AN INVESTIGATION OF CRITICAL FACTORS AFFECTING CUSTOMERS' TRUST IN ...

288 Pages·2017·3.94 MB·English

An Investigation of Critical Factors Affecting Customers'
Trust in Electronic Banking: Empirical Evidence from
Vietnam
Author
Nguyen, Long Duy
Published
2016
Thesis Type
Thesis (PhD Doctorate)
School
Griffith Business School
DOI
https://doi.org/10.25904/1912/840
Copyright Statement
The author owns the copyright in this thesis, unless stated otherwise.
Downloaded from
http://hdl.handle.net/10072/367718
Griffith Research Online
https://research-repository.griffith.edu.au
AN INVESTIGATION OF CRITICAL FACTORS
AFFECTING CUSTOMERS’ TRUST IN ELECTRONIC
BANKING: EMPIRICAL EVIDENCE FROM VIETNAM

Nguyen Duy Long
B.Sc (Economics), M.Sc (Economics)

Department of Accounting, Finance and Economics
Griffith Business School
Griffith University

Submitted in fulfilment of the requirements for the degree of
Doctor of Philosophy

November, 2015
ABSTRACT
Electronic banking services have gained increased popularity around the world;
however in Vietnam these services have put just their first footsteps in the beginning of
2005. Electronic banking is an alternative means of offering customers expedited and
self-controlled transactions using the Internet as the medium for the transaction.
Nowadays, banks use electronic banking services as a powerful “value added” channel
to attract and retain new customers. This research examines the critical factors affecting
customers’ trust in electronic banking in Vietnam. The analysis is carried out by
answering three research questions: Does customers’ trust in electronic banking affect
their intention to use electronic banking in Vietnam? What are the key factors affecting
customers’ trust in using electronic banking and subsequently, their intention to use
electronic banking in Vietnam? How can banks use these factors to foster customers’
trust in electronic banking? These questions often confront researchers as well as bank
managers and policy makers.
The study conducts a comprehensive field survey, covering 557 participants, in the
North, Central, and South of Vietnam (July 1 to November 30, 2013) to collect primary
data from the customers’ perspectives. Two main methods of analysis are used to
develop and analyse the collected data: analytical reviews and synthesis; and
econometric analysis with various statistical techniques, including Exploratory Factor
Analysis, Confirmatory Factor Analysis, and Structural Equation Model. To our
knowledge, this is the first study to consider the factors affecting customers’ trust in
using electronic banking in Vietnam. Few papers have attempted to examine the
adoption model, the drivers of customer intention to use electronic banking, the factors
that affect the adoption of online banking, and the use of e-payment. None of these
studies, however, has examined the factors affecting customers’ trust in electronic
i
banking, even though trust plays an important role in e-commerce, especially electronic
banking transactions.
The study finds that trust has a positive and significant effect on customers’ attitude
towards as well as customers’ intention to use electronic banking. Customers’ trust in
electronic banking, in turn, is found to be influenced by the usefulness of electronic
banking websites, the disposition to trust, their trust in the institution (institution-based
trust) and their perception of the quality of electronic banking websites (perceived
website quality). To enable bank managers and policy makers to benefit from the
identification of those factors affecting customers’ trust in electronic banking, the issues
underpinning these factors are converted into eight actionable guidelines. The policy
makers could consider these guidelines while framing policies with regard to usability,
security, privacy, website design, education, advertisement, assurance, and feedback
between electronic banking suppliers and customers. We believe the findings of this
research to be useful for both bank managers and policy makers of other developing
countries.

ii
STATEMENT OF ORIGINALITY
This work has not previously been submitted for a degree or diploma in any
university. To the best of my knowledge and belief, the thesis contains no
material previously published or written by another person except where
due to reference is made in the thesis itself.
---------------------------------------------------------
Nguyen Duy Long
2016
iii
TABLE OF CONTENTS

ABSTRACT .......................................................................................................................i
LIST OF ABBREVIATIONS........................................................................................... xi
LIST OF TABLES.......................................................................................................... xiii
LIST OF FIGURES ......................................................................................................... xv
LIST OF PUBLICATIONS ........................................................................................... xvii
ACKNOWLEDGEMENTS.......................................................................................... xviii

