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

Pham Thanh An

FARMERS’ BEHAVIORAL INTENTION
TO USE FORMAL CREDIT:
A STUDY IN CANTHO CITY, VIETNAM

Ho Chi Minh City – 2016


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

Pham Thanh An

FARMER’S BEHAVIORAL INTENTION
TO USE FORMAL CREDIT:
A STUDY IN CANTHO CITY, VIETNAM

ID: …….

MASTER OF BUSINESS (Honours)
SUPERVISOR: Dr. TRAN PHUONG THAO

Ho Chi Minh City – 2016

i
ACKNOWLEDGMENTS
Firstly, I would like to express my deepest appreciation to my supervisor Dr. Tran
Phuong Thao for her professional guidance, valuable advices, continuous
encouragement, and support that made this thesis possible.
I would like to extend deep senses of gratitude to Prof. Nguyen Dinh Tho, Dr. Tran Ha
Minh Quan, and lecturers who have taught and transferred me valuable knowledge and
experiences during my time taking Master of Business courses at International School
of Business, special thanks to all of my dear friends in Mbus4 class who gave me
useful materials, responses and experiences to conduct this study.
I would also like to express my grateful thanks to my associates, my friends, and my
colleagues who participated in filling the questionnaires and/or helped send the
questionnaires to the famers, and provided valuable information and comments for this
study.
Personally, I wish to express my deep gratitude to my colleagues and friends working
at State Bank of Vietnam, Cantho City; MBBank Cantho; Vietcombank Cantho;
Sacombank Cantho; Eximbank Cantho; BIDV Cantho; Agribank Cantho
Ho Chi Minh City, Vietnam


ii
ABSTRACT
Exploring motivation for accessing formal credit is increasingly receiving interest
from researchers and practitioners. However, few of their works have specifically
investigated in the context of Vietnam on empirical basis. This paper aims to
empirically examine the determinants of farmer‟s behavioral intention towards using
formal credit in Vietnam. Drawing on Theory of Reasoned Action (TRA) model, this
study suggests a modified TRA model associated with other constructs (i.e. perceived
service quality, and perceived value). Using a data set of 250 cases in a survey and
multiple regressions, the analyses indicated that formal credit‟s usage is enabled

substantially by perceived service quality and subjective norm following by perceived
value and attitude. The results imply that to facilitate the farmer‟s behavioral intention
to use formal credit, banking authorities and commercial banks need to continuously
improve quality of lending service which focuses on simplifying procedures of
approving and disbursing fund, and to consider educating the farmers and local
associations the promotion of ease of use and usefulness of formal credit as well as its
distinct advantages compared with informal credit or “black credit”. The findings
suggest several implications for leadership of commercial banks and banking
authorities.
Keywords: Formal credit, Theory of Reasoned Action (TRA), perceived service
quality, perceived value, behavioral intention.


iii
TABLE OF CONTENTS
ACKNOWLEDGMETS................................................................................................. i
ABSTRACT. ..................................................................................................................ii
TABLE OF CONTENT .............................................................................................. iii
LIST OF FIGURES ....................................................................................................... v
LIST OF TABLES ........................................................................................................ vi
LIST OF ABBREVIATIONS .....................................................................................vii
CHAPTER 1: INTRODUCTION ................................................................................ 1
1.1. Research background .............................................................................................. 1
1.2. Research problem. .................................................................................................. 3
1.3. Research objectives................................................................................................. 5
1.4. Research scope ........................................................................................................ 6
1.5. Research contribution ............................................................................................. 6
1.6. Research structure ................................................................................................... 7
CHAPTER 2: LITERATURE REVIEW .................................................................... 8
2.1. Foundational theory ................................................................................................ 8

2.2. Review on Behavioral intention. .......................................................................... 10
2.3. Hypotheses Development. .................................................................................... 12
2.3.1. Attitude ............................................................................................................... 12
2.3.2. Subjective norm .................................................................................................. 13
2.3.3. Perceived service quality .................................................................................... 14
2.3.4. Perceived value. .................................................................................................. 15
2.4. Conceptual model ................................................................................................. 16
2.5. Chapter summary. ................................................................................................. 17
CHAPTER 3: METHODOLOGY ............................................................................. 18
3.1. Research process. .................................................................................................. 18
3.2. Questionnaire design ............................................................................................ 19
3.3. Sampling method . ................................................................................................ 22
3.4. Research method. .................................................................................................. 22
3.4.1. Reliability measure (Cronbach‟s Alpha) ............................................................ 22


iv
3.4.2. Validity measure by exploratory factor analysis. ............................................... 22
3.4.3. Multiple Regressions .......................................................................................... 23
3.5. Chapter summary. ................................................................................................. 24
CHAPTER 4: DATA ANALYSIS .............................................................................. 25
4.1. Respondent‟s demographics. ................................................................................ 25
4.2. Reliability Analysis............................................................................................... 26
4.3. Exploratory factor analysis (EFA). ....................................................................... 28
4.3.1. EFA for Independent constructs. ......................................................................... 28
4.3.2. EFA for Dependent variable. ............................................................................... 30
4.4. Multiple Regressions. ........................................................................................... 30
4.4.1. Results of testing assumptions............................................................................. 31
4.4.2. Results of multiple regressions analysis. ............................................................. 32
4.5. Discussion of research findings. ........................................................................... 35

