Factors affecting customers choice of banks to deposit

Based on the literature reviewed in thebank selection criteria, this study empirically investigates the main factors influencingcustomers’ choice of banks to deposit in Vietnam.. Accordi

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

I would not have been able to complete my thesis without the advice, assistance,understanding and encouragement of my supervisors, my family and my friends I wouldlike to gratefully and sincerely acknowledge their assistance and support

First of all, the most important person I would like to thank is my supervisor, Dr DinhThai Hoang Thanks to his valuable advice and generous guidance throughout the process

of completing this thesis

Secondly, I would like to express my gratefulness to Dr Nguyen Dinh Tho and Dr.Nguyen Thi Mai Trang for their kindness in supporting me to deal with issues inResearch Design problem

Also, I would like to send my kindest gratefulness to my family, my mom, my dad and

my sister in supporting me, encouraging me throughout the hard time of completing mythesis

Furthermore, I would like to thank all of the staff at International School of Business –University of Economics Ho Chi Minh City who are always enthusiastic and give me alot of administrative support, assistance and understanding

Finally, I would like to give my gratefulness to all my classmates who have been sharingwith me all their knowledge and experience as well as joys and hardship during MBAcourse I would not complete my thesis without their support

In brief, it has been a long journey and I have grown in so many ways I would like to say

“thank you” again for the involvement of everyone who has helped me to complete thisthesis

The priority task of not only bankers but also the economists in Vietnam is to attract moresurplus capital into the bank channel to provide for the whole economy Accomplishingthis task can help pushing enterprises into investing more, and expending business more,which attributes into boosting the whole national economy, especially in the contextwhen interest rate of deposit is less attractive Based on the literature reviewed in thebank selection criteria, this study empirically investigates the main factors influencingcustomers’ choice of banks to deposit in Vietnam

A quantitative method via questionnaire survey was used to obtain the views ofapproximately 250 customers who are having or used to have deposit in banks in Ho ChiMinh City regarding their decision whether to choose this bank to deposit or not LogisticRegression analysis was used to test the proposed hypothese to investigate therelationship between customer’s choice and the influencing factors derived

According to the findings of this research, Comfortable and Financial benefits make apositive impact on Customers’ choice of banks to deposit The results of this research areimportant for bankers in managerial implications to enhance and improve theircompetitiveness, in other words, to allure and retain more deposit, which will ultimatelyresult in more profitability to Banks and boosting more capital to the Economy

Keywords: Deposit, Customers’ choice, Bank selection criteria.

Table of Content

CHAPTER 1 INTRODUCTION 1

1.1 Research Background 1

1.2 Research Problem and Research Objective 2

1.2.1 Research problem 2

1.2.2 Research objective 3

1.3 Scope of Research 3

1.4 Significance of Research 3

1.5 Research Structure 3

CHAPTER 2 LITERATURE REVIEW 5

2.1 Review on Customer choice of banks 5

2.2 Hypothesis development 7

2.2.1 Security 7

2.2.2 Financial benefits 7

2.2.3 Service quality 8

2.2.4 Convenience 9

2.2.5 Bank image 10

2.2.6 Demography 11

2.3 Research Model 12

CHAPTER 3 RESEARCH METHODOLOGY 13

3.1 Data Sources 13

3.2 Research process 13

3.3 Sample Size 16

3.4 Measurement Scale 17

3.5 Data Analysis Method 19

3.5.1 Reliability measure 20

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3.5.2 Validity measure by EFA (Exploratory Factor Analysis) 20

