Credit services quality of vietnam joint stock commercial bank for industry and trade vietinbank

CREDIT SERVICES QUALITY OF VIETNAM JOINT STOCK COMMERCIAL
BANK FOR INDUSTRY AND TRADE - VIETINBANK

___________________________

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

___________________________

In Partial Fulfillment
of the Requirements for the Degree
Doctor of Business Administration

___________________________

By

DONG TRUNG CHINH (ERICH)
December 2013
i


APPROVAL SHEET

The Dissertation of

DONG TRUNG CHINH

entitled
CREDIT SERVICES QUALITY OF VIETNAM JOINT STOCK COMMERCIAL
BANK FOR INDUSTRY AND TRADE - VIETINBANK
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

MELCHOR MELO O. PLACINO, PhD
Expert

EDWIN P. BERNAL, DBA
Expert

WALBERTO A. MACARAAN, EdD
Expert

ALICE T. VALERIO, PhD
External Panel

CECILIA N. GASCON, PhD
Chairman
Endorsed by:

Recommended by:

CONRADO L. ABRAHAM, PhD
Adviser

APOLONIA A. ESPINOSA, PhD
Dean

Accepted in Partial Fulfilment of the Requirements for the Degree
Doctor of Business Administration

_____________________
Date

WALBERTO A. MACARAAN, EdD
Vice President for Academic Affairs
ii


CERTIFICATE OF ORIGINALITY

iii


ACKNOWLEDGMENT
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 who directly gave me useful and
memorable lectures and guides in DBA namely Dr. Cecilia N. Gascon,
Dr.Walberto A. Macaraan, Dr. Milo O. Placino, and Dr. Alice T. Valerio. They
provided me a rich and fertile environment to study and explore new ideas.
They made my DBA life ever fluid, and, in the course of it all, a warm and

inviting place to work.
My special thanks to Dr.Conrdo L. Abraham who provided me valuable
guides to complete the dissertation.
I would also like to thank: Associate Professor, Dr. Do Anh Tai, Dr.
Pham Hong Manh who helped me during this research, read the manuscript
and provided me with constructive comments.
I extend especial thanks to the board of Rectors of Hanoi University of
Industry for permitting me to pursue the doctoral course and create favorable
conditions for me to accomplish this doctoral degree.
I would not have completed this road if not for my parents, my wife, my
children, and all of my dear friends who instilled within me a love fr creative
pursuits, science and language, all of which finds a place in this the
dissertation.
Dong TrungChinh
iv


DEDICATION

To my parents, my wife, my children, and all of my dear friends my friend, Dr.
Pham Hong Manh and to all who have contributed to make this study a success.
This piece of work, I owe to you.

DTC

v


TABLE OF CONTENTS
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 ………………………………………………………...

x

LIST OF APPENDICES …………………………………………………...

xii

ABSTRACT …………………………………………………………………

xiii

CHAPTER
I

II

III

IV

INTRODUCTION ……………………………………………

1

Background of the Study …………………………………..

2

Statement of the Problem ………………………………….

3

Objectives of the Study …………………………………….

4

Scope and Delimitation …………………………………….

5

Significance of the Study …………………………………..

6

Definition of Terms ………………………………………….

7

REVIEW OF LITERATURE ……………………………….

9

Conceptual Framework ………………………………….…

32

METHODOLOGY …………………………………………..

36

Locale of the Study …………………………………………

36

Research Design ……………………………………………

37

Data Gathering Procedure …………………………………

38

Population, Sample and Sampling Technique …..………

39

Research Instrument ……………………………………….

40

Statistical Treatment ………………………........…….……

41

RESULTS AND DISCUSSIONS ………………………….

45

vi

V

SUMMARY OF FINDINGS, CONCLUSIONS AND
RECOMMENDATIONS
Summaryof Findings ………………………………………

76

Conclusions …………………………………………………

79

Recommendations …………………………………………

80

REFERENCES ………………………...…………………………………..

