Identifying dimension of BIDVs trade finance services quality in hochiminh city area

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY BI VU THANH XUAN IDENTIFYING DIMENSIONS OF BIDV’S TRADE FINANCE SERVICES QUALITY IN HOCHIMINH CITY AREA MASTER THESIS Ho Chi Minh City, 2011 MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY BI VU THANH XUAN IDENTIFYING DIMENSIONS OF BIDV’S TRADE FINANCE SERVICES QUALITY IN HOCHIMINH CITY AREA MAJOR: BANKING AND FINANCE MAJOR CODE: 60.31.12 MASTER THESIS INSTRUCTOR: DR TRUONG QUANG THONG Ho Chi Minh City, 2011 i ACKNOWLEDGEMENT I would like to express my heartfelt gratitude and deepest appreciation to my research supervisor, Dr Truong Quang Thong for his precious guidance, share of experience and highly valuable suggestions throughout the course of my research My special gratitude is extended to all instructors and staff at Postgraduate Faculty, University of Economics Ho Chi Minh City (UEH) for their support and the valuable knowledge during my study in UEH I also wish to thank to my colleagues in BIDV’s branches, who help me during the collection of data My thanks would also extend to the respondents, without them, my thesis could not have been done Specially, my thanks go to Ms Vu Thi Bich Ngoc for their valuable and enthusiastic support for this research study as well as for their comments of English from early draft of my thesis ii Abstract Maximizing customer satisfaction through service quality has been described as the ultimate weapon This study applied the SERVQUAL model of Parasuraman (1988) to test the dimensions to have relationship to BIDV’s trade finance service quality in Ho Chi Minh City area A study of 150 respondents from branches was conducted Multiple linear regression technique was used to test the hypotheses and research model The chosen model is modified from SERVQUAL model According to the results, empathy, responsibility, assurance, reliability were confirmed to have positive impact on service quality Some independent variables such as tangibility, price, portfolio have no enough evidence to conclude to have relationship to service quality Recommendations for related regression results are suggested to improve trade finance services quality and therefore BIDV can serve customers better Keywords: Customer satisfaction, Service quality, trade finance, SERVQUAL iii CONTENTS Acknowledgement i Abstract ii Contents iii List of tables vi List of Figures and Charts vii Chapter I: INTRODUCTION TO THE STUDY 1.1 Rationale of the study 1.2 Problem statement 1.3 Research objectives 1.4 Scope 1.5 Research methods 1.6 Structure of the study Chapter II: RELATED LITERATURE REVIEW 2.1 Understand service quality 2.1.1 Definition of service quality 2.1.2 The role of banking service quality 2.1.2.1 A significant source of competitive advantage and customer retention 2.1.2.2 Increase Bank brand 2.1.2.3 Profitability 2.2 Empirical evidence 2.2.1 Models 2.2.2 Summary and comparative evaluation of service quality models 13 2.2.3 Applications models in some countries 15 Chapter III: OVERVIEW TRADE FINANCE SERVICES IN VIETNAM 18 3.1 Trade finance in Vietnam 18 3.1.1 Exports 18 3.1.1.1 Some highlights in 2010 18 3.1.1.2 First haft of 2011 19 3.1.2 Imports 20 3.1.2.1 Some highlights in 2010 20 3.1.2.2 In the first half of 2011 21 3.1.3 Vietnam trade balance 22 3.2 Trade finance services in BIDV 23 Chapter IV: DATA ANALYSIS AND FINDINGS 28 4.1 Methodology 28 4.1.1 Data collection 28 4.1.2 Sample size 28 4.1.3 Questionnaire design 28 4.1.4 Variables 29 4.1.5 Measurement and scales 30 4.1.6 Tests Used for Data Analysis 30 4.2 Data analysis 30 4.2.1 Preliminary results 30 4.2.2 Hypotheses development 32 4.2.3 Regression results - test and analyze 32 4.2.3.1 Basic regression model 32 4.2.3.2 Optimal