4.6. Chapter summary. ................................................................................................. 38
CHAPTER 5: CONCLUSIONS AND IMPLICATIONS ........................................ 40
5.1. Conclusion. ........................................................................................................... 40
5.2. Implications. ......................................................................................................... 41
5.2.1. For bank‟s Managers. ......................................................................................... 41
5.2.2. For government authorities. ................................................................................ 42
5.3. Recommendation for further studies. ................................................................... 42
REFERENCE............................................................................................................... 44
APPENDICES .............................................................................................................. 55
Appendix A: List of in-depth interview participants...................................................... 1
Appendix B: In-depth interview‟s refinement measurement scale. ................................ 2
Appendix C: Questionnaire (English Version). .............................................................. 3
Appendix D: Questionnaire (Vietnamese Version)......................................................... 5
Appendix E: Descriptive statistics................................................................................... 7
Appendix F: Reliability test............................................................................................. 9
Appendix G: Exploratory factors analysis .................................................................... 11
Appendix H: Regressions Results. ................................................................................ 13


v
LIST OF FIGURES
Figure 2.1

TRA model

9

Figure 2.2

Conceptual model


17

Figure 3

Research process

19

Figure 4

The research model tested by Multiple Regressions

35


vi
LIST OF TABLES
Table 2.1

Representative studies utilizing TRA and bank selection criteria

11

Table 3.1

Final measurement scales

21


Table 4.1

Demographics profile

25

Table 4.2

Reliability test result

26

Table 4.3

KMO and Bartlett's Test of Independent variables

28

Table 4.4

Total variance explained of Independent variables

29

Table 4.5

Pattern matrix

29


Table 4.6

KMO and Bartlett's Test of Dependent variable

30

Table 4.7

Factor Matrix

30

Table 4.8

Total variance explained of Dependent variables

30

Table 4.9

Correlation matrix

32

Table 4.10 Model summary

32

Table 4.11 ANOVA


33

Table 4.12 Regression results by ENTER method

33

Table 4.13 Summary of results of testing hypotheses

34


vii
LIST OF ABBREVIATIONS
No.

Abbreviation

Name

1

TRA

Theory of reasoned action

2

EFA

Exploratory Factor Analysis


3

ATT

Attitude

4

SJN

Subjective norm

5

PSQ

Perceived service quality

6

PVL

Perceived Value

7

TAM

Technology acceptance model


8

TPB

Theory of planned behavior

9

SBV

State Bank of Vietnam


1
CHAPTER 1: INTRODUCTION
1.1. Research background
Vietnam‟s economy has been converting from a centrally planned economy to a
market - oriented economy as from the Doi Moi policy being initiated in the late
1980s. The policy resulted in a steady annually economic growth of 4.6% in the
1980s, 7.6% in the 1990s and 7% in 2008 (Duy, D‟Haese, Lemba, Hau & D‟Haese,
2012). For instance, the contribution of agriculture to total gross domestic production
on average at 3.68% per annum for the period of 1986 to 2014, of which growth rate
of farming, forestry and fishery production stably increase by 5.5% per annum within
the same period (Ministry of Foreign Affairs, 2016). After 20 years since Doi Moi
policy, agricultural production has been steadily grown, in which food production had
a significant rise since 1989. Yet, poverty levels remain relatively high in countryside
areas, with the inequity in development between rural and urban regions still being
large.
Additionally, there is a wide gap in wealth between rich and poverty-stricken

households. Rural economies in Vietnam therefore deserve more attention and
support, if rural poverty is to be contained (Scott & Brassard, 2005). Known as a
country of high proportion of rural population, 66.9% of the peasant households of
Vietnam live in rural areas mainly attached to farming (General Statistics Office of
Vietnam, 2014). Peasant household, nevertheless, does farming business without right
direction and with being in shortage of finance (Phan Huy Duong, Bui Duc Tung &
Phan Anh, 2010). Credit, hence, is considered to be an essential resource to improve
farm household welfare and production. In rural development programs, the
government uses credit programs in an attempt to provide the rural poor with access to
cheap credit, in order to increase productivity, living standards. Access to formal
credit is considered to be an important tool for promoting production and quality of
life (Duy et al., 2012).
Formal credit, which is also widely named as agricultural credit, rural credit, is
generated from formal lenders (i.e. commercial banks, cooperative banks) being
institutions regulated by the government and operated within the regulatory
framework of the financial systems while informal sources are money lenders,


