STATE BANK OF VIETNAM MINISTRY OF EDUCATION AND TRAINING BANKING ACADEMY OF VIETNAM -o0o TRAN THI THANG PROMOTING FINANCIAL INCLUSION IN NORTHERN DELTA PROVINCES Major: Finance - Banking Code number: 9340201 SUMMARY OF PHD THESIS HANOI – 2019 THIS THESIS WAS COMPLETED AT THE BANKING ACADEMY OF VIETNAM Supervisors: Assoc Prof Dr Pham Thi Hoang Anh Dr Nguyen Xuan Quang Phản biện 1: Assoc Prof Dr Le Van Luyen Phản biện 2: Assoc Prof Dr Dao Minh Phuc The thesis was defended in front of the thesis committee at … … on at the Banking Academy of Vietnam INTRODUCTION THE NECESSITY OF THE THESIS Financial inclusion can be defined as financial services provided to all members of society, especially for vulnerable groups, in a way that is convenient and tailored to needs, through which this can contribute a part of creating livelihood opportunities, circulating investment capital and saving in society, promoting sustainable economic growth Over the decades, financial inclusion has become a universal vision of the world in the mission of hunger eradication and poverty reduction, towards a stable, fair and prosperous society where everyone is entitled to achievements of economic development Therefore, financial inclusion has become an agenda not only at the national level of a country but also in most countries around the world Although there have been certain achievements in economic growth and promoting financial inclusion in recent years, there is still a large gap in access to finance because there are still many people in the world who have not had access to banking services In Vietnam, up to 70% of people not have access to banking services1, a significant proportion of people not have access to official financial services, opportunities to access and use official financial services are low compared to other countries in the region and the world Especially the poor, women and vulnerable people, they face many barriers when accessing officiall financial services due to the lack of a synchronous legal framework; Financial infrastructure has been developed unevenly, and financial knowledge and consumer protection are limited Up to half of Vietnamese population does not have a bank account at an organization that provides official financial services (Duc Dung, 2018) Most people living in rural areas not have access to basic financial services of official financial institutions, they are still familiar with traditional financial way.The main reasons given are that because the area is too far, the scale of the bank is limited, the number of ATMs is rare, the cost of services for savings and small loans is high, credit information is still poor, opening an account requires many documents, cumbersome procedures Northern Delta is one of four key economic regions of Vietnam, an area located around the Red River downstream area in northern Vietnam, with the highest population density, more than 22 million people, accounting for 22 3% of the total population of the country; GDP ratio (Statistical Yearbook, 2017) In particular, people who agricultural works accounting for approximately 62% of the total population of the region, these people are often without qualifications, having unstable income and limited financial knowledge So people in rural areas are more difficult to access finance than urban people because of low income, sparse bank branch density, low level of financial knowledge, small number of account ownership People in the region have limited ability to access savings services, credit but this is a potential customer group If financial inclusion is promoted here, it will boost the overall financial inclusion of the whole country, stimulate economic growth, reduce poverty and social inequality For aboves reasons, the author decided to write the thesis titled “Promoting financial inclusion in northern delta provinces” The author would like to understand the current situation of financial inclusion in Vietnam through the Northern Delta provinces, on the basis of studying the achieved results, some limitations, the causes of the problems to provide a number of policy recommendations to authorities to promote financial inclusion in the Northern Delta provinces in particular and across the country in general RESEARCH OVERVIEW In recent years, the topic of financial inclusion has been concerned by organizations and countries around the world and there are many research projects on this issue The thesis performs an overview according to the contents (i) Definition of financial inclusion; (ii) The roles of financial inclusion shown: reducing poverty, creating jobs, promoting savings, limiting income inequality, bringing efficiency in investment, promoting economic growth and stabilizing the financial system; (iii) Factors affecting financial inclusion; (iv) Model to assess factors affecting financial inclusion; (v) financial inclusion indicators RESEARCH GAP Overview of domestic and international academic works shows that research on financial inclusion is not a new thing, especially in the world, there are many scientists studying this issue However, in Vietnam, there are only a few studies on "The role of banks in financial inclusion development in Vietnam" by Nguyen Thuy Duong, Nguyen Thi Thu Trang (2017), "Factors affecting financial inclusion development - Solutions for Vietnam "by Pham Thi Hong Van, Tran Thi Thu Huong (2017)," Solutions to effectively promote financial inclusion in Vietnam "by Nguyen Duc Long ( 2017) Thus, there are currently no studies on: (i) Current situation of financial inclusion in Vietnam in general and Northern Delta in particular (ii) Factors