3.5.3 Logistic regression analysis 21

CHAPTER 4 DATA ANALYSIS AND RESULTS 23

4.1 Descriptive stastistics survey results 23

4.1.2 Preparation data 23

4.1.3 Characteristics of the sample population 26

4.2 Reliability of measurement instruments 27

4.3 Validity of measurement instruments 30

4.3.1 Suitability of data 32

4.3.2 Factor extraction 32

4.3.3 Factor rotation 33

4.4 Logistic Regression analysis 39

4.4.1 Introduction 39

4.4.2 Computing variables 40

4.4.3 Assumption for Logistic Regression 40

4.4.4 Testing hypotheses 40

4.4.5 Controlling variables 44

4.5 Conclusion 45

CHAPTER 5 CONCLUSIONS AND IMPLICATIONS 47

5.1 Research Overview 47

5.2 Research Findings 47

5.3 Managerial Implications 49

5.4 Research Limitations and Directions for Future Research 49

APPENDIX 1 OPEN QUESTIONS FOR DRAFT SURVEY 59

APPENDIX 2 QUESTIONNAIRE 60

APPENDIX 3 EFA RESULT OF VARIABLES……….65

List of Figures

Figure 2.1 Conceptual framework……… 12Figure 3.1 Research process……….…… …15Figure 4.1 Re-constructed Conceptual framework……… 39

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List of Tables

Table 3.1 Main factors affecting customers’ choice of banks to deposit………17

Table 4.1 Coded factors……… 24

Table 4.2 Sample summary……….……… ….26

Table 4.3 Cronbach’s Alpha test results……….…….28

Table 4.4 KMO and Bartlett’s test……… ……….…32

Table 4.5 EFA Rotated Factor Matrix……….33

Table 4.6 Re-run EFA KMO and Bartlett’s Test……….………35

Table 4.7 Re-run EFA Rotated Factor Matrix……… …… ………35

Table 4.8 Re-run Cronbach’s Alpha test result……… ………37

Table 4.9 Classification……… …… 41

Table 4.10 Variables not in the Equation……….…… 41

Table 4.11 Omnibus Test of Model Coefficients……… …….41

Table 4.12 Model Summary……… 42

Table 4.13 Variables in the Equation……….……43

Table 4.14 Control Variables in the Equation……… … 44

CHAPTER 1 INTRODUCTION

1.1 Research Background

In the modern time, the important role of bank deposits in economy is undeniable sincewithout bank deposits businesses would not be able to access funds from individual(Ritter, Silber & Udell; 2008) Banks are a channel to collect savings from surplus sectors

in the form of deposits and bump this money into the economy in the form of loans If thepeople do not interact and deal with banks, a great portion of the economic capital wouldremain idle (Rosly, 2005) In the present context of Vietnam, while gold, stock market, orreal estate investments are not likely suited for amateur investors (Vietnam News, 2014),bank deposit is still popular and favourable, regardless of the considerably low interestrates by the end of February, which was supposed to discourage deposits (The State Bank

of Viet Nam, 2014) On February 2014, according to the municipal Statistic Office(2014), in Ho Chi Minh City, total capital mobilization reached VND1.16 trillion(US$55.18 million), constituting a 15.1 per cent year-on-year increase Of that,commercial banks accounted for 56.8 per cent of the total city's deposits, up 18.4 per centyear on year (Ho Chi Minh City Statistic Office, 2014) Consequently, raising capital viadeposits in commercial banks plays an important role not only in spurring economicgrowth and salvaging dying businesses in the present regression time of the economy butalso creating profit for commercial banks themselves and depositors by interest rates(Ritter, Silber & Udell; 2008) In line with that, alluring customers to deposit is therequisite to any commercial banks, which needs to research for both theoretical andmanagerial purposes

The study of bank selection criteria has received attention from many bank marketingresearchers since few decades ago (Abduh, 2012) However, most of the studiesresearched on bank selection criteria for a whole financial service aspect includingdeposits, credits, online banking… Plenty of these studies applied T-test, Probit orMultiple Linear Regression model to explore the factors affecting the customers’ choice

of banks to deposit Moreover, in Vietnam, a few recent studies on customers’ decision to

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deposit in banks have only limited in one specific branch of bank In 2012, Hueconducted a research on factors affecting retail customers’ intention of depositing inBIDV Hue Branch In 2013, Ha, in her study in Vietnam obtained information about thefactors determining the decision of retail customers in depositing in An Binh Bank HueBranch This study tries to explore more specifically the factors affecting bank selectioncriteria to deposit in banks in a region of Vietnam applying Logistic Regression.

