Luận văn thạc sĩ UEH deposit insurance, a study of vietnamese households knowledge and perception , luận văn thạc sĩ

INTRODUCTION

Introduction

This chapter serves as a general introduction to the current study, outlining the research background, objectives, and questions that justify the investigation It also discusses the methodology, scope, and limitations of the study Additionally, the final section presents the structure of the study, with an outline provided in Table 1.1.

Structure of the study

A stable financial system is crucial for a robust economy, driving economic growth and development One of the foundational elements of a secure financial system is an effective deposit insurance scheme, which fosters public confidence However, public awareness regarding the existence and functioning of deposit insurance is vital for its effectiveness Unfortunately, information and awareness are frequently neglected in the design of deposit insurance systems.

Many countries implement deposit insurance systems that clearly communicate the terms and conditions of coverage to inform depositors about its existence and reduce the risk of bank runs during financial failures It is crucial for depositors to understand the limitations of this coverage, including the maximum amounts and types of accounts included, to prevent the misconception that all deposits and financial products are fully protected.

Research has highlighted the public's understanding of deposit insurance, with notable studies conducted in countries with extensive experience in this area Inakura et al (2005) found that awareness of the deposit insurance system in Japan is relatively high, particularly among households with greater income and educational levels Conversely, Laure Bartiloro (2008) reported that the general awareness of deposit insurance in Italy is lacking Both studies aimed to identify factors influencing this awareness, including internet access, income, and education.

Vietnam's deposit insurance scheme, established later than in many developed nations, has experienced significant growth, with six regional branches contributing to the sustainable development of the country's banking system Despite this progress, the Vietnamese economy and banking sector continue to face challenges, particularly in the aftermath of recent financial and debt crises that have led to the collapse of several banks worldwide This situation has reignited discussions about the effectiveness of deposit insurance.

Previous research on public awareness of deposit insurance has primarily focused on measuring awareness levels, with insufficient attention given to the factors that positively influence this awareness Notably, there is a scarcity of studies examining public awareness of deposit insurance within the Vietnamese context This gap in research motivates the current study to explore the determinants that enhance public awareness of deposit insurance in Vietnam.

The Vietnamese public is increasingly aware of deposit insurance, prompting this study to investigate the level of public knowledge regarding deposit insurance and the correlation between various selected factors and public perception.

An effective deposit insurance system requires the public to be well-informed about its benefits and limitations The recent financial crisis prompted policymakers to reevaluate deposit insurance activities and adjust policies to bolster depositor confidence in the banking sector, ultimately ensuring the safety of the financial system.

This study investigates the public awareness of deposit insurance in Vietnam and explores the key factors influencing this awareness.

This research offers valuable insights for policymakers, deposit insurers, insured institutions, depositors, and researchers interested in public awareness of deposit insurance.

The findings of this research reinforce the importance of policy makers and deposit insurers in implementing effective strategies to bolster public awareness and trust in the banking system.

The findings provide depositors with crucial insights into the security of their funds, enabling them to make informed decisions about depositing or withdrawing their money This awareness is essential in preventing situations that could lead to bank runs.

Finally, the research is able to be a reference for researchers, lectures and students in finance and banking

As above discussed, this study addresses the following questions:

Q1: How is the awareness of Vietnamese public about deposit insurance?

Q2: What are the determinants that play a large role to the awareness of deposit insurance?

Depositors rely on the deposit insurance system (DIS) to safeguard their funds, as they lack control over bank operations This system not only protects individual depositors but also helps to maintain stability in the banking sector by preventing panic withdrawals When depositors are assured of their funds' safety through deposit insurance, they are less likely to withdraw their money en masse, which can lead to a bank's collapse Awareness of the DIS fosters a sense of security among depositors, reinforcing their confidence in the banking system.

The study uses two different research questions to approach the issue is that the awareness of deposit insurance

This study was conducted in Ho Chi Minh City and two nearby province are Long an and Binh Duong with two phases: a pilot study and main study

Different countries exhibit unique characteristics in their deposit insurance schemes and financial systems The initial phase of the study utilized a qualitative approach to assess the relevance of various factors in Vietnam, employing group discussions with experts in the finance and banking sectors The subsequent phase adopted a quantitative approach, gathering data through interviews with households using a convenience sampling method Data analysis was conducted using SPSS software version 16.0.

This thesis addresses the issue of public awareness regarding deposit insurance in Vietnam, highlighting several limitations Firstly, the sampling method utilized was convenience-based, resulting in low representation and limited generalizability Future research should encompass a broader national scope and include diverse target audiences to accurately assess public awareness levels Secondly, while previous studies informed the determinants of awareness, it is crucial to explore additional factors that may influence public understanding Lastly, the lack of comparable research on public awareness, along with challenges related to dimensionality, convergent, and discriminant validity, further constrains the findings of this thesis.

This study is organized into five chapters, following a conventional structure Chapter 1 offers a general introduction to the research Chapter 2 summarizes deposit insurance and public awareness while reviewing relevant literature and developing hypotheses Chapter 3 outlines the methodology used in the study Chapter 4 details the sampling process and presents the research findings Finally, Chapter 5 discusses the study's implications, contributions, and limitations, concluding the overall research.

Table 1.2 shows the structure of the study

Chapter 1 Introduction Chapter 2 Literature review Chapter 3 Methodology Chapter 4 Data analysis and findings Chapter 5 Implication and conclusion

LITERATURE REVIEW

Introduction

This chapter presents the theoretical foundation of deposit insurance, focusing on its objectives, roles, and the establishment of deposit insurance in Vietnam Additionally, it reviews relevant literature on public awareness of deposit insurance, aiming to propose a research model that generates hypotheses for testing in the context of Vietnam's deposit insurance system This will help address the research questions and validate the proposed model An outline of Chapter 2 is provided in Table 2.1.

Developing of empirical research hypothesis

2 2 Overview of Deposit insurance 2.2.1 The Concept of Deposit Insurance

Deposit insurance is a crucial government mechanism designed to maintain the stability and integrity of the banking system while safeguarding small depositors from potential losses resulting from bank failures.

Deposit insurance schemes primarily aim to safeguard less sophisticated depositors while also capping the insurer's liability Typically, these schemes impose an upper limit on the capital that is guaranteed, ensuring a controlled risk exposure for the insurer.

2.2.2 Objectives and role of deposit insurance

Deposit insurance serves as a crucial component of a nation's financial safety net, enhancing the stability of credit institutions It ensures the safety and soundness of their operations by safeguarding the interests of depositors.

Choi (2000) outlines key objectives of deposit insurance, which include protecting individual depositors, especially small and less sophisticated ones, who struggle to evaluate the financial health of banks and governments It aims to enhance financial system stability and operational efficiency by preventing bank failures, fostering a competitive and fair market among credit institutions of varying sizes and development levels, and clarifying the rights and responsibilities of depositors and credit institutions Additionally, deposit insurance seeks to build public confidence in the banking system while minimizing the financial burden on taxpayers during bank failures.

The role of deposit insurance

Deposit insurance plays a vital role in enhancing banking operations, attracting unused community funds, and fostering community participation based on mutual benefit, which ultimately supports steady economic development Its importance can be summarized in four key aspects: it strengthens public confidence in the national banking system, promotes savings mobilization for investment and sustainable growth, creates favorable conditions for the development of the banking sector, and aids in the prompt resolution of insolvent financial institutions and financial crises.

Deposit insurance (DI) originated in the early 20th century, with the establishment of the Federal Deposit Insurance Corporation (FDIC) in the U.S in 1933, marking the world's first institution of its kind Created by the U.S Federal Government in response to widespread bank failures during the Great Depression, the FDIC aimed to restore public confidence in the banking system.

It is notable that after FDIC commenced operations on 1 January 1934, other countries followed very slowly with nine schemes being created in the years 1961-

In 1969, the FDIC introduced a deposit insurance scheme, which inspired the creation of over seven similar programs worldwide during the 1970s By the late 1970s and throughout the 1980s, many European countries established their own deposit guarantee systems The majority of these schemes were implemented in the last quarter of the 20th century, resulting in a total of 71 programs by 1999 (Safakli and Guryay, 2007) By the end of 2003, the number of countries offering explicit deposit guarantees had increased to 87 (Demirguc-Kunt, Kan, and Laeven, 2006).

