Factors affecting the intention to borrow money of personal customers at commercial banks in ho chi minh city

MINISTRY OF EDUCATION & TRAINING HO CHI MINH UNIVERSITY OF BANKING GRADUATION THESIS FACTORS AFFECTING THE INTENTION TO BORROW MONEY OF PERSONAL CUSTOMERS AT COMMERCIAL BANKS IN HO CHI M

MINISTRY OF EDUCATION & TRAINING HO CHI MINH UNIVERSITY OF BANKING

GRADUATION THESIS

FACTORS AFFECTING THE INTENTION TO BORROW MONEY OF PERSONAL CUSTOMERS AT COMMERCIAL BANKS IN HO CHI MINH CITY

Major: Finance – Banking Code: 7 34 02 01

NGUYỄN HỮU TRƯỜNG

HO CHI MINH CITY, 2023

MINISTRY OF EDUCATION & TRAINING HO CHI MINH UNIVERSITY OF BANKING

GRADUATION THESIS

FACTORS AFFECTING THE INTENTION TO BORROW MONEY OF PERSONAL CUSTOMERS AT COMMERCIAL BANKS IN HO CHI MINH CITY

Major: Finance – Banking

ABSTRACT

This research is to identify and measure factors affecting the intention to borrow money of personal customers at commercial bank in Ho Chi Minh City Propose solutions to improve high service quality and attract personal customers to borrow money To achieve this goal, the study conducted a survey of 150 personal customers who have been and are in need of using loan services at Commercial Banks The author uses qualitative and quantitative research methods with a survey sample of 150 personal customers and this research’s data sets were collected from people in Ho Chi Minh City The datas were analyzed by the method of Cronbach’s Alpha, Exploratory Factor Analysis (EFA) and multivariate linear regression analysis This research show that there are 6 factors affecting the intention of personal customer to borrow money including (1) Service Quality; (2) Bank Brand; (3) Bank Reputation; (4) Credit Policy; (5) Service Price and Cost; (6) Influence from Relationship

Keywords: Borrowing intention, Commercial bank, Personal customers

DECLARATION

Student Nguyen Huu Truong would like to declare that this is a graduation thesis written by myself, and is the result obtained during the research process The content of the graduation thesis is about the topic “Factors affecting the intention to borrow money of personal customers at Commercial Banks in Ho Chi Minh City”

The data presented in this report are truthful, all information and documents are clearly cited I take full responsibility for my report

Author

Nguyễn Hữu Trường

ACKNOWLEDGMENTS

First, I would like to thank to all lecturers of Ho Chi Minh University of Banking, who have directly taught and imparted useful knowledge during the 4 years I studied at the university That is the foundation and extremely valuable luggage to help me step firmly into my future career

I would also like to send my sincere thanks to Mr Nguyen Hoang Vinh Loc - who wholeheartedly guided me so that I could complete my graduation thesis in the best way

With limited research time at the unit and limited knowledge, I cannot avoid shortcomings in my report I hope to receive comments and suggestions from teachers to complete the report

Finally, I would like to wish you always joy, happiness, good health and success in your work Sincerely!

