(Luận văn) factors affecting customer loyalty in the vietnamese banking industry

UNIVERSITY OF ECONOMICS HO CHI MINH CITY t to ng International School of Business hi ep w n lo ad y th ju Tran Nguyen Anh Tuan yi pl n ua al va n FACTORS AFFECTING CUSTOMER LOYALTY IN THE VIETNAMESE BANKING INDUSTRY ll fu oi m at nh z z k jm ht vb om l.c gm MASTER OF BUSINESS (Honours) an Lu n va ey t re th Ho Chi Minh City – Year 2014 t to ng UNIVERSITY OF ECONOMICS HO CHI MINH CITY hi ep International School of Business w n lo ad ju y th yi pl Tran Nguyen Anh Tuan n ua al n va FACTORS AFFECTING CUSTOMER LOYALTY IN THE VIETNAMESE BANKING INDUSTRY ll fu oi m at nh z z k jm ht vb gm ID: 22110077 om l.c n va SUPERVISOR: DINH THAI HOANG an Lu MASTER OF BUSINESS (Honours) ey t re th Ho Chi Minh City – Year 2014 t to ABSTRACT ng hi With a population of 91 million consumers and economic growth rate averaged 6.57 percent ep from 2006 until 2012, Vietnam has been an attractive foreign investment destination Therefore, w the competition has been gradually increasing Banking industry is no exception as it has high n lo ad interaction with the customers, so managers have to understand the factors which influence the y th loyalty of customers towards their respective banks According to Afsar et al., (2010), “it is ju yi always costly to attract new customers, so the managers always try to find ways to retain their pl customers of the organizations” n ua al current customers and focus on different factors which enhances the customer loyalty among the va n Based on that, the study was carried out to reveal the impact of corporate image, service quality, ll fu at nh industry oi m customer satisfaction, switching cost and trust on customer loyalty in the Vietnamese banking This study gathered survey data from a convenience sample of 252 consumers are living and z z ht vb working in Ho Chi Minh City The results demonstrate that corporate image, customer k jm satisfaction and switching cost have positive relationships with customer loyalty The om l.c gathered from the respondents gm relationships of these factors are studied and the SPSS software is used to analyze the data an Lu n va ey t re th i t to ACKNOWLEDGMENTS ng hi I would like to express my sincere thankfulness to my research advisor, Prof Dinh Thai Hoang ep for his support throughout the research process He had devoted his valuable time and efforts in w patiently guiding me to complete this study I would like to convey my special thanks to him for n lo ad his assistance and encouragement ju y th I would like to express my gratitude to all ISB staffs that supported necessary materials and yi helped summit my papers Especially, I would like to give my special thanks my family for pl ua al supporting me spiritually throughout my life n I thank my friends and colleagues who provided much needed inspiration and support during this n va time fu ll Ho Chi Minh City, Viet Nam oi m at nh z z ht vb Tran Nguyen Anh Tuan k jm om l.c gm an Lu n va ey t re th ii t to TABLE OF CONTENTS ng hi Abstract i ep Acknowledgments ii w Tables of content iii n lo ad List of tables vi ju y th List of figures vii yi Chapter 1: Introduction pl ua al 1.1 Background n 1.2 Research problem va n 1.3 Research questions fu ll 1.4 Research delimitations oi m 1.5 Contribution of the research nh at 1.6 Outline of study z z Chapter 2: Literature review ht vb 2.1 Customer loyalty jm k 2.2 Factors affecting customer loyalty gm l.c 2.2.1 Customer satisfaction om 2.2.2 Trust an Lu 2.2.3 Service quality n va 2.2.4 Switching cost ey t re 2.2.5 Corporate image 