FACTORS CONTRIBUTING TO VIETNAMESE ADULTS’ INTENTIONS AND BEHAVIORS TOWARDS PERSONAL FINANCIAL PLANNING In Partial Fulfillment of the Requirements of the Degree of MASTER OF BUSINESS ADMINISTRATION In International Business By Ms: Nguyen Thi Phuong Trang ID: MBA06036 International University - Vietnam National University HCMC August 2014 FACTORS CONTRIBUTING TO VIETNAMESE ADULTS’ INTENTIONS AND BEHAVIORS TOWARDS PERSONAL FINANCIAL PLANNING In Partial Fulfillment of the Requirements of the Degree of MASTER OF BUSINESS ADMINISTRATION In International Business By Ms: Nguyen Thi Phuong Trang ID: MBA06036 International University - Vietnam National University HCMC August 2014 Under the guidance and approval of the committee, and approved by all its members, this thesis has been accepted in partial fulfillment of the requirements for the degree. Approved: ---------------------------------------------Chairperson ---------------------------------------------- --------------------------------------------Committee member --------------------------------------------- Committee member ---------------------------------------------Committee member Committee member --------------------------------------------Committee member INTERNATIONAL UNIVERSITY SOCIALIST REPUBLIC OF VIETNAM SCHOOL OF BUSINESS Independence - Freedom - Happiness ASSURANCE QUALIFIED THESIS Student’s Name: NGUYEN THI PHUONG TRANG Student ID: MBA06036 Title of Thesis: FACTORS CONTRIBUTING TO VIETNAMESE ADULTS’ INTENTIONS AND BEHAVIORS TOWARDS PERSONAL FINANCIAL PLANNING Advisor: Ph.D PHAN TRIEU ANH I assure that the content of this thesis has been qualified all requirements for a research paper and able to participate in the final thesis defense. Approved by i Acknowledge I would like to express my very great appreciation to my advisor – Ph.D Phan Trieu Anh with all my respect and gratitude. I have been fortunate in receiving his insightful guidelines, recommendations and feedbacks during this research. I am grateful to all the researchers stated in my study, especially Dr. Yasser Alhenawi who has provided me with further information related to his research. I appreciate the research participants for taking time to answer my questions as their inputs are very valuable to my thesis. I am also sincerely thankful all my friends for their willingness to encourage and motivate me fulfilling the research. Most especially to my mom, thank you for giving me strengths and love to overcome all the difficulties. Without all of your help and support, I could not have completed this thesis. ii Plagiarism Statements I would like to declare that, apart from the acknowledged references, this thesis either does not use language, ideas, or other original material from anyone; or has not been previously submitted to any other educational and research programs or institutions. I fully understand that any writings in this thesis contradicted to the above statement will automatically lead to the rejection from the MBA program at the International University – Vietnam National University Ho Chi Minh City. iii Copyright Statement This copy of the thesis has been supplied on condition that anyone who consults it is understood to recognize that its copyright rests with its author and that no quotation from the thesis and no information derived from it may be published without the author‟s prior consent. © Nguyen Thi Phuong Trang/MBA06036/2014 iv Table of Contents PLAGIARISM STATEMENTS ....................................................................................... III COPYRIGHT STATEMENT ........................................................................................... IV CHAPTER ONE – INTRODUCTION ........................................................................ - 14 1. INTRODUCTION ....................................................................................................... - 14 - 2. BACKGROUND OF THE PROBLEM ............................................................................ - 15 - 3. STATEMENT OF THE PROBLEM ................................................................................ - 16 - 4. RESEARCH QUESTIONS............................................................................................ - 16 - 5. RESEARCH OBJECTIVES AND LIMITATIONS ............................................................ - 16 - 6. RESEARCH RATIONALE ........................................................................................... - 17 6.1. Importance of the research ............................................................................ - 17 - 6.2. Beneficiaries of this research ........................................................................ - 17 - CHAPTER TWO – LITERATURE REVIEW .......................................................... - 18 1. THE THEORY OF REASONED ACTION (TRA) ......................................................... - 18 - 2. THE THEORY OF PLANNED BEHAVIOR (TPB) ....................................................... - 19 - 3. PERSONAL FINANCIAL PLANNING ........................................................................... - 20 - 4. TPB IN PERSONAL FINANCIAL PLANNING .............................................................. - 25 4.1. Attitudes .......................................................................................................... - 25 - 4.2. Subjective Norms ............................................................................................ - 27 - 4.3. Perceived behavioral control ........................................................................ - 28 - 4.4. Behavioral intentions ..................................................................................... - 30 - 4.5. Behavior.......................................................................................................... - 30 v 5. RESEARCH MODEL .................................................................................................. - 32 - 6. RESEARCH HYPOTHESES ......................................................................................... - 34 - CHAPTER THREE – RESEARCH METHODOLOGY ......................................... - 35 1. RESEARCH DESIGN .................................................................................................. - 35 - 2. RESEARCH PROCESS ................................................................................................ - 35 - 3. SAMPLE AND DATA COLLECTION METHOD ............................................................. - 36 3.1. Sample statistics ............................................................................................. - 36 - 3.2. Sample size ..................................................................................................... - 37 - 3.3. Data collection method .................................................................................. - 38 - 4. OPERATIONALIZATION OF VARIABLES ................................................................... - 38 - 5. MEASUREMENT ....................................................................................................... - 41 - 6. Q UESTIONNAIRE DESIGN ........................................................................................ - 43 - 7. DATA ANALYSIS ...................................................................................................... - 43 - CHAPTER FOUR – DATA ANALYSIS AND DISCUSSIONS .............................. - 45 1. SAMPLE DEMOGRAPHIC .......................................................................................... - 45 - 2. OVERALL OF COLLECTED DATA ............................................................................. - 47 - 3. TESTING RELIABILITY OF THE MEASUREMENT SCALE ........................................... - 50 - 4. EXPLORATORY FACTOR ANALYSIS (EFA) ............................................................ - 55 - 5. STRUCTURAL EQUATION MODEL (SEM) ................................................................ - 63 5.1. Accessing the measurement model (Confirmatory Factor Analysis) .......... - 64 - 5.1.1. Goodness-of-fit ........................................................................................... - 65 - 5.1.2. Construct validity ....................................................................................... - 67 - 5.2. Accessing the structural model ..................................................................... - 71 vi 6. 7. 5.2.1. Goodness-of-fit ........................................................................................... - 71 - 5.2.2. Significant and meaningful structural relationships ................................ - 72 - TEST FOR DIFFERENCES IN THE MEANS OF THE BEHAVIORS .................................. - 76 6.1. Gender ............................................................................................................ - 76 - 6.2. Marital status ................................................................................................. - 77 - DISCUSSIONS ........................................................................................................... - 78 - CHAPTER FIVE – CONCLUSIONS, RECOMMENDATIONS AND LIMITATIONS ............................................................................................................... - 82 1. CONCLUSIONS ......................................................................................................... - 82 - 2. RECOMMENDATIONS .............................................................................................. - 82 - 3. LIMITATIONS ........................................................................................................... - 83 - REFERENCES ................................................................................................................ - 85 APPENDIX 1 ................................................................................................................... - 93 APPENDIX 2 ................................................................................................................... - 99 - vii List of Abbreviations Acronym Definition AMOS Analysis of MOment Structures ANOVA Analysis of variance AVE Average variance extracted CFA Confirmatory factor analysis CFI Comparative fit index CMIN Chi-square significant CR Construct reliability DF Degree of freedom EFA Exploratory factor analysis GFI Goodness of fit KMO Kaiser-Meyer-Olkin PBC Perceived behavioral control RMSEA Root mean square error of approximation SEM Structural equation model SIC Squared interconstruct correlations TLI Tucker – Lewis index TPB Theory of Planned Behavior TRA Theory of Reasoned Action viii List of Tables Table 1: Research hypotheses .......................................................................................... - 34 Table 2: Respondent selection criteria ............................................................................. - 37 Table 3: Operationalization of variables .......................................................................... - 40 Table 4: Measurement of the variables ............................................................................ - 41 Table 5: Data analysis ....................................................................................................... - 43 Table 6: Attitudes .............................................................................................................. - 48 Table 7: Subjective norms ................................................................................................ - 48 Table 8: Perceived behavioral control ............................................................................. - 49 Table 9: Intentions............................................................................................................. - 49 Table 10: Behaviors .......................................................................................................... - 49 Table 11: Reliability statistics for Attitude variables...................................................... - 50 Table 12: Item-Total Statistics for Attitude variables..................................................... - 51 Table 13: Reliability statistics for Attitude variables after removing Attitude5 ........... - 52 Table 14: Item-Total Statistics for Attitude variables after removing Attitude5 .......... - 52 Table 15: Reliability statistics for Behaviors variables .................................................. - 53 Table 16: Item-Total Statistics for Behaviors variables ................................................. - 53 Table 17: Reliability statistics for Behaviors variables after removing Behaviors6..... - 54 Table 18: Item-Total Statistics for Behaviors variables after removing Behaviors6 .... - 54 Table 19: KMO and Bartlett's Test .................................................................................. - 56 Table 20: Total Variance Explained ................................................................................ - 57 Table 21: Pattern Matrix ................................................................................................... - 59 ix Table 22: Pattern Matrix after removing Information5 .................................................. - 61 Table 23: Fit indices for the test model result (CFA) ..................................................... - 66 Table 24: Standardized Regression Weights ................................................................... - 68 Table 25: Average variance extracted (AVE) and construct reliabilities (CR) ............. - 69 Table 26: Discriminant validity ........................................................................................ - 70 Table 27: Covariances....................................................................................................... - 70 Table 28: Correlations....................................................................................................... - 70 Table 29: Fit indices for the test model result (SEM) ..................................................... - 71 Table 30: Regression Weights ......................................................................................... - 72 Table 31: Standardized regression weights ..................................................................... - 75 Table 32: Squared Multiple Correlations ........................................................................ - 75 Table 33: Covariances....................................................................................................... - 75 Table 34: Correlations....................................................................................................... - 75 Table 35: One-way Anova test for gender ....................................................................... - 76 Table 36: One-way Anova test for marital status ............................................................ - 77 Table 37: Supported research hypotheses........................................................................ - 81 - x List of Figures Figure 1: Theory of Reasoned Action (Ajzen & Fishbein, 1980) .................................. - 18 Figure 2: The Theory of Planned Behavior (Ajzen, 1991) ............................................. - 20 Figure 3: Implement a plan for making personal financial decisions ............................ - 21 Figure 4: Components of personal financial planning .................................................... - 21 Figure 5: The financial planning process......................................................................... - 24 Figure 6: Research model ................................................................................................. - 33 Figure 7: Research process ............................................................................................... - 36 Figure 8: Participants' gender ........................................................................................... - 45 Figure 9: Participants' marital status ................................................................................ - 45 Figure 10: Participants' education level ........................................................................... - 46 Figure 11: Participants' employment status ..................................................................... - 46 Figure 12: Participants' total annual net income ............................................................. - 47 Figure 13: The diagram of variables in CFA................................................................... - 66 Figure 14: Structural equation model............................................................................... - 71 - xi Abstract Financial literacy, especially personal financial planning, has been caught people‟s attention in recent years because poor financial management and unwise decision making can definitely lead to lower living standard, credit card debts, financial crisis and prevent families from achieving important long-term goals such as buying a home and raising kids as their wishes. This thesis examines the factors contributing to adults‟ intentions and behaviors towards personal financial planning which could be important to newly affluent young Vietnamese adults for responsible financial behaviors. Quantitative research method is used for testing Structural Equation Model rooted from the model from the Theory of Planned Behavior (TPB) of Fishbein and Ajzein. Using the convenience sample of 382 Vietnamese people participating into online survey, the research tries to answer one question and explore eight hypotheses. Through analysis of practical data via using SPSS 16 and AMOS 20 software, the results show that TPB is significant to predict to intentions and behaviors towards personal financial planning. Future research is needed to further investigate more deeply on how personal financial knowledge affects the financial planning behaviors for motivating planning practices from Vietnamese adults. Keywords: Theory of Planned Behavior, personal financial planning, structural equation model, Vietnamese adults. xii This page is intentionally left blank xiii Chapter One – Introduction 1. Introduction Financial literacy can be described as the ability to use one‟s knowledge and skills to manage financial resources effectively. It includes the ability to recognize available financial choices, to make financial plan for better future, to spend money wisely, and to well-manage the challenges as well as