Doctoral thesis correlation of depositors’ behavior and bank patronage in the inner districts of ha noi

SOUTHERN LUZON STATE UNIVERSITY, LUCBAN, QUEZON, PHILIPPINES IN COLLABORATION WITH THAI NGUYEN UNIVERSITY, SOCIALIST REPUBLIC OF VIETNAM _ CORRELATION OF DEPOSITORS’ BEHAVIOR AND BANK PATRONAGE IN THE INNER DISTRICTS OF HA NOI DOCTOR OF BUSINESS ADMINISTRATION BY TRINH THANH BINH – BECKAM August, 2013 ACKNOWLEDGEMENT I would like to express my heartfelt gratitude to leaders of Thai Nguyen University in VietNam and Southern Luzon State University in the Philippines who created best conditions for me to complete the course generally and fulfill the thesis particularly My gratitude goes towards Professors directly gave me useful and memorable lectures and guides in DBA namely Dr Professor Cecilia N Gascon, Dr Professor Walberto A Macaraan, Dr.Professor Melchor Melo O Placino, Dr.Professor Alice T Valerio, Dr Professor Do Anh Tai, and Dr.Professor Tran Dai Nghia They provided me a rich and fertile environment to study and explore new ideas They made my DBA life is ever fluid, and, in the course of it all, a warm and inviting place to work My special thank to Dr Professor Cecilia N Gascon who provided me valuable guides to complete the dissertation I am grateful to lecturers who managed the International Cooperation Program between Vietnam and the Philippines namely Professor Tran Tuan Anh and Professor Nguyen Thanh Hai Without their cooperation, I could not have chance to join and fulfill the course I would not have contemplated this road if not for my parents, my wife, my children, and all of my dear friends who instilled within me a love of creative pursuits, science and language, all of which finds a place in this the dissertation Trinh Thanh Binh July, 2013 i TABLE OF CONTENTS ACKNOWLEDGEMENT i TABLE OF CONTENTS ii ABSTRACT vii LIST OF TABLES viii LIST OF FIGURES xiv LIST OF APPENDICES xv CHAPTER I II INTRODUCTION 1.1 Background of the Study 1.2 Objectives of the Study 1.3 Statement of the Problem 1.4 Hypotheses of the Study 1.5 Significance of the Study 1.6 Scope and limitation of the Study 1.7 Definition of Terms REVIEW OF LITERATURE AND STUDIES 10 ii 2.1 Economic Development 10 2.1.1 Viet Nam Economy 10 2.1.2 Ha Noi Economic Development 11 2.2 Regulation of Banking Industry 12 2.2.1 Background of Vietnam Banking Industry 12 2.2.2 Key Challenges Facing the Banking Industry 13 2.3 Background of Ha Noi Banking Industry 15 2.3.1 Banking Industry in Ha Noi 15 2.3.2 Practice in Deposit Mobilization in Ha Noi 15 2.4 Consumer Behavior 16 2.5 Review of Related Studies 20 2.6 Psychological Attributes of Depositors’ Behavior in Bank 22 Patronage 2.6.1 External Psycological Attributes 22 2.6.2 Internal Attributes 23 2.7 Factors Influencing Depositor Behavior in Deposit 24 2.7.1 Subjective Factors 24 iii III IV 2.7.2 Objective Factors 25 2.8 Conceptual Framework 27 METHODOLOGY 29 3.1 Research Design 29 3.2 Determination of Sample Size 29 3.3 Sampling Design and Techniques 30 3.4 Subject of the Study 31 3.5 Research Instrument 31 3.6 Data Collection Method 31 3.7 Data Processing Method 32 RESULTS AND DISCUSSION 34 4.1 Depositors’ Profile 34 4.2 Depositors’ Distribution by Districts 36 4.3 Attributes of Depositors’ Behavior in Bank Patronage in the 37 Inner Districts of Ha Noi 4.3.1 External Attributes Implication of Depositors’ Behavior 37 4.3.1.1 Depositors’ Selection by Specific Banks and Type of 37 Banks – Foreign Banks, State Owned Banks and Joint Stock Banks 4.3.1.2 Time Span Depositors Began Relationship with Banks 39 iv 4.3.1.3 Depositors’ Selection of the Deposit Kinds and Terms 42 4.3.2 Depositors’ Motivation in Bank Patronage 47 4.3.2.1 Depositors’ Motivation for Changing a Bank 47 4.3.2.2 Depositors’ Motivation for Selecting Banks They Deposit 54 with 4.3.2.3 Depositors’ Expectation on the Future Promotions 65 4.3.2.4 Depositors’ Future Investment Plan 68 4.3.2.5 Depositors’ Willingness to Make a Reference with Their 72 Friends 4.3.3 Depositors’ Perception and Bank Patronage 74 4.3.3.1 Depositors’ Attitudes in Acceptance of Interest Rate 74 4.3.3.2 Depositors’ Attitudes in Acceptance of Bank Service Quality 75 4.3.3.3 