INTRODUCTION
Background to the research
The Vietnamese banking sector is rapidly evolving and is projected to outpace many neighboring Asian countries in growth over the coming years, driven by state-led economic reforms since the late 1980s and the establishment of State-Owned Commercial Banks (SOCBs) The sector's transformation gained momentum following Vietnam's accession to the World Trade Organization in 2007, leading to significant liberalization These reforms, coupled with two decades of substantial economic development, present significant opportunities for both domestic and international banks, particularly in the retail banking sector.
Since early 2014, despite the lowest interest rates for enterprises since the 2009 government stimulus package, credit growth remains challenging as many businesses hesitate to secure loans Consequently, banks are increasingly focusing on personal loan services to boost their credit outstanding balance These services have gained popularity among individual customers due to their simple and convenient application processes The success of the retail banking sector hinges on maintaining strong relationships with customers and understanding their evolving needs, as the commercial banking industry recognizes individual customers as a significant and distinct market segment.
Customer loyalty is a vital strategic tool for banks aiming to attract new clients, retain existing ones, and foster strong relationships Researchers and marketers prioritize understanding the predictors and causal structure of customer loyalty Previous studies have demonstrated that customer participation significantly influences loyalty (Auh, Bell, McLeod & Shih, 2007; Ngo & O'Cass, 2013), highlighting its importance for marketers and managers in cultivating lasting customer relationships.
Research on bank choice behavior attributes, such as search, experience, and credence, has gained attention, yet the relationship between these attributes, customer participation, and customer loyalty remains underexplored This study aims to develop a model that examines the influence of bank choice behavior and customer participation on customer loyalty It empirically tests how bank choice behavior attributes affect customer participation and further investigates how these attributes, combined with customer participation, impact customer loyalty The following section will outline the statement of the problem.
Statement of the problem
The rising demand for personal loans presents a challenge for banks, which struggle to effectively attract new customers and retain existing ones A study exploring the impact of bank choice behavior and customer participation on loyalty can equip bank managers with targeted marketing strategies By understanding these dynamics, banks can implement methods to enhance customer loyalty and maintain their current clientele Additionally, examining the link between customer participation and loyalty enables banks to identify strategies that encourage greater customer involvement in transactions, ultimately boosting overall loyalty.
Research questions
This research aims to empirically examine the influence of bank choice behavior and customer participation on customer loyalty within Vietnam's retail banking sector As customers increasingly seek personal banking services and have a wider array of products to choose from, understanding the dynamics of bank choice, customer involvement, and loyalty becomes essential The study seeks to address key research questions related to these themes.
To what extent, do attributes of bank choice behavior (e.g search, experience and credence) and customer participation influence customer loyalty?
Between bank choice behavior and customer participation, which factor will most influence to customer loyalty?
Significance of the Study
This study has important implications for both practitioners (leaders of commercial banks, marketing managers) and academic (researchers, students of the business administration department) as follow:
This study enhances our understanding of bank choice behavior and customer participation, highlighting their roles in fostering customer loyalty The insights gained will enable commercial bank managers to develop effective strategies aimed at boosting customer loyalty and improving operational efficiency.
Marketing managers should analyze the factors influencing bank choice behavior to enhance customer loyalty in the personal loan sector, enabling them to develop effective communication strategies Additionally, the findings of this study serve as a valuable resource for researchers and students, guiding future research and practical applications in the field.
Research scope and delimitation
This study focuses on Ho Chi Minh City, a major economic hub in Vietnam, and surveys approximately 500 customers utilizing personal loan services from large domestic commercial banks Despite constraints in time and budget, the findings from this research may serve as a representative sample for Vietnam as a whole and provide valuable insights for future studies.
This research investigates how attributes of bank choice behavior and customer participation influence customer loyalty Utilizing a quota sampling method, which is a form of non-probability sampling, the study collects data to analyze these dynamics While the selected sample may not universally represent the entire population, carefully choosing controlled characteristics can enhance its relevance and applicability in practical scenarios.
Organization of the thesis
This thesis consists of five chapters, beginning with an introduction that outlines the research background, identifies the research problem, and states the objectives It also covers the scope of the research, its implications, and the overall structure of the thesis.