regression model 34 4.3 Findings 40 Chapter V: CONCLUSION AND RECOMMENDATIONS 41 5.1 Conclusions 41 5.2 Implications and recommendations 41 5.3 Assessment 42 5.3.1 Strength 42 5.3.2 Limitations 43 References 44 Appendix 48 Appendix I Database 49 Appendix II Questionnaire 55 Appendix III General statistic index 59 vi List of Tables Table 2.1: Definition of service quality .4 Table 2.2: Impact of quality improvement Table 2.3 Comparative evaluation of service quality models 13 Table 2.4 Comparing service quality dimensions with past research (by rank) .17 Table 3.1: Top 10 import products in Vietnam in 1st haft 2011 22 Table 4.1: General information of customers 30 Table 4.2: Gap score for seven dimensions .31 Table 4.3: Compare service quality dimensions with Parasuraman’s research (by rank) 40 Table 5.1 The hypotheses testing results 41 vii List of Figures and Charts Figure 2.1 Service quality model Figure 2.2 Gap analysis model 10 Figure 2.3 Attribute service quality model .12 Figure 2.4 Model of service quality, customer value and customer satisfaction 13 Figure 2.5 Model of service quality in internet banking 14 Chart 1: Major Export product of Vietnam in 2010 21 Chart 3.2 Top ten main exports of Vietnam in first quarter 2011 22 Chart 3.3: Vietnam import year 2010 23 Chart 3.4: Exports, imports and trade balance of Vietnam 25 From Jun 2010 to March 2011 Chart 3.5: Comparison export and import turnover of BIDV with some banks .29 CHAPTER I: INTRODUCTION TO THE STUDY 1.1 Rationale of the study: In a more globalized and integrated economy with increasing deregulation, competition in the banking industry has become significantly fiercer Banking industry in Vietnam has also grown rapidly especially in the growth of foreign banks This makes customers have many choices and compare the service quality among banks that they perceive Satisfying customers is one of the main objectives of every business Businesses recognize that keeping current customers is more profitable than having to win new ones to replace those lost Therefore, customer satisfaction and service quality are compelling to the attention of all banking institutions Service quality is the core problem for banks to differentiate, retain customers, make revenues and expand market share Besides, since Vietnam joints in WTO, bilateral agreements, multilateral conventions, trade barriers have been loosen This encourages the international trade to grow rapidly Vietnamese businesses have opportunities to trade with foreign partners is very high Therefore, banks in Vietnam has focused their interest in trade finance services to serve better the demand of customers This is the potential field business that banks should continue to explore Among many kinds of banking services, trade finance services bring a large source of fees for banks It is better when Vietnamese banks wants to increase the fees from services and decrease the fees and commissions from credit This is completely suitable to international trends Beside, developing trade finance services also increase the Vietnamese banks position in international market However, customers perception of service quality is a complex process Therefore, multiple dimensions of service quality have been suggested It is agreement that there is no standard model to adapt to banking service quality measurement in a specific country Because of the role of service quality and optimism of trade finance development, this research aims to identify dimensions of BIDV’s trade finance services quality in Ho Chi Minh City area 1.2 Problem statement: Service quality is an elusive concept It attracted the interest of academics and practitioners as well Service quality is a dynamic, multidimensional concept For instance, ‘… quality is what the customer