Depositors’ Attitudes for Existing Promotion Programs 77 4.3.3.4 Depositors’ Perception of Bank Safety 83 4.4 Factors Influencing Depositors’ Behavior in Bank Patronage in 85 the Inner District of Ha Noi 4.4.1 Depositors’ Selection of Factors and Factors’ Correlation 85 4.4.2 Critical Factors 89 v V 4.4.2.1 Prestigious Banks 89 4.4.2.2 Quick and Convenient Procedure 91 4.4.2.3 Competitive Interest Rates 91 4.4.2.4 Security and Safe 93 4.4.2.5 Convenient Location 94 SUMMARY, FIDINGS, CONCLUSIONS AND 95 RECOMMENDATIONS 5.1 Summary of Findings 95 5.2 Conclusions 102 5.3 Recommendations 105 BIBLIOGRAPHY 109 APPENDICES 114 SURVEY QUESTIONNAIRES 151 CURRICULUM VITAE 161 vi ABSTRACT This study was conducted to determine and analyze the correlation of depositors’ behavior and bank patronage in the inner districts of Ha Noi As the knowledge of depositors’ behavior and bank patronage is not well understandable and given the critical importance of understanding of depositors’ behavior, this study intended to identify the factors influencing depositors’ behavior and define the winning strategies for the banks in fund mobilization The methodology of the thesis was to review the various relevant literatures Method of system analysis, method of fieldwork, method of comparison, quantitative research methods and forecasting method were also used in the study This research was conducted within the inner districts of Hanoi with 257 respondents, which were selected based on random probability Findings showed that depositors’ behavior was influenced by both internal demographic factors and external factors The result further revealed a high correlation between depositors’ behavior and factors such as “prestigious banks”, “security and safe”, “competitive rates”, “quick and convenient procedure” However, lower correlation was obtained in depositors’ perception and attitudes The recommendations are developed from the insights and conclusions First is to address the brand issue of banks that built through depositors’ perception of “bank safety”, “prestigious” and other key influencers Second, banks should take into account all factors in their winning marketing strategies Third is to recommend the contingency plan that banks should have to keep safe And the last is to recommend the SBV need to liberalize interest rates on deposits vii LIST OF TABLES Table CONTENT Page Table Bank classification by ownership and key indicators as of 30 June 2013 13 Table Depositors’ profile 35 Table Distribution of depositors by gender and marital status 36 Table The bank selection by bank ownership 38 Table Distribution of depositors by banks 39 Table The period of time that depositors maintain relationship with 40 Banks Table Relation between marital Status and time span with banks 41 Table Relation between age range and time span with banks 41 Table Relation between professional, employment and time span 42 with banks Table 10 Kind of deposits 43 Table 11 Deposit maturity 44 Table 12 Relation between marital status and type of deposits 44 Table 13 Relation between age range and terms of deposits 45 Table 14 Relation between education background and terms of deposits 45 Table 15 Relation between professional, employment and types of 46 deposits Table 16 Relation between professional, employment and terms of 47 deposits Table 17 Reasons for depositors to change banks (having at least two 49 banks at the same time) by gender and marital status viii Appendix B.45 Relation between age range with the factor of recommendations from friends/relatives Crosstab Count Your age range: Recommendation from friends / relatives Recommendation from friends / relatives Total Below 25 13 19 25 to 34 120 128 35 to 44 42 50 45 to 54 22 25 55 to 64 23 26 9 229 28 257 From 65 and over Total Chi-Square Tests Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association df Asymp Sig (2-sided) a 0.018 12.518 0.028 0.463 0.496 13.703 N of Valid Cases 257 a cells (33.3%) have expected count less than The minimum expected count is 98 Source: SPSS 148 Appendix B.46 Relation between employment with the factor of recommendations from friends/relatives Crosstab Count Recommendation from friends / relatives