Chapter 2 reviews previous research on customer loyalty and customer participation Specifically, the chapter reviews the mediating role of customer participation model and theory of bank choice behavior and, how they are used in various contexts This chapter concentrates on explaining each variable in the model, and reasons for choosing them to be included in the research model
Chapter 3 introduces research methodology used to validate the research model in previous session It presents the research design, development of survey questionnaire, qualitative study, and main survey This chapter also presents how to collect data and analyze the data collected to test the research hypotheses proposed in chapter 2
Chapter 4 analyses data as well as discusses the result finding in connection with research model This chapter explains the empirical part of the study This part discusses the analyses of the data received, psychometric properties of focal constructs, and hypothesis testing
The last chapter, chapter 5 discusses implications and research limitations Finally, this thesis makes suggestions for further research on the topic area
References and appendixes are included in the end of thesis.
Bank choice behavior
The bank choice behavior model, rooted in the economics of information literature and later refined in the services context, identifies three key attributes influencing consumer decisions: search, experience, and credence Search attributes are evaluated prior to decision-making, allowing consumers to make informed choices According to Babakus et al (2004), these attributes play a crucial role in understanding consumer behavior in banking services.
When selecting a bank, it's essential to assess key search attributes such as interest rates on deposits and loans, overdraft privileges, fees and charges, working hours, and the availability of new banking services.
Experience attributes in banking can only be accurately evaluated after the service has been utilized Key factors include the helpfulness and attentiveness of tellers, the timely provision of services, the friendliness and expertise of bank employees, and the promptness of decisions made by authorized personnel.
Credence attributes refer to qualities that customers may find difficult to evaluate even after a transaction, often due to a lack of technical expertise or the absence of immediate indicators In the banking sector, these attributes include the confidentiality of customer banking information, the bank's integrity, its commitment to adopting the latest technology, and its overall operational effectiveness within the industry.
Figure 2.1 - Totally disaggregated second-order model of bank choice behavior
Customer participation
Numerous theories explore strategies for enhancing customer engagement in service production and distribution (Auh et al., 2007; Yi et al., 2011) Firat et al (1995) highlighted that customer participation can lead to the development of new services tailored to their needs Furthermore, customer involvement fosters long-term relationships between businesses and clients (Bendapudi & Leone, 2003; Payne et al., 2009) Companies increasingly focus on encouraging customers to share positive word of mouth, as this engagement transforms them into brand evangelists when they communicate their feedback to management.
Effective customer engagement is crucial for banks, as it leads to valuable insights that can shape product and service offerings While many managers recognize the importance of listening to customer feedback, few truly implement it beyond superficial efforts The potential benefits of actively seeking and valuing client input are often underestimated, yet the return on customer participation can significantly enhance business success.
Customer participation plays a crucial role in the production and supply of services, as highlighted by Dabholkar (1990) By integrating customers into the innovation process, companies can significantly enhance service quality and achieve greater market success Dagger & Sweeney (2007) emphasize that prioritizing service quality in the industry is essential, as it not only fosters positive customer behavior but also leads to increased market share, revenue, and profitability.
Customer participation, as defined by Lengnick-Hall et al (2000), involves customers actively engaging in an organization's operations, resulting in significant benefits This engagement not only helps organizations reduce costs—such as minimizing transaction errors and time in banking services—but also enhances customer satisfaction Furthermore, customer involvement can lead to lower product and service prices, thereby improving profitability and competitiveness Mills et al (1983) support this notion, asserting that customer participation boosts organizational productivity Additionally, it enables banks to tailor their offerings to meet customer desires, with direct consumer input playing a crucial role in service delivery High-contact services, like banking, legal, and medical services, exhibit characteristics such as continuous interaction, interdependence, and knowledge exchange (Kellogg and Chase, 1995) Notably, the benefits of customer participation extend beyond high-involvement services; even in low- and moderate-involvement contexts, customers appreciate having greater control over the service delivery process and the opportunity for enhanced customization (Bateson, 1985; Schneider and Bowen, 1995).
Customer participation plays a crucial role in co-creating value between companies and clients, as highlighted by Bendapudi & Leone (2003) and Ravald & Gronroos (1996) It allows customers to explore and recognize the benefits of their involvement, enhancing their shopping and consumer experiences (Prahalad & Ramaswamy, 2004) Furthermore, this active engagement not only aids customers in utilizing products and services but also empowers companies to refine and elevate the quality of their offerings As a result, businesses increasingly encourage customer collaboration to generate greater value through a mutually beneficial relationship.
