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STATE BANK OF VIETNAM

MINISTRY OF EDUCATION AND TRAINING

BANKING ACADEMY OF VIETNAM

---------o0o--------

TRAN THI THANG

PROMOTING FINANCIAL INCLUSION IN
NORTHERN DELTA PROVINCES

Major: Finance - Banking
Code number: 9340201

SUMMARY OF PHD THESIS

HANOI – 2019


THIS THESIS WAS COMPLETED AT
THE BANKING ACADEMY OF VIETNAM

Supervisors:
1. Assoc. Prof. Dr. Pham Thi Hoang Anh
2. Dr. Nguyen Xuan Quang

Phản biện 1: Assoc. Prof. Dr. Le Van Luyen
Phản biện 2: Assoc. Prof. Dr. Dao Minh Phuc

The thesis was defended in front of the thesis committee at
…........… on ................................... at the Banking Academy of
Vietnam


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INTRODUCTION
1. THE NECESSITY OF THE THESIS
Financial inclusion can be defined as financial services provided to all members of
society, especially for vulnerable groups, in a way that is convenient and tailored to needs,
through which this can contribute a part of creating livelihood opportunities, circulating
investment capital and saving in society, promoting sustainable economic growth. Over the
decades, financial inclusion has become a universal vision of the world in the mission of
hunger eradication and poverty reduction, towards a stable, fair and prosperous society
where everyone is entitled to achievements of economic development. Therefore, financial
inclusion has become an agenda not only at the national level of a country but also in most
countries around the world.
Although there have been certain achievements in economic growth and promoting
financial inclusion in recent years, there is still a large gap in access to finance because there
are still many people in the world who have not had access to banking services. In Vietnam,
up to 70% of people do not have access to banking services1, a significant proportion of
people do not have access to official financial services, opportunities to access and use
official financial services are low compared to other countries in the region and the world.
Especially the poor, women and vulnerable people, they face many barriers when accessing
officiall financial services due to the lack of a synchronous legal framework; Financial
infrastructure has been developed unevenly, and financial knowledge and consumer
protection are limited. Up to half of Vietnamese population does not have a bank account at
an organization that provides official financial services (Duc Dung, 2018). Most people
living in rural areas do not have access to basic financial services of official financial
institutions, they are still familiar with traditional financial way.The main reasons given are

that because the area is too far, the scale of the bank is limited, the number of ATMs is rare,
the cost of services for savings and small loans is high, credit information is still poor,
opening an account requires many documents, cumbersome procedures.
Northern Delta is one of four key economic regions of Vietnam, an area located
around the Red River downstream area in northern Vietnam, with the highest population
density, more than 22 million people, accounting for 22. 3% of the total population of the
country; GDP ratio (Statistical Yearbook, 2017). In particular, people who do agricultural
works accounting for approximately 62% of the total population of the region, these people
are often without qualifications, having unstable income and limited financial knowledge.
So people in rural areas are more difficult to access finance than urban people because of
low income, sparse bank branch density, low level of financial knowledge, small number of
account ownership. People in the region have limited ability to access savings services,
credit but this is a potential customer group. If financial inclusion is promoted here, it will


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boost the overall financial inclusion of the whole country, stimulate economic growth,
reduce poverty and social inequality.
For aboves reasons, the author decided to write the thesis titled “Promoting financial
inclusion in northern delta provinces”. The author would like to understand the current
situation of financial inclusion in Vietnam through the Northern Delta provinces, on the
basis of studying the achieved results, some limitations, the causes of the problems to
provide a number of policy recommendations to authorities to promote financial inclusion in
the Northern Delta provinces in particular and across the country in general.
2. RESEARCH OVERVIEW
In recent years, the topic of financial inclusion has been concerned by organizations
and countries around the world and there are many research projects on this issue. The
thesis performs an overview according to the contents (i) Definition of financial inclusion;
(ii) The roles of financial inclusion shown: reducing poverty, creating jobs, promoting
savings, limiting income inequality, bringing efficiency in investment, promoting economic

growth and stabilizing the financial system; (iii) Factors affecting financial inclusion; (iv)
Model to assess factors affecting financial inclusion; (v) financial inclusion indicators.
3. RESEARCH GAP
Overview of domestic and international academic works shows that research on
financial inclusion is not a new thing, especially in the world, there are many scientists
studying this issue. However, in Vietnam, there are only a few studies on "The role of banks
in financial inclusion development in Vietnam" by Nguyen Thuy Duong, Nguyen Thi Thu
Trang (2017), "Factors affecting financial inclusion development - Solutions for Vietnam
"by Pham Thi Hong Van, Tran Thi Thu Huong (2017)," Solutions to effectively promote
financial inclusion in Vietnam "by Nguyen Duc Long ( 2017). Thus, there are currently no
studies on:
(i) Current situation of financial inclusion in Vietnam in general and Northern Delta in
particular
(ii) Factors affecting financial inclusion based on quantitative research models in Vietnam
and in the Northern Delta.
Therefore, the author thinks that there is a research gap about the assessment of overall
situation of financial inclusion of Vietnamese people in general and the Northern Delta in
particular. This is an important basis for the author to choose the topic of the thesis: “ Promoting
financial inclusion in northern delta provinces”. Research does not overlap with previous studies.
And as of April 2019, this can be considered as a complete research on financial inclusion in the
Northern Delta provinces, both in theory and practice.
4. RESEARCH OBJECTIVES, OBJECTS AND SCOPE
4.1 Research objectives


