Luận văn thạc sĩ UEH determinants of customer satisfaction in the personal loan service

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY HOANG THI THANH THANH DETERMINANTS OF CUSTOMER SATISFACTION IN THE PERSONAL LOAN SERVICE: A STUDY OF PUBLIC AND PRIVATE BANKING SECTORS IN HO CHI MINH CITY MASTER’S THESIS In Business Administration Ology Code: 60.34.01.02 Supervisor Associate Professor NGUYEN DINH THO Ho Chi Minh City, 2012 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEGEMENT This research project would not have been possible without the support of many people Firstly I would like to express my heartfelt gratitude and deepest appreciation to my supervisor, Associate Professor Nguyen Dinh Tho for his precious guidance, share experience, ceaseless encouragement, and valuable suggestions throughout the course of my research My thanks would also go to all of my classmates, my colleagues, especially my “old pals”, Ms Nguyen Thi Phuong Thao and Ms Le Thi Nhu Huyen for all of their friendship and encouragement I also wish to thank my friends in Agribank, ACBank, Sacombank and Eximbank for their great support My thanks would also go to the respondents, without them, my thesis could not have been done Finally, I would like to express my deepest gratitude and honor to my dear parents for not only the love they devote to me but also for the time I took from them which should have been my devotion to them in their aged time LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ABSTRACT This study investigates the main factors of the personal loan service affecting customer satisfaction between public and private banks in Ho Chi Minh city Data analysis over a few years reveals that bank‟s performance may be evaluated in relation to a set of satisfaction dimensions to indicate the strong and the weak points of a business According to the results, customer satisfaction is positively related to the service An interesting finding is that five components of service quality (tangibility, reliability, responsiveness, assurance, and empathy) have a positive and significant impact on customer satisfaction, which consists of a previous study of Parasuraman (1991) On the other hand, brand image is an important determinant in relation with customer satisfaction that is measured by Akviran (1994) The different weights of customer expectation, perceived quality, and perceived value have implications for bank managers to use them as a reference source for customer satisfaction strategy The research also provides a modified model of customer satisfaction to determine the critical personal loan service dimensions in public and private banks in Ho Chi Minh city LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CONTENTS ACKNOWLEGEMENT .1 ABSTRACT CONTENTS LIST OF TABLES LIST OF FIGURES CHAPTER 1: INTRODUCTION .8 1.1 BACKGROUND OF THE STUDY .8 1.1.1 Vietnamese banking sector 1.1.2 The personal loan service 1.1.3 Customer satisfaction in Vietnam 11 1.2 RATIONALE OF THE RESEARCH 11 1.3 STATEMENT OF THE PROBLEM .12 1.4 RESEARCH OBJECTIVE .13 1.5 SCOPE OF THE RESEARCH .13 1.6 RESEARCH METHODOLOGY 14 1.6.1 Secondary data 14 1.6.2 Primary data .14 1.7 THE STRUCTURE OF THE RESEARCH 14 CHAPTER 2: LITERATURE REVIEW 16 2.1 INTRODUCTION 16 2.2 CUSTOMER SATISFACTION .16 2.3 DETERMINANTS OF CUSTOMER SATISFACTION 17 2.4 CUSTOMER SATISFACTION WITH THE PERSONAL LOAN SERVICE .18 2.5 HYPOTHESES AND MODEL 18 2.5.1 Brand image .18 2.5.2 Customer expectation 19 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 2.5.3 Perceived quality .20 2.5.4 Perceived value 21 2.6 CONCLUSION 23 CHAPTER 3: RESEARCH DESIGN .24 3.1 INTRODUCTION 24 3.2 RESEARCH DESIGN 24 3.3 MEASUREMENT SCALE 27 3.3.1 Introduction 27 3.3.2 Operation of measures .27 3.3.2.1 Scale to measure brand image 27 3.3.2.2 Scale to measure customer expectation 28 3.3.2.3 Scale to measure perceived quality 29 3.3.2.4 Scale to measure perceived value .30 3.4 PRILIMINARY RESEARCH 31 3.5 MAIN RESEARCH .32 3.5.1 Sample design 32 3.5.1.1 Brand selection 32 3.5.1.2 Sampling 33 3.5.1.3 Sample size 34 3.5.2 Survey method 35 3.6 CONCLUSION 35 CHAPTER 4: RESEARCH RESULTS 37 4.1 INTRODUCTION 37 4.2 SAMPLE CHARACTERISTICS 37 4.2.1 Final sample .37 4.2.2 Characteristics of sample 38 4.3 DATA ANALYSIS 42 4.3.1 Reliability evaluation through Cronbach‟s Alpha 43 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 4.3.2 Evaluation the measurement scale by using Exploratory Factor Analysis (EFA) 46 4.3.2.1 Some rules in EFA test .46 4.3.2.2 EFA for determinants of customer satisfaction 46 4.3.2.3 EFA