Customer involvement in the service process, while beneficial in some aspects, can also present significant challenges, as noted by Krajewski et al (2010) Active participation may lead to inefficiencies, complicating the management of customer needs and the measurement of service quality Businesses might incur higher costs due to the need for skilled personnel to facilitate customer interaction Nevertheless, when customers engage actively, they often perceive greater value, as this involvement can lead to time and cost savings Increased client participation typically results in improved service quality, faster delivery, enhanced flexibility, and potentially lower prices Consequently, self-service options are becoming increasingly popular among various retailers, including supermarkets, gas stations, and banks.
Encouraging customer participation is essential for maximizing their competencies in innovation activities (Blazevic & Lievens, 2008) To inspire this involvement, businesses should establish ongoing relationships and collaborate closely with customers to ensure their needs are met In this context, customers are viewed as active partners in creating innovative offerings Therefore, to enhance service quality, companies must develop new strategies, such as social management and marketing innovations, to promote customer engagement, while also implementing effective monitoring and management processes throughout the journey.
Customer Loyalty
Customer loyalty is defined as the tendency to maintain positive attitudes towards a brand's products or services and the commitment to continue purchasing or using them (Bowen and Chen, 2001) Marketing experts emphasize that customer loyalty often holds greater significance than customer satisfaction (Cooil et al., 2007; Pleshco and Baqer, 2008) Additionally, loyal customers are more likely to overlook disappointments related to a specific brand or store, demonstrating a forgiving nature (Shankar et al., 2003).
Bendapudi & Berry (1997) identify two primary perspectives on customer loyalty: behavioral and attitudinal The behavioral approach defines loyalty as repeat purchasing, though customers may continue buying out of habit or due to barriers preventing them from switching suppliers, leading to a form of obligation-based loyalty without genuine affection for the supplier Conversely, the attitudinal perspective views loyalty as a psychological state influenced by the supplier's relational strategies, where customers willingly maintain relationships due to the benefits received This positive attitude towards the supplier fosters repeat purchasing behavior, indicating that true loyalty stems from the customer's intrinsic motivation to sustain the relationship (Caruana, 2004; Oliver, 1999).
This study conceptualizes supplier loyalty as a multidimensional construct, following Gremler et al (2001), which encompasses customers' future purchase intentions, their positive attitudes towards suppliers, and their perception of vendors as unique options for future needs To enhance customer loyalty, managers can adopt two key strategies: first, by ensuring customer satisfaction through quality products and services, thereby fostering a desire to maintain that satisfaction; and second, by creating barriers that hinder customers from switching to competitors As noted by Balabanis, Reynolds, and Simintiras (2006), if customers perceive market offerings as homogeneous, they are less likely to see benefits in changing providers, ultimately reducing the likelihood of abandoning their current supplier and increasing loyalty levels.
Research model and hypotheses development
Building upon prior research, Figure 2.2 integrates the focal constructs of the thesis with hypothesized relationships.
2.4.1 Bank choice behavior and customer loyalty
Nelson (1970, 1974) and Darby and Karni (1973) expanded on Stigler's (1961) economic information theory by exploring how different attributes affect customer search and experience They distinguished between search attributes, which customers can verify before purchase through direct checks or available information, and experience attributes, which can only be assessed after using the product (Ford et al., 1990) Additionally, Darby and Karni (1973) introduced credence attributes, which are challenging for customers to verify even post-use Products or services may encompass one, two, or all three attribute types; for instance, in personal loan services, interest rates represent search attributes, professional service quality reflects experience attributes, and staff integrity embodies credence attributes These attributes are crucial for addressing customer skepticism (Ford et al., 1990; Smith, 1990), informing marketing content (Norton and Norton, 1988), and evaluating trust and confidence (Wright and Lynch).
1995), and the important role of price in making choice services (Ostrom and Iacobucci, 1995)
Customer loyalty in banking is primarily established through customer satisfaction with the services offered, which can only be developed after experiencing the product Consumers can evaluate search attributes, such as interest rates and overdraft privileges, prior to purchasing, leading to lower skepticism regarding these claims Research by Hoch and Ha (1986) indicates that search attributes are clear and straightforward, allowing customers to compare the perceived quality of services between banks effectively Consequently, this study posits that changes in search attributes significantly impact customer loyalty.