affecting financial inclusion based on quantitative research models in Vietnam and in the Northern Delta Therefore, the author thinks that there is a research gap about the assessment of overall situation of financial inclusion of Vietnamese people in general and the Northern Delta in particular This is an important basis for the author to choose the topic of the thesis: “ Promoting financial inclusion in northern delta provinces” Research does not overlap with previous studies And as of April 2019, this can be considered as a complete research on financial inclusion in the Northern Delta provinces, both in theory and practice RESEARCH OBJECTIVES, OBJECTS AND SCOPE 4.1 Research objectives The overall objective of the study is to analyze the current situation as well as the factors affecting the level of financial inclusion of the Northern Delta region Specific objectives are: (i) Providing a comparative analysis of the current situation of access to banking products and services of the poor, people living in rural areas and low-income people in the Northern Delta region (ii) Assessing the impact of factors on the access to basic banking services products of the poor, rural people and low-income people of the Northern Delta region (iii) Proposing a number of policy recommendations to related parties to improve the accessibility of the poor, rural people and low-income people to basic banking products and services with a suitable and affordable cost 4.2 Research objects Research objects are the current situation of access to basic banking services in the Northern Delta provinces and factors affecting financial inclusion in this region 4.3 Research scope a/ Content scope Scope of research space: The thesis is limited to assessing the current situation of access to basic banking products and services of individuals in the Northern Delta provinces, especially those living in rural areas and people with low income The reason why the Northern Delta was chosen for this research is that this is the region where most people in rural areas earn there living mainly on agricultural activitives, have low income and only can access to basic financial services The region is more limited than other regions in the country In addition, to assess more comprehensively the factors affecting the level of financial inclusion, the thesis has conducted research on customers in 10 provinces and cities through taking direct surveys Researched customers are individuals, this is the customers who mainly has not access to financial services and also a potential group of customer for financial institutions b/ Time scope Secondary data about banking industry was collected in the period of 2013-2017 at 10 SBV branches in the Northern Delta region Secondary data on population and natural characteristics were collected in the period of 2013 - 2017 at the annual statistical yearbook and summary report of the provinces in the Northern Delta region Secondary data on comparing indicators of access to basic products and services in the period 2013 - 2017 are calculated from 2013 to 2017 to provide average figures for this period Primary data on customers were collected from direct survey through questionnaires for adults in the region, mainly those living in rural areas, from January to July 2018 RESEARCH QUESTIONS After doing researches, analyzing and evaluating a number of published works related to the topic, the author raised new questions that need to be researched in order to find specific answers; include: (i) Current situation of financial inclusion in Northern Delta provinces? (ii) Factors from the demand and supply side affecting financial inclusion in Northern Delta provinces? (iv) Solutions to promote financial inclusion in Northern Delta provinces? RESEARCH METHODS 6.1 Statistical method 6.2 Survey method The author conducted a survey to know customers’ opinions through survey questionnaires to find out the banking products and services that customers are using, understand more about the causes and also some customer suggestions 6.3 Information collection method Collecting secondary data The decision of criterias used to study the overall level of financial inclusion of the Northern Delta region is based on reference to documents, books, magazines, articles, websites, related research works, financial report, annual report of the State Bank branches in the Northern Delta provinces, the annual summary report of the People's Committees of the Northern Delta provinces, and the annual statistics yearbooks of the General Statistics Office Collecting primary data Primary information is collected from actual survey through a prepared questionnaire Select research sample: Overall survey The number of questionnaires issued was 425 Survey aims to study and assess of customers' ability to use basic financial services products This indicates the level of customer’s financial inclusion Thereby assessing the actual situation of the influence of factors on financial inclusion In this study, samples were selected mainly from people living in rural areas, low-income people and partly customers of Vietnam Bank for Agriculture and Rural Development, Social Policy Bank of Vietnam, People Credit Fund Since the study is composed of a variety of customers using a variety of banking products and reviews of customers having different ages, different incomes, different living places, so the accuracy of assessing the influence of factors on financial inclusion and the data collected are quite comprehensive The author allocates them to each province At the same time, in each province the author allocates the