INTRODUCTION
Introduction
This chapter serves as an introduction to the current study, outlining the research background, objectives, and questions that underpin the investigation It also discusses the methodology, scope, and limitations of the study Additionally, the final section presents the structure of the study, with an overview provided in Table 1.1.
Structure of the study
A stable financial system is essential for a robust economy, driving economic growth and development A well-functioning deposit insurance system is a critical component of this stability, fostering public confidence in financial institutions However, public awareness regarding the existence and functionality of deposit insurance is crucial for its effectiveness Unfortunately, the importance of public information and awareness is often neglected in the design of deposit insurance systems.
Many countries have implemented deposit insurance systems and actively promote the terms and conditions of coverage to inform depositors about its existence This transparency helps to mitigate the risk of bank runs during financial crises It is crucial for depositors to understand the limitations of this coverage, including the maximum amounts and types of accounts that are protected, to prevent misconceptions that all deposits and financial products are fully insured.
Research has highlighted the public's understanding of deposit insurance, with notable studies from countries with extensive experience in this area Inakura et al (2005) found that awareness of Japan's deposit insurance system is relatively high, particularly among households with greater income and education Conversely, Laure Bartiloro (2008) reported that knowledge of deposit insurance in Italy is lacking The studies aimed to identify factors influencing awareness, including internet access, income levels, and educational attainment.
Vietnam's deposit insurance scheme, though established later than in many developed countries, has experienced significant growth and now plays a crucial role in the sustainable development of the nation's banking system Despite this progress, the Vietnamese economy and banking sector continue to face numerous challenges, particularly in the wake of recent global financial and debt crises that have led to the collapse of many banks These events have reignited discussions regarding the effectiveness of deposit insurance.
Previous research on public awareness of deposit insurance has primarily concentrated on assessing general awareness levels, with limited focus on identifying the factors that positively influence this awareness Notably, there is a scarcity of studies examining the public's understanding of deposit insurance within the Vietnamese context This gap in the literature inspires the current study to explore the determinants that enhance public awareness of deposit insurance in Vietnam.
The awareness of deposit insurance in Vietnam is growing among the public This study aims to explore the level of public knowledge regarding deposit insurance and the correlation between various factors and individuals' perceptions of it.
For a deposit insurance system to function effectively, it is crucial for the public to be well-informed about its benefits and limitations The recent financial crisis has prompted policymakers to reevaluate deposit insurance practices and implement changes aimed at boosting depositor confidence in the banking sector and ensuring the overall safety of the financial system.
This study explores public awareness of deposit insurance in Vietnam and identifies key factors influencing this awareness.
This research offers valuable insights for policymakers, deposit insurers, insured institutions, depositors, and researchers interested in understanding public awareness of deposit insurance.
The findings of this research reinforce the importance of policy makers and deposit insurers in ensuring that insured institutions implement effective strategies to maintain and boost public knowledge and confidence in the banking system.
The findings provide depositors with crucial insights into the security of their deposits, empowering them to make informed decisions regarding their money This awareness helps prevent situations that could lead to bank runs, ensuring that individuals can confidently choose whether to deposit or withdraw their funds.
Finally, the research is able to be a reference for researchers, lectures and students in finance and banking
As above discussed, this study addresses the following questions:
Q1: How is the awareness of Vietnamese public about deposit insurance?
Q2: What are the determinants that play a large role to the awareness of deposit insurance?
Depositors rely on the deposit insurance system (DIS) to safeguard their funds and maintain confidence in the banking system By ensuring that deposits are protected, the DIS helps prevent panic withdrawals that could lead to a bank's collapse When depositors are aware of the existence of deposit insurance, they feel more secure about their savings, fostering stability within the financial sector.
The study uses two different research questions to approach the issue is that the awareness of deposit insurance
This study was conducted in Ho Chi Minh City and two nearby province are Long an and Binh Duong with two phases: a pilot study and main study
Each country possesses unique characteristics in its deposit insurance scheme and financial system The initial phase of the study employs a qualitative approach to assess the relevance of various factors in Vietnam, utilizing group discussions with experts from the finance and banking sectors Subsequently, a quantitative approach is adopted, involving convenience sampling through household interviews Data analysis is conducted using SPSS software version 16.0 to derive meaningful insights.