CHAPTER 1 ..................................................................................................................... 1
INTRODUCTION ............................................................................................................ 1
1.1. INTRODUCTION ..................................................................................................... 1
1.2. RESEARCH PROBLEM AND SIGNIFICANCE OF RESEARCH AREA. ........... 2
1.3. RESEARCH OBJECTIVES AND CONTRIBUTIONS ........................................... 5
1.4. RESEARCH METHODS .......................................................................................... 7
1.5. STRUCTURE OF THE STUDY ............................................................................... 7

CHAPTER 2 ................................................................................................................... 10
FACTORS AFFECTING CUSTOMERS’ TRUST IN ELECTRONIC BANKING:
REVIEW OF THE LITERATURE ................................................................................ 10
2.1. INTRODUCTION ................................................................................................... 10
2.2. ELECTRONIC BANKING: SOME CONCEPTUAL UNDERPINNINGS ........... 11
2.2.1. Electronic banking: some basics ....................................................................... 11
iv
2.2.2. Advantages of electronic banking..................................................................... 14
2.2.3. Disadvantages of electronic banking ................................................................ 16
2.2.4. Importance of trust in electronic banking ......................................................... 17
2.2.4.1. Definitions of trust...................................................................................... 17
2.2.4.2. Importance of trust ..................................................................................... 19
2.3. FACTORS AFFECTING THE ADOPTION OF ELECTRONIC BANKING: A
REVIEW OF THE THEORIES AND MODELS .......................................................... 20
2.4. ELECTRONIC BANKING IN THE INTERNATIONAL SETTING .................... 25
2.4.1. Samples and methodologies of previous research ............................................ 26
2.4.2. Factors affecting customers’ acceptance of electronic banking........................ 27
2.4.3. Empirical findings of international studies ....................................................... 33
2.5. ELECTRONIC BANKING IN VIETNAM ............................................................ 54
2.6. RESEARCH GAPS IN THE LITERATURE.......................................................... 57
2.7. SUMMARY AND CONCLUSIONS ...................................................................... 59

CHAPTER 3 ................................................................................................................... 60
RESEARCH QUESTIONS, METHODOLOGY AND DATA ..................................... 60
3.1. INTRODUCTION ................................................................................................... 60
3.2. CONCEPTUAL FRAMEWORK AND RESEARCH QUESTIONS ..................... 61
3.3. DATA ...................................................................................................................... 63
3.3.1. Primary data: field survey and questionnaire design ........................................ 63
3.3.1.1. Measurement scale ..................................................................................... 64
3.3.1.2. Questionnaire design .................................................................................. 64
3.3.1.3. Questionnaire pre-test................................................................................. 64
3.3.1.4. Vietnamese translation ............................................................................... 65
3.3.1.5. Ethics for the questionnaire survey ............................................................ 65
v
3.3.1.6. Sampling method ........................................................................................ 65
3.3.1.7. Sampling frame and sample size ................................................................ 66
3.3.1.8. Data collection method ............................................................................... 67
3.3.2. Secondary data .................................................................................................. 69
3.4. MEASUREMENT SCALE ANALYSIS ................................................................ 69
3.4.1. Internal consistency........................................................................................... 70
3.4.2. Item-total correlation......................................................................................... 70
3.5. RESEARCH METHODOLOGY ............................................................................ 71
3.5.1. Exploratory factor analysis ............................................................................ 71
3.5.2. Confirmatory factor analysis ......................................................................... 74
3.5.3. Structural Equation Modelling ...................................................................... 80
3.6. SUMMARY AND CONCLUSIONS ...................................................................... 84