survey to the transaction offices of each bank 6.4 Methods of analyzing and synthesizing information 6.4.1 Method of analyzing secondary data During the research process, information about the bank's criterias was collected by the author based on the annual report of the provincial branches, including the number of commercial bank branches, the number of different cards, ATMs, POS machines, the total mobilization from the economy, the total outstanding loans to the economy The data was selected by the author, then processed and putt into this study in the form of statistical tables The analysis of these data includes a comparative analysis of data between phases, namely each year 6.4.2 Methods of descriptive statistics and inference statistics Descriptive statistics allow researchers to present data collected in the form of structure and summary Descriptive statistics were used in this study to analyze and describe data include: the number of bank branches per 100000 people, the number of bank branches over 1,000km2 Make a frequency table to describe the sample Samples collected will be described according to attributes such as gender, age, income, occupation and residence NEW CONTRIBUTIONS OF THE THESIS (i) The thesis generalizes the development process of financial inclusion in the world and Vietnam and synthesizes fundamental theory of financial inclusion, factors affecting financial inclusion, the role of financial inclusion and lessons to apply financial inclusion to Vietnam (ii) The thesis is the first research that studies the current situation of financial inclusion in the Northern Delta provinces on the basis of synthesizing data from State Bank’s branches in different provinces, using data of the General Statistics Office and a set of survey data From the indicators of the Global Findex, the thesis calculates the suitable criterias of financial inclusion for the Northern Delta provinces and compares such criterias with the whole country (iii) The thesis uses probit quantitative model based on the survey data collected from direct questionnaires to assess factors affecting financial inclusion in the Northern Delta provinces (iv) On the basis of analyzing the current situation, the causes affecting finanancial inclusion in the Northern Delta area, the thesis proposes a number of recommendations to related parties to promote financial inclusion in the Northern Delta provinces and Vietnam STRUCTURE OF THE THESIS In addition to the introduction, conclusion, list of references, the content of the thesis is divided into four chapters, namely: Chapter 1: Fundamental theories of promoting financial inclusion Chapter 2: The current situation of finanancial inclusion in the Northern Delta provinces Chapter 3: Models and results of finanancial inclusion in the Northern Delta provinces Chapter 4: Some recommendations to promote finanancial inclusion in the Northern Delta provinces CHAPTER 1: FUNDAMENTAL THEORIES OF PROMOTING FINANCIAL INCLUSION 1.1 UNDERSTANDING FINANCIAL INCLUSION 1.1.1 Definition of Financial Inclusion: “Financial Inclusion is the process of promoting financial products and services and expanding the scope of use to all segments in the society through the implementation of modern and innovative approaches, including awareness and financial education to promote access to finance and social - economic integration” (Atkinson & Messy, 2013) On that basis, to match the objectives of the thesis research, the author defines financial inclusion as follows: “Financial Inclusion means the majority of people have access to and widespreadly use of useful financial products and services in a convenient, affordable way to meet their needs, especially the poor and low-income people, the ones living in rural and remote areas Financial Inclusion includes savings, credit, transaction, payment and insurance services At the same time, there is a mechanism for financial education and consumer protection” In other words, financial inclusion requires encouraging the market to develop and provide financial products and services focused on people with low access, disadvantaged people In the larger context, financial inclusion can promote economic development through the establishment of mechanisms that allow greater access to products and services of financial institutions; deeper knowledge of banks and microfinance institutions 1.1.2 Roles of financial inclusion 1.1.2.1 Roles of financial inclusion towards the economy a/ Financial inclusion is the driving force for economic growth Research of Calderon & Liu (2002) shows that the causal relationship between financial inclusion and economic growth still exists, but financial inclusion will boost economic growth more in developed countries than in developing countries b/ Financial inclusion helps to reduce poverty and social inequality Studies have found a strong positive relationship at the national level between financial inclusion and income and poverty reduction In particular, there are many evidence from studies worldwide that financial inclusion plays an important role in reducing poverty, reducing income disparities and social inequality That is, the financial inclusion helps to create value for small businesses, bring a great impact on improving human development indicators such as health, nutrition and education - and repell inequality and poverty.