(Luận văn thạc sĩ) factors affecting customers choice of banks to deposit

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
--------------------

PHẠM THỊ MINH HẰNG

FACTORS AFFECTING CUSTOMERS’ CHOICE
OF BANKS TO DEPOSIT

ID 22120010

MASTER OF BUSINESS (Honours)
SUPERVISOR: DINH THAI HOANG, Ph.D.

Ho Chi Minh City – Year 2014

1


ACKNOWLEDGEMENT
I would not have been able to complete my thesis without the advice, assistance,
understanding and encouragement of my supervisors, my family and my friends. I would
like to gratefully and sincerely acknowledge their assistance and support.
First of all, the most important person I would like to thank is my supervisor, Dr. Dinh
Thai Hoang. Thanks to his valuable advice and generous guidance throughout the process
of completing this thesis.
Secondly, I would like to express my gratefulness to Dr. Nguyen Dinh Tho and Dr.
Nguyen Thi Mai Trang for their kindness in supporting me to deal with issues in
Research Design problem.
Also, I would like to send my kindest gratefulness to my family, my mom, my dad and
my sister in supporting me, encouraging me throughout the hard time of completing my

thesis.
Furthermore, I would like to thank all of the staff at International School of Business –
University of Economics Ho Chi Minh City who are always enthusiastic and give me a
lot of administrative support, assistance and understanding.
Finally, I would like to give my gratefulness to all my classmates who have been sharing
with me all their knowledge and experience as well as joys and hardship during MBA
course. I would not complete my thesis without their support.
In brief, it has been a long journey and I have grown in so many ways. I would like to say
“thank you” again for the involvement of everyone who has helped me to complete this
thesis.


ABSTRACT
The priority task of not only bankers but also the economists in Vietnam is to attract more
surplus capital into the bank channel to provide for the whole economy. Accomplishing
this task can help pushing enterprises into investing more, and expending business more,
which attributes into boosting the whole national economy, especially in the context
when interest rate of deposit is less attractive. Based on the literature reviewed in the
bank selection criteria, this study empirically investigates the main factors influencing
customers’ choice of banks to deposit in Vietnam.
A quantitative method via questionnaire survey was used to obtain the views of
approximately 250 customers who are having or used to have deposit in banks in Ho Chi
Minh City regarding their decision whether to choose this bank to deposit or not. Logistic
Regression analysis was used to test the proposed hypothese to investigate the
relationship between customer’s choice and the influencing factors derived.
According to the findings of this research, Comfortable and Financial benefits make a
positive impact on Customers’ choice of banks to deposit. The results of this research are
important for bankers in managerial implications to enhance and improve their
competitiveness, in other words, to allure and retain more deposit, which will ultimately
result in more profitability to Banks and boosting more capital to the Economy.

Keywords: Deposit, Customers’ choice, Bank selection criteria.

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Table of Content
CHAPTER 1. INTRODUCTION ............................................................................... 1
1.1

Research Background ......................................................................................... 1

1.2.

Research Problem and Research Objective ......................................................... 2

1.2.1. Research problem ............................................................................................... 2
1.2.2. Research objective .............................................................................................. 3
1.3.

Scope of Research ............................................................................................... 3

1.4.

Significance of Research ..................................................................................... 3

1.5.

Research Structure .............................................................................................. 3

CHAPTER 2. LITERATURE REVIEW .................................................................... 5

2.1.

Review on Customer choice of banks ................................................................. 5

2.2

Hypothesis development ..................................................................................... 7

2.2.1. Security............................................................................................................... 7
2.2.2. Financial benefits ................................................................................................ 7
2.2.3. Service quality .................................................................................................... 8
2.2.4. Convenience ....................................................................................................... 9
2.2.5. Bank image ....................................................................................................... 10
2.2.6. Demography ..................................................................................................... 11
2.3.

Research Model ................................................................................................ 12

CHAPTER 3. RESEARCH METHODOLOGY ...................................................... 13
3.1

Data Sources ..................................................................................................... 13

3.2

Research process .............................................................................................. 13

3.3.