for customer satisfaction 48 4.3.3 Modeling Testing .48 4.3.3.1 Correlation coefficient analysis 48 4.3.3.2 Regression analysis 49 4.3.3.2.1 Multiple regression assumptions 49 4.3.3.2.2 Regression model .50 4.4 SUMMARY 56 CHAPTER 5: CONCLUSIONS AND IMPLICATIONS 57 5.1 INTRODUCTION 57 5.2 CONCLUSIONS FROM THE RESEARCH QUESTIONS 57 5.3 DICUSSIONS OF THE RESEARCH FINDINGS 59 5.4 CONTRIBUTIONS 61 5.4.1 Theoretical contribution 61 5.4.2 Methodological contribution 63 5.5 MANAGERIAL IMPLICATIONS OF THE RESEARCH 64 5.5.1 Managerial implications for public banks .64 5.5.2 Managerial implications for private banks 65 5.6 LIMITATIONS OF THE RESEARCH AND FUTURE RESEARCH 66 5.7 CONCLUSION 67 APPENDIX 1: GROUP DISCUSSION 74 APPENDIX 2: QUESTIONNAIRE 79 APPENDIX 3: CRONBACH‟S ALPHA ANALYSIS RESULT .83 APPENDIX 4: FACTOR ANALYSIS RESULT .87 APPENDIX 5: MUPTIPLE REGRESSION ASSUMPTIONS 90 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF TABLES Table 3.1 Measures of brand image 28 Table 3.2 Measures of customer expectation 28 Table 3.3 Measures of perceived quality 29 Table 3.4 Measures of perceived value 30 Table 3.5 Measures of customer satisfaction 30 Table 4.1 Sample characteristics of public banks 39 Table 4.2 Sample characteristics of private banks 41 Table 4.3 Reliability test of the personal loan service and customer satisfaction in public and private banks 43 Table 4.4 Final reliability test of the personal loan service and customer satisfaction in public and private banks .45 Table 4.5 EFA analysis result of determinants in public and private banks 47 Table 4.6 EFA analysis result of customer satisfaction in public and private banks 48 Table 4.7 Pearson correlation matrix in public and private banks 49 Table 4.8 Model Summary b in public and private banks .51 Table 4.9 Anova b in public and private banks 51 Table 4.10 Coefficients a in public and private banks .51 Table 4.11 Model Summary b in public banks 52 Table 4.12 Model Summary b in private banks 53 Table 4.13 Anova b in public banks 53 Table 4.14 Anova b in private banks 53 Table 4.15 Coefficients a in public banks 54 Table 4.16 Coefficients a in private banks .54 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Figure 2.1 Research model .22 Figure 3.1 Research process .26 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CHAPTER 1: INTRODUCTION 1.1 BACKGROUND OF THE STUDY 1.1.1 Vietnamese banking sector The banking sector in Vietnam has a significant growth rate during past two decades along with the economic development This banking system consists of five commercial state-owned banks, thirty seven commercial joint-stock banks, six jointventure banks, thirteen 100% foreign banks, and fifty three representative branches of foreign banks (Wikipedia, 2012) The development primarily concentrates on commercial joint-stock and foreign banks showing the attractiveness and potential development of Vietnam baking industry to inland investors as well as international financial institutions The market changes create more challenges and difficulties for banks The public banks face adoption of technology and issues like credit proposals and personal matters Processing bad debits, finding partners to increase financial ability, dealing with difficult issues from the tight currency policy and the limited credit scale are carried out by the private banks Changing the attitude of personnel and developing strategies are justified for the strong and weak banks All banks must design a new plan to survive in the innovative period (Bui, 2011) With the entry of new generation tech-savvy private banks and the expansion of operations of foreign banks, the banking sector has become too competitive Well-computerized foreign banks are beginning to compete seriously with the nationalized banks They aim at a profitable and wealthy part of the market and, in contrast to the nationalized banks; they not recognize any social responsibilities to small account holders Almost of the banks are still controlled by Public Sector Banks (PSBs) PSBs are still dominating the commercial banking system To deal LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com with the emerging situations, bankers have to shed a lot of old ideas, change in practices, develop customer loyalty programs, and adopt a distinct approach to meet the challenges ahead In a fiercely competitive market, non-price factors like customer service become more important Hence, it is desirable for banks to develop a customer-centric approach for future survival and growth Efficient and speedy customer service is