(Luận văn) the determinants of customer satisfaction on banking services , the case of commercial banks in ho chi minh city

Research scope

The investigated objects of this research are just focused on individuals Ho Chi Minh City is selected as research place Moreover, the research is carried out in

LITERATURE REVIEW

Conceps

This section contains the definitions of key concepts related to the research such as customer satisfaction and banking services

Customer satisfaction is a crucial metric that evaluates how well a company meets or exceeds customer expectations regarding its products and services In today's competitive market, businesses must strive to attract new and potential customers, making customer satisfaction a vital element of their overall strategy It serves as a key differentiator that can significantly influence a company's success.

Banking services encompass a wide range of products offered by banks, including the safekeeping of deposits, enabling withdrawals, providing mortgage and loan options for individuals and businesses, issuing credit cards, managing credit card transactions, facilitating bill payments, and handling both domestic and international remittances.

The determinants of customer satisfaction on banking services: The case of commercial banks in Ho Chi Minh City

Literature review of customer satisfaction

Cardozo may be considered as the first person carried out the study of customer satisfaction In the research on customer effort, expectation, and satisfaction in

In 1965, research revealed that customer satisfaction is significantly influenced by the effort invested in obtaining a product and the expectations associated with it Specifically, customers tend to feel more satisfied when they exert considerable effort to acquire a product compared to when their efforts are minimal This finding challenges traditional views on customer convenience and marketing effectiveness Additionally, the study indicated that satisfaction levels are higher when a product meets or exceeds customer expectations, rather than falling short.

Parasuraman, Zeithaml, and Berry (1985 and 1988) created the SERVQUAL scale, consisting of 22 items across five dimensions: reliability, tangibles, assurance, responsiveness, and empathy This scale assesses consumer perceptions of service quality in retail and service sectors, based on a survey of 200 consumers aged 25 and older in a major Southwestern U.S shopping mall By analyzing the gap between consumer expectations and perceptions, they evaluated the level of consumer satisfaction.

In a 1992 study analyzing 660 questionnaires from customers across four service industries—fast food, pest control, banking, and dry cleaning—in a medium-sized city in the Southeast United States, Cronin and Taylor examined the relationships between service quality, customer satisfaction, and purchase intentions Their research emphasized measuring service quality based on actual performance to evaluate customer satisfaction, rather than comparing customer perceptions with their expectations.

Anderson and Sullivan (1993) conducted a telephone survey involving 22,300 customers across 57 firms in Sweden from 1989 to 1990 to analyze customer satisfaction and its impact on business performance.

The determinants of customer satisfaction in banking services, particularly among commercial banks in Ho Chi Minh City, reveal significant insights into the antecedents and consequences of customer satisfaction Research across various service industries, including banks, indicates that customer satisfaction is not directly influenced by expectations Therefore, it is crucial for banks to prioritize excellent customer service and effectively address customer complaints to maintain satisfaction levels Meeting customer needs and ensuring their satisfaction is essential for enhancing future profitability for these firms.

Customer satisfaction is a critical focus for marketers across various service industries globally In the retail banking sector, a study by Levesque and McDougall in 1996 analyzed data from 325 usable questionnaires out of 400 distributed Their findings revealed a strong correlation between service problems, service recovery ability, and customer satisfaction Additionally, they identified products, service features, and service quality dimensions as significant, albeit less influential, factors affecting customer satisfaction.

Andaleeb, in his research on the main factors influencing on the satisfaction of

1 patients with the hospitals in the health care service industry at a large city and its suburt in Pennsylvania (northeastern and mid-Atlantic area of the United States) in

In 1998, a study was conducted analyzing data from 130 completed questionnaires out of 390 distributed These questionnaires were gathered from patients across four hospitals, comprising two facilities with 100 beds and two with 450 beds.

The researcher utilized a probability sampling method and employed a multiple regression model to test his hypotheses The results indicated that five key factors significantly influenced patient satisfaction.

Customer satisfaction in banking services, particularly in commercial banks in Ho Chi Minh City, is influenced by several key factors These include the professionalism and demeanor of the staff, the quality of the facilities, effective communication with clients, and the perceived costs associated with the services.

A study by Ribiere et al (1999) in the U.S health care service sector analyzed survey data from internal customers, including physicians, pharmacists, nurses, quality department staff, and laboratory technologists The findings highlighted that accuracy, timeliness, and completeness are key factors influencing customer satisfaction with hospital information systems.

In 1999, Sonne conducted empirical research to identify the key factors affecting customer satisfaction with the consulting services of the Norwegian Institute of Fisheries and Aquaculture Ltd in Tromso, Norway Customers were surveyed using a seven-point Likert scale to evaluate their perceptions and assessments of various aspects of completed projects.

Threugh factor analysis on the basis of collected data, her study showed that the competence of consultants and technical reliability had substantial effect on

In 2003, Ekinci conducted research in the tourism industry to explore the factors influencing customer satisfaction Utilizing structural equation modeling, the study tested ten different hypotheses, revealing that service quality had the most significant impact on tourist satisfaction.

Meanwhile, Jamal and Naser (2003) undertook a study on the main determinants of

A study on customer satisfaction in the retail banking sector in Pakistan analyzed data from 165 completed questionnaires out of 300 distributed at a branch of the First Women Bank Ltd in a major northern city Utilizing a multivariate regression model, the research revealed that both the contractual (core) aspects of service and the customer-employee relationship (relational) significantly influence customer satisfaction.

In the context of commercial banks in Ho Chi Minh City, the study found no significant relationship between the tangible elements of the service environment and customer satisfaction.

I Eboli and Mazzulla (2007) utilized a structural equation model to identify key factors affecting student satisfaction with bus services in Cosenza, South Italy Their research involved a survey of 763 students to gain insights into their expectations and needs regarding public transportation The findings revealed a strong correlation between various service quality attributes—such as cleanliness, personnel security, information systems, helpfulness of staff, physical conditions of bus stops, availability of shelters and benches, overcrowding, and safety—and overall student satisfaction with the bus service.