says it is’ (Webster & Hung 1994) or ‘… a measure of how well the service level delivered matches the customer’s expectations’ (Lewis and Booms, 1983) Thereafter, some researchers suggest that service quality Page Francis Buttle (1996) “SERVQUAL: review, critique, research agenda” European journal of marketing, vol.30, no.1 pp – 32 Gujarati (2004) Base Econometrics, fourth edition The McGraw – Hill H Emari, S.Iranzadeh and S.Bakhshayesh (2011) “Determining the dimensions of service quality in banking industry: examining the Gronroos’s Model in Iran” Academic journals Inc pp 57 – 64 Hawjeng Chiou, yi- Hsuan Lee and Sutrisno Hadi Purnomo (2010) “The influences transfer of training on relationship between knowledge characteristic of work design model and outcomes” International Journal of innovation, management and Technology, Vol.1, No.2, ISSN: 2010 – 0248.pp.116 – 122 J Joseph Cronin, Jr & Steven A Taylor (1994) “SERVPERF versus SERVQUAL: reconciling performance based and perceptions minus expectations measurement of service quality” Journal of marketing, vol.58, pp.125 – 131 Jayaraman Munusamy, Shankar Chelliah and Hor Wai Mun (2010) “Service quality delivery and its impact on customer satisfaction in the banking sector in Malaysia” International journal if Innovation, management and technology, Vol.1, No.4.pp.398 – 403 K.Ravichandran, B.Tamil Mani, S.Arun Kumar (2010) “Influence of service quality on 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Ghazizadeh, Ali Soleimani Besheli, Vajiheh Talebi (2010) “Assessing of bank customers retention and loyalty: a case study of state – owned banks in Tehran” European journal of social sciences, vol.17,no.2 pp.274 – 287 Nguyen Trong Hoai, Phung Thanh Binh, Nguyen Khanh Duy (2009), Du bao va phan tich du lieu kinh te va tai chinh Nha xuat ban Thong Ke Nitin Seth and S.G Deshmukh, Prem Vrat (2004) “Service quality models: a review” International journal of quality and reliability management, vol.22, No.9, pp.913 – 949 Parmita Saha – Yanni Zhao (2005) “ Relationship between online service Quality and Customer satisfaction, a study in internet banking” Sweden: Department of business administration and social Sciences, Lulea University of technology Ruth N.Bolton, Katherine N.Lemon, Peter C Verhoef (2004) “The Theoretical Underpinnings of customer asset management: a framework and propositions for future research” Journal of the academy of marketing science vol.32,no.3 pp 1- 20 Victoria Bellou , Andreas Andronikidis (2008) “The impact of internal service quality on customer service behavior, evidence from the banking sector” International journal of quality and reliability management, Vol.25, No.9 pp 943-954 Xiaoni Zhang, Daniel Peak (2009) “Measuring IS system service quality with SERVQUAL: Users’ perceptions of relative importance of the five SERVPERF dimensions” The international journal of an emerging transdiscipline, vol.12 pp.18 – 33 Websites Annual report,2008, 2009, 2010 from http://www bidv.com.vn Annual report,2008, 2009, 2010 from http://www vcb.com.vn Page 46 Annual report,2008, 2009, 2010 from http://www icb.com.vn Annual report,2008, 2009, 2010 from http://www eximbank.com.vn Annual report,2008, 2009, 2010 from http://www techcombank.com.vn Vietnam import – export highlights in year 2010 Retrieved June 2011, from http://www.vietpartners.com/Statistic-imex.htm Vietnam export revenue soar in first six months Retrieved July 2011, from http://www.vietnamimportexportnews.com Vietnam traders expect their trade finance requirement to increase in the next six months Retrieved June 2011, from http://www.intellasia.net/news/articles/business/111325053.shtml Highlights of Vietnam’s foreign merchandise trade in March and the first quarter of 2011 Retrieved June 2011, from http://www.customs.gov.vn