Correlation of depositors behavior and bank patronage in the inner districts of ha noi

xviii AND BANK PATRONAGE IN THE INNER DISTRICTS OF HANOI Name and Address of Institution : Southern Luzon State University Lucban, Quezon, Philippines and Thai Nguyen University, Social

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PATRONAGE IN THE INNER DISTRICTS OF HANOI

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A DISSERTATION Presented to the Faculty of the Graduate School Southern Luzon State University, Lucban, Quezon, Philippines

in Collaboration with Thai Nguyen University, Socialist Republic of Vietnam

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The Dissertation of

TRINH THANH BINH

entitled

CORRELATION OF DEPOSITORS’ BEHAVIOR AND BANK PATRONAGE

IN THE INNER DISTRICTS OF HA NOI

Submitted in Partial Fulfilment of the Requirements for the Degree

DOCTOR OF BUSINESS ADMINISTRATION

A program offered by Southern Luzon State University,

Republic of the Philippines in collaboration with

Thai Nguyen University, Socialist Republic of Vietnam

has been approved by Oral Examination Committee

JOANNA PAULA A ELLAGA, DBA EDWIN P BERNAL, DBA

NELLY I MENDOZA, DBA ALICE T VALERIO, PhD

MELCHOR MELO O PLACINO, PhD

Chairman

CECILIA N GASCON, PhD APOLONIA A ESPINOSA, PhD

Accepted in Partial Fulfilment of the Requirements for the Degree

Doctor of Business Administration

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I would like to express my heartfelt gratitude to leaders of Thai Nguyen University in VietNam and Southern Luzon State University in the Philippines who created best conditions for me to complete the course generally and fulfill the thesis particularly

My gratitude goes towards Professors directly gave me useful and memorable lectures and guides in DBA namely Dr.Cecilia N Gascon, Dr.Walberto A Macaraan, Dr.MelchorMelo O Placino, Dr.Alice T Valerio, Dr Professor Do Anh Tai, and Dr Tran Dai Nghia They provided me a rich and fertile environment to study and explore new ideas They made my DBA life is ever fluid, and, in the course of it all, a warm and inviting place to work

My special thank to Dr Cecilia N Gascon who provided me valuable guides to complete the dissertation

I am grateful to lecturers who managed the International Cooperation Program between Vietnam and the Philippines namely Professor Tran Tuan Anh and Professor Nguyen ThanhHai Without their cooperation, I could not have chance to join and fulfill the course

I would not have contemplated this road if not for my parents, my wife,

my children, and all of my dear friends who instilled within me a love of creative pursuits, science and language, all of which finds a place in this the dissertation

Trinh ThanhBinh

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To My Friends & Family Thank you for ALL the Support

Trinh ThanhBinh

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PAGE

TITLE PAGE ……… i

APPROVAL SHEET ……… ii

CERTIFICATE OF ORIGINALITY ……… iii

ACKNOWLEDGEMENT ……… iv

DEDICATION ……… v

TABLE OF CONTENTS ……… vi

LIST OF TABLES ……… viii

LIST OF FIGURES ……… xiii

LIST OF APPENDICES ……… xiv

ABSTRACT ……… xviii

CHAPTER I INTRODUCTION Introduction ……… 1

Background of the Study ……… 2

Objectives of the Study ……… 3

Statement of the Problem ……… 3

Hypothesis of the Study ……… 4

Significance of the Study ……… 5

Scope and Limitation of the Study ……… 6

Definition of Terms ……… 7

II REVIEW OF LITERATURE AND STUDIES Related Literature … ……….……… 11

Related Studies ……… 20

Operational Framework ……… 28

III METHODOLOGY Research Design ……… 30

Determination of Sample Size ……… 30

Sampling Design and Techniques ……….… 31

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Research Instrument ……… 32

Data Collection Method ……… 33

Data Processing Method ……… 33

IV RESULTS AND DISCUSSIONS ……… 35

V SUMMARY, CONCLUSION AND RECOMMENDATION Summary of Findings ……… 103

Conclusions ……… 111

Recommendations ……… 114

BIBLIOGRAPHY ……… 118

APPENDICES ……… 123

CURRICULUM VITAE ……… 177

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Relation between Professional and Employment with the