1.6.Meaning of the topic 4

1.7.Contribution of the thesis 5

1.8.Thesis layout 6

SUMMARY OF CHAPTER 1 8

CHAPTER 2.RESEARCH OVERVIEW 9

2.1.Overview of personal loans 9

2.1.1.Definitions 9

2.1.2.Characteristics of personal lending activities 10

2.1.3.Classification of personal customer loans 11

2.1.4.Process of pesonal loans 13

2.1.5.Conditions for borrowing loans 15

2.1.6.Principle for borrowing loans 16

2.2.Theoretical framework 16

2.2.1.Theory of Planned Behavior 16

2.2.2.Theory of Reasoned Action 18

2.2.3.Theory of Service Quality 19

4.2.2.Check scale reliability using Cronbach’s Alpha 44

4.2.3.Exploratory Factor Analysis 50

4.2.4.KMO and Bartlett’s Test 51

4.3.Analyze linear regression models 52

4.3.1.Analyze Pearson correlation coefficient: 52

4.3.2. Test regression hypotheses 57

4.3.3.Checking for multicollinearity 66

SUMMARY OF CHAPTER 4 67

CHAPTER 5.CONCLUSION AND RECOMMENDATIONS 68

LIST OF TABLES

Table 2.3.1 Summary of related research 25

Table 3.1.2 Research Process 29

Table 3.2.3 Research model 31

Table 3.4.4 Research design 34

Table 4.1.5 Research Statistics 40

Table 4.2.6 Descriptive statistics 42

Table 4.2.7 Check scale reliability using Cronbach Alpha 44

Table 4.2.8 Principal Component 50

Table 4.2.9 KMO and Bartlett's Test 51

Table 4.3.10 Pearson Correlation 52

Table 4.3.11 Model Summary 58

Table 4.3.12 Anova Model 59

Table 4.3.13 Coefficients Model 60

Table 4.3.14 Standardized Coefficients 61

Table 4.3.15 Checking for multicollinearity 66

LIST OF FIGURE

Figure 2.2.1 Theory of Planned Behavior – TPB 16

Figure 2.2.2 Theory of Reasoned Action – TRA 18

Figure 4.3.3 Histogram 63

Figure 4.3.4 Normal P-P Plot 64

Figure 4.3.5 Scatterplot 65

CHAPTER 1 INTRODUCTION 1.1 Reason for choosing the topic

Lending activities always contribute an important part to banks' profits At the present, banks' interest in lending activities to personal customers has increased significantly Lending to this group often carries less risk for banks, because it helps diversify loan portfolios and most personal customers have enough collateral to secure their loans Furthermore, this activity is often more profitable than lending to corporate customers, mainly due to higher lending interest rates In addition, personal customers tend to use a variety of products and services offered by banks, including credit cards, checking accounts, and insurance This creates opportunities for banks to increase interaction with customers and generate additional income streams from these services In short, expanding lending activities to personal customers has become an important part of banks' business strategies, bringing benefits of low risk, increased profits and opportunities for growth, diverse financial products and services

This investigation focuses on understanding the underlying factors and motivations that influence individuals' decisions to apply for loans from Commercial Banks in the dynamic and bustling city of Ho Chi Minh City, Vietnam This overview provides a glimpse into the key aspects of this research topic Borrowing money is one of the most important activities of banks Providing loans helps finance projects and business development, promote economic growth, and can also build relationships with customers through loan services Personal customers face many factors when deciding to borrow money Understanding the factors that influence customers' loan decisions can help them ensure personal financial stability and effective loan plans

1.2 Research objectives

General objectives: Determine the factors affecting the loan intention of personal customers at Commercial Banks in Ho Chi Minh City Therefore, the aim is to provide new evidence on the impacts of factors affecting personal customers' loan intention at Commercial Banks in Ho Chi Minh City

Specific objectives: Identify the factors affecting the loan intention of personal customers at Commercial Banks in Ho Chi Minh City and measure the level of influence of these factors Provide recommendations to improve the quality of service and policy of commercial banks in Ho Chi Minh City

1.3 Research questions

To achieve the above research goals, the author needs to answer the following research questions:

Question 1: What factors affect the loan intention of personal customers at Commercial Banks in HCM city?

Question 2: What is the level of influence of factors on the loan intention of personal customers at Commercial Banks in HCM city?

Question 3: What can help to increase the borrowing intention of personal customers at Commercial Banks in HCM city?

1.4 Research object and scope of research

The object of research are personal customers who are intending to borrow money from Commercial Banks in Ho Chi Minh City

Research period: 9/2023 to 12/2023

1.5 Research methods

Survey method: is a method of gathering market information using surveys sent to participants to get their responses Data from customer responses will be statistically and analyzed to find useful information and draw meaningful market research conclusions Develop a questionnaire on issues related to loan intention of personal customers at Commercial Banks in Ho Chi Minh City The survey method is a quantitative method of collecting information from a group of participants by asking many survey questions Therefore, the data obtained from the survey is quantitative data Survey of individuals who have participated and have intention to borrow money at Commercial Banks

Comparative method: In order to analyze the problem, based on data and information from surveys and related documents, the author compares and analyzes factors affecting customers' loan intentions The comparative method allows us to synthesize common features as well as separate unique features of the phenomena being compared, on that basis to evaluate aspects of development or underdevelopment, effectiveness or ineffectiveness to find optimal management solutions in each specific case