implemented to attract the existing customers in continuing and inducing new customers to try the services offered by a bank Vietnamese banks have already taken lot of initiatives in this regard Further, it has been realized that Vietnamese banks have miles to go to capture the recent trends and to compare with the Western counterparts As a result, many banks have introduced new customer friendly measures like 24-hour banking, 7-day and anywhere banking, internet banking, extended business hours, ATM network, etc 1.1.2 The personal loan service With years, banks are adding services to their customers The Vietnamese banking industry is passing through a phase of customers market The customers have more choices among the banks A competition has been established within the banks‟ operating in Vietnam The development of business activities, manufacturing and trading, more and more individuals borrow a large of money from banks to manage their business It creates a large chance for banks extending personal loan service with different loan methods such as partial loan, loan under credit limit, installment loan, etc Besides, the Pubic Sector Banks have signed the determinant to decrease the loan interest rate to 17 - 18%/year for individuals (Nguyen, 2012) The enlarged loan objects, the loosened loan conditions, and the improved liquidity make the commercial banks give promotions In February, 2012 Oceanbank has the loan projects to buy houses with the interest rate down to 19%/year It lends up maximum 80% of house value within up to 120 months ABBank is implementing the program “Easy loans – LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 77 IV Perceived value According to you, what benefits you feel important in the personal loan service? Now we offer the following questions for you to know (1) Do you understand the questions? Why? (2) According to you, what are the meanings of these questions? (3) If you evaluate about perceived value, what things these questions need more and less? Why? Bank [X]’s interest on personal loans shows corresponding values for loans Bank [X]’s charges of personal loan service express commensurate values for loans Bank [X]’s personal loan time period is suitable values for loans Bank [X]’s personal loan rate is commensurate with inflation rate Bank [X]’s traveling expenses to meet personal loan service is suitable values for loans V Customer satisfaction In what level you satisfy the personal loan service? Now we offer the following questions for you to know (1) Do you understand the questions? Why? (2) According to you, what are the meanings of these questions? (3) If you evaluate about customer satisfaction, what things these questions need more and less? Why? Overall, you are satisfied with bank [X]’s the personal loan service Overall, you find bank [X] better than other banks LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 78 You are likely to recommend bank [X] to others Sincerely thank you for spending time to participate in this study and providing valuable comments LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 79 APPENDIX 2: QUESTIONNAIRE Research on Determinants of Customer Satisfaction in the Personal Loan Service between Public and Private Banks in Ho Chi Minh City The objective of this survey is to find out the attitudes of individual customers for personal loan service in commercial banks Your objective answer will contribute to the success of this research and help to improve personal loan service from banks All the answers of individuals will remain confidential; we will only publish aggregate results Thanks to the cooperation of you No BCH:…… Interview at: h, Interviewer: _ Name of the bank is date: _/ _/2012 evaluated: _ Please spend some time to help us answer some questions by circling the score that you evaluate No answer is right or wrong All responses are valuable to us Answer guidance: Evaluation of personal loan service in Bank[X] Completely disagree Disagree Neutrality Agree Strongly agree Items Evaluation level Brand image Bank [X] specializes in the personal loan service Bank [X]‟s personal loan service is very diverse Bank [X]‟s leadership board is good at management Bank [X] has high achievements in the personal loan service Bank [X] is very reliable LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 80 Bank [X] has transaction offices in all provinces Bank [X]‟s image is very impressed in your mind Bank [X]‟s brand name is closed to you Customer expectation Bank [X]‟s personal loan service has a high satisfaction 10 Bank [X] has adopted