Factor “I was Not Happy with the Service so I Switch to

Another Bank”

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Relation between Educational Background and the Factors

of “Prestigious Banks, Clear Explanation and Procedure,

Banks with Branches Located at Convenient Place, Paper

and Electronic Statements”

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AND BANK PATRONAGE IN THE INNER DISTRICTS OF HANOI

Name and Address

of Institution

: Southern Luzon State University Lucban, Quezon, Philippines and Thai Nguyen University, Socialist Republic of Vietnam

This study was conducted to determine and analyze the correlation of depositors’ behavior and bank patronage in the inner districts of Ha Noi As the knowledge of depositors’ behavior and bank patronage is not well understandable and given the critical importance of understanding of depositors’ behavior, this study intended to identify the factors influencing depositors’ behavior and define the winning strategies for the banks in fund mobilization

The methodology of the dissertation was to review the various relevant literatures Method of system analysis, method of fieldwork, method of comparison, quantitative research methods and forecasting method were also used in the study

This research was conducted within the inner districts of Hanoi with 257 respondents, which were selected based on random probability Findings showed that depositors’ behavior was influenced by both internal demographic factors and external factors The result further revealed a high

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banks”, “security and safe”, “competitive rates”, “quick and convenient procedure” However, lower correlation was obtained in depositors’ perception and attitudes

The recommendations are developed from the insights and conclusions First is to address the brand issue of banks that built through depositors’ perception of “bank safety”, “prestigious” and other key influencers Second, banks should take into account all factors in their winning marketing strategies Third is to recommend the contingency plan that banks should have to keep safe And the last is to recommend the SBV need to

ChapterI INTRODUCTION

Fund mobilization is essential to banks’ success Recently, banks face with strong competition in attracting and retaining depositors Many banks fail

to mobilize funds while others are able to understand better depositors and depositors’ behavior in bank patronage and take advantage of their knowledge to win the game In the study, the researcher would like to address the issue of depositors’ behavior and bank patronage

Background of the Study

Vietnam economy has been in the fast growth track for a decade Vietnam GDP growth is mainly come from government capital expenditure and private sector investment The fast infrastructure development and urbanization process require huge source of funding One of the engines to lure the growth is the expansion of credit by banking sectors

The banking sector in Viet Nam consists of 5 state owned banks, 37 commercial joint stock banks, 53 foreign – related banks, 30 financial companies and finance lease companies, 1 Central People Credit Fund and 1,057 local people credit funds (Nguyen C.T., 2011) The number is quite big giving the Vietnam’s GDP per capital is 1,300 USD by 2011 (Dantri, 2011) The competition is high in the sector, especially in main economic and political areas like Ha Noi and Ho Chi Minh cities

The interest income contributes a major part of banks income Most banks have their income heavily dependent on lending activities with interest income to total income ratio of some banks reaching above 90% in 2010

(Quach, 2011) This causes many banks concentrating on fund mobilization One of key sources of fund would be the depositors’ funding The source of fund is viewed as a stable funding and counts for a big part in banks’ balance sheet Many strategies that banks persuade to lure their deposit growth including branch network expansion, high interest rate offer, attractive promotion campaigns

Due to the fact that the banking sector plays a key part in the economic activities and economic development, and social stability as well, the banking activities in Vietnam have been highly regulated There are still many different experts’ opinions on if the banking sector needs to be moving more deregulation or regulation However, taking the reason to prevent banks’ failure, the State Bank of Viet Nam put in place a very high level on banks supervision Some regulations that directly affect banks’ expansion of credit and fund mobilization include control of capital adequacy, bank liquidity ratio, and the banks’ branch network expansion Even though, the State Bank of Viet Nam tries to communicate and act to prevent the banks’ failure in the future However, depositors are always facing with risk of losing their fund in case of banks’ run or bankruptcy For deposit insurance, the depositors can receive is 30 million VND at maximum as per law

To study the depositors’behavior is always necessary for banks to serve better their clients In fact, a few information of depositors’ behaviorhave been made available in public sources in Viet Nam Information is normally in the form of observation and experts’ opinion In late 2013, there is a doctorate study on individual customers’ depositing behavior at banks made by Le Thi Thu Hang, which is available at the Viet Nam Institute of Social Science Le