Overview of commercial banks in Ho Chi Minh City and the present main

The commercial banking system in Ho Chi Minh City comprises three state-owned banks (Agribank, BIDV, MHB), 39 joint-stock banks, including the largest ten such as VietinBank, Vietcombank, and Eximbank, along with five wholly foreign-owned banks (HSBC, Standard Chartered, ANZ, Shinhan, Hong Leong) and five joint-venture banks (IVB, VID PB, SVB, VSB, VRB) Additionally, there are over 40 branches of foreign banks, all of which play a crucial role in driving the economy forward.

Mobilizing capital and lending are two major activities of commercial banks

However, these activities had the tendency of significant decline in the recent years

Between 2005 and 2007, the banking sector successfully mobilized substantial domestic and foreign funds, significantly boosting the economy's savings In 2005, the capital mobilization growth rate was 32.1%, which rose to 36.5% in 2006 The peak was reached in 2007, with a remarkable growth rate of approximately 54% However, following this peak, the capital mobilization status of commercial banks experienced a noticeable decline.

2009 due to high inflation and the impacts of global economic depression The capital mobilization growth rate decreased to 20% in 2008 and to 10% in 2009

Details are showed in Figure 2.1 tot nghiep down load thyj uyi pl aluan van full moi nhat z z vbhtj mk gmail.com Luan van retey thac si cdeg jg hg

Figure 2.1: Capital mobilization status of commercial banks from 2005 to 2009

Source: State Bank of Vietnam (20 1 0)

Commercial banks play a crucial role in bolstering investment by providing loans that meet the capital demands of the economy This support enables businesses to stabilize production and invest in technology, including upgrading machinery and equipment, which ultimately enhances the economy's production capacity Over the years, the investment capital sourced through credit institutions has been categorized into three distinct periods.

From 2004 to 2006, the credit growth rate experienced a slight decline but remained high at over 25% In the subsequent period from 2006 to 2007, lending activities surged, achieving an impressive growth rate of approximately 54% However, from 2007 to 2009, lending was closely regulated, resulting in a significant drop to 11.2% by 2009.

I The determinants of customer satisfaction on banking services: The case of commercial banks in Ho Chi Minh City

Figure 2.2: Credit operation status of commercial banks from 2004 to 2009

Source: State Bank of Vietnam (2010)

Beside the banking services related to capital mobilization and lending activiti~s, there are still many other services related to cards, treasury, remittance, etc

Banking services are also classified into personal banking services and business banking services Details will be shown obviously in the Appendix 1

Banks continuously innovate and implement new products and services, particularly in electronic banking, which includes home banking, internet banking, telephone banking, and SMS banking These modern banking technologies offer online processing capabilities, providing inquiry and payment utilities for a diverse range of customers, including individuals, businesses, and financial institutions with accounts at the banks.

Statistically, the banking system had approximately 32 million individual accounts;

By the end of 2010, the number of cards in circulation exceeded 28.5 million, supported by over 11,000 ATMs and nearly 50,000 POS devices The banking industry's payment system is increasingly adopting modern technology and automation, expanding service offerings and application scope while enhancing processing speed This evolution aims to promote card payments and reduce cash usage.

Especially, the system of commercial banks has enhanced an important role in administrating monetary policy of the State Bank, from that affecting the economy.

ANALYTICAL FRAMEWORK AND METHODOLOGY

Analytical framework

Numerous factors influence customer satisfaction across various service industries, particularly in the banking sector Key determinants include service problems, service recovery, product offerings, service quality dimensions, basic facilities, convenience of transactions, employee behavior, and the overall banking environment This paper introduces a model designed to test these determinants of customer satisfaction specifically within banking services in Ho Chi Minh City.

It is measured by the Likert scale with five-point (similar to the paper of Jham and Khan, 2008)

The study examines the impact of independent variables such as basic facilities, convenience, and employee competence on banking performance It highlights the significance of employee behavior and the overall banking environment, drawing parallels with the research conducted by Jham.

Khan, 2008), employee competence (professionality of bank staff) (New) and

Basic facilities (or traditional facilities) are interactions with the bank such as demand draft facility, fixed deposits, money transfer, locker facility, and ATM

When these traditional facilities are performed well, this will make customers feel satisfied; and on the contrary, customers will not satisfy Thus, the following hypothesis is proposed:

H1: Basic facilities have positive effect on customer satisfaction with banking services

Convenience in banking refers to the ease of transactions for customers, eliminating the need for physical visits to the bank This concept, known as multichannel banking, encompasses services such as debit cards, credit cards, telephone banking, and internet banking When these services are executed effectively, they enhance customer satisfaction; however, poor performance can lead to dissatisfaction Therefore, the following hypothesis is proposed:

H 2: Convenience has positive effect on customer satisfaction with banking services

Employee competence is reflected in the behavior and professionalism of bank staff, which is crucial for success in the service industry High professionalism and positive interactions from bank employees lead to customer respect and satisfaction, fostering a positive transactional experience Conversely, a lack of professionalism and poor behavior can result in customer dissatisfaction This paper proposes a hypothesis regarding the impact of employee behavior on customer satisfaction in banking services.