Hypothesis 1: There is a positive effect of search attributes on customer loyalty
Experience and credence attributes of products and services are challenging for customers to assess before use, as noted by Darby and Karni (1973) and Nelson (1974) According to Kirmani and Wright (1989), Shapiro (1983), and Wernerfelt (1988), customers must engage with a product or service to evaluate its attributes effectively Prior to use, customers often rely on other features to infer quality, but even after use, credence attributes remain difficult to assess Consequently, customers form perceptions based on their experiences, which can shift after trying the service For instance, if two services differ only by the bank's name, a trial can diminish loyalty to the lower-quality bank while enhancing loyalty to the higher-quality one This leads to the hypothesis that experience and credence attributes positively influence customer loyalty.
Hypothesis 2: There is a positive effect of experience attributes on customer loyalty Hypothesis 3: There is a positive effect of credence attributes on customer loyalty
2.4.2 Bank choice behavior and customer participation
Customer experience encompasses the accumulated knowledge regarding service performance and the comparative value of similar offerings from different providers This heightened experience enhances customer engagement for multiple reasons As customers become more familiar with a product type, they can more effectively assess where they can contribute Moorthy et al (1997) support this notion, suggesting that increased experience enables customers to better evaluate the distinct attributes of various service options.
Experienced customers are more capable of contributing effectively to service production, as their familiarity enhances their confidence in decision-making In contrast, inexperienced customers often perceive a higher risk in their choices, leading to reluctance in participation due to fears of suboptimal results Additionally, experienced customers tend to have a stronger desire for control over the service delivery process, which further motivates their involvement in production activities.
The process of bank choice behavior involves customers engaging in a journey that includes searching for information, experiencing services, and establishing trust Effective communication, as defined by Sharma and Patterson (1999), plays a crucial role in this interaction, facilitating the exchange of meaningful and timely information between clients and bank staff in an empathetic manner In the financial context, this communication encourages clients to participate in the loan process, seek service information, clarify their understanding of products, and receive timely responses from bank representatives A strong communication flow is essential for building trust and managing client expectations by addressing their queries and concerns Consequently, it is anticipated that the interaction between advisors and clients will enhance customer participation, leading to a greater willingness to share sensitive information.
Hypothesis 4: There is a positive effect of search attributes on customer participation Hypothesis 5: There is a positive effect of experience attributes on customer participation
Hypothesis 6: There is a positive effect of credence attributes on customer participation
2.4.3 Customer participation and customer loyalty
Customer participation is essential in the service creation and delivery process, emphasizing the importance of meaningful and cooperative contributions In the context of financial services, this participation includes clients preparing for meetings with advisors, actively providing input during decision-making, and responding promptly and accurately to requests for information from their advisors.
Customer participation offers numerous advantages, such as reduced prices, increased purchasing opportunities, and greater flexibility in product configuration It can lead to shorter waiting times and enhanced customization options However, the relationship between customer participation and perceived value is not always straightforward Companies have less control over training customers for effective participation compared to service employees, which can introduce uncertainty into transactions Some customers may find the effort required for co-production burdensome and may withdraw from the process Nonetheless, many customers view their involvement in service creation as valuable, particularly in today's landscape of informed and empowered consumers Research indicates that customer compliance, a key aspect of participation, is closely linked to customer satisfaction, fostering mutual understanding that elicits positive emotional responses These experiences contribute to customer satisfaction, which is vital for building loyalty to an organization Thus, it is essential to measure both attitudinal and behavioral loyalty in this context.
Attitudinal loyalty reflects clients' intentions and commitment to an organization, while behavioral loyalty, particularly in financial services, quantifies the brokerage fees clients pay to the firm within a year after a survey Based on these loyalty measures, the study proposes a hypothesis that integrates these concepts.
Hypothesis 7: There is a positive effect of customer participation on customer loyalty
Figure 2.2 - The proposed research model with hypotheses
Research design
This study employs a two-phase research design, beginning with qualitative research to identify models, factors, and appropriate measurement variables specific to Ho Chi Minh City (HCMC) A questionnaire was developed based on previous research and subsequently tested in a pilot study to ensure the relevance and clarity of the questions The second phase involves a quantitative survey aimed at assessing the impact of bank choice behavior and customer participation on customer loyalty within the retail banking sector's personal loan services.