the risks that come as life events such as loosing job, having a family, saving for child‟s education, etc. Visa and Kiplinger‟s Personal Finance Magazine (2012) surveyed 25,500 participants from 28 countries, the countries with the least financially literacy were Pakistan, Indonesia and Vietnam. Survey results shows that people in these countries have no family budgeting, and there is no discussions with children about money management. However, Vietnamese respondents hold the rank at 10th out of 28 in savings account dedicated for risks. To measure the ways people in Asia Pacific region making decisions about their home finances, the MasterCard Index of Financial Literacy was studied with 7,756 respondents with age from 18 to 64 in 16 Asia Pacific markets. The research found out that women in the emerging markets such as Myanmar, Vietnam and China outscored men in financial literacy, by 7 index points, 6 index points and 3 index points respectively. And Vietnam was at the 12th in overall financial literacy index out of 16 (MasterCard, 2013). Financial literacy is a concern in which a large proportion of society having no support and education that is necessary for granting a developed world. One of the - 14 - practices of financial literacy is personal financial planning. Figuring out the factors contributing to the intentions and behaviors of adults towards personal financial planning in order to identify opportunities for improvement is calling for action of this research. 2. Background of the problem Financial literacy, especially personal financial planning, has been caught people‟s attention in recent years because poor financial management and unwise decision making can definitely lead to lower living standard, credit card debts, financial crisis and prevent families from achieving important long-term goals such as buying a home and raising kids as their wishes. Having low knowledge on personal finance and having no personal financial planning can lead to none budgeting allocation and expenses tracking which can lead to conspicuous consumption behaviors such as lavish spending on goods and services for impressing others. Furthermore, public education about the importance of having savings account is critical to increase national saving rate which is an important element for economic growth of every country. The first part of this research is examination of the factors contribute to adults‟ intentions and behavior towards personal financial planning such as budgeting, savings, insurance, education, investments and retirement. And then, the second part explores the differences in levels Vietnamese‟s personal financial knowledge on behaviors towards personal financial planning. - 15 - 3. Statement of the problem Research indicates the objective factors such as attitudes, subjective norms and perceived behavioral control are the important elements affecting adults‟ intentions and behaviors towards personal financial planning. 4. Research questions The research question that will be investigated in this study is: “What factors contribute to Vietnamese adults‟ intentions and behaviors towards personal financial planning?” 5. Research objectives and limitations In order to answer the research question, the research objectives are as following: - Investigate the factors that influence adults‟ personal intentions and behaviors towards personal financial planning. - Analyze the linkage between intentions and behaviors towards personal financial planning. - Encourage public sectors and educational academia on building up personal financial knowledge that will help adults achieve financial success in their life. Limitations on the study can be considered as below: - Only Vietnamese persons who are higher educated and from 25 to 34 years old were requested to participate in the quantitative survey. The investigations on the group of teenagers or students or more mature adults might be the suggestions for further researches. - 16 - 6. Research rationale 6.1. Importance of the research The motivation for this study is based on the observations that most Vietnamese adults have low level of personal financial knowledge and no attention to personal financial planning. In recent years, people are disillusioned with returns getting from their investments. They have invested in totally inappropriate channels without even being aware of this. Personal financial literacy and personal financial planning are highly recommended in this era of unstable economic not only in Vietnam but also in the whole world. During data collection steps, I have received an encouragement from a respondent named Frederikke Lindholm as “I applaud that you've chosen a thesis topic that will benefit society, and I enjoyed answering your questions. I work with an NGO on poverty reduction, and I'm happy to see independent research in this area, instead of that done by banks who are only trying to gain more customers. With your thirst for knowledge and your polite approach to potential respondents, I'm sure you will succeed gathering valuable data.” 6.2. Beneficiaries of this research The research explores factors which impact adults‟ intentions and behaviors towards personal financial planning which could be important to newly affluent young Vietnamese adults for responsible financial behaviors. It encourages people to practice personal financial planning for better financial management and brighter future. It also suggests academia and public sectors to consider on monitoring and improving people‟s positive financial intentions and behaviors towards personal financial planning. - 17 - Chapter Two – Literature Review A critical investigation of the relevant literature must be conducted as the background information of this research. Literature study includes definitions and previous research results in social sciences and economics sciences via typical publications, international books, articles and researches. After literature review, the researcher will be able to develop a research model and a meaningful questionnaire for answering the research questions. 