H3 : Employee competence has positive effect on customer satisfaction with banking services

The environment of bank includes five items that related to service scape, parking space, dissemination of information, query handling, and networking of branches

In the current banking sector, the environment significantly impacts customer satisfaction A well-upgraded and prioritized banking atmosphere fosters positive impressions, leading to customer comfort and satisfaction Conversely, neglecting this aspect can result in customer dissatisfaction Therefore, the following hypothesis is proposed:

H4 : The environment of bank has positive effect on customer satisfaction with banking services

Transaction costs encompass the expenses customers incur when engaging in banking transactions, which include not only monetary costs like loan rates and service fees but also time-related costs such as waiting periods and procedural durations It is generally understood that banks offering lower loan rates, higher deposit rates, reduced service fees, minimal waiting times, and expedited procedures will enhance customer satisfaction compared to those with higher loan rates, lower deposit rates, increased service costs, longer waiting times, and slower processes Consequently, this study posits the following hypothesis:

H 5: Good transaction cost has positive effect on customer satisfaction with banking servtces

Details will be made clear in the questionnaire (Appendix 3)

Customer satisfaction in banking services is influenced by three key factors: the quality of services provided, the satisfaction with loan facilities, and the efficiency of transaction services.

This study examines the factors influencing customer satisfaction with banking services, specifically focusing on commercial banks in Ho Chi Minh City It highlights the relationship between the services provided by banks and overall customer satisfaction The research model is visually represented in the accompanying figure.

Research methodology

The research approach can be categorized as either quantitative or qualitative, which are the methods used to analyze and discuss data The choice of the most suitable approach for a study is determined by the research purpose and the specific research questions involved (Yin, 1994).

This study aims to identify the key factors influencing customer satisfaction in banking services, utilizing a quantitative method as the primary tool to describe and measure the strength of the relationship between these factors and customer satisfaction.

This study utilized a questionnaire to gather primary data, allowing for extensive population coverage The collected data can be effectively measured and analyzed using statistical software.

3.2.2 Research process The research process includes three main steps that are illustrated in Figure 3.2

Figure 3.2: Research process 3.2.2.1 Step 1: Generation of items

The initial phase of the survey focuses on generating items based on a literature review that identifies five key factors influencing customer satisfaction in banking services To clarify the concepts within the conceptual framework and gather insights from respondents, interviews with experienced banking professionals are conducted The majority of respondents concur with the identified determinants of customer satisfaction in banking services The detailed questionnaire used for the in-depth interviews can be found in Appendix 2.

The second step includes conducting a pilot survey with a sample size of 50 respondents who possess knowledge of the banking sector This step aims to facilitate a preliminary evaluation and refinement of the measurement scale.

The analysis of customer satisfaction determinants in banking services, specifically for commercial banks in Ho Chi Minh City, begins by excluding items with low Item-Total Correlation values below 30, as recommended by Nunnally (1978) Subsequently, Factor Analysis is employed to eliminate items with factor loadings lower than 50, following the guidelines set by Hair et al.

The survey involved individuals who have engaged in transactions with various types of commercial banks in Ho Chi Minh City, including state-owned, joint-stock, wholly foreign-owned, and joint venture banks, with a sample size of 245 respondents The constructs were refined using Cronbach's alpha and Factor Analysis, followed by confirmatory factor analysis (CFA) to validate these measures The research concluded with regression analysis to explore the relationships among the observed items, marking the final step in the research process.

3.2.3 Measurement scales of the questionnaire

Based on the theories and research discussed in earlier chapters, along with insights gathered from preliminary interviews, the measurement scales for the questionnaire were adapted and developed, as shown in Table 3.1.

Coding Items of measurement scales Source

BFl Demand draft facility of bank A is very good

Basic BF2 Fixed deposits schemes of bank A are very good Jham and facilities BF3 Money transfer of bank A is very good Khan (2008)

BF4 Locker facility of bank A is very good BF5 A TM of bank A is very good

CONI Debit card of bank A is very good

Convenience CON2 Credit card of bank A is very good Jham and

CON3 Tele-banking of bank A is very good Khan (2008)

Jham and Employee ECl Attitude ofbank A's staff is very good

EC2 Professionality ofbank A's staff is very high New

Jham and EBl Service scape of bank A is very good

EB2 Parking space of Bank A is very good Jham and

The Khan (2008) environment EB3 Dissemination of information of bank A is Jham and of bank very good Khan (2008)

EB4 Query handling of bank A is very prompt Jham and

Khan (2008) - EB5 Networking of branches of bank A is very Jham and wide Khan (2008)

TCl Loan rate of bank A is very low New

Transaction TC2 Deposit rate of bank A is very high New cost TC3 Cost of service of bank A is very low New

TC4 Waiting time is the least New

TC5 Time for procedure is fastest New

CSI I totally satisfy with general services of bank

A Customer I totally satisfy with transaction of services, Jham and satisfaction CS2 loans facility provided by bank A Khan (2008)

CS3 I totally satisfy with quality of services of bank A

The measurement scales for independent variables were adapted from Jham and Khan (2008) and included two new scales Specifically, there were five scales for independent variables: three scales with five items each, focusing on basic facilities, the banking environment, and transaction costs, along with one scale containing three items.

The determinants of customer satisfaction on banking sen 1 ices: The case of commercial banks in Ho Chi Minh City

, (convenience), and one scale with two items (employee competence) The scale measurement for dependent variable was adapted from sample questions of Jham

' and Khan (2008) with three items These scales were used in the form of five-point

Likert technique The survey questions were anchored by five levels from "1" to

"5" (1 = strongly disagree; 2 = disagree; 3 = neutral; 4 = agree; 5 = strongly agree)

Additional measurements on demographic factors were represented as follows:

The ownership of the bank is classified into four categories: (i) joint-stock, valued at "1"; (ii) state-owned, valued at "2"; (iii) wholly foreign-owned, valued at "3"; and (iv) joint-venture, valued at "4".

The number of bank's operation year from the foundation day was classified into:

I (i) Under 5 years (measured with value equal to "1 "); (ii) from 5 to 10 years

The age categories are defined as follows: (i) 0 to 10 years, assigned a value of "2"; (ii) 10 to 15 years, assigned a value of "3"; (iii) 15 to 20 years, assigned a value of "4"; and (iv) over 20 years, assigned a value of "5".