Sample Size ...................................................................................................... 16

3.4.

Measurement Scale ........................................................................................... 17

3.5.

Data Analysis Method ....................................................................................... 19

3.5.1. Reliability measure ........................................................................................... 20
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3.5.2. Validity measure by EFA (Exploratory Factor Analysis) .................................. 20
3.5.3. Logistic regression analysis .............................................................................. 21
CHAPTER 4. DATA ANALYSIS AND RESULTS ................................................. 23
4.1.

Descriptive stastistics survey results ................................................................. 23

4.1.2 Preparation data ................................................................................................ 23
4.1.3 Characteristics of the sample population ........................................................... 26
4.2.

Reliability of measurement instruments ............................................................ 27

4.3.

Validity of measurement instruments ................................................................ 30

4.3.1. Suitability of data .............................................................................................. 32
4.3.2. Factor extraction ............................................................................................... 32
4.3.3. Factor rotation................................................................................................... 33
4.4

Logistic Regression analysis ............................................................................. 39

4.4.1 Introduction ...................................................................................................... 39
4.4.2 Computing variables ......................................................................................... 40
4.4.3 Assumption for Logistic Regression ................................................................. 40
4.4.4 Testing hypotheses ............................................................................................ 40
4.4.5 Controlling variables ......................................................................................... 44
4.5

Conclusion ........................................................................................................ 45

CHAPTER 5. CONCLUSIONS AND IMPLICATIONS ........................................ 47
5.1.

Research Overview ........................................................................................... 47

5.2.

Research Findings ............................................................................................. 47

5.3.

Managerial Implications ................................................................................... 49

5.4.

Research Limitations and Directions for Future Research ................................. 49

APPENDIX 1. OPEN QUESTIONS FOR DRAFT SURVEY ................................. 59
APPENDIX 2. QUESTIONNAIRE .......................................................................... 60
APPENDIX 3. EFA RESULT OF VARIABLES…………………………………….65
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List of Figures
Figure 2.1. Conceptual framework………………………………………………….......12
Figure 3.1. Research process………………………………………………….……...…15
Figure 4.1. Re-constructed Conceptual framework……………………………………..39

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List of Tables
Table 3.1. Main factors affecting customers’ choice of banks to deposit………………17
Table 4.1. Coded factors………………………………………………………………...24
Table 4.2. Sample summary……………………………………………….………...….26
Table 4.3. Cronbach’s Alpha test results………………………………………….…….28
Table 4.4. KMO and Bartlett’s test……………………………………..…………….…32
Table 4.5. EFA Rotated Factor Matrix………………………………………………….33
Table 4.6. Re-run EFA KMO and Bartlett’s Test……………………………….………35
Table 4.7. Re-run EFA Rotated Factor Matrix…………………………..……...………35
Table 4.8. Re-run Cronbach’s Alpha test result…………………...……………………37
Table 4.9. Classification………………………………………………………..…….....41
Table 4.10. Variables not in the Equation……………………………………….……...41
Table 4.11. Omnibus Test of Model Coefficients………………………………..…….41

Table 4.12. Model Summary…………………………………………………………...42
Table 4.13. Variables in the Equation…………………………………………….……43
Table 4.14. Control Variables in the Equation……………………………………..…..44

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CHAPTER 1. INTRODUCTION
1.1

Research Background

In the modern time, the important role of bank deposits in economy is undeniable since
without bank deposits businesses would not be able to access funds from individual
(Ritter, Silber & Udell; 2008). Banks are a channel to collect savings from surplus sectors
in the form of deposits and bump this money into the economy in the form of loans. If the
people do not interact and deal with banks, a great portion of the economic capital would
remain idle (Rosly, 2005). In the present context of Vietnam, while gold, stock market, or
real estate investments are not likely suited for amateur investors (Vietnam News, 2014),
bank deposit is still popular and favourable, regardless of the considerably low interest
rates by the end of February, which was supposed to discourage deposits (The State Bank
of Viet Nam, 2014). On February 2014, according to the municipal Statistic Office
(2014), in Ho Chi Minh City, total capital mobilization reached VND1.16 trillion
(US$55.18 million), constituting a 15.1 per cent year-on-year increase. Of that,
commercial banks accounted for 56.8 per cent of the total city's deposits, up 18.4 per cent
year on year (Ho Chi Minh City Statistic Office, 2014). Consequently, raising capital via
deposits in commercial banks plays an important role not only in spurring economic
growth and salvaging dying businesses in the present regression time of the economy but
also creating profit for commercial banks themselves and depositors by interest rates
(Ritter, Silber & Udell; 2008). In line with that, alluring customers to deposit is the

