Determinants of consumer satisfaction on service quality in private comercial banks in ho chi minh city

Result of the study showed service quality dimensions is crucial for customer satisfaction in private commercial banks in HCMC and helps managers of commercial banks in HCMC taking measu

RESEARCH PROJECT

(BMBR5103)

DETERMINANTS OF CUSTOMER SATISFACTION ON SERVICE QUALITY

IN PRIVATE COMMERCIAL BANKS IN

HO CHI MINH CITY

Advisor’s assessment

Advisor’s signature

ACKNOWLEDGMENTS

I would like to express my deeply sincere gratitude to my teacher, Dr Phan Dinh Nguyen, for his valuable guidance and advice on effective method His professional research understanding helps me and my friends recognize the research method thoroughly and we had experienced actual process His comments and meaningful suggestions were contributed great help for my completion of this research

In addition, I would like to special express my thanks to all of my classmates, my colleagues, my friends who are working in some banks in Ho Chi Minh City: Ms Ngo Tran Doan Trinh (VietBank), Mr Ky Minh Thien (Vietcombank), Mr Hoang Minh Hung (GPbank), Mrs Nguyen Thi Chau (Eximbank)….for their support and encouragement during the time I was doing my research And thank you to all customers who had spent precious time to answer the questionnaire for my topic

Ho Chi Minh City, Vietnam

September 6th 2014

Pham Ngoc Dung

2.1.5 Relationship between Service Quality and Customer Satisfaction 18

b Analysis steps to achieve objective 2 22

CHAPTER 4: BUSINESS SITUATION AND PERFORMANCE OF

4.1 General overview of the activities of private commercial banks that have

CHAPTER 6 : SOME POSSIBLE SOLUTIONS ARE GIVEN TO

IMPROVE CUSTOMER SATISFACTION ON SERVICE QUALITY OF

List of Tables and figures

Table 4.2: The operations for mobilizing and lending capital of the banks 26

Table 5.7 : The order of the impact of these factors to customer satisfaction 46

List of Abbreviations

Result of the study showed service quality dimensions is crucial for customer satisfaction in private commercial banks in HCMC and helps managers of commercial banks in HCMC taking measures to improve the level of satisfaction for customers in oder to keep old customers and attract new customers such as : variety of banks products and services, promote marketing activities and improve the capacity, skills of staff

CHAPTER 1: INTRODUCTION

1.1 Problem statement

The social is increasingly developing, life quality of people is increasingly high,

so the consumer demand for the products that they choose is also higher Improving product and services quality is competitive trends that private commercial banks in Vietnam must pay attention in order to increase market share and face many challenges in term of competition, especially when large foreign financial groups and banks entered Vietnam

Being aware of the importance of customer satisfaction, Vietnam banking system

in general and the private commercial banks in Ho Chi Minh City in particular need to improve their operations as well as strengthen their images in customers’ eyes in order to be able to capture market shares, develop faster and have position

in the market The problem that banks try their best to fulfill is how to give customers the best satisfaction in order to meet their needs when using bank’s products and services The study “Determinants of customer saisfaction on service quality in private commercial banks in HCMC” is not out of this purpose which aims to enhance customer satisfactions for improving the service quality of the private commercial banks in HCMC in the context of financial liberalization and globalization

At the end of May, 2014 there are 13 private commercial banks that have headquarters in HCMC, such as : Eximbank, ACB, Sacombank, SaigonBank, NamAbank, VietcapitalBank, OCB, ABBank, DongAbank, VietABank, SCB, HDBank and SouthernBank Three (03) of them such as ACB, Eximbank, Sacombank which have been rated as good domestic banks for the last years by various domestic and international financial publications based on theirs financial situation, operation scale, long-term vision, strategy, market positioning, service quality, analysts’ assessments The remaining banks (10 banks) of them have

been rated as small banks by charter capital, total assets, financial situation and analysts’ assessments Due to limited conditions to carry out this study, I only selected customers of 5 small-scale banks for my study, to ensure that collected samples are representative of the whole These 05 small-scale banks are OCB, Vietbank, ABBank, HDBank, Southernbank Number of samples was sent and eligible and to be presented through Table 1