This thesis addresses the issue of public awareness regarding deposit insurance in Vietnam, highlighting several limitations Firstly, the study's sampling method, which relied on convenience sampling, resulted in low representation and limited generalizability To accurately assess public awareness across the country, future research should encompass a broader scope and include diverse target groups Secondly, while the determinants of awareness were informed by previous studies, it is crucial to identify additional factors that may influence public understanding Lastly, the lack of comparable research on public awareness, along with challenges related to dimensionality, convergent, and discriminant validity, further constrains the findings of this thesis.
This study is organized into five chapters, following a conventional structure Chapter 1 offers a general introduction to the research In Chapter 2, we summarize deposit insurance and public awareness while reviewing relevant literature and developing hypotheses Chapter 3 outlines the methodology employed in the study Chapter 4 details the sampling process and presents the research findings Finally, Chapter 5 discusses the implications, contributions, and limitations of the study, concluding with key insights.
Table 1.2 shows the structure of the study
Chapter 4 Data analysis and findings
LITERATURE REVIEW
Introduction
This chapter presents the theoretical foundations of deposit insurance, outlining its objectives, roles, and the establishment of Vietnam's deposit insurance system Additionally, it reviews relevant literature on public awareness of deposit insurance, aiming to propose a research model that will generate hypotheses for testing in the context of Vietnam's deposit insurance This approach seeks to address the research questions and validate the proposed research model An outline of this chapter is provided in Table 2.1.
Developing of empirical research hypothesis
2.2.1 The Concept of Deposit Insurance
Deposit insurance serves as a crucial mechanism implemented by governments to enhance the stability and integrity of the banking system while safeguarding small depositors from potential losses arising from bank failures.
Deposit insurance schemes primarily aim to safeguard less sophisticated depositors while also capping the insurer's liability, typically by imposing a maximum limit on the coverage provided.
2.2.2 Objectives and role of deposit insurance
Deposit insurance serves as a crucial component of a nation's financial safety net, enhancing the stability of credit institutions It plays a vital role in ensuring the safety and soundness of these institutions by safeguarding the interests of depositors.
Choi (2000) outlines several key objectives of deposit insurance, including the protection of individual depositors, particularly small and less sophisticated ones, who may struggle to evaluate the financial health of banks It aims to enhance financial system stability and efficiency by preventing bank failures, while also fostering a competitive and equitable market among diverse credit institutions to promote banking innovation Additionally, deposit insurance clarifies the rights and responsibilities of depositors and credit institutions, builds public confidence in the banking system, and seeks to reduce the financial burden on taxpayers in the event of bank failures.
The role of deposit insurance
Deposit insurance plays a vital role in enhancing banking operations by attracting temporarily unused funds from the community and encouraging active participation based on mutual benefit This support fosters favorable conditions for steady economic development Its significance in a nation's financial system can be summarized in four key aspects: strengthening public confidence in the banking system, promoting savings for investment and sustainable development, creating conducive conditions for the growth of the national banking system, and facilitating the prompt resolution of insolvent financial institutions and financial crises.
Deposit insurance (DI) originated in the early 20th century, culminating in the establishment of the Federal Deposit Insurance Corporation (FDIC) in 1933, the first organization of its kind globally Created by the U.S Federal government, the FDIC was a direct response to the widespread bank failures during the Great Depression of the early 1930s, aiming to restore public confidence in the banking system.
It is notable that after FDIC commenced operations on 1 January 1934, other countries followed very slowly with nine schemes being created in the years 1961-
In 1969, the FDIC introduced a deposit insurance scheme, which inspired the creation of over seven similar programs worldwide during the 1970s By the late 1970s and throughout the 1980s, numerous European countries developed their own deposit guarantee systems The majority of these schemes were established in the last quarter of the 20th century, leading to a total of 71 by 1999 By the end of 2003, the number of countries offering explicit deposit guarantees had increased to 87.
Explicit deposit insurance has spread rapidly in recent years, as of 31 March
2011, 111 countries have instituted some form of explicit deposit insurance and another countries are considering
Chart 2.1 shows numbers deposit insurance system established in the world
Sources: http://www iadi.org/di.aspx
2.2.4 Case of Deposit insurance in Vietnam
Since the economic reforms initiated in 1986, Vietnam has experienced significant development, transitioning its banking system from a centrally planned model to one based on independent accounting Although the number of commercial banks and credit funds surged, many faced bankruptcy between 1989-1990 and 1995-1997, undermining public trust in the financial system The 1997 Asian financial crisis prompted a comprehensive overhaul of the Vietnamese banking sector to enhance its performance, competitiveness, and public perception This crisis, along with the failures of credit cooperatives, highlighted the necessity for effective risk management strategies.