From the above reasons, the study sees the essentiality in doing the research on “Factors

affecting customers’ choice of banks to deposit” This study has attempted to discover

the important factors that influence retail consumers’ behavioral decision to choose banks

to deposit by investigating customers depositing in banks in a region of Vietnam

1.2 Research Problem and Research Objective

their business especially in the current context By solving that problem, banks couldallure more deposits, providing more opportunities for enterprises to approach capital,helping the economy in struggling for regression.

1.2.2 Research objective

The objective of the present study is to identify and measure the main factors influencingcustomers’ choice of banks to deposit Consequently, the research questions of the thesisare raised as two following questions:

- What are factors affecting customers’ choice of banks to deposit?

- How these factors affect customers’ choice of banks to deposit?

1.3 Scope of Research

For limited conditions, the research is conducted in Ho Chi Minh City with therespondents who have deposits in banks with various careers The timeframe of researchintentionally lasts from the middle of June to the end of August in 2014

Depositing is the main channel to raise capital for the economy in Vietnam Besides, oureconomy is in the phase of regression due to the lacking of capital Findings of mainfactors influencing customers’ choice of banks to deposit in order to improve capitalraising activities have the practical and essential value in the contemporary context

The research is divided into five chapters The first chapter introduces about background,research problems, research objectives, research questions, scope of research andresearch structures The second chapter covers literature review of the previous researchand shows hypotheses, as well as the conceptual framework of the research The thirdchapter presents the research process, sampling size, measurement scale, main survey,and data analysis method The fourth chapter concentrates on preparation data,

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descriptive data, assessment measurement scale and hypotheses testing Finally, the fifthchapter points out research overview, research findings, managerial implications, researchlimitations and directions for future research.

CHAPTER 2 LITERATURE REVIEW

Overview

This chapter discusses about the theoretical framework related to the customers’behaviour Then, the chapter presents a review of the literature in the bank selectioncriteria which concentrates on factors influencing customers’ choice of banks to depositfrom developed financial markets to developing ones, including Vietnam From theliterature reviewed, five hypotheses (H1, H2, H3, H4) are proposed with five factorsderived including security, financial benefits, service quality, convenience and bankimage The controlling variables such as gender, income and experience of depositing arealso tested their effect on customers’ choice of bank to deposit

2.1 Review on Customer choice of banks

Financial industries, especially banks, are becoming more and more competitive day byday since the gaps between financial institutes are narrower Besides the traditionalcompetitive advantages such as interest rate, product attributes, etc., banks are alsocompeting in service differentiation, easiness of service availability, technology used inservice delivery, bank facilities (Goiteom, 2011) Thus, to attract customers, banks arefacing challenges more than ever Consequently, it is crucial for bankers to know whatselection criteria customers are adopting in choosing banks to deposit

The study of bank selection criteria and bank patronize behavior has been done in a largenumber of studies In some developed countries, Kennington et al., (1996), Almossawi(2001) and Şafakli(2007), for instance, found that the bank’s reputation was the mainfactor in determining customers’ decision in using banks’ services, while in some otherdeveloping countries, Owusu-Frimpong(1999), Ta and Har (2000), Kaynak and Harcar(2005) and Safakli (2007) found that profitability factors and service quality, such as lowservice charges and high interest rates, were the major reasons why customers chose aparticular bank

The other factors which are also reported to be significant affecting customers’ decisionare convenience, competence, recommendation by peers, and free banking charges

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(Hinson et al., 2009; Blankson et al., 2007; Laroche et al., 1993; Ardic & Yuzereroglu,2009; Yavas & Kaynak, 1993; Babakus et al., 2004) Saunders et al., (2007), for anextension, investigated the banking behavior of poor people in South Africa and reportedthat a bank which could offer more beneficial products for the people would have biggeropportunity to be chosen.