Synthesis method: is a method of arranging diverse information collected from different sources and documents into a system with a strict structure from the system-structure perspective of building a theoretical model to build a complete new theory to help understand the subject more fully and deeply From the collected results, the author synthesizes, selects, and classifies information to evaluate the impact of factors on personal customers' loan intentions

Quantitative research, also known as formal research, is a method of using data collected from interviews with research object combined with analytical tools to

evaluate scales and test hypotheses set out in the research models From there, subjects will be able to draw accurate conclusions The goal of quantitative research is to develop and use mathematical models, theories or hypotheses that are directly related to phenomena Quantitative research incorporates EFA to explore underlying structures, Cronbach's Alpha for assessing reliability, KMO and Barlett's test to evaluate the suitability of data for factor analysis, and linear regression to model and understand relationships between variables These techniques collectively contribute to the rigor and depth of quantitative analysis in research studies

1.6 Meaning of the topic

Topic: "Factors affecting the intention to borrow money of personal customers at Commercial Banks in Ho Chi Minh City" was conducted to identify factors affecting the loan intention of personal customers at Commercial Banks in Ho Chi Minh City Research data was collected from online surveys of individuals living in Ho Chi Minh The comparison method is used to compare and analyze the impact of factors that influence loan intention From there, the study provides a number of recommendations for Commercial Banks regarding each influencing factor to attract personal customers to choose to borrow money from the bank This research topic aims to identify, analyze, and understand the factors that play a significant role in a person's intention to apply for a loan, use it for personal, educational, housing, or any other purpose By examining the factors affecting the loan intention of personal customers at Commercial Banks in Ho Chi Minh City, the research seeks to provide a deeper understanding of the borrower's decision-making process This topic is centered around understanding the different factors that play a role in influencing an individual's intention to borrow money These factors could encompass a wide range of elements, including economic, social, psychological, and personal financial considerations The geographical context is specified to Ho Chi Minh City, indicating that the study is centered around the

commercial banking sector in this specific location This could involve examining the offerings, services, and practices of commercial banks in Ho Chi Minh City and how these factors relate to individuals' borrowing intentions

1.7 Contribution of the thesis

Research on loan intentions of personal customers in Ho Chi Minh City can provide deeper information about customer psychology in a dynamic economic environment Understanding how these factors impact loan intention will help banks improve the quality of their services and products Therefore, this research aims to help banks increase their understanding of customers, tailoring their products and services to meet customer needs more effectively Analyze the factors influencing loan intention can guide policymakers in promoting financial inclusion and creating policies that cater to underserved or marginalized populations By facilitating better access to loans and financial products tailored to customer needs, the research may contribute to the overall economic growth of Ho Chi Minh City The findings from this study can be beneficial for Commercial Banks, policymakers, and personal customers Commercial Banks can use this research to tailor their loan products and services, while policymakers can develop more informed financial regulations and consumer protection policies For personal customers, understanding these factors can help them make more informed decisions about borrowing and managing their finances In summary, the chosen topic addresses the complexities of individual decision-making regarding borrowing money in the specific context of Ho Chi Minh City, with potential implications for the banking sector, policy formulation, and academic research

1.8 Thesis layout

In addition to the abstract, list of references, the article is structured in 5 chapters:

Chapter 1: Introduction

Chapter 1 introduces the reader to the study, providing a foundational understanding of the research's context and objectives

Chapter 2: Research overview

Chapter 2 offers a comprehensive overview of the existing body of research related to the topic, highlighting key findings and identifying gaps that the current study aims to address

Chapter 3: Research models and methods

Chapter 3 delves into the research models and methods employed, detailing the approach taken to gather and analyze data, thereby establishing the study's methodological framework

Chapter 4: Research results

Chapter 4 presents the core findings and results of the research, offering insights derived from the collected data and analyzing their implications in the context of the research questions

Chapter 5: Conclusion and recommendations

Chapter 5 serves as the conclusion, summarizing the key findings, discussing their significance, and providing recommendations for future research or practical

applications This structured layout ensures a logical flow of information, guiding the reader through the entire research process