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The overall objective of the study is to analyze the current situation as well as the factors
affecting the level of financial inclusion of the Northern Delta region. Specific objectives are:
(i) Providing a comparative analysis of the current situation of access to banking
products and services of the poor, people living in rural areas and low-income people in the

Northern Delta region.
(ii) Assessing the impact of factors on the access to basic banking services products of
the poor, rural people and low-income people of the Northern Delta region.
(iii) Proposing a number of policy recommendations to related parties to improve the
accessibility of the poor, rural people and low-income people to basic banking products and
services with a suitable and affordable cost.
4.2 Research objects
Research objects are the current situation of access to basic banking services in the
Northern Delta provinces and factors affecting financial inclusion in this region.
4.3 Research scope
a/ Content scope
Scope of research space:
The thesis is limited to assessing the current situation of access to basic banking
products and services of individuals in the Northern Delta provinces, especially those living
in rural areas and people with low income. The reason why the Northern Delta was chosen
for this research is that this is the region where most people in rural areas earn there living
mainly on agricultural activitives, have low income and only can access to basic financial
services. The region is more limited than other regions in the country.
In addition, to assess more comprehensively the factors affecting the level of
financial inclusion, the thesis has conducted research on customers in 10 provinces and
cities through taking direct surveys. Researched customers are individuals, this is the
customers who mainly has not access to financial services and also a potential group of
customer for financial institutions.
b/ Time scope
Secondary data about banking industry was collected in the period of 2013-2017 at
10 SBV branches in the Northern Delta region.
Secondary data on population and natural characteristics were collected in the period
of 2013 - 2017 at the annual statistical yearbook and summary report of the provinces in the
Northern Delta region.
Secondary data on comparing indicators of access to basic products and services in

the period 2013 - 2017 are calculated from 2013 to 2017 to provide average figures for this
period.
Primary data on customers were collected from direct survey through questionnaires


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for adults in the region, mainly those living in rural areas, from January to July 2018.
5. RESEARCH QUESTIONS
After doing researches, analyzing and evaluating a number of published works related
to the topic, the author raised new questions that need to be researched in order to find
specific answers; include:
(i) Current situation of financial inclusion in Northern Delta provinces?
(ii) Factors from the demand and supply side affecting financial inclusion in Northern
Delta provinces?
(iv) Solutions to promote financial inclusion in Northern Delta provinces?
6. RESEARCH METHODS
6.1. Statistical method
6.2. Survey method
The author conducted a survey to know customers’ opinions through survey
questionnaires to find out the banking products and services that customers are using,
understand more about the causes and also some customer suggestions.
6.3. Information collection method
Collecting secondary data
The decision of criterias used to study the overall level of financial inclusion of the
Northern Delta region is based on reference to documents, books, magazines, articles,
websites, related research works, financial report, annual report of the State Bank branches
in the Northern Delta provinces, the annual summary report of the People's Committees of
the Northern Delta provinces, and the annual statistics yearbooks of the General Statistics
Office.
Collecting primary data

Primary information is collected from actual survey through a prepared
questionnaire.
Select research sample: Overall survey
The number of questionnaires issued was 425.
Survey aims to study and assess of customers' ability to use basic financial services
products. This indicates the level of customer’s financial inclusion. Thereby assessing the
actual situation of the influence of factors on financial inclusion. In this study, samples were
selected mainly from people living in rural areas, low-income people and partly customers
of Vietnam Bank for Agriculture and Rural Development, Social Policy Bank of Vietnam,
People Credit Fund. Since the study is composed of a variety of customers using a variety of
banking products and reviews of customers having different ages, different incomes,
different living places, so the accuracy of assessing the influence of factors on financial
inclusion and the data collected are quite comprehensive. The author allocates them to each