requisite to any commercial banks, which needs to research for both theoretical and
managerial purposes.
The study of bank selection criteria has received attention from many bank marketing
researchers since few decades ago (Abduh, 2012). However, most of the studies
researched on bank selection criteria for a whole financial service aspect including
deposits, credits, online banking… Plenty of these studies applied T-test, Probit or
Multiple Linear Regression model to explore the factors affecting the customers’ choice
of banks to deposit. Moreover, in Vietnam, a few recent studies on customers’ decision to
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deposit in banks have only limited in one specific branch of bank. In 2012, Hue
conducted a research on factors affecting retail customers’ intention of depositing in
BIDV Hue Branch. In 2013, Ha, in her study in Vietnam obtained information about the
factors determining the decision of retail customers in depositing in An Binh Bank Hue
Branch. This study tries to explore more specifically the factors affecting bank selection
criteria to deposit in banks in a region of Vietnam applying Logistic Regression.
From the above reasons, the study sees the essentiality in doing the research on “Factors
affecting customers’ choice of banks to deposit”. This study has attempted to
discover the important factors that influence retail consumers’ behavioral decision to
choose banks to deposit by investigating customers depositing in banks in a region of
Vietnam.
1.2.

Research Problem and Research Objective

1.2.1. Research problem
According to State Bank of Vietnam (2014), recently, there is a quite severe credit
shortage since credit growth has been fallen from 51.4% in 2007 to 10% in the Fall of
2014. Contrast to developed economies where capital source comes from both equity and

fixed income markets, enterprises in Vietnam and other developing countries rely
substantially on bank credit for financial needs (VinaCapital, 2014). While domestic
enterprises have been hobbled by a lack of access to low cost credit or any credit at all,
the priority task of not only bankers but also the economists in Vietnam is to attract more
surplus capital into the bank channel to provide for the whole economy. Accomplishing
this task can help pushing enterprises into investing more, and expending business more,
which attributes into boosting the whole national economy. Besides, the fact that the
Government control ceiling interest deposits by cutting the dong deposit rate to 5.5%
from 6% from October 29, 2014 makes deposits less attractive (State Bank of Vietnam,
2014). As to the bankers, the main problem raised is how to identify and measure the
main factors influencing depositing customers’ choice of banks to have right strategies in
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their business especially in the current context. By solving that problem, banks could
allure more deposits, providing more opportunities for enterprises to approach capital,
helping the economy in struggling for regression.
1.2.2. Research objective
The objective of the present study is to identify and measure the main factors influencing
customers’ choice of banks to deposit. Consequently, the research questions of the thesis
are raised as two following questions:
- What are factors affecting customers’ choice of banks to deposit?
- How these factors affect customers’ choice of banks to deposit?
1.3.

Scope of Research

For limited conditions, the research is conducted in Ho Chi Minh City with the
respondents who have deposits in banks with various careers. The timeframe of research
intentionally lasts from the middle of June to the end of August in 2014.

1.4.

Significance of Research

Depositing is the main channel to raise capital for the economy in Vietnam. Besides, our
economy is in the phase of regression due to the lacking of capital. Findings of main
factors influencing customers’ choice of banks to deposit in order to improve capital
raising activities have the practical and essential value in the contemporary context.
1.5.