Page 47 APPENDIX Page 48 APPENDIX I DATABASE ITEM INFO TANGIBILITY RELIABILITY RESPONSIVENESS ASSURANCE COM TRANS FREQ E P E P E P E EMPATHY P E PRICE P E PORTFOLIO SER QUAL P E E P P CP NK O 7 7 7 7 CP NK W 6 6 7 NN XNK O 7 7 7 7 CP XNK O 7 6 5 NN XNK W 6 6 6 6 6 CP NK O 7 7 7 6 6 TNHH NK D 7 6 6 6 LD XNK O 6 6 7 6 6 6 LD XK D 6 7 7 7 6 10 TN XK M 7 6 7 6 6 11 NN XNK W 7 7 6 7 12 NN NK D 7 7 7 7 13 TNHH XNK O 6 6 7 7 6 14 CP W 6 6 7 7 NK Page 49 15 CP XNK O 7 7 7 7 16 NN NK O 7 7 17 NN XNK W 6 7 6 18 LD XNK O 6 7 6 19 TNHH NK W 7 7 7 6 20 TNHH XNK D 7 7 6 21 TNHH XNK W 7 7 7 7 22 NN W 6 6 6 6 23 TNHH NK O 6 6 7 24 NN XNK W 7 7 6 25 CP NK O 6 6 5 6 26 TN XNK W 7 6 5 6 27 CP XNK O 6 6 6 7 28 NN NK W 7 7 7 7 29 CP XNK W 7 7 6 30 TN NK M 7 7 6 31 CP NK D 7 7 7 7 7 7 32 CP NK D 7 6 33 TNHH XNK D 6 7 6 6 34 TN W 5 7 6 6 XNK NK Page 50 35 CP XK D 7 7 7 7 7 36 TNHH XNK O 7 7 6 6 37 CP XK W 6 7 6 6 38 TNHH NK O 6 7 6 6 6 6 39 TNHH XNK W 7 6 6 7 40 CP NK D 7 7 7 7 6 6 41 CP NK O 7 7 6 6 42 NN XNK O 7 7 7 7 43 CP NK O 7 7 7 7 7 44 CP XNK O 7 6 6 45 TNHH XK M 7 7 7 7 46 TNHH NK O 7 6 6 47 LD NK O 7 7 6 48 CP XNK M 7 6 6 5 49 TNHH XNK O 6 6 6 6 50 CP XNK W 7 7 7 6 7 7 51 CP NK W 7 7 7 52 CP NK W 7 7 7 53 TNHH XK M 7 7 7 54 TN D 7 6 7 XNK Page 51 55 TNHH XK W 7 7 7 7 56 CP XNK W 5 6 6 7 7 7 7 57 CP NK W 7 7 6 6 58 CP XK W 7 7 6 7 7 59 TNHH NK O 6 7 6 6 6 6 60 TNHH XNK W 7 6 6 7 61 CP NK D 7 7 7 7 6 6 62 CP NK O 7 7 6 6 63 NN XNK O 7 7 7 7 64 CP NK O 7 7 7 7 7 65 TNHH XNK W 5 6 6 7 7 7 7 66 CP NK D 7 7 6 6 67 LD XK W 7 6 7 7 68 TNHH XK M 7 7 7 7 69 TNHH NK O 7 6 6 70 LD NK O 7 7 6 71 CP XK W 6 6 7 7 7 72 NN NK M 7 7 7 7 73 TNHH NK M 7 7 6 74 TNHH NK M 7 7 7 7 Page 52 75 CP NK W 7 7 7 7 7 7 76 CP NK W 6 7 6 6 77 CP XK W 6 6 6 6 78 TNHH NK M 7 6 7 7 7 79 TNHH XK W 6 6 6 6 80 CP XK W 7 7 7 81 CP NK W 6 7 7 7 82 NN NK W 7 6 7 83 NN XNK O 7 7 7 7 84 CP XNK O 7 6 85 NN XNK W 6 6 6 6 6 86 CP NK O 7 7 7 6 6 87 TNHH NK D 7 6 6 6 88 LD XNK O 6 6 7 6 6 6 89 LD XK D 6 7 7 7 6 90 CP XNK D 7 6 6 91 CP NK W 6 7 6 6 92 TNHH NK M 6 7 6 6 93 TNHH XK W 7 7 7 6 7 94 TNHH NK W 7 7 7 7 7 Page 53 95 TN NK M 6 6 6 6 6 6 96 TN NK M 6 6 6 97 CP NK D 7 6 98 TNHH XNK D 6 7 6 6 99 TN NK W 5 7 6 6 100 CP XK D 7 7 7 7 7 Abbreviation note:  COM: Kinds of company - CP: Joint stock company, TNHH: Limited Company, TN: Private Company, LD: Joint venture company , NN: State own Company  TRANS: kinds of transaction - NK: imports, XK: exports, XNK: imports + exports  FREQ: frequency - D: daily, W: weekly, M: monthly, O: others  E: expectation  P: perception Page 54 APPENDIX II QUESTIONAIRE Nghiên cứu nhằm tìm hiểu ý kiến Quý khách hàng chất lượng sản phẩm tài trợ thương mại (TTTM) BIDV Xin vui lòng cho biết mức độ mà Quý vị kỳ vọng ngân hàng nên cung ứng dịch vụ mức độ cảm nhận chất lượng dịch vụ mà Quý vị nhận cho phát biểu bên Không có câu trả lời đúng/ sai Các câu trả lời giữ kín Điều quan tâm số điểm từ 1-7 thể ý kiến quý vị Thang điểm đo lường tăng dần với hoàn toàn không đồng ý hoàn toàn đồng ý ( This section of the survey deals with your opinions of BIDV’s trade finance services Please show the extent to which you expect banks should posses and which you believe or feel this bank has the feature described in the statement Answers are not judged to be wrong or right Answers are also kept secret Here, we are interested in a number from to that shows your expectation or perception about the bank.) The score of each statement as follows: Strongly Strongly Disagree Agree Phần 1: Thông tin chung (Part 1: General Information) 1/ Loại hình Công ty (Types of firm):  DN nhà nước (State own Company)  Công ty Cổ phần (Joint stock company)  Công ty TNHH (Limited Company)  Công ty liên doanh (Joint venture company)  DN tư nhận (Private Company)  Khác (Other) 2/ Loại giao dịch (Type