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province. At the same time, in each province the author allocates the survey to the
transaction offices of each bank.
6.4. Methods of analyzing and synthesizing information.
6.4.1. Method of analyzing secondary data
During the research process, information about the bank's criterias was collected by
the author based on the annual report of the provincial branches, including the number of
commercial bank branches, the number of different cards, ATMs, POS machines, the total
mobilization from the economy, the total outstanding loans to the economy... The data was
selected by the author, then processed and putt into this study in the form of statistical
tables. The analysis of these data includes a comparative analysis of data between phases,
namely each year.
6.4.2. Methods of descriptive statistics and inference statistics
Descriptive statistics allow researchers to present data collected in the form of
structure and summary. Descriptive statistics were used in this study to analyze and describe

data include: the number of bank branches per 100000 people, the number of bank branches
over 1,000km2.
Make a frequency table to describe the sample
Samples collected will be described according to attributes such as gender, age,
income, occupation and residence
7. NEW CONTRIBUTIONS OF THE THESIS
(i) The thesis generalizes the development process of financial inclusion in the world and
Vietnam and synthesizes fundamental theory of financial inclusion, factors affecting financial
inclusion, the role of financial inclusion and lessons to apply financial inclusion to Vietnam.
(ii) The thesis is the first research that studies the current situation of financial inclusion in
the Northern Delta provinces on the basis of synthesizing data from State Bank’s branches in
different provinces, using data of the General Statistics Office and a set of survey data. From
the indicators of the Global Findex, the thesis calculates the suitable criterias of financial
inclusion for the Northern Delta provinces and compares such criterias with the whole country.
(iii) The thesis uses probit quantitative model based on the survey data collected from
direct questionnaires to assess factors affecting financial inclusion in the Northern Delta
provinces.
(iv) On the basis of analyzing the current situation, the causes affecting finanancial
inclusion in the Northern Delta area, the thesis proposes a number of recommendations to
related parties to promote financial inclusion in the Northern Delta provinces and Vietnam.
8. STRUCTURE OF THE THESIS
In addition to the introduction, conclusion, list of references, the content of the thesis
is divided into four chapters, namely:


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Chapter 1: Fundamental theories of promoting financial inclusion.
Chapter 2: The current situation of finanancial inclusion in the Northern Delta provinces
Chapter 3: Models and results of finanancial inclusion in the Northern Delta provinces
Chapter 4: Some recommendations to promote finanancial inclusion in the Northern

Delta provinces


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CHAPTER 1: FUNDAMENTAL THEORIES OF PROMOTING
FINANCIAL INCLUSION
1.1. UNDERSTANDING FINANCIAL INCLUSION
1.1.1. Definition of Financial Inclusion:
“Financial Inclusion is the process of promoting financial products and services and
expanding the scope of use to all segments in the society through the implementation of
modern and innovative approaches, including awareness and financial education to promote
access to finance and social - economic integration” (Atkinson & Messy, 2013).
On that basis, to match the objectives of the thesis research, the author defines
financial inclusion as follows: “Financial Inclusion means the majority of people have
access to and widespreadly use of useful financial products and services in a convenient,
affordable way to meet their needs, especially the poor and low-income people, the ones
living in rural and remote areas. Financial Inclusion includes savings, credit, transaction,
payment and insurance services. At the same time, there is a mechanism for financial
education and consumer protection”
In other words, financial inclusion requires encouraging the market to develop and
provide financial products and services focused on people with low access, disadvantaged
people. In the larger context, financial inclusion can promote economic development
through the establishment of mechanisms that allow greater access to products and services
of financial institutions; deeper knowledge of banks and microfinance institutions.
1.1.2. Roles of financial inclusion
1.1.2.1. Roles of financial inclusion towards the economy
a/ Financial inclusion is the driving force for economic growth
Research of Calderon & Liu (2002) shows that the causal relationship between
financial inclusion and economic growth still exists, but financial inclusion will boost
economic growth more in developed countries than in developing countries.

b/ Financial inclusion helps to reduce poverty and social inequality
Studies have found a strong positive relationship at the national level between
financial inclusion and income and poverty reduction. In particular, there are many evidence
from studies worldwide that financial inclusion plays an important role in reducing poverty,
reducing income disparities and social inequality. That is, the financial inclusion helps to
create value for small businesses, bring a great impact on improving human development
indicators such as health, nutrition and education - and repell inequality and poverty.(CIMP,
2011).
c/ Financial inclusion facilitates payment; safe, convenient and secured money transfer,
and increase national savings.


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Transferring money directly to beneficiary bank accounts, instead of cash payments
for subsidies, will avoid the risks of cash transportation. Financial inclusion improves
payment of conditional transfers such as parents sending money to their children for school,
paying tuition fees through bank transfer instead of paying cash directly.
1.1.2.2 Roles of financial inclusion to individuals in the economy
a/ Helping people to manage more easily personal finance
Savings help households to increase cash flow management, be proactive in using and
building working capital. Credit creates conditions for households to have capital to do
business and promote production and business. If households have access to savings and
credit, they can increase their income. With the increase in income, households can have
additional needs for other financial services such as payment, insurance ... and from there,
this will allows them to be more proactive in managing financial resources and risks
encountered while minimizing risks to external shocks and conflicts.
b/ Helping people to access appropriate financial services, be proactive in spending and
investment plans
Expanding financial inclusion will help people to access appropriate financial services,
be proactive in spending and investment plans, savings, use credit services and buy