1. The Theory of Reasoned Action (TRA) The theory of reasoned action (Ajzen & Fishbein, 1980) provides a model that has potential benefits for predicting the intention to perform a behavior based on an individual‟s attitudinal and normative beliefs (Southey, 2011). Figure 1: Theory of Reasoned Action (Ajzen & Fishbein, 1980) According to the theory, the most important determinant of a person's behavior is behavior intention. The individual's intention to perform a behavior is a combination of - 18 - attitude toward performing the behavior and subjective norm. TRA works most successfully when applied to behaviors that are under a person's volitional control. If behaviors are not fully under volitional control, even though a person may be highly motivated by her own attitudes and subjective norm, she may not actually perform the behavior due to intervening environmental conditions. The Theory of Planned Behavior (TPB) was developed to predict behaviors in which individuals have incomplete volitional control. 2. The Theory of Planned Behavior (TPB) The Theory of Planned Behavior is an extension of the Theory of Reasoned Action (Ajzen & Fishbein, 1980; Fishbein & Ajzen, 1975) made necessary by the original model‟s limitations in dealing with behaviors over which people have incomplete volitional control. As a general rule, the more favorable the attitude and subjective norm with respect to a behavior, and the greater the perceived behavioral control, the stronger should be an individual‟s intention to perform the behavior under consideration. The relative importance of attitude, subjective norm, and perceived behavioral control in the prediction of intention is expected to vary across behaviors and situations. Thus, in some applications it may be found that only attitudes have a significant impact on intentions, in others that attitudes and perceived behavioral control are sufficient to account for intentions, and in still others that all three predictors make independent contributions (Ajzen, 1991). - 19 - Figure 2: The Theory of Planned Behavior (Ajzen, 1991) 3. Personal financial planning Kapoor, Dlabay, and Hughes (2012) stated that “Financial uncertainty affects everyone. However, wise choices can ease potential difficulties. Avoid the temptation of credit card use. Identify budget items that can be eliminated or reduced. Have adequate auto, home, health, and life insurance. Prevent becoming a victim of financial scams by being well informed. Talk with others about your financial concerns to help reduce anxiety. Your ability to use wise money management strategies will serve you in every stage of your life, and in every phase of the business cycle.” Personal financial planning is described in the below figure: - 20 - Figure 3: Implement a plan for making personal financial decisions The figure below presents an overview of the eight major personal financial planning areas that must be coordinated through an organized plan and wise decision making to achieve a successful financial situation. Figure 4: Components of personal financial planning - 21 - i. Obtaining: You obtain financial resources from employment, investments, or owner-ship of a business. Obtaining financial resources is the foundation of financial planning, since these resources are used for all financial activities. ii. Planning: Planned spending through budgeting is the key to achieving goals and future financial security. Efforts to anticipate expenses along with making certain financial decisions can reduce taxes, increase savings, and result in less financial stress. iii. Saving: Long-term financial security starts with a regular savings plan for emergencies, unexpected bills, replacement of major items, and the purchase of special goods and services, such as a college education, a boat, or a vacation home. Once you have established a basic savings plan, you may use additional money for investments that offer greater financial growth. iv. Borrowing: Maintaining control over your credit buying habits will contribute to your financial goals. The overuse and misuse of credit may cause a situation in which a person‟s debts far exceed the resources available to pay those debts. Bankruptcy is a set of federal laws allowing you to either restructure your debts or remove certain debts. The people who declare bankruptcy each year may have avoided this trauma with wise spending and borrowing decisions. v. Spending: Financial planning is designed not to prevent your enjoyment of life but to help you obtain the items you want. Too often, however, people make purchases without considering the financial consequences. Some people shop compulsively, creating financial difficulties. You should detail your living - 22 - expenses and your other financial obligations in a spending plan. Spending less than you earn is the only way to achieve long-term financial security. vi. Managing risk: Adequate insurance coverage is another component of personal financial planning. Certain types of insurance are commonly overlooked in financial plans. For example, the number of people who suffer disabling injuries or diseases at age 50 is greater than the number who dies at that age, so people may need disability insurance more than they need life insurance. Yet surveys reveal that most people have adequate life insurance but few have needed disability insurance. vii. Investing: Although many types of investments are available, people invest for two primary reasons. Those interested in current income select investments that pay regular dividends or interest. In contrast, investors who desire long-term growth choose stocks, mutual funds, real estate, and other investments with potential for increased value in the future. You can achieve investment diversification by including a variety of assets in your portfolio – these may include stocks, bond mutual funds, real estate, and collectibles such as rare coins. viii. Retirement and estate planning: Most people desire financial security upon completion of full-time employment. But retirement planning also involves thinking about your housing situation, your recreational activities, and possible part-time or volunteer work. The financial planning process