As the banking system becomes increasingly integrated into the global economy, the associated risks grow, necessitating effective preventive measures The Deposit Insurance (DI) scheme is a critical financial institution designed to limit losses and avert systemic failures within the banking sector To achieve stability and safety in the banking system while bolstering the national financial sector, the government enacted Decree No 89 on September 1, 1999, which focuses on deposit insurance.
218 of Prime Minister on Nov 9 th 1999 to establish Deposit insurance of Vietnam (DIV)
The Deposit Insurance Vietnam (DIV) serves as a crucial tool for implementing the Deposit Insurance (DI) policy, functioning as a non-profit government agency dedicated to protecting the legitimate rights and interests of depositors while ensuring the stability of banking institutions Its establishment marked a significant milestone in the banking sector, as it was the first institution focused on safeguarding depositors' interests Over the years, DIV has played an essential role in the economic reform and restructuring of the banking system It is important to note that from 1994 to 1996, Bảo Việt Corporation attempted a pilot scheme for DI, but it did not achieve the desired outcomes.
The Deposit Insurance Fund (DIV) is regulated by government decisions, making membership mandatory for all banks and People Credit Funds in the country Initially, the deposit protection scheme offered reimbursement of up to VND 30 billion per depositor, but this was increased to VND 50 million per depositor following Decree No 109 issued on September 19, 2005 The insured deposits, which are covered under this scheme, include VND deposits made by individuals, households, cooperative teams, private enterprises, and limited partnerships, excluding certain principal cases as specified in the decree It is important to note that only domestic currency deposits are insured, while deposits in foreign currencies are not covered.
The funding for the Deposit Insurance Fund (DIV) includes an initial allocation of VND 1,000 billion from the government, distributed in several batches, with the final installment disbursed on May 21, 2003, alongside insurance premiums collected from insured institutions.
The Vietnam Deposit Insurance System (DIS), as outlined in Decision No 218 by the Prime Minister, aims to safeguard the rights and interests of depositors, contribute to the stability of insured institutions, and promote a sound and secure banking system DIS is responsible for reimbursing depositors in the event of a bank failure, as well as conducting off-site supervision and on-site examinations of all banks and credit funds across the country However, the on-site examinations are limited in scope, primarily focusing on the premiums collected by depository institutions It is important to note that the operation of Vietnam's deposit insurance is governed by specific regulations rather than the broader laws on financial institutions and insurance.
2.3.1 Deposit insurance and public awareness
Research conducted by the Financial Stability Forum (FSF) and the International Association of Deposit Insurers (IADI) highlights the critical importance of public awareness in the design and development of deposit insurance systems.
The Financial Stability Forum's Study Group on Deposit Insurance highlights the essential attributes of an effective deposit insurance system, emphasizing the importance of public awareness As noted in their research, "The public should be informed of the key elements of the deposit insurance system to instill confidence" (Garcia, 2000: 7-12) This awareness is particularly crucial for newly established systems, as many countries with established deposit insurance have actively promoted the terms and conditions of coverage to enhance depositor awareness and mitigate the risk of bank runs during failures Furthermore, it is vital for depositors to understand coverage limitations concerning amounts and account types, preventing the misconception that all deposits or financial products are fully protected (Financial Stability Forum, 2001: 7-8).
METHODOLOGY
Introduction
This chapter outlines the research methodology, detailing the methods used to test the hypotheses established in Chapter 2 It includes a pilot study aimed at refining and finalizing the questionnaire for the main study Additionally, the chapter discusses the statistical techniques employed for data analysis and hypothesis testing, with an overview provided in the accompanying table.
Research design
Research design allows the researcher to select an appropriate methods in order to meet the research objectives in the most efficient way
Data for this study was collected using a survey technique This technique
“provides a quick, efficient and accurate means of assessing information on a population, especially in the case of a lack of secondary data” (Zikmund, 1997)
This study utilizes descriptive statistics to assess public awareness of deposit insurance, highlighting the level of understanding among the general population To further analyze the influence of various factors on this awareness, logistic regression analysis is employed, providing insights into the determinants affecting public knowledge of deposit insurance.
