EVALUATING THE IMPACTS OF SOCIAL CAPITAL TO ACTIVITIES OF COMMERCIAL BANKS IN HO CHI MINH CITY

MINISTRY OF EDUCATION AND TRAINING

THE STATE BANK OF VIETNAM

BANKING UNIVERSITY OF HO CHI MINH CITY

VU CAM NHUNG

EVALUATING THE IMPACTS OF SOCIAL CAPITAL TO ACTIVITIES OF
COMMERCIAL BANKS IN HO CHI MINH CITY

SUMMARY OF DOCTORAL THESIS

Major: Finance - Banking
Code: 9.34.02.01
Academic advisor: Assoc. Prof. Dr. Nguyen Thi Nhung
Dr. Huynh Thanh Dien

HO CHI MINH CITY - 2018


1

CHAPTER 1: INTRODUCTION

1.1 The urgency of the research topic
The activities of business in general and commercial banks in particular are
dominated by all social relationships. In the process of its operation, banks are able to link
well with customers, partners, projects and programs, the mobilization of capital, loans,
investment ... is also more convenient.
Beside the positive side, the relationships also show the negative side. In the last

period, the phenomenon of mutual acquisition between banks, take advantage of
relationships with officials to serve the interests of the individual group, causing market
manipulation and psychological insecurity for market participants (Nguyen Duc Chien
2013). Recent economic cases involving bank leaders have caused thousands of billion loss
to the economy, partly due to social ties, including relationship of bank leaders. At the same
time, there are still phenomena of internal collusion for funds, fake record for savings,
loans... causing loss of reputation for banks and affecting to the banks ‘s development. In
particular, fraudulent lending in developing economies such as Vietnam is quite high,
influence the results of the bank deeply (Leonard Onyiriuba 2016). After the crisis in 20072009, confidence in the financial services industry has been severely diminished (Benamati
et al. 2010). Trust is an important foundation for the bank's sustainable development.
Faith is also the basic core to building and developing a network of relationships
(social capital) (Dasgupta 2002; Koniordos 2005 quoted in Crystal Holmes Zamanian &
Lisa Åström 2014). The study of social capital for the banking sector in the context of low
credibility, such as the banking industry (one of the least reliable with 49% compare with
technology, or electronic production with 70-73% in the world ranking (Edelman Trust
Barometer 2013) is essential and this research is also potential to clarify social capital for
the financial services industry and contribute to the current context, when the faith is
affected after the crisis (Maskell 2000).
Social relationships are both positive and negative. Especially, last time the negative
in the banking sector is a big problem for the society, so the banks themselves and the
government need a theoretical framework to realize the impact of these relationships on the


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bank's operations as well as solutions to promote positive effects and limit negative effects
from these social relationships. This helps commercial banks to effectively use these
relationships in their business operations.
The relationship between social capital in the banking sector, there have been studies
in the world and in Vietnam, such as Xie Wenjing (2013; Crystal Holmes Zamanian and

Lisa Åström (2014); Heru Sulistyo and the authors (2015); Justin Yiqiang & the authors
(2017); Huynh Thanh Đien (2011). Most of the research is qualitative and only deals with
some aspects of the relationship between social capital and banking, and there is no study
evaluating the relationship between social capital and the activities of Bank. That's the space
for the researcher.
Starting from the above mentioned, the author has chosen to study the topic of
"Evaluating the impact of social capital to the activities of commercial banks in Ho Chi
Minh City".
1.2. Research objectives and questions
General goal:
Assess the impact of social capital on business activities of commercial banks in order
to exploit the positive role and limit the negative impact of social capital on business
activities of commercial banks in Ho Chi Minh city
Detail goal:
-

Discover and measure the composition of the bank's social capital and business

activities of Vietnamese commercial banks.
-

Accreditation of the scale and model testing about banks ‘s social capital affect

to the activities of commercial banks in Vietnam, typical case: commercial banks in Ho Chi
Minh City.
-