Explicit deposit insurance has spread rapidly in recent years, as of 31 March

2011, 111 countries have instituted some form of explicit deposit insurance and another countries are considering

Chart 2.1 shows numbers deposit insurance system established in the world

Sources: http://www iadi.org/di.aspx

2.2.4 Case of Deposit insurance in Vietnam

Since 1986, Vietnam has experienced significant economic reforms, transitioning its banking system from a centrally planned model to one based on independent accounting This shift led to a rapid increase in the number of commercial banks and credit funds, although many faced bankruptcy between 1989-1990 and 1995-1997, undermining public trust in the financial system The 1997 Asian financial crisis prompted comprehensive reforms within the Vietnamese banking sector to enhance performance, competitiveness, and public perception The failures of credit cooperatives and the crisis underscored the necessity of proactive measures to mitigate risks in the financial landscape.

As the banking system becomes increasingly integrated into the global economy, the associated risks escalate, necessitating preventive measures The Deposit Insurance (DI) scheme plays a crucial role in mitigating potential losses and averting systemic banking failures To achieve stability and safety within the banking sector, the government enacted Decree No 89 on September 1, 1999, which focuses on deposit insurance and aims to bolster the development and security of the national financial system.

218 of Prime Minister on Nov 9 th 1999 to establish Deposit insurance of Vietnam (DIV)

The Deposit Insurance Vietnam (DIV) is a government agency established to implement the Deposit Insurance (DI) policy, focusing on protecting the legitimate interests and rights of depositors while ensuring the stability of banking institutions Its establishment marked a significant milestone, as it was the first institution dedicated to safeguarding depositors within the banking system Over the years, DIV has played a crucial role in economic reform and the restructuring of the banking sector Notably, between 1994 and 1996, Bảo Việt Corporation attempted a pilot scheme for DI, but it did not achieve the desired outcomes.

The Deposit Insurance Scheme (DIV) is mandated by government regulations, requiring all banks and people’s credit funds in the country to participate Initially, the scheme offered reimbursement to depositors up to VND 30 billion, but this was increased to VND 50 million per depositor following Decree No 109 on September 19, 2005 The insurance covers deposits made in VND by individuals, households, cooperative teams, private enterprises, and limited partnership companies, with certain exceptions outlined in the decree It is important to note that only domestic currency deposits are insured, while deposits in foreign currencies are not covered.

The funding for the Deposit Insurance Fund (DIV) includes an initial allocation of VND 1,000 billion from the government, distributed in several batches, with the final installment made on May 21, 2003 Additionally, the fund receives insurance premiums from insured institutions.

The Vietnam Deposit Insurance System (DIS), as outlined in Decision No 218 by the Prime Minister, aims to safeguard the rights and interests of depositors, contributing to the stability of insured institutions and the overall safety of the banking system In addition to reimbursing depositors in the event of bank failures, DIS conducts off-site supervision and on-site examinations of all banks and people's credit funds across the country However, the scope of on-site examinations is limited, primarily focusing on the premiums collected by depository institutions It is important to note that the deposit insurance system in Vietnam operates under specific regulations and is not governed by the laws pertaining to financial institutions or insurance.

2.3 Related literature 2.3.1 Deposit insurance and public awareness

Research conducted by organizations like the Financial Stability Forum (FSF) and the International Association of Deposit Insurers (IADI) highlights the critical importance of public awareness in the design and development of deposit insurance systems.

The Financial Stability Forum's Study Group on Deposit Insurance emphasizes the importance of public awareness in fostering confidence in deposit insurance systems Their research highlights that informing the public about key elements of these systems is crucial, especially for newly established ones Countries with established deposit insurance systems have effectively communicated the terms and conditions of coverage to enhance depositor awareness and mitigate the risk of bank runs during failures Additionally, it is vital for depositors to understand coverage limitations concerning amounts and account types to prevent misconceptions that all deposits or financial products are fully protected.

METHODOLOGY

Introduction

This chapter presents the research methodology, detailing the methods used to test the hypotheses established in Chapter 2 It includes a pilot study aimed at refining and finalizing the questionnaire for the main study Additionally, it outlines the statistical techniques applied for data analysis and hypothesis testing A chapter outline is provided in the accompanying table.

Research design

Research design allows the researcher to select an appropriate methods in order to meet the research objectives in the most efficient way

Data for this study was collected using a survey technique This technique

“provides a quick, efficient and accurate means of assessing information on a population, especially in the case of a lack of secondary data” (Zikmund, 1997)

This study utilizes descriptive statistics to assess public awareness of deposit insurance, highlighting the level of knowledge among the general population Additionally, logistic regression analysis is employed to investigate the influence of various factors on this awareness, providing insights into what affects public understanding of deposit insurance.

The research process of this study is shown in chart 3 1

The final draft of questionnaire

Logistic regression -SPSS Testing hypothesis 2

Aggregate and statistics Testing hypothesis 1

The first draft of questionnaire

The pilot study aimed to refine the initial draft of questionnaires, addressing flaws to enhance respondents' experience and improve data quality for the main survey Most questions were previously used and tested in developed countries, necessitating modifications to align with the context of developing nations, particularly Vietnam The original questionnaire was designed in English, and the first step involved translating it into Vietnamese, resulting in a bilingual draft with several amendments made to ensure clarity and relevance.

A group discussion was held with five bank experts, including three male and two female branch managers from various banks in Ho Chi Minh City The aim was to evaluate the clarity of the survey instrument and ensure that all questions effectively addressed the research topic related to deposit insurance and banking Following the feedback from these financial experts, several amendments were made to enhance the survey's comprehensiveness.

The result of a group discussion shows that the first question, the item Q1:

In Vietnam, if a bank were to fail, are your deposits protected? It's important to understand the maximum amount guaranteed by deposit insurance in the country Additionally, consider a scenario where you have VND 100 million in a savings account with a 10% annual interest rate; after two years, how much would you expect to have in your account if you allowed the money to grow?

Recent changes in financial inquiries include a shift from asking about mortgage types that allow for fixed amounts and installment numbers to a focus on the relationship between interest rates and bond prices Additionally, the independent variable previously identified as “percentile of household income” has been revised to “how much is your or the household monthly income?” Notably, the study of household income and wealth in Vietnam remains underdeveloped, leading to the removal of the independent variable concerning “percentile of household wealth.”

The question regarding the choice of depositing money has been revised from "Do you prefer small banks or large banks?" to "Do you prefer stated banks or commercial banks?" Additionally, the variable concerning whether deposits are held in a bank or at the Post Office has been removed.

The final step involved conducting interviews with ten depositors at the Bank for Investment and Development – No 2 transaction center in Ho Chi Minh City, using an amended version of the questionnaire All ten depositors were able to understand and respond to the questions, indicating no need for further adjustments The finalized questionnaire is presented in a bilingual format (English-Vietnamese), as detailed in Appendix 1, while a list of finance experts and depositors can be found in Appendix 2.

3.4 Main study 3.4.1 Target audience selection

Guidance paper “Public awareness of deposit insurance systems” of IADI

In 2009, it was emphasized that the primary target audience for a public awareness campaign should encompass both depositors and the general public, including diverse age groups like retirees and students Notably, a crucial segment of this audience is the staff of depository institutions, particularly those in operations and front-line roles.

This study has chosen the popular audiences that similar to the previous study The target audiences are subjected to the following selection criteria:

1 The survey was conducted only to people who declared they had a bank account

2 People are interviewed only to people who declared they earn higher income in their family or manage financial in their family

Participants are requested to respond to a series of questions to contribute to our research Additionally, respondents must provide information on demographic variables, as well as factors related to education, employment, income, and financial literacy.

To assess awareness of deposit insurance in Vietnam, we developed a set of fundamental questions for participants This method aligns with the research conducted by Laure Bartiloro (2008) and Straeter et al (2008) Our survey comprised five questions regarding deposit insurance knowledge, with four formatted as Yes/No or "don't know" responses, and one presented in a multiple-choice format.

A quality sample must achieve both accuracy and precision, as highlighted by Donald & Pamela (2003) The required sample size is influenced by the desired level of precision and confidence in estimating population parameters, along with the population's variability (Canava et al 2001) Researchers recommend a minimum sample size ranging from 100 to 150 responses when employing the Maximum Likelihood (ML) method, while others advocate for at least five observations per estimate.