policies to encourage personal loans 11 Bank [X] is the first choice when there is demand for personal loans 12 Bank [X]‟s personal loan service is the long-term use Perceived quality 13 Bank [X]‟s staff treat you as a precious customer 14 Bank [X]‟s physical facilities are securable for personal loans 15 Bank [X] has up to date equipment 16 Procedures at bank [X] are fast and brief 17 Bank [X] provides personal loan services at that time it promises to 18 When personal loan rates change, bank [X] fully informs customers 19 You feel safe in your personal loan transactions with bank [X] 20 There are several payment methods to choose in bank [X] 21 Bank [X]‟s employees are dressed elegantly and brightly 22 Bank [X]‟s employees capture fast and response well to customer needs 23 Bank [X]‟s employees deal with issues skillfully 24 When you have problems, bank [X] is sympathetic and reassuring 25 Bank [X]‟s employees are always willing to help you 26 Bank [X]‟s transaction locations are very comfortable and relaxed 27 Bank [X]‟s working environment is very professional Perceived value 28 Bank [X]‟s interest on personal loans shows corresponding values for loans 29 Bank [X]‟s charges of personal loan service express LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 81 commensurate values for loans 30 Bank [X]‟s personal loan time period is suitable values for loans 31 Bank [X]‟s personal loan rate is commensurate with inflation rate 32 Bank [X]‟s traveling expenses to meet personal loan service is suitable values for loans Customer satisfaction 33 Overall, you are satisfied with bank [X]‟s the personal loan service 34 Overall, you find bank [X] better than other banks 35 You are likely to recommend bank [X] to others 36 Please tell me your name: 37 Gender: 38 Age: 18 – 30 31 – 40 41 – 50 > 50 Male Female 2 39 How long have you used personal loan service in bank [X]? year(s) 40 Type of personal loan services is you using in bank [X]? (can choose more than one): Home mortgage loan Home equity – renovation Home equity – overseas education Home equity – other purposes Car loan Personal installment loan Other loan (note clearly: 41 Your income level monthly is: < million VND – < 10 million VND 10 – < 20 million VND ≥ 20 million VND ) LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 82 42 Your education level: Under high school High school College / University Over university 43 Your career is: Officer or employee of State company Staff of foreign company Teacher Trade, small business Worker Student Retiree Owner of private enterprise Professional career (doctor, lawyer…) Housewife Other occupation (note clearly: ) 10 11 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 83 APPENDIX 3: CRONBACH’S ALPHA ANALYSIS RESULT 3.1 BRAND IMAGE Reliability Statistics Cronbach's Alpha N of Items 939 Item-Total Statistics Scale Mean if Item Scale Variance if Deleted Item Deleted Corrected Item- Cronbach's Alpha Total Correlation if Item Deleted BI1 19.8168 49.091 751 933 BI2 19.7422 48.560 881 925 BI3 19.8230 49.106 786 931 BI4 19.6988 50.691 697 937 BI5 19.6770 48.506 804 930 BI6 19.6211 48.816 812 929 BI7 19.5621 48.210 781 931 BI8 19.6460 49.282 765 932 3.2 CUSTOMER EXPECTATION Reliability Statistics Cronbach's Alpha N of Items 910 Item-Total Statistics Scale Mean if Item Scale Variance if Deleted Item Deleted Corrected Item- Cronbach's Alpha Total Correlation if Item Deleted CE1 7.9286 8.858 809 881 CE2 7.8882 9.825 776 891 CE3 7.9627 9.855 698 918 CE4 7.9907 9.274 923 843 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 84 3.3 PERCEIVED QUALITY 3.3.1 Step Reliability Statistics Cronbach's Alpha N of Items 877 15 Item-Total Statistics Scale Mean if Item Scale Variance if Deleted Item Deleted Corrected Item- Cronbach's Alpha Total Correlation if Item Deleted PQ1 35.9596 96.475 424 874 PQ2 35.9255 99.901 251 881 PQ3 36.0217 99.031 320 878 PQ4 35.6957 98.075 348 877 PQ5 36.0590 100.349 267 880 PQ6 35.7857 95.396 455 873 PQ7 35.7857 91.932 600 866 PQ8 36.1801 89.301 738 860 PQ9 36.0311 89.258 774 859 PQ10 36.0062 87.489 708 860 PQ11 35.9099 89.939 692 862 PQ12 35.9130 87.849 689 861 PQ13 36.0435 93.631 472 872 PQ14 35.9348 90.317 624 865 PQ15 35.9224 92.483 529 870 3.3.2 Step Reliability Statistics Cronbach's Alpha 893 N of Items 12 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 85 Item-Total Statistics Scale Mean if Item Scale Variance if Deleted Item Deleted Corrected Item- Cronbach's Alpha Total Correlation if Item Deleted PQ1 28.4286 83.168 286 899 PQ4 28.1646 83.988 246 901 PQ6 28.2547 82.533 303 899 