The research process of this study is shown in chart 3 1
The final draft of questionnaire
Logistic regression -SPSS Testing hypothesis 2
Aggregate and statistics Testing hypothesis 1
The first draft of questionnaire
The pilot study aimed to refine the initial draft of the questionnaires, addressing potential issues to enhance respondent clarity and improve data quality for the main survey Most questions were adapted from those previously tested in developed countries, necessitating modifications to fit the context of developing countries, particularly Vietnam The original questionnaire was designed in English and was subsequently translated into Vietnamese, resulting in a bilingual first draft with several amendments made for better comprehension.
A group discussion was held with five bank experts, including three male and two female branch managers from various banks in Ho Chi Minh City The objective was to evaluate the clarity of the survey instrument and ensure that all questions effectively addressed the research topic related to deposit insurance and banking Following feedback from the financial experts, several amendments were made to enhance the survey's effectiveness.
The result of a group discussion shows that the first question, the item Q1:
In Vietnam, are your deposits protected in the event of bank failures? It's essential to understand the maximum amount guaranteed by deposit insurance in the country For instance, if you had VND 100 million in a savings account with a 10% annual interest rate, how much would you expect to have after two years? Additionally, consider how interest rates typically affect bond prices When discussing household finances, it's important to assess your monthly income, as studies on household income and wealth are not widespread in Vietnam, leading to the exclusion of household wealth as an independent variable.
When considering where to deposit your money, you may choose between state banks and commercial banks Additionally, the option regarding whether your deposit is held in a bank or at the Post Office has been removed from the discussion.
The final step involved utilizing a revised questionnaire to conduct interviews with ten depositors at the Bank for Investment and Development – No 2 transaction center in Ho Chi Minh City The results indicated that all ten depositors comprehended and responded to the questions effectively, necessitating no further adjustments The completed questionnaire is presented in a bilingual format, featuring both English and Vietnamese (see Appendix 1), while a list of finance experts and depositors can be found in Appendix 2.
Guidance paper “Public awareness of deposit insurance systems” of IADI
In 2009, it was emphasized that the primary target audience for a public awareness campaign should include depositors and the general public, spanning various age groups like retirees and students Nonetheless, a key focus should also be on the staff of depository institutions, particularly those in operations and front-line positions.
This study has chosen the popular audiences that similar to the previous study The target audiences are subjected to the following selection criteria:
1 The survey was conducted only to people who declared they had a bank account
2 People are interviewed only to people who declared they earn higher income in their family or manage financial in their family
Participants are requested to respond to a series of questions to support our research Additionally, respondents must provide information regarding demographic variables, as well as factors related to education, employment, income, and financial literacy.
To assess the understanding of deposit insurance in Vietnam, we formulated key questions inspired by the methodologies of Laure Bartiloro (2008) and Straeter et al (2008) The assessment comprised five questions regarding deposit insurance knowledge, with four questions utilizing a Yes/No or "don't know" format, and one presented in a multiple-choice format.
A good sample must achieve both accuracy and precision, as highlighted by Donald & Pamela (2003) The required sample size is influenced by the desired level of precision and confidence in estimating population parameters, along with the population's variability (Canava et al 2001) Researchers recommend a minimum sample size of 100 to 150 responses when employing the Maximum Likelihood (ML) method, while others suggest at least five observations per estimate.
The intended sample size for this study was 300 participants or more; however, this number was insufficient for effective comparison with previous studies Despite being below the desired threshold, it exceeded the minimum sample size recommendation of over 25 times the number of observed variables.
Surveys are a crucial tool for gathering feedback from participants, but not all surveys provide valuable data due to potential biases in responses Certain questions, particularly those involving time measurements or event frequencies, may lead to unreliable answers Research methodology literature outlines various survey methods, including face-to-face interviews, telephone interviews, mail surveys, and online surveys Among these, face-to-face surveys tend to produce higher response rates and enable researchers to utilize physical stimuli to enhance the interview process (Zikmund 1997).
This study utilized both face-to-face interviews and online surveys for data collection Despite the dual approach, only one in seven respondents was gathered through the online survey to achieve the necessary sample size.