Table 1 : Results of collected samples

sent

Number of samples was eligible

in HCMC

Specific objectives are as follows :

1 To consider the level of customer satisfaction on service quality of commercial banks in HCMC;

2 To identify the impact of service quality on customer satisfaction of the private commercial banks in HCMC;

3 To give some possible solutions to improve customer satisfaction on service

quality of the private commercial banks in HCMC;

1.3 Research questions

Specifically, the research aims to address the following questions:

1 How are business situation and business performance of private commercial banks in HCMC?

2 What are are the most important dimensions of service quality that affect

customer satisfaction in commercial banks in HCM city?

3 What should the private commercial banks in HCMC do in order to improve

the level of satisfaction of existing customers and attract new customers?

1.4 Scope and Methodology of Research

- The scope of the study is direct customers that have used the products and services of 05 following banks : OCB, Vietbank, ABBank, HDBank, Southernbank

- The variables included in this study are : Tangible, Reliability, Responsiveness, Assurance and Empathy are independent variables And customer satisfaction is dependent variable

- The determinants of customer satisfaction is estimated from the SERVPERF model by Cronin and Taylor (1992) to fit the banking market in Vietnam through SPSS 16 software The primary data and the secondary data are used to fulfill the proposed research objectives

1.5 Research structure

The study is organized in three chapters such as

 Chapter 1 : the above introduction

 Chapter 2: This part reviews theoretical literature and research model of service quality

 Chapter 3: The study identifies and describes the sources of data,

methods of data analysis, research framework will be used

 Chapter 4: Business situation and business performance of private commercial banks in HCMC

 Chapter 5: The impact of service quality on customer satisfaction of the private commercial banks in HCMC

 Chapter 6: Some possible solutions are given to improve customer satisfaction on service quality of the private commercial banks in HCMC

CHAPTER 2: LITERATURE REVIEW

In this chapter, section 2.1 reviews key theories that are relevant of service quality and following this, section 2.2 introduces the service quality models which is used to measure service quality to fit private commercial banks in HCM city

2.1 Theoretical literature

2.1.1 Quality :

Quality is one of the things that consumers look for in an offer, which service happens to be one (Solomon 2009, p 413) Quality can also be defined as the totality of features and characteristics of a product or services that bear on its ability to satisfy stated or implied needs (Kotler et al., 2002, p 831) Therefore, quality is very important to specify needs & wants of customer and design the service to meet these requirements

2.1.2 Service :

- In order for a company’s offer to reach the customers there is a need for services These services depend on the type of product and it differs in the various organizations

- Service can be defined in many ways depending on which area the term is being used An author defines service as “any intangible act or performance that one party offers to another that does not result in the ownership of anything” (Kotler

& Keller, 2009, p 789)

- Giving a comprehensive definition of service, Gronroos (1990) pointed out: A service is an activity or series of activities of more or less intangible nature that normally, but not necessarily, take place in interactions between the customer and service employees and/or systems of the service provider, which are provided as solutions to customer problems (p 21)

- In all, service can also be defined as an intangible offer by one party to another

in exchange of money for pleasure

2.1.3 Service Quality :

- Organizations operating within the service sector consider service quality to be

a strategic component of their marketing plan (Spathis et al., 2004) Through service quality, organizations can reach a higher level of service quality, a higher level of customer satisfaction, and can maintain a constant competitive advantage (Meuter et al., 2000)

- Service quality is defined as “the consumer's overall impression of the relative inferiority/superiority of the organization and its services” (Bitner & Hubber,

1994, p 77)

- Service quality is an important tool to measure customer satisfaction (Hazlina et al., 2011) The studies of Lee et al (2000); Gilbert and Veloutsou (2006); Sulieman (2011) and Buttle (1996) suggest service quality leads to customer satisfaction

