Customer satisfaction and service quality in the banking industry (agribank) in ho chi minh city

CUSTOMER SATISFACTION AND SERVICE QUALITY IN THE BANKING INDUSTRY(AGRIBANK) IN HO CHI MINH A dissertation presented to The Faculty of Graduate School Tarlac State University Tarlac City _ In Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy Major in Business Administration VU MINH HIEU March 2013 Republic of the Philippines TARLAC STATE UNIVERSITY GRADUATE SCHOOL Tarlac City APPROVAL SHEET This Dissertation of VU MINH HIEU entitled “Customer satisfaction and service quality in the banking industry (Agribank) in Ho Chi Minh City” which is prepared and submitted in partial fulfillment of the requirements for the Degree of Doctor of Philosophy, Major in Business Administration, is hereby accepted Charles H Cransford PhD Dissertation Adviser DISSERTATION COMMITTEE Chair man Member Member Member Member Accepted and approved in partial fulfillment of the requirements for the Degree of Doctor of Philosophy, Major in Business Administration Dean, Graduate School Date: i © 2013 Vu Minh Hieu ALL RIGHTS REVERVED ii ABSTRACT Title: CUSTOMER SATISFACTION AND SERVICE QUALITY IN THE BANKING INDUSTRY (AGRIBANK) IN HO CHI MINH CITY Researcher: VU MINH HIEU Institution: Tarlac State University Tarlac City Course: Doctor of Philosophy Major: Business Administration This study aims at identifying factors influencing to the level of customer satisfaction with the quality of Vietnam Bank for Agriculture and Rural Development (Hereinafter is abbreviated by Agribank) The data is collected from 142 corporate customers of Agribank in Ho Chi Minh City, focusing on the corporate customer This study examined determinants of customer satisfaction of Agribank in Ho Chi Minh City, build up the research model to measure customer satisfaction based factors influencing to them, examine the customer satisfaction level to bank products and also recommend the customer satisfaction improvement to Agribank Ho Chi Minh City This research uses the quantitative and qualitative research method through the evaluation with Exploratory Factor Analysis (EFA) and the reliability test by Cronbach's Alpha, then the regression analysis which is used to test the research model The proposed model identifies the service quality to improve, with the aim of offering Agribank services characterized by higher quality level iii ACKNOWLEDGEMENTS The completion of my doctoral research would not be possible without the immense contributions of a number of people: friends, colleagues and students, relatives and all family members, especially for my parents who are always encouraging and motivating me to finish this dissertation I would like to express my thank you to all I particularly wish to express my gratitude to my supervisor Dr Charles H Cranford for his supervision - for reviewing the progress of my work and offering valuable advice that helped me to direct my research and keep it in track I sincerely own thanks to Dr Phan Quan Viet and his wife for their provisions of journals, books… for my reference More of that, I also send my great thank you to Mr Nguyen Van Phuc – my Doctoral classmate who give me many valuable advice to complete this dissertation Last but not least, I must express my gratitude to my wife and children for their enormous