MINISTRY OF EDUCATION AND TRAINING
HO CHI MINH CITY UNIVERSITY OF ECONOMICS
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TRAN THI THU VAN
FACTORS AFFECTING THE CHOICE OF BANK FOR DEPOSIT TRANSACTIONS OF INDIVIDUAL CUSTOMERS
Major: BANKING Code: 60340201
MASTER'S THESIS IN ECONOMICS
SCIENTIFIC INSTRUCTOR: ASSOCIATE PROFESSOR, DR. TRUONG QUANG THONG
Ho Chi Minh City – 2013
COMMITMENT
I hereby certify that this research is my own work, the data and content in this research are true. The results of the research have never been published in any scientific work.
Author
Tran Thi Thu Van
INDEX
INTRODUCTION 1
CHAPTER 1: OVERVIEW OF INDIVIDUAL CUSTOMER DEPOSITS OF COMMERCIAL BANKS AND RESEARCH MODEL 2
1.1. Sources of capital mobilized from deposits of Commercial Banks 2
1.1.1. Concept 2
1.1.2. Types of deposit mobilization 2
1.2. Personal customer deposits 4
1.2.1. Concept 4
1.2.2. Feature 6
1.2.3. Role 7
1.3. Factors affecting the choice of bank of individual customers depositing money in banks 8
1.3.1. Overview of studies on bank choice 8
1.3.2. Diversity of factors in choosing a bank 11
1.3.3. Inconsistency in the component variables forming factor 14
1.4. Research model of factors 17
1.4.1. Formation of variable list 17
1.4.2. Research methods 19
1.5. Conclusion 20
CHAPTER 2: CURRENT STATE OF FACTORS AFFECTING THE CHOICE OF BANK FOR DEPOSIT TRANSACTIONS BY INDIVIDUAL CUSTOMERS21
2.1. Overview of commercial banks in Vietnam 21
2.1.1. Formation and development process 21
2.1.2. Business organization structure 22
2.1.3. Business performance results of the commercial banking system (2010-2012) 25
2.2. Current status of factors affecting the choice of bank for deposit transactions of individual customers 31
2.2.1. Organizing the mobilization of individual customer deposits of commercial banks 31
2.2.2. Analysis of factors affecting the choice of bank for deposit transactions of individual customers 36
2.3. Conclusion 63
CHAPTER 3: SOLUTIONS TO ATTRACT INDIVIDUAL CUSTOMERS TO DEPOSIT MONEY IN COMMERCIAL BANKS 65
3.1. Development orientation of Vietnamese commercial banks to 2020 65
3.1.1. General development orientation 65
3.1.2. Customer attraction orientation 67
3.2. Solutions to attract individual customers to deposit money in commercial banks 69
3.2.1. Group of solutions implemented by commercial banks themselves 69
3.2.2. Support solution group 72
3.3. Limitations and further studies 75
3.4. Conclusion 76
CONCLUSION 77
REFERENCES 78
APPENDIX 82
LIST OF FIGURES, TABLES
Table 1. 1 List of factors affecting bank selection 13
Table 1. 2 Bank selection factors in the US, Taiwan and Ghana 15
Table 1.3 Comparison of the components of the Convenience factor 15
Table 1.4 List of 56 research variables 17
Table 2.1 Demographic characteristics of sample 36
Table 2. 2 Statistics of the proportion of banks used 38
Table 2. 3 The five most important variables for men and women 41
Table 2. 4 Five least important variables for men and women 42
Table 2. 5 The five most important variables in bank choice by age group ..43
Table 2. 6 Five least important variables in bank choice by age group 44
Table 2. 7 The five most important variables in choosing a bank by income level
................................................................ ................................................................ ..............................45
Table 2.8 Five least important variables in bank choice by income level 46
Table 2.9 List of variables, factors, item-total correlation coefficient and Cronbach Alpha
................................................................ ................................................................ ..............................50
Figure 2. 1 Critical measurement model 53
Table 2. 10 Normalized weights 54
Table 2.11 Testing the correlation coefficient between concepts (factors) 54
Table 2. 12 Composite reliability, extracted variance of concepts 55
Table 2. 13 List of factors, component variables, Total correlation coefficient and Cronbach Alpha 56
Table 2.14 Ranking of importance of factors 58
Table 2.15 Ranking of importance of factors for both male and female customers
................................................................ ................................................................ ..............................59
INTRODUCTION
When Vietnam joined the WTO, the financial market gradually opened up to welcome international financial institutions. On the one hand, integration created a diverse market with many suppliers for customers. On the other hand, foreign banks with advantages in capital, technology and international management experience directly competed and attracted customers with domestic banks. This forced banks more than ever to understand more about customers in addition to efforts to improve technology, products... to thereby attract new customers and retain existing customers. Within the limits of budget, human resources, time... banks must find for themselves an effective competitive strategy based on taking advantage of existing advantages.