Research Structure

The research is divided into five chapters. The first chapter introduces about background,
research problems, research objectives, research questions, scope of research and
research structures. The second chapter covers literature review of the previous research
and shows hypotheses, as well as the conceptual framework of the research. The third
chapter presents the research process, sampling size, measurement scale, main survey,
and data analysis method. The fourth chapter concentrates on preparation data,
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descriptive data, assessment measurement scale and hypotheses testing. Finally, the fifth
chapter points out research overview, research findings, managerial implications,
research limitations and directions for future research.

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CHAPTER 2. LITERATURE REVIEW
Overview

This chapter discusses about the theoretical framework related to the customers’
behaviour. Then, the chapter presents a review of the literature in the bank selection
criteria which concentrates on factors influencing customers’ choice of banks to deposit
from developed financial markets to developing ones, including Vietnam. From the
literature reviewed, five hypotheses (H1, H2, H3, H4) are proposed with five factors
derived including security, financial benefits, service quality, convenience and bank
image. The controlling variables such as gender, income and experience of depositing are
also tested their effect on customers’ choice of bank to deposit.
2.1.

Review on Customer choice of banks

Financial industries, especially banks, are becoming more and more competitive day by
day since the gaps between financial institutes are narrower. Besides the traditional
competitive advantages such as interest rate, product attributes, etc., banks are also
competing in service differentiation, easiness of service availability, technology used in
service delivery, bank facilities (Goiteom, 2011). Thus, to attract customers, banks are
facing challenges more than ever. Consequently, it is crucial for bankers to know what
selection criteria customers are adopting in choosing banks to deposit.
The study of bank selection criteria and bank patronize behavior has been done in a large
number of studies. In some developed countries, Kennington et al., (1996), Almossawi
(2001) and Şafakli(2007), for instance, found that the bank’s reputation was the main
factor in determining customers’ decision in using banks’ services, while in some other
developing countries, Owusu-Frimpong(1999), Ta and Har (2000), Kaynak and Harcar
(2005) and Safakli (2007) found that profitability factors and service quality, such as low
service charges and high interest rates, were the major reasons why customers chose a
particular bank.
The other factors which are also reported to be significant affecting customers’ decision
are convenience, competence, recommendation by peers, and free banking charges
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(Hinson et al., 2009; Blankson et al., 2007; Laroche et al., 1993; Ardic & Yuzereroglu,
2009; Yavas & Kaynak, 1993; Babakus et al., 2004). Saunders et al., (2007), for an
extension, investigated the banking behavior of poor people in South Africa and reported
that a bank which could offer more beneficial products for the people would have bigger
opportunity to be chosen.
A study was conducted by Abduh et al. (2012) on the Indonesian customer's attitude in
bank selection criteria and bank patronizing behavior. They targeted the customers of
Islamic banks. The findings of his study were that most customers prefer state-owned
banks and that interest rate was their first consideration in patronizing a particular bank.
The customers also put reason of safety of fund during the financial crisis as priority to
patronize Islamic banks in Indonesia. In addition, bank’s marketing and advertisement
also highly influences individuals to patronize Islamic banks.
A recent study conducted by Khaled et al. (2013) investigated the factors influencing
Yemeni's consumers who possibly differ from consumers in the developed
countries in terms of their psychological, cultural and behavior to use the banking
system involving depositing. They found that service quality, banking Legal framework,
and bank advertisement had significantly positive effects on behavioral intention to
use banking services in Yemen except cultural belief where it was significant but
played a negative role

in using the banking services in Yemen.

In Vietnam, Hue (2012) conducted a research on factors affecting retail customers’
intention of depositing in BIDV Hue Branch. The study indicated that there were five
major factors that influenced retail customers’ intention of depositing in BIDV Hue
Branch which were high interest, recommendation from relatives, brand awareness and
population, quality of service and promotion.
Most recently, Ha (2013), in her study in Vietnam obtained information about the factors

determining the decision of retail customers in depositing in An Binh Bank Hue Branch.
She found that promotion, employees’ skills, recommendation from relatives, location,
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and convenience were key determinants in the decision of retail customers in depositing
in An Binh Bank Hue Branch.
2.2