insurance at an affordable cost.
1.2. CRITERIAS TO ASSESS FINANCIAL INCLUSION
1.2.1. Criterias of Global Findex to evaluate financial inclusion
Criterias
of
Global
Findex
to
evaluate
financial
inclusion
are the most comprehensive database measuring the level of financial inclusion, which
provides in-depth data on how individuals use accounts, save money, borrow, pay and
manage risk.
1.2.2. Evaluation criteria for financial inclusion by the basic component analysis
method (PCA)
According to Cárama (2014), we can evaluate financial inclusion using three aspects:
Usage, Barriers and Access (PCA).
1.2.3. Financial Inclusion Index by Sarma
According to Sama (2015), financial inclusion was evaluated based on: the
penetration of the banking system, the convenience of banking services and level of usage.
1.3. FACTORS AFFECTING FINANCIAL INCLUSION
1.3.1. Factors from the demand side
First, gender. Gender gaps are found in ownership of official accounts.
Second, educational level. Those who are unable to read or have no financial
knowledge will face disadvantages in financial inclusion.
Third, age. The older people are likely to have more access to fianancial products.


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Forth, work and income. People having jobs and stable incomes will use more
financial products.
Fifth, household vulnerability. For households with high vulnerability, the demand
for financial inclusion will be lower.
Sixth, the habit of holding and using cash. Preference of storing cash, gold, property
at home and cash use habits affect financial inclusion in the population.
Seventh, Religion. Strong belief in religion and deep aversion from banking
transactions has created a part of non-financial inclusion in the society.
1.3.2. Factors from the supply side
First, limitations on financial network and và supply channels: The more developed
financial network is, the more convinient for people to access to financial products and
services.
Second, the suitability of financial products for people: Financial products and
services need to be suitable for the income of each person.
Third, financial services cost: Is a barrier for people, especially for low income
people. Higher costs may limit the use of financial products.
Forth, characteristics of the bank: such as the ratio of capital to total assets, being a
foreign bank or state-owned bank ... have an impact on the level of accessing to financial
inclusion.
Fifth, the trust for financial institutions
1.3.3. Eco-social factors
First, Consumption culture. Financial inclusion depends on the awareness of people
and the culture of using financial services in the society.
Second, local economic characteristics. Has positive impact on financial inclusion.
Third, social infrastructure. Traffic network, information system positively impact on
financial inclusion.
Forth, population structure in society. In the country having an aging population
structure and a high dependency ratio, financial inclusion tends to be less developed.
Fifth, the development of technology. Has positive impact on promoting financial
inclusion.

And sixth, the gross domestic product (GDP) per capita. The higher the GDP per
capita, the greater need of using financial products and services.
1.4. INTERNATIONAL EXPERIENCES ON PROMOTING
INCLUSION AND LESSONS FOR VIETNAM
1.4.1. Experiences of other nations on promoting financial inclusion
1.4.1.1 Experiences of China
a / Bank-based model - sustainable and long-term development

FINANCIAL


10
China has succeeded in establishing a network of correspondent banks, through the
combination of regulations, subsidies, instructions for suppliers and social transfers via bank
cards.
b / Application of information technology and promotion of digital finance
China has especially focused on promoting digital financial solutions and has gained
a lot of success in this area.
c / The role of the government in accessing finance
The Chinese government switched to a more sustainable, market-based approaches,
and enacted favorable policies and hence there were the emergence of new technology
models.
d / Promoting account usage, especially savings.
China uses the policy of transferring money from the Government to people to
motivate people to open accounts and adopt policies to attract people's savings.
e / Develop a financial education program through bank of women formation
"Bank of women: Financial education in rural China" is a great effort to bridge the
financial capacity gap in rural China.
1.4.1.2 Experiences of India
a/ Develop biometric identification project

India has proposed a unique effort and achieved success in forming a national
biometric identification system - “Aadhaar” in 2009.
b/ Set up non-cumbersome bank accounts and boost saving
India has advised all banks to provide a non-cumbersome ' basic bank account with
fees and balances equal to 'zero' or 'very insignificant'
c/ Promote the application of information technology and digital finance
India has advised effective use of information technology, and promoted digital
finance.
d/ Know your customer (KYC)
Simplify KYC and account opening procedures for customers
e / Promote the role of Government and Indian Reserve Bank (RBI).
The Government of India issued regulations on financial inclusion, organized
competitions to disseminate financial information, established a permanent exhibition center
for financial education. RBI developed the national financial inclusion strategy with a focus
on digitization.
f / Develop a network of business reporters and business supporters
India extends its network development of BCs and BFs to promote financial
inclusion.
g / Expanding objects using credit cards and multi-function cards


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Expanding the users of Kisan and GCC to facilitate short-term credit for agricultural
farmers and escape the clutches of loan sharks.
h/ Diversify suppliers
RBI promoted financial inclusion by diversifying suppliers and existing products.
i/ Reform public banks and protect the consumers
1.4.2. Lessons for Vietnam
1.4.2.1 Vietnam needs to develop a national strategy on financial education and
consumer protection

