How small business firms select a bank: Survey findings

Figure 1 reports the weighted average rank scores obtained in the two separate countries and Figure 2 shows the differences in weighted average rank score for each of the 14 bank selection criteria. The actual weighted average rank scores used to construct these figures are given in the Appendix at the end of the paper. In Figure 1, the Australian rankings are charted at the top (the dark shaded rectangle) and the US rankings are charted on the bottom (the lighter shaded rectangle). In Figure 2, if the US small business firms ranked an individual factor higher than the Australian small business firms, the shaded rectangle is to the right of centre, and if the Australian small business firms ranked it higher, the shaded rectangle is to the left of centre.

As can be seen in Figure 1, the three most important bank selection criteria for small business firms in the United States were factors I, H and B (willingness to accommodate credit needs, convenient location and product and service delivery). These were the three criteria receiving the highest weighted average rank score and in each case the score exceeded 0.7. In the simplest sense, a weighted average rank score greater than 0.7 implies that over 70 per cent of the small business firms in the survey selected the individual criteria as one of their top three concerns. Factors selected by less than 70 per cent of respondents would not appear to be as important to small business firms as a whole.

Figure 1 Weighted average factor rankings

Small business firms in Australia were also interested in the bank’s willingness to accommodate their credit needs (factor I). On the other hand, they seemed equally interested in factors F, A and C (the ability of the bank to provide a long term business relationship, competitive prices and efficient day-to-day operations). In the case of the Australian firms, only these four selection criteria received a weighted average rank score great than 0.7.

Figure 2 Difference in weighted average rank scores

As can be seen in Figure 2, American small business firms consider four criteria as being more important in the bank selection process than their Australian counterparts. They are:

—   product and service delivery (factor B)

—   convenient location (factor H)

—   the bank’s financial health (factor M)

—   a personal banking relationship (factor G).

On the other hand, Australian small business firms consider three different bank selection criteria as being more important. They are:

—   the ability of the bank to provide a long- term business relationship (factor F)

—   efficient day-to-day operations (factor C)

—   competitive prices (factor A).

Not only were the signs of the differences between weighted average rank scores

between both countries positive (shaded area to the right) and negative (shaded area to the left), respectively, each of these factors was determined to be statistically significant at a .05 level of significance. While the weighted average rank scoring system and Student-t testing procedures for identifying significant criteria may be subject to criticism, work by the authors found similar results when the data were analysed using categorical measures and a non-parametric Z-test of differences between cumulative factor proportions.