Recommendation from friends / relatives Total Your professional and employment Retired person 34 37 Self-employed 26 30 43 49 123 12 135 3 229 28 257 Work in government agencies Work in business sector Other, please specify Total Chi-Square Tests Value df Asymp Sig (2-sided) 10.583 a 0.032 Likelihood Ratio 6.852 0.144 Linear-by-Linear Association 0.342 0.559 Pearson Chi-Square N of Valid Cases 257 a cells (30.0%) have expected count less than The minimum expected count is 65 Source: SPSS 149 Appendix B.47 Relation between income with recommendations from friends/relatives Crosstab Count Recommendation from friends / relatives Q21 Less than 10 million VND 10 million to less than 20 million 20 million to less than 30 million 30 million to less than 40 million 40 million to less than 50 million 80 million and more Total one two three four five six seven eight nine ten eleven 1 10 12 18 48 30 136 3 1 5 13 37 89 0 0 2 13 0 0 1 0 0 0 0 0 0 0 0 0 0 4 18 15 23 33 87 45 252 Chi-Square Tests Value df Asymp Sig (2-sided) Pearson Chi-Square 96.678a 55 Likelihood Ratio 74.736 55 0.04 1.861 0.173 Linear-by-Linear Association Total N of Valid Cases 252 a 60 cells (83.3%) have expected count less than The minimum expected count is 02 Source: SPSS 150 SURVEY QUESTIONNAIRE SURVEY QUESTIONNAIRE “Correlation of depositors’ behavior and bank patronage (inner districts of Ha Noi) Dear Sir/Madam, We are conducting a study to understand depositors’ behavior and bank patronage in the inner districts of Ha Noi to complete our proposal for Doctor program in business administration (DBA) managed by The Southern Luzon University and Thai Nguyen University Could you please spend some time and contribute to our study Your opinions are highly appreciated and kept confidential Full name: Telephone: _ Address: MAIN QUESTIONS No Question Answer Gender: (Record, not ask) Q1 Have you placed deposits Male Female Yes CONTINUE No THANKS & at bank in inner districts of Ha Noi in the last 12 151 months Q2 CLOSE Your district: (Check quota) Q3 a At present, which banks are you keeping your deposits with? b Please rank in order for the banks you deal with first, second and so on? Hoan Kiem Ba Dinh Tay Ho Hai Ba Trung Dong Da Cau Giay Thanh Xuan Hoang Mai Long Bien Tu Liem 10 Q3 a Q3 b Currently Ranking in use order ABBank ACB Agribank ANZ BIDV Citi Bank Dong A Bank (EAB) Eximbank Habubank 152 HD Bank 10 HSBC 11 Maritime bank 12 MB Bank 13 NaVibank 14 Ocean bank 15 PG Bank 16 Sacombank 17 SCB 18 SeAbank 19 Standard Chartered Bank 20 Techcombank 21 VIB Bank 22 Vietcombank 23 Vietinbank 24 VP Bank 25 Others, please specify: 97 Q4 Only ask if more than code is selected in Q3 Why did you have deposits To reduce risk with more than bank? To seek for the best/better service To seek for better interest rate To have attractive promotion 153 Have friends/relatives working in that bank To seek for stronger reputation Bank branch closer to my home Variety of products for selection I was not happy with the service so I switch to another bank Others (Please specify) Q5a 98 How long have you been Bank Bank Bank Bank Bank dealing with these banks? 1 1 2 2 to 5 years 5 5 What type of deposits did Bank Bank Bank Bank Bank you select? Please select Savings 1 1 Certificate of 2 2 Less than months months to < year Q5b all applicable deposits 154 Others (please 3 3 What term (time duration) Bank Bank Bank Bank Bank of deposit did you deposit By week 1 1 1 month 2 2 months 3 3 months 4 4 12 months 5 5 Bank Bank Bank Bank Bank specify……) Q6 your money? Q7 Please let me know what were reasons that you chose to save at these banks? Prestigious bank Quick and convenient procedure Competitive interest rate Security and safe Suitable fees and charge Can make deposit / withdrawal flexibly Clear explanation & procedure 155 Bank with branches locate at my convenient place Paper and electronic statements Recommendation from friends / relatives Has attractive promotions Others (specify ) Q8 How likely are you to Bank Bank Bank Bank Bank Very likely 1 1 Somewhat 2 2 Neutral 3 3 Somewhat 4 4 5 5 recommend the bank with your friends? likely unlikely Very unlikely Q9 a In overall, how satisfied are you with the current Q9a Q9b Very dissatisfied 1 Somewhat dissatisfied 2 Neutral 3 level of interest rate that banks offer? 