2
pawnshops and family or friends (Campero & Kaiser, 2013). It is believed that
informal credit is easy to access due to its convenience, quickness, widespread
presence (i.e. market, neighboring places). However, the government‟s failure to
intervene agriculture credit led to the existence of informal lending activities in
Vietnam, which is similar to many developing countries. Informal credit exposes
some features such as by far higher rate of interest than formal one which is usually
verbally agreed, short lending period which is commonly agreed on monthly basis,
and at the due date violence might be applied if the borrower fails to repay (State
Bank of Vietnam [SBV], 2016). Lack of collateral, weak credit contract enforcement
and underdevelopment of insurance service discourage bank creditors to serve this
market (Ghosh, Mookherjee, & Ray, 2000). It is asymmetry information that formal

financial institutions ruled peasant household out the access of formal credit (Hoff &
Stiglitz, 1990).
Agricultural credit involves giving out of credit to small scale farmers for the
purpose of farming (Oladeebo & Oladeebo, 2008). This was also argued by
Muhongayire, Hitayezu, Mbatia and Mukoya-Wangia (2013) that farm credit
enhances productivity and promotes standard of living by breaking vicious cycle of
poverty of small scale farmers. It is usually also considered as an essential input for
increasing agricultural land and labor productivity, boosting food production and
income levels, encouraging employment and alleviating rural poverty.
Generally, farm credit is provided for relief of distress and for purchasing
productivity-enhancing inputs such as seeds, fertilizers, and farm implements. The
importance of credit for rural development is even more pronounced for developing
countries with largely subsistence farming systems. According to World Bank (2014),
number of adults in Vietnam owning bank account and using financial services is
rather moderate, approximately 31% compared to world average number at 62%.
While agriculture contributes significantly to the country‟s economic growth, the
sector continues to be characterized by very low levels of input use. Currently the
supply of formal credit to agriculture sector is sharply increasing of that many
institutions get involved in providing formal credit other commercial banks, and the
agricultural credit balance has been growing dramatically (Nguyen & Nguyen, 2011).


3
Further, KPMG (2013) indicated that corporate lending is the main activity of the
banks in Vietnam and it accounts for almost half of total loans while only 28% are
loans to individuals. By contrast, informal credit in Vietnam has been increasingly
growing, and reached an amount of US$ 50 billion equivalent to 30% of total lending
balance provided by commercial banks (SBV, 2013). This implies that very few
farmers in Vietnam in general and in Mekong Delta in particular actually accesses
formal credit from commercial banks. Thus, exploration of motivation for farmer‟s

usage of formal credit instead of “black credit”, “cut-throats loans” (Lainez, 2014) is
increasingly carried out by researchers and practioners.
It is challenging for farmers to grow out of poverty without being provided with
adequate and affordable financial services (Papias & Ganesan, 2010). Credit
accomplishes this developmental task by enabling risk-averse smallholder farmers to
overcome their liquidity problem and to make farm investments, particularly in
improved farm technology and inputs that could lead to increased agricultural
production (Fuentes, 1996). Thus, agricultural credit is very essential if economic
growth is to be achieved in developing countries and emerging markets.
1.2. Research Problem
Can Tho city is the primarily rice growing region of Vietnam. In 2015, Cantho
City transformed approximately 12,000ha of rice-growing land into aquaculture land,
which increased average value of production per 1 ha at 153 million VND per annum
much greater than other regions in Mekong Delta (Ministry of Agriculture and Rural
Development, 2016). Yet, most of Vietnam‟s commercial banks seem to be not paid
much attention to lend this segment of customers (Vietnam Farmer‟s Union, 2016).
As the result, there is no a specifically designed lending product for the farmers,
and the existing lending procedures and processes failed to meet the real demand,
even restraint the farmers from accessing the lending. All of commercial banks with
the intervention from the Government are carrying out lending package to this
segment of customers, but the practical effectiveness of these credit promoting
programs is still very limited.
Consequently, 62.1% users of informal credit in Mekong Delta are farmers and
family-sized businesses (Bui, 2016), there have been many credit delinquents resulted