2.3 Research model and hypotheses th Chapter 3: Research method 12 iii t to 3.1 Research process 12 ng hi 3.2 Measurement scale 14 ep 3.2.1 Customer loyalty 14 w 3.2.2 Corporate image 14 n lo ad 3.2.3 Perceived service quality 14 ju y th 3.2.4 Customer satisfaction 15 yi 3.2.5 Switching cost 16 pl ua al 3.2.6 Trust 16 n 3.3 Measurement refinement 16 va n 3.3.1 Qualitative research 17 fu ll 3.3.2 Quantitative pilot research 17 oi m 3.4 Sample and date collection 18 nh at 3.4.1 Sample size 18 z z 3.4.2 Sampling 19 ht vb 3.4.3 Data analysis methods 19 jm k Chapter 4: Data analysis and results 22 gm l.c 4.1 Pilot study 22 om 4.1.1 Cronbach’s alpha 22 an Lu 4.1.2 Exploratory factor analysis 23 ey 4.2.2 Cronbach’s alpha 28 t re 4.2.1 Descriptive analysis 26 n va 4.2 Main survey 26 th 4.2.3 Exploratory factor analysis 28 iv t to 4.2.4 Regression analysis 30 ng hi Chapter 5: Conclusion and implications 36 ep 5.1 Conclusion 36 w 5.2 Managerial implications 36 n lo ad 5.3 Limitations of study and future research 38 ju y th References 40 yi Appendices 43 pl ua al Appendix 1: Questionnaire 43 n Appendix 2: Reliability analysis in Pilot study 49 va n Appendix 3: EFA result of service quality in pilot study 53 fu ll Appendix 4: EFA result of the remaining variables in pilot study 55 oi m Appendix 5: Descriptive analysis 58 nh at Appendix 6: Reliability in main study 59 z z Appendix 7: EFA result of service quality in main study 61 ht vb Appendix 8: EFA result of the remaining variables in main study 63 jm k Appendix 9: Partial regression plot 65 gm l.c Appendix 10: Homoscedasticity of residuals 67 om Appendix 11: Charts of residual normality 68 an Lu n va ey t re th v t to LIST OF TABLES ng hi Table 3.1: Scales of customer loyalty ep Table 3.2: Scales of corporate image w Table 3.3: Scales of perceived service quality n lo ad Table 3.4: Scales of customer satisfaction ju y th Table 3.5: Scales of switching cost yi Table 3.6: Scales of trust pl ua al Table 4.1: Summarized EFA analysis for Service quality in pilot study n Table 4.2: Summarized EFA analysis of the remaining variables in pilot study n va Table 4.3: Service characteristics fu ll Table 4.4: Summarized EFA analysis for Service quality in main survey oi m Table 4.5: Summarized EFA analysis for the remaining variables in main survey at nh Table 4.6: Correlations z z Tables 4.7: Coefficients k jm Table 4.9: Summary of Hypotheses testing results ht vb Table 4.8: Model summary and ANOVA om l.c gm an Lu n va ey t re th vi t to LIST OF FIGURES ng hi Figure 2.1: A conceptual model ep Figure 3.1: Research process w Figure 4.1: A revised model n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z k jm ht vb om l.c gm an Lu n va ey t re th vii t to CHAPTER ng hi INTRODUCTION ep This chapter introduces the background and problems of the research It then shows the research w questions that are needed to answer It also reviews the contribution and the structure of the n lo ad research ju y th 1.1 Background yi During the past decade, the financial services sector has undergone drastic changes, resulting in a pl ua al market place which is characterized by intense competition, little growth in primary demand and n increased deregulation In the new market place, the occurrence of committed and often inherited va n relationships between a customer and his or her bank is becoming increasingly scarce (Levesque fu ll & McDougall, 1996) Banking industry has traditionally operated in a stable environment for oi m decades Today, this industry is facing fierce competition for market share Indeed, Huong Tra nh