Jype of contact with the bank was divided to (i) individual (measured with value equal to "1 "); and (ii) business (measured with value equal to "0")

Age was classified into three separate groups: (i) under 30 (measured with value equal to "1 "); (ii) from 30 to 50 (measured with value equal to "2"); and (iii) over

50 (measured with value equal to "3")

Gender was divided to (i) male (measured with value equal to "1 "); and (ii) female (measured with value equal to "0")

The survey's questionnaire was crafted from insights gathered during interviews, featuring 23 specific questions along with 7 additional ones, and began with a concise open letter Although the questionnaire was developed in English, it was designed for Vietnamese customers.

1 questionnaire had been translated into Vietnamese as understandable as possible

1 The English version of the questionnaire is attached in the appendix

An open letter accompanied the questionnaire, outlining the primary purpose of the survey The letter highlighted the significance of the respondents' enthusiastic and responsible participation in completing the questionnaire.

In this part, there were 23 questions Among them, 5 questions were used to test the effect of "basic facilities" factor, 3 questions were taken to examine the impact of

The study utilized a 5-point Likert scale to assess customer satisfaction, incorporating various factors: two questions addressed the "convenience" factor, five questions evaluated "employee competence," five questions examined the "environment of the bank," and five questions analyzed the "transaction cost" factor According to Likert (1932), this scale effectively captures both positive and negative responses, allowing respondents to express their level of agreement through five options: "1" for strongly disagree, "2" for disagree, "3" for neutral, "4" for agree, and "5" for strongly agree.

This section presents seven questions focused on the socio-demographic details of respondents, including the name of the bank where transactions were made (respondents may choose not to disclose if they prefer), the type of bank ownership, and the number of banks involved.

Sampling

This research utilized a large sample size analysis based on a survey, employing a convenient sampling method As noted by Hair et al (1998), analysts must consider various questions, including those related to sample size Specifically, researchers should avoid factor analysis on samples smaller than a certain threshold.

50 observations, and preferably the sample size should be larger than or equal to

In factor analysis, a minimum of 5 observations is required for each item, which means that with 28 observed items, a sample size of at least 140 is necessary Consequently, a sample size of approximately 245 is deemed acceptable for this study.

Data collection

A survey was conducted from February 16 to 28, 2011, involving the distribution of thirty questionnaires to individual customers at various commercial banks in Ho Chi Minh City This was done to ensure the questionnaire's content was easily understandable Based on feedback and suggestions from experts, the questionnaire was revised accordingly The finalized questionnaires were then directly delivered to and collected from the respondents.

'The questionnaire was requested to be returned only after two days upon receipt

This gave respondents time to think and fulfill the questionnaire

250 samples were returned After collecting and checking, 5 samples were rejected because they were not complete Finally, 245 samples were used The valid response rate attained 98%

This study employs various statistical methods, including frequency distribution tables, percentages, variance, and standard deviation, to analyze and compare data collected from questionnaires The analysis is conducted using SPSS software version 16.0.

The scale testing

1 The Cronbach's alpha coefficient was used to test the suitability of the scale The , higher coefficient indicates the higher homogeneity of measurement items

Nunnally (1978) states that a scale is deemed acceptable when the Cronbach's alpha coefficient exceeds 0.60, and the Corrected Item-Total Correlation coefficient is greater than 0.30; otherwise, the item will be removed from the scale.

Assessment of scale's uni-dimensionality, discriminant validity and convergent

Hair et al (1998) indicated that uni-dimensionality means all items in a scale have strongly associated with each other

! Neuman (1999) also said that one of the more advanced techniques, namely factor

1 analysis that is often used in order to test the uni-dimensionality of data

Discriminant validity refers to the extent to which items of a specific construct are related to each other while showing a lack of association with opposing constructs In contrast, convergent validity evaluates the correlation between two measures that assess the same concept.

Principal component factor analysis with Varimax rotation is primarily utilized to assess uni-dimensionality, condensing the original data into fewer variables for predictive purposes (Hair et al., 1998).

While common factor analysis is often used to measure discriminant validity and

1 convergent validity and explore the talent dimensions represented in the original : variables (Conway and Huffcutt, 2003) Therefore, it is appropriate for the current

This research utilizes common factor analysis through principal axis factoring, employing an eigenvalue criterion of 1.00 or higher to determine the number of extracted factors Consequently, any factors with eigenvalues below 1.00 will be excluded from the research model.

When analyzing a uni-dimensional construct, factor analysis will yield a single extracted factor This is crucial for ensuring accurate interpretation of the data.

The study examines the factors influencing customer satisfaction in banking services, specifically focusing on commercial banks in Ho Chi Minh City It emphasizes that all key constructs in the theoretical framework are uni-dimensional Additionally, items with a factor loading below 0.50 will be excluded from the analysis to ensure the reliability of the findings.

(to not converge properly with the talent construct they were designed to measure

For reliability analysis, Cronbach's alpha is utilized to evaluate and enhance measurement items Hair et al (1998) state that each construct's scale must achieve a minimum Cronbach's alpha coefficient of 60, and items with a Corrected Item-Total Correlation coefficient below 30 will be excluded.

Different assessments can be made regarding the measurement of constructs Firstly, each item should load significantly on only one factor, indicating a uni-dimensional measurement, meaning that each item measures a single construct (Anderson and Gerbing, 1988) Secondly, all items within a scale must load highly on one factor that represents the core construct, as high loadings demonstrate convergent validity, while loading on a single factor confirms the uni-dimensional nature of the construct Lastly, to establish discriminant validity, no factor should contain two sets of items that load highly on the same factor (Hair et al., 1998).

Multiple regression analysis

This research employs multiple linear regression analysis to investigate the correlation and predictive impact of five independent variables on customer satisfaction, the dependent variable After refining our causal hypotheses, we aggregated the items representing each concept and conducted a multiple regression analysis to assess their influence on customer satisfaction.

