1994) put forward
three further consumer complaining behaviors: retaliation, avoidance and grudge-holding.
Retaliation is the process of ‘getting even’ with the seller; a form of revenge.
Both avoidance and grudge-holding are forms of extended exit. The
problem with the current conceptualization of exit is that it has no time-frame
attached; According to Huefner and Hunt, exit is a short-term
phenomenon, whereas avoidance is more medium-term in a deliberate attempt to
‘punish’ the firm. Grudge-holding is much more extreme and can last for years,
even decades.


A perplexing question to researchers
has been what triggers customers to complain. Dissatisfaction is not thought to
be a sufficient trigger by itself to cause a complaint; research show that on
average only 5% to 10% of customers who have been unhappy with a service
actually complain (Lovelock & Wirtz, 2011).  Kowalski (1996) conceptualized the issue in
terms of thresholds: consumers have both dissatisfaction and a complaining
threshold. Consumers may be dissatisfied easily (i.e. they have a low dissatisfaction
threshold) but may be reluctant to complain because they have a high
complaining threshold.


Some of the triggers discussed by
academics are: Situational triggers- refer to the specifics of the
dissatisfying episode, some of which: product/service importance (Blodgett
& Granbois 1992); level of involvement (Godwin et al. 1995);
dissatisfaction intensity, (Prakash 1991); perceived costs and benefits of engaging
in a particular complaint (Singh & Wilkes 1996). Attribution triggers-
these include perceptions of controllability and stability (Blodgett &
Granbois 1992; and Singh & Wilkes 1996); controllability refers to
whether or not the dissatisfied consumer perceives that the company involved
could have prevented the dissatisfying episode from occurring, and stability
refers to the dissatisfied consumer’s perception of whether the product/service
failure is short or long term. Demographic factors- include age, gender,
income, educational level, rural/urban location, and the cost-sensitivity
of the dis-satisfied consumer. Psychographic triggers- these include
assertiveness level of confidence and aggression attitude to and past
experience of complaining and willingness to engage in uncomfortable situations.
Company/consumer relationship factors- relate to the degree of loyalty
felt by the consumer towards the company where loyal customers are those who do
not value prices and they do not switch to competitors’ products or substitutes
in case of product/service failure and they always have positive attitude
towards company (Ashraf, Sajjad, Rizwan
2013). Furthermore, the degree of interaction, the strength and the time
period (relationship duration) of the relationship between the customer and the
company, could be factors triggering CCB (Hui, Ho, & Wan, 2011). Furthermore,
Kim et al (2003) proposed that another factor could be the consumer’s attitude
toward complaining.


The concept of attitude takes us to Theory of Planned Behavior
–TPB- by Ajzen (1991) which was an extension of the Theory of Reasoned Action
-TRA. The TPB theory suggests that what drives a certain person behavior is the
intention towards it; and this person’s intention is shaped by three factors:
1) subjective norms – the social pressure
to perform or not perform a certain behavior; 2) perceived behavioral control
– the ease or difficulty in performing
a behavior; and 3) attitude – defined in terms of how a person generally sees a
specific behavior negatively or positively.


In this paper, our interest is in
the triggers and determinants of the customer complaint behavior in the banks
in Lebanon. Therefore, the population of interest is all bank customers in
Lebanon who felt dissatisfied by any kind of service defect or failure at the
bank they deal with and decided to complain accordingly.


Research problem

In February 2015, BDL issued basic
circular no. 134 related to the principles of banking and financial operations
with customers. Through this circular, BDL forced the banks to establish a Unit
in charge of implementing those principles. The Unit is entitled of many tasks some
of which are:

claims from customers to examine them and give an opinion in this regard.

the customer about the outcome of the claim.


Article 7 of the circular states the
following: “Banks and financial institutions operating in Lebanon shall set
a clear mechanism that ensures that customer claims are handled and settled
within 15 days at most. They shall also comply with the following:

Allocate a specific space in their head office and all branches,
and on their website, to receive customers’ claims.

Notify the customer of the following:

The process and means for submitting claims (personally, claim box,
ordinary mail, e-mail, website, telephone or any other means).

The claim will be directly transferred to a specialized Unit at the
head office of the bank or financial institution, and the management and staff
of the concerned branch shall not take cognizance of its contents.

all cases, the customer may directly file a complaint to the competent Lebanese
administrative or judicial authorities, without going through the Unit”.


The circular represents both an
opportunity and a challenge for banks. The opportunity is that banks could
assess more the customer’s comments and experiences with their frontline and
backline employees. Accordingly, banks could work harder on rectifying the
flaws and improving their services. Eventually this will benefit the bank in
two ways:

complaints on flaws and inefficiencies are usually categorized under the
operational risk category against which the banks have to allocate capital as
per BDL and BCBS (Basel Committee on Banking Supervision) best practices.
Better management of those operational incidents might alleviate the capital
burden on banks.

successfully with the customers’ complaints might stimulate the service
recovery paradox leading to more satisfied and loyal customers who would be
willing to spread PWOM about the banks; this is an advantageous feature for the
banks especially that they are operating in a highly competitive market place
composed of more than 50 banks (Bilanbanques 2017).