1.4.2.2 State authorities should create an open legal environment to promote financial
inclusion
1.4.2.3. Develop financial infrastructure to facilitate financial inclusion
1.4.2.4 Vietnam needs to diversify types and organizations providing financial services.
1.4.2.5 Diversification of financial services provided in the market.
1.4.2.6 Financial institutions need to apply information technology and promote digital
financial services
1.4.2.7 Establishment of bank agents
1.4.2.8 Build a solid biometric identification project related to financial development


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CHAPTER 2: THE CURRENT SITUATION OF FINANANCIAL INCLUSION IN
THE NORTHERN DELTA PROVINCES
2.1. NATURAL, ECONOMIC - SOCIAL CHARACTERISTICS OF NORTHERN
DELTA PROVINCES
2.1.1. Natural characteristics
2.1.2. Economic-social characteristics
2.1.2.1 Population and source of labor
Table 2.1: Population factors in the Northern Delta region in the period of 2013 - 2017
Content
2013
2014
2015
Population (Thousands of people)
20.481 20.705 20.912
Pupulation density (People/km2)
971
983
994

Gender (Thousands of people)
- Male
10.089 10.149 10.271
- Female
10.392 10.556 10.641
Adult (>=15 years old)
(Thousands of people)
11.984 12.033 11.992
Living place (Thousands of people)
- Urban
6.341 6.736
7.174
- Rural
14.140 13.969 13.738
The proportion of literate adults (%)
98,1
98,1
98,2
The proportion of trained adults who are
24,9
25,9
27,5
active (%)
Source: Statistical yearbooks from 2013 to 2017
2.1.2.2 Industry sector
2.1.2.3 Agriculture sector

2016
2017
21.118 21.342

994 1.004
10.383 10.509
10.735 10.833
11.994 12.015
7.654 8.148
13.464 13.194
98,3
98,3
28,4
25,2

2.1.2.4 Service sector
2.1.2.5 System of infrastructures, equipments
2.2. CURRENT SITUATION OF FINANCIAL INCLUSION IN NORTHERN
DELTA PROVINCES
2.2.1. Choice of assessment criterias
The thesis uses criterias of Global Findex, which are suitable for conditions for
economic development in the Northern Delta region, focusing on five basic contents of the
use of personal financial services: accounts, savings, loans, payments and insurance.
2.2.2. Current situation of financial inclusion in Northern Delta provinces
2.2.2.1 Current situation of using bank account
a/ Number of bank branches in Northern Delta provinces
Coverage of bank branches by population: In 2013 there were 5.7 bank branches over
100000 people, by 2017 this figure was up to 6.6 branches. Although there are 648 branches in
2013 and the number increased to 724 branches in 2017, the growth rate of coverage is not too
high because the population growth rate in the past years has also increased.


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Coverage of bank branches by geography: In 2013 the region had 3.1 bank branches per

1000 km2 on average, this figure had reached 3.6 bank branches in 2017, with an increase of 1.17
times compared to 2013.
b/ Number of ATMs and ATM cards in Northern Delta provinces
ATM coverage by population: 100000 adults in the region in 2013 had 36.8 ATMs,
by 2017 the number of ATMs reached to 44.3.
ATM coverage by population and geography: in 2013 there were 20.9 ATMs per
1,000 km2, by 2017 this number was 25, increased by 1.19 times compared to 2013.
2.2.2.2 Current situation of bank saving deposits
In 2013, the total mobilized capital of the region reached VND 1406005 billion, of which
deposits of people were VND 687384 billion, accounting for 48.8% of the total mobilized capital.
In 2017, deposits were VND 1525704 billion, accounting for 45.6% of the total mobilized capital
from the economy, which is lower compared to 2013.
2.2.2.3 Current situation of bank loans
In 2013, the value of loans from agriculture and rural areas was VND 203880 billion,
accounting for approximately 16.2%. In 2017, this figure was up to VND 328888 billion, an
increase of VND 125008 billion, accounting for 15% of total outstanding loans to the
economy. Although the loan value for this area increased over the years, the proportion of
total loans decreased, showing that rural areas still face many difficulties in accessing credit.
2.2.2.4 Current situation of using payment services
a/ The number of cards
Between 2013 and 2017, the card issuance rate increased by an average of 16.4% in
the region.
b/ The number of POS
As of 2017, there are 96532 POS, an increase of 345.3% compared to the number of
POS in 2013. Especially from 2015 to 2016, there is a growth from 34,574 POS to 66,162
POS with a growth rate of 91.3%
c/ Other methods
Financial instutions apply information technology into banking activities and follow
the fourth industrial revolution: 100% of commercial banks having websites to introduce
products and services, and centers for direct consultancy to customers. , providing 24/24

hour service, online banking services ...
The number and value of transactions via Internet Banking and Mobile Banking
increased significantly. However, there is still a large proportion of people in the region who
do not have access to official financial services.
2.3. ASSESS THE CURRENT SITUATION OF FINANCIAL INCLUSION IN
NORTHERN DELTA PROVINCES