85

APPENDICES ……………………………………………………………...

91

CURRICULUM VITAE …………………………………………………….

114

vii

LIST OF TABLES
TABLE

PAGE

3.1

Distribution of the Sample in the Study Area

36

4.1

ClassificationBorrowing Subjectsby Type of Enterprises
inVietinbank

48

4.2

TableofCustomerInterest Rate

51

4.3

Status of Repayment fortheCreditLoans

52

4.4

The EaseofApproaching BusinessCredit
ServicesinBankLoans at VietinBank

53

The DifficultyofAccessing CreditBusinessLoans at
BanksVietinbank

53

TheEvaluationComponent of"Empathy" Compared
withCustomer Expectations

54

TheEvaluationof the Component"Reliability" Compared
With ExpectationsCustomer

55

TheAssessmentofComponents"Tangible" Compared With
ExpectationsCustomer

56

TheEvaluationof the Component"Assurance" Compared
WithCustomerExpectations

57

TheEvaluationof theComposition"The Response"
Compared WithCustomers'Expectations

58

TheAssessmentof theCredit ProfileComponentsCompared
WithCustomers’ Expectations

59

TheOverall SatisfactionCompared
WithExpectationsofCustomers

60

4.13

ResultsRegressionAnalysis

61

4.14

ResultsSummary of ComponentsFactor Analysis

63

4.15

StatisticalAverageComponent"Tangible"

66

4.16

StatisticalAverageComposition"Credibility"

67

4.5

4.6

4.7

4.8

4.9

4.10

4.11

4.12

viii

TABLE

PAGE

4.17

StatisticalAverageComposition"Empathy"

68

4.18

StatisticalAverageComposition"Response"

69

4.19

Statisticalaveragecomponent "Assurance”

70

4.20

StatisticsoftheAverage"Profile"

71

4.21

Nonparametric Correlations

73

ix


LIST OF FIGURES
FIGURE

PAGE

2.1

Model of Customer Satisfaction

24

2.2

Model Technical and Functional Quality Model

25

2.3

ModelQualityService-Based Distance (GAP model)

26

2.4

Model ofCausalRelationshipsBetweenPerceived
QualitiesWithCustomerSatisfaction

27

2.5

Model of Cause and
EffectBetweenthePerceivedQualitiesofthe
CustomerwithCustomerSatisfaction

28

2.6

Model Customer Satisfaction Index of the United States

29

2.7

The Research Model with Hypotheses Based on Five
Dimensions by Parasuraman et al (1988)

34

3.1

The Process of Conducting Research

38

4.1

GenderofClientsin theStudy Sample

45

4.2

Age GroupofCustomerinTransactionsinVietinBank

46

4.3

Educational AttainmentoftheCustomerTransactionVietinBank

4.4

The Position of the Customer in the Transaction with
VietinBank

47

4.5

Types of Business Enterprises Transacting inVietinBank

48

4.6

CharacteristicsofCustomerTransactionsatVietinBank

49

4.7

The SizeofBorrow CapitalEnterprise Customersin
theResearch Sample

49

4.8

LoanPurpose of Businesses

50

4.9

Evaluation onApproaching Credit Services

52

TheEvaluationComponentof"Empathy" Compared

withCustomerExpectations

54

TheEvaluationof the Component"Reliability" Compared With
ExpectationsCustomer

55

47

4.10
4.11

x


FIGURE

4.12

4.13

4.14

4.15

4.16

4.17

4.18

PAGE

TheAssessmentofComponents"Tangible" Compared With
ExpectationsCustomer

56

TheEvaluationof the Component"Assurance" Compared
withCustomerExpectations

57

TheEvaluationof theComposition"The Response" Compared
WithCustomers'Expectations

58

TheAssessmentof theCredit ProfileComponentsCompared
WithCustomers’ Expectations

59

TheOverall SatisfactionCompared
WithExpectationsofCustomers

60

The
RelationshipBetweenStandardizedResidualsandStandardized
Predicted Value
Distributionof theEstimatedResidualsfromthe Regression
Model