A study was conducted by Abduh et al (2012) on the Indonesian customer's attitude inbank selection criteria and bank patronizing behavior They targeted the customers ofIslamic banks The findings of his study were that most customers prefer state-ownedbanks and that interest rate was their first consideration in patronizing a particular bank.The customers also put reason of safety of fund during the financial crisis as priority topatronize Islamic banks in Indonesia In addition, bank’s marketing and advertisementalso highly influences individuals to patronize Islamic banks

A recent study conducted by Khaled et al (2013) investigated the factors influencingYemeni's consumers who possibly differ from consumers in the developed

countries in terms of their psychological, cultural and behavior to use the banking systeminvolving depositing They found that service quality, banking Legal framework,

and bank advertisement had significantly positive effects on behavioral intention to usebanking services in Yemen except cultural belief where it was significant but played anegative role in using the banking services in Yemen

In Vietnam, Hue (2012) conducted a research on factors affecting retail customers’intention of depositing in BIDV Hue Branch The study indicated that there were fivemajor factors that influenced retail customers’ intention of depositing in BIDV HueBranch which were high interest, recommendation from relatives, brand awareness andpopulation, quality of service and promotion

Most recently, Ha (2013), in her study in Vietnam obtained information about the factorsdetermining the decision of retail customers in depositing in An Binh Bank Hue Branch.She found that promotion, employees’ skills, recommendation from relatives, location,

and convenience were key determinants in the decision of retail customers in depositing

in An Binh Bank Hue Branch

In developing countries, customers have a tendency of depositing in banks where theirfunds are protected and guaranteed since the banking system is still developing and needs

to become sophisticated to survive if any crisis occurs The cyclical financial crises havefrightened bank customers about losing their money if their bank liquidated or announced

to be bankrupt The rational action to mitigate the financial crisis risk is by depositingtheir money in a safer place, which are Islamic banks (Abduh, 2012) Consequently, inMalaysia, in a study of Abduh (2012), bank’s reputation was placed in the third rank ofattributes affecting customers’ choice of banks

The paper, therefore, hypothesizes that:

H1: There is a positive relationship between banks’ security and customers’ choice

of banks to deposit.

2.2.2 Financial benefits

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Financial benefits consist of high interest on saving (Goiteom, 2011), new accountpremiums or gifts (Aderson, 1976) According to Anderson (1976), financialconsiderations constituted the principle determinants of bank choosing decision Erol andEl-Bdour (1989), Metawa and Almossawi (1998), and Dusuki and Abdullah (2007) alsocome up with profitability as among the factors affecting customer decision to join abank.

Similarly, in a study of Abduh (2012) operated in Malaysia, financial benefits come as thesecond highest rank of attributes affecting customers’ choice of banks In Jordan, which isalso a developing country, Erol & El-Bdour (1989) concluded that instead of religiosity,another factor like rate of return constituted the main factors influencing individualcustomer to patronize particular bank

In USA, Javalgi et al (1989) found out that high interest rate on savings was among themost important factors affecting the determinants of customers’ bank selection decision.Similarly are the results of Boyd et al (1994) research run in USA, and Ta and Har(2000) research run in Singapore

The paper, therefore, hypothesizes that:

H2: There is a positive relationship between financial benefits and customers’ choice

of banks to deposit.

2.2.3 Service quality

Most economies are becoming more service-driven In the bank sector, wherecompetition becomes harsher and harsher, maintaining the quality of service is a pre –requisite for survival (Sharma & Mehta, 2005) Customer handling approach of bankpersonnel is also reflects the quality of service, which is not restricted to a smile orpassing greeting to customers but also the customer relations and techniques of answeringtelephones (Jantan, 1998) Efficiency of service also includes the speed of transaction,shorter waiting time (Muhamad et al., 1998) Other studies revealed that fast and efficient

service, speed of transaction and staff friendliness were frequently stated as the mostimportant attributes in purchase decision process (Sudin & Norafifah 1992; Kaynak,Kucukemifoglu & Odabasi 1991; Erol & El-Bdour 1989; Tumbull 1989).