support, encouragement and understanding during these years of study iv LIST OF FIGURES Figure Page 1 Service Quality Model 13 The Gaps Model…………………………………………… Determinants of Perceived Quality of Service……………… 14 Service quality model……………………………………… 16 Service Quality and Customer Satisfaction………………… 26 Research Process…………………………………………… 34 Conceptual paradigm of the study…………………………… Factors for research model………………………………… 36 The overall research model………………………………… 58 10 Adjusted research model …………………………………… 69 v 14 LIST OF TABLES Table Page The measurement scale on the customer satisfaction factors…… 45 Summary of the coded measurement scale……………………… Descriptive statistics of customer expectations………………… 48 Descriptive statistics of the service quality scales……………… 49 Descriptive statistics of the price competitives scales………… 50 Descriptive statistics of the corporate image scales…………… 50 Descriptive statistics of customer satisfaction………………… 51 Results of the analysis of Cronbach's coefficient alpha………… 54 EFA result……………………………………………………… 57 10 Pearson’ result on factors of customer Satisfaction…………… 60 11 Results of Pearson analysis of Customer Satisfaction………… 61 12 Results of regression analysis…………………………………… 65 13 Summary of the measurement scale of the customer satisfaction 73 vi 46 TABLES OF CONTENTS Approval sheet……………………………………………………… ……………….i Ccopyright page……………………………………………………………………….ii Abstract……………………………………………………………… … …… ….iii Acknowledgments……………………………….………………………………… iv List of figures…………………………………………………… ……………… iv List of tables………………………………………………………………………… vi Chapter I THE PROBLEM AND ITS BACKGROUND Statement of the problem Research objectives Research questions Content of the study Definition of terms II REVIEW OF RELATED LITERATURE AND STUDIES Introduction Related literature and studies, along with conceptual framework Definition of service, quality and service quality Conceptualization of Service Quality 13 Functional and Technical Service Quality model and the corporate image 17 Service quality measurement and its instruments 21 Definition of customer satisfaction and its models and measurements 24 The links between service quality and customer satisfaction 27 The role of price and its relation with customer satisfaction 30 III METHODS OF STUDY AND SOURCES OF DATA 35 Introduction 35 The research model 35 Hypotheses 38 The measurement model of the customer satisfaction 38 The descriptive model 38 Determinants of the customer satisfaction 40 Research methodology 40 Data collection 41 Primary data 41 Secondary data 41 Research design 41 Qualitative method 41 Quantitative research 44 Questionnaire design 48 IV ANALYSIS AND FINDINGS OF DATA 50 The descriptive statistics 50 Identifying customer needs 50 Factors influencing to the customer satisfaction 51 Measurement of customer satisfaction 52 Analysis of the measurement scales 53 Cronback’s alpha 53 Exploratory Factor Analysis (EFA) 56 The generalised research model 59 The research model 59 Hypotheses 59 Testing the research model 60 Pearson’s correlation coefficient analysis 60 Regression analysis 62 ANOVA analysis 67 Findings 68 Identifying customer needs 68 Factors influencing to the customer satisfaction 69 Measuring the customer satisfaction 73 The links between seniority & number of banks & customer satisfaction 74 V SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS 75 Summary of findings 75 Conclusion 75 Recommendations 77 Orienting the development strategy 77 Improving the service quality 78 Upgrading the staff professional competence 79 Assuring the price competitiveness 80 Building a professional working environment 81 Developing the cooperation with financial institutions 81 Strengthening the good image in customer concepts 82 Recommendations to Agribank Head Office 82 Implications and Limitations 84 Theoretical implications 84 Practical implications 84 Limitations and recommendations for future research 85 BIBLIOGRAPHY 87 APPENDIX A Questionnaire to customers 98 APPENDIX C The second EFA 106 APPENDIX D The third EFA 111 APPENDIX E EFA with measurement of customer satisfaction 116 APPENDIX F The regression analysis 117 APPENDIX G ANOVA Analysis 119 APPENDIX H The link between seniority and number of banks and customer satisfaction 121 APPENDIX K Decriptive statistics 121 CHAPTER I THE PROBLEM AND ITS BACKGROUND Introduction Customer satisfaction is one of the key issues for companies in their efforts to improve quality in the market place Most businesses have their own targets for being profitable They have carefully planned and implemented strategies, but they all have something in common – a customer Business purposes are based on customers and if companies want to be successful, they must concentrate on them This means determining customers’ needs, responding to their requirements and maintaining customer satisfaction by assuring quality in business’s operations More of that, customer satisfaction is so important because satisfied customers spread positive word of mouth that attracts more new customers and then companies will sell more and gain high profits (Garson 1993, 5.) Statement of the problem In Vietnam, with the current rapid globalization and international economic integration in the region, with the technology development and the Vietnam market openings, with the banking sector, after nearly four years of joining the World Trade Organization (WTO), banking system of Vietnam has made marked progress and positive Banks are rapidly developing in size, make technological innovation and improve the quality of human resources in accordance with the integration process However, World Trade Organization accession also poses challenges to competitiveness, service quality, customer satisfaction, as well as long-term connection to the customer's bank Structure Matrix Factor COU01 ,912 COU02 ,792 COU03 COU05 ,740 ,693 INT02 ,749 CON01 CON02 ,684 ,767 CON03 ,519 POR01 ,680 POR02 ,593 REL01 ,787 REL02 ,584 REL03 ,703 INT01 ,656 INT04 ,468 TAN02 TAN03 ,598 ,756 TAN04 ,760 TAN01 IMA02 ,619 IMA01 ,619 IMA03 ,843 PRI01 PRI02 ,786 ,528 Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser Normalization Factor Correlation Matrix Factor 1,000 ,249 ,379 ,389 ,330 ,240 ,249 1,000 ,227 ,162 ,233 ,333 ,379 ,227 1,000 ,312 ,201 ,301 ,389 ,162 ,312 1,000 ,245 ,246 ,330 ,233 ,201 ,245 1,000 ,396 ,240 ,333 ,301 ,246 ,396 1,000 Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser Normalization 110 APPENDIX D THE THIRD EFA KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Approx Chi-Square df 253 Sig ,000 Communalities Initial ,7675 1240,14 Extraction COU01 ,770 ,850 COU02 ,665 ,650 COU03 ,549 ,551 COU05 ,558 ,531 INT02 ,641 ,581 CON01 ,479 ,491 CON02 ,554 ,621 CON03 ,324 ,312 POR01 ,445 ,506 POR02 ,459 ,365 REL01 ,614 ,639 REL02 ,363 ,378 REL03 ,456 ,516 INT01 ,454 ,440 INT04 ,265 ,275 TAN02 ,419 ,452 TAN03 ,466 ,546 TAN04 ,441 ,605 IMA02 ,482 ,455 IMA01 ,414 ,401 IMA03 ,509 ,735 PRI01 ,438 ,684 PRI02 ,265 ,263 Extraction Method: Principal Axis Factoring 111 Total Variance Explained Initial Eigenvalues Extraction Sums of Squared Loadings Factor Total % of Variance Cumulative % Total % of Variance Cumuative % Rotation Sums of Squared Loadings(a) % Total 5,617 24,423 24,423 5,176 22,503 22,503 4,109 2,439 10,606 35,030 1,969 8,561 31,064 2,879 2,039 8,866 43,895 1,567 6,812 37,876 3,132 1,764 7,671 51,566 1,327 5,770 43,646 2,473 1,549 6,736 58,302 1,105 4,805 48,451 2,357 1,221 5,310 63,613 ,701 3,046 51,497 2,096 ,906 3,939 67,552 ,769 3,344 70,896 ,749 3,256 74,151 10 ,736 3,202 77,353 11 ,674 2,930 80,283 12 ,617 2,684 82,967 13 ,548 2,382 85,349 14 ,532 2,314 87,663 15 ,440 1,911 89,574 16 ,421 1,830 91,405 17 ,398 1,730 93,134 18 ,392 1,704 94,839 19 ,320 1,393 96,232 20 ,277 1,202 97,434 21 ,239 1,308 98,472 22 ,201 ,874 99,346 23 ,150 ,654 100,000 Extraction Method: Principal Axis Analysis a when factors are collated, sums of squared loadings cannot be added to obtain a total variance 112 Factor Matrix Factor COU01 ,781 COU02 ,668 COU03 ,552 COU05 ,565 INT02 ,691 CON01 ,534 CON02 ,618 CON03 POR01 POR02 REL01 ,514 ,583 ,479 ,512 REL02 REL03 INT01 ,476 INT04 TAN02 TAN03 ,469 ,532 TAN04 IMA02 ,604 ,501 IMA01 IMA03 ,607 PRI01 -,545 PRI02 Extraction Method: Principal Axis Factoring a Attempted to extract factors More than 25 iterations required (Convergence=,001) Extraction was terminated 113 Pattern Matrix(a) Factor COU01 ,908 COU02 ,787 COU03 ,793 COU05 ,687 INT02 ,686 CON01 ,683 CON02 ,777 CON03 ,475 POR01 ,686 POR02 ,561 REL01 ,790 REL02 ,612 REL03 ,673 INT01 ,654 INT04 ,455 TAN02 ,551 TAN03 ,710 TAN04 ,805 IMA02 ,517 IMA01 ,619 IMA03 ,913 PRI01 ,796 PRI02 ,515 Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser Normalization a Rotation converged in iterations 114 Structure Matrix Factor COU01 ,917 COU02 ,793 COU03 ,734 COU05 ,692 INT02 ,750 CON01 ,695 CON02 ,770 CON03 ,529 POR01 ,668 POR02 ,590 REL01 ,792 REL02 ,578 REL03 ,701 INT01 ,657 INT04 ,468 TAN02 ,626 TAN03 ,729 TAN04 ,770 IMA02 ,619 IMA01 ,621 IMA03 ,841 PRI01 ,824 PRI02 ,499 Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser Normalization Factor Correlation Matrix Factor 1,000 ,265 ,375 ,384 ,328 ,241 ,265 1,000 ,237 ,145 ,236 ,339 ,375 ,237 1,000 ,316 ,194 ,285 ,384 ,145 ,316 1,000 ,231 ,222 ,328 ,236 ,194 ,231 1,000 ,397 Extraction Method: Principal Axis Factoring Rotation Method: Promax with Kaiser Normalization 115 ,241 ,339 ,295 ,222 ,397 1,000 APPENDIX E EFA WITH MEASUREMENT OF CUSTOMER SATISFACTION KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity ,665 Approx Chi-Square 114,845 df Sig ,000 Communalities Initial Extraction Overall service quality ,288 ,357 Ability to meet customer needs ,399 ,508 Continuity to bank services ,466 ,757 Extraction Method: Principal Axix Factoring Total Variance Explained Factor Initial Eigenvalues % of Cumulative Total Variance % 2,048 68,256 68,256 ,589 19,,638 87,894 ,363 12,106 100,000 Extraction Sums of Squared Loadings Cumuative Total % of Variance % 1,622 Extraction Method: Principal Axis