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
INTRODUCTION
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.
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.
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?
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 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.
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.
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.
Thesis layout
In addition to the abstract, list of references, the article is structured in 5 chapters:
Chapter 1 introduces the reader to the study, providing a foundational understanding of the research's context and objectives
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 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 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
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.
RESEARCH OVERVIEW
Overview of personal loans
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:
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
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
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
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
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
According to Vietnam Prosperity Joint Stock Commercial Bank’s credit granting regulations, there are 6 main steps:
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:
Loan application form and money use plan
Documents proving the purpose of the loan
Documents proving income: labor contract, salary confirmation,
Confirmation of appraisal of personal customer loan conditions
Step 2: Evaluate customer's loan conditions
Theoretical framework
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
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
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
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
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.
Related 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
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
Table 2.3.1 Summary of related research
Author Research scope Independent variables Results
Commercial banks in Ho Chi Minh City
Lending policy Service staff Price
Lending policy Service staff Price
Understanding Personal orientation Marketing activities
Service quality Credit policy Bank image Prices
Service quality Credit policy Bank image Prices
Joint Stock Commercial Bank for Investment and Development of Vietnam
Service quality Interest rates and loan costs
Bank brand Loan procedures Convenience
Service quality Interest rates and loan costs
Bank brand Loan procedures Convenience
Credit policy Bank brand Prices Service quality Trust
Credit policy Bank brand Prices Service quality Trust
Trust Utilitarian value Bank brand Convenience Prices
Trust Utilitarian value Bank brand Convenience Prices
Attitude Subjective Norms Perceived Behavioral Control
Attitude Subjective Norms Perceived Behavioral Control
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.
RESEARCH MODELS AND METHODS
Research process
The research process begin by establishing clear research goals focused on understanding the factors influencing personal customer's intentions to borrow money This involves defining the key variables and outcomes to be explored Then develop a theoretical framework that provides a conceptual structure for the research Incorporate relevant theories or models, such as the Theory of Reasoned Action, to guide the investigation into the factors affecting loan intention Create a draft measurement scale based on the theoretical framework Formulate questions or items that will be used to collect quantitative data during the research Refine the measurement scale through pre-testing and validation
Conduct pilot surveys or interviews to ensure the clarity, comprehensiveness, and effectiveness of the questions Finalize the scale to ensure reliability and validity for official data collection Implement the quantitative research phase using the finalized scale Collect data from a representative sample through surveys or other quantitative methods Ensure that the research design aligns with the established goals and theoretical framework Research Results will analyze the quantitative data using statistical methods Examine the relationships between the identified factors and loan intention Interpret the results to draw conclusions regarding the significance and impact of each factor on individuals' intentions to borrow
Conclusion and Recommendations will summarize the findings based on data analysis Conclude the study by discussing the implications of the results within the context of the research goals and theoretical framework Provide actionable recommendations for stakeholders, such as financial institutions or policymakers, to enhance their understanding and potentially improve services or policies related to loan intention This systematic process ensures a comprehensive exploration of the factors influencing loan intention, starting from conceptualization to actionable insights, providing a robust foundation for informed decision-making in the realm of financial services.