4
from informal credit occurred over Vietnam in general and in Mekong Delta in
particular. In other words, the questions on rationales of farmers willing or reluctant to
use formal credit and factors influencing their behavioral intention to access formal

credit in Vietnam have received increasing concerns of researchers.
Many prior studies on agricultural lending have been conducted with regard to
the bank lending for farmers. For example, Betubiza and Leatham (1995) indicated
factors affecting commercial bank lending to agriculture, Oladeebo and Oladeebo
(2008) conducted study on farmers‟ loan repayment, and Frangos, Fragkos,
Sotiropoulos, Manolopoulos and Valvi (2012) indicated factors affecting customer‟s
decision for taking out bank loans. In Vietnam, most of the studies were conducted to
investigate farmers‟ access to bank credit in Hai Duong province (Chau et al., 2012),
rural credit market in the Mekong River Delta (Phan, 2012), household‟s accessibility
to formal credit in the suburb of Hanoi (Nguyen & Nguyen, 2011), formal and
informal credit in four provinces of Vietnam (Barslun & Tarp, 2008), access to credit
and borrowing behavior of rural households in a transition economy (Cuong, 2007),
credit use in farm households (Marsh, MacAulay & Hung, 2004), intention of peasant
household to apply loans in Nam Dinh province (Pham & Dong, 2013); factors
affecting the access to formal credit in An Giang province (Tran & Huynh, 2013).
Those studies in Vietnam, however, were not empirical analyses in Can Tho City and
failed to indicate the rationales for farmers to use formal credit, which factors
affecting their behavioral intention. As such, to fulfill the gap in the context of
Vietnam, this study aims to investigate the factors influencing the Vietnamese
farmers‟ behavioral intention to access formal credit from commercial banks in
Vietnam that is empirical evidence from Can Tho city in which demand of financing
the farming activities is increasingly important.
This study is about to adapt the modified TRA (theory of reasoned action)
model, which includes two original constructs (i.e. attitude, subjective norm) and two
newly added constructs (i.e. perceived service quality, perceived value), to find the
positive effects on behavioral intention. In literature, TRA model has been widely
employed in testing (behavioral) intention to accept/use internet/mobile banking,
financial service/product (Ismail, Azmin & Thurasamy, 2014; Amin, 2012; Amin,



5
Ghazali & Supinah, 2010; Nor, Shanab & Pearson, 2008). Additionally, for the sake
of managerial and marketing strategies, perceived service quality and perceived value
have been widely used to test the acceptance of, to test the preference of
customer/consumer in selecting a certain service/product, and to test the customer
loyalty (Lien, Wen, Huang & Wu, 2015; Zameer, Tara, Kausar & Mohsin, 2014;
Akdag & Zineldin, 2011; Yang & Peterson, 2004). Research on many service
industries also suggests that perceived value plays a more important role than
perceived quality in influencing customer satisfaction and loyalty (Shamdasani,
Mukherjee & Malhotra, 2008) which drive to customer‟s behavioral intention.
Previous studies suggest that customers‟ positive behavioral intentions come from
their satisfaction, while satisfaction is the result of good service quality (Ali, Leifu,
YasirRafiq & Hassan, 2015; Alqasa & Balhareth, 2015; Ladhari & Ladhari, 2011;
Abedniya & Zaeim, 2011). Thus, the concept of perceived value has been also
proposed, which simultaneously combines the benefit and cost aspects to explain
customer behavioral intentions (Monroe, 1991; Zeithaml, 1988).
1.3. Research Objectives
The overall objective of this study is to examine factors influencing the farmer‟s
behavioral intention to use formal credit. Specifically, four factors are considering in
this study includes Attitude, Subjective norm, Perceived Service quality, and
Perceived Value affecting Behavioral Intention of farmers in Can Tho city, Vietnam.
Specifically, four questions are given as follow:
Question 1: whether does attitude affect the farmer‟s intention to use in CanTho
city? If yes, how is the effect?
Question 2: whether does subjective norm affect the farmer‟s intention to use in
CanTho city? If yes, how is the effect?
Question 3: whether does Perceived Service quality affect the farmer‟s intention
to use in CanTho city? If yes, how is the effect?
Question 4: whether does Perceived Value affect the farmer‟s intention to use in
CanTho city? If yes, how is the effect?



6
Results from the study are expected to show the subsidized credit that penetrates
rural farm households in Can Tho City, which is considered to be one of the key
agricultural regions in Vietnam.
1.4. Research scope
Can Tho City, located in the Centre of the Mekong Delta, is a city directly under
the Central authorities. It is known as “the capital city of the Southwestern Vietnam”
more than one hundred years ago (Vietnam Trade Promotion Agency, 2015). Can Tho
city has advantages concerning agriculture and aquatic products, as well as in
geographical position that helps the city develop in areas such as urban infrastructure,
traffic infrastructure, hi-tech agriculture, agricultural–aquatic products and the seafood
processing, tourism and supportive industries.
The formal credit provided by formal financial institutions mentioned in this study
is within the extent of licensed banks (i.e. both state-owned banks and private
commercial banks, cooperative bank). As such, for the purpose of convenient
sampling, this study focuses on the farmers who live in Can Tho City and who are
borrowers and (would-be) borrowers of banks (i.e. Vietcombank, BIDV, Agribank,
MBBank, Sacombank, Agribank, Kienlong Bank, PVCombank, Martimebank,
Eximbank) are selected for this study.
1.5. Research Contribution
Since the study is to fill the gap in literature associated with farmer‟s behavioral
intention to use formal credit in the setting of Vietnam in which few empirical
research on the same field were conducted. The findings of this study, therefore, make
a few following contributions.
Firstly, the TRA models were demonstrated its applicability to in predicting
intention over the world, but only few TRA-based researches were conducted in the
context of formal credit in Cantho, Vietnam. Specially, the research model was built
up on the combination of two TRA constructs and two new constructs (i.e. perceived

