001048567 – The influence of brands perception on bank stock investment in Vietnam market (full) final

LITERATURE REVIEW...7 2.1 Consideration for Alternatives...7 2.2 Optimism, and Confidence for expectation about financial returns...8 2.3 Familiarity related to a specific bank’s brand..

TABLE OF CONTENTS

DECLARATION i

ACKNOWLEGEMENTS ii

LIST OF TABLES AND FIGURES v

ABSTRACT vi

CHAPTER 1 INTRODUCTION 1

1.1 Background 1

1.2 Research purposes 4

1.2 Scoop of the study 5

1.3 Research methods and Sample 5

1.4 Research structure 5

CHAPTER 2 LITERATURE REVIEW 7

2.1 Consideration for Alternatives 7

2.2 Optimism, and Confidence for expectation about financial returns 8

2.3 Familiarity related to a specific bank’s brand 9

2.4 Evaluation of bank Brand 10

2.5 Gap in literature review 12

CHAPTER 3 METHODOLOGY 13

3.1 Conceptual model and hypothesis development 13

3.2 Sampling and Data Collecting 17

3.3 Measurement of Variables. 18

3.4 Data Analysis. 19

3.4.1 Descriptive Statistical Analysis 19

3.4.2 Factors Analysis 19

3.4.3 Structural Equation Model (SEM) 20

CHAPTER 4 ESTIMATION RESULTS 22

4.1 Demographic statistics 22

4.2 Confirmatory factor analysis 22

4.3 Test of hypotheses 23

CHAPTER 5 CONCLUSION 27

5.1 Key findings 27

5.2 Limitations 29

5.3 Future Research 29

REFERENCE 31

LIST OF TABLES AND FIGURES

Figure 3.1 Conceptual Model 14

Table 3,1 Hypothesis 16

Table 4.1 CFA result 21

Table 4.2 Discriminant validity and Correlation Matrix 21

Table 4.3 Goodness-of-fit (CFA) 21

Table 4.4 Hypotheses testing 23

Researchers in behavioral finance have become particularly interested in theconnection between the collective views of investors regarding firms and their equitypurchasing behaviors This study aimed to provide a systematic review of how thesubjective and affective assessments of businesses' brands and products by investors, inparticular, can impact shareholders' the tendency to view these businesses as investmenttargets Through applying psychological market behaviour models, the researcherhypothesizes the results and checks the conclusions with data obtained from 434 investors.The findings demonstrate that the personal importance that an investor assigns to thecommodity domain of a given company limits the attention that the investor provides toalternate investment goals when buying in the stock of that business A comparable impact

is the investor's affective appraisal of the commodity name of the firm In addition, thefindings suggest that the affective appraisal of a corporate brand by a shareholder enhanceshis confidence regarding the business's stock's financial rewards Eventually, the findingsindicate that, contrast to what may be predicted, the identification of a shareholder with thebrand of the firm does not minimize the attention it provides to alternative investmentobjectives, nor is branding familiarity related to overconfidence in the business's stock'sinvestment0rewards

CHAPTER 1 INTRODUCTION

1.1 Background

Commercial banks were formed, existed and developed in association with thedevelopment of the commodity economy The development of the commercial bankingsystem has had a huge and important impact on the development of the commodityeconomy, on the contrary, the commodity economy strongly developed to its high stage– market economy - commercial banks are also increasingly improving and becomingindispensable financial institutions

For Vietnam, the concept of commercial banks in the Law on Credit Institutions

No 47/2010 / QH 12, passed by the National Assembly on June 16, 2010, states thefollowing: “Commercial banks are all types of credit institutions can be carried outBanking and other related activities for profit” This law also defines: “Banking is abusiness, regular supply of one or more of the following operations: deposit receipt,grant credit, provide payment services via accounts” Thus, through the abovedefinitions, we can generalize the concept of money Commercial banks are as follows:

“A commercial bank is a financial institution The intermediary has the ability toperform whole banking and financial services because of the item spend profit”

Commercial banks' operations with the aim of purely for profit Commercialbanks are the strongest type of activity and play a leading role in monetary tradingtoday, it holds an important position in the economy Thanks to commercial banks, theidle money that is scattered in the society will be mobilized to gather, and at the sametime use that capital to provide credit to entities in the economy for socio-economicdevelopment

When the commodity economy develops to the highest level, which is a marketeconomy, commercial banks are increasingly perfecting and becoming an indispensablefinancial institution to operate the economy

Commercial banks are the place that provides capital to the economy, is animportant tool to promote the development of production forces: Monetary trading withthe function of credit intermediaries, commercial banks overcoming the shortcomings of

the financial market , unleash idle capital in all organizations, individuals, all economicsectors to form a loan fund and use them to meet the capital needs of the economy.