xi

72

73


LIST OF APPENDICES
APPENDIX

PAGE

A

Questionnaire

92

B

ResultsAnalysis ofReliability

96

C

FactorAnalysisResultsDiscovery

103

D

AnalysisResultsRelationandRecoveryProcess

108

`

xii


ABSTRACT
Title of Research

: CREDIT SERVICES QUALITY OF VIETNAM
JOINT STOCK COMMERCIAL BANK INDUSTRY
AND TRADE – VIETINBANK

Researcher

: DONG TRUNG CHINH (ERICH)

Degree Conferred

: DOCTOR OF BUSINESS ADMINISTRATION

Name and Address
of Institution

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

Adviser

: Dr. Conrado L. Abraham

Year Written
: 2013
______________________________________________________________
Industrial and Commercial Bank of Vietnam (VietinBank) is one of the
largest commercial banks in Vietnam with a long history of development.
However the explosion of commercial banks is still a major challenges in
improving the quality of service credit.
This study used a model of service quality by Parasuraman et al (1985;
1988) as applied to the credit quality services at VietinBank - Red River Delta
Region. Statistical analysis tools such as reliability analysis, factor analysis to
explore, regression analysis and ANOVA analysis of the 368 customers
surveyed are in the business of trading in the local VietinBank of the Red
River Delta area.
Results

reveal

withVietinBankcorporate
withthisbank.Most

thatthe
customers,

majority
who

ofcustomersaretransactions

have

much

timetransactions

ofthebusinessestradingatVietinBankare

xiii


privateenterprisesandnon-statebusiness

corporations.State-owned

enterprises(the state capital) accounts for onlya small fraction.
Second,creditloansare
aremainlycomplementary

for

mostlyunder5billion.
businessesin

These

loans

thecapitalandprocurement

of

machinery andequipmentforproduction and businessactivitiesoftheenterprise.
In addition,enterprisesalsousethese loansforother purposes, such asin the
construction of buildings.However,forthe purpose ofthisloanis negligible.
Third,the
accessibilitythecreditofVietinBankstillshowcertaindifficultiesfortheenterprisescu
stomer. ThedifficultyinVietinBankloansis that borrowingconditionshavesecured
assetsforthe mortgage.
Fourth,the natureofservice qualityoftenchangevery rapidlyover timedue
to theincreasingdemandsofcustomers and thedifferencebetweenthebanks.
Therefore,the use ofmodelsofservicequalityof Parasuramanet al(1988) show
significant differencebetween the studiesinVietnamand the world. The study
revealsthat,

in

al(1988),thequality

addition
of

to

5componentsofservicequalityParasuramanet

servicesinVietinBank-Red

hasa"creditprofile" component.

xiv

River

Deltaregionalso


1

Chapter I
INTRODUCTION
Thecommercial

bankshave

increasinglydemonstratedtheirimportant

rolein the economyofeach country, in whichVietnamis notan exception. In the
earlier times, Vietnam's economyhas beenrapidly integratedwiththe world

economy, which createdmany opportunitiesbutalsomanychallenges toevery
field.

Credit activityisone of themainfunctionsofthecommercial banks, and
thisactivity

createsthe

largestsource

ofincomeforbanksinVietnam.

Theprosperityofthecommercial bankswill depend onthe quality of services,
especiallycredit

services.

Putin

fiercecompetitiontoday,

the

context

ofthe

increasingly

improvingcredit

satisfyincreasinglyhigherdemandsfrom

qualityto

customersare

becomingmajor

concernsofthecommercial bankstoday.

The

emergenceofthejoint-stock

innovationandstrongadvanceofthebig

commercialbanks,
state-ownedbankshas

broughtbetterqualityservices,
helpingbusinessesandindividual’sconditionalselectionbankingtransactionsand
access

tobanking

servicesmoreeasily.