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2.3.1. Achievements
Firstly, people's access to financial services is increasing.
Secondly, the number of savings accounts increases and the amount of savings at
banks also increases, especially for farmers and people with unstable incomes.
Thirdly, the number of savings accounts increases and the value of savings deposits
increases.
Fourthly, the use of non-cash payment services grows increasingly in terms of
method, quantity and transaction value.
2.3.2. Limitations
First, the number of bank branches in over 1,000 km2 is still low compared to the
national average, the network of bank branches and transaction offices is unevenly
distributed among localities in the whole region.
Secondly, access to bank services is mainly developed in big cities and urban areas
while in rural and remote areas, access to financial services is limited.
Third, credit growth rate of SMEs is usually lower than the average rate of regional
economy.
Fourth, payment services have developed quite rapidly in recent years, but the
service quality is not high and the distribution is not convenient.
Fifth, there is no legal and institutional framework to protect consumers.
Sixth, the educational level of rural people in the region is lower than the national
average.

2.3.3. Causes
2.3.3.1 Causes from the demand side
a / Affected by employment and income
b / Due to the habit of keeping cash and using cash
c / The awareness of the people on finance is incomplete
d / Due to the distance to the bank
e / Due to sparse population density
2.3.3.2 Causes from the supply side
a / Due to the legal environment to promote financial inclusion
b / Lack of financial infrastructure
c / Due to the cost of using banking products and services
d / Because the bank products are really concern about the customers which are poor
e / Due to procedures, ducumented records of using bank products and services
f / Due to limitations on the size of MFIs


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CHAPTER 3: MODELS AND RESULTS OF FINANANCIAL INCLUSION IN THE
NORTHERN DELTA PROVINCES
3.1. RESEARCH METHODS
Doing Survey on 425 customers in 11 provinces in the Northern Delta, based on
convenient sampling method.
Survey sample: survey participants are over 15 years old and mainly people living in rural
areas, low-income people, people with unstable jobs and partly customers of Vietnam Bank for
Agriculture and Rural Development, Social Policy Bank of Vietnam, People Credit Fund in
different localities of the Northern Delta region.
Survey method: Direct survey.
Survey process: Includes test surveys and official surveys. Seven-part-set of questions:
including personal information and information related to the bank's basic product usage
3.2. DESCRIPTION OF COLLECTED DATA

3.2.1. Customer’s age and gender
For gender: Among 400 valid votes: there are 193 males (48%) and 207 females (52%).
For age, the author divides into 6 groups: Group 1: from 15 to 18 years old, 17 people;
Group 2: from 19 to 22 years old, 3 people; Group 3: from 23 to 35 years old, 157 people;
Group 4: from 36 to 45 years old, 129 people; Group 5: from 46 to 60 years old, 78 people;
Group 6: over 60 years old, 16 people.
3.2.2. Customer’s occupation
The author divides into 6 groups: Doing agricultural works: 173 people (43%); civil
servants, office workers, technicians, teachers, engineers: 131 people (33%); workers 26
people (7%); freelancers and self-employeds: 45 people (11%), students: 17 people (4%),
retired group: 9 people (2%).
3.2.3. Customer’s income
It is monthly income, includes 5 levels: Less than VND 3 millions: 16 people (4%); over
VND 3 millions to VND 6 millions: 202 people (51%); over VND 6 millions to VND 9 millions:
156 people (39%); over VND 9 millions to VND 12 millions: 20 people (5%) and over VND 12
millions: 6 people (2%)
3.2.4. Customer’s living place
The author divides into 2 region: urban region with 131 people (33%) and rural
region with 269 people (67%).
3.3. FACTORS AFFECTING FINANCIAL INCLUSION
The first method is to study the demand-side factors, from the customers themselves,
the second way is to study supply-side factors, where financial services are provided.
3.3.1. Factors from the demand side
Being the factors from the clients themselves affecting the access to the bank's services, in
the study of assessing the impact of gender, age, occupation and residence on how customers
access to their bank accounts, using cards, savings deposit, payment and credit services. With 400
questionnaires collected, the study received results that will be presented in the thesis.
3.3.1.1 Factors affecting access to bank accounts
251 people answered that they had bank accounts (62,75%), the rest (149 people 37,25%) did not.
3.3.1.2 Factors affecting the use of cards

There are 171 answers of people who use ATM cards, accounting for 43%; the rest
who do not use ATM cards is 229 people, equivalent to 57%.
Credit card: there are 373 people who do not use credit cards, accounting for 93%
and only 27 people use credit cards, accounting for 7%.


