The influence of corporate social responsibility on the loyalty of customers depositing money at Vietnamese commercial banks

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMY HCMC. HO CHI MINH

LE ANH TUAN

THE EFFECT OF CORPORATE SOCIAL RESPONSIBILITIES ON CUSTOMERS DEPOSING CUSTOMERS AT COMMERCIAL BANKS IN VIETNAM

Specialization: Finance - Banking. Code: 60340201

MASTER THESIS OF ECONOMY

SCIENTIFIC GUIDE: Dr. TRAN PHUONG THAO

Ho Chi Minh City – Year 2017

GUARANTEE

I hereby declare that this is my own independent scientific research under the guidance of my scientific supervisor Dr. Tran Phuong Thao. The data used in the analysis in the thesis have clear origins and have been published in accordance with regulations. The research results in the thesis are researched and analyzed by myself, honestly, objectively and in accordance with the reality of Vietnam. These results have never been published in any other studies

City. Ho Chi Minh, October 13, 2017

Author

Le Anh Tuan

TABLE OF CONTENTS

ACCESSORY COVER DISCLAIMER

LIST OF SIGNS, ABBREVIATION ONLY LIST OF TABLES

LIST OF PICTURES AND Graphs CHAPTER 1: INTRODUCTION TO THE THESIS

1.1 Reasons for choosing topic 1

1.2 Research objectives 2

1.3 Research question 3

1.4 Subjects and scope of research 3

1.5 Research Methods 5

1.6 Meaning of the thesis 6

1.7 Structure of the thesis 6

CHAPTER 2: THEORETICAL OVERVIEW AND PRIVATE RESEARCH ON CORPORATE SOCIAL RESPONSIBILITIES AND CUSTOMERS' Loyalty.

2.1 Corporate Social Responsibility 8

2.1.1 Concept of corporate social responsibility 8

2.1.2 Approach to corporate social responsibility 11

2.1.2.1 Benefit-cost-oriented approach 11

2.1.2.2 Stakeholder-oriented approach 11

2.1.3 Customer-oriented corporate social responsibility 13

2.1.4 Consequences of Corporate Social Responsibility 15

2.1.4.1 Customer satisfaction 15

2.1.4.2 Customer's trust 15

2.1.4.3 Emotions of customers 16

2.1.4.4 Customer identification 17

2.2 Customer loyalty 17

2.2.1 The concept of customer loyalty 17

2.2.2 Measuring loyalty 18

2.2.3 Factors affecting customer loyalty 20

2.2.3.1 Customer satisfaction 21

2.2.3.2 Customer's trust 22

2.2.3.3 Customers' feelings 22

2.2.3.4 Customer identification 23

2.3.4 The need to study the loyalty of customers depositing money at Vietnamese commercial banks 23

2.3 Review of studies on the relationship between corporate social responsibility and customer loyalty 25

2.3.1 Direct influence of CSR on customer loyalty. 25

2.3.2 Indirect influence of CSR on customer loyalty 25

2.4 Research model and hypothesis 30

2.4.1 Proposed research model 30

2.4.2 Research hypothesis 31

2.4.2.1 Impact of CSR on customer satisfaction and loyalty 31

2.4.2.2 Influence of CSR on customer identification, customer loyalty. 32

2.4.2.3 The influence of CSR on customers' emotions and loyalty. 32

2.4.2.4 The influence of CSR on the trust and loyalty of customers. 33

2.4.2.5 The relationship between trust, emotion, customer satisfaction and customer identity. 33

CHAPTER 3: THE SITUATION OF DEPOSIT MOBILE ACTIVITIES AND CORPORATE SOCIAL RESPONSIBILITIES OF VIETNAM COMMERCIAL BANKERS.