Hypothesis development

From the above literature review, the paper chose to investigate the following constructs
which might be suitable to Vietnamese context.
2.2.1. Security
The banking industry is known as inherently unstable; hence, safety is of the greatest
concern of customers (Khaled, 2013). Credibility, which is accounted for safety, includes
reputation, being a government owned and the establishment period of the bank
(Goiteom, 2011). In a research of Kennington (1996), reputation was not explicitly
mentioned but did emerge indirectly in the notion of safety/trust, which could be
explained that there was a connection between the reputation and safety level that
customers’ funds held by financial institutions are protected.
In developing countries, customers have a tendency of depositing in banks where their
funds are protected and guaranteed since the banking system is still developing and needs
to become sophisticated to survive if any crisis occurs. The cyclical financial crises have
frightened bank customers about losing their money if their bank liquidated or announced
to be bankrupt. The rational action to mitigate the financial crisis risk is by depositing
their money in a safer place, which are Islamic banks (Abduh, 2012). Consequently, in
Malaysia, in a study of Abduh (2012), bank’s reputation was placed in the third rank of
attributes affecting customers’ choice of banks.
The paper, therefore, hypothesizes that:

H1: There is a positive relationship between banks’ security and customers’ choice
of banks to deposit.
2.2.2. Financial benefits

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Financial benefits consist of high interest on saving (Goiteom, 2011), new account
premiums or gifts (Aderson, 1976). According to Anderson (1976), financial
considerations constituted the principle determinants of bank choosing decision. Erol and
El-Bdour (1989), Metawa and Almossawi (1998), and Dusuki and Abdullah (2007) also
come up with profitability as among the factors affecting customer decision to join a
bank.
Similarly, in a study of Abduh (2012) operated in Malaysia, financial benefits come as
the second highest rank of attributes affecting customers’ choice of banks. In Jordan,
which is also a developing country, Erol & El-Bdour (1989) concluded that instead of
religiosity, another factor like rate of return constituted the main factors influencing
individual customer to patronize particular bank.
In USA, Javalgi et al. (1989) found out that high interest rate on savings was among the
most important factors affecting the determinants of customers’ bank selection decision.
Similarly are the results of Boyd et al. (1994) research run in USA, and Ta and Har
(2000) research run in Singapore.
The paper, therefore, hypothesizes that:
H2: There is a positive relationship between financial benefits and customers’ choice
of banks to deposit.
2.2.3. Service quality
Most economies are becoming more service-driven. In the bank sector, where
competition becomes harsher and harsher, maintaining the quality of service is a pre –
requisite for survival (Sharma & Mehta, 2005). Customer handling approach of bank
personnel is also reflects the quality of service, which is not restricted to a smile or

passing greeting to customers but also the customer relations and techniques of answering
telephones (Jantan, 1998). Efficiency of service also includes the speed of transaction,
shorter waiting time (Muhamad et al., 1998). Other studies revealed that fast and efficient
8


service, speed of transaction and staff friendliness were frequently stated as the most
important attributes in purchase decision process (Sudin & Norafifah 1992; Kaynak,
Kucukemifoglu & Odabasi 1991; Erol & El-Bdour 1989; Tumbull 1989).
Another prerequisite issue is that professionalism and politeness of staff are of the
essence of making service faster and more efficient (Stafford, 1994). According to Jantan
(1998), bank employers’ inefficiency and low quality of service decreased the bank
credibility causing the customers’ dissatisfaction, which might have affected the
customers’ choice of banks. Solving problems concerning technical skills accuracy and
timely service plays an important part in pleasing new customers and retaining loyal
customers.
In Malaysia, Haron et al., (1994) study the selection criteria of Muslim and non-Muslim
customers in patronizing a particular bank. As the result, Haron et al., (1994) discovered
that one of the most important factors considered by both Muslim and non-Muslim when
selecting their financial institutions is “fast and efficient service” and “friendliness of
bank personnel”.
The paper, therefore, hypothesizes that:
H3: There is a positive relationship between banks’ service quality and customers’
choice of banks to deposit.
2.2.4. Convenience
In the modern time, where everything needs to be executed at its top speed, convenience
is a commodity readily marketed and handily profitable (LoBello, 1985). According to
Anderson (1976), convenience consists of full service offering, hours of operation, which
brings the customers the ultimate comfortability in managing their deposits. To the extent
of conscious deliberation, convenience appears to be a dominant determinant in

customers’ bank selection decision (Anderson, 1976).