Research process includes the steps as illustrated in Figure 3 (Steiger, 1990; Albright, 2006; Schumacker at all, 2006)
Development of questionnaire
The measurement scales used in this study is multi-item five point Likert scales, which were well-established in the extant literature
3.2.1.1 Measure of search, experience and credence
Bank choice behavior is assessed through twenty-one items divided into three components: eight items related to search, seven items focused on experience, and six items concerning credence These items reflect the application of knowledge in the decision-making process for selecting a bank, as highlighted in previous literature (Babakus et al., 2004; Devlin, 2002) The measurement will utilize a five-point Likert scale, with responses ranging from strong disagreement to strong agreement.
Table 3.1 - Measurement scales of bank choice behavior
Construct Coding of variables Items Short describe
SA1 1 I always search interest rates on loans information of banks before I make decision of using services Interest rate
SA2 2 I usually ask banks what is the type of collateral the bank will accept to secure my loan? Collateral requirements
SA3 3 I usually ask banks whether they willing offer me an overdraft privileges account (unsecured) Overdraft privileges
SA4 4 I usually compare fee structure between banks when I use their services Fees structure
SA5 5 I always consider bank transaction hour whether it fixes with my times to do transaction at banks Banking hour
SA6 6 I usually make a research if banks have got new services which have advantages for me New bank services SA7
7 I consider whether branch location near my house or not Branch location
8 I consider the bank that I use personal loan services is a well-known or little-known Image/reputation
EA1 1 Bank X’s staffs serve me with friendliness and attentiveness friendliness and attentiveness
EA2 2 Bank X provides services in a timely manner Timely manner of service provision EA3 3 Bank X’s staffsare always willing to listen to me Willingness to listen
EA4 4 Bank X’s staffs present their professional in all services expertise
EA5 5 Bank X gives me a specific period for my application approval period for application
EA6 6 Bank X serves me quickly and efficiently Speed of dicision
EA7 7 Bank X does not require me so much un-need documents Absence of bureaucratic procedures
Credence attributes CRE1 1 I think that bank staff always has up to date knowledge of bank products
Up to date knowledge of bank products
CRE2 2 I feel that bank staff always show their integrity when
I take transaction at bank Integrity of loan officer
CRE3 3 I see that bank staff has got knowledge of the market when they converse with me Knowledge about the market
CRE4 4 I believe that bank staff always keeping my private information in safely status Information confidential
CRE5 5 When I use services at my bank, bank staff usually introduces to me new technological advancements
Help customer up date new technological advancements
CR6 6 I believe that my bank has enough competence in the business
Competence in the business of banking
Customer participation consists of six items These items refer to the application of knowledge in customer participation from the literature (Ngo & O'cass, 2013; Auh at al., 2007;
Chan at al., 2010) This construct will be measured on a five-point Likert scale with scale poles ranging from strong disagree to strong agree
Table 3.2 - Measurement scales of customer participation
Construct Coding of variables Items Short describe
1 I spent a lot of time sharing information about my needs and opinions with the staff of bank X during the service process
2 I put a lot of effort into expressing my personal needs to the staff of bank X during the service process
CP3 3 I always provide suggestions to the staff of Bank
X for improving the service outcome Suggestions for improving
CP4 4 I have a high level of participation in the service using process of bank X Level of participation
5 I am very much involved in deciding how the services should be provided when dealing with bank X
Customer loyalty is defined by four key components derived from existing literature (Auh et al., 2007) This concept will be evaluated using a five-point Likert scale, where respondents can express their level of agreement ranging from strong disagreement to strong agreement.
Table 3.3 - Measurement scales of customer loyalty
Construct Coding of variables Items Short describe
CL1 1 I will apply more loan amount at bank Xin the future Willing to use more
CL2 2 I will continue to use bank X for my needs in the future
Willing to continue using services
I am highly inclined to explore additional services offered by Bank X, as I frequently rely on them for most of my transaction needs.
In summary, based on the previous research and after refinement, 30 variables are select and group in fours indenpent variables and a dependent variable
A five-point Likert scale questionnaire was utilized to gather data on the research model's factors To ensure content validity, most items were adapted from prior studies Specifically, the items assessing search, experience, credence, customer participation, and customer loyalty were sourced from existing research, as detailed in section 3.2.1.