Analysis Factor Matrix Factor Overall service quality ,597 Ability to meet customer needs ,713 Service continuity to the bank ,870 Extraction Method: Principal Axis Factoring factor extracted 17 iterations required 116 54,055 54,055 APPENDIX F THE REGRESSION ANALYSIS Variables entered/removed(a) Model Variables Entered Variables Removed COU Stepwise (Criteria: Probability-of-F-to-enter =,100) PRI Stepwise (Criteria: Probability-of-F-to-enter =,100) IMA Stepwise (Criteria: Probability-of-F-to-enter =,100) REL Stepwise (Criteria: Probability-of-F-to-enter =,100) CON Stepwise (Criteria: Probability-of-F-to-enter =,100) TAN Stepwise (Criteria: Probability-of-F-to-enter =,100) Method (a) Dependent variables CSL Model R Model Summary (g) Adjusted R Std Error of the R Square Square Estimate ,620(a) ,384 ,380 ,43180 ,800(b) ,640 ,635 ,33121 ,878(c) ,771 ,766 ,26522 ,927(d) ,860 ,856 ,20797 ,967(e) ,936 ,934 ,14124 ,994(f) ,989 ,988 a Predictors: (constant), COU b Predictors: (Constant), COU, PRI c Predictors: (Constant), PCPC, PRI, IMA d Predictors: (Constant), PCPC, PRI, IMA, REL e Predictors: (Constant), PCPC, PRI, IMA, REL, CON f Predictors: (Constant), PCPC, PRI, IMA, REL, TAN g Dependent variables CSL ,05904 Durbin Watson 1,944 Coefficients(a) Model (Constant) COU (Constant) COU PRI (Constant) COU PRI IMA (Constant) COU PRI IMA REL (Constant) COU PRI IMA REL CON (Constant) Unstandardized coefficients B Std Error 2,722 ,194 ,463 ,050 1,754 ,178 ,394 ,039 ,325 ,033 1,184 ,157 ,329 ,032 ,276 ,027 ,269 ,030 ,680 ,134 ,269 ,026 ,244 ,021 ,252 ,024 ,242 ,026 ,345 ,095 ,241 ,018 ,209 ,015 ,223 ,016 ,234 ,018 ,208 ,016 -,120 ,044 Standardized coefficients Beta ,620 ,527 ,515 ,441 ,437 ,383 ,360 ,387 ,359 ,319 ,322 ,331 ,318 ,308 ,293 117 t Sig Collinearity Statistics Tolerance 14,015 9,309 ,9843 10,146 9,912 7,564 10,321 10,279 8,844 5,074 10,246 11,472 10,548 9,317 3,632 13,610 14,189 13,616 13,222 12,643 -2,738 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,007 ,000 ,000 ,000 ,000 ,000 VIF 1,000 1,000 ,967 ,967 1,034 1,034 ,917 ,926 ,892 1,090 1,080 1,121 ,860 ,903 ,887 ,877 1,163 1,108 1,128 1,140 ,846 ,870 ,869 ,876 ,885 1,182 1,149 1,150 1,142 1,130 COU PRI IMA REL CON TAN ,204 ,195 ,208 ,217 ,195 ,208 ,008 ,006 ,007 ,007 ,007 ,008 ,272 ,309 ,296 ,286 ,275 ,245 a Dependent variables CSL 118 27,009 31,544 30,246 29,244 28,336 25,271 ,000 ,000 ,000 ,000 ,000 ,000 ,814 ,863 ,863 ,869 ,880 ,870 1,228 1,158 1,159 1,151 1,136 1,139 APPENDIX G ANOVA ANALYSIS Descriptives Customer satisfaction N Std Deviation Mean 95% Confidence Interval for Mean Lower Upper Bound Bound 4,29 4,74 Std Error Minimum Maximum 6 years 28 4,82 ,307 ,058 4,70 4,94 142 4,71 ,445 ,037 4,64 4,79 Total Test of Homogeneity of Variances Customer satisfaction Levene Statistic df1 3,583 df2 Sig 137 ,008 ANOVA Customer satisfaction Sum of Squares Between Groups df Mean Square 1,829 ,457 Within Groups 26,081 137 ,190 Total 27,909 141 F Sig 2,401 ,053 POST HOC TESTS Multiple Comparissons Dependent Variable: Customer satisfaction Dunett (2-sided) 95% Confidence Interval Mean Difference (I-J) Std Error > years -,31 ,124 ,051 -,61 ,00 1-2 years > years -,21 ,116 ,205 -,50 ,07 3-4 years > years -,05 ,112 ,969 -,33 ,22 5-6 years > years -,02 ,115 ,999 -,30 ,26 (I) Seniority (J) Seniority 8 banks 14 4,62 142 4,71 Total Minimum Maximum 4,90 4,56 