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Additionally, by providing extra facilities, like extended hours of service will allow the
customer more flexibility in transactions with banks instead of rushing to banks during
standard banking hours which may not convenient for them (Jantan, 1998).
In Indonesia, during year 2000 until 2005, Bank Indonesia (BI) together with Department
of Statistics of Bogor Agricultural University (IPB) conducted a wide survey for West,
Central, and East Java respectively as well as West Sumatera and South Kalimantan. The
research concluded that convenience was one of the main factors in patronizing banks.
In a research of Khaled (2013) in Yemen, the analytical results also revealed that
convenience was considered as a first choice of bank selection. Besides, in USA, a Wall
Street Journal/ NBC survey conducted in 1975 found that 75% of household earning
USD 100,000 or more felt that “managing their time is a bigger problem than managing
their money” (Mesister, 1996). Therefore, convenience is an important attributes to the
purchase decision of customers.
The paper, therefore, hypothesizes that:
H4: There is a positive relationship between convenience and customers’ choice of
banks to deposit.
2.2.5. Bank image
Bank image includes bank’s facilities, transaction space, internal or external decoration…
A bank with well-equipped facilities, attractive and professional internal or external
decoration would increase the customers’ belief in depositing.
In Malaysia, a research of Muhamad et al. in 1998 measured the relative importance of
five attributes: efficiency, physical facilities, range of service, terms of payment and
media and social influence on each dimension of foreign and local banks using Analytic
Hierarchy Process (AHP) method. The finding was that Customers’ preference for local
bank is influenced by physical facilities, range of service, terms of payment and media

and social influence dimension (Muhamad et al., 1998).
10


In developed countries, Erol and El-Bdour (1989), Erol et al (1990), Kennington et al
(1996), Almossawi (2001), Şafakli (2007) and Dusuki and Abdullah (2007) found that
the dimension of bank’s quality of services/facilities, reputation, profitability and staff
friendliness were the fundamental factors in depositors’ bank selection criteria.
Another investigation on the Islamic-bank selection criteria, particularly in Malaysia was
conducted by Abduh M. and Omar M. in 2012. To accomplish this purpose, information
collected from 279 respondents within the Klang-valley area was incorporated in the
analysis. The Analytic Hierarchy Process was used to rank the criteria based on the
respondents’ preferences. The result has shown profitability, bank’s reputation, bank’s
status, facilities and services, and friendly personnel respectively (Abduh & Omar, 2012).
The paper, therefore, hypothesizes that:
H5: There is a positive relationship between bank image and customers’ choice of
banks to deposit.
2.2.6. Demography
“Demographic” characteristics of customers are internal factors related to decision
making (Mateja & Irena, 2009). “Demographic” characteristics consist of the individuals
in term of “gender, age, educational status, marital status, career, the quantity of family
members and children, as well as the residence property”. “Demographic” characteristics
consist of age (Yalch & Spangenberg, 1990), education (Gattiker et al., 2000), income
level (Dawson et al., 1990), gender (Zhang et al., 2007) which are factors influenced on
the “purchase decision” of customer. Particularly, “gender” has significantly influence on
the customer behaviour in selecting banks (Goiteom, 2011). Correspondingly, in this
study, “gender”, “age”, “income”, and “experience of depositing” characteristics are
considered as control variables so that investigate whether effect of those demography
variables on customers’ choice of banks to deposit or not.

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2.3.

Research Model
Security

H1
Customers’
choice of banks

H2
Financial benefits
H3
Service quality

Demographic
attributes
(gender, income,
and experience of
depositing

H4
Convenience
Bank image
H5
Figure 2.1. Conceptual framework
Conclusion

In summary, five hypothese in the theoretical model are developed deriving from the
literature review. The model proposes that customers’ choice of banks to deposit is
positively affected by security, financial benefits, service quality, convenience and bank
image. In addition, the effect of demographic factors on customers’ choice of bank to
deposit is also examined.