This study conducted formal research with sampling method is convenience sampling The survey was conducted between November 30 and December 31,
In 2011, a study involving 400 households was conducted, where participants were informed that their involvement was voluntary and that their information would be kept confidential by the interviewers The majority of participants expressed a keen interest in the research topic.
Following the completion of data collection, descriptive statistics were performed to give an overview of the sample We utilized primary data to classify and analyze the level of public awareness regarding deposit insurance in Vietnam through percentage analysis Additionally, logistic regression analysis was employed to evaluate the second hypothesis.
Data analysis techniques
Research design allows the researcher to select an appropriate methods in order to meet the research objectives in the most efficient way
Data for this study was collected using a survey technique This technique
“provides a quick, efficient and accurate means of assessing information on a population, especially in the case of a lack of secondary data” (Zikmund, 1997)
This study utilizes descriptive statistics to assess public awareness of deposit insurance By employing logistic regression analysis, it investigates the influence of various factors on the level of public knowledge regarding deposit insurance.
The research process of this study is shown in chart 3 1
The final draft of questionnaire
Logistic regression -SPSS Testing hypothesis 2
Aggregate and statistics Testing hypothesis 1
The first draft of questionnaire
The pilot study aimed to refine the initial draft of the questionnaires, addressing flaws to enhance respondent clarity and improve data quality for the main survey Most questions were previously developed and tested in developed countries, necessitating modifications to fit the context of developing nations, particularly Vietnam Initially designed in English, the questionnaire was translated into Vietnamese, resulting in a bilingual first draft with several amendments made for better comprehension.
A preliminary group discussion was held with five bank experts, including three male and two female branch managers from various banks in Ho Chi Minh City This discussion aimed to assess the clarity of the survey instrument and ensure that all questions effectively addressed the research topic related to deposit insurance and banking Following the feedback from these financial experts, several amendments were made to enhance the survey's clarity and relevance.
The result of a group discussion shows that the first question, the item Q1:
In Vietnam, are your deposits protected in the event of a bank failure? It’s essential to understand the maximum amount guaranteed by the country’s deposit insurance For instance, if you had VND 100 million in a savings account with a 10% annual interest rate, how much would your account grow after two years? Additionally, consider the implications of interest rates on bond prices Instead of focusing on the percentile of household income, it's more relevant to inquire about your or your household's monthly income, as studies on household income and wealth are still developing in Vietnam.
When considering where to deposit your money, you may wonder whether to choose state banks or commercial banks Additionally, the option of holding your deposit at the Post Office has been removed from consideration.
The final stage involved utilizing a revised questionnaire to interview ten depositors at the Bank for Investment and Development - No 2 transaction center in Ho Chi Minh City All ten depositors were able to comprehend and respond to the questions, indicating that no further adjustments were necessary The completed questionnaire is presented in a bilingual format, combining English and Vietnamese (see Appendix 1), while a list of finance experts and depositors is provided in Appendix 2.
Guidance paper “Public awareness of deposit insurance systems” of IADI
In 2009, it was emphasized that the primary target audience for a public awareness campaign should encompass both depositors and the general public, including various age demographics like retirees and students Notably, a crucial segment of this audience is the staff of depository institutions, particularly those in operations and front-line roles.
This study has chosen the popular audiences that similar to the previous study The target audiences are subjected to the following selection criteria:
1 The survey was conducted only to people who declared they had a bank account
2 People are interviewed only to people who declared they earn higher income in their family or manage financial in their family
Participants are requested to respond to a series of questions to aid our research Additionally, respondents must provide information regarding demographic variables, as well as factors related to education, employment, income, and financial literacy.
To assess awareness of deposit insurance in Vietnam, we selected several fundamental questions for participants, following a methodology akin to that of Laure Bartiloro (2008) and Straeter et al (2008) Our survey comprised five questions, with four structured as Yes/No or "don't know" options, and one presented in a multiple-choice format.
A good sample must meet the criteria of both accuracy and precision, as highlighted by Donald & Pamela (2003) The required sample size is influenced by the desired level of precision and confidence in estimating population parameters, along with the population's variability (Canava et al 2001) Researchers recommend a minimum sample size of 100 to 150 responses when employing the Maximum Likelihood (ML) method, while others suggest at least five observations per estimate as a baseline.