The intended sample size for this study was over 300 participants, which, while higher than the minimum recommended size (25 times the number of observed variables), was still insufficient for meaningful comparisons with previous research.

Surveys are a crucial research technique that gather feedback from interviewees, but not all surveys yield reliable data due to potential biases in responses, particularly concerning time measurements and frequency of events Research methodology literature highlights various survey methods, including face-to-face interviews, telephone interviews, and mail or online surveys Notably, face-to-face surveys tend to produce higher response rates and enable researchers to utilize physical stimuli to enhance the interview process (Zikmund 1997).

This study employed two survey methods: face-to-face interviews and online surveys To achieve the desired sample size, only one in seven respondents participated via the online survey.

This study conducted formal research with sampling method is convenience sampling The survey was conducted between November 30 and December 31,

In 2011, a study involving 400 households was conducted, where participants were informed that their involvement was voluntary Interviewers were required to maintain confidentiality regarding the information shared by participants Notably, a majority of the participants expressed a keen interest in the research topic.

Data analysis techniques

Research design allows the researcher to select an appropriate methods in order to meet the research objectives in the most efficient way

Data for this study was collected using a survey technique This technique

“provides a quick, efficient and accurate means of assessing information on a population, especially in the case of a lack of secondary data” (Zikmund, 1997)

This study utilizes descriptive statistics to assess public awareness of deposit insurance, highlighting the importance of understanding this financial safety net Additionally, logistic regression analysis is employed to investigate how various factors influence public knowledge about deposit insurance, providing insights into the determinants of awareness in this critical area of financial literacy.

The research process of this study is shown in chart 3 1

The pilot study aimed to refine the initial draft of the questionnaires, enhancing respondent clarity and improving data quality for the main survey Most questions were previously used and tested in developed countries, necessitating modifications to fit the context of developing nations, particularly Vietnam The original questionnaire was designed in English and subsequently translated into Vietnamese, resulting in a bilingual first draft with several amendments made for better comprehension.

A group discussion was held with five bank experts, including three male and two female branch managers from various banks in Ho Chi Minh City The aim was to evaluate the clarity of the survey instrument and ensure that all questions effectively addressed the research topic related to deposit insurance and banking Based on the feedback from these financial experts, several amendments were made to enhance the survey's clarity and comprehensiveness.

In Vietnam, it's crucial to understand whether your deposits are protected in the event of a bank failure One key aspect to consider is the maximum amount of deposits guaranteed by the country's deposit insurance Additionally, financial literacy plays a vital role; for instance, if you had VND 100 million in a savings account with an annual interest rate of 10%, after two years, you would need to calculate how much your investment would grow.

The financial inquiry has been revised from asking about the type of mortgage that allows for fixed amounts and installments to a question regarding the typical impact of interest rates on bond prices Additionally, the independent variable previously defined as "percentile of household income" has been updated to "how much is your or the household monthly income?" In Vietnam, research on household income and wealth is limited, leading to the removal of the independent variable concerning "percentile of household wealth."

The question regarding the choice of depositing money has been revised from "Do you prefer small banks or large banks?" to "Do you prefer state banks or commercial banks?" Additionally, the variable concerning whether deposits are held in a bank or at the Post Office has been removed.

The final step involved using a revised questionnaire to interview ten depositors at the Bank for Investment and Development – No 2 transaction center in Ho Chi Minh City All ten depositors comprehended and responded to the questions, indicating no need for further adjustments The completed questionnaire is available in a bilingual English-Vietnamese format (see Appendix 1), and a list of finance experts and depositors is provided in Appendix 2.

In 2009, it was emphasized that the primary target audience for a public awareness campaign should encompass both depositors and the general public, which includes various age groups like retirees and students Crucially, the campaign should also focus on the staff of depository institutions, particularly those in operations and front-line roles, as they play a vital part in disseminating information and engaging with the community.

Participants are requested to respond to a series of questions to contribute to our research Additionally, respondents must provide information regarding demographic variables, as well as details related to education, employment, income, and financial literacy.

To assess awareness of deposit insurance in Vietnam, we developed a set of fundamental questions for participants This methodology aligns with the research conducted by Laure Bartiloro (2008) and Straeter et al (2008) The survey comprised five questions, four of which required Yes/No or "don't know" responses, while one was presented in a multiple-choice format.

A quality sample must meet the criteria of both accuracy and precision (Donald & Pamela, 2003) The determination of sample size relies on the desired level of precision and confidence in estimating population parameters, alongside the variability within the population (Canava et al., 2001) Researchers recommend a minimum sample size of 100 to 150 responses when employing the Maximum Likelihood (ML) method, while others suggest at least five observations per estimate.

The intended sample size for this study was over 300 participants, which, while higher than the minimum recommended size of 25 times the number of observed variables, was still insufficient for meaningful comparison with previous research.

Surveys are a crucial research technique that gathers feedback from participants, but not all surveys yield reliable data due to potential biases in responses, especially concerning time measurements and event frequency Various survey methods exist, including face-to-face interviews, telephone interviews, and mail or online surveys Notably, face-to-face surveys tend to achieve higher response rates and enable researchers to incorporate physical stimuli to enhance the interview process (Zikmund 1997).

This study utilized both face-to-face interviews and online surveys for data collection Notably, only one out of seven respondents was gathered through the online survey method to achieve the targeted sample size.

In 2011, a study involving 400 households was conducted, where participants were informed that their involvement was voluntary and that their information would be kept confidential by the interviewers Notably, the majority of participants expressed a keen interest in the research topic.

DATA ANALYSIS AND FINDINGS

Introduction

This chapter presents the results of the main study The following section describes the description of collected samples The next section we state the results and give some discussion

Results and discussions

4.2 Description of collected samples 4.2.1 Final sample

The primary survey involved face-to-face interviews conducted by six trained interviewers, with a sample size determined to be at least 300 based on statistical probability calculations To achieve this target, a comprehensive questionnaire was developed.

To facilitate the data collection process, a total of 400 questionnaires were distributed, achieving an estimated response rate of 75% The survey was designed to minimize the burden on respondents by utilizing an online format for a random subset of participants Data collection methods included distributing 50 electronic copies via the Internet and conducting 350 face-to-face interviews with households.

We removed 74 questionnaires with a substantive proportion of missing value (the missing rate was 18.5 percent), and these valid responses 326 were accepted

Chart 4.1 shows the description of collected samples

Source: Build from collected data

In term of respondents’ gender, there are 52 percent of the respondents are female (n0), and 48 per cent are male (n6)

Chart 4.2 shows gender of respondents

Source: Build from collected data The majority of respondents are under 30 years old (28%, n = 91) and over

60 years old (28%, n = 91), The smallest percentage of respondents belonged to the age group from 45-59 (21%, n = 68) The rest of the respondents belonged to the age group from 31 to 44 (23%, n = 76)

Chart 4.3 shows Age group of respondents

Source: Build from collected data The respondents belonged to various occupations and regard to educational qualification with 239 respondents has upper secondary and university degree

4.3 Results and discussions 4.3.1 Knowledge about Deposit insurance of Vietnam

Between 2008 and 2011, the global economic and debt crisis significantly impacted nations worldwide, leading to currency devaluation, systemic bank failures, and a loss of depositor confidence In response, deposit insurance institutions played a crucial role in stabilizing the financial landscape by protecting depositors and enhancing market stability To bolster public trust and prevent bank runs, several countries in America, Europe, and Asia implemented measures such as increasing deposit insurance coverage or introducing temporary blanket guarantees, exemplified by Italy's full coverage of all deposits in October 2008 and the FDIC's increase in standard maximum coverage from $100,000 to $250,000 on October 14, 2008.

In response to rising inflation and the threat of economic recession, the Vietnamese government implemented a series of measures aimed at stabilizing the market During this period, the banking sector displayed flexibility in its monetary policies, transitioning from a tightening approach to combat inflation to a more supportive stance for economic growth By the end of 2011, the central bank initiated a restructuring process that involved merging three struggling banks: Tin Nghia, Ficombank, and Saigon Commercial Bank Surprisingly, despite initial concerns, depositors remained calm regarding the bank mergers, preventing any market chaos.