Basis for research model
Through the process of previous research documents as well as the theory of loan intention, a research model has been proposed to prove that it is suitable for the purpose and scope of research in the banking industry of this topic, in which there are 6 factors: Service Quality, Bank Brand, Bank Reputation, Credit Policy, Service Price and Cost, Influence from Relationship Thereby evaluating the impact of these factors on loan intention
• Dependent variable: Loan intention of personal customers at Commercial Banks in Ho Chi Minh City
Research hypothesis
- H1: Service Quality has a positive impact on the intention to borrow money of personal customers at commercial bank
- H2: Bank Brand has a positive impact on the intention to borrow money of personal customers at commercial bank
- H3: Bank Reputation has a positive impact on the intention to borrow money of personal customers at commercial bank
- H4: Credit Policy has a positive impact on the intention to borrow money of personal customers at commercial bank
- H5: Service Price and Cost has a positive impact on the intention to borrow money of personal customers at commercial bank
- H6: Influence from Relationship has a positive impact on the intention to borrow money of personal customers at commercial bank
To analyze factors affecting loan decisions of personal customers at, model attributing factors that influence personal customers' loan decisions have the following general form:
Y: is the dependent variable reflecting the loan intention
Xi (i=1 6): are independent variables, reflecting image factors influence loan intention βi (i=1 6): Regression coefficients β0: Constant
Research design
Professional and enthusiastic staff SQ1 The products and service satisfy customer SQ2 Loan product information is fully updated SQ3
The bank has many branches BB1
The bank has many ATMs BB2
The bank has a recognizable brand BB3
The bank has financial potential BR1 The bank has high information security BR2 The bank often appears in the media BR3
Loan terms and repayment terms are diverse CP3
Has an incentive program for loan borrowing SC2 Lower interest rates for new customers SC3
Loan selection based on referrals from relatives IR1
Loan selection based on the recommendation of bank staff IR2
Loan selection based on advertising information IR3
Choosing to borrow money from Commercial
Bank is the right decision LI1
Will choose to borrow money from Commercial
The research includes 7 scales with 20 variables expressed through 20 questions Specifically:
- The Service Quality scale is measured through 3 observed variables denoted SQ1, SQ2, SQ3
- The Bank Brand is measured through 3 observed variables denoted as BB1, BB2, BB3
- The Bank Reputation scale is measured through 3 observed variables denoted as BR1, BR2, BR3
- The Credit Policy scale is measured through 3 observed variables denoted as CP1, CP2, CP3
- The Service Price and Cost scale is measured through 3 observed variables denoted as SC1, SC2, SC3
- The Influence from Relationship scale is measured through 3 observed variables denoted as IR1, IR2, IR3
- The Loan Intention scale is measured through 3 observed variables denoted as LI1, LI2
- Research using data analysis tools:
- Use Cronbach Alpha coefficient to evaluate the reliability of The scale
- Use exploratory factor analysis (EFA) to verify concept value
- Check the suitability of the model using regression method multiply
Building measurement scales
Formal research was conducted using information collection techniques through surveys from target groups in Ho Chi Minh City based on pre-designed questionnaires Convenience sampling method with sample size of 150 The survey was collected from individuals who are intending to borrow capital from commercial banks The author surveyed individuals from VPBank, TPBank, ACB from October to December, the survey was sent directly to individuals and is completed right at the time the customer enters the bank To measure the perceived level of attitudes of survey participants and based on relevant theory and empirical research, a research model is proposed Observing the variables in the model all use a 5-level Likert scale
Level 1 - Completely disagree Level 2 - Disagree
Level 4 - Agree Level 5 - Completely agree
Collected data is processed through SPSS software The author uses a number of data analysis tools such as: descriptive statistics, exploratory factor analysis (EFA), building a regression function to test the relationship between variables, check the scale reliability and analyze linear regression models to examine the differences between demographic variables on loan intention
The research sample was collected through a questionnaire Size sample depends on the analytical method, factor analysis requires the smallest sample is 100 observations, based on Hair et al (2006) theory Minimum requirement is 5 samples for 1 observed variable Therefore, the model has 20 observed variables, the minimum number of samples is n = 20 x 5 = 100 samples When collected, it is processed using SPSS software The questionnaire consists of 20 statements, each question is measured on a 5-point Likert scale
Chapter 3 is a critical section of this research, as it outlines the framework, hypothesis, design, and methods, the author employs to investigate the factors affecting the loan intention to borrow money of personal customers at Commercial Banks in Ho Chi Minh City This chapter serves as a roadmap for the research, detailing the methodologies to explore from the research questions The research design and research model present a visual representation of the relationships between various variables under investigation By gathering data from a diverse sample of personal customers, the author put research models and methods into action, collecting and analyzing data to build measurement scales to gain a comprehensive understanding of the factors that drive loan intentions.