T.T.H (2012) scoped her study at nation-wide scale and focused on individuals who had or did not have a deposit at banks However, there has not been a similar study of the correlation between depositors’ behaviorand bank patronage in Ha Noi that the researcher could identify in the public sources In addition, depositors’ behavior would always reflect through certain factors Therefore, the study of the correlation of depositors’ behaviorand bank patronage should be a key success factor for banks to win in the deposit competition race in Ha Noi and for those who want to get knowledge of the study

Objectives of the Study

The main objective of the study is to determine and analyze the correlation

of depositors’ behavior and bank patronage in the inner districts of Ha Noi Besides, the search aims to achieve the following objectives:

1 To determine the depositors’ behavior of respondents

2 To identify the factors that influence the depositors’ behavior

3 To determine the correlates of depositors’ behavior and bank patronage in the inner districts of Ha Noi

4 To identify the winning strategies for banks in fund mobilization

Statement of the Problem

Funding mobilization is very critical to banks in Vietnam, especially in

Ha Noi as a large number of bankswith too high credit growth (Quach, 2011) with the limited source of owners capital need to maintain their growth and liquidity by seeking deposits from public In addition, banks facewith stiff

competition in deposit mobilization and this makes banks more difficult in attracting and keeping depositors

Ha Noi is a big city where all banks have presence and try to gain advantage over competitors Understanding depositors’ behavior in Ha Noi would help banks adapt their funding strategies accordingly However, there is

a very limited knowledge of depositors’ behavior available in the research or

at bank strategists’ desk Therefore, it should be an opportunities for researchers to study the depositors’ behavior and make it useful to all stakeholders

To understand the depositors’ behavior and bank patronage The following questions will be addressed:

1 What is the background of banking industry in Ha Noi?

2 What are the profiles of depositors in Ha Noi?

3 What are the implications of depositors’ behavior?

4 How are the depositors’ behavior and bank patronage correlated with bank-related factors and depositors’ personal characteristics?

5 What are the factors that influence the depositors’ behavior in selecting banks?

6 How do depositors prioritize the factors?

7 What are the winning strategies for the banks in fund mobilization?

Hypotheses of the Study

The following hypotheses will be tested:

Hypothesis 1: Depositors’ behavior and bank patronage are positively

correlated to the bank-related factors

Hypothesis 2: Depositors’ behavior and bank patronage are influenced by depositors’ personal characteristics

Hypothesis 3: Depositors patronize the banks when their deposit is secured

Significance of the Study

The study is important as it addresses to answer several key questions and it benefits researchers and banks in setting up their strategy in fund mobilization

The study is to identify the factors that influence depositors’ behavior in selecting banks for placing their deposits

For the banking industry’s regulator, it finds out the gap between the facts and polices for fund mobilization, implication for strengthening the policy environment

For the banks, they understand factors to influence the depositors’ behaviors; through which banks would be able to address key issues that influence depositors in bank patronage and able to reshape their policies and strategies to win the competition

For marketers, the understanding of depositor behavior and influencing factors would help them to develop suitable and effective marketing campaigns

For researchers and students, they would have valuable information about depositor behavior in Ha Noi and apply in the work and study

Scope and Limitation of the Study

The study focused on the Ha noi urban city area where the competition among banks is fierce and the main source of bank funding come from The subject is on depositors who used to or place their deposits at financial institutions in Ha Noi urban areas

The survey questionnaire is developed to address several factors influencing depositors’ behavior The direct interview method is used to collect primary data from depositors The questionnaire is handled directly by the researcher or agents The interviews are conducted from November 2012 to February 2013 within the inner districts of Ha Noicity

The limitations that have direct bearing on the results of the study consist of the following: (i) Duration of the study is short and resource islimited, these would not allow a large-scale interview to be made Therefore

a reasonable sample size is expected to fit with the scope of the study; (ii) Ha Noi is a big city and it has just merged with Ha Tay province where over 80% population living in rural areas with limited access to banks, the study is only

to conduct in the inner districts of Ha Noi urban city areas where population is highly condensed and well informed of banks and their services; (iii) Depositors are selected randomly and due to a low ratio of deposit access, it

is not easy for interviewers to approach successfully interviewees at any time, hence it would take time and resources; (iv) there is limited information on the research available and there has not been any official research made, the identification of factors could be come from the review of literature and researcher’s experienced observations; and (v) a very limited available

information and weak connection between socio-economics factors that have impact on depositors’ behavior and bank patronage