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CHAPTER 3. RESEARCH METHODOLOGY
Overview
This chapter presents the research methods and approaches used to investigate customer
bank selection criteria in Ho Chi Minh City including research approach, measurement,
sampling, data collection, and data analysis technique.
3.1

Data Sources

Primary data: The author designed a questionnaire based on bank choosing criteria
review.
Secondary data: In doing this research, books, academic research papers, journals,
magazines in terms of the customer behavior theories, determinants in choosing banks,
determinants in depositing in banks, bank attributes as well as service quality from the
Google Scholar, Proquest Search and University library were utilized in the research.
Specially, annual reports of Government departments concerning bank depositing
analysis in Vietnam were quoted in this research.
Doing this research, several ideas from specialists in bank deposit have provided a wide
range of good reference for the author to create a good research on customers’ choice of
banks to deposit as well as a solution to improve these determinants and increase deposits
for the bank in this case.

3.2

Research process

Step 1: Review the literature background to find out factors that influence in customers’
choice of banks to deposit. The findings in this step were used to be the foundation for
later quantitative research to confirm the intensity of the explored results.
Step 2: Theory Model was built based on the literature review above. The dependable
variable was identified as “Customers’ choice”. The five independable variables were
defined as “Reputation”, “Financial benefits”, “Employers’ efficiency”, “Variety of
services” and “Convenience” with Demographic attributes as Control variables.
13


Step 3: Focus group interview was chosen as an in-depth interview. In this research, the
author has chosen group of 10 customers who were depositing or used to deposit in banks
and ask some open-ended questions based on the previous research, for example:
-

What are the key factors for you to choose to deposit in a bank?

-

What makes you think that these factors are important?

-

What are determinants affecting this key factor in your choice of banks to deposit?

-

Why you choose theses factors but not the others?

A draft questionnaire with the measurement scales was then set up.
Step 4: Next, the draft questionnaire was delivered to 02 management officers who
involving in depositing department and 03 specialists in depositing in banks to respond,
and a discussion about the draft questionnaire was carried out later. The aim of the pilot
phase was to modify and clear the measure scale.
After that, the revised questionnaires were delivered to another small group of 5 persons
to test about clear understanding of the questionnaire. Finally, a main survey was built up
with some adjustment.
Step 5: The main survey was adjusted based on feedbacks received from the customers
and specialists. The dependable variable was still “Customers’ choice”. The five
independable variables were re-defined as “Security”, “Financial benefits”, “Service
quality” “Convenience” and “Bank image”. The main survey was conducted with 254
respondents.
Step 6: The sample size consisted 254 observations. Questionnaire was sent directly to
the customers who visited banks for transactions. The rest amount of questionnaire was
sent via email to the author’s friends, colleagues or relatives who live in Ho Chi Minh
City. By using filter question, the respondents were defined as people who were
depositing or used to deposit in Banks.

14


Step 7: After finishing the survey, the data was collected and prepared to analysis. Data
was edited, coded and adjusted for missing data. Next, reliability of measuring instrument
was analyzed by calculation Cronbach’s alpha which was required above 0.7 (Hair et
al., 2010).
Step 8: The validity of measuring instrument was also evaluated to define the number

extracted factors based on the Eigenvalue value over than 1 and changing of the slope in
the Scree plot (Hair et al., 1998; Tabachnick & Fidell, 2001).
Step 9: The coded and adjusted data, then, was analyzed through five hypothesizes to find
out whether five dimensions above have positive relationship with customers’ choice of
banks to deposit. The Logistic regression analysis was

applied to evaluate the

relationship between five independent variables, including “Security”, “Convenience”,
“Service quality”, “Financial benefits”, “Bank image” and one dependent variable,
namely “Customer’s choice”. Moreover, defining whether there was any significant
contributory of control variables consisting of “gender”, “income”, and “experience
of depositing” on customers’ choice of banks to deposit was also analyzed by the Logistic
regression.
Step 10: Based on the findings from previous step, conclusion was drawn and managerial
implication was suggested.
The research process is illustrated by the following Figure 3.1
Literature Review