RESEARCH RESULTS
Research statistics
Statistic is the synthesis of theoretical methods and applications in the field of economics by drawing conclusions based on collected data and information Descriptive statistics is a collection of all methods of measuring, describing and presenting data Some values that need attention include: Mean value, median value, mode, variance, standard deviation which is the square root of the variance Frequency analysis method is one of the descriptive statistical tools used to describe and learn about the distribution characteristics of a certain sample of raw data calculated by subtraction and accumulation; Frequency is calculated as a percentage (%) by dividing the frequency of each expression by the total number of observed samples The research individuals are individuals in Ho Chi Minh City who have been intending to borrow money from Commercial Banks
The author performs data analysis and collects samples to clarify and broaden the goals, and the level of objectivity is therefore more accurate Through the process of collecting data using the Google Form survey form, the author has collected 160 samples, of which 150 are valid samples (accounting for 93.75%) and 10 invalid samples are eliminated (accounting for 6 samples with 25%) After collection, descriptive statistics of qualitative variables are presented
Regarding gender: among 150 survey individuals in Ho Chi Minh City, male gender accounted for 52% (78 individuals) while female gender participated in the survey was 72 individuals (accounting for 48%)
Regarding age: among the 150 individuals participating in the survey, the group with the highest proportion is the age group from 20 - 30 years old, accounting for 74%, the age group from 30 - 40 years old accounts for 26%
Regarding income: among 150 surveyed individuals in Ho Chi Minh City, income under 5 million accounted for the highest proportion with 46% (69 individuals) Income from 5 to 10 million VND includes 46 individuals (accounting for 30.67%) Income from 5 million VND accounts for at least 4%
Regarding the intention to borrow money: Among 150 survey individuals in Ho Chi Minh City, 95% of individuals thought that choosing to borrow money at Commercial Bank was the right decision and intend to borrow in the future or when the need arises
Evaluation of research scales
The survey form uses a 7-level Likert scale for measurement, so the authors use average statistical techniques for quantitative variables to make a general assessment of the survey subjects' opinions with the following questions asked in the scale
According to the results from the quantitative variables The independent variables have the lowest rating of level 1 and the highest rating of level 5, the average value is greater than 3 Meanwhile, the dependent variables have the lowest rating of level 1 and the highest rating of level 2, the average value approaching to 2 The data have a low deviation from the average value, these values are concentrated around the average value Thus, the results have initially shown that the level of influence on the loan intention of individuals at Commercial Banks in Ho Chi Minh City is quite high
4.2.2 Check scale reliability using Cronbach’s Alpha
When the author test the reliability of the Cronbach Alpha scale means evaluating the relationship between variables in the same group and the same factor, not considering the relationship between all observed variables in the factors other factors Meanwhile, EFA considers the relationship between variables in all different groups (factors) to detect observed variables that load on many factors or observed variables that are assigned the wrong factor from the original factor
Table 4.2.7 Check scale reliability using Cronbach Alpha
Cronbach's Alpha if Item Deleted
Scale Variance if Item Deleted
Cronbach's Alpha if Item Deleted
Scale Variance if Item Deleted
Cronbach's Alpha if Item Deleted
Scale Variance if Item Deleted
Cronbach's Alpha if Item Deleted
Scale Variance if Item Deleted
Cronbach's Alpha if Item Deleted
Scale Variance if Item Deleted
Cronbach's Alpha if Item Deleted
Scale Variance if Item Deleted
Cronbach's Alpha if Item Deleted
The independent variable "Service Quality" is measured by 3 observed variables SQ1, SQ2 and SQ3 The results of testing the reliability of the scale using SPSS 20.0 show that Cronbach's Alpha coefficient is 0,903 > 0,6, the correlation coefficients are
The total variable of observed variables is greater than 0.3 If any variable in the scale is removed, the Cronbach's Alpha coefficient will decrease, so this scale meets the requirements and all observed variables of the scale are included in the next EFA exploratory factor analysis
The independent variable "Bank Brand" is measured by 3 observed variables BB1, BB2 and BB3 The results of testing the reliability of the scale using SPSS 20.0 show that Cronbach's Alpha coefficient is 0,839 > 0,6, the correlation coefficients are the total variable of observed variables is greater than 0.3 If any variable in the scale is removed, the Cronbach's Alpha coefficient will decrease, so this scale meets the requirements and all observed variables of the scale are included in the next EFA exploratory factor analysis