16
3.3.1.3 Factors affecting access to savings deposits
There are 279 customers that deposit savings into banks, accounting for 70%. 30% of
customers do not save through banks but in other forms (121 people).
3.3.1.4 Factors affecting access to payment services through banks
a / Number of people using payment services via bank
There are 53% of adults using bank payment, with the number of 212 customers,
while 47% of people are familiar with direct buying and selling, paying with cash.
b/ Payment methods offered by banks
Table 3.1 sumarizes the results on which payment methods that customers use:
Table 3.1: Payment methods used by customers
TT
1.
2.
3.
4.
5.
6.
7.

Payment methods
Number of users
At bank counters
(by cash or bank transfer)

135
Payment order
3
Via ATM
25
Via Internet banking
17
Via Mobile banking
9
Via POS machine
0
Other payment methods
1
Total
190
Source: Author Survey Results

Percentage (%)
71,1
1,6
13,2
8,9
4,7
0
0,5

c/ Payment services via Mobile banking
282/400 people did not use payment services via Mobile banking, accounting for
70,5%.
3.3.1.5 Factors affecting the access of credit services

a/ Number of customers having loans
178/400 people answered that they had loans, which equivalent to 45% and 222 people
did not, accounting for 56 %.
b/ Customer choice on source of loans
Customers use source of loans as follows:
Table 3.2: Source of loans using by customer
Content
Number Percentage (%)
Official loans
75
42
Unofficial loans
22
12
Both official and unofficial loans
81
46
Total
178
Source: Author Survey Results

3.3.2 Factors caused by financial institutions
3.3.2.1 Factors affecting the customer decision on using bank accounts
Includes distance, cost of use, request on personal document information (people's identity
card, salary, job ...), belief, lack of money, religion and joint use of financial services.
3.3.2.2 Factors affecting the customer decision on saving
Due to low deposit interest rates, complicated sending and withdrawal procedures,
inconvenient to come to banks, the money is being sent to the tontine group, savings club...
3.3.2.3 Factors affecting the customer decision on the use of payment services
Because customers do not have a need and do not know information or understand the

interface, transaction fees, do not use 3G...
3.3.2.4 Factors affecting the customer decision on the use of bank loans
3.3.2.5 Factors affecting the customer decision on the use of informal capital


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3.4. QUANTIFY THE EFFECTS OF FACTORS AFFECTING FINANCIAL
ACCESS IN NORTHERN DELTA PROVINCES
3.4.1 Selection of models
3.4.1.1 Overview of research on models
3.4.1.2 Selection of a research model
Whereas:
* Dependent variables:
FININCLUSION: Financial inclusion, which is represented by specific variables as
follows
- Number of bank accounts: ACCNUMBER
- Having bank accounts: ACCOUNT
- Having ATM cards: ATM
- Having credit cards: CREDITCARD
* Independent variables:
- AGE: Age of the customer (Over 15 years old)
- GENDER: Gender of the customer
- INCOME: Income of the customer
- LIVINGPLACE: Living place of the customer
- OCCU2: Customers who are workers
- OCCU3: Customers who do agricultural jobs
- OCCU4: Customers who are civil servants, office workers, technicians, teachers, engineers
- OCCU5: Customers who are freelancers and self-employed people.
- i is an index for customer
3.4.2 Results and comments

Table 3.3: Factors affecting financial inclusion in the Northern Delta provinces
Model 1
Model 2
Model 3
- Number of accounts
- Having accounts - Having ATM cards
-3.348364***
-3.244059***
-3.604911***
(0.596492)
(0.632369)
(0.715598)
C
0.026766***
0.028995***
-0.007726
(0.007647)
(0.008262)
(0.008964)
AGE
0.525489***
0.597712***
0.296940
(0.156003)
(0.171045)
(0.182479)
GENDER
0.464912**
0.389301
0.842604***

(0.236017)
(0.251409)
(0.214420)
INCOME
0.715026***
0.645046**
0.563209**
(0.264254)
(0.294387)
(0.245401)
LIVINGPLACE
0.851373
0.436213
1.114834*
(0.583914)
(0.616661)
(0.604518)
OCCU2
-0.089228
-0.245277
0.243921
(0.422150)
(0.432866)
(0.486687)
OCCU3
0.864007*
0.619089
1.261973**
(0.489630)
(0.502922)

(0.513551)
OCCU4
0.161276
0.003735
-0.001044
(0.521584)
(0.551023)
(0.565620)
OCCU5
Source: Result drawn from data processed by Eviews


18
Note: ***, **, * equivalent to 1%, 5% và 10% of statistical significance respectively
First, Probit model shows that the age has positive impact on financial inclusion
(using bank accounts, having banks account) at the statistical significance of 1%.
Second, level of financial inclusion differs between male and female. The results
show that female has better ability of access to financial inclusion than male at the statistical
significance of 1%,
Third, table 3.3 shows that income at the statistical significance of 5% and the
number of bank accounts at the statistical significance of 1% have impact on whether
customers have ATM cards.
Forth, according to the survey results, living place of the customer has statistical
significance of 1% to the number of account and 5% to whether customers have bank
accounts and use ATM cards.
Fifth, Customers who are workers has statistical significance of 10% to the access to
bank products. (level of using ATM cards).
Sixth, Customers who do agricultural jobs have difficulties in the access to bank
products.
Seventh, Customers who are civil servants, office workers, technicians, teachers,

engineers has statistical significance of 10% to the number of bank account, and 5% to the
level of using ATM cards
Eighth, Freelancers and self-employed people belong to a group having unstable
work with limited access to finance and banking.


