Researching customer behavior is a topic of recent research interest. From the perspective of managers, bank salespeople, the study of customer behavior helps banks easily access and increase the influence of their products. Sharing the same view, the main purpose of this research is to investigate the borrowing behavior of individual customers in housing loan. In the research a conceptual model was proposed after an extensive review of the literature. Data was collected from 156 individual customers of Joint Stock Commercial Bank for Investment and Development of Vietnam - Dong Da Branch. Descriptive statistics and Logistic Regression were applied to analyze and confirm the conceptual model proposed in this research. The research finds the decision-making process of customers when choosing a loan is a complex process but can be modeled through 5 steps: need recognition, information search, alternative evaluation, purchase decision, post-decision evaluation. Furthermore, borrow interest and cost, service quality and bank policies are the factor affecting the decision to borrow the housing loan at BIDV Dong Da. The research can be used for a reference aim and reliability suggestions to enhance the decision of borrowing the loan at BIDV Dong Da. The researcher also gives out some recommendations including (i) increase competitiveness by price; (ii) enhance service qualities; (iii) reduce and simplify bank policies; and (iv) apply marketing project.
NATIONAL ECONOMICS UNIVERSITY BUSINESS SCHOOL CAO HAI DANG BORROWING BEHAVIOR OF HOUSING CUSTOMERS IN BIDV DONG DA MASTER OF BUSINESS ADMINISTRATION THESIS HANOI – 2021 NATIONAL ECONOMICS UNIVERSITY BUSINESS SCHOOL CAO HAI DANG BORROWING BEHAVIOR OF HOUSING CUSTOMERS IN BIDV DONG DA MASTER OF BUSINESS ADMINISTRATION THESIS SUPERVISOR: ASSOC PROF PHD TRAN THI VAN HOA HANOI – 2021 ACKNOWLEDGEMENTS I would like to express my special thanks to my supervisor Assoc Prof PhD Tran Thi Van Hoa for his guidance and immense knowledge that contributed to my study and helped me a lot in all the time of my study and writing this thesis My gratitude to Cua Nam Transaction Department of Joint Stock Commercial Bank for Investment and Development of Vietnam – Dong Da Branch for allowing me to approach the respondents and providing me the information needed for the thesis I would like to acknowledge the Business School for their continuous supports and instructions during my time in this MBA program Finally, I am extremely grateful to family who are always giving me encouragements, supports and advices throughout my life Cao Hai Dang December 2021 TABLE OF CONTENTS ACKNOWLEDGEMENTS STATUTORY DECLARATION LIST OF FIGURES LIST OF TABLES EXECUTIVE SUMMARY CHAPTER INTRODUCTION 1.1 Rationale 1.2 Research Objectives .3 1.3 Research Questions 1.4 Research Methodology 1.4.1 Research Process 1.4.2 Data collection method 1.4.3 Data analysis method 1.5 Research Scope .6 1.6 Structure of thesis CHAPTER 2: THEORETICAL BACKGROUND ON BORROWING BEHAVIOR OF HOUSING CUSTOMERS IN COMMERCIAL BANK 2.1 Consumer Behavior and Consumer Decision Making Model 2.1.1 Consumer Behavior .8 2.1.2 Consumer Decision Making Model 2.2 Factors affecting decision making process of consumers 14 2.3 Experiences in studying borrow behaviors of housing customers 16 2.3.1 Studying of environmental influences and individual differences factors towards borrow behaviors 16 2.3.2 Studying of factors that affecting customer decision to borrow the housing loan 19 2.4 Proposed research model for analyzing borrowing behavior of housing customers .21 2.4.1 General model for of decision-making for analyzing customer borrowing behavior .21 2.4.2 Proposed research model for analyzing customer decision of borrowing loans .21 2.4.3 Measurement design for variables of the proposed research model 24 CHAPTER 3: ANALYZING BORROWING BEHAVIOR OF HOUSING CUSTOMERS IN BIDV DONG DA 26 3.1 Overview of Joint Stock Commercial Bank for Investment and Development of Vietnam .26 3.1.1 General Information 26 3.1.2 Establishment and Development History 26 3.1.3 Organizational Structure and Management Structure of BIDV 28 3.1.4 Main Business Activities .29 3.1.5 Financial and business performance 33 3.2 Overview of BIDV Dong Da Branch 34 3.3 Analyzing borrow behavior of housing customer at BIDV Dong Da 38 3.3.1 Demographic overview of respondents .38 3.3.2 Analyzing borrow behavior of housing customers in Need recognition stage 39 3.3.3 Analyzing borrow behavior of housing customers in Information search stage 42 3.3.4 Analyzing borrow behavior of housing customers in Evaluate alternatives stage 44 3.3.5 Analyzing borrow behavior of housing customers in Decision stage 45 3.3.6 Analyzing borrow behavior of housing customers in After purchase stage 56 3.4 Summary of Findings 57 CHAPTER 61 SOLUTION IN ENHANCE BORROWING DECISION OF HOUSING CUSTOMERS IN BIDV DONG DA 61 4.1 Solution to identity more customers 61 4.2 Solution to increase competitiveness by price 62 4.3 Solutions to increase service qualities 62 4.4 Solution to improve procedures and policies .63 4.5 Limitation & further research direction 64 REFERENCES APPENDIX STATUTORY DECLARATION I herewith