Exploring the influence of service quality and trust on customer loyalty mediated by satisfaction: An expectation-confirmation theory approach

This study examines the influence of service quality and trust on customer loyalty, with customer satisfaction as a mediating variable, in the context of Village-Owned Enterprises (BUMDes) in Jembrana Regency, Indonesia. Grounded in Expectation-Confirmation Theory (ECT), the research employs a quantitative approach using Structural Equation Modeling with Partial Least Squares (SEM-PLS). Data were obtained from 98 respondents who are active BUMDes customers. The analysis indicates that service quality and trust both exert significant positive effects on customer satisfaction and loyalty. Moreover, satisfaction plays a role as a partial mediator in strengthening the relationship between these antecedents and loyalty. These findings highlight the central role of satisfaction in transforming quality services and institutional trust into long-term loyalty outcomes. The study contributes to the literature on rural financial services by validating ECT in the BUMDes context and offers practical implications for improving service delivery and enhancing customer retention strategies.