- In the changing banking scenario of 21st century, the banks had to have a vital identity to provide excellent services Banks nowadays have to be of world-class standard, committed to excellence in customer’s satisfaction and to play a major role in the growing and diversifying financial sector (Guo et al., 2008) There has been a remarkable change in the way of banking in the last few years Customers have also accurately demanded globally quality services from banks With various choices available, customers are not willing to put up with anything less than the best Banks have recognized the need to meet customer’s aspirations Consequently service quality is a critical motivating force to drive the bank up in the high technology ladder Banking industry is a demand driven industry, which constitute an important part of the service industry (Newman & Cowling, 1996) Banks have to redefine their corporate image to that emphasizes service quality since it provides many advantages to a company such as allowing the company to

differentiate itself from its competitors by increasing sales and market shares, providing opportunities for cross selling, improving customer relations thus enhancing the corporate image, reliability, responsiveness, credibility and communication results in the satisfaction and retention of customers and employee, thus reducing turnover rate (Newman, 2001)

2.1.4 Customer Satisfaction:

- Customer satisfaction is one of the most important concepts for most marketers and consumers (Jamal, 2004) Customer satisfaction has been a subject of great interest to organizations and researchers alike The principal objective of organizations is to maximise profits and to minimise cost Profit maximisation can be achieved through increase in sales with lesser costs One of the factors that can help to increase sales is customer satisfaction, because satisfaction leads to customer loyalty (Wilson et al., 2008, p 79), recommendation and repeat purchase

- Some authors stated that there is no specific definition of customer satisfaction, and after their studies of several definitions they defined customer satisfaction as

“customer satisfaction is identified by a response (cognitive or affective) that pertains to a particular focus (i.e a purchase experience and/or the associated product) and occurs at a certain time (i.e post-purchase, post-consumption)” (Giese & Cote, 2000, p 15) This definition is supported by some other authors, who think that consumer’s level of satisfaction is determined by his or her cumulative experience at the point of contact with the supplier (Sureshchander et al., 2002, p 364) It is factual that, there is no specific definition of customer satisfaction since as the years passes, different authors come up with different definitions Customer satisfaction has also been defined by another author as the extent to which a product’s perceived performance matches a buyer’s expectations (Kotler et al., 2002, p 8) According to Schiffman & Karun (2004) Customer satisfaction is defined as “the individual’s perception of the performance of the products or services in relation to his or her expectations”

(Schiffman & Karun 2004, p 14) In line with Tsoukatos and Rand (2006), customer satisfaction is a key to long-term business success To protect or gain market shares, organizations need to outperform competitors by offering high quality product or service to ensure satisfaction of customers In proportion to Magesh (2010), satisfaction means a feeling of pleasure because one has something or has achieved something It is an action of fulfilling a need, desire, demand or expectation Customers compare their expectations about a specific product or services and its actual benefits As stated by Kotler & Armstrong, (2010), satisfaction as a person’s feelings of pleasure or disappointment resulting from the comparison of product’s perceived performance in reference to expectations Customer’s feelings and beliefs also affect their satisfaction level Along with Zeithaml (2009), satisfaction or dissatisfaction is a measure or evaluation of a product or service’s ability to meet a customer’s need or expectations Razak et al (2007) also reported that overall satisfaction is the outcome of customer’s evaluation of a set of experiences that are linked with the specific service provider It is observed that organization’s concentration on customer expectations resulted into greater satisfaction If the customers of an organization are satisfied by their services the result is that, they will be loyal to them and consequently be retained by the organization, which is positive for the organization because it could also mean higher profits, higher market share, and increasing customer base (Karatepe et al., 2005) Customer satisfaction has become important due to increased competition as it is considered very important factor in the determination of bank’s competitiveness (Berry et al., 2002) Continuous measurement of satisfaction level is necessary in a systematic manner (Chakravarty et al., 1996) Because satisfied customer is the real asset for an organization that ensures long-term profitability even in the era of great competition Cronin et al., (2000) mentioned in their study that satisfied customer repeat his/her experience to buy the products and also create new customers by communication of positive message about it to others On the other hand,

dissatisfied customer may switch to alternative products/services and communicate negative message to others Customer satisfaction is a set of feeling

or outcome attached with customer’s experience towards any product/ service (Solomon, 1998) Hence, organizations must ensure the customer satisfaction regarding their goods/services