SUMMARY OF CHAPTER 1

Chapter 1 of the thesis has mentioned some theoretical introduction related about research objectives, research questions and the original meaning of the topic Giving readers an overview of Factors affecting the intention to borrow money of personal customers at Commercial Banks in Ho Chi Minh City The chapter outlines the methodologies employed in the research, providing insights into the approaches and tools used to gather and analyze data This ensures transparency in the research process Besides, the exploration of factors affecting the loan intention to borrow money of personal customers at Commercial Banks in Ho Chi Minh City contributes to the broader understanding of consumer behavior in the context of borrowing In summary, Chapter 1 sets the stage for the thesis, providing a clear rationale, objectives, questions, and methods and establishes the significance of the chosen topic and outlines the potential contributions of the research

CHAPTER 2 RESEARCH OVERVIEW 2.1 Overview of personal loans

2.1.1 Definitions

Provision of loans means a form of credit extension by which a credit institution gives or commits to give a client a sum of money for use for a specific purpose in a certain period of time as agreed upon the principle of repayment of principal and interest

Lending activities refer to the financial transactions and services provided by Commercial Banks and other financial institutions to personal customers These activities involve lending money to individuals for various purposes, such as personal expenses, purchasing a home, buying a car, financing education, or covering unexpected expenses Personal customer loans are a form of financial support from banks and financial companies to individuals, the individual submits a loan request If it is approved, the bank will disburse a sum of money to the customer Then customer commit that they must repay both principal and interest within a specified period of time

Customer can borrow in cash or transfer money, money can be transferred to the customer's account or the account of the seller to the customer Personal customers must be individuals with civil legal capacity, financial capability, and responsible according to the law Commercial Banks and financial institutions assess the creditworthiness of borrowers to determine the terms and interest rates for these loans Personal customer lending activities play a crucial role in the financial industry by providing individuals with access to financing for their various needs and contributing to the overall economy

2.1.2 Characteristics of personal lending activities

Personal customers are a group of individuals including: individuals, farm owners, households, cooperative groups This group of customers has a very large number and needs to borrow small amounts of money

Lending activities for personal customers are mainly to support the purchase of cars, houses, household equipment, construction materials to repair and modernize houses or cover hospital expenses, household business and production investments and other personal expenses

Thus, lending activities for personal customers are a form of lending in which the Bank transfers money to customers who are individuals or households for the purpose of consumption and small production and business activities of individuals and households The personal loans have these characteristics:

- High-risk loans

Loans are often secured by the individual's income However, if the customer encounters an unforeseen event such as illness, disease, etc., that income will immediately decrease or may even be completely lost Commercial Banks always have to face those risks, but appraisal and customer management cannot control all of them Because of this, many commercial banks for a long time in the past were very afraid to lend money to individuals But now, realizing that lending activities bring a significant source of revenue, commercial banks have focused on this goal and risk management is increasingly paid more attention by banks

- The large number of loans

Personal customer loans are smaller compared to loans from businesses Moreover, personal customers are often the most numerous In addition, loans from personal customers frequently arise and the transaction volume is increasingly large Because the number of loans is large, profits from lending activities will not be small if the Bank knows how to mobilize and do other related management tasks well

- Large appraisal costs

To avoid risks in lending activities, Banks often spend a lot of time and money on loan appraisal and other services In addition, collecting personal information is very difficult (often incomplete and inaccurate), so Commercial Banks will ensure the safety of loans by collecting more datas from customer’s relationships Commercial Banks have to adjust higher interest rates to compensate for costs (including costs of time, human resources, appraisal, etc.)

2.1.3 Classification of personal customer loans

- Classification by loan term:

Short-term loan: Is a loan account of less than 1 year and is used to supplement the customer's temporary lack of liquid money towards family living goals These are loans with relatively brief repayment periods They are typically used for immediate or emergency expenses

Medium-term loan: A loan account with a term of 1-5 years, usually for providing and purchasing assets, serving the high-value production and needs of households These are often used for purposes like debt consolidation or home improvements

Long-term loan: A credit loan with a term of 5 years or more, aimed at meeting household needs such as large production and purchasing high-value housing

- Classified by collateral assets:

Loan with collateral: is a type of loan where the borrower pledges some valuable asset as security or collateral for the loan This means that if the borrower is unable to repay the loan according to the agreed-upon terms, the lender has the right to seize the collateral to recover the outstanding balance