The independent variable "Bank Reputation" is measured by 3 observed variables BR1, BR2 and BR3 The results of testing the reliability of the scale using SPSS 20.0 show that Cronbach's Alpha coefficient is 0,791 > 0,6, the correlation coefficients are the total variable of observed variables is greater than 0.3 If any variable in the scale is removed, the Cronbach's Alpha coefficient will decrease, so this scale meets the requirements and all observed variables of the scale are included in the next EFA exploratory factor analysis
The independent variable "Credit Policy" is measured by 3 observed variables CP1, CP2 and CP3 The results of testing the reliability of the scale using SPSS 20.0 show that Cronbach's Alpha coefficient is 0,820 > 0,6, the correlation coefficients are the total variable of observed variables is greater than 0.3 If any variable in the scale is removed, the Cronbach's Alpha coefficient will decrease, so this scale meets the requirements and all observed variables of the scale are included in the next EFA exploratory factor analysis
The independent variable "Service Price and Cost" is measured by 3 observed variables SC1, SC2 and SC3 The results of testing the reliability of the scale using SPSS 20.0 show that Cronbach's Alpha coefficient is 0,832 > 0,6, the correlation coefficients are the total variable of observed variables is greater than 0.3 If any variable in the scale is removed, the Cronbach's Alpha coefficient will decrease, so this scale meets the requirements and all observed variables of the scale are included in the next EFA exploratory factor analysis
The independent variable "Influence from Relationship" is measured by 3 observed variables IR1, IR2 and IR3 The results of testing the reliability of the scale using SPSS 20.0 show that Cronbach's Alpha coefficient is 0,700 > 0,6, the correlation coefficients are the total variable of observed variables is greater than 0.3 If any variable in the scale is removed, the Cronbach's Alpha coefficient will decrease, so this scale meets the requirements and all observed variables of the scale are included in the next EFA exploratory factor analysis
The dependent variable "Loan Intention" is measured by 2 observed variables LI1 and LI2 The results of testing the reliability of the scale using SPSS 20.0 show that Cronbach's Alpha coefficient is 0,707 > 0,6, the correlation coefficients are the total variable of observed variables is greater than 0.3 If any variable in the scale is removed, the Cronbach's Alpha coefficient will decrease, so this scale meets the requirements and all observed variables of the scale are included in the next EFA exploratory factor analysis
The analysis results are divided into six groups as follows:
Group 1 includes 3 observed variables belonging to the factor group Service Quality including SQ1 SQ2 SQ3 measured by factor 1 - name this group SQ
Group 2 includes 3 observed variables belonging to the factor group Bank Brand including BB1 BB2 BB3 measured by factor 2 - name this group BB
Group 3 includes 3 observed variables belonging to the factor group Bank Reputation including BR1 BR2 BR3 measured by factor 3 - name this group
Group 4 includes 3 observed variables belonging to the factor group Credit Policy including CP1 CP2 CP3 measured by factor 4 - name this group CP
Group 5 includes 3 observed variables belonging to the factor group Service Price and Cost including SC1 SC2 SC3 measured by factor 5 - name this group
Group 6 includes 3 observed variables belonging to the factor group Influence from Relationship including IR1 IR2 IR3 measured by factor 5 - name this group IR
Table 4.2.9 KMO and Bartlett's Test
The KMO coefficient (Kaiser-Meyer-Olkin) is an index used to consider the appropriateness of factor analysis The value of KMO must reach a value of 0.5 or higher (0.5 ≤ KMO ≤ 1), which is a sufficient condition for factor analysis to be appropriate If this value is less than 0.5, factor analysis is likely not appropriate for the research data set
According to KMO and Bartlett's Test table The coefficient KMO = 0.847 is in the range from 0.5 to 1 and the Bartlett test with sig = 0.00 < 0.05 shows that the observed variables are linearly correlated with each other in the population and are completely suitable for causal analysis The results of the rotated matrix show that the observed variables are classified into 6 factors, all observed variables have Factor
Loading coefficients greater than 0.5 and there are no longer bad variables Thus, EFA exploratory factor analysis is appropriate There are 6 factors extracted with the criterion eigenvalue greater than 1 with a total cumulative variance of 79,661% The total variance extracted by these 6 factors is 79,661% > 50%, so these 6 factors best summarize the information of observed variables included and participated in EFA.