Suggesting policy to help commercial banks in Ho Chi Minh City improve their

performance through the use of social capital. At the same time, suggest policy to help

policymakers and government support Vietnamese commercial banks develop positive
forms of social linkages and limit the form of negative social linkages.
Research question:


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To achieve the above objectives, the topic should answer the following research
questions:
- How are the social capital of the bank and the activities of the commercial banks
recognized and measured?
- How is the model of research on social capital affecting the operation of commercial
banks built in Vietnam?
- What are the policy implications of improving the performance of commercial banks
through the use of social capital?
1.3. Research subject, scope and research method
Research subject:
The research is to study the impact of social capital on the activities of commercial
banks in Ho Chi Minh City. The surveyed subjects are leaders (directors/deputy directors of
branches) of commercial banks in Ho Chi Minh City.
Scope:
The study is limited to commercial banks operating in Ho Chi Minh City between
June 2015 and December 2016.
Research method:
To achieve the research objectives and answer the research questions posed by the
topic, the thesis using qualitative and quantitative methods will be presented in chapter 3.
1.4 The main contribution of the thesis
The scientific contributions:
- The first contribution of the thesis was to build up a full social capital scale in all
three aspects of the internal, external networks and the bank leadership on the basis of

theoretical and qualitative research, private features of Vietnam banking.
- The research identified the basic groups of commercial banks as capital
mobilization, using capital and providing service activities. The scale of commercial banks'
activities has been tested for credibility in the case of Vietnamese commercial banks,
ensuring the value and reliability of their assets so that they can be inherited for related
research in Vietnam.


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- The research results show the direct and indirect effects of social capital on the
groups operating in commercial banks, thus confirming that social capital is a resource that
banks need to plan for its business strategy is to be able to exploit and use effectively in the
business process of the bank. The results of the model test for the typical case of Ho Chi
Minh City have contributed to the theoretical as well as the scientific basis, contributing to
the foundation of further research about the relationship between social capital and business
activities is not only in the banking industry but also in other economic sectors.
Practical contributions
- The thesis has built and tested the social capital scale on all three aspects include of
the inside, out side and the bank leadership, which helps the bank to identify the framework
for creating, using, development and assessment of social capital in the bank. Banks will
then devise strategies to exploit, develop and use social capital to promote business
activities.
- The dissertation has developed and tested the scale of commercial banks' business
groups, while pointing out the link between all activities through out the theoretical and
practical accreditation activities in Ho Chi Minh City. This will help banks to evaluate more
comprehensive operational groups.
- The thesis also shows the positive and negative effects of social capital in the
banking sector. This will help state management agencies at all levels to recognize the
importance and motivation of this resource to timely formulate policies to promote positive

forms of social cohesion. Limited form of negative social capital in the banking sector of
Vietnam.
- The results of the thesis also support the association of Ho Chi Minh City Bank and
the Vietnam Bankers Association in recognizing the importance of social capital as well as
creating value from the affiliate networks. Members of the association can exploit the
benefits of these networks for the business process.
1.5 The organization of the study
Chapter 1: Introdution
Chapter 2: Theoretical foundation and analytical framework for the relationship
between social capital and commercial banking activities


5

Chapter 3: Research method
Chapter 4: Accreditation modeling research and discussion.
Chapter 5: Conclusions and recommendations.


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CHAPTER 2: THEORETICAL AND ANALYSIS FRAMEWORK THE
RELATIONSHIP BETWEEN SOCIAL CAPITAL AND COMMERCIAL BANKS’
ACTIVITIES

2.1 SUMMARY OF SOCIAL CAPITAL AND SOCIAL CAPITAL IN BANKING
2.1.1 Social capital concept
The concept of social capital was first mentioned in 1916, by Lyda Judson Hanifan,
an American educator. He uses the notion of social capital to refer to friendship, mutual
understanding, and interaction between individuals or families. According to Bourdieu.P