This

makescompetitionbetween

banksalreadyfierceand now,fiercer.

With

thefierce

ofservicesismatter

of

competitiontaking
survivalforthe

place,improving
competitiveness

the

quality

oftheBank.


2

Banksdomakea

differenceinservice,

highusability;

the

banks

willhavestrongcompetitiveadvantages.
Background of the Study

VietinBankisa

bank

that

conducts

one

of

themostlarge

scaleoperationsinVietnam, with awide branchnetwork, and havingmet the
demandsfor investmentonalleconomic sectors. VietinBankcreditisthe bank’s
mainsource ofincome, which has createdalarge volume ofassetforthe bank.
The total revenue, interestincomeandother expensesdirectly relatedtocredit
operations, represents65% -75% of the profit of VetinBank. However,the
service

qualityofbankcreditstillhavemany

proceduresare stillfrillsloan, andtheloan

limitations,

such

as:the

conditionsstillneedthe collateral,

among others.Allof these problemsareobstaclesforcustomersin approaching
servicesatthe bankcredit. Ifthese problemswere noresolved,soonthere will
bepotential risksforVietinBankin raisingthe competitivenessofthe economyas
well asenhance the reputationofVietinBankonthe domestic and international
market.

Over the years, thegeneralquality of serviceincommercialbankshave
beenstudied by many authorsin the world ofresearch, such as: studiesofGuoet
al(2008)

formeasuringservice

qualityinthebankingmarketshareinChina,the

studyofAldlaigan&Buttle(2002) formeasuringthe quality ofbanking services,
andresearchofSureshchandaret al(2002) on the relationshipbetweenservice
qualityandcustomerssatisfaction. Most of theresearch onquality of serviceis

basedonthe theoretical foundationfor the qualityofserviceof Parasuramanet
al(1985, 1988), the scale of which was developedinhisstudies.


3

In
become

Vietnam,

access

to

to

some

interesting

creditandthequalityofbankingserviceshave
other

researchers.

For

example,

LeVanHuyandPhamThiThanhThao(2008)

have

assessedandconsolidatedmeasurementandindicatorsin

settingprioritiesto

improvequality of service through a case studyinthe banking sector. The study
that

measuredcustomersatisfactionwiththe

servicesofSaigonJoint

StockBank(2009)

ofParasuraman(1988).

quality

used

the

ofbanking
similar

Meanwhile,

scale

researchby

PhamHongManh,HaThiThieuDao(2010) on access tocredit servicesusedthe
theoryTDPto assessthe accessibilityofcreditservices forfishermen.

Considering

these

matters,the

leadershipofVietinBankhasmany

solutions, such as: raisingcharter capitalandimprovetechnology, diversification
of productsandimprovement ofthe quality of serviceinstages, includingcredit
servicesto

improve

Apparently,

thequalityofbankingservicesforfastmarket
evaluationof

share.

creditqualityservicetomore

responsivecustomersatisfactionisaregular

operationofVietinBanktoknow

thequalityoftheirservicecreditwherethere
aregapswhatwiththecustomer'sexpectationsforimprovedmeasures.

Stemmingfromthe
motivatedtochoosethe

above

problems,the

research

topic

researcher
onthe

became
credit

qualityservicesofVietNamjoint-stock commercialbank for industryandtrade, the
case ofVietinBank.

Statement of the Problem

4

The dissertation objectives will concentrate on the following research
questions:
1. What is the demographic profile of the respondents?
2. What is the composition of the quality of service of VietinBank?
3. Which

componentservice

ofVietinBank,

affects

thecustomersatisfaction?
4. What are the possible models that influence the customer satisfaction
about credit quality of VietinBank?
5. What are the recommendations necessary for the management of
VietinBank based on the results?