PQ7 28.2547 79.268 453 892 PQ8 28.6491 72.266 844 872 PQ9 28.5000 72.712 857 871 PQ10 28.4752 70.967 784 874 PQ11 28.3789 73.364 766 876 PQ12 28.3820 71.857 736 877 PQ13 28.5124 75.054 621 883 PQ14 28.4037 73.618 697 879 PQ15 28.3913 74.993 631 883 3.3.3 Step Reliability Statistics Cronbach's Alpha N of Items 929 Item-Total Statistics Scale Mean if Item Scale Variance if Deleted Item Deleted Corrected Item- Cronbach's Alpha Total Correlation if Item Deleted PQ7 20.1584 68.377 236 949 PQ8 20.5528 57.382 904 911 PQ9 20.4037 57.625 929 910 PQ10 20.3789 56.149 839 914 PQ11 20.2826 58.752 798 917 PQ12 20.2857 56.977 788 918 PQ13 20.4161 59.147 715 922 PQ14 20.3075 57.964 787 918 PQ15 20.2950 59.380 708 923 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 86 3.3.4 Step Reliability Statistics Cronbach's Alpha N of Items 949 Item-Total Statistics Scale Mean if Item Scale Variance if Deleted Item Deleted Corrected Item- Cronbach's Alpha Total Correlation if Item Deleted PQ8 17.8261 52.294 907 936 PQ9 17.6770 52.444 938 935 PQ10 17.6522 50.957 851 939 PQ11 17.5559 53.537 805 942 PQ12 17.5590 51.886 791 943 PQ13 17.6894 53.386 753 946 PQ14 17.5807 53.260 763 945 PQ15 17.5683 54.109 716 948 3.4 PERCEIVED VALUE Reliability Statistics Cronbach's Alpha N of Items 913 Item-Total Statistics Scale Mean if Item Scale Variance if Deleted Item Deleted Corrected Item- Cronbach's Alpha Total Correlation if Item Deleted PV1 11.1988 17.138 720 905 PV2 11.1335 16.421 782 893 PV3 11.1304 16.780 717 907 PV4 11.1832 17.029 884 876 PV5 11.1801 16.516 812 886 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 87 APPENDIX 4: FACTOR ANALYSIS RESULT 4.1 DETERMINANTS OF CUSTOMER SATISFACTION KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity 808 Approx Chi-Square 9.309E3 df 300 Sig .000 Total Variance Explained Initial Eigenvalues Total Component % of Variance Extraction Sums of Squared Loadings Cumulative % Total % of Variance Rotation Sums of Squared Loadings % of Cumulative % Total Variance Cumulative % 11.069 44.274 44.274 11.069 44.274 44.274 6.337 25.347 25.347 4.751 19.004 63.278 4.751 19.004 63.278 5.403 21.612 46.959 1.712 6.846 70.124 1.712 6.846 70.124 4.135 16.542 63.501 1.544 6.174 76.299 1.544 6.174 76.299 3.199 12.798 76.299 814 3.255 79.554 719 2.878 82.432 616 2.462 84.894 507 2.026 86.921 467 1.868 88.789 10 408 1.632 90.421 11 350 1.398 91.819 12 334 1.336 93.155 13 274 1.096 94.251 14 238 953 95.204 15 216 864 96.069 16 193 770 96.839 17 175 701 97.540 18 142 567 98.107 19 109 437 98.544 20 094 375 98.919 21 083 333 99.251 22 076 305 99.556 23 052 207 99.763 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 88 24 035 141 99.904 25 024 096 100.000 Extraction Method: Principal Component Analysis Component BI1 669 BI2 798 BI3 602 BI4 808 BI5 668 BI6 739 BI7 745 BI8 818 CE1 796 CE2 728 CE3 799 CE4 795 PQ8 911 PQ9 921 PQ10 831 PQ11 850 PQ12 806 PQ13 795 PQ14 742 PQ15 778 PV1 835 PV2 748 PV3 814 PV4 841 PV5 811 4.2 CUSTOMER SATISFACTION KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Approx Chi-Square df Sig .549 262.497 000 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 89 Total Variance Explained Initial Eigenvalues Extraction Sums of Squared Loadings % of Component Total % of Variance Cumulative % 1.874 62.467 62.467 850 28.342 90.809 276 9.191 100.000 Total 1.874 Variance 62.467 Cumulative % 62.467 Component Matrixa Component TM1 906 TM2 877 TM3 533 Extraction Method: Principal Component Analysis a components extracted LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 90 APPENDIX 5: MUPTIPLE REGRESSION ASSUMPTIONS 5.1 LINEARITY AND HOMOSCEDASTICITY 5.2 NORMALITY LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 91 Tests of Normality Kolmogorov-Smirnova Statistic df Standardized Residual 039 322 a Lilliefors Significance Correction * This is a lower bound of the true significance Shapiro-Wilk Sig .200* Statistic 991 df Sig 322 041 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ... dimensions of customer satisfaction, as well as the relationships between customer satisfaction and the other dimensions of the personal loan service Therefore, the population of the study was customers,... the differences in the perception of customers about the personal loan service For instance, Singh and Arora (2011) examine the banking services and customer satisfaction by comparing public, private,... finalization of the instrument for the main study The fourth section presents the assessment of the personal loan service construct using factor analysis The fifth section reports the assessment of the