As an effective capital distribution channel, commercial banks create conditions forbusinesses to take advantage of investment opportunities, expand production andbusiness, improve technological processes, thereby improving labor productivity to canstand firm in the fierce competition of the market With the ability to provide capital,commercial banks have become one of the starting points for the economic development

of a national bait

Commercial banks are the bridge between businesses and the market: To be able

to bring products and services to the output market and seek profits, businesses needcapital (important inputs, background of all activities) to carry out production Whenequity is not enough to work, businesses must look to other sources of capital.Commercial banks will help businesses solve difficulties with credit capital Thus,commercial banks are the bridge to bring businesses to the market, helping businessesfind input capital, lubricate production and business activities and make payments tocreate finished products for the market Commercial banks help businesses and marketscloser together in both space and time

Commercial banks are tools for the state to regulate the macro economy:Commercial banks are directly affected by monetary policy tools (open market,compulsory reserves, interest rates) on the other hand, indirectly participate inregulating the macro economy through the relationship with economic organizations,individuals in financial and credit activities Through operations of commercial bankswith other entities in the economy, all information related to monetary policy planningwill be returned to the central bank, helping the central bank to be able to formulatemacroeconomic policies, appropriate in each period to ensure promoting economicgrowth and stable development

Commercial banks are the bridge connecting the national finance with theinternational finance: Today, the independent nation is developing diverse and complexinternational relations in many fields: economics, politics, diplomacy, culture, scienceand technology, in which economic relations are most focused Competitive pressure

forces each country to open the door of integration to have strong potential The system

of commercial banks with operations such as international payment, foreign exchangetrading, investment trust, will help the economy of a country integrate with the rest ofthe world The domestic commercial banking system has regulated domestic finance inline with the movement of the international finance, bringing the domestic finance tocatch up with the international finance

Currently, until 2019 there are 49 banks in Vietnam In which 4 banks with 100%state capital, 31 joint stock commercial banks, 9 banks with 100% foreign capital, 2policy banks, 1 cooperative bank and 2 joint venture banks

There are 3 main operating models of commercial banks: specialized banks,general business banks, multi-functional banks

- Specialized banks: are banks that only specialize in a certain field such asindustrial banking, rural banking, urban banking

- General business banks: are banks that can perform many types of traditionaloperations simultaneously and in many fields In essence, the bank performs a generaloperation of many specialized banks

- Multi-functional bank: is a bank that not only performs general bankingoperations but also performs other business operations outside the banking sector such

as insurance, securities There are two types of multi-purpose banks First, directmultipurpose banking According to this model, commercial banks in addition to thebanking business also directly deal in securities or insurance without openingsecurities companies or affiliated insurance companies Second, it is the indirect multi-purpose banking model According to this model, commercial banks other than bankingoperations are not allowed to directly deal in securities or insurance, but open asecurities company or an affiliated insurance company to operate

Along with the strong development of the stock market, the insurance market,traditional banking and modern banking operations with securities and insuranceoperations increasingly close together, Multi-purpose banking is becoming more andmore popular in countries In Vietnam, commercial banks operate under the model ofindirect multipurpose banking

Economics psychology and behavioral finances scholars have increasingly beeninterested in how the individual expectations of consumers about firms can affect theirchoices to invest in the stock of companies (banks) In particularly, the links betweenthe subjective assessments of enterprise' products/service and brands by individuals andtheir stock investments decisions have drawn growing interest For example, Frieder,Subrahmanyam [2005] proposed that enterprises with powerful product/service brandsare simply drawn to individual investor.