Objectives of the Study
The studygenerally determined the levelofcustomersatisfactionwiththe
service

qualityofVietinBank-Red

proposesolutionsto

improve

the

River

Deltaregion-Vietnam

to

qualityofservicecreditVietinBank.

This

dissertation specifically aims to:
1. Determine the demographic profile of the respondents as to:
a) Sex
b) Age
c) Educational Attainment
d) Type of business owned
e) Frequency of transaction
f)

Range of Amount Loaned

g) Purpose of Loan


5

h) Accessibility of Service
2. Identify thecomponents of qualityservicecreditof VietinBank;

3. Build scale components of service quality credit for VietinBank;
4. Propose

amodelforthe

studyoffactors

thataffectthecustomersatisfactionaboutthe credit qualityofVietinBank;
and
5. Testhypothesesabout
servicecomposition,

the

relationshipbetweenthequality

demographiccharacteristicstothe

of

satisfactionof

thecustomer's creditqualityVietinBank.

Scope and Delimitation

In the completion ofthe thesis, the author usedthe modelcomponentsof
ParasuramanQualityofServicesto assessclientsatisfactionwiththe servicesof
VietinBankcredit. Although there have beenmanyeffortsinthe implementation
process, thedissertationmaintainedcertain limits:

First,the

process

of

collectingdocuments

anddatainvestigationon

theuseofcreditservicesfromthe customersof VietinBankisdifficult. Therefore,
thesamplesizeissmallcompared tothe totalnumber of customerswho are using
the servicesofVietinBankinthe Red River Deltaregiondue to the limitationof
timeandfinancial resources.

Second,stratified samplingmethodforthelocalstudy areacannotrepresent
manydifferentcustomers, that is why it was not employed as a sampling
technique.


6

Third,withalargecredit institutionasVietinBankmanydifferent services,
such

asloans,

receivingdeposits,

ATM,

cash,

a

recentstudystoppedjustinfinancial servicesresearchofthebank.
Fourth, to analyze the quality service composition of the bank, the
theory of service qualitytaken fromParasuraman’s SERVQUAL model was
adjusted for the characteristics of VietinBank in the region Red River Delta,
Vietnam.

The data was collectedfromJuly 2012 to April 2013.

Significance of the Study

This study will be primarily beneficial to the customers and
administrators of VietinBank, as well as other banks in the country.

First,servicesaredifficult

to

theelementsofaqualitycharacterizedby
especiallycredit

servicesis

essential.

measure,

identify

customerserviceevaluation,
Understanding

theexpectations

andperceptionsofcustomers towardsbankshelpmanagersbetter understand,
more sympathetic, more enthusiasmforservingcustomers.

Second,the

level

ofqualityofservicecreditprovidedby

the

Bankanditsdegree of influencetothe satisfactionofbankcustomershave the
opportunity tohelplookat themselvesfrom the perspective ofthe customer.From
there, through the result of this study, they may makepoliciesappropriateto
their operations so astoimprovetheir service quality, and eventually to
betterserve the customers.


7

For banks, the results of the measurement the satisfaction level of the

customers in this studymay be used to easily building strategies, action plans
towards achieving the target customer satisfaction level and customer loyalty,
thereby retaining customers and increase profits.

For bank staff, the identification of the elements of a quality customer
service, especially on the credit services are essential in better understanding,
beingmore sympathetic, and being more enthusiasticin serving his subjects.

This dissertation is likewise done in the hope of contributing to the
system part of the rationale for assessing service quality satisfaction
measurement of credit quality and in particular quality banking services in
general.

In addition, the study results can be the basis for other units of the
system

VietinBankin

similar

services

such

as

telephone

service,

transportation service passenger, courier services.

Definition of Terms
The following terms are defined conceptually and operationally:
Assurance.The knowledge and courtesy of employees and their ability to
convey trust and confidence.
Empathy.The provision of caring, individualized attention to customers.
Quality service. Quality service is what customers perceive through feel the
perception or customer related to their individual demand.