Summary, customer satisfaction could be the pleasure obtained from consuming

an offer Regardless of whether these organizations provide goods or services, they recognize that satisfied customers are the key to their success

2.1.5 Relationship between Service Quality and Customer Satisfaction:

Quality and customer satisfaction have long been recognized as playing a crucial role for success and survival in today's competitive market Regarding the relationship between customer satisfaction and service quality, Oliver (1993) first suggested that service quality would be antecedent to customer satisfaction regardless of whether these constructs were cumulative or transaction-specific In relating customer satisfaction and service quality, researchers have been more precise about the meaning and measurements of satisfaction and service quality Satisfaction and service quality have certain things in common, but satisfaction generally is a broader concept, whereas service quality focuses specifically on dimensions of service (Wilson et al., 2008) Although it is stated that other factors such as price and product quality can affect customer satisfaction, perceived service quality is a component of customer satisfaction (Zeithaml & Bitner, 2003) As said by Wilson et al (2008), service quality is a focused evaluation that reflects the customer’s perception of reliability, assurance, responsiveness, empathy and tangibility while satisfaction is more inclusive and it is influenced

by perceptions of service quality, product price and quality, also situational factors and personal factors The relationship between service quality and customer satisfaction is becoming crucial with the increased level of awareness among bank customers Demographic characteristics should be considered by the bank managers to understand their customers (Sureshchander et al 2002)

2.2 Service Quality Research Models

There were various service quality models proposed and applied in different context for the purpose of this study are such as : SERVQUAL and GAP model

by Parasuraman et al (1985; 1991), SERVPERF by Cronin and Taylor (1992)

 In 1985, Parasuraman, Zeithaml, and Berry introduced a new model of service quality measurement by using the gap be between expected level of service and dilivered level of sevice called “SERVQUAL” Initially, it has ten dimensions and later it got condensed to five dimensions like Tangibility, Reliability, Assurance, Responsiveness and Empathy

+ Tangibility: physical facilities, equipment, and appearance of personnel + Reliability: ability to perform the promised service dependably and

accurately

+ Responsiveness: willingness to help customers and provide prompt

service

+ Assurance: knowledge and courtesy of employees and their ability to

inspire trust and Confidence

+ Empathy: caring individualized attention the firm provides to its

customers

Service quality is defined the model SERVQUAL as follows :

Service Quality = Customer Perceptions – Customer Expectations

Although SERVQUAL has been applied in many studies to assess service quality, the reliability and validity of this instrument have been debated by several authors, particularly the expectation dimensions Carman (1990), for

instance, argued that SERVQUAL is not applicable for the measurement of service quality in every service industry since its five dimensions cannot be generalized to all service industries Teas (1993) also claimed that SERVQUAL lacks the discriminatory validity that stems from the expectation dimension scores because the respondents misunderstand the And

a new research instrument, SERVPERF is came up by Cronin and Taylor (1992) This SERVPERF did not include the expectation dimension for the measurement of service quality Compared to SERVQUAL, SERVPERF is considered a simpler instrument for measuring service quality since the elimination of the expectation dimension makes the SERVPERF instrument more efficient (Buttle, 1996) Boulding et al., (1993) also disagreed with the consideration of the expectation dimensions, and stated that only perception can be used to evaluate service quality Thus, in this study, SERVPERF will

be used to measure service quality

 The SERVPERF scale consists of the five dimensions of service quality and

22 perception items excluding any consideration of expectations Five dimensions of the SERVPERF scale are tangibility, reliability, assurance, responsiveness and empathy

Service quality is defined the model SERVPERF as follows :

Service Quality = Customer Perceptions

The research instrument designed is based on the five dimensions of service quality and the 22 service items of the SERVPERF model

CHAPTER 3: RESEARCH METHODOLOGY

Within this chapter, The study specifically identifies and describes the sources of data, methods of data analysis, research framework to be used in the investigation

of three objective of this study

3.1 Data sources

- The secondary data used for this topic were collected from documents, books, newspapers, internet about 13 private commercial banks that have headquarters in HCMC, and the information of the State Bank