3.1 Operational network of Vietnamese commercial banks in Ho Chi Minh City. Ho Chi Minh City 36

3.2 Actual situation of deposit mobilization activities of Vietnamese commercial banks in the city. Ho Chi Minh 38

3.2.1 Deposit mobilization products 38

3.2.2 Status of deposit mobilization 41

3.3 Actual situation of customer-oriented corporate social responsibility activities

products at Vietnamese commercial banks in the city. Ho Chi Minh. 44

CHAPTER 4: RESEARCH MODEL OF THE EFFECT OF CORPORATE SOCIAL RESPONSIBILITIES ON THE Loyalty of

CUSTOMERS SEND MONEY AT VIETNAM COMMERCIAL BANKS.

4.1 Research Process 49

4.2 Building a scale of 50 . variables

4.3 Qualitative Research 52

4.3.1 Qualitative research objectives 52

4.3.2 Design of qualitative research 52

4.3.2 Qualitative research results 53

4.4 Quantitative Research 57

4.5 Research results 61

4.5.1 Sample descriptive statistics 61

4.5.2 Reliability analysis of the 64 . scale

4.5.3 Exploratory factor analysis EFA 66

4.5.4 Confirmatory factor analysis CFA 69

4.5.5 Testing the theoretical model by SEM analysis 73

4.5.5.1 Testing the theoretical model 74

4.5.5.2 Estimating the theoretical model using Bootstrap 74

4.5.5.3 Research Hypothesis 76

4.5.6 Analysis of the 79 . multi-group model

4.5.6.1 Analysis of multi-group model according to customer characteristics 79

4.5.6.2 Analysis of multi-group model according to characteristics and products and services of banks

CHAPTER 5: CONCLUSION AND SOME HINTS

5.1 Research results 85

5.2 Some suggestions for commercial banks 88

5.2.1 Suggestions on implementing social responsibility customer-oriented approach

................................................. ................................................. ............88

5.2.2 Suggestions on the premises to improve the loyalty of depositing customers.

................................................. ................................................. ............89

5.3 Limitations and development directions of the project 94

REFERENCES APPENDIX

LIST OF SIGNS, ARRIVALS

&	And
2_	Chi-squared
ACB	Asia Commercial Joint Stock Bank
BIDV	Joint Stock Commercial Bank for Investment and Development of Vietnam
BSR Business organization for social responsibility
CFA	Confirmatory Factor Analysis
CFI	Comparative Fit Index
CMIN/DF	Chi-square adjusted for degrees of freedom
DF	Coefficient of degrees of freedom
EFA	Exploratory Factor Analysis
FIRE	Customer
NC	Research
SMALL	Bank
SBV	State bank
NH	Commercial Bank
Joint Stock Commercial Bank	Joint-stock commercial bank
SCB	Saigon Commercial Joint Stock Bank
SEM	Structural Equation Modeling
Techcombank	Vietnam Technological and Commercial Joint Stock Bank
TMCP	Stock Commercial
TMNN	State Trade
CSR	Corporate Social Responsibility
Ho Chi Minh City	Ho Chi Minh City
TVE	Total variance extracted (summarized from EFA results)
Vietcombank	Joint Stock Commercial Bank for Foreign Trade of Vietnam
VietinBank	Joint Stock Commercial Bank for Industry and Trade of Vietnam
VN	Vietnam

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LIST OF TABLES

Table 2.1 Some definitions of CSR over time 9

Table 2.2: Stakeholder-oriented CSR approach 12

Table 2.3: Relationship between attitude and buying behavior 20

Table 2.4 Summary of some related studies 28

Table 3.1 Operational network of Vietnamese commercial banks in Ho Chi Minh City 36

Table 3.2 Savings deposit interest rates of some commercial banks by month 40

Table 3.3 Capital mobilization results of Vietnamese commercial banks in the city. Ho Chi Minh City in the period 2011 - 2016. 41

Table 3.4 Capital mobilization results of Vietnamese joint stock commercial banks in Ho Chi Minh City. Ho Chi Minh City for the period 2011 - 2016. 42

Table 3.5 Size of residential deposits of Vietnamese commercial banks in Ho Chi Minh City in the period 2011