Another prerequisite issue is that professionalism and politeness of staff are of theessence of making service faster and more efficient (Stafford, 1994) According to Jantan(1998), bank employers’ inefficiency and low quality of service decreased the bankcredibility causing the customers’ dissatisfaction, which might have affected thecustomers’ choice of banks Solving problems concerning technical skills accuracy andtimely service plays an important part in pleasing new customers and retaining loyalcustomers

In Malaysia, Haron et al., (1994) study the selection criteria of Muslim and non-Muslimcustomers in patronizing a particular bank As the result, Haron et al., (1994) discoveredthat one of the most important factors considered by both Muslim and non-Muslim whenselecting their financial institutions is “fast and efficient service” and “friendliness ofbank personnel”

The paper, therefore, hypothesizes that:

H3: There is a positive relationship between banks’ service quality and customers’ choice of banks to deposit.

2.2.4 Convenience

In the modern time, where everything needs to be executed at its top speed, convenience

is a commodity readily marketed and handily profitable (LoBello, 1985) According toAnderson (1976), convenience consists of full service offering, hours of operation, whichbrings the customers the ultimate comfortability in managing their deposits To the extent

of conscious deliberation, convenience appears to be a dominant determinant incustomers’ bank selection decision (Anderson, 1976)

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Additionally, by providing extra facilities, like extended hours of service will allow thecustomer more flexibility in transactions with banks instead of rushing to banks duringstandard banking hours which may not convenient for them (Jantan, 1998).

In Indonesia, during year 2000 until 2005, Bank Indonesia (BI) together with Department

of Statistics of Bogor Agricultural University (IPB) conducted a wide survey for West,Central, and East Java respectively as well as West Sumatera and South Kalimantan Theresearch concluded that convenience was one of the main factors in patronizing banks

In a research of Khaled (2013) in Yemen, the analytical results also revealed thatconvenience was considered as a first choice of bank selection Besides, in USA, a WallStreet Journal/ NBC survey conducted in 1975 found that 75% of household earningUSD 100,000 or more felt that “managing their time is a bigger problem than managingtheir money” (Mesister, 1996) Therefore, convenience is an important attributes to thepurchase decision of customers

The paper, therefore, hypothesizes that:

H4: There is a positive relationship between convenience and customers’ choice of banks to deposit.

2.2.5 Bank image

Bank image includes bank’s facilities, transaction space, internal or external decoration…

A bank with well-equipped facilities, attractive and professional internal or externaldecoration would increase the customers’ belief in depositing

In Malaysia, a research of Muhamad et al in 1998 measured the relative importance offive attributes: efficiency, physical facilities, range of service, terms of payment andmedia and social influence on each dimension of foreign and local banks using AnalyticHierarchy Process (AHP) method The finding was that Customers’ preference for localbank is influenced by physical facilities, range of service, terms of payment and mediaand social influence dimension (Muhamad et al., 1998)

In developed countries, Erol and El-Bdour (1989), Erol et al (1990), Kennington et al(1996), Almossawi (2001), Şafakli (2007) and Dusuki and Abdullah (2007) found that thedimension of bank’s quality of services/facilities, reputation, profitability and stafffriendliness were the fundamental factors in depositors’ bank selection criteria.

Another investigation on the Islamic-bank selection criteria, particularly in Malaysia wasconducted by Abduh M and Omar M in 2012 To accomplish this purpose, informationcollected from 279 respondents within the Klang-valley area was incorporated in theanalysis The Analytic Hierarchy Process was used to rank the criteria based on therespondents’ preferences The result has shown profitability, bank’s reputation, bank’sstatus, facilities and services, and friendly personnel respectively (Abduh & Omar, 2012).The paper, therefore, hypothesizes that:

H5: There is a positive relationship between bank image and customers’ choice of banks to deposit.