(CIMP, 2011) c/ Financial inclusion facilitates payment; safe, convenient and secured money transfer, and increase national savings 8 Transferring money directly to beneficiary bank accounts, instead of cash payments for subsidies, will avoid the risks of cash transportation Financial inclusion improves payment of conditional transfers such as parents sending money to their children for school, paying tuition fees through bank transfer instead of paying cash directly 1.1.2.2 Roles of financial inclusion to individuals in the economy a/ Helping people to manage more easily personal finance Savings help households to increase cash flow management, be proactive in using and building working capital Credit creates conditions for households to have capital to business and promote production and business If households have access to savings and credit, they can increase their income With the increase in income, households can have additional needs for other financial services such as payment, insurance and from there, this will allows them to be more proactive in managing financial resources and risks encountered while minimizing risks to external shocks and conflicts b/ Helping people to access appropriate financial services, be proactive in spending and investment plans Expanding financial inclusion will help people to access appropriate financial services, be proactive in spending and investment plans, savings, use credit services and buy insurance at an affordable cost 1.2 CRITERIAS TO ASSESS FINANCIAL INCLUSION 1.2.1 Criterias of Global Findex to evaluate financial inclusion Criterias of Global Findex to evaluate financial inclusion are the most comprehensive database measuring the level of financial inclusion, which provides in-depth data on how individuals use accounts, save money, borrow, pay and manage risk 1.2.2 Evaluation criteria for financial inclusion by the basic component analysis method (PCA) According to Cárama (2014), we can evaluate financial inclusion using three aspects: Usage, Barriers and Access (PCA) 1.2.3 Financial Inclusion Index by Sarma According to Sama (2015), financial inclusion was evaluated based on: the penetration of the banking system, the convenience of banking services and level of usage 1.3 FACTORS AFFECTING FINANCIAL INCLUSION 1.3.1 Factors from the demand side First, gender Gender gaps are found in ownership of official accounts Second, educational level Those who are unable to read or have no financial knowledge will face disadvantages in financial inclusion Third, age The older people are likely to have more access to fianancial products 9 Forth, work and income People having jobs and stable incomes will use more financial products Fifth, household vulnerability For households with high vulnerability, the demand for financial inclusion will be lower Sixth, the habit of holding and using cash Preference of storing cash, gold, property at home and cash use habits affect financial inclusion in the population Seventh, Religion Strong belief in religion and deep aversion from banking transactions has created a part of non-financial inclusion in the society 1.3.2 Factors from the supply side First, limitations on financial network and supply channels: The more developed financial network is, the more convinient for people to access to financial products and services Second, the suitability of financial products for people: Financial products and services need to be suitable for the income of each person Third, financial services cost: Is a barrier for people, especially for low income people Higher costs may limit the use of financial products Forth, characteristics of the bank: such as the ratio of capital to total assets, being a foreign bank or state-owned bank have an impact on the level of accessing to financial inclusion Fifth, the trust for financial institutions 1.3.3 Eco-social factors First, Consumption culture Financial inclusion depends on the awareness of people and the culture of using financial services in the society Second, local economic characteristics Has positive impact on financial inclusion Third, social infrastructure Traffic network, information system positively impact on financial inclusion Forth, population structure in society In the country having an aging population structure and a high dependency ratio, financial inclusion tends to be less developed Fifth, the development of technology Has positive impact on promoting financial inclusion And sixth, the gross domestic product (GDP) per capita The higher the GDP per capita, the greater need of using financial products and services 1.4 INTERNATIONAL EXPERIENCES ON PROMOTING INCLUSION AND LESSONS FOR VIETNAM 1.4.1 Experiences of other nations on promoting financial inclusion 1.4.1.1 Experiences of China a / Bank-based model - sustainable and long-term development FINANCIAL 10 China has succeeded in establishing a network of correspondent banks, through the combination of regulations, subsidies, instructions for suppliers and social transfers via bank cards b / Application of information technology and promotion of digital finance China has especially focused on promoting digital financial solutions and has gained a lot of success in this area c / The role of the government in accessing finance The Chinese government switched to a more sustainable, market-based approaches, and enacted favorable policies and hence there were the emergence of new technology models d / Promoting account usage, especially savings China uses the policy of transferring money from the Government to people to motivate people to open accounts and adopt policies to attract people's savings e / Develop a financial education program through bank of women formation "Bank of women: Financial education in rural China" is a great effort to bridge the financial capacity gap in rural China 1.4.1.2 Experiences of India a/ Develop biometric