Nevertheless, while these current pieces of literature indicate, at the base level,that product/service or brand assessments could affect the stocks investment ofindividual investor, the actual research does not include comprehensive theoreticalanalyses or systemic psychometric data of that effect Evidently, what the current thesishas been notably quiet on is the follow up question: How accurately can the arbitraryassessments of companies' goods and trademarks by consumers appear to impact theiropinions about such companies as equity investment goals by shaping assumptionsregarding the financial return of the stock of the firms or otherwise

Researchers in behavioral finances have become particularly interested in theconnection between the collective expectations of individual investor about firms andtheir equity buying decision This essay attempts to have a comprehensive analysis ofhow the subjective and affective appraisal by investors of the goods and brands ofcompanies/banks, in particular, will impact the tendency of investor to view thesecompanies/banks as investments goals

Therefore, the research target analyzes the customer decision to invest in aparticular bank stocks with the influences of these brands perception in Vietnam market

1.2 Research purposes

The key aim of this study is to perform a systematic and detailed review ofindividual 'subjective appraisal of the brands of businesses (in specific, the brands ofbank) on their plan to select the stocks of these banks for investment in order to fill thegap in recent research Through technically studying the effect and evaluating thehypotheses with collective evidence, the thesis serves these objectives

In specific, the viewpoint of this analysis suggests that in this thesis certain keyproblems need to be addressed as follows:

- (1) The combination of both marketing theory and the financial behavior theory

- (2) The influence of the factors (familiarity and affective evaluation related to abrand, optimism and confidence related to potential financial returns of a bank’s stock)

on the consideration for alternative investing goals

- (3) The influence of familiarity and affective evaluation related to a brand onoptimism and confidence related to potential financial returns of a bank’s

1.2 Scoop of the study

This report includes individual investors in Vietnam's capital markets who arecurrently invested in bank shares of three Vietnamese banks Samples and data fromindividual investors were obtained over the period from December 2019 to March 2020.The research period is considered as suitable for research purpose as the from March

2020, the Vietnam stock market witnessed a huge fluctuation because of Covid 19 Withthe suitable research period, the paper can eliminate the influence of other factors such

as investor phycology, disease influence which are not considered in the research

1.3 Research methods and Sample

A questionnaire was developed in Vietnamese and the surveys were then sent toonline respondents during the period from December 2019 to March 2020 The goal ofthe research is to collect information through online channels such as Facebok, mail,and the other The questionnaire also established several demographic points in addition

to the issue of calculating the variable to gather information on genders, ages,professions

Utilizing SPSS-Statistics-18.0, AMOS - analyze software for models, the acquired data was then analyzed respondents' answers obtained by varioustypes of survey questions to validate the hypothesis

Structural-equation-1.4 Research structure

Section One-Chapter 1 Introduction includes introductions on Vietnam's bankingindustry, research history, research objectives and framework of research Suchchapters, literature analysis, methods, outcomes and discourse, respectively, accompany

this chapter The 2nd chapter-the second chapter of the literature review discussesseveral observations from previous research, describes structures, and establishes thetheories that will be evaluated in the analysis The third part, Chapter 3 Methodologyincludes analytical introductions It provides sample and data collection material,creation of questionnaires, review of data The 4th chapter-the findings of the dataanalysis, predictions and test results are discussed Chapter 5 introduces key researchfindings and some commentary In this section, some restrictions and more future studyare also listed.

CHAPTER 2 LITERATURE REVIEW

2.1 Consideration for Alternatives

Study of financial sector have assumed that certain stocks or other investmentprospects all over the world, along with all significant details regarding them, areimmediately available to investors and usable (Warneryd, 2001) With any of theseassumptions, ordinary analysis really hasn't paid much attention to the issue of howinvestors actually make decisions of which specific stock as investment targets andcomparing them with the others

