Factors affecting the decision of consumer loans of private customers in Bac Lieu province

Abstract

Credit institutions need to develop an effective consumer loan risk management policy to ensure the safety of both customers and the bank. To achieve this, bank leaders must clearly understand the local residents' consumer behavior. Understanding the factors that influence consumer borrowing decisions also helps banks strengthen their competitiveness and develop the financial market in Bac Lieu province. The aim of this study is to analyze the factors influencing the consumer borrowing decisions of individual customers in Bac Lieu province. A convenient survey method was used to interview 250 individual customers currently transacting with banks in Bac Lieu province. The reliability of the measurement scale was tested using Cronbach's alpha coefficient. Exploratory factor analysis was used to identify new factor groups, and multiple regression was used to identify factors that influence the consumer borrowing decisions of individual customers in Bac Lieu province. The estimated model results showed that factors such as bank brand, bank staff, service quality, and loan interest rates positively correlate with customers' consumer borrowing decisions in Bac Lieu province. All these factors have a positive impact on customer borrowing decisions. The study also showed that bank brand is the strongest factor influencing individual customer borrowing decisions. Based on this, the study proposed four implication groups to improve the effectiveness of consumer lending operations for individual customers in Bac Lieu.