8

Reliability.The ability to perform the promised service dependably and
accurately.
Responsiveness.The willingness to help customers and to provide prompt
service.
Service. Service is any act or benefit one party can offer to another party that
is basically very and the owner does not bring any.
Tangibles.The appearance of physical facilities, equipment personnel and
communication materials.


9

Chapter II
REVIEW OF LITERATURE
This chapter presents the theoretical foundations of this study.
Thecontentincludes: Services andcharacteristicsofservicesandservice quality,
service

qualityofbankcredit,

customersatisfactionandthe

betweenservicequalitycustomersatisfactions.

In

relationship

addition,an

overview

oftheresearchmodelrepresentingthequality of the service; the components
ofservice qualityare also presented.
Finally,

theproposedtopicmodelintothestudy

ofthequality

of

servicecreditforcustomersatisfactionisalsopresented inthechaptercontent.
Service
The concept of service: According to modern marketing research
Kotler and Armstrong (2004) service definition as follows: "Service is any act
or benefit one party can offer to another party that is basically very and the

owner does not bring any” Services have four (4) properties below:
Invisibility (intangibility): a pure service cannot be evaluated using any
public body senses before it is purchased. Therefore, to reduce uncertainty,
people will search for evidence of the quality of service from their audience
exposure, equipment that they see.
The inseparable (inseparability): specific services are produced and
consumed simultaneously at the same time. If someone is hired, the service
provider side will be part of the service, whether the service provider is the
real person or machine. Because customers will also be present at the


10

services offered to the interaction between the service provider and the
customer is a special feature of services marketing.
Calculate or change (variability): characteristics reflected in the quality
of service depend on the service provider, time, location and the way services
are provided.
The fragile (perishability):other services to the common goods in that it
cannot be stored. In other words, services are more sensitive to common
goods before the change and the diversity of needs. When demand changes,
the service company always looking to match supply and demand together,
such as the travel companies always hire car to serve tourists in the peak
season.
In addition to the above properties, the service can be described with
the following attributes:
-

Lack of transport properties can be: services must be consumed in
place of "production" services.

-

Lack of uniformity: almost impossible to provide services with the same
quality finish.

-

Need more manpower: services typically include significant human
activity, rather than the process of being set up correctly. Therefore,
human resource management is very important. Human factor is often
a key factor to the success in the service sector.

-

Fluctuations needs: it is difficult to predict demand. Demand can vary
by season, time of day, the business cycle.

-

No refund if customers are not satisfied, they can return the money, but
services cannot be refunded.


11

-

Through human relations: the role of man in the service is generally
very high and customers when evaluating appraisal services.

-

The individual: customer service evaluation based on his personal
experience a lot.

-

Psychology: service quality is evaluated according to the psychological
state of the client.

Quality of service
Qualityserviceiswhatcustomersperceivethroughfeel
theperceptionorcustomerrelated totheir individualdemand.
According toParasuraman, ZeithamlandBerry(1985), the quality of
serviceasperceived

bycustomersasavalue-

creatingservicesworthyoftheirprevious
toParasuraman(1988),
customer,

which

expectations.

expectationsofservice
means

they

According

qualityisthe

desire

ofthe

feelproviderstoperformwillnotperform

therequestedservice.
Otherqualitygoodsaretangibleandcan
criteriasuch

asfunctionality,features,

be

measuredbyobjective

anddurability.

However,service

qualityisintangible. Therefore, the documentdefinedservice qualitybased on:
subjective,attitude, andability to identify. Zeithaml(1987) explains: "Quality of
service

isthecustomer'sevaluationoftheultraVietnamandthegreatgeneralofan

entity. Itisa form ofbehaviorandconsequencesfroma comparisonbetween
whatis expectedandawareness ofwhatwereceive. "
ButLewisandBoomssaid:"Serviceisameasure

ofthe

servicegiventocustomerswithadequatecustomerexpectationsofto

level

of
where.