In May 2011, Vietnam's deposit insurance law was officially presented and debated in parliament, generating significant public interest Concurrently, the Vietnam Deposit Insurance launched a contest aimed at educating the public about deposit insurance and its operations, with the goal of enhancing awareness of its existence It was anticipated that these initiatives would lead to a broader understanding of deposit insurance among Vietnamese households Hypothesis 1 suggests that these households are well-informed about the main features of the Vietnam Deposit Insurance System, with results detailed in Table 4.2.

Table 4.2: Knowledge about Vietnam deposit insurance

Question True answer Frequency Percent

1 Regarding your or the household’s current or savings account, in case of a bank failure, do you think that there are exists a deposit insurance scheme refund your money?

2 (If yes to 1) Is there maximum coverage on the amount of the current or savings account?

3 (If yes to 2) Which is the maximum amount of deposit guaranteed by deposit insurance of Vietnam?

The study's findings contradict the hypothesis that Vietnamese households lack a solid understanding of deposit insurance and its existence As indicated in Table 4.2, there is a notably low percentage of households demonstrating awareness of this financial safety net.

Only 40 percent of households are aware of the existence of deposit insurance, with a significant number unable to respond to this inquiry Conversely, 16 percent believe that their deposits lack any form of coverage.

Chart 4.4 shows an international comparison

Source: MDIC annual report (2010) and Laure Bartiloro (2008)

A comparison of international data reveals that awareness and understanding of deposit insurance in Vietnam are limited According to the International Association of Deposit Insurers (IADI), global public awareness of deposit insurance remains low as of 2009.

Surveys conducted in various countries reveal notable differences in sample selection, highlighting that awareness of deposit insurance is generally widespread However, four countries exhibit significantly lower awareness levels: Malaysia at 17.6%, Italy at 29%, Vietnam at 40%, and Germany at 42%.

Concerning knowledge about DI, Inakura et al (2005) test the determinants of household’s knowledge The authors conducted a financial behaviors survey in

An international comparison (Percentage of correct answer)

A study conducted in 1996 with a sample of 2,500 subjects around Tokyo revealed that 52% of Japanese individuals were aware of the disaster insurance scheme A follow-up survey in 2001, using a similar sample but with different questions, indicated a significant increase in awareness, rising to 67% This 15% increase in awareness can be attributed to the Asian financial crisis at the end of the 1990s, which likely heightened Japanese knowledge of disaster insurance.

The Federal Deposit Insurance Corporation (FDIC) partnered with the Gallup organization to conduct a survey assessing public awareness of deposit insurance This survey aimed to gather insights into the public's understanding of the FDIC and the information needs of depositors regarding their insurance coverage Gallup conducted telephone interviews with a sample of 2,500 randomly selected adults, aged 18 and older, who identified as knowledgeable about household finances, referred to as household Chief Financial Officers (CFOs) The findings revealed that a significant portion of households are aware of deposit insurance, with 67 percent of respondents having heard of the FDIC and 46 percent understanding its primary function (Kinssinger, 2003).

A 2009 survey conducted by the Canada Deposit Insurance Corporation (CDIC) revealed that 52 percent of Canadians believed their deposit accounts were guaranteed or protected by the CDIC in case of a bank failure.

A study by Straeter et al (2008) examined the knowledge of private investors in Germany, surveying 849 individuals in a university town in 2007 The findings revealed a significant lack of knowledge among investors, despite their high confidence in depositor protection measures.

Only 42 percent of subjects know that there is existence of DIS

2 There are a number of deposit insurance schemes in Germany: the information refers to the private

A 2008 survey on Household Income and Wealth in Italy, analyzed by Laure Bartiloro, revealed that awareness of deposit insurance is low, with only 29% of the 4,090 households surveyed recognizing its existence The findings show that men are more informed than women, while both younger and older adults demonstrate less awareness; however, there are no significant differences in awareness among the middle-aged demographic.

Each year, the Malaysia Deposit Insurance Corporation (MDIC) conducts a nationwide consumer survey to gauge public awareness and understanding of deposit insurance This survey not only assesses the effectiveness of MDIC's communication initiatives but also helps evaluate their efforts to promote deposit insurance awareness The latest survey results from 2010 revealed that public awareness of MDIC stood at just 17.6% (MDIC Annual Report 2010).

IMPLICATIONS AND CONCLUSION

Introduction

Chapter 4 discusses the analysis results and the main findings of the study

This chapter will discuss the implications of the research, while the subsequent section will address the study's limitations and suggestions for further research The final section will summarize all hypotheses and provide conclusions An outline of Chapter 5 is presented in Table 5.1.

Implications of the research

A study analyzing survey data from 326 households in Vietnam reveals that awareness of deposit insurance is limited among the population This finding highlights the need for Vietnamese monetary authorities and relevant institutions to develop and implement programs aimed at increasing public understanding of deposit insurance.

The IADI guidance paper (2009) and the IMF’s research group emphasize the crucial role of public awareness in establishing an effective deposit insurance system According to Principle 12 of the "Guidance for Developing Effective Deposit Insurance Systems," it is vital for the public to be regularly informed about the benefits and limitations of deposit insurance to ensure its effectiveness.

Conclusion

A study analyzing survey data from approximately 326 households in Vietnam reveals that awareness of deposit insurance is limited among the population This finding underscores the need for Vietnamese monetary authorities and relevant institutions to launch initiatives aimed at improving public understanding of deposit insurance.

The IADI guidance paper (2009) and the IMF’s research group emphasize the critical role of public awareness in establishing an effective deposit insurance system According to Principle 12 of the "Guidance for Developing Effective Deposit Insurance Systems," it is vital for the public to be regularly informed about the benefits and limitations of deposit insurance to ensure its effectiveness.

Effective communication channels play a crucial role in raising public awareness about deposit insurance, as highlighted by the DICJ survey The survey revealed that the most favored methods for conveying messages from deposit insurers include leaflets (21.1%), the Internet (15.8%), seminars (13.2%), television and radio (10.5%), and video (7.9%) Additionally, posters and call centers each account for 7.9% and 5.3% respectively, while school textbooks also represent 5.3% of the preferred communication channels (IADI).

In addition to traditional communication methods such as newspapers, leaflets, and presentations, it is essential to utilize modern tools to enhance public awareness of deposit insurance A well-designed website serves as a crucial platform for disseminating information about the functions of deposit insurance institutions in various countries, especially as internet usage continues to rise Furthermore, establishing a toll-free helpline for both local and overseas depositors will facilitate direct and prompt responses to customer inquiries This hotline is particularly valuable during times when insured institutions face issues, alleviating depositor concerns about the safety of their funds.

Vietnam's deposit insurance should utilize diverse strategies for effective communication through print and broadcast media, as well as on-street exhibitions, to reach a wider audience Utilizing signs and logos serves as a vital tool for enhancing public awareness, with the logo acting as a "seal of trust" that reassures depositors about their protection under the deposit insurance system These logos can be prominently displayed in both print and electronic communications and at banking institutions Additionally, deposit insurers are committed to improving financial literacy among the general public, particularly students who represent future depositors, and they offer training courses for bank staff who interact directly with customers In instances where a customer's deposits exceed the insurance limit, bank staff are equipped to provide essential literature, including details about deposit insurance features.

Raising public awareness about deposit insurance in Vietnam is crucial for the Deposit Insurance of Vietnam (DIV) to effectively protect depositors and ensure financial stability Building public confidence in these systems is essential, as it fosters trust among depositors A well-executed public awareness program can effectively communicate accurate information and strengthen this trust.

To enhance public awareness, Vietnam's deposit insurance coverage limit should be adjusted over time to align with inflation and GDP growth Currently, the maximum coverage of VND 50 million for individual deposits is deemed inadequate given the country's economic conditions, which undermines the effectiveness of capital mobilization from the population According to Mr Doan Quang Trung from the Banking University of Ho Chi Minh City, the original reimbursement amount established in 2005 was equivalent to nearly five times the per capita GDP, protecting about 90% of depositors With the current per capita GDP at approximately USD 1,100, it is essential to increase the deposit insurance coverage This adjustment would not only reflect global trends in managing economic fluctuations but also bolster depositor confidence in the banking system.

The study identifies three key factors—internet access, education, and banking services—that significantly influence public awareness of deposit insurance in Vietnam These findings have important implications for banks and policymakers in enhancing deposit insurance awareness among the public.