Analyze linear regression models
LI1 LI2 SQ1 SQ2 SQ3 BB1 BB2 BB3 BR1 BR2 BR3 CP1 CP2 CP3 SC1 SC2 SC3 IR1 IR2 IR3
* Correlation is significant at the 0.05 level (2-tailed)
** Correlation is significant at the 0.01 level (2-tailed)
Expect that the analysis results from the data will show that the independent variables are correlated with the dependent variable or have an impact on the dependent variable If correlation analysis is performed before regression, the results from Pearson correlation show that the independent variable is correlated with the dependent variable, the possibility that the independent variable will have an impact on the dependent variable in the regression will be higher To analyze linear regression effectively, it is necessary to consider the degree of correlation between the dependent variable and the independent In other words, consider the linear relationship between each variable and factor affecting the loan intention of personal customers at Commercial Banks in Ho Chi Minh City
The results of Pearson correlation analysis show that there are 6 independent variables, namely Service Quality, Bank Brand, Bank Reputation, Credit Policy, Service Price and Cost, Influence from Relationship with value sig=0.00, if the value sig =0.05, it means the value does not meet the condition, meaning there is no linear correlation with the dependent variable Thus, there is a linear relationship between these independent variables and the dependent variable Between independent variables, there is no too strong correlation when the absolute value of the correlation coefficient between pairs of variables is less than 0.5, so the possibility of collinearity/multicollinearity is also lower Therefore, in this study, the author will continue to include 6 independent variables that meet the conditions in linear regression analysis
4.3.2 Test regression hypotheses a Dependent Variable: LI b Predictors (Constant): SQ, BB, BR, CP, SC, IR
Table 4.3.11 Model Summary a Predictors: (Constant), IR, CP, BB, SC, SQ, BR b Dependent Variable: LI
When we add more independent variables to the regression analysis, R Square tends to increase This leads to some cases where the fit of the regression model is inflated when we include independent variables that explain very weakly or not at all the dependent variable In SPSS, besides the R Square index, we also have the R Square Adjusted index (adjusted R2) The adjusted R Square index does not necessarily increase when more independent variables are added to the regression, so the adjusted R Square reflects the model fit more accurately than the R Square coefficient
R Square or adjusted R Square both have fluctuations in the range from 0 to 1 If
R Square moves closer to 1, the independent variables explain more about the dependent variable, and vice versa, the closer R Square moves to 0, the more the independent variables establish less explanation for the dependent variable
Independence of errors (residuals) -> Use the Durbin-Watson test
The model explains 6,7% of the variation in LI (R Square)
There is independence of the residuals through the Durbin-Watson statistical value = 2,212
Dependent Variable: LI b Predictors: (Constant), IR, CP, BB, SC, SQ, BR
We need to evaluate model fit accurately through hypothesis testing To test the suitability of the regression model, we hypothesize H0: R Square = 0 The F test is used to test this hypothesis
Based on the ANOVA table, it shows that the resulting model can be used for prediction with LI value:
F(6, 149) = 1.725 p.value = 0.000 < 0.005 Rejecting the hypothesis H0, meaning R Square
≠ 0 in a statistically significant way, the regression model is appropriate.
*The multivariate regression equation has the form:
*Based on the results table, we have the regression equation:
LI= 0.912+0.024*SQ-0.042*BB+0.046*BR-0.022*CP+0.023*SC+0.007*IR
Regression method is performed with the dependent variable LI and 6 independent variables SQ, BB, BR, CP, SC, IR
The variance inflation factor (VIF) is an index to evaluate collinearity in a regression model The smaller the VIF, the less likely multicollinearity is to occur Hair et al (2009) said that a VIF threshold of 10 or higher will cause strong multicollinearity Researchers should try to keep VIF as low as possible, because even at VIF levels of 5 or 3, serious multicollinearity can occur
All 6 regression coefficients are statistically significant with p.value 0.7)
VIF 0.1 (Violation when Tolerance > 0.1 VIF