Definition of Terms

For clarity and better understanding of this study, the following terms were hereby defined conceptually and operationally:

Bank is a credit institution that has the right to involve in all banking activities

(Law on Credit Institutions, 2010)

Bank availability means bank office’s location that measured by a distance

from bank to depositors’ place or the time they spend to reach the bank

Bank patronage is indicated by depositors’ length of time with banks, and

their favor of banks in terms of attitudes and references

Bank-related factorsare interest rates, procedures, services, products and

the likes that banks offer to depositors and that can influence on depositors’ behavior and their bank patronage

Behavior is simply a response of an individual or a group to an action,

environment, person or stimulus

Certificate of deposit is a liability issued by a bank to mobilize deposit from

public within a certain period of time and repayment of principal and interest on due date

Commercial bank is a bank, which is allowed to provide all kinds of banking

activities for profit

Credit Institution is an entity to involve in one, some or all banking activities

Credit institutions include banks, non-bank credit institutions, micro

finance institution and People’s credit funds (Law on Credit Institution, 2010)

Customer behavior is response that customer reveals during the process of

acquiring goods or services and usage and influenced by subjective and objective factors

Deposit is an amount of money that a depositor places in bank with

expectation to add value, keep secure and convenient for use

Depositor is a person/individual who places his/her money at banks in term

of savings, or buys banks’ term deposit certificate or bond

Depositors’ attitudes are defined as depositors’ evaluation of the banks in

terms of service quality and bank brand, operating conditions

Depositors’ behavior is indicated by external and internal attributes such as

the depositor’s selection of bank, kind of money, term, and kind of deposit, originated from his motivation, perception and attitudes and the behavior is influenced by subjective factors such as age, professional, work experiences and income, and objective factors like bank influencers, social and economic environment

Depositors’ motives are to seek for value added, to ensure safety and

convenience for their money

Depositors’ perception is defined as the depositors’ understanding and

knowledge of banks and their products and services

External attributeimplication of depositors’ behavior appears in the forms

of depositors’ selection of banks, kinds of deposits, terms of deposits, and the currencies for deposits

Foreign banks are commercial banks having branches or establishing

100%-own banks in Viet Nam

Funds mobilization is banks’ activities to mobilize funds or deposits from

different sources including funds from depositors

Gross Domestic Product (GDP) is the market value of all officially

recognized final goods and services produced with a country in a given period

Human behavior refers to the range of behaviors by humans and influenced

by culture, attitudes, emotions, values, ethics, authority, rapport, hypnosis, persuasion, and coercion

Interest rate is the price that banks offer to pay depositors for taking deposits

with commitment to return deposit amount in full plus interest at the end of deposit period

Internal implication of depositors’ behavior is indicated through depositors’

internal motivation and their perception and attitudes towards related factors

bank-Implication of depositors’ behavioris indicated through depositors’ internal

and external attributes

Joint Stock Banks are the commercial banks established in Viet Nam with

capital contribution from individuals and entities

Non-performing Loans (NPL) is the loans at banks that overdue more than

90 days

Personal attributes of a depositor are the traits or/and characteristics that

the depositor owns or expresses when he involves in deposit-making process with banks