 Disseminate the information of deposit insurance of Viet Nam to households and depositors via internet

The goal is to effectively communicate Vietnam's deposit insurance information to individuals with limited education, such as those holding only a primary or lower secondary school certificate, including unemployed and blue-collar workers This will be achieved through accessible mediums like leaflets and television broadcasts.

 Maximize the attraction of temporarily un-used funds from community

Banks should be disseminated the information of deposit insurance of Viet Nam to depositors via internet

In short, the findings of this study bring various practical meaning:

This study underscores the importance of deposit insurance institutions, banks, and policymakers in implementing effective strategies to enhance public awareness and bolster depositor confidence in the banking system.

The study provides valuable insights for depositors regarding the security of their funds, enabling them to make informed decisions about depositing or withdrawing their money This awareness helps prevent situations like bank runs, where a lack of information can lead to panic withdrawals.

This research introduces a scale for deposit insurance in Vietnam, enriching the existing literature on the topic Furthermore, it contributes to the ongoing discussion regarding the factors that influence public awareness of deposit insurance.

5.3 Limitations of the research and further research

This study has several limitations that affect its reliability and generalizability Firstly, the sampling method used was convenience sampling, which is known to be less reliable, as the respondents were primarily high-income individuals managing their household finances Secondly, the research was conducted solely in Ho Chi Minh City and two nearby towns, limiting the ability to generalize findings to the broader Vietnamese population Lastly, the research model focused on only twelve components influencing public awareness, suggesting that additional factors may also play a significant role These limitations indicate potential areas for further research.

Finally, the scarcity of comparable papers of public awareness and the issues of dimensionality, convergent, and discriminant validity are one of limitation of the thesis

A further research with larger scope of whole country and many group target audiences is necessary to examine exactly the level of public awareness of deposit insurance

5.4 Conclusion 5.4.1 Summary of all hypotheses

This section will summarize the hypotheses testing results and illustrates in table 5.2

Table 5.2 shows summary of all hypotheses

H1: Vietnamese public are well informed about the existence of the Deposit insurance and main features of DIV

H2a: People who are man tend to be better informed about deposit insurance

H2b: People who are older tend to be better informed about deposit insurance

H2c: People who live in the inner city tend to be better informed about deposit insurance

H2d: People who attain the high education tend to be better informed about deposit insurance

H2e: People who are working or self-employed tend to be better NO informed about deposit insurance

H2f: People who have high income tend to be better informed about deposit insurance

H2g: People who are less risk aversion tend to be better informed about deposit insurance

H2h: People that have a larger amount of deposits tend to be better informed about deposit insurance

H2i: When people choose a bank to deposit, the safety of bank influences the awareness of deposit insurance

H2k: People that use internet tend to be better informed about deposit insurance

H2l: The awareness is raised when the number of households components is also increased

H2m: People that have high financial literacy tend to be better informed about deposit insurance

A study involving 326 households in Vietnam revealed that approximately 40% are aware of the deposit insurance system, while only 10% have detailed knowledge, accurately identifying the coverage limit as VND 50 million.

While 30 percent have basic knowledge

An international comparison reveals that the bias in the level of knowledge about deposit insurance may be influenced by the number of years since its adoption and past financial crises Importantly, this study addresses significant differences in sample selection to ensure accuracy.

Questionnaire

Questionaire / Câu hỏi khảo sát

Để bảo vệ lợi ích của người gửi tiền và đảm bảo an toàn cho hoạt động tài chính ngân hàng, nhiều quốc gia đã thành lập tổ chức bảo hiểm tiền gửi Tôi đang tiến hành điều tra nhận thức của công chúng về bảo hiểm tiền gửi tại Việt Nam nhằm phục vụ cho đề tài nghiên cứu “Nhận thức của công chúng về Bảo hiểm tiền gửi Việt Nam” Kính mong quý vị dành chút thời gian để trả lời một số câu hỏi Mọi ý kiến của quý vị đều quý giá và chỉ được sử dụng cho mục đích nghiên cứu, đồng thời thông tin cá nhân sẽ được bảo mật Rất mong nhận được sự hợp tác nhiệt tình từ quý vị Xin vui lòng cung cấp thông tin cá nhân và cho biết ý kiến về các câu hỏi sau:

The deposit insurance scheme is a widely implemented mechanism globally, aiming to safeguard depositors' interests and ensure the stability of banking operations In Vietnam, this scheme plays a crucial role in maintaining public trust in the financial system However, there is a need to assess the current level of public awareness regarding deposit insurance in the country By investigating this aspect, valuable insights can be gained to inform research and policy decisions that promote financial security and stability in Vietnam's banking sector.

We kindly ask you to take a moment to complete the questionnaire below Your suggestions are invaluable to our research, and rest assured that all information you provide will be kept secure by the author We look forward to your enthusiastic collaboration Please share your personal information and provide your comments and opinions.

1 Full legal name/Họ và tên:

2 What is your gender/Giới tính:

3 What age group are you in? / Bạn thuộc nhóm tuổi nào dưới đây

30 and under / dưới 30 tuổi From 30 to 44 / Từ 30 tuổi đến 44 tuổi From 45 to 59 / Từ 45 tuổi đến 59 tuổi

From 60 to over / Trên 60 tuổi

4 Area of residence / Khu vực cư trú inner City / Nội thành (các quận trung tâm Thành phố Hồ Chí Minh ) Suburban district / Ngoại thành

Nearby provinces / Các tỉnh lân cận

5 Educational qualification / Trình độ học vấn

None / không Primary school certificate/ Tiểu học Lower secondary school certificate / Trung học cơ sở Upper secondary school diploma/ Trung học phổ thông University degree/ Đại học

Other not employed/không nghề nghiệp Retired/nghỉ hưu

Blue-collar worker/Công nhân Office worker/Nhân viên văn phòng

Trader, business – owner, other self-employed/ thương nhân, Kinh doanh, buôn bán

7 How much is your or the household monthly income? /Thu nhập hàng tháng của bạn hoặc của gia đình bạn là bao nhiêu?

When considering budget options, amounts less than 5 million VND are available, while those ranging from 5 to under 10 million VND offer additional choices For mid-range budgets, options from 10 to below 20 million VND are ideal, and for higher-end selections, amounts starting from 20 million VND and above provide extensive possibilities.

Imagine receiving a bank statement; can you determine the total amount of money available at the end of the month?

Amount in VND / Số tiền VND…………

If you deposit VND 100 million in a savings account with an annual interest rate of 10%, after two years, your account balance would grow significantly By allowing the money to accumulate interest, you would have approximately VND 121 million at the end of the two-year period This demonstrates the power of compound interest and the benefits of saving over time.

Less than VND 110 million / Ít hơn 110 triệu VND

Exactly VND 110 million / Chính xác 110 triệu VND More than VND 110 million / Nhiều hơn 110 triệu VND

3 If interest rates rise, what will typically happen to bond prices.? Nếu lãi suất tăng, một cách điển hình việc gì sẽ xãy ra đối với giá trái phiếu?

When considering bank products, it's essential to identify your preferred level of risk aversion Understanding your comfort with risk can guide you in selecting financial services that align with your investment goals and financial stability Whether you lean towards conservative options with minimal risk or are open to more aggressive investments for potentially higher returns, knowing your risk tolerance is crucial for making informed decisions This awareness helps ensure that your banking choices reflect your personal financial strategy and peace of mind.

I prefer a large profits, even with high risk / Tôi thích lợi nhuận lớn thậm chí với mức rủi ro cao

I prefer good return, but also fair degree of protection/ Tôi thích lợi nhuận tốt, nhưng có mức bảo đảm vừa phải

I prefer fair return, with a good degree of protection / Tôi thích lợi nhuận khá, nhưng có mức bảo đảm tốt

I want low profits with no risk/ Tôi muốn lợi nhuận thấp và không có rủi ro

5 How much is your saving accounts in bank? Số tiền gửi của bạn ở ngân hàng khoảng bao nhiêu?

Less than 50 million VND / Dưới 50 triệu đồng From 50 to below 100 million VND / Từ 50 đến dưới 100 triệu đồng

From 100 to below 200 million VND / Từ 100 triệu đến dưới 200 triệu đồng

From 200 million VND to over / Từ 200 triệu đồng trở lên

6 Which following types of banks do you chose to deposit your money?/ Ngận hàng nào sau đây bạn chọn để gửi tiền tiết kiệm của bạn ?