at (2013) stated, “Currently the retail market has witnessed fierce competition from banks in Viet z z Nam Although this industry has developed in the early stages, it has been contributing ht vb significantly to the economic growth of the country On average, the contribution of retailers to jm k GDP is about 14% each year By 2014, the sector’s contribution to GDP will increase to 23%” gm l.c Banks begin to realize that no bank can offer all products as every bank is trying hard to retain om their existing customers with all sorts of innovation in their product According to Afsar et al., an Lu (2010), “it is always costly to attract new customers, so the managers always try to find ways to ey customer generally behaves better than a satisfied one and prefers to repurchase the products and t re among the customers of the organizations” Tariq and Moussaoui (2009) stated that “a loyal n va retain their current customers and focus on different factors which enhances the customer loyalty th t to Total Variance Explained of service quality in pilot study ng hi Initial Eigenvalues ep Component w Cumulative % 10.546 52.728 52.728 10.546 52.728 52.728 6.762 33.808 33.808 1.764 8.820 61.548 1.764 8.820 61.548 3.312 16.558 50.366 1.029 5.143 66.692 1.029 5.143 66.692 3.265 16.325 66.692 lo n Rotation Sums of Squared Loadings % of Cumulative Total Variance % % of Variance Total Extraction Sums of Squared Loadings % of Cumulative Total Variance % ad ju y th yi pl n ua al n va ll fu oi m at nh z z k jm ht vb om l.c gm an Lu n va ey t re th 54 t to Appendix 4: EFA result of the remaining variables in pilot study ng hi -First-time running factor analysis ep Total Variance Explained w n Rotation Sums of Squared Loadings Loadings Initial Eigenvalues lo ad Total % of Cumulative Variance % 8.137 1.654 1.291 7.592 1.095 6.440 846 4.974 698 4.108 80.712 596 3.503 84.215 467 2.748 86.964 395 2.322 89.286 10 351 2.066 91.352 11 303 1.783 93.135 12 269 1.585 94.719 13 237 1.393 96.113 14 209 1.231 97.343 15 194 1.142 98.485 16 148 872 99.357 17 109 643 100.000 Cumulative Variance % Total % of Cumulative Variance % 47.866 8.137 47.866 47.866 3.447 20.276 20.276 9.732 57.598 1.654 9.732 57.598 3.314 19.495 39.771 65.190 1.291 7.592 65.190 2.953 17.370 57.142 71.630 1.095 6.440 71.630 2.463 14.488 71.630 ju 47.866 Total % of pl y th Component Extraction Sums of Squared yi n ua al 76.604 n va ll fu oi at nh z z k jm ht vb om l.c gm an Lu Analysis m Extraction Method: Principal Component n va ey t re th 55 t to ng a hi Rotated Component Matrix ep Component w n lo 865 215 Customer satisfaction 712 161 308 183 Customer satisfaction 680 253 290 240 Trust 670 392 334 178 Trust 487 347 389 256 484 212 401 398 Corporate image 160 790 189 135 Corporate image 195 779 297 147 776 157 321 720 115 559 105 185 847 169 828 178 825 120 169 864 ad Customer satisfaction ju y th yi pl Trust n ua al 187 n va Corporate image 153 ll fu Corporate image 530 oi m Corporate image 188 Customer loyalty 310 214 156 319 823 jm Switching cost 125 ht 233 vb Switching cost z Switching cost 261 z Customer loyalty at 221 nh Customer loyalty 236 723 k Rotation Method: Varimax with Kaiser Normalization l.c gm Extraction Method: Principal Component Analysis a Rotation converged in iterations om an Lu -Final running factor analysis Kaiser-Meyer-Olkin Measure of Sampling Adequacy 792.499 105 Sig .000 th df ey Approx Chi-Square 881 t re Bartlett's Test of Sphericity n va KMO and Bartlett's Test a Rotated Component Matrix 56 t to Component ng hi ep w 791 Corporate image 790 Corporate image 770 Corporate