- The primary data were collected through personal interview from customers were using banking services about their perceptions of the services quality provided by five private commercial banks in HCMC in August 2014 The structured questionnaire from selected customers consists five (05) questions for Reliability, five (05) questions for Responsiveness, five (05) questions for Assurance, five (05) questions for Empathy and four (04) questions for Tangibility and five (05) for Customer satisfaction with relevant personal information

3.2 Methods of data analysis

3.2.1 For objective No.1 :

Topic was used secondary data from the business situation of 14 commercial banks that have headquarter in HCMC through internet, some statistical reports of

Mr Nguyen Duc Lenh - Integrated Research Manager of the State Bank of Vietnam – HCMC branch

3.2.2 For objective No.2 :

a Scale

Topic used SERVPERF scale to determine the factors that affect customer satisfaction on service quality of private commercial banks in HCMC All scales

of concept were studied in scale model are multivariate and were measured with 5-point Likert-type scale ranging from 1- Strongly Disagree to 5- Strongly Agree

b Analysis steps to achieve objective 2 : Cronbach’s Alpha; Exploratory factor

analysis (EFA) and binary logistic model were used to analyse objective 2

b1) A Tool for Assessing the Reliability of Scales is Cronbach’s Alha (Cronbach, 1951) Cronbach's alpha determines the internal consistency or

average correlation of items in a survey instrument to gauge its reliability It emphasized that reliability tests are especially important when derivative variables are intended to be used for subsequent predictive analyses If the scale shows poor reliability, then individual items within the scale must be re-examined and modified or completely changed as needed One good method of screening for efficient items is to run an exploratory factor analysis on all the items contained in the survey to weed out those variables that failed to show high correlation

b2) Exploratory factor analysis (EFA): EFA is a technique that attempts to

determine the minimum number of continuous latent variables or factors that can adequately describe the correlations among a set of observed variables The model is exploratory in the sense that it does not impose a structure on the relationship between the observed variables and the continuous latent variables but only specifies the number of continuous latent variables The goal of exploratory factor analysis is to find the smallest number of interpretable factors that can adequately explain the correlations among a set of variables It is important that the factors be interpretable according to a recognized theory in addition to the model fitting the data well Exploratory factor analysis results can

be influenced by the set of variables included in the analysis Therefore, it is important that the set of variables be developed carefully with the aim of measuring specific content areas prior to using EFA to study the intended dimensionality When used with such a set of variables, EFA can be a useful tool

not only for understanding the dimensionality of a set of variables but also for isolating variables that do not measure the dimensions well EFA can be helpful during pilot work in the development of a set of items Structural diagram of the multiplier variable described by the following equation :

Fi = Wi1X1 + Wi2X2 + Wi3X3+ + WiKXk

B3) Multiple Regression Analysis: Regression analysis examines the

simultaneous effects of several independent variables on a dependent variable that is in interval scale Therefore, it was applied to show us how much of the variance in the customer satisfaction is explained by the set of service quality

factors

For objective No.3 :

Analysis results of objective 2 shows the strengths, weaknesses, reasons in order

to propose mary solutions to improve service quality, provide best satisfaction

when customers use services of the private commercial banks

3.4 Research Hypotheses

From the above mentioned model the following main hypothesis are developed such as:

H1: More responsiveness, more satisfaction

H2: More empathy, more satisfaction

H3 : More reliability, more satisfaction

H4: More tangibility, more satisfaction

H5: More assurance , more satisfaction

CHAPTER 4: BUSINESS SITUATION AND BUSINESS PERFORMANCE

OF PRIVATE COMMERCIAL BANKS IN HCMC

4.1 General overview of the activities of the private commercial banks that

have headquater in HCMC :

The overview about business activities of private commercial banks (14 banks

have headquaters in HCMC) by the end of October, 2014 reflected indicators of

following main activities :

Table 4.1: The overview about business activities of private banks

In the past 5 years, although operating during the global economic crisis and the

difficulties of the country's the macro economic, the commercial banks operating

in HCMC, in terms of quantity, there is a high level of growth in scale of

operations and operating network This reflects on following 03 key dimensions:

4.1.1 Scale of operations grow and expand In that, total assets at the end of

October,31, 2012 reached : 1,089,041 billion VND, increased by 3 times and

chartered capital: 79 678 billion VND, an increase of 3.5 times compared to

2007 Associated with that process, network of operations expands Most large

commercial banks have branches operating throughout the provinces of the

country, creating conditions to attract deposit funds; providing development capital and banking services

4.1.2 Capital raising activities and high credit growth and expanded market share :

Except for the recent 02 years (2011 and 2012) by implementing tight monetary policy, credit growth under oriented indicators and scale of operations, the financial capacity of each banks - capital raising and credit growth in the last 02 years of commercial banks is low But if you calculated the overall figures for 5-year period, the operations for mobilizing and lending capital of the private commercial banks in HCMC had high and overheated growth In 2009, credit of this group increased to 62.1% and 38.2% in 2010 Specifically :

Table 4.2: The operations for mobilizing and lending capital of the banks

Accordingly, the market share of deposits and credits from this group increases and changes the structure of the market in relation with the group of other banks (analysis of the banking group in the form of ownership) If in 2007, all commercial banks accounted for 41.5% of total deposits and 43.9% of total credits, then to october, 2012 total deposits and total credits of this group are 54.6% and 49,85%

4.1.3 Development and application of modern banking technology in business are more completed, common, comprehensive and highly effective

This is a remarkable result in the operation of commercial banks in the area in the last period If before year 2007, this process developed in the different levels, but

now almost all the commercial banks in HCMC have developed and the application of modern banikng technology in business Developing corebanking, enabling centralized data processing, and connecting and paing online throughout system of credit institutions Creating conditions for credit institutions and operators flexibility to use capital more efficiently, promoting and developing activities of payment, money transfer and electronic banking services to meet the increasing demand for translation banking economy Creating conditions for credit institutions to exploit and use capital more flexibly and efficiently, promoting and developing activities of payment, transfering money and electronic banking services to meet the increasing demand for banking services for the economy

However, due to the impact of the global financial crisis and the difficulties of macro economy, the operation of the banking system in general and the city commercial banks in particular has difficulties and many existing restrictions, do not only have solutions in the medium and long term, has better process to restructure and transform the growth model for the entire banking system and for each major banks : transition from growth to the width, growth in terms of quantity (as before) to growth in depth, quality, efficiency and sustainability

4.2 The basic existence and limitations:

4.2.1 Unstable and sustainable growth : growth of the commercial banks in the

area in past years mainly grew in size, quantity (As discussed in the previous section) with the unstable

growth and development In 2008, credit growth of this group is 13.3%; increased

to 62.1% in 2009, 38.2% in 2010, and decreased to 11.87% in 2011 This process reduces and greatly affected the quality and performance of the banks:

+ Unreasonable capital structure and use : Short-term deposit was primarily, but banks focused more on long-term loans, real estate loans Term risk potential Besides some banks had high ratio of using capital (over 100% in 2007 -2008),

some banks had capital ratios to 150%, use capital of market II in order to lend Consequently, when the market corrected, particularly the real estate market froze, some commercial banks faced many difficulties about liquidity and had line impact to the whole system

+ Bad debts incurred and had tends to increase Rapid and overheated growth lead credit risk levels highly As a result of bad debts in the commercial banks have tended to increase Currently, some banks have high bad debts and over 5% + Quality of asset and debt asset is low Some investment areas strongly affected

by fluctuating market, causing great impact on business performance

4.2.2 Low competitiveness : Management perspective, assessing the

convergence factor of the competitiveness such as : Position of banks; Capital and profits; risk levels and other related issues: capital and liquidity; market share placed in relation to comparisons with other commercial banking group, especially foreign bank group in last years - reflecting the competitiveness of domestic banks in general and commercial banks of the area in particular is very limited And in the current difficult conditions, this limitation can be seen more clearly