– 2016................................................................................................ ................................................. ............ 43

Table 3.6 Summary of CSR in customer-oriented approach of Vietnamese commercial banks 46

Table 4.1 Scale of CSR after adjustment 54

Table 4.2 Customer loyalty scale after adjustment 55

Table 4.3 Customer identification scale after 55 . correction

Table 4.4 Customer's emotional scale after 55 . correction

Table 4.5 Customer confidence scale after adjustment 56

Table 4.6 Customer satisfaction scale after adjustment 56

Table 4.7 Number of Surveys 62

Table 4.8 Sample statistics by sex and age 62

Table 4.9 Summary of sample descriptive statistics 63

Table 4.10 Analysis results of Cronbach's Alpha 65

Table 4.11 Results of EFA analysis of all variables 67

Table 4.12 Matrix of Elements 67

Table 4.13 Indicators for testing the reliability of the 71 . scale set

Table 4.14 Correlation coefficients between concepts 72

Table 4.15 Bootstrap estimation results with N = 500 75

Table 4.16 Hypothesis test results at 5% significance level 76

Table 4.17 Results of direct and indirect effects of research hypotheses 77

Table 4.18 Multi-group analysis by sex 80

Table 4.19 Multi-group analysis by service usage time 80

Table 4.20 Multi-group analysis by income 81

Table 4.21 Multi-group analysis by bank characteristics 82

Table 4.22 Multi-group analysis by characteristics of banking products and services 82

Table 4.23 Summary of multi-group analysis results 83

LIST OF PICTURES, Graphs

Figure 2.1 Customer-oriented CSR approach 14

Figure 2.2 Relationship between CSR and customer loyalty 26

Figure 2.3 Analytical framework of the topic 31

Figure 3.1 Capital mobilization results of Vietnamese commercial banks in Ho Chi Minh City. Ho Chi Minh City for the period 2011 - 2016. 42

Figure 3.2 Residential deposits of Vietnamese commercial banks in Ho Chi Minh City. Ho Chi Minh 44

Figure 4.1 Research process 49

Figure 4.2 Customer size of banks in sample 64

Figure 4.3 Results of the 1st normalized CFA analysis 69

Figure 4.4 The critical model after joining the errors has a large correlation coefficient of 70

Figure 4.5. SEM results for theoretical model (normalized) 73

Figure 4.6 Estimation results (normalized) 77

CHAPTER 1: INTRODUCTION TO THE THESIS

1.1 Reasons for choosing the topic

Customers are the lifeblood of any business, especially in the banking sector, where customer interaction is very high. However, finding a new customer is not always easy. According to Lindgreen et al. (2004), the cost to attract a new customer is typically 10 times higher than retaining an existing customer. Worse still, it takes a long time for new customers to buy goods and services at the same rate as old customers are lost. Loyal customers not only buy more products, but they themselves will bring businesses many new customers through referring friends and relatives to use products and services that they feel satisfied. Especially in Vietnam, word of mouth effect will be much more meaningful than customers finding a new product that they have never used.Profits range from 25-95% depending on the economic situation of each industry. For that reason, maintaining and exploiting existing customers to the fullest, creating close relationships, sharing with them, developing them into loyal customers must be the top priority of banks. . Banks need to have a steady stream of loyal customers. Customer loyalty is a key factor for banks to dominate the market and develop competitive advantages (Afsar et al., 2010).