The intended sample size for this study was over 300 participants, which, while higher than the minimum recommended size of 25 times the number of observed variables, was still insufficient for meaningful comparisons with previous research.
Surveys are a crucial tool for gathering feedback from interviewees, yet not all surveys yield valuable data due to potential biases in responses Questions related to time measurements or event frequency may lead to unreliable answers Research methodology literature outlines various survey methods, including face-to-face interviews, telephone interviews, mail surveys, and online surveys Notably, face-to-face surveys tend to produce higher response rates and enable researchers to utilize physical stimuli to enhance the interview process (Zikmund, 1997).
This study employed two survey methods: face-to-face interviews and online surveys To achieve the necessary sample size, only one out of seven respondents was gathered through the online survey approach.
This study conducted formal research with sampling method is convenience sampling The survey was conducted between November 30 and December 31,
In 2011, a study involving 400 households was conducted, where participants were informed that their involvement was voluntary and that their information would remain confidential The majority of participants expressed a strong interest in the research topic.
Following the completion of data collection, we conducted descriptive statistics to gain an overview of the sample This analysis utilized primary data to classify and assess the level of public awareness regarding deposit insurance in Vietnam through percentage analysis Additionally, logistic regression analysis was employed to test the second hypothesis.
DATA ANALYSIS AND FINDINGS
Introduction
This chapter presents the results of the main study The following section describes the description of collected samples The next section we state the results and give some discussion
Results and discussions
The primary survey involved face-to-face interviews conducted by six trained interviewers, with a sample size determined to be at least 300 based on statistical probability calculations To achieve this target, a comprehensive questionnaire was developed.
To reduce the burden of interviews, a questionnaire was designed for an online survey targeting a random subset of the sample, with a total of 400 respondents, reflecting a 75% response rate Data collection methods included distributing 50 electronic copies via the Internet at https://docs.google.com and conducting 350 face-to-face interviews with households.
We removed 74 questionnaires with a substantive proportion of missing value (the missing rate was 18.5 percent), and these valid responses 326 were accepted
Chart 4.1 shows the description of collected samples
Source: Build from collected data
In term of respondents’ gender, there are 52 percent of the respondents are female (n0), and 48 per cent are male (n6)
Chart 4.2 shows gender of respondents
Source: Build from collected data The majority of respondents are under 30 years old (28%, n = 91) and over
60 years old (28%, n = 91), The smallest percentage of respondents belonged to the age group from 45-59 (21%, n = 68) The rest of the respondents belonged to the age group from 31 to 44 (23%, n = 76)
Chart 4.3 shows Age group of respondents
Source: Build from collected data The respondents belonged to various occupations and regard to educational qualification with 239 respondents has upper secondary and university degree
4.3.1 Knowledge about Deposit insurance of Vietnam
Between 2008 and 2011, the global economic and debt crisis significantly impacted nations worldwide, leading to currency devaluation, bank failures, and a decline in depositor confidence In response, deposit insurance institutions played a crucial role in stabilizing the financial landscape by safeguarding depositors and enhancing the safety of both domestic and global markets To bolster public trust and prevent bank runs, several countries in America, Europe, and Asia increased deposit insurance coverage or implemented temporary blanket guarantees For instance, Italy announced full coverage of all deposits on October 8, 2008, while the FDIC raised the standard maximum coverage from $100,000 to $250,000 on October 14, 2008.
In response to rising inflation and the threat of economic recession, the Vietnamese Government implemented a series of measures aimed at stabilizing the market During this period, the banking sector demonstrated flexibility in its monetary policies, shifting from tightening measures to support economic growth By the end of 2011, the central bank initiated a restructuring process that involved merging three struggling banks: Tin Nghia, Ficombank, and Saigon Commercial Bank Contrary to expectations, depositors remained calm regarding the bank mergers, preventing any market chaos.
In May 2011, Vietnam's parliament officially debated the deposit insurance law, sparking significant public interest Concurrently, the Vietnam Deposit Insurance (DIS) launched a contest aimed at educating the public about deposit insurance and its operations, with the goal of increasing awareness of its existence It was anticipated that these initiatives would lead to a broader understanding of deposit insurance among Vietnamese households Hypothesis 1 suggests that these households are well-informed about the key features of the Vietnam DIS, with results detailed in Table 4.2.