+ The growth of the business and expanding the scale of operation, the operating network associated with performance, these products and services will provide utility customers, attract customers and open market share - That is the result of effective growth, sustainable growth However, in recent years, this advantage of the commercial banks have been affected, diminished market confidence Especially in last times, when a number of cases related to banking activities arise, market sentiment and confidence of the people affected, directly impact to the business operations of a some commercial banks in the area

+ The commercial banks mostly gain market share and attract customers with promotions, interest rates, rising costs, not only affects business performance, competitiveness, but also influences not small to the market order and

implements effective policies of central banks on monetary, credit and interest rates

+ The fields of busines were reduced and grew lowly Mobilizing and lending capital increased slowly and lowly; profits declined; bad debts rose while foreign banking group had stability growth and still remained quite In the overall business results of the first 10 months of year 2012, foreign bank group accounted for 60%

4.2.3 High risk potential business : These are limitations that need special

attention, with deep impact and a high level of banking activity, which requires the necessity of restructuring activities and the banking apparatus And structure

of the banking system reflects all the limitations of the private commercial banks

In that, resulting from the improper use of funds, focusing on loan real estate sector; financial business investment: corporate bonds; securities; Gold trading; mobilizing capital and lending in gold … having potential level of risk and when the market volatility has significant impact to the business operations of the bank, depending on the severity and scale of investment business in the fields

4.3 A number of reasons:

There are many causes giving the existence of restrictions on commercial banks

in general and HCMC in particular In which the objective causes of environmental factors and their impact on macro-economic difficulties, the commodities market, real estate market, gold market…But underlying nature and causes, profound causes belongs to the credit institutions, joint stock commercial banks during the operation and development Specifically :

First overheated growth and management of liabilities - assets was less effective

Resulting from hot credit growth in the previous year (on average 30% / year) In such part of the capital was focused on the non-manufacturing sector Especially the field of real estate So when these markets adjust, freeze, difficulty for credit

institutions in general and in particular commercial banks is very large, because the borrower does not have the ability to repay

+ Exploitation and improper use of funds, mainly focused on lending, investment

of government bonds, low state bank bills Some credit institutions do not have this portfolio So when the tough market, credit problems, credit institutions face many difficulties in liquidity; in income and diversify investments

Second Transparency in business activities have not been adhered to Especially

in the banking sector - highly demanding field that requires special about compliance, principles and transparency in business operations But in past years,

a number of banks for chasing profits, for the purpose of business was unreasonable legal risk: interest spleen; increased financial investment; recognition and investment trusts inappropriate nature and objects Leading to significant risks A part of the bad debt or loss of capital due to the lack of transparency caused as a result of the current difficulties;

Third The cause of the elements of resources and resources quality In which :

+ Elements of human resources, low level of human resources and uneven degree

at the management level Specially, factors of professional ethics of bankers - mistakes due to human factors at different levels: from credit officers; Accounting officers and leaders in a number of banks in relation to lawsuits arising recent upward trend, reflect the severity and special attention, have corrective and changing methods of management from major financial institutions to enhance the quality and operational efficiency

+ Building management system, inappropriate and unscientific system of targets

At some banks in last years, the targets (mobilization, lending; profit .) has become a pressure on the branch, for each of the employees of banks and consequences arising out of unfair competition, the lending conditions in credit growth, significant influence on the currency market and banking activities, credit institutions due to bad and overdue debts incurred;

+ Some credit institutions’ forecasting, market analysis and assessment is limited When the volatile markets, especially the real estate market; gold market is difficult at present, there is a significant impact to the business operations of these credit institutions

+ Lending mode and credit assessment, rely too much on the secured assets, the forms of loan based on cash flow; assessing the financial capability and project performance remains are untapped maximum So even if the secured assets of loan are houses, land extensively, they are handle debt recovery still having significant potential risks (real estate market froze, hard sell, hard to handle and

to implement judgment execution slowly )

CHAPTER 5 : EMPIRICAL RESULTS AND DISCUSSION

Determination of the factors affects the level of customer satisfaction with the services quality of private commercial banks The study examined the suitability

of the scale, then proceed the Exploratory Factors Analysis (EFA), regression analysis