156 b In overall, how satisfied Somewhat satisfied 4 Very satisfied 5 are you with the bank’s service quality? Q10 Did you receive any promotion? Q11 Yes No Ask if code is selected, if not, move to Q12 In overall, how satisfied were you with the bank’s Very satisfied Somewhat satisfied Neutral Somewhat dissatisfied Very dissatisfied Q12a Q12b promotion campaign? Q12 a What kinds of promotion did you Cash reward Lottery participation Gifts Add point to loyalty cards Combine many kinds above Others (Specify) 98 receive? b Please rank the promotion that you liked most by Q13 Would you agree that keeping money at bank always safe? Very disagree Somewhat disagree Neutral Somewhat agree 157 Q14 What is your plan for future saving? Q15 Very agree Depositing by VND at bank Depositing by foreign currency at bank Buying gold and save at t bank Buying to gold and save at home Keep money in cash at home Others (please specify) 98 a What of the following factors would you consider for selecting a bank for deposit next Q15a Prestigious bank Quick and convenient Q15b procedure time? b Competitive interest rate Security and safe Suitable fees and charge Can make deposit / withdrawal Please rank, in order of importance from most important to less important, in which is most important and 11 is least important flexibly Clear explanation & procedure Bank with branches locate at my convenient place Paper and electronic statements Recommendation from friends / 10 relatives 158 Has attractive promotions Q16 a What kinds of 11 Q16a promotion would Cash reward Lottery participation Gifts Add point to loyalty cards Combine many kinds above Others (Specify) 98 Q16b you like to have? b Please rank the most by DEMOGRAPHIC Q17 Q18 Q19 Your marital Status Your age range: Single Married Below 25 25 to 34 35 to 44 45 to 54 55 to 64 From 65 and over Your education High school background: College University Postgraduate 159 Q20 Q21 Your professional and Retired person employment Self-employed Work in government agencies Work in business sector Other, please specify Your average monthly Less than 10 million VND income: 10 million to less than 20 million 20 million to less than 30 million 30 million to less than 40 million 40 million to less than 50 million 60 million to less than 70 million 70 million to less than 80 million 80 million and more 160 CURRICULUM VITAE I Personal Information Name: TRINH THANH BINH Birthday: 10-05-1972 Birthplace: Ninh Binh, Viet Nam Civil Status: Vietnamese Parents: Trinh Quang Do (father); Duong Thi Thao (mother) Spouse's name (if any): Nguyen Thi Kieu Oanh Children: Trinh Hoang Anh II Educational Qualification 1988-1992: Bachelor in economics, banking and finance National Economics University, Ha Noi 1995-1997: Master in Business Administration (MBA), Asian Institute of Management (AIM), Makati, the Philippines 2010-2013: student of Doctor in Business Management (DBA), the Southern Luzon State University, the Philippines and the Thai Nguyen University, Viet Nam III Civil service, eligibility and Government Licensure, Examination IV Experiences 1992-2001: Vietnam Bank for Agriculture and Rural Development 161 Manager of Foreign Exchange Skills Department 2001-2002 Vietnam Bank for Agriculture and Rural Development, Bac Ha Noi Branch, head of international payment department 2002- 2008 Vietnam International Bank (VIB) Deputy General Director 2008- Present Vietnam International Bank (VIB) Head of Supervisors Board 162 ... determine and analyze the correlation of depositors’ behavior and bank patronage in the inner districts of Ha Noi As the knowledge of depositors’ behavior and bank patronage is not well understandable... knowledge of the study 1.2 Objectives of the Study The main objective of the study is to determine and analyse the correlation of depositors’ behavior and bank patronage in the inner districts of Ha Noi. .. and to determine depositors’ behavior model To characterise the profile of the depositors in Ha Noi To identify the factors that influence the depositors’ behavior in selecting banks in the inner