Loan without collateral: also known as unsecured loan, has no collateral or third-party guarantee These loans are based on the borrower's creditworthiness, and interest rates are often higher than secured loans

- Classified by purposes:

Loan for daily-life needs: means the provision of the loan by a credit institution to an individual client to pay for his/her own and his/her family living expenses

Loan for other activities: means the provision of a loan by a credit institution to a client being a legal person or an individual to meet fund demand of such person or individual or of the business household or private enterprise owned by such individual

Loan for production and business: these loans will help individuals and households have additional money to invest in purchasing equipment or investing in facilities to serve their business

Consumer loan: this form of loan helps personal customers meet their urgent needs such as buying a house, buying a car, paying tuition

Overdraft loan: This form allows customers to spend more than their current deposit limit

2.1.4 Process of pesonal loans

According to Vietnam Prosperity Joint Stock Commercial Bank’s credit granting regulations, there are 6 main steps:

Step 1: Receive loan applications

Banks and credit companies will receive customer applications In this application, customers need to clearly state what their loan needs are, what their current financial situation is this information will be verified by banks and credit companies If qualified, staff will guide customers to prepare a loan application Normally, the application set will include the following documents:

 Customer information  ID card/passport

 Marriage certificate (if married)  Loan profile

 Loan application form and money use plan  Documents proving the purpose of the loan

 Documents proving income: labor contract, salary confirmation,  Evaluate personal loan conditions

 Confirmation of appraisal of personal customer loan conditions Step 2: Evaluate customer's loan conditions

Based on documents, information provided by customers, information collected from actual customers, other information sources (if any), prepare an assessment,

appraisal and approval/decision/recommendation report Credit extension includes at least the following contents:

- Customer reviews;

- Evaluate customers' financial capacity and ability to fulfill debt obligations; - Assess customers' credit needs;

- Evaluate plans/projects proposed for credit; - Evaluate security measures

Step 3: Credit analysis

Credit analysis will help banks and credit companies minimize risks arising during the lending process

Through analysis, banks can accurately assess the level of reputation, legal status or financial and payment ability of customers at present and in the future From there, the approval decision is made

Determine customer class: follow current credit scoring and ranking process; Determining the level with authority to decide credit: comply with current credit authority regulations;

Step 4: Approve loans to personal customers

After the appraisal and analysis is completed, the approval department will have to review the information again before deciding on a loan

In case the loan application is approved, the bank or credit company will notify the customer soon to complete loan procedures

Step 5: Sign the contract and disburse money

When the application is approved, the bank or credit company will send the customer a commitment contract regarding loan amount, loan period, interest rate for both parties to sign and commit to implement

Step 6: Proceed to collect debt

When the payment term comes, banks/financial companies will notify customers, requiring customers to make timely loan payments in terms of principal and interest that both parties have signed in advance

In case the customer pays late or is unable to pay, the bank will consider the actual situation and make the latest and most appropriate credit decisions for the customer

2.1.5 Conditions for borrowing loans

Credit institutions will consider and decide to lend when customers meet the following loan conditions:

- Customer is a legal entity with civil legal capacity according to the provisions of law Customers are individuals from 18 years of age or older with full civil act capacity according to the provisions of law or from 15 years old to under 18 years old without loss or limitation of civil act capacity according to the provisions of the law

- Have demand to borrow capital to use for legal purposes - Have a feasible capital use plan

- Have financial ability to repay debt

2.1.6 Principle for borrowing loans

Principles for lending and borrowing capital from credit institutions are specified in Article 4 of Circular 39/2016/TT-NHNN regulating lending activities of credit institutions and foreign bank branches to customers, issued by the State Bank of Vietnam as follows:

- Lending activities of credit institutions to customers are carried out according to the agreement between the credit institution and customers, in accordance with the provisions of relevant legal provisions, including laws on environmental protection

- Customers who borrow money from credit institutions must ensure that they use the loan capital for the right purpose and repay loan principal and interest on time as agreed with the credit institution

2.2 Theoretical framework

2.2.1 Theory of Planned Behavior

Figure 2.2.1 Theory of Planned Behavior – TPB

According to Ajzen's theory of planned behavior (1991), the author believes that the intention to perform a behavior will be influenced by three factors such as attitude toward the behavior, subjective standards and perceived behavioral control The theory of planned behavior was developed from the theory of rational behavior (Ajzen and Fishbein, 1975), this theory was created due to the limitation of the previous theory in assuming that human behavior is completely determined by human behavior mind control