(1986), social capital is the resource that exists in relationships between individuals or
organizations (collectively referred to as the subject), thereby benefiting all stakeholders
Beneficial in mobilizing resources. Similarly, the views of Nahapiet & Ghosal (1998), the
authors argue that social capital is the resource that exists within the social networks of the
organization or individual (collectively referred to as the subject). This social network helps
social stakeholders to mobilize more resources. According to Aslaninan (2011), social
capital is the value created when individuals join together in a group or network, a social
network where resources and information are invested.
In summary, it is possible to understand that social capital is the resource of an
individual or group or organization (collectively referred to as the subject) formed and
developed on the basis of interrelated networks of mutual trust each other (quality relations
networks).
2.1.2 Previous studies related to the topic:
Xie Wenjing (2013), in his thesis exploring the relationship between social capital
and banking risk. The empirical results show that banking risk is lower in countries with
higher social capital, mean in areas with high social capital, banks are far from being at risk
of bankruptcy.
Crystal Holmes Zamanian and Lisa Åström (2014) analyze the social capital
investment of banks. Research also shows that the benefits of building and nurturing social
networks (or social capital) are important to banks. The study also shows that banks need to


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invest more deeply in relationships and provide technology to help banks build relationships
with partners.
In the study by Heru Sulistyo et al (2015), examined the role of social capital in the
loyalty of Islamic banking customers in Central Java. The results show that social capital
has a significant and positive impact on customer loyalty to the bank.
Justin Yiqiang et al (2017), in a study of the relationship between social capital and

bank stability, the authors point out that banks in higher social capital areas are less likely
to fail and face to less financial problems during the 2007-2010 crisis than banks in low
social capital areas.
Most of the research works are qualitative and handle only some aspects of the
relationship between social capital and economic development, as well as the banking
sector.
Huynh Thanh Dien (2011) in the thesis analyzing the contribution of social capital to
Vietnam’ real estate companies in Ho Chi Minh City. The research has built up the scale of
social capital is more complete when mentioned to all three aspects of internal, external and
business leaders network. Research results also show the direct and indirect contributions
of social capital to the operating groups of the real estate business. The results of this study
will suggest that the authors study the impact of social capital on the banking sector.
2.1.3 Social capital in banks
2.1.3.1 The concept of social capital in banks
Social capital in banks is the sum of the resources of an individual, group, or
organization that exists in relationships that link, share, and trust each other in accordance
with accepted social norms.
2.1.3.2 The meaning of social capital in banks
- Social capital reduces the cost of information, transaction costs and monitoring
costs
- Social capital contributes to reducing financial costs, credit costs
- Social capital helps reduce loan losses
- Social capital increases the supply of credit
- Social capital encourages customers to use the bank’ products and services.


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2.1.3.2 Character of social capital in the operation of commercial banks
-Ttwo-sided (positive and negative)

- Profitability
- Replacement / addition of other capital types
- Cohesiveness
- Bridging
- Accumulated over time
2.1.4 The basic component of social capital in the bank
2.1.4.1 Social capital of bank leaders
Social capital of the bank leaders is mentioned as the network and the quality of
relationships of bank leaders.
The author Tushman & O'Reilly III (1997), pointed out that a network of leaders
including relatives, friends, business partners, colleagues, press agencies, and officials
members of the state management agencies, research institutions, clubs.
2.1.4.2 External social capital of the bank
External social capital of the bank is referred to as the network and the quality of
external relationships of the bank.
Kaasa's (2007) study, pointed out that external social capital includes relationships
with friends, colleagues, relatives and neighbors.
Landry et al. (2000); Jansen et al. (2011) and Yang et al. (2011), in their studies, have
identified components of a horizontal corporate external network of customers, investors,
corporations, consulting firms, clubs, competitors in the same industry; and vertically
composed of parent companies - children in the same corporation and government at all
levels. Joanna Wyrwa (2014) mentions social capital outside the enterprise as the quality of
external corporate networks associated with its activities (involving stakeholders such as
customers, suppliers , Business Partners); environment (institutions, competitors,
government officials, media); and the market (current customers, prospects, clubs)
2.1.4.3 Internal social capital of the bank
Internal social capital of the bank is referred to as the network and the quality of
relationships inside the bank.