One-way ANOV A

After identifying the key factors influencing customer satisfaction, a one-way ANOVA will be utilized to assess whether significant differences exist in satisfaction levels among various customer groups based on bank ownership, the number of years since the bank's establishment, and the type of contact.

The study examines the factors influencing customer satisfaction in banking services, focusing on commercial banks in Ho Chi Minh City, particularly considering variables such as bank affiliation, age, and gender The findings aim to provide valuable insights for management to enhance satisfaction levels among different customer segments.

DATA ANALYSIS AND RESEARCH RESULTS

General information of respondents

This section will present data on respondents' contact types with the bank, along with their age and gender Additionally, it will include details about the bank's ownership type and the number of operational years since its establishment The findings will be clearly illustrated through frequency tables and charts for each item.

Total of 250 samples were collected However, 5 samples were rejected because they were not completed Finally, 245 samples were used to analyze

4.1.1 Type of contact with the bank

The frequency of respondents' contact types with the bank is detailed in Table 4.1.

Table 4.1: Frequency of respondents' type of contact with the bank

Frequency Percent Valid Percent Cumulative Percent

A survey of 245 respondents revealed that 127 customers, accounting for 51.8%, visited the bank for individual contact, while 118 customers, representing 48.2%, sought business contact Figure 4.1 illustrates the comparison of these contact types with the bank.

Figure 4.1: Relative frequency of respondents' type of contact

The frequency result of respondents' age group is presented in Table 4.2

1 Table 4.2: Frequency of respondents' age group

Valid Cumulative Frequency Percent Percent Percent

Total 245 100.0 100.0 tot nghiep down load thyj uyi pl aluan van full moi nhat z z vbhtj mk gmail.com Luan van retey thac si cdeg jg hg r

The determinants of customer satisfaction on banking sen>ices: The case of commercial banks in Ho Chi Minh City

The majority of respondents, comprising 68.2%, were aged between 30 and 50 years, totaling 167 customers In contrast, 28.6% of respondents were over 50 years old, amounting to 70 individuals, while only 3.2%, or 8 respondents, were under 30 years old A visual comparison of the age groups is illustrated in Figure 4.2.

From 30 to SO yrs old Over 50yrs old

Figure 4.2: Relative frequency of respondents' age group 4.1.3 Gender of customers

The frequency result of respondents' gender is presented in Table 4.3

Table 4.3: Frequency of respondents' gender

Among 245 respondents, 118 customers were male, occupied 48.2% The remaining

Out of 245 respondents, 127 were female, representing 51.8% of the total Figure 4.3 illustrates the gender distribution among the participants.

Figure 4.3: Relative frequency of respondents' gender 4.1.4 Type of ownership of the bank

The frequency result of banks' type of ownership is presented in Table 4.4

Table 4.4: Frequency of banks' type of ownership

Among the 245 respondents, 58% reported joint-stock ownership, while 23.7% indicated state-owned ownership Additionally, 15.1% of the samples were wholly foreign-owned, and 3.2% were joint ventures The distribution of bank ownership types is illustrated in Figure 4.4.

Figure 4.4: Relative frequency of banks' types of ownership 4.1.5 The number of bank's operation year from the foundation day

The frequency result of number of bank's operation year from the foundation day is presented in Table 4.5

Table 4.5: Frequency of number of bank's operation year from the foundation day

Among 245 respondents, 33.9% (83 customers) conducted transactions with banks that have been operating for 15 to 20 years, while 32.2% (79 customers) chose banks with over 20 years of operation Additionally, 13.5% (33 customers) engaged with banks that have been in operation for less than 5 years, and 27 customers, representing a smaller segment, transacted with banks that have operated for 5 to 10 years.

Since its foundation, 11% of customers have engaged in transactions with banks that have been operating for up to 10 years, while 9.4% of customers have transacted with banks that have been in operation for 10 to 15 years Figure 4.5 illustrates the comparison of the number of years banks have been operational since their establishment.

Under 5 years From 5 ã 10 From 10 ã 15 From 15 ã 20 Over 20 years years years years

Figure 4.5: Relative frequency of number of bank's operation year

The results of pilot survey

The result of pilot survey with 50 respondents is showed in Table 4.6 In detail, the mean values of independents variables and dependent variable are presented as follows:

The mean value of basic facilities is from 3.12 for "ATM of the bank" to 4.04 for

"Locker facility of the bank" The mean value of convenience is from 2.88 for

"Tele-banking of the bank" to 3.44 for "Credit card of the bank" The mean value of employee competence is from 3.26 for "Professionality of bank staff' to 3.58 for

"Attitude of bank staff' The mean value of the bank environment is from 2.68 for

The bank's parking space has a mean value of 3.60, while the networking of branches shows a mean transaction cost ranging from 2.54 for service costs to 2.76 for deposit rates and waiting times.

' satisfaction is from 2.80 for "totally satisfy with general services of the bank" to 12.92 for "totally satisfy with quality of services of bank"

N Minimum Maximum Mean Std Deviation Independent variables

CS3 50 2.00 4.00 2.92 695 tot nghiep down load thyj uyi pl aluan van full moi nhat z z vbhtj mk gmail.com Luan van retey thac si cdeg jg hg

4.2.2 Results of the scale testing

The basic facilities scale demonstrates a strong reliability with a Cronbach's alpha coefficient of 758 The five key items included in this scale—demand draft facility, fixed deposits, money transfer, locker facility, and ATM—exhibit high Corrected Item-Total Correlation coefficients, all exceeding 3 Consequently, these items will be retained for further analysis.

The convenience scale demonstrates a strong reliability with a Cronbach's alpha coefficient of 768 The three components of this scale—debit card, credit card, and tele-banking—exhibit high Corrected Item-Total Correlation coefficients, all exceeding 3 Consequently, these items will be included in the subsequent analytical phase.