Table 4.2: Knowledge about Vietnam deposit insurance
Source: Build from collected data
Question True answer Frequency Percent
1 Regarding your or the household’s current or savings account, in case of a bank failure, do you think that there are exists a deposit insurance scheme refund your money?
2 (If yes to 1) Is there maximum coverage on the amount of the current or savings account?
3 (If yes to 2) Which is the maximum amount of deposit guaranteed by deposit insurance of Vietnam?
The study's findings contradict the hypothesis that Vietnamese households lack a solid understanding of deposit insurance and its existence As indicated in Table 4.2, a significant number of households demonstrate a low awareness of deposit insurance.
Only 40 percent of individuals are aware of the existence of deposit insurance, with a significant number of households unable to provide an answer Conversely, just 16 percent believe that their deposits lack any form of coverage.
Chart 4.4 shows an international comparison
Source: MDIC annual report (2010) and Laure Bartiloro (2008)
A comparison of international data reveals that awareness and understanding of deposit insurance in Vietnam is notably low According to the International Association of Deposit Insurers (IADI), global public awareness of deposit insurance remains inadequate Surveys from various countries indicate a generally higher awareness, with Vietnam ranking among the countries with the lowest recognition rates, alongside Malaysia (17.6%), Italy (29%), and Germany (42%).
Concerning knowledge about DI, Inakura et al (2005) test the determinants of household’s knowledge The authors conducted a financial behaviors survey in
An international comparison (Percentage of correct answer)
A study conducted in 1996 on a sample of 2,500 subjects around Tokyo revealed that 52% of Japanese individuals were aware of the disaster insurance scheme By 2001, a follow-up survey with a similar sample indicated a 15% increase in awareness, with 67% of respondents demonstrating basic knowledge of disaster insurance This rise in awareness is likely attributed to the Asian financial crisis at the end of the 1990s, which may have heightened Japanese knowledge of disaster insurance schemes.
The Federal Deposit Insurance Corporation (FDIC) commissioned the Gallup organization to conduct a survey on deposit insurance awareness among U.S adults This survey aimed to gauge public understanding of the FDIC and the information needs of depositors regarding their insurance coverage The Gallup organization carried out telephone interviews with a sample of 2,500 randomly selected adults, aged 18 and older, who identified themselves as knowledgeable about household finances, referred to as household Chief Financial Officers (CFOs) The findings revealed that a significant portion of households are aware of deposit insurance, with 67 percent of respondents having heard of the FDIC and 46 percent understanding its primary function (Kinssinger 2003).
A 2009 survey conducted by CDIC revealed that 52 percent of Canadians believed their deposit accounts were guaranteed and would be protected by CDIC in the event of a bank failure.
A study by Straeter et al (2008) examined the knowledge of private investors in Germany, surveying 849 residents of a university town in 2007 The findings revealed a significant lack of knowledge among participants regarding financial protections, despite their high level of confidence in depositor protection Notably, only 42 percent of respondents were aware of the existence of the Deposit Insurance Scheme (DIS).
2 There are a number of deposit insurance schemes in Germany: the information refers to the private
A 2008 survey on Household Income and Wealth in Italy, analyzed by Laure Bartiloro, revealed that awareness of deposit insurance is low, with only 29% of the 4,090 surveyed households recognizing its existence The findings indicate that men are generally more informed than women, while both young and older adults show less awareness compared to middle-aged individuals, who exhibit minimal differences in knowledge.
The Malaysia Deposit Insurance Corporation (MDIC) conducts an annual nationwide survey to gauge public awareness and understanding of deposit insurance This survey not only assesses the effectiveness of MDIC's communication initiatives but also evaluates its efforts to raise awareness about deposit insurance The most recent survey results from 2010 indicated that public awareness of MDIC stood at 17.6%, as reported in the MDIC Annual Report 2010.
The survey indicates that public awareness of deposit insurance in Vietnam is notably low, despite the efforts of the Deposit Insurance of Vietnam (DIV) to bolster confidence in the banking system This limited knowledge can be attributed to the relatively recent establishment of deposit insurance as a financial institution From 1999 to 2007, DIV prioritized enhancing financial capacity, legal infrastructure, organizational restructuring, human resources development, and IT infrastructure, while public relations activities remained minimal It is only in recent years that efforts to improve public awareness have gained momentum.