formally declare that I myself have written the submitted Master’s Thesis independently I did not use any outside support except for the quoted literature and other sources mentioned at the end of this paper Hanoi, / /2021 LIST OF TABLES Table 1: Measurement design applied in this research 24 Table 2: Funds mobilized as of December 31, 2020 .30 Table 3: Outstanding loans by term in the period of 2018-2020 31 Table 4: Results of foreign exchange business in the period of 2018 – 2020 32 Table 5: Results of BIDV's international payment activities in the period of 2018-2020 .33 Table 6: Some key business performance indicators 2019-2020 33 Table 7: Details of financial indicators in 2018-2020 34 Table 8: Respondents Demographic Profile 38 Table 9: Average values of independent variables 45 LIST OF FIGURES Figure 1: The five stages of traditional consumer decision-making model 12 Figure 2: BIDV Organizational Structure .28 Figure 3: Organizational structure of Dong Da Branch 35 Figure 4: Net income of Dong Da Branch from 2018 to 2020 .36 Figure 5: Dong Da Branch Housing Loan scale and efficiency 37 EXECUTIVE SUMMARY Researching customer behavior is a topic of recent research interest From the perspective of managers, bank salespeople, the study of customer behavior helps banks easily access and increase the influence of their products Sharing the same view, the main purpose of this research is to investigate the borrowing behavior of individual customers in housing loan In the research a conceptual model was proposed after an extensive review of the literature Data was collected from 156 individual customers of Joint Stock Commercial Bank for Investment and Development of Vietnam Dong Da Branch Descriptive statistics and Logistic Regression were applied to analyze and confirm the conceptual model proposed in this research The research finds the decision-making process of customers when choosing a loan is a complex process but can be modeled through steps: need recognition, information search, alternative evaluation, purchase decision, post-decision evaluation Furthermore, borrow interest and cost, service quality and bank policies are the factor affecting the decision to borrow the housing loan at BIDV Dong Da The research can be used for a reference aim and reliability suggestions to enhance the decision of borrowing the loan at BIDV Dong Da The researcher also gives out some recommendations including (i) increase competitiveness by price; (ii) enhance service qualities; (iii) reduce and simplify bank policies; and (iv) apply marketing project 61 with the advantage of interest rates and service quality often have stricter approval rules, so not all customers can access them Similarly, in many cases, a project allows only a few banks to access loans, thereby limiting the bank's ability to reach customers and limit the customer's choice of loans Branding and Marketing have less impact on the customer's loan decision This can be explained by the specific nature of borrowing money, which is a choice that needs to be carefully considered, so customers not rely only on the initial impressions that the brand brings and ignore the other characteristics other of the loan In addition, it may also be due to the special characteristics of Asian homebuyers who have traditionally chosen carefully and carefully with large assets associated with their lives 62 CHAPTER SOLUTION IN ENHANCE BORROWING DECISION OF HOUSING CUSTOMERS IN BIDV DONG DA From the perspective of the Bank - the lenders, the BIDV Dong Da managers should consider more about the psychology of the customer's loan choice, specifically some policy suggestions as follows: 4.1 Solution to identity more customers - Intensify the existing customers: (i) Credit customers: Regularly review the average usage rate of products and services per customer to increase sales, review multi-year fee exemptions and reductions, especially for customers who not guarantee the total benefit (ii) Customers who not have a credit relationship: As potential customers who have not used many banking services, they need to focus on promoting sales - Developing target customers, new customers: (i) Individual customers: identifies target customers by age, industry, and region for branch access to sell Developing a new customer base from a customer base of partners who are large corporations and corporations, from customers who use bill payment services but have not opened account at BIDV - Promote cross-selling, promote sales at the customer care center: The head office regularly informs the list of potential customers and the branch delivery to approach and promote sell - Collecting, enriching, cleaning and standardizing accurate customer information is a mandatory requirement, the basis for implementing policies to personalize products, prices, and customer care to improve quality, service quality and make a difference and impression on customers 63 4.2 Solution to increase competitiveness by price The branch should regularly learn about interest rates in the market, thereby assessing the competitiveness of their lending products compared to competitors However, banks are not required to compete