identification project India has proposed a unique effort and achieved success in forming a national biometric identification system - “Aadhaar” in 2009 b/ Set up non-cumbersome bank accounts and boost saving India has advised all banks to provide a non-cumbersome ' basic bank account with fees and balances equal to 'zero' or 'very insignificant' c/ Promote the application of information technology and digital finance India has advised effective use of information technology, and promoted digital finance d/ Know your customer (KYC) Simplify KYC and account opening procedures for customers e / Promote the role of Government and Indian Reserve Bank (RBI) The Government of India issued regulations on financial inclusion, organized competitions to disseminate financial information, established a permanent exhibition center for financial education RBI developed the national financial inclusion strategy with a focus on digitization f / Develop a network of business reporters and business supporters India extends its network development of BCs and BFs to promote financial inclusion g / Expanding objects using credit cards and multi-function cards 11 Expanding the users of Kisan and GCC to facilitate short-term credit for agricultural farmers and escape the clutches of loan sharks h/ Diversify suppliers RBI promoted financial inclusion by diversifying suppliers and existing products i/ Reform public banks and protect the consumers 1.4.2 Lessons for Vietnam 1.4.2.1 Vietnam needs to develop a national strategy on financial education and consumer protection 1.4.2.2 State authorities should create an open legal environment to promote financial inclusion 1.4.2.3 Develop financial infrastructure to facilitate financial inclusion 1.4.2.4 Vietnam needs to diversify types and organizations providing financial services 1.4.2.5 Diversification of financial services provided in the market 1.4.2.6 Financial institutions need to apply information technology and promote digital financial services 1.4.2.7 Establishment of bank agents 1.4.2.8 Build a solid biometric identification project related to financial development 12 CHAPTER 2: THE CURRENT SITUATION OF FINANANCIAL INCLUSION IN THE NORTHERN DELTA PROVINCES 2.1 NATURAL, ECONOMIC - SOCIAL CHARACTERISTICS OF NORTHERN DELTA PROVINCES 2.1.1 Natural characteristics 2.1.2 Economic-social characteristics 2.1.2.1 Population and source of labor Table 2.1: Population factors in the Northern Delta region in the period of 2013 - 2017 Content 2013 2014 2015 Population (Thousands of people) 20.481 20.705 20.912 Pupulation density (People/km2) 971 983 994 Gender (Thousands of people) - Male 10.089 10.149 10.271 - Female 10.392 10.556 10.641 Adult (>=15 years old) (Thousands of people) 11.984 12.033 11.992 Living place (Thousands of people) - Urban 6.341 6.736 7.174 - Rural 14.140 13.969 13.738 The proportion of literate adults (%) 98,1 98,1 98,2 The proportion of trained adults who are 24,9 25,9 27,5 active (%) Source: Statistical yearbooks from 2013 to 2017 2.1.2.2 Industry sector 2.1.2.3 Agriculture sector 2016 2017 21.118 21.342 994 1.004 10.383 10.509 10.735 10.833 11.994 12.015 7.654 8.148 13.464 13.194 98,3 98,3 28,4 25,2 2.1.2.4 Service sector 2.1.2.5 System of infrastructures, equipments 2.2 CURRENT SITUATION OF FINANCIAL INCLUSION IN NORTHERN DELTA PROVINCES 2.2.1 Choice of assessment criterias The thesis uses criterias of Global Findex, which are suitable for conditions for economic development in the Northern Delta region, focusing on five basic contents of the use of personal financial services: accounts, savings, loans, payments and insurance 2.2.2 Current situation of financial inclusion in Northern Delta provinces 2.2.2.1 Current situation of using bank account a/ Number of bank branches in Northern Delta provinces Coverage of bank branches by population: In 2013 there were 5.7 bank branches over 100000 people, by 2017 this figure was up to 6.6 branches Although there are 648 branches in 2013 and the number increased to 724 branches in 2017, the growth rate of coverage is not too high because the population growth rate in the past years has also increased 13 Coverage of bank branches by geography: In 2013 the region had 3.1 bank branches per 1000 km2 on average, this figure had reached 3.6 bank branches in 2017, with an increase of 1.17 times compared to 2013 b/ Number of ATMs and ATM cards in Northern Delta provinces ATM coverage by population: 100000 adults in the region in 2013 had 36.8 ATMs, by 2017 the number of ATMs reached to 44.3 ATM coverage by population and geography: in 2013 there were 20.9 ATMs per 1,000 km2, by 2017 this number was 25, increased by 1.19 times compared to 2013 2.2.2.2 Current situation of bank saving deposits In 2013, the total mobilized capital of the region reached VND 1406005 billion, of which deposits of people were VND 687384 billion, accounting for 48.8% of the total mobilized capital In 2017, deposits were VND 1525704 billion, accounting for 45.6% of the total mobilized capital from the economy, which is lower compared to 2013 2.2.2.3 Current situation of bank loans In 2013, the value of loans from agriculture and rural areas was VND 203880 billion, accounting for approximately 16.2% In 2017, this figure was up to VND 328888 billion, an increase of VND 125008 billion, accounting for 15% of total outstanding loans to the economy Although the loan value for this area increased over the years, the proportion of total loans decreased, showing that rural areas still face many difficulties in accessing credit 2.2.2.4 Current situation of using payment services a/ The number of cards Between 2013 and 