Personal factors are personal attitudes toward the behavior in terms of whether it is positive or negative when performing the behavior Regarding the person's perceived intention of social pressure, because it deals with the perception of pressure or normative compulsion, it is called subjective norm Social pressures such as family and friends can affect the decision to borrow money

In addition, the level of financial knowledge can influence the decision to borrow Incorporate the Theory of Planned Behavior (TPB), Attitude: Personal customers' positive or negative evaluation of obtaining a loan from the bank Subjective Norms: Influence from friends, family, and peers regarding the decision to take a loan Perceived Behavioral Control: Perceived ease or difficulty in obtaining a loan from the bank

Finally, there is the determinant of self-awareness or the ability to perform the behavior, called cognitive behavioral control (Ajzen, 2005) The theory suggests the importance of attitudes toward behavior, subjective norms, and perceived behavioral control leading to the formation of a behavioral intention Positive attitudes and confidence in the ability to repay debt can increase borrowing intentions Psychological comfort level with risk also affects borrowing intention

2.2.2 Theory of Reasoned Action

Figure 2.2.2 Theory of Reasoned Action – TRA

Subjective Norms: The degree of influence from the opinions of others, especially family, friends, and relatives in the loan decision, can be an important factor If these people all support the loan decision, the likelihood of loan intention increases

Attitude: Positive or negative attitude toward borrowing money can be an important factor If customers positively evaluate the benefits of borrowing, they may have a higher intention to borrow Trust may have a strong association with loan intention Customers need to have confidence in the bank's ability to provide loan services and properly meet commitments

Theoretical Foundations of Consumer Behavior through the theory of reasoned action shows interest in customer behavior as well as identifying behavioral tendencies, which are part of attitudes toward behavior and intentions The theory explains the tendency to perform behavior by customers' behavior-oriented attitudes Therefore, this theory will make an important contribution in the study of customers' behavior and decision-making to borrow money from banks

Theoretical Foundation Consumer Behavior is a subjective standard factor that can be measured through people related to the consumer (such as family, friends, colleagues, etc.); These people like or dislike what they buy The degree of impact of the subjective norm factor on the consumer's borrowing tendency depends on: the level of support/opposition for the consumer's intention and the consumer's motivation to follow the wishes of others The degree of influence of related people on consumer behavioral trends and the motivation for consumers to follow related people are two basic factors to evaluate subjective norms The stronger the level of intimacy of the people involved with the consumer, the greater the influence on their borrowing decisions The greater the consumer's trust in related people, the greater their borrowing tendency will be affected Consumers' borrowing intentions will be affected by these people with different levels of strong and weak influence

2.2.3 Theory of Service Quality

According to Gronroos, “service quality is the result of an evaluation process where customers compare the actual service they have received with their expectations.”

Sharing the same view as Gronroos, Parasuraman et al (1985) identified "service quality is a form of attitude, resulting from the comparison between the actual service that customers perceive when consuming service to their expectations Service quality is related but not equivalent to customer satisfaction.”

According to the service quality model of Brogowicz et al (1990), this quality model is a service quality model based on the integration of traditional management framework, service design and operation services and marketing activities in business It is essential to link potential customers' perceptions of service quality with customers' actual perceptions of service quality after they have used the service

2.2.4 Theory of Brand

Brand is the second essential asset for organizations in economic sectors (Doyle, 2001) Besides, many scholars around the world have emphasized the importance of brands playing a fundamental role in customer decision making

Zenor (1994) argues that the organizational form of category brand management appears to be justified by its improved ability to coordinate pricing and other marketing efforts for other products and brands of a company His research uses a game theory model to estimate the profitability of portfolio management, given different levels of cross-market price elasticities He demonstrates that the success of category management is enhanced when competitors are similarly organized

Low and Fullerton (1994) trace the development of brand management from the origins of the first national brands to the present They provide an important historical perspective on many of the issues affecting brand management today They note that brand management has proven quite adaptable to different companies and marketing environments relative to its existence