To maintain customer loyalty, banks can diversify products and improve service quality as effective competitive measures to gain market advantages. In addition, banks pay attention to strengthening their image, improving their reputation, developing their brand through building corporate culture and business ethics, which is a solution that is being applied and initially started. bring positive results in many banks around the world. Businesses that want to affirm their brands in the market, what they are aiming for now is the good implementation of corporate social responsibility (CSR). If CSR in the field of

In typical production areas such as food processing, CSR reports often focus on indicators of food safety and hygiene, or commitment and product quality to consumers, or commitments of enterprises on food safety and hygiene. waste treatment, exhaust gas to ensure safety criteria for the environment. Corporate Social Responsibility in the banking sector focuses on customer aspects, investments in which banks receive capital from customers. Regarding the banking sector, Al-bdour et al. (2010) believe that research on CSR activities in banking is necessary because this is a particularly important industry, playing a key role in the growth of the banking sector. development of society. Banking is a particularly sensitive sector to the impacts of social responsibility activities due to a more diverse and complex stakeholder system than other sectors. Being socially responsible will help the bank build a good reputation, attract and retain a high-quality workforce. McDonald et al (2008) discovered the positive influence of corporate social responsibility on customer loyalty in the banking sector.

Research gap

In Vietnam, there have also been some studies on corporate social responsibility (Nguyen Thi Thuy Dung, 2013; Nguyen Ngoc Nha Uyen , 2013; Ngo Dinh Luan, 2016). These authors often focus on analyzing the relationship between corporate social responsibility and employee commitment and motivation. Some other studies examine the influence of social responsibility on brand trust, consumer repurchase intention (Nguyen Tinh, 2013; Le Van Phung, 2014) or customer loyalty (Nguyen Tinh, 2013). Hong Ha, 2016). However, these studies were carried out for the manufacturing, building materials, and consumer goods sectors without any research in the banking sector. From the importance of both practical and theoretical issues, the author decided to choose the topic "The influence of corporate social responsibility on the loyalty of customers depositing money at Vietnamese commercial banks ” as a research topic.

1.2 Research objectives

Overall objective: to study the influence of corporate social responsibility on the loyalty of depositors at Vietnamese commercial banks.

Detail goal:

- Analyze the consequences of CSR of banks.

- Analyzing the antecedents of loyalty of deposit customers at Vietnamese commercial banks.

- Analyzing the relationship between the mediating factors in the influence of CSR on the loyalty of customers depositing at Vietnamese commercial banks.

- Proposing solutions to improve the loyalty of depositors at Vietnamese commercial banks.

1.3 Research questions

With the above research objective, the thesis aims to answer the following questions:

- How does corporate social responsibility affect the loyalty of customers depositing money at Vietnamese commercial banks?

- What factors affect the relationship between corporate social responsibility and customer loyalty at Vietnamese commercial banks? If yes, what is the influence of these factors?

- Does the difference in customer characteristics have an impact on the influence of CSR on the loyalty of depositors at Vietnamese commercial banks?

- Do the differences in characteristics and products and services of banks have an impact on the influence of CSR on the loyalty of depositors at Vietnamese commercial banks?

- What solutions to improve the loyalty of customers depositing at Vietnam commercial banks?

1.4 Subjects and scope of research

Research object: The influence of corporate social responsibility on the loyalty of depositing customers. This influence is detected through a number of factors such as trust, emotion, customer satisfaction, customer identification.

Research scope: CSR is stakeholder-oriented, including many approaches such as human resources; shareholder; customer; provider; financial partners; public authorities; community; environment (Perrini, 2005). This study focuses on analyzing CSR with a customer-oriented approach. The survey subjects are individual customers who are depositing money at Vietnamese commercial banks in Ho Chi Minh City. Ho Chi Minh. The reason the author sets this limit is because:

Firstly, the author chooses customer-oriented CSR analysis because this is an orientation that focuses mainly on the direct benefits of customers. According to McDonald and Rundle-Thiele (2008), customer-oriented CSR is often valued higher than community-oriented CSR because customers often focus on personal interests rather than considering community interests. On the other hand, customers are very important to the banking business, are the users of services and generate profits for the bank. Therefore, this study will have practical significance for Vietnamese commercial banks in the process of operation, helping banks to better understand their customers and thereby be able to operate more effectively.