2017, the card issuance rate increased by an average of 16.4% in the region b/ The number of POS As of 2017, there are 96532 POS, an increase of 345.3% compared to the number of POS in 2013 Especially from 2015 to 2016, there is a growth from 34,574 POS to 66,162 POS with a growth rate of 91.3% c/ Other methods Financial instutions apply information technology into banking activities and follow the fourth industrial revolution: 100% of commercial banks having websites to introduce products and services, and centers for direct consultancy to customers , providing 24/24 hour service, online banking services The number and value of transactions via Internet Banking and Mobile Banking increased significantly However, there is still a large proportion of people in the region who not have access to official financial services 2.3 ASSESS THE CURRENT SITUATION OF FINANCIAL INCLUSION IN NORTHERN DELTA PROVINCES 14 2.3.1 Achievements Firstly, people's access to financial services is increasing Secondly, the number of savings accounts increases and the amount of savings at banks also increases, especially for farmers and people with unstable incomes Thirdly, the number of savings accounts increases and the value of savings deposits increases Fourthly, the use of non-cash payment services grows increasingly in terms of method, quantity and transaction value 2.3.2 Limitations First, the number of bank branches in over 1,000 km2 is still low compared to the national average, the network of bank branches and transaction offices is unevenly distributed among localities in the whole region Secondly, access to bank services is mainly developed in big cities and urban areas while in rural and remote areas, access to financial services is limited Third, credit growth rate of SMEs is usually lower than the average rate of regional economy Fourth, payment services have developed quite rapidly in recent years, but the service quality is not high and the distribution is not convenient Fifth, there is no legal and institutional framework to protect consumers Sixth, the educational level of rural people in the region is lower than the national average 2.3.3 Causes 2.3.3.1 Causes from the demand side a / Affected by employment and income b / Due to the habit of keeping cash and using cash c / The awareness of the people on finance is incomplete d / Due to the distance to the bank e / Due to sparse population density 2.3.3.2 Causes from the supply side a / Due to the legal environment to promote financial inclusion b / Lack of financial infrastructure c / Due to the cost of using banking products and services d / Because the bank products are really concern about the customers which are poor e / Due to procedures, ducumented records of using bank products and services f / Due to limitations on the size of MFIs 15 CHAPTER 3: MODELS AND RESULTS OF FINANANCIAL INCLUSION IN THE NORTHERN DELTA PROVINCES 3.1 RESEARCH METHODS Doing Survey on 425 customers in 11 provinces in the Northern Delta, based on convenient sampling method Survey sample: survey participants are over 15 years old and mainly people living in rural areas, low-income people, people with unstable jobs and partly customers of Vietnam Bank for Agriculture and Rural Development, Social Policy Bank of Vietnam, People Credit Fund in different localities of the Northern Delta region Survey method: Direct survey Survey process: Includes test surveys and official surveys Seven-part-set of questions: including personal information and information related to the bank's basic product usage 3.2 DESCRIPTION OF COLLECTED DATA 3.2.1 Customer’s age and gender For gender: Among 400 valid votes: there are 193 males (48%) and 207 females (52%) For age, the author divides into groups: Group 1: from 15 to 18 years old, 17 people; Group 2: from 19 to 22 years old, people; Group 3: from 23 to 35 years old, 157 people; Group 4: from 36 to 45 years old, 129 people; Group 5: from 46 to 60 years old, 78 people; Group 6: over 60 years old, 16 people 3.2.2 Customer’s occupation The author divides into groups: Doing agricultural works: 173 people (43%); civil servants, office workers, technicians, teachers, engineers: 131 people (33%); workers 26 people (7%); freelancers and self-employeds: 45 people (11%), students: 17 people (4%), retired group: people (2%) 3.2.3 Customer’s income It is monthly income, includes levels: Less than VND millions: 16 people (4%); over VND millions to VND millions: 202 people (51%); over VND millions to VND millions: 156 people (39%); over VND millions to VND 12 millions: 20 people (5%) and over VND 12 millions: people (2%) 3.2.4 Customer’s living place The author divides into region: urban region with 131 people (33%) and rural region with 269 people (67%) 3.3 FACTORS AFFECTING FINANCIAL INCLUSION The first method is to study the demand-side factors, from the customers themselves, the second way is to study supply-side factors, where financial services are provided 3.3.1 Factors from the demand side Being the factors from the clients themselves affecting the access to the bank's services, in the study of assessing the impact of gender, age, occupation and residence on how customers access to their bank accounts, using cards, savings deposit, payment and credit services With 400 questionnaires collected, the study received results that will be presented in the thesis 3.3.1.1 Factors affecting access to bank accounts 251 people answered that they had bank accounts (62,75%), the rest (149 people 37,25%) did not 3.3.1.2 Factors affecting the use of cards There are 171 answers of people who use ATM cards, accounting for 43%; the