2.2.5 Theory of Satisfaction

There are many different perspectives on customer satisfaction Customer satisfaction is their response to the perceived difference between known experience and expectations (Parasuraman et al., 1988; Spreng et al., 1996) That is, the customer's known experience when using a service and the results after the service is provided Most specifically, customer satisfaction is the mood and feeling a customer has about a company when their expectations are satisfied or exceeded throughout the life cycle of a product or service Customers who achieve satisfaction will gain loyalty and continue to buy the company's products

A popular theory to consider customer satisfaction is the "Expectation - Confirmation" theory The theory was developed by Oliver (1980) and is used to study customer satisfaction with the quality of an organization's services or products That theory includes two small processes that have an independent impact on customer satisfaction: service expectations before purchase and service perceptions after experience

Cronin and Taylor (1992) argue that if a service provider provides customers with quality products that satisfy their needs, that business has taken a step forward to make customers satisfied Therefore, to improve customer satisfaction, service providers must improve service quality In other words, service quality and customer satisfaction are closely related to each other, in which service quality is what first creates and then determines customer satisfaction The cause and effect relationship between these two factors is a key issue in most customer satisfaction studies

2.3 Related research

2.3.1 Domestic research

According to Tran Vuong Thinh's research (2021), the results show that there are 6 factors that positively affect personal customers' loan intentions, of which (1) Lending Policy is the most influential factor; (i) Lending policy; (ii) Service staff; (iii) Price; (iv) Understanding; (v) Personal orientation and (vi) Marketing activities The results of the study showed no evidence of “Convenience” is not decisive and determine the amount of Commercial Banks to borrow due to research in Ho Chi Minh City Recently, Dr Nguyen The Doanh conducted research on Factors affecting personal customers' loan intention (2017) Reseach show that there are 5 factors that affect the figure, These factors are proportional to the decision to borrow money The increase or decrease in the customer's decision to borrow money will be affected by the

increasing or decreasing trend of the influencing factors Under the condition that other factors do not change when the Service Quality factor increases by 1 unit, the decision to borrow money is determined to increase by 0.274 units, showing a biggest impact on customers' loan decisions

According to Nguyen The Doanh’s research (2017) “Research on factors affecting individual customers' loan decisions at Vietnam Prosperity Joint Stock Commercial Bank - Da Nang branch" has systematized the basic issues of individual customer loans, explore factors that lead to individual customers' decision to choose loans The author has established a research process to build topic implementation Based on theoretical basis and previous research The total correlation of observed variables is greater than 0.3, all scales with Cronbach Alpha coefficients greater than 0.6 Therefore, all observed variables are accepted and used in the factor analysis The results showed service quality, credit policy, bank image, prices, has a positive impact on customers' loan decisions From those results, the author makes some main suggestions and implications policies that can positively impact decision to borrow for individual customers

Research by Phan Thi Ut Chau and colleagues (2020), aims to identify factors affecting individual customers' loan decisions at BIDV Hau Giang Research data was collected through a survey of individual customers who have been borrowing capital at BIDV Hau Giang Research results show that the key factors affecting individual customers' loan decisions at BIDV Hau Giang, arranged in descending order include: (1) Service quality; (2) Interest rates and loan costs; (3) Bank brand; (4) Loan procedures; (5) Convenience Based on the research results achieved, a number of management implications are proposed to contribute to improving service quality to maintain current customers and attract new individual customers to borrow capital at BIDV Hau Giang in the future As a result of qualitative research, the scales were fully

determined to include 5 independent variables with 26 observed variables and 01 dependent variable that are considered to influence the loan decisions of individual customers at BIDV Hau Giang The author uses a 5-level Likert scale to measure respondents' level of agreement with the statements The results of testing scale reliability show that the total Cronbach's Alpha coefficient of 01 dependent variable with 04 observed variables and 06 independent variables with 26 observed variables has the lowest component variable - total variable correlation coefficient more than 0.3 so everyone accepts it Thus, all 30 observed variables were used in exploratory factor analysis