Nevertheless, more recent scientific research on behavioral finance have graduallyadopted the idea of treating stocks as 'products' on the market, analogous to consumergoods (Barber, Odean, 2008) This has prompted scholars to become more concernedabout how individual investors actually learn, evaluate, compare, and establishtendencies towards particular stocks In the meantime, it is really the trend that scholarshave noticed stock markets, particularly with the growth of a global online market,crowded with hundreds of substitute banks, shares and stocks that leads privateinvestors to face amazing difficulties in the dealing of data in selecting the right stocks

to make investing decisions

In any event, the present researchers have been quiet on the mechanism about how

a particular bank (or any companies) can really catch the concern of an individualinvestor, the level of (mindful) thinking the investor gives to a particular stock ratherthan other alternative ones, till making a decision to purchase (Goldstein, Sharpe, 2008).This is largely related to the absence of individual scale, mental philosophy and the lack

of knowledge that may appeal to individual financial expert psychology as opposed tooverall bank (company) knowledge, such as investment marketing or attention-attracting details from banks (firms) Another is the connection between the thinkingpoint of buying decisions and the willingness of investors who want to invest in a bank(companies) with relevant bank (companies) experience Within that article, theresearchers develop the study with a market theory-informed perspective and approach

on financial behavior, followed by the study of observational, person-level evidence

2.2 Optimism, and Confidence for expectation about financial returns

When it comes to projected financial returns, the analysis focuses first on apsychological component of expectations of financial returns, namely "optimism." Intruth, the concept of optimism is a particular definition which considers the financialreturns that investments obtain from stocks that are determined not only throughquantitative statistical estimates and probability projections, but also through investors'forecasts Furthermore, Keynes (2018) also discussed the sense of hope that peopleoften obtain in investment choices and related to the value they expected In essence, theanalysis should also conclude that greater "optimism" about the financial benefits of abank's portfolio contributes to greater perceptions of financial returns In conventionaleconomic terms, confidence can be interpreted in such a way where there is a higherexpectation (target) of a bank's return on investments or a lower risk to be expected toaccept Since, as seen in the theory of finance (Clark-Murphy and Soutar, 2005),expected financial rewards appear to be the fundamental predictor of stock investmentdecision-making and thus confidence is closely related to expected financial gains.General speaking, the analysis will suggest that the potential decisions of individualsinvestor to invest in stocks depend on the confidence in invest return Consequently,obviously, the more confidence of investor regarding the return on the investing of abank stock, the more appeal they will relate to the stock, and the greater the tendency tomake investing decisions on that stock

A secondary theory of value-related financial expect is faith, thus accordingDaniel (2001) This appears to be no specific understanding of trust, but this term oftentends to explain the accuracy of the subjective knowledge on desired investing returns

to investors' estimations In reality, seeing investment chance will, in principle, refer tothe subjective perception of probability propagation (and associated median) of anperson as to how often he notices the dosh-related benefits of sstock to go down a baddirection from even their own incredibly cruel (or anticipated) esteem Assurance may

be interpreted in a distinct way as the investment's (2nd charge) investigation of thelevel to which its particular perspective of propagation of probability is correct or

incorrect / uncertain In fact, following the research of Glaser et al (2007), the greaterconfidence of an individual investors in its own assumptions about the investing returns

of a portfolio is the less possible risk that it links to investing returns But at the otherhands, it could be inferred that as more confidence the investor get, the more likely thatthe less risk investor would perceive, in the future, the financial returns of a stock.Moreover, concepts of hope and trust help us establish our initial theories aboutthe thinking provided by individuals when contrasting particular investing stocks withequity fund objectives Both conclusions have been based on the basic presumption thatthe investors can need stronger investing returns (i.e optimism) and otherwise morebelief in such expectations (i.e faith) from inside the stocks of a given bank (orcompanies) While he would be linked to a certain basic resource or, as a result, theworst he was likely to propose option (other) resource targets The analysis thenestablishes the following theories:

H1: optimism related to potential financial returns of a bank’s stock negativelyinfluence the consideration for alternative investing goals

H2: confidence related to potential financial returns of a bank’s stock negativelyinfluence the consideration for alternative investing goals

2.3 Familiarity related to a specific bank’s brand

It is a reasonably excellently-established find in financial research, givenfamiliarity, that personal investors are inclined to prefer buying in securities that arecommon to themselves (Coval and Moskowitz, 1999) In addition, instead of just thefinal option, the analysis refers to a degree of appraisal provided to real bank shareswith regard to other substitute stocks even before buying decision has been made Withregards to this assessment, also on basis of the present financial report, the report mayconclude that the familiarity of personal investors with a particular bank will weakenconsideration, evaluation of alternative goals

