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Measuring price fairness and its impact on consumers’ trust and switching intentions in microfinance institutions

Author

Listed:
  • Nathan Chubaka Mushagalusa

    (Catholic University of Bukavu (UCB))

  • Eddy Balemba Kanyurhi

    (Catholic University of Bukavu, Laboratoire d′Economie Appliquée au Développement (LEAD-UCB), and Institut Supérieur d′Informatique et de Gestion (ISC Goma))

  • Deogratias Bugandwa Mungu Akonkwa

    (Catholic University of Bukavu and University (UCB) of Goma (UNIGOM))

  • Patrick Murhula Cubaka

    (Catholic University of Bukavu)

Abstract

Although price fairness has been intensively studied for decades, the measurement of its multidimensionality has not yet reached any consensus. Its impact on consumers’ trust and switching intentions in financial institutions has been less frequently analysed. This paper fills both gaps and has two objectives. First, it aims to develop a reliable and valid measurement scale for price fairness in microfinance. Second, following the equity and social exchange theories, it tests the impact of price fairness on consumers’ trust and switching intentions. Data were collected from 324 customers in six microfinance institutions (MFIs) in Bukavu, Democratic Republic of the Congo, and tested using exploratory and confirmatory factor analyses, as well as structural equation modelling. The results confirm that price fairness is a multidimensional construct with six dimensions, revealing that the construct has not been comprehensively captured in prior research. Furthermore, findings suggest that price fairness significantly affects customer trust and satisfaction, and that both variables mediate the relationship between price fairness and customer switching intentions. These results confer a strategic role of price fairness, trust and switching intention in the microfinance industry, which is currently subject to customer sensitivity to interest rates and mistrust towards MFIs.

Suggested Citation

  • Nathan Chubaka Mushagalusa & Eddy Balemba Kanyurhi & Deogratias Bugandwa Mungu Akonkwa & Patrick Murhula Cubaka, 2022. "Measuring price fairness and its impact on consumers’ trust and switching intentions in microfinance institutions," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 27(2), pages 111-135, June.
    • Handle: RePEc:pal:jofsma:v:27:y:2022:i:2:d:10.1057_s41264-021-00102-3
    DOI: 10.1057/s41264-021-00102-3
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