of transaction): Page 55  Xuất (Export)  Nhập (Import )  Cả Xuất Nhập (Both) 3/ Tần số giao dịch (Frequency):  Hàng ngày (Daily)  Hàng tuần ( weekly )  Hàng tháng (monthly)  Khác (Others) 4/ Tại Chi Nhánh (At branch):  HoChiMinh  Gia Dinh  Sai Gon  Khác (Others)  Transaction Point Phần 2: Bảng câu hỏi (Part II: Questionaire) ITEM Thang điểm kỳ vọng - Score (Expectation) Thang điểm cảm nhận Score (Perception) Yếu tố hữu hình (Tangibles) Q1 : Trang thiết bị đại Up-to-date equipment Q2 : Cơ s vật chất b t m t qu vị Appearance of physical facilities Q3 : Trang phục nhân viên ch nh tề, lịch s Appearance of employees Q4 : Tài liệu liên quan đến sản phẩm dịch vụ b t m t Quý vị Visual appeal of materials associated with service Sự tin cậy (Reliability) Q5 : Ngân hàng th c cam kết Keep promises to something by a certain time Q6 : hi qu vị c vướng m c, BIDV cảm th ng, tận tâm x l Interest shown in solving a problem Q7 : Phục vụ kịp thời, x lý xác Performing the service right the first time Q : Cung cấp sản phẩm dịch vụ thời hạn cam kết Provide the services at the time promised Q9 : Hồ sơ, chứng từ chính xác Accuracy of records Sự nhiệt tình đáp ứng (Responsiveness) Q10 : Ngân hàng cho biết xác hoàn tất giao dịch Telling exactly when services will be performed Page 56 Q11 : Phục vụ qu vị nhanh ch ng Giving prompt service to customers Q12 : Nhân viên lu n s n l ng giúp đ qu vị Willingness of employees to help customers Q13 : Nhân viên kh ng bận r n để giải đáp yêu cầu Quý vị (Never be too busy to responding to customer requests) Sự đảm bảo (Assurance) Q14 : Nhân viên ngân hàng đáng tin cậy Trustworthiness of employees Q15: Đảm bảo độ an toàn giao dịch Safety in transactions Q16 : Nhân viên ngân hàng lịch sự, nhã nhặn Politeness of employees Q17 : Nhân viên có kiến thức chuyên môn để giải thích c n k d hiểu (Knowledge of personnel in answering questions) Sự thấu cảm (Empathy) Q1 :Nhân viên ngân hàng dành cho qu vị s quan tâm cá nhân ( Individual attention you receive) Q19 : Giờ giấc phục vụ ngân hàng thuận tiện cho qu vị Having convenient operating hours Q20 : Quan tâm đến nhu cầu riêng qu vị Personal attention given to customers Q21 : Ngân hàng đ t lợi ích quý vị lên hết Having your best interests at heart Q22 : Hiểu r nhu cầu riêng biệt qu khách Understanding the specific needs of customers Phí dịch vụ (Price/ fees) Q23: Phí dịch vụ nhập hợp l Page 57 Reasonable import fees Q24: Phí dịch vụ xuất hợp l Reasonable export fees Q25: Biểu phí cạnh tranh Competitive fees with other banks Danh mục sản phẩm, dịch vụ (Services portfolio) Q26: Cung cấp g i sản phẩm dịch vụ đầy đủ, đáp ứng nhu cầu qu vị Full complete package of service Q27: Sản phẩm dịch vụ đại lu n cập nhật ph hợp The range of services is consistent with the latest innovations in banking services Service quality Q28: Chất lượng dịch vụ tài trợ thương mại BIDV tốt BIDV’s trade finance services quality is very well Q29: Quý vị hài l ng s nsàng giới thiệu cho người khác Satisfactory and willing to introduce to others Q30: Hài l ng chất lượng dịch vụ tài trợ thương mại BIDV (Satisfaction of BIDV’s trade finance services quality) Cảm ơn nhiều giúp đỡ (Thank you for your help) Page 58 APPENDIX III General statistic index Page 59 ...MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY BI VU THANH XUAN IDENTIFYING DIMENSIONS OF BIDV’S TRADE FINANCE SERVICES QUALITY IN HOCHIMINH CITY AREA. .. measurement: A case of BIDV trade finance services quality in Ho Chi Minh City area Page 17 CHAPTER III:OVERVIEW ON TRADE FINANCE IN VIETNAM This chapter provides the overview on trade finance in Vietnam... trade finance service quality and focus on enhancing the service quality 3.1 Trade finance in Vietnam After the reformation in 1986, international trade had become an increasingly important part of