4,80 ,103 4,44 4,85 ,597 ,160 4,27 4,96 ,445 ,037 4,64 4,79 Test of Homogeneity of Variances Customer satisfaction Levene Statistic df1 2,156 df2 Sig 137 ,077 ANOVA Customer satisfaction Sum of Squares Between Groups df Mean Square ,790 ,197 Within Groups 27,120 137 ,198 Total 27,909 141 F Sig ,997 ,411 POST HOC TESTS Multiple Comparisons Dependent Variable: Customer satisfaction Dunett (2-sided) 95% Confidence Interval Lower Upper Bound Bound (I) banks to business with (J) banks to business with 1-2 banks >8 banks ,25 ,184 ,417 -,20 ,69 3-4 banks >8 banks ,17 ,137 ,486 -,16 ,50 5-6 banks >8 banks ,06 ,137 ,959 -,27 ,40 7-8 banks >8 banks ,03 ,143 ,999 -,32 ,37 Mean Difference (I-J) Std Error Sig a Dunnett t-test treat one group as a control, and compare all other groups against it 120 APPENDIX H THE LINK BETWEEN SENIORITY AND NUMBER OF BANKS AND CUSTOMER SATISFACTION 121 APPENDIX K Descriptive statistics Mean Accurate and on-time delivery Price competitiveness Full ranges of services Available business networks 2,11 2,12 2,14 2,27 Staff competence Simple procedure Willingness to help customers 2,30 2,66 2,88 Ensuring commitments Clear and easily-understood documents 3,01 3,18 Modern equipment and technology 3,20 Valid N (listwise) Table Descriptive statistics of customer expectations TAN01 Minimum Maximum Mean 4,15 Std Deviation ,743 COU05 INT01 INT03 5 4,08 4,06 4,24 ,744 ,815 ,891 INT04 Valid N (listwise) 4,60 ,584 Table Descriptive statistics of the service quality scales Minimum Maximum Mean Std Deviation PRI01 3,81 1,017 PRI02 3,80 1,028 PRI03 4,25 ,846 Valid N (listwise) Table Descriptive statistics of the price competitive scales Minimum Maximum Mean Std Deviation IMA01 IMA02 5 3,51 3,87 1,077 ,885 IMA03 3,70 ,982 IMA04 4,66 ,618 Valid N (listwise) Table Descriptive statistics of the corporate image scales 122 Minimum Maximum Mean Std Deviation Overall service quality 4,73 ,548 Ability to meet customer needs 4,70 ,502 Continuity to use bank services 4,71 ,566 Valid N (listwise) Table Descriptive statistics of customer satisfaction scales 123 RELIABILITY ANALYSIS Item-total Statistics Scale CON01 CON02 CON03 POR01 POR02 Scale Corrected Mean if Item Deleted Variance if Item Deleted ItemTotal Correlation Alpha if Item Deleted 13,5745 13,6667 13,7163 13,7305 13,9362 9,4319 8,9524 9,4618 9,1268 8,8602 ,5696 ,6289 ,4812 ,5693 ,5332 ,7349 ,7145 ,7634 ,7339 ,7478 Alpha = TAN01 TAN02 TAN03 TAN04 11,4296 12,0141 11,7042 11,5845 5,6936 4,2126 4,1956 4,2729 ,3398 ,4661 ,5945 ,6237 Alpha = COU01 COU02 COU03 COU05 11,5141 11,6690 11,5000 11,2254 4,7197 4,8187 5,2872 5,9489 12,7042 12,8944 12,5211 12,1620 3,1601 2,9320 2,9038 3,6970 7,2042 7,3239 7,3028 2,9013 3,3837 2,7516 8,0493 8,0634 7,6056 2,4302 2,4144 2,9356 7,5634 7,2113 7,3803 2,6023 3,2316 2,6061 9,4155 9,4366 9,4296 ,5694 ,5801 ,5543 ,5738 ,6384 ,5724 ,6885 ,6521 ,7274 ,9254 ,9428 ,7858 ,6568 ,6856 ,5091 ,7119 ,5278 ,6011 ,6731 Alpha = ,5411 ,5504 ,5749 ,6533 ,5099 ,4770 ,6189 Alpha = CSL01 CSL02 CSL03 ,8604 ,4756 ,4698 ,4561 Alpha = IMA01 IMA02 IMA03 ,7842 ,8194 ,8264 ,8507 ,6050 ,5083 ,5450 Alpha = PRI01 PRI02 PRI03 ,7121 ,4181 ,4101 ,4406 ,4434 Alpha = REL01 REL02 REL03 ,7309 ,6802 ,5877 ,5725 ,7928 ,7180 ,6957 ,6387 Alpha = INT01 INT02 INT03 INT04 ,7798 ,7625 ,6843 ,5944 ,7653 Table Results of the analysis of Cronbach's coefficient alpha 124