2.3.2 Foreign research

The study conducted by Peng Wang and colleagues in 2015 “Exploring the critical factors influencing online lending intentions” The findings highlight that trust emerges as the primary driver of lending intentions, with perceived information asymmetry acting as an influencing factor on trust Perceived information asymmetry does not exert a direct impact on lending intentions Trust is notably influenced by the reputation of borrowers and the integrity of information available The various causes of information asymmetry, including structural assurance and legitimacy, significantly impede the further progress of online lending The study underscores that trust not only serves as a foundation in traditional e-commerce but also holds immense importance in the online lending market Reputation, perceived information integrity, and perceived information asymmetry collectively shape trust Notably, the perception of information integrity does not significantly affect perceived information asymmetry, and it is surprising to note that perceived information asymmetry does not directly influence lending intentions The results suggest that trading behavior in the online lending market may diverge from that observed in the traditional online shopping market

The research “Factors Affect the Intention to Borrow Through Peer to Peer Lending in Indonesia” of Susanti and colleagues (2020) investigates the factors influencing the intention to borrow through peer-to-peer lending, revealing that trust and utilitarian value are pivotal determinants The conclusive findings indicate that these factors, trust, and utilitarian value, wield a substantial and positive impact on users' intentions to engage with peer-to-peer lending services The study underscores the harmonious relationship between user intentions and the perceived trust and utilitarian value associated with peer-to-peer lending Furthermore, perceived risk and perceived cost exhibit a positive and significant correlation with the intentions of peer-to-peer lending users This suggests that users display a pronounced inclination towards utilizing peer-to-peer lending services, notwithstanding the associated high risks and transaction fees Surprisingly, ease of use, as explored in this study, demonstrates a relationship that lacks significance concerning the intention to borrow Users on the peer-to-peer lending platform seem to perceive that this online loan service doesn't offer added value in terms of ease of use compared to other loan transactions

In the research conducted by Ahmed Tolba and colleagues in 2015, titled "Factors Influencing Intentions of Egyptian MSME Owners in Taking Commercial Bank Loans," the focus is on unraveling the behavioral determinants impacting the intentions of small and medium enterprise (SME) owner-managers in Egypt to seek commercial bank loans Drawing insights from consumer buyer behavior perspectives, a conceptual model based on the theory of planned behavior is employed According to this model, SME owner-managers' intentions are influenced by factors such as Knowledge, Previous Experience, Perceptions, Attitude, Subjective Norms, and Perceived Behavioral Control The study also considers individual-level variables like Gender, Age, Knowledge, and Education, which may impact these relationships At the

company level, variables such as Firm Size, Type, Years in Operation, Growth Orientation, and Owner-Manager Separation are explored A mixed-methods approach, combining qualitative methods like interviews and focus groups with quantitative methods including surveys and regression analysis, is employed The findings reveal that the propensity to seek a commercial bank loan is low among Egyptian SME owner-managers, accompanied by negative perceptions regarding the service quality of loan providers Key influencers on loan-taking intentions include Subjective Norm and Knowledge Furthermore, variations in intentions are observed based on demographic and company-specific characteristics The study concludes by drawing managerial and policy implications for financial institutions, governments, and developmental organizations, aiming to address the identified challenges and enhance the access to and perception of commercial bank loans among SMEs in Egypt

2.3.3 Summary of related research

Table 2.3.1 Summary of related research

Author Research scope Independent variables Results

SUMMARY OF CHAPTER 2

Chapter 2 has provided a comprehensive overview of personal customer lending activities, setting the stage for the exploration of the factors influencing loan intentions at Commercial Banks in Ho Chi Minh City Chapter 2 introduced the various types of personal loans commonly offered by Commercial Banks in Ho Chi Minh City, explored the classification of personal customer loans, considering various criteria Loans were classified by loan term, allowing us to understand the temporal aspects of personal lending, and by collateral assets, helping bank assess the risk profiles associated with different loan types The chapter proceeds to outline different types of personal loans, offering insights into the diversity of financial products within this category Moving beyond this descriptive landscape, Chapter 2 introduces a robust theoretical framework Drawing upon theories such as the Theory of Planned Behavior, Theory of Reasoned Action, Theory of Service Quality, Theory of Brand, and Theory of Satisfaction, the chapter provides a conceptual lens through which the study will analyze the factors influencing personal loan decisions These theories contribute an understanding of the psychological, behavioral, and service-oriented aspects that may shape borrowers' intentions and actions Additionally, the chapter delves into existing research, summarizing both domestic and foreign studies related to personal loans This comparative analysis enhances the research context by identifying similarities and variations in personal lending behaviors across different geographical and cultural contexts