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Authors Cheng & colleagues (2006), Goyal & Akhilesh (2007), Nisbet (2007), and
Schenkel & Garrison (2009) in their studies have shown that the horizontal is the quality of
relationships between employees and functional departments; and vertically is the quality
of the relationship between the upper level individual and the lower level individual,
between the superior functional department and the lower level functional unit.
2.2 BASIC ACTIVITIES OF COMMERCIAL BANKS
Activities of commercial banks include: (1) capital activities: equity, mobilized
capital, loans, other capital; (2) using capital activities: fixed asset acquisition, reserving,
credit granting, investment; (3) providing service activities: treasury services, payment
services, collection and payment, safes, financial consultancy, investment advisory,
securities brokerage, insurance, foreign currency trading.
General understanding of the basic operation of commercial banks is through the
implementation of professional operations capital resources, operations using the capital and
professional services to maximize profits.
2.3 ANALYTICAL FRAMEWORK OF RESEARCH
From the theoretical relationship, in chapter 2, the thesis explored the framework for
analyzing the relationship between social capital and commercial banking activities.


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Figure 2.1: Framework for analyzing the relationship between social capital and
commercial bank activities
Commercial banks’ activities

Bank’ social capital

Capital

activities

Social capital of
the bank leader

External
social capital
of the bank

Bank’ social
capital

Internal
social capital
of the bank

Commercial
bank’
activities

Providing
services
activities

: support relations
: expression / mention
Source: the author's thesis proposal

Using capital
activities

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CHAPTER 3: RESEARCH METHODS

3.1 Research methods
The dissertation uses the following research methods:
Qualitative research method: using in-depth interview and group discussion with
experts to develop the research scale and hypothesis.
Quantitative research method: primary data survey questionnaire (through
questionnaire survey). Data collected, after testing, will be processed by SPSS software. The
subject will test the hypothesis of the study using the SEM model with the help of SPSS and
Amos software.
3.2 Method of building and accreditating the scale
3.2.1 Method of building the scale
The method of building the scale is summarized in Table 3.1
Table 3.1: Method of building the scale
Goal

Way

Formulating
the

scale

social capital

- Information gathered from the double discussion -> shaping the

of network structure of leaders, outside and inside the bank.
- Combined with the concepts in structure and characterization of
relationships quality -> form the social capital scale of the leader,
outside and inside the bank.

Formulating
the

scale

activities

- From the classification of operations in commercial banking
of activities, such as mobilizing capital, using capital and providing
of services.

commercial

- Combined with the recognition of expectations of bank leaders

banks

in these activities -> form the scale of activities of commercial
banks.
Source: synthesis of the thesis author

3.2.2 Method of measuring preliminary measurement


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The evaluation was based on the data of 120 directors, deputy directors of commercial
banks in Ho Chi Minh City. Reliable coefficients (Cronbach's alpha) and Exploratory Factor
Analysis (EFA) are two tools used in preliminary quantitative research.
3.2.3 Scale test method for case study
Cronbach's alpha, Exploratory Factor Analysis (EFA), and Confirmatory Factor
Analysis (CFA) will be used to test the scale. Use CFA to get a final conclusion on the value
of the scale (Hurley et al., 1998, cited in Nguyen Dinh Tho & Nguyen Thi Mai Trang 2008).
3.3 Hypothesis and research model
3.3.1 Hypothesis and research model development
The model of research with the hypotheses of social capital impact on the operation
of commercial banks is based on theoretical and qualitative research for the second time.
In this thesis, 5 hypotheses are given as follows:
H1: Increasing social capital of the bank has a positive impact on the results of capital
activities.
H2: Increasing social capital of the bank has a positive impact on the results of using
capital activities.
H3: Increasing social capital of the bank has a positive impact on the results of
providing services activities.
H4: Increasing in operating results of capital activities having the same effect with
the increasing in the results of using capital activities.
H5: Increasing in operating results of using capital activities having the same effect
with the increasing in the results of providing services activities.
3.3.2 Hypothesis testing and case study model
Verification of the hypotheses is done by two methods: (1) the non-parametric
quantitative method used to test relationships with observable variables by means of
quantitative indicators, mainly tools used are descriptive statistics and correlational analysis;
(2) qualitative methods with descriptive, categorical, and connected procedures for
exploring relationships (Corbin & Strauss 1990; Finch 2002).
To confirm the fit of the theoretical model, SEM is used for accreditation. The model