Promotion is the marketing campaigns adding more value to depositors that

banks offer to them

Psychological attributes of depositors’ behavior are indicated through

external psychological attributes and internal attributes

Referral is recommendation or advice from depositors’ friends or relatives to

use a bank or products

Reputation is the bank image and brand name

Service quality is the quality of products or services that banks offer and

could be measured through depositors’ satisfaction

State Owned banks are the commercial banks established in Viet Nam with

the state controls more than 50% owner capital

The State Bank of Viet Nam (SBV) is the central bank of Viet Nam who is

responsible to manage and supervise the banking system of Viet Nam

Viet Nam Dong (VND) is the official currency of Viet Nam

Viet Nam GeneralStatistical Office (GSO) is the government entity providing

the statistical data

United States Dollars (USD) is the official currency of the United States of

America

ChapterII REVIEW OF LITERATURE AND STUDIES

The chapter presents the discussion of the overview of Viet Nam economic development and the literature review of banking industry, the consumer behavior model, and similar studies of depositor’s behavior and, the review of influencing factors to depositors as well Deposit formulates a key part in banks’ balance sheet Banks are only able to fund its growth of balance sheet size by attracting more deposit Giving the strong competition in the banking industry, banks’ survival in the long- run would very much depend on whether they are able to attract depositors and retain them Therefore, the study on the depositors’ behavior in bank patronage is the key to help the researcher and banks to address better the issue of winning depositors’

interest

Economic Development

Viet Nam Economy

Viet Nam population is 86.9 million, of which 30% lives in urban areas and 70% lives in rural areas (General Statistic Office (GSO), 2010)

The country has experienced bouts of macroeconomic turbulence in recent years-double-digit inflation, depreciating currency, capital flight, and loss of international reserves-eroding investor confidence Rapid growth has revealed new structural problems The quality and sustainability of growth remain a source of concern, given the resource-intensive pattern of growth, high levels of environmental degradation, lack of diversification and value addition in exports, and the declining contribution of productivity to growth

Vietnam’s competitiveness is under threat because power generation has not kept pace with demand, logistical costs and real estate prices have climbed, and skill shortages are becoming more widespread (world Bank (WB), 2012)

The Socio-Economic Development Strategy 2011-2020 gives attention

to structural reforms, environmental sustainability, social equity, and emerging issues of macroeconomic stability It defines three "breakthrough areas": (i) promoting human resources/skills development (particularly skills for modern industry and innovation), (ii) improving market institutions, and (iii) infrastructure development The overall goal is for Vietnam to lay the foundations for a modern, industrialized society by 2020 (WB, 2012)

Ha Noi Economic Development

Ha Noi is the capital of Viet Nam In 2008, Ha Noi expanded in geographical area by merging with Ha Tay province, extending to 3,3 million km2 with population of 9 million (GSO, 2012) The average GDP growth rate per annum: 10% (2011-2015), 9% (2016-2020), and about 8% (2021–2030) and GDP per capita: about US $3,300 (by 2015), US $5,300 (2020) and US

$11,000 (2030 as projected (Xuan Hong, 2009)

According to the strategy on socio-economic development to 2030, Ha Noi continues to function as the country’s administrative and political center

building a knowledge economy, nurturing talents and skilled human resource,

so as to become a high-grade training center in the region The city will further prioritize hi-tech industries and modern services, especially finance, banking, insurance, securities, post and ICT, health, education and scientific services

Meanwhile, agriculture will be modernized through applying technical

technical infrastructure (Xuan Hong, 2009)

Regulation of Banking Industry

Background of Vietnam Banking Industry

Vietnamese banking sector consists of 99 banks and foreign bank branches including 6state owned banks (including VCB and CTG), 34joint stock commercial bank, 55foreign banks and foreign bank branches, and 4joint venture banks Only 11 out of 40 domestic banks (25.6%) have chartered capital of VND5,000 billion and above Small banks account for a large proportion in the banking sector currently Most of these were initially rural commercial banks but are now pursuing the strategy of becoming national banks This transition enabled them to achieve fast expansion in terms of assets and high growth of loans within a short time, however, risk management and corporate governance were not accordingly improved to mitigate risks (Quach, 2011) Banks have strongly grown not only in number but also in size of operating network However, the development strategy of each bank determines the way it expands the geographical coverage of branches, transaction offices and ATMs

Table 1 below provides classification of banks by ownership and some key indicators of the banks in Viet Nam.There are only 6 SOBs but they dominate the market with nearly 40% market share while 34JSCBs also have the same portion of market share and the remaining 10% for foreign banks and joint venture banks.The Appendix A.1 to A.5 provides details of name,

capital, location of head office and some key information of all participants in the banking industry It is obvious that most of the banks based their head offices in Ha Noi and Ho Chi Minh Cities where having concentration of commercial and economic activities and big size of healthy population Some few JSCBs locate their head offices in provinces, mainly historically for license

in the fast, but their operation also concentrates in Ha Noi and Ho Chi Minh and some other healthy areas