Structure of questionnaire consists of three main parts:
Part 1: General information of customers who have used personal loan services This information helps select the target respondent to study
The research utilized a 5-point Likert scale to measure responses, ranging from 1 (strongly disagree) to 5 (strongly agree) This scale facilitated the collection of nuanced data on participants' opinions regarding the proposed statements.
Part 3: Questions on demographics characteristics are included at the end of the questionnaire
The survey questions were translate from English to Vietnamese by the researcher and asked to edit by others.
Pilot study
This step clarifies key concepts and details related to the measurement scale centered on customer opinions, allowing for essential adjustments to strengthen the scale's effectiveness Additionally, it presents opportunities to incorporate new ideas and items, thereby enhancing the research model and measurement scale.
A pilot study was conducted using qualitative research methods to adapt previously established scales for this research The aim was to collect information and refine the variables within these scales Additionally, the Vietnamese language wording for these scales was carefully examined to ensure that respondents clearly understand the questions, minimizing any potential confusion.
A pilot test was carried out at the Ho Chi Minh branch of Shinhan Bank, where 10 questionnaires, translated into Vietnamese, were distributed to three banking experts and seven customers, all of whom possessed extensive knowledge and experience in retail banking services Following their feedback, minor adjustments were made to the questionnaires to enhance clarity and ensure better understanding among respondents.
After refining the initial questionnaire, it was tested on a small sample of fifteen convenient respondents to identify any unclear aspects All participants comprehended the questionnaire well and understood how to respond Consequently, the final version was prepared for a broader survey, leading to the implementation of the main survey.
Sample method
The target audience for this study consists of banking customers utilizing personal loans from various banks in Ho Chi Minh City, Vietnam's largest city Given constraints in time and budget, the research will focus on approximately 500 respondents.
Researchers often employ the quota sampling method for data collection, which is a form of non-probability sampling While this method does not allow for the generalization of the sample to the entire population, it can still yield representative results if the right controlled characteristics are chosen When the population is divided based on these characteristics, the elements within each group tend to exhibit high homogeneity, allowing the non-probability selected sample to reflect the population to some extent Consequently, quota sampling is a widely used technique in scientific theory testing and applied research, particularly when a sampling frame is unknown (Nguyen Dinh Tho, 2012).
This research focuses on control characteristics such as location, personal loan service usage, gender, and age in Ho Chi Minh City The location was determined by targeting individuals with bank accounts in the city, while personal loan service usage was assessed through a Yes/No questionnaire Gender and age data were utilized to accurately calculate the sample rate, based on the 2009 population census in Ho Chi Minh City and the principles of quota sampling The findings of this study are presented in detail.
Table 3.4 - calculating sample with quota sampling method
The study involved a sample divided into 14 groups based on age, ranging from 25 to 59, and gender (male and female) To analyze the data, the research utilized Exploratory Factor Analysis (EFA), Confirmatory Factor Analysis (CFA), and Structural Equation Modeling (SEM) Many researchers in this field concur that a large sample size is essential for these methods, as they rely on robust statistical foundations.
Age Total Sample Man Women Sample % Man % Women
No Age Gender % in sample
The determination of an appropriate sample size for studies involving women aged 55-59, which constitutes 4% of a large sample distribution, remains unclear (Raykov & Widaman, 1995) Furthermore, the required sample size is influenced by the estimation method employed, such as Maximum Likelihood (ML), Generalized Least Squares (GLS), or Augmented Dickey-Fuller (ADF).
Researchers have emphasized the importance of sample size in statistical modeling, indicating that it is possible to calculate the necessary sample size (N) based on the number of variables, constructs, and the desired level of statistical power (Kim, 2005; MacCallum, Browne, & Cai, 2006) Additionally, studies suggest that having three or more indicators per factor typically requires a minimum sample size of 100 respondents to achieve convergent validity, while a sample size of 150 is often adequate for both convergent and proper solutions (Anderson & Gerbing, 1984).