service quality and perceived value) to evaluate farmer‟s behavioral intention, which
has not ever investigated in acceptance of formal credit. On the basis of the feedback
from the respondents in Vietnam, the empirical evidence of this study will indicate


7
that the consumer intention can be significantly explained by the modified TRA. As a
result, this work is to demonstrate the validity and generalizability of TRA in the
context of intention to use formal credit in Cantho, Vietnam. This enriches extant
researches on TRA and makes substantial contribution to the literature.
Secondly, while previous studies were conducted in Cantho City and by
Vietnamese researchers associated with the microfinance and/or rural credit, but
exploring farmer‟s behavioral intention to use formal credit by using empirical data
was just a few.
Finally, as mentioned above informal credit accounts for around 30% of total
lending balance, this study provides some managerial recommendations in order for
the leadership of commercial banks to reduce this figure.
1.6. Research structure
This study includes four chapters after chapter 1 Introduction, as below:
The first chapter introduces about background, research problems, research
objectives, scope of research and research structures.
The second chapter covers literature review of the previous research and shows
hypotheses, as well as the conceptual model of the research.
The third chapter presents the research process, sampling size, measurement
scale, main survey, and data analysis method.
The fourth chapter concentrates on preparation data, descriptive data, and
assessment measurement scale hypotheses testing.
The fifth chapter points out conclusion, implications, and directions for future
research.



8
CHAPTER 2: LITERATURE REVIEW
Chapter 1 introduced overview of research including research background, statement
of problem, research objectives, research scope, research contribution, and research
structure. The chapter 2 presents the TRA theory associated with farmer‟s behavioral
intention to use formal credit, and the models testing the farmer‟s behavioral intention
to accept a certain financial products over the world. Moreover, a conceptual model is
built resulting from the hypotheses generating from extant literature, simultaneously,
its constructs and relationship hypothesized among these constructs are also discussed.
2.1. Foundational theory
Studies on credit borrowers‟ acceptance and use have been conducted
extensively because bank credit have been in wide usage, and several models
originated from different theoretical disciplines (i.e. psychology, sociology and
information systems) have been developed to explain the acceptance and usage. There
exist a rising number of literatures pertaining to the applicability of the TRA to bank
marketing context, especially in the context of finance (Amin, 2012; Amin et al.,
2010; Lada, Tanakinjal & Amin, 2009). The TRA is selected as foundational theory in
this study because it receives rich empirical supports in behavioral intention. This
explains that the selection of the TRA is based on its parsimony and predictive power
which makes it easy to apply in different context of study (i.e. banking service,
banking technology, online purchase).
First introduced by Fishbein and Ajzen (1975) in effort to found a relationship
amongst beliefs, attitudes, intentions, and behavior (Taib, Ramayah & Razak, 2008),
TRA asserts that attitude towards formal credit and subjective norm are the
antecedents of performed behavior. To gain deeper understanding of the factors
influencing behavior, it is required to look into beliefs that individuals hold about
themselves and their environment. Therefore, beliefs are viewed as underlying a
person‟s attitude and subjective norm, and ultimately determine the intention and
behavior. The TRA also leads to marketing strategies as formal credit subject to

individual‟s attitude and social influence. This implies one‟s attitude is appeared as an
intrinsic force which generate favorable an outcome for adoption, whilst good
subjective norm for formal credit will build better “environment” for individuals to


9
choose formal credit. These behavioral psychology components have tendency to
explain one‟s consumption for a particular product is largely sourced from his attitude
and other people influence around him. The research model stems from Fishbein and
Ajzen (1975) model of TRA and is shown in Figure 2.1.
Behavioral beliefs and
evaluation of outcomes