This suggests that the individuals will therefore somehow develop more trust inthe assumptions of the familiar banks' return on investing (Barber and Odean, 2002),which would in turn have a significantly negative impact on the appraisal he invests onalternative investments targets

H3: Familiarity related to a specific bank’s brand negatively influence theconsideration for alternative investment goals

H4: Familiarity related to a specific bank’s brand positively influence theconfidence related to potential financial returns of a bank’s stock

2.4 Evaluation of bank Brand

The customer would also have a beneficial (or unpleasant) successful appraisal ofthe brand of the bank (i.e the leading brand under which the bank generates products inmany or more product categories) independent of the degree of particular importancecorrelated with the industries funded by both the goods/services In expansion, aindividual may have a positive (or negative) full of feeling evaluation of the brand of atrade ( i.e the brand title beneath which the firm offers products in one or more benefitcategories) to a few degree free of the degree of person significance related to spacesbacked by the products, services of the companies or banks In fact, good evaluationsguide much of the growth of human judgment or decisions-making in specific.Certainly, since they were unfavorable estimates of the returning-risk profile of electivestock, individual person is by and wide able to shape At that point, amid theorythoughts, an individual will basically choose the stock of a commerce that he likes theforemost, or the brand he likes the foremost, over elective stocks that appear to haveprofiles of returns-risk that are around indistinguishable In another way, the stock-investors may prefer to use his easily accessible full of feeling experiences of theproducts of the companies/banks to promote his last speculation option instead ofinvesting more of his restricted (mental and other) resources on undertaking moredata/information look of and thinking about the different elective speculationopportunities that seem to have about comparable monetary/financial return-riskprofiles

As well acknowledged in economic theory and behavioral finances (Aspara andTikkanen, 2010), that appraisal of an object by a person (for instance, the brands of abank) entails the effect linked to the interpretation of the object As a consequence,brand reputation or affective tests are also used to direct personal clients in theinvestment decisions-making processes (MacGregor et al., 2000) In specific, since the

ability of the investors to accurately quantify all the upsides / downsides of variousalternative stocks (concerning potential return on investing) is minimal, the influence ofaffecttive assessments can also be particularly emphasized in the decisions-making ofstock investing

H5: Affective evaluation of a specific bank’s brand negatively influence theconsideration for alternative investment goals

In addition, in addition to the immediate effect on the priority that an individualinvestor may offer to the investing goals of alternatives, the affecttive appraisal of thebrand of a bank may also affect the actual estimates of a banks' investing return onstock In the domains of manufacturing, for example, personal perceptions of thefinancials and market results of the industries are closely related to the general affecttiveappraisal of these domains (MacGregor and others, 2000) Frieder and Subrahmanyam(2005) will (gullibly) assume that now the likelihood of a bank's services and bank'sbrands predicts prevailing risks-adjusted financials returns for investments made to thisbank in one classification of this sort of partnership, proposed by specific individualinvestors Investors can thus believe that corporations with high qualityproducts/services are well-run enterprises/banks and thus want them to enhance overallfinancial investing returns

H6: Affective evaluation of a specific bank’s brand positively influence optimismrelated to potential financial returns of a bank’s stock

H7: Affective evaluation of a specific bank’s brand positively influenceexpectation related to potential financial returns of a bank’s stock

In comparison to the findings mentioned earlier, further interconnections appeared

to occur between all established cognitive systems Second, the unique meaning of aperson's qualities to a corporation would have a positive influence on his or herproductive appraisal of the brand of a bank that is perceived as supporting orrepresenting the corporation of its services Furthermore, the experience of an individualwith the brands of a bank and the banks, in depth, may have a significant impact on thebanks Based on the customers marketing principle, the effect can be forecast The

greater the experience with one object (bank services), in specific, the more favorableaffecttive evaluations that an individual has with this object.