Develop Theory Model

Design First Draft Questionnaire

In-depth Interview
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Final Questionnaire

Main Survey

Cronbach Alpha

To evaluate the reliability
of measurement

Exploratory Factor Analysis

To evaluate the validity of
measurement

Testing Hypotheses by
Logistic Regression

Conclusion and Managerial
Implication
Figure 3.1: Research process
3.3.

Sample Size

A data set satisfied requirement of Exploratory Factor Analysis was five times the
number of variables and at least more than 100 (Hair et al., 1998). n = 5k (k: number of
variables) and n > 100. Therefore, in this study, the minimum sample required by EFA
was n = 5 x 23= 115.
Besides, based on the work of Peduzzi et al. (1996), a minimum sample size for logistic
regression must ensure the formula of N = 10 k / p where p is the smallest of the
proportions of negative or positive cases in the population and k the number of covariates
(the number of independent variables). As there were five independent variables
including in the model and the proportion of negative cases in the population is 0.39

(39%). The minimum number of cases required is N = 10 x 5 / 0.39 = 128. If the resulting
number is less than 100 you should increase it to 100 as suggested by Long S. J. (1997).
16


As a result, the minimum sample size in this study was 128 which would be
satisfied both EFA and logistic regression analysis. In this paper, the author collected a
sample of 254 observations.
3.4.

Measurement Scale

In order to operate concepts, it is necessary to measure them in some manners, so
different variables are required to choose an appropriate scale. The independent variables
were applied interval scale with five - point of Likert scale consisting of totally disagree
(1), disagree (2), neutral (3), agree (4), totally agree (5); beside, the dependent variable
was dichotomous variable with two option Yes or No. The control variables were
measured with two states for the simplicity on testing. Gender were observed as Male or
Female; Income as Less than 10 millions and Above 10 millions; Experience of
depositing as Less than 3 years and Above 3 years.
A summary table of main factors affecting customers’ choice of banks to deposit is
presented as following Table 3.1.
Table 3.1: Main factors affecting customers’ choice of banks to deposit
No

Factor

Variables
Banks

Code
brand names Secu1

with reputable

stimulates confidence.
Banks

which

Security

Banks

relatives

recommend Secu2

relatives

work

at

stimulates Secu3

confidence.
Banks

with

information

high

Ha. (2013), Addis
A. (2011), Abduh

stimulates confidence.
1

Reference

reputation

security

of Secu4

stimulates

confidence.
17

(2012)


Financial benefits

2

Interest rate on savings is competitive.

Fin1

Interest payment schedule is flexible.

Fin2

Transparent interest rate is quoted.

Fin3

High interest rate with short schedule is Fin4

(2013),

Goiteom

(2011),

Aderson

(1976),

Javalgi

et

al.

Fin5

Banks with modern facilities provide Ima1

Hue.

good impression.

Muhamad et al.

Professional documents provide good Ima2
Bank image

Ha.

(1989)

offered.
Low service fee is offered.

3

Mikhail K. (2005),

impression.

(2012),

(1998),

Evans

(1979),

Hwan

(1986), Laroche et
Comfortable transactional space provide Ima3

al, (1986), Jabagi

good impression.

(1989), Denton &

Attractive

external/internal

design Ima4

Chan (1991)

provide good impression.
Hospitality of employees provide good Ser1

Ha.

(2013),

impression.

Stafford

(1994),

Jantan

(1998),

4

Service quality

Efficency of employees provide good Ser2

Muhamad et al.

impression.

(1998), Sudin &
Support of employees provide good Ser3

Norafifah (1992),

impression.

Kaynak;

Consultancy of employees provide good Ser4

Kucukemifoglu &
Odabasi

impression.

(1991),

Erol & El-Bdour
Promotion

gifts

provide
18

good Ser5

(1989),

Tumbull