In state bank / Ở ngân hàng nhà nước

In commercial joint stock bank / Ở ngân hàng thương mại cổ phần

7 Do any members of your household use the internet at home or elsewhere? Các thành viên trong gia đình bạn có sử dụng internet ở nhà hay ở nơi khác không?

8 Number of households’ component / Số thành viên trong hộ gia đình bạn

C Knowledge about the deposit insurance system in Vietnam / Hiểu biết về bảo hiểm tiền gửi Việt nam

1 In case of bank failure, are your deposits protected in Vietnam? / Trong trường hợp ngân hàng bị đỗ vỡ, tiền gửi của bạn có được bảo vệ ở Việt Nam?

2 Do you know about deposit insurance? / Bạn có biết (nghe nói) về Bảo hiểm tiền gửi không?

Yes/Có No/Không Don’t know/Không biết

If your bank were to collapse, would you trust that a deposit insurance system would reimburse your savings or those of your household? Understanding the existence and reliability of deposit insurance is crucial for safeguarding your financial assets in the event of a bank failure.

No/Không Don’t know/Không biết

4 (If yes to Q3 )Is there a maximum amount of deposits guaranteed by deposit insurance system?/ Có một mức tiền gửi tối đa được bảo đảm bởi bảo hiểm tiền gửi?

Deposit insurance in Vietnam guarantees a maximum amount for deposits, ensuring financial security for account holders.

VND 50 million/ 50 triệu đồng VND VND 100 million/100 triệu đồng VND Unlimited/không có giới hạn

Thank you for taking time to complete the questionnaire / Cám ơn bạn đã dành thời gian để hoàn thành bảng câu hỏi này.

List of financial experts and depositors

1 List of financial experts invited to focus discussion group

No Full name Gender Bank

1 Nguyễn Thị Tú Oanh Female Manager - Techcombank - Tan Quy branch -

District 7 - Ho Chi Minh City

2 Lê Thị Huệ Female Director transaction office No 4 BIDV- No

3 Phan Duy Lăng Male Manager - Maritimebank - Ho Chi Minh City

4 Trần Văn Nghị Male Manager Agribank – Binh Phu branch

5 Huỳnh Công Minh Male Chief control department- Seabank

2 List of ten depositors who is clients of BIDV – No 2-transaction center invited to interview

No Full name Gender Note

1 Huỳnh N.Huyền Trân Female Understand all questions of questionnaire

2 Nguyễn Minh Phương Female Understand all questions of questionnaire

3 Bùi Nhật Đức Male Understand all questions of questionnaire

4 Lê Khắc Thịnh Male Understand all questions of questionnaire

5 Trần Anh Túc Male Understand all questions of questionnaire

6 Hứa Hữu Mai Chi Female Understand all questions of questionnaire

7 Nguyễn T Diễm Thu Female Understand all questions of questionnaire

8 Phùng Thị Kỳ Female Understand all questions of questionnaire

9 Bùi Anh Phương Male Understand all questions of questionnaire

10 Đào Văn Vững Male Understand all questions of questionnaire

Descriptive Statistics of variables

Gender Age Area Education Working Income Finance1 Risk Deposit Bank Internet People Finance2

Frequency Percent Valid Percent Cumulative Percent

Selected Cases Included in Analysis 326 100.0

Total 326 100.0 a If weight is in effect, see classification table for the total number of cases

Overall Percentage 53.7 a Constant is included in the model b The cut value is 500

Variables not in the Equation

1 Hoàng Trọng – Chu Nguyễn Mộng Ngọc (2008), “Thống kê ứng dụng trong kinh tế xã hội, NXB Thống kê”

2 Nguyễn Thị Kim Oanh (2004), “Bảo hiểm tiền gửi: Nguyên lý và thực tiễn”

1 Annamaria Lusardi and Olivia S Mitchell (2011), “Financial Literacy around the World”

2 BIS(2011), “Guidance for developing effective deposit insurance systems”

3 Bowen , F., (2002) “Financial knowledge of teens and their parents Financial counseling and Planning Journal, 13, 93-101”

4 Banca d’Italia (2010), “Household income and Wealth in 2008”

5 Thomas L.Harnisch (2010), “ Boosting Financial literacy in American: A role for state colleges and univesities”

7 Choi J.B (2000), “Structuring a deposit insurance system from the Asian

8 Canava, R Y., Delahaye, B L., & Sekaran, U (2001), “Applied business research: Qualitative and quantitative methods John Wiley & Sons Australia, Ltd Australia”

9 Diamond D.W., Dybvig P.H (1983), “Bank runs, deposit insurance and liquidity”,

10 Demirgiic-Kunt and Kane (2002), “Deposit insurance around the world”

12 Donald R.C & Pamela S.S.(2003), “Business research methods 8th Ed., Mc

Graw-Hill/Irwin, New York”

14 Financial Stability Forum, 2001, “Guidance for developing effective deposit insurance systems Technical report, working group on deposit insurance”

15 Garcia G.(2000), “Deposit insurance: a survey of actual and best practices”

16 Inakura N., Shimizutani S., Paprzycki R (2005), “Deposit insurance and depositor discipline: direct evidence on bank switching behaviour in Japan”

17 IADI (2009), “Public awareness of deposit insurance system”

18 Kinssinger T.L (2003), “An analysis of the 2003 FDIC awareness survey data”

19 Laura Bartiloro, (2008), “Is your money safe? What Italian know about deposit insurance”

21 Nguyen Thi Kim Oanh and Michael Oborn (2006), “ Deposit insurance of

Vietnam: Are there implications for Australia”.

Research process

The pilot study aimed to refine the initial draft of the questionnaires, addressing potential issues to enhance respondent clarity and improve data quality for the main survey Most questions in this study were previously utilized and tested in developed countries, necessitating modifications to tailor the questionnaire for the context of developing countries, particularly Vietnam The original English questionnaire was translated into Vietnamese, resulting in a bilingual first draft with several amendments made for better comprehension.

A focus group discussion was held with five bank experts, including three male and two female branch managers from various banks in Ho Chi Minh City The aim was to evaluate the clarity of the survey instrument and ensure that all questions effectively addressed the research topic related to deposit insurance and banking Following feedback from the financial experts, several amendments were made to enhance the survey's comprehensiveness and clarity.

In Vietnam, it's essential to understand the protection of your deposits in the event of bank failures The maximum amount guaranteed by Vietnam's deposit insurance is crucial for safeguarding your finances Additionally, consider how changes in purchasing power can affect your savings For instance, if you had VND 100 million in a savings account with a 10% annual interest rate, after two years, you would need to calculate the total amount you would have if you allowed your money to grow.

Recent updates to the financial questionnaire include a shift from asking about mortgage types that allow for fixed amounts and installments to a query about the typical impact of interest rates on bond prices Additionally, the independent variable previously defined as "percentile of household income" has been revised to inquire about the specific monthly income of the household In Vietnam, research on household income and wealth is limited, leading to the removal of the independent variable concerning "percentile of household wealth."

The question regarding your preference for depositing money has been revised from "Do you choose to deposit your money in small banks or large banks?" to "Do you prefer to deposit your money in state banks or commercial banks?" Additionally, the variable concerning whether your deposit is held in a bank or at the Post Office has been removed.

The final version of the questionnaire, presented in a bilingual format (English-Vietnamese), was utilized to interview ten depositors at the Bank for Investment and Development – No 2 transaction center in Ho Chi Minh City All ten depositors demonstrated a clear understanding of the questions and provided satisfactory answers, indicating no need for further adjustments A list of finance experts and depositors is included in Appendix 2.

In 2009, it was emphasized that the primary target audience for a public awareness campaign should focus on depositors and the general public, encompassing various age groups, including retirees and students Crucially, the campaign must also prioritize the staff of depository institutions, particularly those in operations and front-line roles.

Participants are requested to respond to a series of questions to aid our research Additionally, respondents must provide information regarding demographic variables, as well as factors related to education, employment, income, and financial literacy.