As for the challenge posed by the
circular, it is how to motivate customers to be proactive through complaining
if they were unsatisfied with the provided service. Thus banks ought to be
cognizant of the triggers and factors that stimulate the customers to complain.


This exploratory research paper
tries to address this issue by studying the possible determinants of the
customer complaint behavior in banks in Lebanon. Defining the variables that
mostly affect customer complaint behavior could benefit bank management in
facilitating the proper logistics, locations and staff to reduce the customer
complaint barriers as possible.


Although the above demonstrates the
importance and urgency of assessing customer complaint behavior in banks in
Lebanon, a legitimate question is whether there is a real problem in customer
complaints in banks in Lebanon. Do bank customers refrain from complaining
about a defective or bad service even when they encounter one? To evaluate this
issue especially in light of deficit research pertaining to customer complaint
behavior in banks in Lebanon, a preliminary pilot study will be conducted to
stand on whether there is a research problem pertaining to the dependent


An on-line questionnaire will be sent
to 50 e-mail addresses provided by local directory service provider. The pilot
questionnaire will be limited to few questions: i) whether the respondents deal
with any local bank, ii) whether they would file a complaint at the bank if
they encounter a service failure other than discrepancies in their bank
accounts, since in this case any customer would certainly complain. 


The response rate is expected to be
not more than 60% in the pilot study. Out of the respondents, it is expected
that minimal amount of respondents will reply back that they deal with local
banks and indicate that they would file a complaint in case of service failure.

Despite that this preliminary pilot
study is not comprehensive; it will give a clear idea that customers of
Lebanese banks abstain from complaining in most service failures they


Literature review:

Many researchers have discussed the
determinants of customer complaint behavior. Bearden (1983) analyzed the impact
of some demographic characteristics specifically age, income and education on
customer complaint intention; it was found that age has a negative impact;
income is positively related while education is not significant in influencing
complaint intention. Moreover he suggested that the more the customer is
assertive and self-confident the higher is his/her intention to complain. Ping
(1993) found that overall customer satisfaction has a positive impact on his/her
complaint intention.


Research also reveals that a person
who has a positive attitude toward complaining is more likely to complain as a
result of dissatisfaction like Blodgett et al (1995) who argued that the
attitude towards complaining and the perceived likelihood of success both
positively influence the complaint intention.  Bodey & Grace (2007) found that usually
customers who have positive attitude toward complaining are more likely to
complain as compared to those who have negative attitude toward complaining.
Thus the first hypothesis would be:

H1: the attitude of the customer
towards complaining positively influences the complaint intention which in turn
positively influences the customer complaint behavior in the banking sector in


Evanschitzky (2011) presented
customer affective commitment as a moderator variable where customers
displaying high levels of affective commitment will complain irrespective of
complaint barriers, whereas customers with low levels of affective commitment
will only complain when barriers are low. In literature, commitment has been
used as an expression of loyalty. Fornell and Wernerfelt (1988) claimed that
loyal customers complain more frequently as compared to non-loyal customers in
case of dissatisfaction. According to Oztopcu (2006), loyal customers do not
switch to competitor companies straight away as a result of dissatisfaction;
they choose to stay with the company and solve the problems. Moreover, for
Nicholson, Compeau and Sethi (2001), loyal consumers who have strong bonding and
long period relationships (duration) with the company accept the service
failure anyways, and help the organization to improve the service next time.


In general, research gap regarding
customer complaint behavior in Lebanese banks is relatively wide compared to
other countries. Moreover, little research has addressed the issue of relationship
duration between the customer and the bank as a variable affecting the customer
complaint behavior through the loyalty and commitment that the customer feels
towards the bank. In Lebanon, where social relationships is an essential
ingredient of the cultural background, it is expected that the length of such
relations, even in a business context, might create certain commitment and
loyalty to the banks and the employees, which in its turn affects the customer
complaint behavior in case of service failure. Thus the second hypothesis:

H2: the relationship duration
between the customer and the bank he/she deals with positively influences the level
of loyalty and commitment which in turn positively influences the customer
complaint behavior in the banking sector in Lebanon.


Research model:

In studying what makes customers
complain in the banking service sector in Lebanon, and in consistency with
previous literature, we try in this paper to assess the relationship duration
between the customer and the bank as a determinant of the customer complaint
behavior through the mediating effect of loyalty and commitment. From another
side and within the framework of Ajzen Theory of Planned Behavior, we try to
assess the attitude towards complaining as another determinant of the customer
complaint behavior in banks in Lebanon through the mediating effect of customer
complaint intention.

The following diagram depicts the model
of this paper.











The population is defined as all
bank customers in Lebanon who felt dissatisfied by any kind of service defect
or failure at the bank they deal with. A sample of those customers dealing with
Lebanese banks in different regions (Beirut-Mountain-South-North and Bekaa
areas) will be chosen and contacted with the help of a local directory service
provider. The sample size will be around 420 (excluding the ones contacted in the
pilot study). The sample unit is the customer dealing with the bank.

The tool for measuring the 5
variables would be an on-line questionnaire sent through e-mail and with
multiple items to measure each construct using a 5-scale Likert type of

Confirming validity and reliability
will be taken through proper measures like factor analysis and Cronbach’s


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