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2.3 Research Model

Financial benefits

Service quality

ConvenienceBank image

Figure 2.1 Conceptual framework

Conclusion

In summary, five hypothese in the theoretical model are developed deriving from the

literature review The model proposes that customers’ choice of banks to deposit is

positively affected by security, financial benefits, service quality, convenience and bank

image In addition, the effect of demographic factors on customers’ choice of bank to

deposit is also examined

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CHAPTER 3 RESEARCH METHODOLOGY

Overview

This chapter presents the research methods and approaches used to investigate customerbank selection criteria in Ho Chi Minh City including research approach, measurement,sampling, data collection, and data analysis technique

Doing this research, several ideas from specialists in bank deposit have provided a widerange of good reference for the author to create a good research on customers’ choice ofbanks to deposit as well as a solution to improve these determinants and increase depositsfor the bank in this case

Step 1: Review the literature background to find out factors that influence in customers’choice of banks to deposit The findings in this step were used to be the foundation forlater quantitative research to confirm the intensity of the explored results

Step 2: Theory Model was built based on the literature review above The dependablevariable was identified as “Customers’ choice” The five independable variables weredefined as “Reputation”, “Financial benefits”, “Employers’ efficiency”, “Variety ofservices” and “Convenience” with Demographic attributes as Control variables

Step 3: Focus group interview was chosen as an in-depth interview In this research, theauthor has chosen group of 10 customers who were depositing or used to deposit in banksand ask some open-ended questions based on the previous research, for example:

- What are the key factors for you to choose to deposit in a bank?

- What makes you think that these factors are important?

- What are determinants affecting this key factor in your choice of banks to deposit?

- Why you choose theses factors but not the others?

A draft questionnaire with the measurement scales was then set up

Step 4: Next, the draft questionnaire was delivered to 02 management officers whoinvolving in depositing department and 03 specialists in depositing in banks to respond,and a discussion about the draft questionnaire was carried out later The aim of the pilotphase was to modify and clear the measure scale

After that, the revised questionnaires were delivered to another small group of 5 persons

to test about clear understanding of the questionnaire Finally, a main survey was built upwith some adjustment

Step 5: The main survey was adjusted based on feedbacks received from the customersand specialists The dependable variable was still “Customers’ choice” The fiveindependable variables were re-defined as “Security”, “Financial benefits”, “Servicequality” “Convenience” and “Bank image” The main survey was conducted with 254respondents

Step 6: The sample size consisted 254 observations Questionnaire was sent directly tothe customers who visited banks for transactions The rest amount of questionnaire wassent via email to the author’s friends, colleagues or relatives who live in Ho Chi MinhCity By using filter question, the respondents were defined as people who weredepositing or used to deposit in Banks

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Step 7: After finishing the survey, the data was collected and prepared to analysis Datawas edited, coded and adjusted for missing data Next, reliability of measuring instrumentwas analyzed by calculation Cronbach’s alpha which was required above 0.7 (Hair et al.,2010).

Step 8: The validity of measuring instrument was also evaluated to define the numberextracted factors based on the Eigenvalue value over than 1 and changing of the slope inthe Scree plot (Hair et al., 1998; Tabachnick & Fidell, 2001)

Step 9: The coded and adjusted data, then, was analyzed through five hypothesizes to findout whether five dimensions above have positive relationship with customers’ choice ofbanks to deposit The Logistic regression analysis was applied to evaluate the

relationship between five independent variables, including “Security”, “Convenience”,

“Service quality”, “Financial benefits”, “Bank image” and one dependent variable,namely “Customer’s choice” Moreover, defining whether there was any significantcontributory of control variables consisting of “gender”, “income”, and “experience ofdepositing” on customers’ choice of banks to deposit was also analyzed by the Logisticregression

Step 10: Based on the findings from previous step, conclusion was drawn and managerialimplication was suggested