As the economy develops, technology advances, and social needs increase, customer needs are not only limited to traditional products such as savings or loans, but also develop into other diverse needs such as international payments, guarantees, online payments, ATMs, etc. Customers have more and more choices and are less dependent on a bank, a product or a service. The choice of a bank for customers to transact with and then become regular customers depends on many factors other than those related to products and services. Banks increasingly need to understand the needs and psychology of customers in order to provide the best service. Therefore, research to understand customer needs is necessary. From there, banks can identify important factors in choosing a bank from the customer's perspective. This research is conducted for no other purpose than the above.
CHAPTER 1:
OVERVIEW OF INDIVIDUAL CUSTOMER DEPOSITS OF COMMERCIAL BANKS AND RESEARCH MODEL
1.1. Capital sources mobilized from deposits of commercial banks
1.1.1. Concept
The mobilized capital of a commercial bank is the monetary value that commercial banks mobilize in the market through deposits, loans and some other capital sources. The mobilized capital part has a decisive meaning in the operational capacity of each commercial bank.
Deposit operations of commercial banks include deposits from businesses, economic organizations, individuals and savings deposits from residents.
1.1.2. Types of deposit mobilization
Commercial banks' deposit sources include term deposits, non-term deposits, checking accounts and current accounts.
1.1.2.1. Term deposits
This type of deposit is also called a periodic deposit with many different terms: 3 months, 6 months, 9 months, one year the longer the term, the higher the interest rate paid to the depositor. Although the amount of each person's deposit is not much, the number of depositors is very large, so the savings deposits of thousands of people are really an important source of business capital for the bank.
The amount of savings deposits attracted depends on whether its nominal interest rate is higher than the actual interest rate plus the inflation rate. The actual interest rate of savings deposits must be lower than the actual interest rate of bank credit, the actual interest rate of the bank must be lower than the actual average profit rate. The actual average profit rate is an important basis for banks to determine lending interest rates and deposit interest rates.
1.1.2.2. Non-term deposits
Similar to term deposits, when a customer brings money to deposit, the bank checks the signature, ID number, address, full name, opens an account for the customer, takes a signature sample, records the ID number of the depositor or authorized person (if any). After the customer deposits money, the bank issues the customer a savings book with the customer's deposit amount recorded.
The amount of savings depends on whether its nominal interest rate is higher than the real interest rate plus the inflation rate.
For example: actual average profit rate: 6%/year, actual interest rate of savings deposits: 4%/year, inflation rate 10%/year, nominal interest rate of savings deposits: 14%/year, actual interest rate of bank credit: 5%/year, nominal interest rate of bank credit: 15%/year.
1.1.2.3. Checking account
Customers come to deposit money to open a checking account, the bank checks the ID card, place of issue, address, full name, signature sample and opens a checking account for the customer to deposit money. Instead of a savings book, the customer is given a checkbook by the bank. When needing to spend, the customer just needs to fill in the check completely.
Checks are divided into many types depending on their nature and usage characteristics.
* Based on the nature of circulation, checks are divided into 3 types: Named checks, anonymous checks, and checks to order.
* Based on the characteristics of use, checks can be distinguished into the following types: cash checks, transfer checks, crossed checks, guaranteed checks, and traveler's checks.
1.1.2.4. Current account
The more current accounts a bank attracts, the more deposits it has to operate. Current accounts differ from checking accounts in that they are current accounts between the bank and the customer. Interest rates on current accounts