image 730 n Corporate image lo ad Corporate image 566 526 y th 869 Customer satisfaction 734 Customer satisfaction ju yi 686 pl Customer satisfaction 420 628 ua al Trust Customer loyalty 847 n 835 n va Customer loyalty Customer loyalty 833 fu 865 ll Switching cost m 828 oi Switching cost 728 at nh Switching cost Extraction Method: Principal Component Analysis z Rotation Method: Varimax with Kaiser Normalization z Rotation Sums of Squared Loadings % of Cumulative Total Variance % 3.229 21.527 21.527 7.115 1.622 10.815 58.248 1.622 10.815 58.248 2.927 19.511 1.289 8.593 66.841 1.289 8.593 66.841 2.683 17.887 1.091 7.276 74.117 1.091 7.276 74.117 2.279 15.191 om % of Variance 47.433 Total Cumulative % 47.433 Extraction Sums of Squared Loadings % of Cumulative Total Variance % 7.115 47.433 47.433 l.c Component gm Initial Eigenvalues k Total Variance Explained jm ht vb a Rotation converged in iterations an Lu 41.038 58.925 va 74.117 n ey t re th 57 t to Appendix 5: Descriptive analysis ng Demographic profile of the respondents hi ep Categories w n Gender lo ad Male Female Below 25 25-35 36-46 Over 46 Married Single Other Elementary education High school University Other Student 112 140 81 149 20 64 186 181 66 33 ju y th Age Frequency yi pl Marital status n ua al n va Education level 152 60,32% 73,41% nh 14,68% 11,90% 24,21% 44,44% 15,08% 7,94% 8,33% 88,10% 100,00% 24,21% 68,65% 83,73% 91,67% 100,00% oi m z z vb k jm ht om l.c gm 37 30 61 112 38 20 21 at Managerial level Other or less 6-10 11-15 16-20 Over 20 ll Mothly income ( million VND) Office staff fu Occupation Percentage Cumulative (%) percent (%) 44,44% 44,44% 55,56% 100,00% 32,14% 32,14% 59,13% 91,27% 7,94% 99,21% 0,79% 100,00% 25,40% 25,40% 73,81% 99,21% 0,79% 100,00% 0,00% 0,00% 1,98% 1,98% 71,83% 73,81% 26,19% 100,00% 13,10% 13,10% an Lu n va ey t re th 58 t to Appendix 6: Reliability in main survey ng hi Scale Mean if Item Deleted Scale Variance if Item Deleted Corrected ItemTotal Correlation Cronbach's Alpha if Item Deleted 16.184 750 865 Corporate image 214.722 16.752 772 860 Corporate image 215.992 16.624 779 858 n 215.556 16.758 756 863 216.706 18.110 622 892 w 212.421 ep Corporate image Corporate image lo ad Corporate image Cronbach's alpha Corporate image 334.161 631 960 975.675 333.880 629 960 971.270 339.107 607 960 333.900 676 959 973.095 327.713 771 958 Service quality 975.992 324.910 798 958 Service quality 973.730 326.984 808 958 Service quality 974.048 328.648 771 958 Service quality 973.770 327.734 771 958 Service quality 10 974.365 326.868 794 958 Service quality 11 974.365 324.502 835 957 Service quality 12 976.349 329.173 721 959 Service quality 13 974.881 326.378 780 958 Service quality 14 973.333 326.526 837 957 Service quality 15 972.381 329.473 759 958 Service quality 16 972.698 332.859 754 958 Service quality 17 979.246 334.867 619 960 Service quality 18 976.706 330.756 586 961 Service quality 19 979.246 328.548 719 959 Service quality 20 977.817 332.880 692 Service quality ju 974.484 jm y th Service quality 892 pl Service quality yi Service quality n ua al Service quality 977.183 n va ll fu oi m at nh z z ht vb k 764 Customer satisfaction 151.627 10.360 776 Customer satisfaction 150.873 11.140 765 Customer satisfaction 151.587 10.580 754 858 863 866 893 n Cronbach's alpha Customer satisfaction 862 720 823 Switching cost 101.429 5.055 766 779 Switching cost 101.270 5.299 731 812 Cronbach's alpha Customer loyalty 100.000 7.490 th 5.771 ey 97.857 t re Switching cost Switching cost va 10.814 an Lu 149.484 om Customer satisfaction l.c 961 gm Cronbach's alpha Service