19
CHAPTER 4: SOME RECOMMENDATIONS TO PROMOTE FINANCIAL
INCLUSION ON NORTHERN DELTA
4.1. ORIENTATION TO PROMOTE FINANCIAL INCLUSION IN NORTHERN
DELTA PROVINCES
4.1.1. Orientation and strategy of economic development of the Northern Delta
provinces until 2025.
4.1.1.1 Overall vision
4.1.1.2 Specific tasks
a / Major plan targets
b/ Developing industry sector
c/ Developing agricultural, forestry and aquatic products
d/ Developing commerce and service
Boosting the development of service sector, especially services that having
competitive advantages, high content of knowledge, technology and values added;
developping open-connection-oriented corridors.
e/ Synchronously developing infrastructure
First of all, complete the transportation system of roadway, airway, railway and
waterway.
And second, complete the infrastructure of electricity and telecomunication.
4.1.2. Development orientation of financial inclusion in the Northern Delta provinces

4.1.2.1 General orientation
4.1.2.2. Specific tasks

a/ Diversify products and services and financial service supply channels
b/ Strengthening the ability and diversifying types of financial services.
First of all, diversifying types of financial services
Secondly, encouraging the participation of financial institution using technology on
providing financial services.
c/ Strengthen financial education, improve financial capacity and protect consumers
4.2. SOME RECOMMENDATIONS TO PROMOTE FINANCIAL INCLUSION IN
NORTHERN DELTA PROVINCES
- Recommendation 1: It is necessary to implement a financial education strategy,
especially the utilities of financial services for the people so that more knowledgeable
people arise the need to use financial services in order to improve financial inclusion.
- Recommendation 2: It is necessary to to expand the branches network and enhance
the application of technology in the supply of financial products to increase the accessibility
of finance in the Northern Delta region.
- Recommendation 3: It is recommended to implement a strategy to promote noncash payment in Vietnam


20
CONCLUSION
The thesis has reviewed and systematized:
(i) Fundamental theories on financial inclusion, evaluation index and the roles of
financial inclusion, overview of factors affecting financial inclusion,
(ii) Two lessons for Vietnam to expand financial inclusion drawn from international
experiences
(iii) Assessment of the current situation of financial inclusion in the Northern Delta
provinces according to Global Findex’s criterias.
(iv) Using statistical methods and models to study factors affecting financial inclusion
in the Northern Delta provinces.
(v) The thesis proposed recommendations to the State authorities and Vietnamese
credit institutions to promote financial inclusion in Vietnam in general and the Northern

Delta region in particular.
Some limitations:
First, The Northern Delta consists of 11 provinces but in fact, the author only collected
data concerning financial inclusion of 10 local branches of the State Bank
Second, Assessing the ability of financial inclusion requires a longer period of time. But
in this thesis, the author could not present the results and findings for a longer period of time
and therefore could not have a clear understanding of the results of financial inclusion in the
Northern Delta provinces because of the lack of data. However, the author tried to collect data,
and analyse actual questionnaires to have desired results, which is the overall situation of
financial inclusion in the Northern Delta provinces.
And third, Due to limitations on data collection from provinces, the study did not
mention the accessibility of insurance for people in the Northern Delta provinces.
Therefore, with futher research in the future, the author desires to study more deeply
on (1) the role of State authorities in promoting financial inclusion in the Northern Delta
provinces. ; (2) How financial inclusion means to the economic development and life of the
people in the Northern Delta provinces and (3) the key barriers to the development of
financial inclusion in the Northern Delta provinces nowadays.


LIST OF RELATED RESEARCHES BY AUTHOR OF THE THESIS
(1) (2017), Developing non-financial services – The subtainable way of modern banks,
Proceedings of the Confernce “Promoting financial inclusion in Vietnam”, Labor Publishing
House, Page 571-580.
(2) (2017), Current situation of providing banking services for individuals, Proceedings
of the Confernce “Promoting financial inclusion in the South Central provinces”, Labor
Publishing House, Page 87 - 97.
(3) (2018), Solutions to promote financial inclusion in Vietnam, Economy and Forecast
Review, Number 20 (Jul 2018), Page 23 - 25.
(4) (2019), Access to financial inclusion in the Red River Delta provinces, Banking
Science and Training Review, Number 202 (Mar 2019), Page 18 – 27.

(5) (2019), Financial inclusion from the perspective of a bank payment service in the
Northern Delta provinces, Proceedings of Banking Vietnam Conference 2019.