H8: Familiarity related to a specific bank’s brand positively influence the affectiveevaluation of the brand

2.5 Gap in literature review

Economics psychology and behavioral finances scholars have increasingly beeninterested in how the individual expectations of consumers about firms can affect theirchoices to invest in the stock of companies (banks) In particularly, the links betweenthe subjective assessments of enterprise' products/service and brands by individuals andtheir stock investments decisions have drawn growing interest

Nevertheless, while these current pieces of literature indicate, at the base level,that product/service or brand assessments could affect the stocks investment ofindividual investor, the actual research does not include comprehensive theoreticalanalyses or systemic psychometric data of that effect

Therefore, the research target analyses the customer decision to invest in aparticular bank stocks with the influences of these brands perception in Vietnam market

CHAPTER 3 METHODOLOGY 3.1 Conceptual model and hypothesis development

- Consideration for Alternatives

Study of financial sector have assumed that certain stocks or other investmentprospects all over the world, along with all significant details regarding them, areimmediately available to investors and usable (Warneryd, 2001) With any of theseassumptions, ordinary analysis really hasn't paid much attention to the issue of howinvestors actually make decisions of which specific stock as investment targets andcomparing them with the others Nevertheless, more recent scientific research onbehavioral finance have gradually adopted the idea of treating stocks as 'products' on themarket, analogous to consumer goods (Barber, Odean, 2008)

- Optimism, and Confidence for expectation about financial returns

The concept of optimism is a particular definition which considers the financialreturns that investments obtain from stocks Keynes (2018) also discussed the sense ofhope that people often obtain in investment choices and related to the value theyexpected In conventional economic terms, confidence can be interpreted in such a waywhere there is a higher expectation (target) of a bank's return on investments or a lowerrisk to be expected to accept The more confidence of investor regarding the return onthe investing of a stock, the more appeal they will relate to the stock Secondary theory

of value-related financial expect is faith, thus according to Daniel (2001) Faith tends toexplain the accuracy of the subjective knowledge on desired investing returns toinvestors' estimations In reality, seeing investment chance will, in principle, refer to thesubjective perception of probability propagation The greater confidence of anindividual investors in its own assumptions about the investing returns of a portfolio isthe less possible risk that it links to investing returns, says Glaser et al (2007)

Concepts of hope and trust help us establish our initial theories about the thinkingprovided by individuals when contrasting particular investing stocks with equity fundobjectives Both conclusions have been based on the basic presumption that theinvestors can need stronger investing returns (i.e optimism)

H1: optimism related to potential financial returns of a bank’s stock negativelyinfluence the consideration for alternative investing goals.

H2: confidence related to potential financial returns of a bank’s stock negativelyinfluence the consideration for alternative investing goals

- Familiarity related to a specific bank’s brand

It is a reasonably excellently-established find in financial research, givenfamiliarity, that personal investors are inclined to prefer buying in securities that arecommon to themselves The familiarity of personal investors with a particular bank willweaken consideration, evaluation of alternative goals This suggests that the individualswill therefore develop more trust in the assumptions of the familiar banks' return oninvesting

H3: Familiarity related to a specific bank’s brand negatively influence theconsideration for alternative investment goals

H4: Familiarity related to a specific bank’s brand positively influence theconfidence related to potential financial returns of a bank’s stock

- Evaluation of bank Brand

The customer would also have a beneficial (or unpleasant) successful appraisal ofthe brand of the bank Good evaluations guide much of the growth of human judgment

or decisions-making in specific In another way, the stock-investors may prefer to usehis easily accessible full of feeling experiences of the products of the companies/banks

to promote his last speculation option instead of investing more of his restricted (mentaland other) resources on undertaking more data/information look of and thinking aboutthe different elective speculation opportunities that seem to have about comparablemonetary/financial return-risk profiles The brand title is the brand title beneath whichthe firm offers products in one or more benefit categories

Brand reputation or affective tests are also used to direct personal clients in theinvestment decisions-making processes In specific, since the ability of the investors toaccurately quantify all the upsides / downsides of various alternative stocks is minimal,the influence of affecttive assessments can also be particularly emphasized

H5: Affective evaluation of a specific bank’s brand negatively influence theconsideration for alternative investment goals