To assess the understanding of deposit insurance in Vietnam, we developed a set of fundamental questions based on methodologies similar to those used by Laure Bartiloro (2008) and Straeter et al (2008) Our survey comprised five questions, four of which required participants to respond with Yes, No, or Don’t Know, while one was presented in a multiple-choice format.

A good sample must meet the criteria of both accuracy and precision, as highlighted by Donald & Pamela (2003) The required sample size is influenced by the desired levels of precision and confidence in estimating population parameters, along with the population's variability (Canava et al 2001) Researchers recommend a minimum sample size ranging from 100 to 150 responses when employing the Maximum Likelihood (ML) method, while others suggest having at least five observations for each estimate.

The intended sample size for this study was 300 participants or more, which, while higher than the minimum recommended size of over 25 times the number of observed variables, was still insufficient for meaningful comparisons with previous studies.

Surveys are a crucial feedback tool that captures the perspectives of interviewees; however, not all surveys yield valuable data, as responses can be biased, particularly for questions involving time measurements or event frequency Research methodology literature outlines various survey methods, including face-to-face interviews, telephone interviews, mail surveys, and online surveys Notably, face-to-face surveys tend to produce higher response rates and enable researchers to employ physical stimuli to enhance the interview process (Zikmund 1997).

This research employed two survey methods: face-to-face interviews and online surveys To achieve the targeted sample size, only one out of seven respondents participated through the online survey.

In 2011, a study involving 400 households was conducted, where participants were informed that their involvement was voluntary and that interviewers were committed to maintaining confidentiality The majority of participants expressed a keen interest in the research topic.

After completing data collection, we conducted descriptive statistics to summarize the sample Initially, we analyzed primary data to assess the level of public awareness regarding deposit insurance in Vietnam through percentage analysis Following this, logistic regression analysis was utilized to evaluate the second hypothesis.

Isolating the “noes” from the “don’t knows”: age

Pct of correct answers Pct of "noes" Pct of "don't knows"

The Chart 4.5 indicates that there is a remarkable difference between “noes” answer and “don’t knows” answer across age Only the subjects who belong to from

45 to 59 give the highest percentage of correctly answer and “noes” answers vary less than “don’t knows” In particular, young people in fewer than 30 ages have

“noes” answer predominating Hence, the programs improving the financial knowlege should promote to target audience belong to this group

Individuals with no education exhibit the lowest percentage of correct answers, as illustrated in Chart 4.6, where negative responses significantly outnumber affirmative ones In contrast, other educational groups display only a slight variation between negative and positive responses.

“don’t knows” answer, this group gives a considerable difference In addition, there is no doubt about the bothersome of this group and promoting financial education for this class is necessary.

Isolating the “noes” from the “don’t knows”: Education

A significant number of respondents from the inner city provided correct answers, while there was no substantial bias in responses between suburban areas and nearby provinces The three response types in these provinces were nearly equal In Ho Chi Minh City's inner and suburban areas, "no" responses were more common, whereas "don't know" responses were predominant in the nearby provinces (chart 4.7).

Chart 4.7: Isolating the “noes” from the “don’t know”: Area of residence

Inner City Suburban district Nearby provinces Pct of correct answers Pct of "noes" Pct of "don't knows"

Research indicates that individuals with a strong aversion to risk tend to answer questions correctly at a higher rate, while those with moderate risk aversion frequently respond with "no." In contrast, respondents who dislike risk show a nearly equal distribution across all answer types.

In Vietnam, the financial capacity of deposit insurance remains inadequate, with the reserve ratio at approximately 1%, significantly lower than the international standard of 2.5% - 3% As of September 19, 2005, the maximum deposit insurance coverage was raised from VND 30 million to VND 50 million per depositor per member bank Economist Tran Hoang Ngan has expressed concerns that the current coverage limit is neither compatible nor safe, particularly amid uncertainties surrounding the commercial banking system A survey revealed that nearly 40% of participants have deposits well below the insurance limit, while over 60% hold amounts exceeding this coverage.

Chart 4.8: Isolating the “noes” from the “don’t knows”: Risk aversion

I prefer a large profits, even with high risk

I prefer good return, but also fair degree of protection

I prefer fair return, with a good degree of protection

I want low profits with no risk

Chart 4.9: Isolating the “noes” from the “don’t knows”: Amount of their deposit

From 200 million VND to over Pct of correct answers Pct of "noes" Pct of "don't knows"

The study reveals that 40% of participants are aware of deposit insurance, with only 40% knowing there is a coverage limit Additionally, 16% mistakenly believe there is no limit, while others could not provide an answer Notably, 60% of those aware of the coverage limit correctly answered questions about the amount of coverage.

Approximately 60% of respondents in the survey are unaware of the deposit insurance scheme in Vietnam Among them, 30% have a basic understanding of the scheme, while only 10% possess detailed knowledge about Vietnam's deposit insurance.

Research indicates that awareness of deposit insurance varies significantly across countries In Germany, nearly 50% of individuals are aware of its existence, yet only over 10% have in-depth knowledge of the system In Italy, a 2008 study revealed that 70% of respondents were unaware of deposit insurance, with only 7% possessing detailed information Similarly, Inakura et al (2005) found that in 2001, 67% of participants had some knowledge of the deposit insurance system, but only 24% were well-informed about it These findings highlight a general lack of detailed understanding of deposit insurance among the public.

A 2001 survey revealed that while many Americans were aware of the FDIC's existence, their understanding of its basic functions was lacking Specifically, only 49 percent of respondents accurately identified the coverage limit, while 35 percent could not provide an answer regarding the maximum coverage limit.

A multivariate analysis is used to support the evidence to search the factors affecting the awareness of public The data obtained have been analyzed through

Many respondents lacked accurate knowledge about deposit insurance, with some believing there was no coverage limit, while others misidentified the limit or could not provide an answer To analyze these responses, a logistic regression was conducted using the Statistical Package for Social Sciences (SPSS 16.0 for Windows).

The results of hypotheses testing about the general appropriation in table 4.4 show the signal of sig =0.000, so we can ignore the hypotheses

Table 4.5 indicates that value of -2LL= 362.283 are not high, so it shows a fairy adequate of the overall model

Omnibus Tests of Model Coefficients

Step -2 Log likelihood Cox & Snell R Square Nagelkerke R Square

1 362.283 a 236 316 a Estimation terminated at iteration number 5 because parameter estimates changed by less than 001

The accuracy of the prediction is detailed in Classification Table 4.6, which indicates that the model correctly predicted 144 out of 196 cases of individuals unaware of deposit insurance, resulting in a hit ratio of 82.3 percent Conversely, for the 130 cases where individuals were aware of deposit insurance, the model made incorrect predictions in 31 instances, yielding a hit ratio of 65.6 percent Overall, the model's correct prediction ratio stands at 74.5 percent.

Overall Percentage 74.5 a The cut value is 500

Table 4.7 Dependent variable: Awareness of existence of deposit insurance

Constant -5.083 912 31.081 1 000 006 a Variable(s) entered on step 1: Gender, Age, Area, Education, Working, Income, Risk, Deposit, Bank, Internet, People, Finance2

4 High finance literacy when people answer all three questions of financial knowledge correctly.

The dependent variable in our regression model is the awareness of deposit insurance, which has three possible responses: yes, no, or do not know To analyze this variable, we employed logistic regression for our econometric analysis.

The Wald test assesses the statistical significance of each coefficient in the regression model According to Table 4.7, which presents the results of the Wald test for 12 independent variables, only three variables demonstrate significance at the p < 0.05 level, allowing us to disregard the null hypothesis for the others.

Thus, the found regression indexes are meaningful and our model has been suitable For the above results of this, we have the following equation:

The binary logistic regression analysis indicates that increased education attainment, bank safety, and internet usage have significantly heightened public awareness, with internet utilization showing the most substantial effect Specifically, the marginal impact of internet use on the perception of deposit insurance, when the initial probability is set at 0.5, is calculated to be 0.34625 In contrast, the marginal impact of education attainment is measured at 0.08975.

The finding shows that there are three factors affecting the public awareness

The negative coefficient of the bank variable negatively influences public awareness regarding deposit safety As discussed in section 2.4, the safety perception of banks affects depositors' decisions on where to place their funds We assume that state-owned banks offer a higher level of safety compared to commercial joint-stock banks.

