How does CSR Influence Customer Loyalty in the Banking Sector? Evidence from Vietnam

Abstract

This study is conducted to identify how corporate social responsibility (CSR) influences consumer loyalty in the banking sector in Vietnam — an emerging economy. The social identity theory, stakeholder theory, and signaling theory are used to answer the question “Does CSR directly or indirectly influence customer loyalty in the banking sector in Vietnam?” To accomplish the research objectives, qualitative and quantitative mixed research methods are used. Qualitative research aims to adjust the scale of constructs to suit the Vietnamese market through face-to-face discussions with 10 Vietnamese customers. A survey is then carried out with 299 Vietnamese customers who have experience dealing with banks in Vietnam. Data collected are processed by Smart Partial Least Square (PLS) software with Partial Least Squares Structural Equation Modeling (PLS-SEM). Research results showed that CSR has no direct impact on customer loyalty. However, CSR has an indirect effect on customer loyalty through an intermediate variable of service quality. Service quality has a strong influence on customer loyalty. The administrative implications of this research are that Vietnamese banks should consider CSR as a way to help improve service quality, thereby increasing customer loyalty. CSR factors to consider are legal, ethical, and philanthropic responsibilities. To improve service quality to increase customer loyalty, Vietnamese banks need to pay attention to the factors of reliability, responsiveness, assurance, and empathy. Future research directions that can be implemented include: use stakeholder dimensions for CSR; use other mediators such as brand image, customer satisfaction, and customer trust; and research in other countries with emerging economies similar to Vietnam to increase generalization.