with interest rate policies There are many preferential tools in interest and fee policy that many banks apply today Typically, the policy of customer segmentation, which offers incentives for priority customer groups, such as customers with good financial capacity, large customers who have used many products Banks should also offer flexible interest rate policies and more options for customers BIDV Dong Da need to change the fee policy by customer group towards personalizing the benefits, contributions, and behavior of customers for the bank, research on pricing of products and services according to customary practices for some products 4.3 Solutions to increase service qualities Service quality is the main positioning factor of the Bank, a counterweight to the price policy To improve the quality of customer service, the first is to enhance the professionalism of the staff, who work directly with customers Customers always want to work with bankers who have a good consulting background, understand their needs and make the best choices for them Besides, the experience when coming to work at the Bank is also very important The facilities at the banking institution should also be designed in a synchronous, convenient and modern manner The bank's information technology systems also need to be operated accurately and easily when customers need to query information related to their loans BIDV Dong Da should motivate reward and honor collectives and 64 individuals that perform well in service quality to create motivation in the implementation and replication of practices in the branch Timely apply sanctions for violations and publicly announce them at the Branch for all staff to grasp and self-correct The branch should research and designs a suitable area for VIP customers (VIP area), synchronize transaction points, improve parking locations, have a car park or have a signboard to guide customers to convenient parking spots for customers to transact BIDV Dong Da also should proactively train qualified and standard transaction styles for tellers and customer service managers, arrange to serve customers in the right order, and comply with BIDV's transaction regulations to minimize waiting time for customers' transactions row Bank staff need to increase using professional sales software and online product to enhance the image of professional sales, increase sales efficiency On the other hand, the branch also need to develop a standard training system/framework for sales staff and customer relations officers to improve service quality, in which to promote training on products and sales skills to meet customer needs banks that not have a credit relationship, use banking services, organize sales certification exams 4.4 Solution to improve procedures and policies The credit policy of each bank is related to the risk appetite for each of those credit sectors However, for the residential lending sector of individual customers, the level of risk is lower than that of other lending sectors Therefore, in order not to miss the opportunity to approach customers, managers also need to periodically review and adjust their credit policies, remove points that are no longer suitable, make recommendations, build new more suitable products BIDV Dong Da’s credit policy should also pay 65 attention to, ensure the interests of customers, should not be too tight and cause losses to borrowers On the other hand, BIDV Dong Da also need to develop forms to communicate their policies to customers, ensure that customers can easily access and understand those policies, feel the respect of the bank's customers BIDV Dong Da should review, upgrade and add features and utilities of current products to improve product quality and increase competitiveness by: - Develop new products, in which: Promote specialization of products and services according to the specific needs of customer groups, develop differentiated products for wealthy customers, and create demand for customers customer - Modify the product and service development process in the direction of: Separating common products from technology-applied products, and fast innovative products - Enhance the responsibility of the branches in product research and design while supplementing and enhancing the customer's experience before selling to the public 4.5 Limitation & further research direction Although marketing policy does not have a strong impact on loan choice by other factors, besides customer psychology, it may also be partly because bank managers have not paid attention to them This work is to attract borrowers In fact, real estate businesses are doing very well in communicating and marketing their projects and attracting many customers The bank also has many solutions to this problem, such as linking with housing projects, promoting brand recognition or even implementing automated consulting programs on banking applications electronically, helping customers easily access and find project information and loan policies 66 as soon as the need arises Within the research scope of the topic, the limitation of the scope and research object may affect the results and analytical judgments The