RELATIONSHIP BETWEEN DEBT COLLECTION PRACTICES AND CUSTOMER SATISFACTION IN FINANCIAL INSTITUTIONS IN SOMALIA

Abstract

Customer satisfaction is crucial for performance of financial institutions hence the need to understand the factors that influence it. The relationship between debt collection strategy and customer satisfaction in financial institutions in Somalia was investigated through a cross sectional survey of 215 respondents from whom data was collected using a structured questionnaire. Specifically, the effect of reactive and proactive debt collection strategy as well as that of debt collection behavior on customer satisfaction in financial Institutions in Somalia was examined. Both descriptive and inferential statistics were used to analyze data and all hypotheses were tested at 5% significance level where reactive debt collection strategy and debt collector behaviour had a significant positive relationship with customer satisfaction. However, proactive debt collection strategy did not significantly influence customer satisfaction. It was recommended that financial institutions in Somalia should focus on enhancing their reactive debt collection strategies and debt collector behaviour to improve overall performance through customer satisfaction.