was considered appropriate for the data when the CFI index was 0.9 to 1 (Hu & Bentler


13

1999), CMIN / df ≤ 2 (some cases CMINs / df could be ≤ 3 (Carmines & McIver 1981 Kline
2010) and RMSEA ≤ 0.08 (Hu & Bentler 1999), (RMSEA case 0.08 -> 0.1: moderate fit
model (MacCallum, Browne & Sugawana 1996).
3.4 DESINGING OF RESEARCH SAMPLES
3.4.1 Sample design for construction and preliminary measurement
Targeted sampling methods were used in this period (Creswell 2009). Sample size is
not limited until no new problems are detected (Finch 2002, Creswell 2009 & 2011).
Non-probability stratified sampling methods (directors, deputy directors of
commercial banks in Ho Chi Minh City) were conducted with a sample size of 120
observations.
3.4.2 Sample design methodology for scale testing and theoretical modeling for case
studies.
The research model was tested on the selected sample using the non-probability
stratification method (according to the commercial bank branch). The surveyed subjects
were the directors and deputy directors of commercial banks in Ho Chi Minh City.
This sampling is for testing the model for a typical case, not for the purpose of
accreditation for the entire banking industry of Vietnam.
The Structural Equation Modeling (SEM) will be used to test the theoretical model.


14

CHƯƠNG 4: TESTING THE RESEARCH MODEL AND DISCUSSION

4.1 DESCRIPTION OF RESEARCH SAMPLES

303 questionnaires were distributed and 271 ballots were collected. After withdrawal,
28 invalid ballots should be rejected. In the rejected ballots there were 12 ballots with empty
more than 10% and 16 ballots with inappropriate answers (not members of the board of
directors). The subject will use 243 samples to process.
4.2 ACCREDITATION SCALE WITH CRONBACH'S ALPHA, EXPLORATORY
FACTOR ANALYSIS (EFA)
The results show that the observed variables are consistent with the study's concepts
with confidence coefficients greater than 0.6 and the total correlation coefficient is less than
0.35. The EFA results show that the social capital scales separate into eleven factors, none
of which is eliminated with all factor weightings greater than 0.5, the covariance deviation
is greater than 50%, the KMO coefficient is greater than 0.5 and the significance level of
the Bartlett test is less than 0.05. Observational variables will continue to be tested by means
of Confirmatory Factor Analysis (CFA).
4.3 ACCREDITATION SCALE WITH CONFIRMATORY FACTOR ANALYSIS
(CFA)
4.3.1 Accreditation scale the third dimension of the concept of social capital
4.3.1.1 Accreditation scale of the leader’ social capital
The CFA results show that the model achieves market relevancy, with 2(42)= 109,521
(P = 0.000); TLI = 0.918; CFI = 0.948 and RMSEA = 0.080; CMIN / dF = 2.608. The results
also show that the CFA weights of all observed variables are greater than 0.5 (the smallest
is 0.510), which confirms the uniqueness and convergent value of the observed variables of
the components of leaders’ social capital. Next, the correlation coefficient of the
components of leader’ social capital is less than 1 unit with a significance level of 1%.
Therefore, these components achieve distinct values in the same concept.