initial results gave the author basic judgments about the role and influence of factors on individual customers' decision to borrow a house The author also encourages further research on this issue, with a broader scope of research, from which to have the most objective and accurate assessments, contributing to the product planning process and quality improvement of housing loan products REFERENCES (1) Doanh N T (2017) Nghien cuu cac nhan to anh huong den quyet dinh vay von cua khach hang ca nhan doi voi Ngan hang Thuong mai Co phan Viet Nam Thinh Vuong - Chi nhanh Da Nang (2) Frangos, C C (2012) et all Factors Affecting Customers’ Decision for Taking out Bank Loans: A Case of Greek Customers, Journal of Marketing Research & Case Studies, Vol 2012, Article ID 927167 (3) Ismail, S (2018) et all Empirical 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Section Demographic Please choose and tick one (✓) to the suitable answer: Are you male or female? o Male o Female How old are you? o Equal or less than 30 years old o 31 – 40 years old o 41 – 50 years old o More than 50 years old What is your marital status? o Marriage o Single o Others What is job category? o Small business o Business owners o Employment o Home, retirement What is your monthly income? o o o o < 10 million VND 10 - 20 million VND > 20 - 30 million VND > 30 million VND How many years have you been transacting at BIDV? o < year o – years o – 10 years o > 10 years Section Questionnaires Please choose and tick one (✓) to the suitable answer: How many houses have you own? o o o o Not yet More than 2 The purpose of your home loan: o Buy for yourself to live in o Buy for other people to live in o For rent/investment How many bank loans you have ever had? o o o o None to loans to loans More than loans How you describe your financial management ability and understanding of financial products and services? o o o o o Excellent Good Normal Low Bad When consider borrow house loan, from which source you find out information about bank loans? You can choose multiple answers Personal experience Friends, relatives Advertising in mass media Internet Find out directly at the bank When consider borrow house loan, the average number of banks you search for loan information: o to banks o to banks o More than banks When consider borrow house loan, your research time until all necessary information is collected: o Within week o From week to month o Over month Please rate your preference for the following types of loans (numbering the options from to 4, with equivalent most preferred)? ( ) Borrow from a family member ( ) Borrowed from friends ( ) Borrow from the bank ( ) Borrow from other sources Which of the following criteria you consider when choosing a housing loan? Interest rates, borrowing costs Maximum loan amount Disbursement time Loan procedures Bank's Reputation Counseling ability of staff Transaction experience at that bank Promotions Other criteria 10.Rate your satisfaction with the bank loan product you are using o o o o o Excellent Good Normal Low Bad 11.Are you willing to share your loan experience with friends and relatives? o Yes o No 12.If you need to borrow a housing loan in the future, will you continue to borrow money at BIDV? o Yes o No/Need more information to consider Please answer the questions below by ticking one (✓) to your most suitable agreement level: Statement Interest rate is my first concern when considering a loan at BIDV BIDV's home loan interest rate is very competitive in the market I am interested in other loan costs such as early repayment fees, notary fees, mortgage … I give priority to loans at BIDV because of preferential interest rates or promotions Conditions on loans at BIDV are clearly and transparently regulated BIDV's loan ratio and collateral ratio are at a competitive level compared to other banks I meet most of the conditions under BIDV's housing loan policy I not have to work with many levels of management and go to the bank many times to the procedure I choose BIDV because it is a big reputable bank 10 BIDV processes and approves loans quickly 11 I feel convenient when: I have done transactions at BIDV / easily come to BIDV Stron gly Disag ree Disag ree Neut ral Agre e Stron gly Agree 12 I am satisfied with the attitude and service quality of the staff 13 I am interested in the Bank's marketing methods (telephone, leaflet, direct consultation, etc.) 14 I learned about loans at BIDV through the media/event organization 15 I was introduced by friends/relatives to borrow money at BIDV Thank you for your participation ... customers in BIDV Dong Da - Chapter Solution in enhance borrowing decision of housing customers in BIDV Dong Da 8 CHAPTER THEORETICAL BACKGROUND ON BORROWING BEHAVIOR OF HOUSING CUSTOMERS IN COMMERCIAL... and finally structure of thesis - Chapter Theoretical background on borrowing behavior of housing customers in commercial banks - Chapter Analyzing borrowing behavior of housing customers in BIDV. .. focuses on determining the borrowing behavior of housing customers in BIDV Dong Da, who is individual customers, most of them living and working around Hanoi area 1.6 Structure of thesis This research