Table 1

Bank Classification by Ownership and Key Indicators as of 30 June 2013

Type of banks

Total Assets (billion VND)

Own Capital (billion VND)

Statutory Capital (billion VND)

Source: The State Bank of Viet Nam

Key Challenges Facing the Banking Industry

According to Quach, 2011, the Viet Nam baking sector is summarized

by the following characteristics: (i) Banking sector experienced dramatic growth in both quantity and total assets during 2005 – 2010, (ii) High NPL ratio, small size, credit growth much higher than deposits and GDP growth, and income heavily depending on lending are key characteristics of the banking sector NPL ratio of the whole sector was 3.1% in June 2011 and is

expected to reach 5% in 2011-year end Average credit growth during

2000-2010 was 32%, higher than 29% of deposit growth and 7.15% of GDP growth, which might cause negative impacts on the health of the economy (iii) Since the beginning of 2011, the banking sector has gone through hard times, due

to instability of the interest rate and multiple changes in the credit policy The SBV has continually adjusted policy rates and imposed a rate cap on VND and USD deposits in an effort to control inflation and stabilize the macro economy Credit growth was slow during the first 7 months of 2011 due to inefficient capital flow among banks and markets Interest rate racing among banks and a large gap maintained between USD and VND credit growth were highlights in this period

After the too fast expansion and growth of the banking industry, it is projected that the banking industry would face with a consolidation period The clear signals were starting from mid of 2012 as (i) the banking industry faced with serious liquidity problems and many of them had to ask for the help

of last resort from State Bank, (ii) the State Bank of Viet Nam stopped giving licenses for banks to open new branches, (iii) the governor of the State Bank

of Viet Nam warmed that strong actions should be taken with weak banks through restructuring process or merged with other banks and there would be

5 to 8 banks should be merged in 2012, following of the merger of 3 banks in

2011 including SCB, Ficobank and VNtinnghia bank

According to Vu H., 2013, 9 weak banks have been placed under restructuring programinitiated by SBV, including (i) the merger of three banks (SCB, Ficombank, and Vntinnghia bank, (ii) the merger of Habubank into SHB bank, (iii) restructure of Trust bank, and (iv) the merger of Western bank and

PVFC – a financial company Besides, DaiA Bank and HDBank announced their merger at shareholders’ meeting on 15 June 2013 (Giaoduc.net.vn, 2013) In addition, Vu H., 2013 mentioned that the restructuring of banks has made significant progress as the safety of banking system improves, the signal of banking system collapse is over, deposit withdrawal is served on time, and the money market is stabilized

Even during financial crisis time and consolidation of the banking system, the figure showed an increase of public deposits in banking system This indicated the depositors’ confidence on the banking system in general The increase of deposits in the banking system was by 11.23%, while credit increased only by 1.4% at of August 2012, in compared with the year beginning (Vneconomy.vn, 2012) Other implication of the situation is that depositors might not have better choices of investment, rather than making deposits at banks

Consumer Behavior

Consumer behavior is a complex process involving the activities people engage in when seeking for, choosing, buying, using, evaluating and disposing of products and services with the goal of satisfying needs, wants and desires Arnould, Price & Zinkhan (2002) defines consumer behavior as individuals or groups acquiring, using, and disposing of products, services, ideas, or experiences A range of factors, both internal and external, takes to

decision is reached is fundamental as this forms the foundation that can be used to analyze any given product or services

In the following, the researcher discusses two conceptual models of consumer behavior that form the foundation of the study, namely the Engel, Kollat and Blackwell modeland the Hawkins, Best and Coney model

Hawkins, Best & Coney (1998) presents a conceptual model of consumer behavior External and internal factors contribute to the formulation

of self-concept and lifestyle, which take an impact on the consumer decision process During this process, experiences and acquisitions update the original external and internal influences

Figure 1 Conceptual Model of Consumer Behavior

Source: Hawkins, Best & Coney (1998)