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Figure 4.1: CFA (standardized) scale of bank leaders’ social capital
L2

L3

L1
0,96

0,86

L4
0,65

0,335

0,88

L5
067

Friends
network

0,431

Colleagues
network

0,90

L6

0,275

0,388
0,347

Network of
officials

0,87

L12

0,542

Partners
network

0,51

L7

0,77

0,78

0,95

0,83

L8
L11

L10

L9

Source: Calculations from survey data of the thesis author
4.3.1.2 Accreditation scale of bank’ external social capital
The CFA results show that the model achieves market data compatibility, with 2(80)
= 165,768 (P = 0.000); TLI = 0.938; CFI = 0.952 and RMSEA = 0.067; CMIN / dF = 2.072.
The results also show that the CFA weights of all observed variables are greater than 0.5
(the smallest is 0.573), which confirms the uniqueness and convergence value of the
observed variables of external social capital. Next, the correlation coefficient of the
components of the external social capital is less than 1 unit with a significance level of 1%.
Therefore, these components achieve distinct values in the same concept.


16

Figure 4.2: CFA (standardized) scale of bank’ external social capital
BN14
BN16
BN15

BN13

BN17

0,84
0,82

0,57
0,538

Customer
network

0,273

0,72

0,81

Partner
network

0,85
BN18

0,334

BN30

0,371
0,308

0,84
BN29

communication
network

0,88

0,385
0,452

0,617
BN28

0,456

0,73
0,487

Association
network

0,366

government
network

0,69
BN22

0,85
0,91

0,87

0,72
BN25

BN27

0,67
BN24

BN26

BN23

Source: Calculations from survey data of the thesis author
4.3.1.3 Accreditation scale of bank’ internal social capital
The CFA results show that the model achieves market data compatibility, with 2(33)
= 72.3 (P = 0.000); CFI = 0.965 and RMSEA = 0.070; CMIN / DF = 2.190. The results also
show that the CFA weights of all observed variables are greater than 0.5 (smallest is 0.60),
which confirms the uniqueness and convergence value of the components in the scale of
internal social capital. Next, the correlation coefficient between the two components of the
internal social capital concept is less than one unit with a significance level of 1%.
Therefore, these components achieve distinct values in the same concept.


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Figure 4.3: CFA (standardized) scale of bank’ internal social capital
BT37

BT31

BT38

0,76
BT32

0,73
0,70

0,76

Cooperation
between individuals

BT33
0,73

0,60
BT35

Cooperation
between functional
departments

0,66

0,79
BT34

0,608

BT39
0,80

0,69
BT36

0,70

BT40

BT41

Source: Calculations from survey data of the thesis author
4.3.2 Accreditation scale the second dimension of the concept of social capital
The second dimension scale of social capital includes social capital of the leader,
internal social capital and external social capital. These three components measure the
concept of social capital. The resulting CFA model after correction correlated with market
data, with: 2(37) = 106,613 (P = 0.000); CFI = 0.921, RMSEA = 0.080 and CMIN / df =
2.881. The results also show that the CFA weights of all observed variables are greater than
0.5 (smallest 0.545), which confirms the uniqueness and convergence value of the factors
in the second dimension scale of the social capital. Next, the correlation coefficient between
the quadratic scales is less than one unit with a significance level of 1%. Thus, these
components gain distinction in the same concept of social capital of the bank.


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Figure 4.4: CFA (standardized) scale of bank’ social capital
Colleagues
Partners

Friends

0,675
0
0,545

Officials
0,717

0,672
Leaders’ social
capital

0,747

0,725

0,694

Internal social
capital

0,832
Cooperation
between
functional
departments

Cooperation

between
individuals

0,54
72

External social
capital

0,793

Customer
0,620

0,644

Communication

0,770
Association

0,687
Bussiness partner
Government

Source: Calculations from survey data of the thesis author
4.3.3 General Confirmation Factor Analysis for social capital scales, activities of
commercial banks
The CFA results show that the model after correction correlated with market data,
with: 2(146) = 292.73 (P = 0.000); CFI = 0.912, RMSEA = 0.079 and CMIN / df = 2.005.