5.1 Results of interviews about the customer personal information

Table 5.1: Demographic profile of the sample respodents

From the above table, it is seen among the 269 eligible respondents such as : + The majority of the customers are found to be Male with 65,06%;

+ Most of the customers were found between the age limit of 30- 60 years with 66,91%

+ As occupation plays an important role in the savings habit of the customers, it

is seen that 36,06% of customers are doing business

+ Survey results showed that most customers are trading at Bank having income

in the range of 10-20 millionVND The results showed that customers have income that they tend to transact banks and meet the needs of using service + Regarding Educational background, it is seen that 56,51% of customers had university level Analyzing the nature of family status, it is found that 54% of the customers are living jointly with their family members These customers are highly qualified education and have the cognitive ability to access the services and facilities of the bank easier And this is one of the advantages of the current bank

high-+ Finally, only 28 customers (accounting for 10.41%) deal with one bank. This shows that customers tend to use the services of many banks That means, if the any bank that has good service quality will attract more and more customers to transact

5.2 Checking the relevance of the scale

Scale of customer satisfaction on service quality have the 5 basic components Those are: (1) Responsiveness; (2) Empathy; (3) Reliability, (4)Tangibility;(5) Assurance

Five variables for Responsiveness, five variables for Empathy, five variables for Reliability, five variables for Assurance and four variables for Tangibility

Variables are evaluated at the 5 level Likert scale from (1) strongly disagree to (5) strongly agree

Before making variables into the analysis model of customer satisfaction on service quality, it is necessary to test the reliability of the scale that constitutes the level of customer satisfaction on service quality The test results of Cronbach alpha from 0.8 to 1 is good, from 0.7 to 0 8 is almost usable (Hoang Trong and Chu Nguyen Mong, 2008) Applied to specific cases, the processing results of information from the survey of customer satisfaction on bank services quality,

we have Cronbach alpha to be 0.762 (overall scale reliability was checked by Cronbach's alpha Reliability test) so the result could be used and 24 variables were used for EFA (Appendix 1)

5.3 Exploratory Factor Analysis

Step 2 is the factor analysis for each component to draw factors that will be used

as independent variables in the regression model

Factor analysis is used for multi-direction scale is to identify the components or factors that explain correlation in a set of variables The variables are not clearly defined correlation with any factor due to factor loading coefficient is approximately the same factors that is considered as garbage and discarded variable If there is an elimination of variable, the process of factor analysis will repeat until the agreement met the necessary requirements Eigenvalue> 1, the total extracted variance is greater than or equal to 50%

The twenty four (24) variables of Service quality dimensions are taken for factor analysis, Barlett's test of Sphericity has coefficient KMO = 0.767 which shows that the service quality factors considered for this study explained the variables in Service quality to the extent of 76.70 percent and sig = 0,000, which is less than the level of significance (p=0.05), hence it is clear that the factor analysis considered for data reduction is efficient and justifiable and it also reflected the correlations among the variables considered for this study Through factor analysis, 5 factors were extracted with rotation sums of squared loadings (Cumulative %) = 67.97%, eigenvalues = 1,54, that means 5 factors explained 67.97% of the data variability Thus, hypothesis Ho is rejected at 1% significance level We accept H1 that means the variables are related to each other All variables have factor loading coefficient> 0.5 so that the model of customer satisfaction with the quality of banking services including 24 variables (see Appendix 2)

The result of Table 5.2 shows in the model, factors have larger coefficients, they have more influential level than the other variables and vice versa

Table 5.2 Rotated Component matrix

R1 Banks are interested in solving problems

for customers

0,73

R2 The Banks offer their services on time as

Responsiveness

Re1 Employees of banks have ready attitude to

serve you quickly and timely

0,85

Re2 Employees of banks ready go to customers’

house to advise and assist them

0,77

Re3 The utility of the products and services of

the bank to meet customers' requirements

0,83

Re4 Processing time of application and

procedure is fast

0,88

Re5 The Banks have several programs of

attractive marketing and promotions

0,81

Assurance

dedicated service attitudes to give

customers comfort

0,66