Service Quality, Trust, And Adoption of Agency Banking by Customers in Jinja District-Eastern Uganda.
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Date
2025-09-20
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Makerere University Business School
Abstract
Agency banking plays a crucial role in expanding financial inclusion by providing formal financial services through authorized third-party agents. While agency banking has spread widely its adoption in Africa, particularly Uganda, remains low. Therefore, this study investigates the demand-side factors influencing the adoption of agency banking in Uganda, focusing on the role of service quality and trust in Jinja District. The study employed a cross-sectional research design with a quantitative approach. Data was collected using structured, self-administered questionnaires targeting agency banking customers in Jinja District. The analysis involved correlation and regression techniques to examine the relationships between service quality, trust, and the adoption of agency banking. Findings revealed a positive and significant relationship between service quality and the adoption of agency banking, indicating that improved service quality enhances customer willingness to use agency banking. Key service quality dimensions; reliability, tangibles, responsiveness, and empathy were all positively associated with agency banking adoption. Similarly, trust was found to be a significant predictor of agency banking adoption, highlighting that customers' confidence in the security and reliability of agent banking services influences their usage. The study contributes to the existing literature by shifting focus from supply-side factors to demand-side determinants of agency banking adoption. It underscores the importance of enhancing service quality and building customer trust to boost adoption rates. The findings suggest that financial institutions should implement measures such as agent training, customer sensitization, and security enhancements to increase customer confidence in agency banking services. Additionally, policy interventions aimed at improving the regulatory framework and enforcing service quality standards can further drive adoption. In conclusion, addressing service quality and trust-related concerns is essential for the successful adoption of agency banking in Uganda. This study provides valuable insights for policymakers, banks, and other financial service providers aiming to optimize the role of agency banking in financial inclusion. Future research could explore additional demand-side factors, including customer awareness and perceived risk, to develop a more comprehensive understanding of agency banking adoption dynamics in Uganda and other similar contexts.
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This is a master's thesis.
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Kivunike, M. (2025). Service Quality, Trust, And Adoption of Agency Banking by Customers in Jinja District-Eastern Uganda. Makerere University Business School.