rest who not use ATM cards is 229 people, equivalent to 57% Credit card: there are 373 people who not use credit cards, accounting for 93% and only 27 people use credit cards, accounting for 7% 16 3.3.1.3 Factors affecting access to savings deposits There are 279 customers that deposit savings into banks, accounting for 70% 30% of customers not save through banks but in other forms (121 people) 3.3.1.4 Factors affecting access to payment services through banks a / Number of people using payment services via bank There are 53% of adults using bank payment, with the number of 212 customers, while 47% of people are familiar with direct buying and selling, paying with cash b/ Payment methods offered by banks Table 3.1 sumarizes the results on which payment methods that customers use: Table 3.1: Payment methods used by customers TT Payment methods Number of users At bank counters (by cash or bank transfer) 135 Payment order Via ATM 25 Via Internet banking 17 Via Mobile banking Via POS machine Other payment methods Total 190 Source: Author Survey Results Percentage (%) 71,1 1,6 13,2 8,9 4,7 0,5 c/ Payment services via Mobile banking 282/400 people did not use payment services via Mobile banking, accounting for 70,5% 3.3.1.5 Factors affecting the access of credit services a/ Number of customers having loans 178/400 people answered that they had loans, which equivalent to 45% and 222 people did not, accounting for 56 % b/ Customer choice on source of loans Customers use source of loans as follows: Table 3.2: Source of loans using by customer Content Number Percentage (%) Official loans 75 42 Unofficial loans 22 12 Both official and unofficial loans 81 46 Total 178 Source: Author Survey Results 3.3.2 Factors caused by financial institutions 3.3.2.1 Factors affecting the customer decision on using bank accounts Includes distance, cost of use, request on personal document information (people's identity card, salary, job ), belief, lack of money, religion and joint use of financial services 3.3.2.2 Factors affecting the customer decision on saving Due to low deposit interest rates, complicated sending and withdrawal procedures, inconvenient to come to banks, the money is being sent to the tontine group, savings club 3.3.2.3 Factors affecting the customer decision on the use of payment services Because customers not have a need and not know information or understand the interface, transaction fees, not use 3G 3.3.2.4 Factors affecting the customer decision on the use of bank loans 3.3.2.5 Factors affecting the customer decision on the use of informal capital 17 3.4 QUANTIFY THE EFFECTS OF FACTORS AFFECTING FINANCIAL ACCESS IN NORTHERN DELTA PROVINCES 3.4.1 Selection of models 3.4.1.1 Overview of research on models 3.4.1.2 Selection of a research model Whereas: * Dependent variables: FININCLUSION: Financial inclusion, which is represented by specific variables as follows - Number of bank accounts: ACCNUMBER - Having bank accounts: ACCOUNT - Having ATM cards: ATM - Having credit cards: CREDITCARD * Independent variables: - AGE: Age of the customer (Over 15 years old) - GENDER: Gender of the customer - INCOME: Income of the customer - LIVINGPLACE: Living place of the customer - OCCU2: Customers who are workers - OCCU3: Customers who agricultural jobs - OCCU4: Customers who are civil servants, office workers, technicians, teachers, engineers - OCCU5: Customers who are freelancers and self-employed people - i is an index for customer 3.4.2 Results and comments Table 3.3: Factors affecting financial inclusion in the Northern Delta provinces Model Model Model - Number of accounts - Having accounts - Having ATM cards -3.348364*** -3.244059*** -3.604911*** (0.596492) (0.632369) (0.715598) C 0.026766*** 0.028995*** -0.007726 (0.007647) (0.008262) (0.008964) AGE 0.525489*** 0.597712*** 0.296940 (0.156003) (0.171045) (0.182479) GENDER 0.464912** 0.389301 0.842604*** (0.236017) (0.251409) (0.214420) INCOME 0.715026*** 0.645046** 0.563209** (0.264254) (0.294387) (0.245401) LIVINGPLACE 0.851373 0.436213 1.114834* (0.583914) (0.616661) (0.604518) OCCU2 -0.089228 -0.245277 0.243921 (0.422150) (0.432866) (0.486687) OCCU3 0.864007* 0.619089 1.261973** (0.489630) (0.502922) (0.513551) OCCU4 0.161276 0.003735 -0.001044 (0.521584) (0.551023) (0.565620) OCCU5 Source: Result drawn from data processed by Eviews 18 Note: ***, **, * equivalent to 1%, 5% 10% of statistical significance respectively First, Probit model shows that the age has positive impact on financial inclusion (using bank accounts, having banks account) at the statistical significance of 1% Second, level of financial inclusion differs between male and female The results show that female has better ability of access to financial inclusion than male at the statistical significance of 1%, Third, table 3.3 shows that income at the statistical significance of 5% and the number of bank accounts at the statistical significance of 1% have impact on whether customers have ATM cards Forth, according to the survey results, living place of the customer has statistical significance of 1% to the number of account and 5% to whether customers have bank accounts and use ATM cards Fifth, Customers who are workers has statistical significance of 10% to the access to bank products (level of using ATM cards) Sixth, Customers who agricultural jobs have difficulties in the access to bank products Seventh, Customers who are civil servants, office workers, technicians, teachers, engineers has statistical significance of 10% to the number of bank account, and 5% to the level of using ATM cards Eighth, Freelancers and self-employed people belong to a group