Customer Trust and Loyalty in Nepali Commercial Banks: A PLS-SEM Analysis Approach

Abstract

Background: This study aims to investigate the customer trust on customer loyalty in commercial banks in Nepal. It assesses how commitment and customer intimacy assist as an intervening role in the relationship between trust and customer loyalty.

Methods: This study used a positivist quantitative in nature with a causal-explanatory design to investigate the influences of trust on customer loyalty. The method of analysis was undertaken through PLS-SEM using the Smart-PLS version 3.0.

Results: The study revealed that customer trust a positive significant influences on commitment, intimacy, and customer loyalty. Both commitment and customer intimacy positively significant impact on customer loyalty in Nepali commercial banks customer using mediation analysis.

Conclusion: The customer trust influence on customer loyalty among the customers of Nepali commercial banks both direct relationship and indirect through customer commitment and customer intimacy. Customer trust enhances customers confidence in the reliability, transparency and integrity of commercial banks. The implications of the study that enhancing trust, transparency, and personalized engagement strengthens customer loyalty in Nepali commercial banks.

Novelty: This study distinctly examines the simultaneous mediating effects of customer commitment and customer intimacy in the relationship between customer trust and customer loyalty within Nepali commercial banks. In addition to, it extends relationship marketing theory by demonstrating how customer trust enhances customer loyalty through both relational and emotional pathways in an emerging economy context.