Normative beliefs and
motivation to comply

Attitude
toward
behavior

Behavioral
intention

Actual
behavior

Subjective
norm

Figure 2.1: TRA model

To better describe the intention to use financial services and/or products in
banking sector, number of studies of which the TRA was modified to fit with the
research context have been conducted by Zameer et al. (2015), Taib et al., (2008),
Ramayah and Suki (2006), Tarkiainen and Sundqvist (2005), Yuserrie, Noresma, and
Ramayah (2004). The modification effort stems from the fact that TRA provides a
general justification only of the determinants of non-information system (IS)
acceptance.
In the settings of banking industry, the factors affecting a customer‟s bank
selection have received significant attention in recent years. In this study, TRA model
is employed to predict intention to use bank credit because of its increasing
applicability to marketing context in banking industry and rich empirical supports
(Amin, 2013). The usage intention is the main dependent variable of the model,
derived from the TRA which posits that behavioral intentions, rather than attitudes,
are the main predictors of actual usage of bank credit amongst farmers.
Vietnam‟s banking market faced increasingly fierce competition amongst
commercial banks comprising of local and international banks. This competition,
coupled with market saturation and low. Emerging markets in general and particularly
Vietnam offers greater growth potential and have thus attracted the attention of
internationalizing banks (Diallo, 2012). Historically, emerging markets were highly
fragmented banking markets characterized by limited infrastructure of information


10
technology, security, dichotomous consumer societies and a lack of regulation
(Sternquist, 2007 as cited in Diallo, 2015).
However, as these countries have developed, local banks began to realize
economies of scale in purchasing and operations, and modern banking systems and
strategic approaches have emerged. As the competition is becoming more intensive
among the bank operators, it is becoming mandatory for them to monitor the
awareness of customers based upon quality of services, and values received by its

customer in return.
Like the extant studies conducted in surrounding countries, this research,
therefore, integrates other variables in which it is classified as a new “independent
variables” namely “perceived value” and “perceived service quality” in addition to
“attitude”, “subjective norm” explaining “behavioral intention”. Contrarily, the
present study omits “actual behavior” and other two original external constructs of
TRA. This is essential since the study is interested to highlight the typical factors
affecting famers‟ usage intention of bank credit only. Thus, behavioral intention of
TRA model is changed to “intention to use bank credit”. This approach is similar to
that of Chiu, Lin, and Tang (2005).
2.2. Review on behavioral intention
Behavioral intention is defined as “the degree to which a person has formulated
conscious plans to perform or not perform some specified future behavior” (Warshaw
& Davis, 1985, p. 214). Consistent to all models portraying from psychological
theories, which argue that individual behavior is predictable and influenced by
individual intention.
Parasuraman, Zeithaml, and Berry (1994) and identified five dimensions of
behavioral intentions: loyalty to the company, propensity to switch, willingness to pay
more, external response to problem, and internal response to problem. Studying the
relative influence of service quality on the five behavioral intention dimensions, they
found positive effects with loyalty to company and willingness to pay more, negative
effects with propensity to switch and external response to problem, and nonsignificant effects with internal response to problem (Parasuraman et al., 1994).


11
Bloemer, De Ruyter, and Wetzels (1999) found different dimensions for
behavioral intentions: repurchase intentions, word-of-mouth communication, price
sensitivity, and complaining behavior. They also found that relationships between
service quality and behavioral intentions had notable differences across industries.
Behavioral intention may change owing to unforeseeable events or time

intervals. High service quality and a positive experience often lead to favorable
behavioral intention toward the service provider, and to the customer willingly paying
a higher price (Hoch & Deighton, 1989). Furthermore, loyal customers are more likely
to recommend friends, relatives or other potential customers to a product/service by
acting as free word-of-mouth advertising agents (Shoemaker & Lewis, 1999).
It could be seen that studying behavioral intention to use service was widely
studied across the world in a wide range of service.
Table 2.1: Summary of the literature on behavioral intention
Author
Lada et al. (2009)
Amin (2013)
Liu, Furrer, and
Sudharshan (2001)

Context
Halal product
Credit card
studying the
relationship between
culture and behavioral
intentions in a service
quality context

Alqasa1 and Balhareth
(2015)

Financial service

Jen, Tu, and Lu (2011)


Transportation
management

Yu et al. (2014)
Kuo, Wu, and Deng
(2009)
Chen and Chen (2010)
Luarn and Lin (2005)
Ursavas (2015)
Wei, Chen, and Long
(2016)
Agudo-Peregrina,
Hernández-García, and
Pascual-Miguel (2014)
Rho, Young-Choi, and
Lee (2014)

Fitness center
Mobile value-added
services
heritage tourism
Mobile banking
Tablet PC usage
Low-carbon
economics

