TITKO JELENA, LACE NATALJA, KOZLOVSKIS KONSTANTINS: Service quality in banking: developing and testing measurement instrument with Latvian sample data. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 2013, LXI, No. 2, pp. 507-515 The paper highlights the importance of managing service quality in banking that can positively aff ect customer satisfaction. The goal of the given study is to develop an instrument for measuring service quality perceived by Latvian banks' retail customers and to determine the most important contributors to customer satisfaction. To achieve this purpose, randomly selected customers of Latvian banks were surveyed, using the authors' developed questionnaire. The proposed instrument was tested for reliability and validity, using techniques of confi rmatory factor analysis. Exploratory factor analysis yielded fi ve service quality dimensions (factors) that allowed constructing customer satisfaction factor model EPICA: E -expenses, P -product, I -image, C -competence and emotional intellect, A -access. The subsequent correlation analysis revealed that the strongest relationship is between customer satisfaction and C factor. The results of the current research are crucially important for Latvian banks' executives because the majority of previous studies in the related fi eld off ered measurement scales adequate for measuring service quality in other industries. Besides, the proposed questionnaire is exclusively developed for Latvia and considers Latvian banking sector specifi cs. retail banking, service quality, factor analysis, EPICA model