quality 959 861 780 879 59 t to ng Customer loyalty 98.968 7.551 834 835 Customer loyalty 99.524 7.233 800 863 Cronbach's alpha hi Customer loyalty 901 ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z k jm ht vb om l.c gm an Lu n va ey t re th 60 t to Appendix 7: EFA result of service quality in main study ng hi KMO and Bartlett's Test ep Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity 953 Approx Chi-Square 4.172E3 w n lo df 190 Sig .000 ad y th a Rotated Component Matrix ju yi Component pl 688 Service quality 686 Service quality 10 680 Service quality 678 Service quality 17 240 828 Service quality 18 721 Service quality 19 709 Service quality 230 858 Service quality 545 ey 754 t re Service quality n 845 va Service quality an Lu 739 om Service quality 20 l.c Service quality 12 gm 697 k Service quality jm 698 ht Service quality vb 702 z Service quality 16 z 724 at Service quality 15 nh 772 oi Service quality 11 m 774 ll Service quality 13 fu 789 n Service quality 14 va 794 n Service quality ua al th Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization a Rotation converged in iterations 61 t to Total Variance Explained ng Extraction Sums of Squared Loadings % of Cumulative Total Variance % 11.595 57.974 57.974 hi Initial Eigenvalues 11.595 % of Variance 57.974 w ep Component 1.490 7.449 65.423 1.490 7.449 65.423 3.536 17.678 53.798 1.107 5.535 70.958 1.107 5.535 70.958 3.432 17.160 70.958 Total Cumulative % 57.974 Rotation Sums of Squared Loadings % of Cumulative Total Variance % 7.224 36.120 36.120 n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z k jm ht vb om l.c gm an Lu n va ey t re th 62 t to Appendix 8: EFA result of the remaining variables in main study ng hi KMO and Bartlett's Test ep Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity 887 Approx Chi-Square 2.503E3 w n df 105 lo Sig .000 ad a Rotated Component Matrix ju y th Component yi 845 al 830 Corporate image 600 Customer satisfaction 162 ll 806 fu Corporate image n 812 va Corporate image n ua Corporate image 4 pl Corporate image 3 Customer loyalty 293 846 Switching cost 161 873 829 Switching cost 808 a Rotation converged in iterations an Lu Rotation Method: Varimax with Kaiser Normalization om Extraction Method: Principal Component Analysis l.c Switching cost gm 824 k Customer loyalty jm 827 ht Customer loyalty vb 767 z Customer satisfaction z 786 at Customer satisfaction nh 812 oi Customer satisfaction m 853 n va ey t re th 63 t to Total Variance Explained in main survey ng hi Extraction Sums of Squared Loadings % of Cumulative Total Variance % Initial Eigenvalues ep Component Total % of Variance Cumulative % Rotation Sums of Squared Loadings Total % of Variance Cumulative % w 6.832 45.543 45.543 6.832 45.543 45.543 3.462 23.083 23.083 2.170 14.469 60.012 2.170 14.469 60.012 3.096 20.642 43.725 1.442 9.610 69.622 1.442 9.610 69.622 2.487 16.578 60.304 1.037 6.911 76.533 1.037 6.911 76.533 2.434 16.230 76.533 n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z k jm ht vb om l.c gm an Lu n va ey t re th 64 t to Appendix 9: Partial regression plot ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z k jm ht vb om l.c gm an Lu n va ey t re th 65 t to ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z k jm ht vb om l.c gm an Lu n va ey t re th 66 t to Appendix 10: Homoscedasticity of residuals ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z k jm ht vb om l.c gm an Lu n va ey t re th 67 t to Appendix 11: Charts of residual normality ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z k jm ht vb om l.c gm an Lu n va ey t re th 68