The research process is illustrated by the following Figure 3.1

Literature Review

Develop Theory Model

Design First Draft Questionnaire

In-depth Interview

Final QuestionnaireMain Survey

Cronbach Alpha

Exploratory Factor Analysis

Testing Hypotheses byLogistic Regression

Conclusion and Managerial

100 (Hair et al., 1998) n

= 5k (k: number ofvariables) and n > 100.Therefore, in this study,the minimum samplerequired by EFA was n =

5 x 23= 115

Besides, based on the work of Peduzzi et al (1996), aminimum sample size for logistic regression must ensurethe formula of N = 10 k / p where p is the smallest of theproportions of negative or positive cases in thepopulation and k the number of covariates (the number

of independent variables) As there were fiveindependent variables including in the model and theproportion of negative cases in the population is 0.39(39%) The minimum number of cases required is N =

10 x 5 / 0.39 = 128 If the resulting number is less than

100 you should increase it to 100 as suggested by Long

S J (1997)

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As a result, the minimum sample size in this study was 128 which would be satisfied bothEFA and logistic regression analysis In this paper, the author collected a sample of 254observations.

3.4 Measurement Scale

In order to operate concepts, it is necessary to measure them in some manners, sodifferent variables are required to choose an appropriate scale The independent variableswere applied interval scale with five - point of Likert scale consisting of totally disagree(1), disagree (2), neutral (3), agree (4), totally agree (5); beside, the dependent variablewas dichotomous variable with two option Yes or No The control variables weremeasured with two states for the simplicity on testing Gender were observed as Male orFemale; Income as Less than 10 millions and Above 10 millions; Experience ofdepositing as Less than 3 years and Above 3 years

A summary table of main factors affecting customers’ choice of banks to deposit is

presented as following Table 3.1.

Table 3.1: Main factors affecting customers’ choice of banks to deposit

No Factor

3.5 Data Analysis Method

After data collection, the first step was data preparation with editing, coding, and dataentry to ensure accuracy of data from raw data and to detect errors or omissions to

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correct Next, data was classified to arrange them into groups or classes of commondemographic.

Finally, variables were tested reliability by Cronbach’s alpha, validity by EFA, andhypothesis and model was tested by Logistic regression of SPSS

3.5.1 Reliability measure

In order to check reliability of each of scales with particular sample, as well as considerthe internal consistency of the scales, it is necessary to use Cronbach’s Alpha coefficientwhich should be above 0.7 (Devellis, 2003)

Also, the corrected item - total correlation values should be at least 0.3 to ensure each ofitems was measuring the same from the scale as a whole (Pallant, 2011)

3.5.2 Validity measure by EFA (Exploratory Factor Analysis)

In order to evaluate the validity and the correlation among variables to identifyunderlying factors or to define number of extracted factors, EFA is applied with theoblique approach using the Promax method However, some requirements of EFA should

be satisfied (Pallant, 2011):

- The minimum of sample size should be at least 100 and rate of observations per items

of models should be five cases for each of the items

- The correlations of r of the correlation matrix should show at least 0.3

- Kaiser-Meyor-Olkin (KMO) test must be equal or above 0.6 (Tabachnick & Fidell,2007)

- Barllett’s test of sphericity should have significant less than 5%

- In order to extract factors, the eigenvalue of factors must be greater than 1 (Kaiser,1956)

3.5.3 Logistic regression analysis

To explore the relationship between independent variables, consisting of “Security”,

“Bank image”, “Service quality”, “Convenience”, “Financial benefits” and adichotomous dependent variable, namely “Customer’s choice” as well as to evaluate theimportance of those independent variables in the framework model, the Logisticregression analysis was conducted

The Logistic regression analysis required that following conditions should be satisfied:

- The minimum sample size required

- The multicollinearity does not exist, so r value, the correlated score is less than 0.9

- The collinearity test on variables is through two values “tolerance” and “VIF”,particularly the VIF should not be less than 0.1, or above 10