5 Data is coded as follow:

Do you know about the deposit insurance?: yes=1;no/don’t know=0 Age: 4 degrees, from 30 under

The study analyzes various demographic and financial factors, focusing on gender, education level, banking preferences, and risk aversion Participants are categorized by gender, with males represented as 1 and females as 0 Education is measured on a scale from 1, indicating no formal education, to 5, representing a university degree Banking preferences differentiate between state-owned banks, assigned a value of 1, and commercial joint-stock banks, which hold a value of 0 Additionally, risk aversion is assessed on a scale from 1, denoting a preference for high-risk, high-reward investments, to 4, indicating a desire for low-risk, low-profit opportunities.

The analysis reveals a significant relationship between banking type and public awareness, with a p-value below 0.05 indicating that the bank variable significantly impacts awareness levels Specifically, individuals with deposits in commercial joint-stock banks prioritize safety concerns more than those with deposits in state-owned banks, suggesting a notable difference in perceptions between the two banking options Additionally, the data indicates a diverse demographic, with a geographical spread of 3 degrees from the inner city and 1 from nearby provinces, and varying employment statuses ranging from unemployed to managerial positions Financial literacy levels also play a role, with high literacy associated with a greater awareness of banking safety.

Isolating the “noes” from the “don’t knows”: Risk aversion

Isolating the “noes” from the “don’t knows”: amount of deposit

Chart 4.8: Isolating the “noes” from the “don’t knows”: Risk aversion

Chart 4.9: Isolating the “noes” from the “don’t knows”: Amount of their deposit

From 200 million VND to over Pct of correct answers Pct of "noes" Pct of "don't knows"

The study reveals that 40% of participants are aware of deposit insurance, with only 40% knowing there is a coverage limit Interestingly, 16% of respondents mistakenly believe there is no limit, while others are unsure Notably, 60% of those aware of the coverage limit correctly answered questions about the amount of coverage.

Approximately 60% of respondents are unaware of the existence of a deposit insurance scheme in Vietnam, with only 30% having a basic understanding and just 10% possessing detailed knowledge about the country's deposit insurance system.

A significant portion of individuals across various countries exhibit limited knowledge about deposit insurance systems In Germany, nearly 50% are aware of its existence, yet only over 10% possess detailed understanding In Italy, a 2008 study revealed that 70% of respondents lacked knowledge about deposit insurance, with only 7% having detailed information Similarly, Inakura et al (2005) found that in 2001, 67% of interviewees were aware of the deposit insurance system, but only 24% had in-depth knowledge This trend highlights a global gap in understanding deposit insurance, emphasizing the need for better education on the topic.

A 2001 survey revealed that while many Americans were aware of the FDIC, their understanding of its basic information was lacking Specifically, only 49 percent of respondents accurately identified the coverage limit, while 35 percent could not answer the question about the maximum coverage limit.

A multivariate analysis is used to support the evidence to search the factors affecting the awareness of public The data obtained have been analyzed through

The survey revealed that participants had varying perceptions of deposit insurance, with some believing there was no coverage limit, others incorrectly stating a limit, and some unable to provide an answer A logistic regression analysis was conducted using SPSS 16.0 to evaluate these responses.

The results of hypotheses testing about the general appropriation in table 4.4 show the signal of sig =0.000, so we can ignore the hypotheses

Table 4.5 indicates that value of -2LL= 362.283 are not high, so it shows a fairy adequate of the overall model

Omnibus Tests of Model Coefficients

Step -2 Log likelihood Cox & Snell R Square Nagelkerke R Square

1 362.283 a 236 316 a Estimation terminated at iteration number 5 because parameter estimates changed by less than 001

The Classification Table 4.6 reveals that the model correctly predicted 144 out of 196 cases of individuals unaware of deposit insurance, resulting in a hit ratio of 82.3 percent Conversely, among the 130 cases aware of deposit insurance, the model incorrectly predicted 31 cases, leading to a hit ratio of 65.6 percent Overall, the model's correct prediction ratio stands at 74.5 percent.

Overall Percentage 74.5 a The cut value is 500

Table 4.7 Dependent variable: Awareness of existence of deposit insurance

Constant -5.083 912 31.081 1 000 006 a Variable(s) entered on step 1: Gender, Age, Area, Education, Working, Income, Risk, Deposit, Bank, Internet, People, Finance2

4 High finance literacy when people answer all three questions of financial knowledge correctly.

The dependent variable in our regression model is the awareness of deposit insurance, which is categorized into three probabilities: yes, no, and do not know To analyze this variable, we employed logistic regression for our econometric analysis.

The Wald test assesses the statistical significance of each coefficient in a regression model According to the results presented in Table 4.7, which examines the overall regression indexes related to 12 independent variables, only three variables demonstrate significance at the p < 0.05 level, allowing us to disregard the null hypothesis for the others.

Thus, the found regression indexes are meaningful and our model has been suitable For the above results of this, we have the following equation:

The binary logistic regression analysis indicates that increased education attainment, enhanced bank safety, and greater internet usage have significantly raised public awareness, with internet utilization having the most substantial effect Specifically, the marginal impact of internet use on the perception of deposit insurance, calculated with an initial probability of 0.5, is 0.34625, while the marginal impact of education is 0.08975.

The finding shows that there are three factors affecting the public awareness

The negative coefficient of banks adversely affects public awareness regarding their safety As discussed in section 2.4, the independent variable related to banks influences depositors' decisions on where to place their funds We hypothesize that state-owned banks offer a higher level of safety compared to commercial joint-stock banks.

5 Data is coded as follow:

Do you know about the deposit insurance?: yes=1;no/don’t know=0 Age: 4 degrees, from 30 under

The study categorizes individuals based on various factors: age ranges from 1 to 60, with a gender classification of female (0) and male (1) Educational attainment is measured on a scale of 1 to 5, where 1 represents no formal education and 5 indicates a university degree Banking preferences are classified as either state-owned banks (1) or commercial joint-stock banks (0) Additionally, risk aversion is assessed on a scale of 1 to 4, with 1 reflecting a preference for high profits despite high risks, and 4 signifying a preference for low profits with no risk.

The study reveals a significant correlation between banking type and public awareness, indicated by a p-value below 0.05 for the bank variable This suggests that the type of bank influences depositor perceptions, with those at commercial joint-stock banks prioritizing safety concerns more than those at state-owned banks The data also highlights a diverse demographic, with varying degrees of employment and financial literacy, further emphasizing the need for tailored financial education strategies.

Research indicates that key determinants influencing financial behavior include gender, education, income, financial literacy, and internet usage Additionally, factors such as age, bank deposit amounts, and household size also play a significant role.

Logistic regression analysis reveals that internet usage, education level, and banking type significantly influence public awareness of deposit insurance Data indicates that individuals who utilize the internet, possess deposits in commercial joint-stock banks, or have higher educational attainment are more likely to recognize the existence of deposit insurance Depositors in state-owned banks tend to believe that their funds are protected by the government, whereas those in commercial joint-stock banks are generally aware that a deposit insurance institution safeguards their deposits To enhance their competitive edge, joint-stock commercial banks often implement marketing campaigns emphasizing the security of client deposits under the deposit insurance system, prominently featuring messages like “Your deposit is insured” on savings books.

However, joint-stock commercial banks do not indicates the exactly the coverage limit This made lots of people suppose that their deposit is blanket guarantee

The other variables like gender, age, area, working, income, risk, deposit, people, high finance literacy have statistically significance in the previous studies

In this study, these variables have sig higher than 0.05 and show that no impact on the awareness In short, these variables play an important role to the awareness

However, these variable are not statistical significant in this study

This study does not consider finding out any determinants of the choice of answering “no” and “don’t know”

The analysis yielded positive results, revealing three key factors that significantly influence public awareness However, the research did not identify any impact from other independent variables on public awareness.

4.3.6 Review the findings of the study

This study shows some aspects that consist with results of Laura Bartiloro

Tiêu đề	Deposit Insurance: A Study of Vietnamese Household’s Knowledge and Perception
Tác giả	Trần Thị Hợp
Người hướng dẫn	Assoc. Prof, Ph.D. Trần Huy Hoàng
Trường học	University of Economics Ho Chi Minh City
Chuyên ngành	Finance-Banking
Thể loại	Master Thesis
Năm xuất bản	2012
Thành phố	Ho Chi Minh City

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