Theoretical model
TRA
TRA


Countries
Malaysia
Malaysia
United States,
Asian countries

Yemen
integrated framework
from the attitudinal
perspective

Taiwan
Korea
Taiwan

TPB and TAM

Taiwan
Taiwan
Turkey

Quadrifid graph model

China

Electronic learning
system

TAM3


Spain

Telemedicine

TAM

Korea


12
2.3. Hypotheses development
2.3.1. The effect of attitude on farmer’s behavioral intention to use formal credit
Attitude is referred as the evaluative effect of positive or negative feeling of
individuals in performing a particular behavior (Fishbein & Ajzen, 1975). Attitude
toward behavior reflects a person‟s beliefs that the behavior leads to certain outcomes
and the person‟s evaluation of those outcomes, favorable or unfavorable. The more
positive the attitude, the stronger the behavioral intention and, ultimately, the higher
the probability of a corresponding behavior should be. Attitude toward using a
particular system is a major determinant of the intention to use that system, which in
turn generates the actual usage behavior. The underlying premise is that individuals
make decisions rationally and systematically on the basis of the information available
to them (Ajzen, 1991).
It is the extent to which a person likes or dislikes an object and a person‟s
attitude toward a behavior is determined by the set of salient beliefs he holds about
performing the behavior. In order to predict attitude from beliefs, there are four steps
First, we have to elicit a subject‟s salient beliefs then we need to measure how a
subject evaluates the outcome of each salient belief. Third, we measure the belief
strength by asking a subject to indicate the likelihood that performing a behavior will
result in a given outcome and lastly, to get the outcome by multiplying the product of
each outcome evaluation by the corresponding beliefs strength to predict a subject‟s

attitude. In the present study context, the acceptance of bank credit is influenced by
attitude toward the financing facility. Pham Hong Manh and Dong Trung Chinh
(2012) indicated that attitude has positively influence on intention to borrow loans by
households in Nam Dinh province of Vietnam. Taib et al. (2008) found that there was
a significant relationship between “attitude” and “Musharakah Mutanaqisah” use, and
Gopi and Ramayah (2007), in Malaysian setting; found that attitude was significantly
associated with online trading system use.
Ramayah and Suki (2006) who examined Master of Business Administration
students‟ intention to use mobile personal computer (PC) by the use of convenience
sampling, found that attitude was significantly related to behavioral intention.
Tarkiainen and Sundqvist (2005), on the other hand, asserted that consumers‟


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intentions to buy organic food can be predicted with their attitude. This means,
attitude is a good driver to explain behavioral intention. Correspondingly, the present
study infers that attitude is considered as the key determinant influencing farmer‟s
behavioral intention to use formal credit. Hence the following hypothesis was
proposed:
Hypothesis 1: Farmers‟ attitude positively associates with behavioral intention to
use formal credit.
2.3.2. The effect of subjective norm on farmer’s behavioral intention to use
formal credit
Subjective norm refers to the individual‟s perception of the likelihood that the
potential referent group or individuals approve or disapprove of performing the given
behavior (Fishbein & Ajzen, 1975). A subject‟s attitude can be predicted by
multiplying the product of each normative belief by the subject‟s corresponding
motivation to comply. This subjective norm has been applied in different contexts
ranging from technology adoption to non-technology adoption researches.
Rouibah, Thurasamy, and May (2009) found that the subjective norm was the

most significant factor that influenced intention to accept Internet banking. In other
words, the greater the subjective norm pressures the higher the intention to accept
Internet banking. Tarkiainen and Sundqvist (2005) asserted that consumers‟ intentions
to buy organic food can be predicted with their subjective norm. Gopi and Ramayah
(2007) found that subjective norm had a direct positive relationship towards
behavioral intention to use internet stock trading. Lada et al. (2009) found that
subjective norm was significantly related to halal products use among consumers in
Labuan. Taib, et al. (2008) also found a significant relationship between subjective
norm and Musharakah Mutanaqisah acceptance. These studies, on the other hand, are
in line with Venkatesh and Davis (2000), Teo and Pok (2003) who reported a
significant relationship between subjective norm and behavioral intention.
Correspondingly, this study infers that subjective norm is considered as the key
determinant influencing farmer‟s behavioral intention to use formal credit. Hence the
following hypothesis was proposed:


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Hypothesis 2: Farmers‟ subjective norm positively associates with behavioral
intention to use formal credit.
2.3.3. The effect of perceived service quality on farmer’s behavioral intention to
use formal credit
Perceived service quality is defined as a consumer‟s judgment or attitude
pertaining to the overall excellence or superiority of a product or a service (Berry et
al., 1988; Parasuraman el al., 1988; Zeithaml, 1988). The recent credit crises have
affected the financial institutes globally. Apart from the global credit crunch, the
Vietnam‟s financial institutions and bank are going through a very challenging
environment, where they need to secure and sustain their products and services by
gaining and retaining a greater number of clients to affirm their survival.
In today‟s competitive economy, success of businesses is comprehensively
dependent upon high-quality services. Consequently it will result in high profitability,