The Logistic regression is used to test hypotheses, to explore the relationship betweenfive independent variables and one dependent variable, and to consider whether controlvariables supported or not to dependent variable The generalized equation (Donald &Pamela, 2006) was:

Logit[p(x)] = log {p(x)/[1-p(x)]} = a + b1x1 + b2x2 + b3x3…

Where:

p = the probability that a case is in a particular category;

a = the constant of the equation and,

b = the coefficient of the predictor variables

Conclusion

This chapter introduces the research methods and general information about the way theresearch was conducted including research approach, measurement, sampling, data

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collection, and data analysis technique More detail discussion of the analytic methods used and results are provided in the Chapter 4.

CHAPTER 4 DATA ANALYSIS AND RESULTS

Overview

This chapter presents data preparation with editing, coding, and data entry from raw data

to correct errors For this paper, data were described through frequency tables about thegeneral information After using Cronbach’s alpha to test the reliability of variables andEFA to test their validity, the Logistic regression was run to explore the relationshipbetween independent variables and dependent variable, and to test hypotheses

The quantitative research was conducted in Ho Chi Minh City by using questionnairedividing into 2 parts: the first part is customer’s general information and the second part

is customer’s judgment on banks depositing or used to deposit The first part was used ascontrol variables while the second part contained data to analyse dependable andindependable variables The survey were designed after consulting managerial officers inbank depositing field and experienced bank deposting customers The official surveywere delivered to depositing customers both in person and through email 368 suveryswere sent and 311 feedbacks were received with ratio of 84,5%

4.1.2 Preparation data

Editing: After collecting 311 feedbacks from respondents including through paper andelectronic surveys, all cases were checked first There were 06 cases of blank sheets, nocases of filling in half of part I only, 19 case of missing some questions concerninggeneral information or bank judgment, 05 cases of missing to reveal their decision ofdepositing, and 07 cases of filling almost choosing number 3 or 4 or 5 The remainingcases of 274 were screened for the approriateness of the data For example, cases inwhich the respondent chose the same range of scale for all statements in the questionnairedue to neglectness were distorted After all, 254 samples, which did not have any cases ofmissing data and contributed well to the research, were used for official analysis

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Coding: With customer’s general information, each answer was assigned numbers ofsymbols so that the responses were grouped into a limited number of categories Withcustomer’s judgment on banks, statements were evaluated by 5 point-Likert scale rangingfrom number 1 to number 5 (see Table 4.1).

Table 4.1 Coded factors

The paper chose the customers who were used to experience any kinds of deposits in anybanks in Ho Chi Minh City with age from 18 to over 50 They were encouraged to judgeone of their old or recent banks and gave the decision whether they continue or quit theservice Besides, five questions were used for collecting personal information of therespondents including Gender, Age, Education, Income, Experience of depositing 254samples were used for official analysis and briefly discussed as following table

Table 4.2 Sample summary

3 Experience of depositing

In summary, the research population was equal in terms of gender with 47% male and53% female Concerning income, there was an equal percentage between the group ofincome less than 10 millions and over 10 millions with 50% versus 50% In terms ofexperience of depositing, the sample focused more on less than 3 years with 61% thanover 3 years with 39%

4.2 Reliability of measurement instruments

Cronbach’s alpha was computed and used to inspect the reliability of the itemsresearched Each scale with particular sample which is considered to be reliable andinternal consistent, should have the Cronbach’s Alpha coefficient of above 7 (Devellis,2003)

Also, to ensure each of the items is measuring the same from the scales as a whole, thecorrected item-total correlation values should be at least 3 (Pallant, 2011)

Each concept was run Cronbach’s Alpha to test its reliability Items with Cronbach’salpha coefficient less than 7 and corrected item-total correlation lower than 3 weredeleted The Cronbach’s Alpha analysis was summarized as Table 4.3 below:

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Table 4.3 Cronbach’s Alpha test results Variables

Con3