In Exploratory Factor Analysis (EFA), determining the appropriate sample size is crucial and is influenced by both the minimum size and the number of variables involved According to Hair et al (2006), a sample size of at least 50 is necessary, with a preference for 100 participants, and a recommended observation-to-variable ratio of 5:1 For instance, with 30 observed variables measuring customer loyalty, a minimum sample size of 150 is required (30 variables x 5 observations each) If using Maximum Likelihood (ML) estimation, the sample size should range from 100 to 150, as noted by Hair et al (1998) Therefore, this study's sample size of 466 meets these essential criteria for effective EFA.
Questionnaire administration
The study involves gathering responses through both an online survey and direct interactions The researcher distributed 100,000 emails to Vietcombank and Shinhanbank account holders residing in Ho Chi Minh City and conducted direct surveys with 50 individuals at Vietcombank.
Between August 10 and August 21, 2014, the Ho Chi Minh Branch conducted a survey, receiving responses from 550 customers online and 31 customers through direct interactions To align with the gender and age distribution established by the quota sampling method, the researcher ultimately selected 466 respondents for data analysis.
Data analysis methods
All completed questionnaires were thoroughly reviewed, coded, and entered as raw data into IBM SPSS Statistics The reliability and validity of the measurement scales were assessed using Cronbach’s alpha test for reliability analysis, along with exploratory factor analysis (EFA) and confirmatory factor analysis (CFA) Subsequently, structural equation modeling (SEM) was employed to interpret the results from both managerial and statistical perspectives A list of the codified variables can be found in Appendix 1.
Descriptive analysis
The study comprised a sample of 466 respondents, including 48 men aged between 25 and 29 years, as detailed in the table below The distribution of respondents aligns with the quota sampling method outlined in Section 3.4.
Table 4.1 - Descriptive statistic of respondent’s characteristics
No Age Gender Frequency Valid Percent
According to income variable, there were 70 persons have income equal or higher VND
In a recent income analysis, it was found that 20 million VND per month represents 15% of the population Additionally, 51 individuals earn between 15 and 20 million VND monthly, accounting for 10.9% Meanwhile, 104 people have monthly incomes ranging from 10 to 15 million VND, making up 22.3% of the total Furthermore, 241 individuals earn between 5 and 10 million VND per month.
Among the respondents, 128 individuals held postgraduate degrees, representing 27.5%, while 324 participants had bachelor's degrees, accounting for the highest percentage at 69.5% Additionally, 14 respondents had completed high school, making up 3.0% of the total The majority of respondents possessed a high level of education, which facilitated their understanding of the questionnaires and contributed to accurate responses.
Of 466 respondents, 136 persons in single status, counted 29.2%; 317 persons in married status, counted highest 68% and 13 persons in other status, counted 2.8%
Table 4.2 - Descriptive statistic of respondent’s characteristics
Reliability analysis
According to George and Malley (2003), Cronbach‟s alpha is used as criterion for judging instruments or scales It only indicates if the items “hang together”; it does not
Name of variable Descriptions Frequency Percent Valid Percent
15 - 0.3 are considered to reach a minimum, Factor loading
>0.4 are considered important, ≥0.5 were considered to have practical significance Hair at all
According to guidelines from 1998, a sample size of at least 350 is required if the factor loading exceeds 0.3 For a sample size of approximately 100, the factor loading should be greater than 0.55, while a sample size around 50 necessitates a factor loading greater than 0.75.
In research, only factors with an eigenvalue of 1 or higher are considered significant, while those below this threshold are disregarded (Lee & Hooley, 2005, p.376) Consequently, factors with eigenvalues exceeding 1 are retained, and factor loadings of 0.3 or above are deemed relevant.
Kaiser-Meyer-Olkin (KMO) is a criterion that assesses the suitability of conducting Exploratory Factor Analysis (EFA), with values ranging from 0.5 to 1 indicating appropriateness Additionally, Bartlett's test evaluates whether the correlation among observed variables approaches zero in the population A statistically significant result (Sig < 0.05) from this test suggests that the observed variables are indeed correlated within the population.
So, researcher should be EFA with the following condistions:
- Using Principal Axis Factoring method with Promax rotation
- Factor Loading of every item must be > = 0.5
- In each item, the difference between | Factor Loading |'s largest and | Factor Loading | any should be > = 0.3 (Jabnoun & Al-Tamimi, 2003)
- Cumulative % of Extraction Sums of Squared Loadings > = 50% (Gerbing & Anderson,
- KMO> = 0.5, Bartlett testing had statistically significant (Sig 0.5); and statistically significant (P