customer loyalty and goodwill of the companies (Ishaq, 2012). In the context of the
service industry, perceived service quality has become one of the top issues,
particularly in the dynamic and competitive marketing of the banking services.
Service quality is what sets a bank aside from its counterparts, where the services
offered should go over the expectations of consumers (Gill, Flaschner & Shachar,
2006).
Quality of services is an essential element to increase customer satisfaction and
to measure consumer perception toward banking products and services. Many studies
have indicated that perceived value more accurately measures banking client‟s
perceptions of service quality than service quality (Adil, 2013; Vanpariya, 2010).
Accordingly, the perceived service quality is used in this study to measure the service
quality perceptions of farmer‟s behavioral intention to use formal credit in Cantho
City, Vietnam. Several prior studies showed that poor services lead to bank switching
(Garland, 2005). Specifically, Schmidt and Bergsiek (2009) reported that in the U.S.,
40% of consumers switched banks owing to ineffective services. Similarly, Allred and
Addams (2000) also reported that 50% of their total respondents switched banks
owing to issues regarding service. The quality-intention to use products relationship
has been investigated in literature, and quality was reported to antecede consumer‟s


15
behavioral intention (Gottlieb, Brown & Drennan, 2011) where positive perceptions of
service quality was known to be related to service/product use via intention to use.
Contrastingly, negative perceptions of it lead to lack of intention to purchase
service/product (Kouthouris & Alexandris, 2005). As such, the following hypothesis
was proposed.
Hypothesis 3: Perceived service quality positively associates with farmers‟
behavioral intention use formal credit.
2.3.4. The effect of perceived value on farmer’s behavioral intention to use
formal credit

Perceived value, as defined by Zeithaml (1988), is “the consumer‟s overall
assessment of the utility of a product based on perceptions of what is received and
what is given” (p.14). According to this definition, value is identified through four
distinct meanings: value can mean (1) low price; (2) what a customer might desire in a
product; (3) the quality that one obtains for the paid price; or (4) what a customer
receives for what a customer gives. In other words, perceived service value is a
tradeoff of visitors‟ perceptions between what they, the visitors, give for the service
they receive. Perceived value has become an important criterion in the development of
managerial strategies to create, communicate, and deliver value to the customer
(Kotler & Keller, 2011). It is defined as the consumer‟s overall assessment of the
utility of a product based on perceptions of what is received and what is given
(Zeithaml, 1988), and also as recognizing the rationality of price in comparison with
quality (Livesey & Lennon, 1978).
Perceived value is measured by assessing the spectrum of a consumer‟s
experience (Sweeney & Soutar, 2001), and by measuring the discrepancy between
actual cost and perceived benefit (Gallarza & Saura, 2006). It is the optimum
transformer throughout an individual‟s consumption process and it plays an important
role in the assessment of service quality, customer satisfaction, and behavioral
intention (Dodds, Monroe & Grewal, 1991). More specifically, a high perceived value
score indicates that a customer perceives a product or a service offered as providing
good value for the money with relatively few detriments, while a low score indicates a
deal is perceived as bad, with a low level of benefits and a high level of detriments.


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The value construct of perceived value has generally received relatively little attention
in the services marketing literature, especially in the service satisfaction literature.
Studies indicate that perceived value may either lead directly to the formation of
feelings of overall satisfaction or may result in the formation of perceptions that a
product or service‟s performance is different than expected, which can influence

overall satisfaction feelings (McDougall & Levesque, 2000; Swait & Sweeney, 2000;
Caruana & Fenech, 2005). Research on many service industries also suggests that
perceived value plays a more important role than perceived quality in influencing
customer satisfaction and loyalty (Shamdasani et al., 2008).
A number of studies on perceived value and overall satisfaction and intention
have been conducted. Zeithaml (1988) defines perceived value as the result of the
comparison between perceived benefits and perceived sacrifices by the customer.
Similarly, Buzzell and Gale (1987) use the notion of trade-off to argue that perceived
service value is a ratio between perceived total benefits received to perceived total
sacrifices taking into consideration the available offerings and perceived cost. In
addition, the perceived value also helps to explain customer behavioral intentions
(Choi et al., 2004; Cronin, Brady & Hult, 2000; Lapierre, Filiatrault & Chebat, 1999;
Liu, Leach & Bernhardt, 2005). These studies also indicate that perceived value plays
a very important role in determining customer behavioral intentions. This may be
because perceived value is a concept which simultaneously integrates customers‟
perception of benefits and costs (Monroe, 1991; Zeithaml, 1988), while satisfaction
research only focuses on the benefit aspect. Therefore, the following hypothesis will
be explored for each of the corporate associations identified in the field study:
Hypothesis 4: Farmer‟s perceived value positively associates farmers‟ behavioral
intention to use formal credit.
2.4. Conceptual model
The foregoing of literature review in this study is discussed as a basis for
developing a conceptual framework. Consistent with the conceptualization, this study
used the Theory of Reasoned Action (TRA). Specifically, a model is developed to
study the relationship between attitude, subjective norm, perceived service quality,