having unstable work with limited access to finance and banking 19 CHAPTER 4: SOME RECOMMENDATIONS TO PROMOTE FINANCIAL INCLUSION ON NORTHERN DELTA 4.1 ORIENTATION TO PROMOTE FINANCIAL INCLUSION IN NORTHERN DELTA PROVINCES 4.1.1 Orientation and strategy of economic development of the Northern Delta provinces until 2025 4.1.1.1 Overall vision 4.1.1.2 Specific tasks a / Major plan targets b/ Developing industry sector c/ Developing agricultural, forestry and aquatic products d/ Developing commerce and service Boosting the development of service sector, especially services that having competitive advantages, high content of knowledge, technology and values added; developping open-connection-oriented corridors e/ Synchronously developing infrastructure First of all, complete the transportation system of roadway, airway, railway and waterway And second, complete the infrastructure of electricity and telecomunication 4.1.2 Development orientation of financial inclusion in the Northern Delta provinces 4.1.2.1 General orientation 4.1.2.2 Specific tasks a/ Diversify products and services and financial service supply channels b/ Strengthening the ability and diversifying types of financial services First of all, diversifying types of financial services Secondly, encouraging the participation of financial institution using technology on providing financial services c/ Strengthen financial education, improve financial capacity and protect consumers 4.2 SOME RECOMMENDATIONS TO PROMOTE FINANCIAL INCLUSION IN NORTHERN DELTA PROVINCES - Recommendation 1: It is necessary to implement a financial education strategy, especially the utilities of financial services for the people so that more knowledgeable people arise the need to use financial services in order to improve financial inclusion - Recommendation 2: It is necessary to to expand the branches network and enhance the application of technology in the supply of financial products to increase the accessibility of finance in the Northern Delta region - Recommendation 3: It is recommended to implement a strategy to promote noncash payment in Vietnam 20 CONCLUSION The thesis has reviewed and systematized: (i) Fundamental theories on financial inclusion, evaluation index and the roles of financial inclusion, overview of factors affecting financial inclusion, (ii) Two lessons for Vietnam to expand financial inclusion drawn from international experiences (iii) Assessment of the current situation of financial inclusion in the Northern Delta provinces according to Global Findex’s criterias (iv) Using statistical methods and models to study factors affecting financial inclusion in the Northern Delta provinces (v) The thesis proposed recommendations to the State authorities and Vietnamese credit institutions to promote financial inclusion in Vietnam in general and the Northern Delta region in particular Some limitations: First, The Northern Delta consists of 11 provinces but in fact, the author only collected data concerning financial inclusion of 10 local branches of the State Bank Second, Assessing the ability of financial inclusion requires a longer period of time But in this thesis, the author could not present the results and findings for a longer period of time and therefore could not have a clear understanding of the results of financial inclusion in the Northern Delta provinces because of the lack of data However, the author tried to collect data, and analyse actual questionnaires to have desired results, which is the overall situation of financial inclusion in the Northern Delta provinces And third, Due to limitations on data collection from provinces, the study did not mention the accessibility of insurance for people in the Northern Delta provinces Therefore, with futher research in the future, the author desires to study more deeply on (1) the role of State authorities in promoting financial inclusion in the Northern Delta provinces ; (2) How financial inclusion means to the economic development and life of the people in the Northern Delta provinces and (3) the key barriers to the development of financial inclusion in the Northern Delta provinces nowadays LIST OF RELATED RESEARCHES BY AUTHOR OF THE THESIS (1) (2017), Developing non-financial services – The subtainable way of modern banks, Proceedings of the Confernce “Promoting financial inclusion in Vietnam”, Labor Publishing House, Page 571-580 (2) (2017), Current situation of providing banking services for individuals, Proceedings of the Confernce “Promoting financial inclusion in the South Central provinces”, Labor Publishing House, Page 87 - 97 (3) (2018), Solutions to promote financial inclusion in Vietnam, Economy and Forecast Review, Number 20 (Jul 2018), Page 23 - 25 (4) (2019), Access to financial inclusion in the Red River Delta provinces, Banking Science and Training Review, Number 202 (Mar 2019), Page 18 – 27 (5) (2019), Financial inclusion from the perspective of a bank payment service in the Northern Delta provinces, Proceedings of Banking Vietnam Conference 2019  ... Dr Pham Thi Hoang Anh Dr Nguyen Xuan Quang Phản biện 1: Assoc Prof Dr Le Van Luyen Phản biện 2: Assoc Prof Dr Dao Minh Phuc The thesis was defended in front of the thesis committee at … … on ... State Bank branches in the Northern Delta provinces, the annual summary report of the People's Committees of the Northern Delta provinces, and the annual statistics yearbooks of the General Statistics... total outstanding loans to the economy The data was selected by the author, then processed and putt into this study in the form of statistical tables The analysis of these data includes a comparative