In themodel, the individual's self-concept and life-style will be influenced by bothexternal and internal factors The external influences are mainly sociological anddemographic, including constructs such as culture,

demographics, social status, referencegroups and family The internal influences are mainly psychological and physical,including constructs such as perception, learning, memory, motives, personality and attitudes According to the conceptual model, the individual's self-concept and life stylegenerate needs and desires, some of which are satisfied by consumption decisions Theindividual is confronted with situations that trigger the consumer decisionprocess The stimuli may include products, retail outlets, sales personnel, advertisements,etc The consumer responds to the stimuli after following a problem-solvingprocess which includes problem recognition, information search, alternative evaluationand selection, outlet selection and purchase, and post purchase processes The stimuli is said to activate and create a state of dissatisfaction or problem that theconsumer will engage in solving In this conceptual model the general structure ofthe stimulus-organism-response models, wherein the internal processes leading to theindividual's response is stated in terms of information-processing and problem-solvingor decision-making

Hawkins, Best, & Coney(1998) in below also describes a conscious problem solving and learning model of consumer behavior This model shows the development in customer behavior In the model there are five stages, this involves problem recognition, alternate evaluation, search for alternatives, purchase, and outcomes It is not essential for the customers to go through all those stages

The customers would get data from marketing and non-marketing research; this would influence the problem recognition This is the first stage

of the decision making process for the customer If the customers have still

not come to a final decision, the consumer would go to the next stage of the model This model has a good description of active information seeking and evaluation processes of consumer The information processed in this model is the stimulus The consumer decision processes act upon this stimulus in order to determine a response to it The model attempts to explain each stage and shows interrelated between the stages of consumer buyer behavior from the stimulus, through the purchase to post purchase behavior

Figure 2 Conscious Problem Solving and Learning Model of Consumer

Behavior

Source: Hawkins, Best, & Coney (1998)

According to Schmukler S., Peria M.S.M., and Levy E (2009), depositors respond to increases in bank risk- reflected in bank-specific characteristics by demanding higher interest rates on their deposits or by withdrawing their funds, penalizing managers for excessive risk-taking Macroeconomic risks can influence depositor’s action, both regardless of and through bank-specific characteristics The effects can take place when worsening macroeconomic conditions directly threaten the value of market participants’assets such as bank deposits Macroeconomic factors are significant drivers of depositor behavior in crisis periods, at times overshadowing the role of bank-specific characteristics

Babolola (2009) mentioned that although trust is the cornerstone of the banking industry, the perceptual factors influence the customers’ choice of banks Attitudes are important in a consumer environment and attitudes influence thoughts, feelings, and most importantly behavior Also, the overriding choice of the customers may depend on a number of external factors

Looking at the intervention from policy makers, Kotaro T (2003) confirmed in his study that depositors expecting “too-big-to-fail” policy by the

government tended to opt for larger banks regardless of their risk exposures and performance However, in other study, Fueda I (2006) confirmed the greater the extent of unsoundness of a bank’s financial conditions, the greater

is the extent of deposit withdrawal Also, bank switching depends on a bank’s financial conditions and size And the less sound the banks’ financial conditions, the higher was their interest rates on large, fixed term deposits; similar results were abstained with respect to large, fixed term deposits of 1 month, 3 months, 1 year, and 2 years

Some studies and observations have been made on the depositors’ behavior in Viet Nam Minh D (2008) conducted an online survey on the internet at Vneconomy.vn, of which 6,000 opinions have been obtained within

1 month The survey results come out with main factors influencing depositors

in selecting banks for their deposits The factors include interest rates as number one in mind, reputation, and promotion Other observation made by NHDMoney (2012) identified 5 factors including reputation, convenience, and purpose of depositors, interest rates, and service quality

There is a doctorate study on individual customers’ depositing behavior

at banks made by Le Thi Thu Hang in late 2012, which is available at the Viet Nam Institute of Social Science Le T.T.H (2012) concentrates the study to two aspects (i) the attributes of individual customers’ depositing behavior (including external attributes and internal psychology characters) and (ii) key factors influencing the individuals’ depositing behavior

According to Le T.T.H (2012) individual customers’ depositing behavior could be understood as the customers’ selection of banks for doing transaction, selecting kinds of deposits, terms, and currencies The behavior