(see item 2, appendix 10.). The results also show that the CFA weights of all observed
variables are greater than 0.5 (smallest 0.56), confirming the uniqueness and convergent
value of the component scales of the social capital, activities of the bank. Next, the
correlation coefficients between scales are less than one unit with a significance level of 1%.
Thus, the scale of social capital, the activities of banks are distinguished values.


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Figure 4.5: CFA (standardized) between concepts in the research model

0,63

CU47: Providing services
to economic organizations

CU46: Providing
services to individual
customers

CV45: Loans to
economic organizations

CV44: Loans to
Individual

HD43: Mobilize capital from
deposits of economic
organizations

HD42: Mobilize capital
from individual deposits

0,66

0,77
6
0,60

0,68

Source: Calculations from survey data of the thesis author

Communicaion

Associations
Government

Bussiness partner
Custoers

Cooperation between
individuals

Cooperation between
functional departments

Officials

Partners

Friends

Colleagues

0,6
6
0,56

0,69
0,61

0,69
0,57
0,82
0,7
0
0,73
0,65

External social
capital
Internal social
capital
Leaders’ social
capital

0,79
0,8
1

0,83

Providing
services
activities

0,75
Using
capital
activities

0,86
Capital
activities

0,70
0,73
0,65
0,70
0,71

0,73

Bank’ social
capital


20

4.4 ACCREDITATION RESEARCH MODELS

4.4.1 Estimation of research model
SEM estimation results with: 2(146) = 291.27 (P = 0.000); CFI = 0.925, RMSEA =
0.079 and CMIN / df = 1.995. According to Hu & Bentler (1999), the model is considered
to be suitable for data when CFI are from 0.9 to 1; RMSEA ≤ 0.08; CMIN / df ≤ 2 (Carmines
& McIver 1981; Kline 2010). Based on the authors' table, the theoretical model after
adjustment correlated with market data. The model results are summarized in Figure 4.6
With a coefficient of 0.612, components of the concept of the bank's social capital
explain for 61.2% of the variation in capital activity.
With a coefficient of 0.784, components of the concept of the bank's social capital
explain for 61.2% of the variation in using capital activity.
With a coefficient of 0.709, components of the concept of the bank's social capital
explain for 61.2% of the variation in providing services activity.


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Figure 4.6: SEM results of the research model (standardized)

Using capital
activities
(0,784)

0,518***(H4+)

0,73

0,68

0,65

CU47: Providing services
to economic organizations

Capiatl
activities
(0,612)

CU46: Providing
services to individual

0,70

CV45: Loans to
economic organizations

CV44: loans to
individuals

HD43: Mobilize capital from
deposits of economic
organizations

HD42: Mobilize capital
from individual deposits
0,71

0,70

0,450***(H5+)

Providing
services
activities
(0,709)

0,587***(H2+)
0,396***(H3+)

0,608***(H1+)

Bank’ social
capital
0,83
Leaders’ social
capital

Internal social
capital

0,65

0,7
0

0,73
0,56

External social
capital

0,57

0,82

0,69

0,63

Comunication

Source: Calculations from survey data of the thesis author

0,77
6
0,60

Association

Government

Business

Customer

Cooperation between
individuals

Cooperation between
functional departments

ban

Officials

Partners

Colleagues

Friends

0,6
6

0,79

0,8
1


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4.4.2 Accreditation hypotheses
The standardized results of the major parameters in the calibration model are shown
in Table 4.1 and the standardized estimation results shown in Figure 4.6 show that the
hypothesis is accepted 1% significance level.
Table 4.1: Regression (standardized) coefficients of relationships
Hypothesis

H1

Relationship between concepts

Regression
coefficient

Increasing social capital of the bank has a positive

0,608

impact on the results of capital activities.
H2

Increasing social capital of the bank has a positive

0,587

impact on the results of using capital activities.
H3

Increasing social capital of the bank has a positive

0,396

impact on the results of providing services activities.
H4

Increasing in operating results of capital activities

0,518

having the same effect with the increasing in the
results of using capital activities.
H5

Increasing in operating results of using capital

0,450

activities having the same effect with the increasing
in the results of providing services activities.
Source: Estimates from the author's survey data
4.5

DISCUSSION RESULTS OF MODEL RESEARCH
The results from the SEM model of the direct and indirect impact of the bank's social

capital to the activities of commercial banks are presented in Table 4.2.