Second , the author chooses Vietnamese commercial banks in Ho Chi Minh City. Ho Chi Minh City for research because as of December 31, 2016 there are 11/35 commercial banks with headquarters in Ho Chi Minh City. In which, there are some banks with quite large total assets as well as a stable customer base after many years of operation such as ACB, SCB, Sacombank, ..Currently, in Ho Chi Minh City. Ho Chi Minh City is the place of business of nearly 364 branches/transaction offices, more than 1500 transaction offices/transaction points of the system of transaction offices.

Vietnam Commercial Bank 1 . Besides, City. Ho Chi Minh is known as the financial center

It is the largest bank in Vietnam, leading the country in terms of number of banks and sales of financial-credit relationships. According to the Website of the Office of the People's Committee of Ho Chi Minh City, the revenue of the Ho Chi Minh City banking system accounts for one third of the total revenue of the country. In which, deposits of individual customers at Vietnamese commercial banks in Ho Chi Minh City accounted for a relatively high proportion, accounting for 53.30% of the total.

1 See the list of banks in Appendix 1

amount of deposits in the period 2011 - 2016 2 . Therefore, the selection of Ho Chi Minh City for the survey can still ensure representativeness. Survey of customers depositing money in Ho Chi Minh City. Ho Chi Minh is also more convenient for research. The Vietnamese commercial banks mentioned in the study are commercial banks established in Vietnam and established under Vietnamese law (excluding branches of foreign banks, joint venture banks between Vietnam and foreign countries). ) that has a branch, office/transaction point in Ho Chi Minh City.

Tuesday, the author chose to survey the loyalty of individual customers who deposit money because this object often goes to the bank to transact, so it is easy to access. Deposit customers are also those who are easily affected by social relationships. In fact, when they are not satisfied with the products and services provided by the bank or they are affected by bad information about the bank they are dealing with, it can also affect their decision to continue. send more money or not? This decision may affect the bank's operations. Because, deposit is a regular and important source of capital in the bank's business. In addition, Pérez and Bosque (2015a) confirmed that depositors are often more affected by the bank's CSR activities. Because they care more about the benefits they and the community get from the money they deposit in the bank. For that reason, in this thesis, the author chooses to study the loyalty of depositing customers. Within the scope of this study, when it comes to loyalty, it is understood that it is the loyalty of individual customers who are depositing money at commercial banks.

1.5 Research Methods

The research is carried out by a combination of qualitative and quantitative research methods.

Qualitative research: to determine the appropriate model, factors, and measurement variables for research in Vietnam. Then conduct a group discussion with 8 subjects including customers who are depositing money and deposit transaction staff of the banks

2 The author summarizes from the website of the City Statistical Office. Ho Chi Minh, details in chapter 3.

commercial banks in the city. HCM. Content and discussion results are recorded and used to adjust observed variables and build survey questionnaires for quantitative research.

Quantitative research: The author uses a survey questionnaire (built on the basis of qualitative research) to collect data. The subjects of the survey are individual customers who deposit money at Vietnamese commercial banks in Ho Chi Minh City. Ho Chi Minh. After surveying the necessary number of samples, the author will measure the reliability of the scale, using exploratory factor analysis (EFA), confirmatory factor analysis (CFA), and linear structural analysis. (SEM) to test the research hypotheses in the research model as well as multi-group analysis to examine the difference in the influence of CSR on the loyalty of depositing customers among different customer groups. characteristics of customers, characteristics of banks or banking products and services.

1.6 Meaning of the thesis

Scientifically, the thesis contributes to building a suitable scale system to measure the social responsibility of banks in the relationship with customer loyalty.

In terms of practice, in Vietnam, there have been many research projects on the impact of CSR on customer loyalty, but there have not been many studies in the banking sector. This topic is meaningful for banking governance, it is the basis for managers to come up with specific measures to improve customer loyalty to banking services through banking activities. corporate social responsibility.

1.7 Structure of the thesis

The thesis is presented in 5 chapters: Chapter 1: Introduction to the thesis.

Chapter 2: An overview of the theory and previous studies on corporate social responsibility and customer loyalty.