The employee competence scale demonstrates a strong reliability with a Cronbach's alpha coefficient of 858 Key items, including the attitude and professionalism of bank staff, exhibit high Corrected Item-Total Correlation coefficients exceeding 3, leading to their retention for further analysis.

The environment of bank scale

The environment of bank scale has very high Cronbach's alpha coefficient (.845)

The environment of bank scale includes five key elements: service scape, parking space, dissemination of information, query handling, and networking of branches, all of which exhibit a high Corrected Item-Total Correlation coefficient exceeding 3 Consequently, these elements will be retained for further analysis.

The transaction cost scale demonstrates a strong reliability with a Cronbach's alpha coefficient of 837 It comprises five key items: loan rate, deposit rate, cost of service, waiting time, and time for procedure, all of which exhibit high Corrected Item-Total Correlation coefficients.

Customer satisfaction scale has very high Cronbach's alpha coefficient (.813)

The customer satisfaction scale includes three key items: overall satisfaction with the bank's general services, satisfaction with transaction services and loan facilities, and satisfaction with the quality of services provided by the bank Each of these items demonstrates a high Corrected Item-Total Correlation coefficient, exceeding 30, which justifies their retention for further analysis.

A summary of the Cronbach's alpha result of the measurement scales in the pilot survey is provided in Table 4.7

Table 4.7: Summary ofthe Cronbach's alpha result (pilot survey)

Customer satisfaction on banking services 813

The Cronbach's alpha of all measurement scales are greater than 60 which shows that all items had good internal consistency

Following the assessment of scale suitability using Cronbach's alpha coefficient, the research proceeds with factor analysis to reduce the number of observed items and identify the underlying factors that group correlated items.

The Kaiser-Meyer-Olkin (KMO) index is a crucial measure for assessing the appropriateness of factor analysis on sample data A KMO value ranging from 0.50 to 1.00 indicates that factor analysis is suitable for the dataset.

Bartlett's Test indicates a significance level of less than 05, leading us to reject the null hypothesis This suggests that there is a correlation among the observed items, making the use of factor analysis appropriate.

- Factor with eigenvalue is greater than or equal to 1.00 will be retained in the research model

- Variance explained must be greater than 50%

- Factor loading must be larger than or equal to 50 in order that the scale gets the convergent value

- This research uses the Principal Components method with the Varimax rotation

4.2.3.2 Results of factor analysis (pilot survey)

Factor analysis effectively condenses the information from original variables into a smaller set of representative variables, minimizing information loss In a pilot survey assessing the impact of 23 variables on customer satisfaction with banking services, factor analysis was employed to reduce these to 20 meaningful factors The results of this analysis for the independent variables are presented in Table 4.8.

Table 4.8: Factor analysis of independent variables

CON3 CON2 CONI BF4 BF3 BFI EB5

Cumulative variance explained(%) 21.112 37.510 Note: Extraction method: Principal Component Analysis , Rotation method: Varimax with Kaiser Normalization

49.160 60.796 68.242 74.751: tot nghiep down load thyj uyi pl aluan van full moi nhat z z vbhtj mk gmail.com Luan van retey thac si cdeg jg hg

' The result of factor analysis for dependent variable (pilot survey) is presented in Table 4.9

Table 4.9: Factor analysis of customer satisfaction on banking services

Factor 1 Customer satisfaction on banking services

Note: Extraction method: Principal Component Analysis

The analysis revealed six factor groups with eigenvalues ranging from 1.037 to 5.789, collectively explaining 74.751% of the cumulative variance Notably, the eigenvalue for customer satisfaction in banking services was 2.199, indicating a significant variance of 73.296%.

The results of main survey

The Cronbach's alpha coefficients for the independent variables ranged from 753 to 878, indicating good reliability Customer satisfaction regarding banking services achieved a reliability score of 812 Nunnally (1978) suggests that a scale is acceptable when the Cronbach's alpha exceeds 60, and each item's Corrected Item-Total Correlation coefficient should be above 30 In the reliability analysis of the banking environment scale, the Corrected Item-Total Correlation coefficient for item EB5 was evaluated.

The networking of bank branches has a low score of 294, which is below the acceptable threshold of 30, leading to its elimination from the scale The findings of the reliability analysis are detailed in Table 4.10.

Table 4.10: Result of reliability analysis

Customer satisfaction on banking services 812

Based on the above results of reliability analysis for measurement scales, factor analysis will be carried out without EB5 item (networking of branches of the bank)

The results of factor analysis for independent variables (EB5 excluded) showed that there were five groups of factor

The first factor group consists of six items: EBl, EB2, EB3, EB4, ECl and EC2 The second factor group consists of four items: TCl, TC3, TC4 and TC5

The third factor group includes five items: BFl, BF2, BF3, BF4, and BF5 The fourth factor group contains three items: CONI, CON2, and CON3 Lastly, the fifth factor group is represented by a single item: TC2.

Details are presented in Table 4.11 tot nghiep down load thyj uyi pl aluan van full moi nhat z z vbhtj mk gmail.com Luan van retey thac si cdeg jg hg

Table'4.11: Factor analysis of independent variables

TC3 TCl TC5 TC4 BFl BF4 BF2 BF3 BF5 CON3 CONI CON2 TC2

Cumulative variance explained(%) 22.113 Note: Item EB5 excluded

Extraction method: Principal Component Analysis Rotation method: Varimax with Kaiser Normalization

856 2.074 1.902 1.080 13.777 12.269 6.828 52.469 64.737 71.565 tot nghiep down load thyj uyi pl aluan van full moi nhat z z vbhtj mk gmail.com Luan van retey thac si cdeg jg hg i

The removal of the itein TC2 "deposit rate of the bank" has led to an increase in the Cronbach's alpha coefficient for the transaction cost scale, rising from an initial value of 836 to 878 The results of the factor analysis for the independent variables, excluding EB5 and TC2, are detailed in Table 4.12.