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Table 4.2: Impact of social capital on commercial banking activities
Dependent

Impact

variable

Bank’ social Capital

Using

capital

capital

activities

activities
Capital activities Direct

Using
activities

Providing

0,608

Indirect

-

Total

0,608

capital Direct

0,587

0,518

Indirect

0,315

-

Total

0,902

0,518

Direct

0,396

-

0,450

0,406

0,233

-

0,802

0,233

0,450

services activities Indirect
Total

Source: Calculated from the author's estimation results
The results of the SEM model (standardized) show that the bank's social capital
directly affects the bank’ capital activities expressed by accepting the hypothesis H1 with
the standardized regression coefficient of 0.608 acceptable at meaning 1%. The SEM results
also show that social capital directly affects to the bank’ using capital activities expressed
by accepting the hypothesis H2 with a standardized regression coefficient of 0.587 is
acceptable at the 1% significance level. In addition to the direct impact, the bank's social
capital also indirectly impacts on the using capital through capital activities with a
standardized regression coefficient of 0.315. Thus, the total impact of bank’ social capital
on the bank to capital use with a standardized regression coefficient is 0.902 (= 0.587 +
0.315).
For service providing, the SEM results also indicate that social capital directly affects
to bank’ providing services activities expressed by accepting the H3 hypothesis with
standardized regression coefficient of 0.396 accepted at 1% significance level. In addition
to, the direct impact of the bank's social capital on bank’ providing services, indirect impacts
through the using capital and providing services with standardized regression coefficients is


24

0.406. Thus, the total direct and indirect impact of the bank's social capital on providing
service activities with a standard regression coefficient is 0.802 (0.396 + 0.406).
There are close and support links between the commercial bank activities. By

accepting the hypothesis H4 with a standardized regression coefficient of 0.518, the results
of the thesis have shown that capital activities has a direct impact on the using capital
activities. This result is consistent with Kashyap et al. (2002); Berger & Bouwman (2009);
Ngo & Tripe (2017); Tram, Nguyen et al (2018); Sarah, Delpachitra & Pham, Dai Van
(2015). In addition, the using capital directly affects providing service by accepting the H5
hypothesis with a standardized regression coefficient of 0.450. (This means that the bank,
loans to borrower has an impact on the bank's providing services.) Thus, capital activities
directly affect the using capital, the using capital directly affects the providing services, that
is, capital activities indirectly affect the providing services through using capital activities
with standardized regression coefficient is 0.233 (0.518 x 0.450 = 0.233). In short, the bank's
social capital has both direct and indirect effects on the bank's activities, through the mutual
interaction between bank activities.
4.6 THE POSITIVE AND NEGATIVE EFFECTS OF SOCIAL CAPITAL TO
COMMERCIAL BANKS
4.6.1 The positive effect
- The positive support of social capital to bank’ mobilize capital (create capital for
banks). This result also fit with the Zang & Fung results (2006).
- For the activities of the bank, social capital has a positive support through promoting
cooperation and cut the transaction cost. This result is fit with results of Fernandez's
Research (2011); Ross (2011) quoted in M. Pastor & E. T. Ausina (2008); Martha & Howard
(2011).
- Social capital helps the bank to receive information and transfer knowledge (inside
and outside the bank) to facilitate the bank's activities smoothly and timely update the
knowledge to serve banking activities. This result is consistent with the empirical results of
Scupola et al. (2009), Adler & Kwon (2002); Leana & Pil (2006); James S.Boles (2011).
- Social capital contributes to reducing bank’ costs of checking credit and collecting
information on clients, thus reducing transaction costs (Chuang & Lin 2008; Witt 2004).