CHAPTER 4 ................................................................................................................... 85
VIETNAM ECONOMY: AN OVERVIEW .................................................................. 85
4.1. INTRODUCTION ................................................................................................... 85
4.2. SOCIO-GEOGRAPHICAL CHARACTERISTICS OF VIETNAM ...................... 86
4.2.1. Geographical characteristics ............................................................................. 86
4.2.2. Demographic structure ...................................................................................... 88
4.2.3. Education .......................................................................................................... 88
4.2.4. Technological factors: information technology in banking services ................ 89
4.3. VIETNAM ECONOMY: 1990s TO 2014............................................................... 89
4.3.1. Vietnam’s accession to WTO ........................................................................... 90
4.3.2. Sectoral investment and performance ............................................................... 92
4.3.3. Economic growth .............................................................................................. 95
4.3.4. Rate of unemployment ...................................................................................... 96
vi
4.3.5. Rate of inflation ................................................................................................ 97
4.3.6. Foreign Direct Investment ................................................................................ 98
4.4. FINANCIAL SECTOR IN VIETNAM ................................................................. 100
4.4.1. The structure of the Vietnamese financial system .......................................... 101
4.4.2. Performance of the banking sector.................................................................. 103
4.5. ECONOMIC AND FINANCIAL REFORMS IN VIETNAM ............................. 105
4.6. STRUCTURE OF THE BANKING SYSTEM IN VIETNAM ............................ 108
4.7. SUMMARY AND CONCLUSIONS .................................................................... 111

CHAPTER 5 ................................................................................................................. 113
ELECTRONIC BANKING IN VIETNAM ................................................................. 113
5.1. INTRODUCTION ................................................................................................. 113
5.2. ELECTRONIC BANKING SERVICES: A GENERAL OVERVIEW ................ 114
5.2.1. Electronic Fund Transfer at Point Of Sale ...................................................... 114
5.2.2. Automated Teller Machine ............................................................................. 115
5.2.3. Phone banking................................................................................................. 116
5.2.4. PC banking or PC home banking .................................................................... 117
5.2.5. Internet banking .............................................................................................. 117
5.2.6. Credit cards ..................................................................................................... 118
5.2.7. Debit cards ...................................................................................................... 119
5.3. ELECTRONIC BANKING: THE REGULATORY FRAMEWORK .................. 120
5.4. GROWTH OF ELECTRONIC BANKING SERVICES IN VIETNAM .............. 125
5.4.1. Internet usage in Vietnam ............................................................................... 125
5.4.2. The usage of cash in the economy .................................................................. 127
5.4.3. The growth of card services ............................................................................ 129
5.4.4. Core banking system in Vietnam .................................................................... 133
vii
5.4.5. Electronic banking in Vietnam ....................................................................... 135
5.5. SUMMARY AND CONCLUSIONS .................................................................... 139

CHAPTER 6 ................................................................................................................. 141
EFFECT OF TRUST ON CUSTOMERS’ INTENTION TO USE ELECTRONIC
BANKING IN VIETNAM ........................................................................................... 141
6.1. INTRODUCTION ................................................................................................. 141
6.2. THE MODEL ........................................................................................................ 142
6.2.1. Technology Acceptance Model ...................................................................... 142
6.2.2. Structure of the extended Technology Acceptance Model ............................. 143
6.3. THE HYPOTHESES SETTING ........................................................................... 144
6.4. MODEL ESTIMATION AND RESULTS............................................................ 147
6.4.1. Exploratory factor analysis ............................................................................. 147
6.4.2. Confirmatory factor analysis........................................................................... 149
6.4.3. Factor-of-factor analysis ................................................................................. 152
6.4.4. Normality of the distribution .......................................................................... 155
6.4.5. Final measurement model ............................................................................... 156
6.4.6. Final structural model ..................................................................................... 158
6.4.7. Hypotheses testing and analysis...................................................................... 161
6.5. SUMMARY AND CONCLUSIONS .................................................................... 163

CHAPTER 7 ................................................................................................................. 165
FACTORS AFFECTING CUSTOMERS’ TRUST IN USING ELECTRONIC
BANKING IN VIETNAM ........................................................................................... 165
7.1. INTRODUCTION ................................................................................................. 165
7.2. MODEL STRUCTURE AND THE HYPOTHESES SETTING .......................... 167
7.2.1. Model structure ............................................................................................... 167
viii