Table 4.12: Factor analysis of independent variables

TC3 TCl TC5 TC4 BFl BF4 BF2 BF3 BF5 CON3 CONI CON2

Cumulative variance explained(%) 23.374 Note: EB5 and TC2 excluded

Extraction method: Principal Component Analysis Rotation method: Varimax with Kaiser Normalization

819 807 788 2.028 1.878 14.958 12.859 55.469 68.328 tot nghiep down load thyj uyi pl aluan van full moi nhat z z vbhtj mk gmail.com Luan van retey thac si cdeg jg hg

Based on the results of factor analysis, there are four main factors including 18 observed items

The first factor, F AC _1, which represents the environment of the bank and employee competence, includes four observed items from an initial set of five These items are: EB1 "service scape of the bank," EB2 "parking space of the bank," EB3 "dissemination of information of the bank," and EB4 "query handling of the bank." Additionally, it encompasses two more items: EC1 "attitude of bank staff" and EC2 "professionalism of bank staff."

The second factor FAC_2 (called as transaction cost) involves 4 observed items:

TCl "loan rate of the bank", TC3 "cost of service of the bank", TC4 "waiting time'', and TC5 "time for procedure"

The third factor, FAC _3, referred to as basic facilities, includes five observed items: BFl, which represents the bank's demand draft facility; BF2, indicating the bank's fixed deposit schemes; BF3, denoting the bank's money transfer services; BF4, referring to the bank's locker facility; and BF5, which pertains to the bank's ATM services.

The fourth factor, F AC _ 4, known as convenience, includes three observed items: CON1, which refers to the bank's debit card; CON2, representing the bank's credit card; and CON3, which pertains to the bank's tele-banking services.

The study reveals that the Corrected Item-Total Correlation coefficients for all items, except item EB5, are significantly high, ranging from 479 to 809, surpassing the acceptable threshold of 30 Additionally, the factor loadings range from 625 to 876, exceeding the acceptable level of 50 as established by Hair et al (1998).

Factor analysis is employed to evaluate the multidimensional aspects of customer satisfaction in banking services The results, as indicated in Table 4.13, reveal that a single component was identified, which is defined as the criteria for customer satisfaction.

The determinants of customer satisfaction on banking services.ã The case of commercial banks in Ho Chi Minh City

1 Table 4.13: Factor analysis of the customer satisfaction criteria

Factor 1 Customer satisfaction criteria on banking services

Note: Extraction method: Principal Component Analysis

Factor analysis suitability is assessed using the Kaiser-Meyer-Olkin (KMO) measure and Bartlett's test A KMO value between 0.50 and 1.00 indicates that factor analysis is appropriate for the data Additionally, if Bartlett's test yields a significance level of less than 0.05, the null hypothesis is rejected, supporting the use of factor analysis.

Ho hypothesis: there is not the correlation among observed items and using the factor analysis is suitable

The results of KMO and Bartlett's Test for the independent variables, shown in Table 4.14, indicate a KMO value of 708, which falls within the acceptable range of 50 to 1.00 Additionally, the p-value for the independent variables was found to be statistically significant.

Table 4.14: KMO and Bartlett's Test of independent variables

Kaiser-Meyer-Olkin Measure of Sampling Adequacy .708

Bartlett's Test of Sphericity Approx Chi-Square 3.031E3 df 190

The results of KMO and Bartlett's Test for the dependent variable, customer satisfaction with banking services, are shown in Table 4.15 The KMO value for this variable was 0.686, indicating a moderate level of sampling adequacy, while the p-value was statistically significant.

Table 4.15: KMO and Bartlett's test of customer satisfaction on banking services

Kaiser-Meyer-Olkin Measure of Sampling Adequacy .686

Bartlett's Test of Sphericity Approx Chi-Square 266.660 df 3

Hypothesis testing

The measurement scales are adjusted before running the multiple regression Details are presented in Table 4.16

I The environment of bank and employee competence

Measurement scales i EBI, EB2, EB3, EB4, ECI and EC2 I I

TCI, TC3, TC4 and TC5 1

FAC 3 BFI, BF2, BF3, BF4 and BF5

F AC 4 CONI, CON2 and CON3

In order to test the link between independent variables and dependent variable, the multiple regression equation is used as the following form (with the null hypothesis is proposed: /3 1 = /3 2 = /3 3 = /3 4 = 0 ):

The multiple regression model is employed to analyze customer satisfaction (SAT) in banking services, with four key independent factors: FAC_1, FAC_2, FAC_3, and FAC_4 Linear regression analysis is utilized to evaluate the model's effectiveness.

This study investigates the factors influencing customer satisfaction in banking services, specifically focusing on commercial banks in Ho Chi Minh City By employing the Enter method, all variables are analyzed simultaneously to identify which factors significantly contribute to customer satisfaction.

The model summary results, shown in Table 4.17, indicate an adjusted R-squared value of 53.8%, suggesting that 53.8% of the variability in SAT scores is explained by the independent variables in the model Additionally, the Durbin-Watson test reveals a positive correlation among the residuals, which is deemed acceptable.

Std Error of the Model R R Square Adjusted R Square Estimate Durbin-Watson

1 739a 546 538 67969959 1.957 a Predictors: (Constant), FAC_ 4, FAC_3, FAC_2, FAC_l b Dependent Variable: SAT

The result of ANOV A is presented in Table 4.18 The significant statistics value Sig = 000 < 05, therefore, the null hypothesis is rejected

Model Sum of Squares df Mean Square F Sig

Total 244.000 244 a Predictors: (Constant), FAC_4, FAC_3, FAC_2, FAC_l b Dependent Variable: SAT

Moreover, the result of coefficients is presented in Table 4.19 Basic facilities factor (FAC_3) has the significant statistics value: (Sig.) = 863 greater than 05

This factor has been excluded from the model.

Model B Std Error Beta t Sig Bound Bound

The new multiple regression equation is presented as follows:

H 1: Customers are more satisfied with banking services if they are served hy employees of the bank have good competence and the environment of bank is renewed and frequent upgraded

The standardized coefficient beta for the bank environment and employee competence (FAC_l) is 546, with a p-value of 000, indicating statistical significance at the 95% confidence level This suggests that customer satisfaction with banking services is positively influenced when employees possess strong competencies and when the bank environment is regularly updated and improved.

Hz: Customers are more satisfied with banking services if transaction cost the.v have to pay is the least and suitable

The standardized coefficient beta for transaction cost (F AC _2) is 0.205, with a p-value of 0.000, which is below the alpha level of 0.05 This indicates a statistically significant relationship at the specified confidence level.

A significant 95% of customers report higher satisfaction with banking services when the transaction costs they incur are minimal and appropriate This finding supports hypothesis 2.

H 3 : Customers are more satisfied with banking services if basic facilities provided by the bank (traditional interactions with the bank) are performed good

The standardized coefficient beta for basic facilities (FAC_3) is 0.008, with a p-value of 0.863, which exceeds the alpha level of 0.05 This indicates that, at a 95% confidence level, basic facilities do not significantly enhance customer satisfaction with banking services when performed well Consequently, hypothesis 3 is rejected.

Customers experience higher satisfaction with banking services when they have access to convenient facilities such as multichannel banking, which includes options like debit cards, credit cards, telephone banking, and internet banking, allowing them to manage their finances without the need to visit a physical bank.

The standardized coefficient beta for convenience (F AC _ 4) is 0.185, with a p-value of 0.000, which is below the alpha level of 0.05 This indicates that, at a 95% confidence level, convenience facilities significantly enhance customer satisfaction with banking services when they are well-executed.

Customer satisfaction in banking services is significantly affected by the convenience of transaction facilities, transaction costs, the banking environment, and employee competence The results of the hypothesis testing are summarized in Table 4.20.

Table 4.20: Summary of hypotheses testing

Customers are more satisfied with banking services if they

HI are served by employees of the bank have good competence

Supported and the environment of bank is renewed and frequent upgraded

H2 Customers are more satisfied with banking services if

Supported transaction cost they have to pay is the least and suitable

Customers are more satisfied with banking services if basic H3 facilities provided by the bank (traditional interactions with Rejected the bank) are performed good

Customers are more satisfied with banking services if they

~ have convenience facilities (multichannel banking including

Supported debit card, credit card, telephone banking, and internet banking) without actually going to the bank

Table 4.21 highlights the significance of independent factors, with the bank environment and employee competence being the most crucial Following this, transaction costs are identified as the next important factor, while convenience ranks last.

Table 4.21: The importance of independent factors

Rank of importance Coefficients Beta

• The environment of bank and 546 1 employee competence

Hierarchical regression analysis

Regression analysis examines the direct relationships between independent factors, such as the banking environment and employee competence.

The determinants of customer satisfaction on banking services: The case of commercial banks in Ho Chi Minh City convenience, transaction cost, and customer satisfaction on banking services The

The study examines how demographic characteristics such as gender, age, type of bank contact, bank ownership, and the number of operational years since establishment influence outcomes These demographic variables are analyzed as dummy variables.

In this study, gender is coded as 1 for female and 0 for male Age is represented by a value of 1 for individuals aged between 30 and 50, which constitutes 68.2% of the sample, making it a significant variable The type of contact with the bank is categorized as 1 for individual contact and 0 for business contact Ownership type is marked as 1 for joint-stock banks, as 58% of participants conducted transactions with them, while 0 is assigned to other ownership types Lastly, the number of operational years since the bank's foundation is coded as 1 for banks in operation for 15 to 20 years, with 0 assigned to all others.

Table 4.22: Hierarchical regression analysis of customer.satisfaction

The environment ofbank and employee competence 546 541

Adjusted Rot -value 538 530 tot nghiep down load thyj uyi pl aluan van full moi nhat z z vbhtj mk gmail.com Luan van retey thac si cdeg jg hg t

The determinants of customer satisfaction on banking sen'ices: The case of commercial banks in Ho Chi Minh City

, Table 4.22 shows that three groups of factors including the environment of bank and employee competence, convenience, transaction cost have significant positive relationships with customer satisfaction on banking services

In Model 2, five demographic characteristics were analyzed as dummy variables, revealing that the environment of the bank, employee competence, convenience, and transaction costs significantly impact customer satisfaction with banking services However, the five demographic characteristics showed no significant effect on customer satisfaction, as indicated by p-values ranging from 610 to 939, all exceeding the 05 threshold, as presented in Table 4.23.

Table 4.23: Coefficients of independent variables and moderate variables

Model B Std Error Beta t Sig

Num_yearl 009 119 004 076 939 a Dependent Vanable: SAT tot nghiep down load thyj uyi pl aluan van full moi nhat z z vbhtj mk gmail.com Luan van retey thac si cdeg jg hg

The determinants of customer satisfaction on banking services: The case of commercial banks in Ho Chi lv!inh City

, In summary, there is no relationship between demographic -characteristics and

This research focuses on the relationship between three key factors—bank environment, employee competence, and convenience—along with transaction costs, and their impact on customer satisfaction in banking services.

CONCLUSIONS AND RECOMMENDATIONS

Tiêu đề	The Determinants of Customer Satisfaction on Banking Services: The Case of Commercial Banks in Ho Chi Minh City
Tác giả	Nguyen Thanh Nien
Người hướng dẫn	Dr. Cao Hao Thi
Trường học	University of Economics Ho Chi Minh City
Chuyên ngành	Development Economics
Thể loại	Thesis
Năm xuất bản	2011
Thành phố	Ho Chi Minh City

Định dạng
Số trang	94
Dung lượng	2,72 MB