as shown below can be viewed as a six-step procedure that can be adapted to any life situation. - 23 - Figure 5: The financial planning process Kapoor et al. (2012) point out in details six steps of personal financial planning process as below: i. Determine current financial situation: In this first step, determine current financial situation regarding income, savings, living expenses, and debts. Preparing a list of current asset and debt balances and amounts spent for various items gives a foundation for financial planning activities. ii. Develop financial goals: Periodically analyze financial values and goals are to differentiate needs from wants. Specific financial goals are vital to financial planning. They can range from spending all of current income to developing an extensive savings and investment program for future financial security. iii. Identify alternative courses of action: Developing alternatives is crucial when making decisions. Although many factors will influence the available alternatives, possible courses of action usually fall into the categories: - Continue the same course of action - 24 - - Expand the current situation - Change the current situation - Take a new course of action iv. Evaluate alternatives: There is the need for evaluating possible courses of action, taking into consideration life situation, personal values, and current economic conditions. v. Create and implement financial action plan: Developing an action plan is to identify ways to achieve financial goals. To implement the financial action plan, you may need assistance from others. vi. Review and revise financial plan: Financial planning is a dynamic process that does not end when you take a particular action. You need to regularly assess your financial decisions. You should do a complete review of your finances at least once a year. Changing personal, social, and economic factors may require more frequent assessments. 4. TPB in personal financial planning 4.1. Attitudes The attitude toward the behavior refers to the degree to which a person has a favorable or unfavorable evaluation or appraisal of the behavior in question, an individual's positive or negative feelings about performing a behavior and it is determined through an assessment of one's beliefs regarding the consequences arising from a behavior and an evaluation of the desirability of these consequences (Ajzen, 1991). - 25 - In the study surveyed 206 MBA students about their attitudes to personal financial planning, Murphy and Yetmar (2010) list the attitudes toward personal financial planning as below: i. Whether they thought that preparing a personal financial plan was important. ii. Whether they were interested in preparing such a plan. iii. Whether they had time to do so. iv. Whether or not they felt that they had the necessary skills to prepare a personal financial plan. v. Whether or not they felt that they had the necessary knowledge to prepare a personal financial plan. Lai and Tan (2009) examined the attitudes of the Malaysians toward personal financial planning which encompasses money management, insurance planning, investment planning, retirement planning, and estate planning. A survey data was obtained from 400 Malaysians by using a set of structured questionnaire. They associated personal financial planning efforts with three measures: attitudes towards personal financial planning, factors influencing various aspects of personal financial planning decision, and frequency of managing for various aspects of personal financial planning. The results show that the job status of a respondent is the primary factor in influencing attitudes towards personal financial planning and the frequency in managing for various aspects of personal financial planning. Self-employed and employed respondents showed statistically significant higher in their mean values as compared to unemployed respondents. Employed and self-employed respondents appear to be more positive and active in money management, insurance, and investment planning. - 26 - As a general rule, the more favorable the attitude and subjective norm with respect to a behavior, and the greater the perceived behavioral control, the stronger should be an individual‟s intention to perform the behavior under consideration (Ajzen, 1991). Thus, the first hypothesis would be: H1: There is significant and positive relationship between attitudes and intentions to personal financial planning. 4.2. Subjective Norms Fishbein and Ajzen (1975) defined subjective norm as the perceived social pressures to perform or not perform the behavior, an individual's perception of whether people important to the individual think the behavior should be performed and the contribution of the opinion of any given referent is weighted by the motivation that an individual has to comply with the wishes of that referent. Kapoor et al. (2012) point out some influences on personal financial planning as following: i. Life situation, such as household size, graduation, dependent children leaving home, changes in health, engagement and marriage, divorce, birth or adoption of a child, retirement, a career change or a move to new area, or the death of a spouse, family member, or other dependent. ii. Economic factors, such as income, global influences, inflation, and interest rates have a strong influence on financial planning Hence, the second hypothesis would be: - 27 - H2: There is significant and positive relationship between subjective norms and intentions to personal financial planning. 4.3. Perceived behavioral control In fact, the Theory of Planned Behavior differs from the Theory of Reasoned Action in its addition of perceived behavior control. Perceived behavioral control plays an important part in the Theory of Planned Behavior. In the scope of this research, perceived behavior control is investigated via two elements such as perception and personal financial planning information sources. Consistent with an emphasis on factors that are directly linked to a particular behavior, perceived behavior control refers to people‟s perception of the ease or difficulty of performing the behavior of interest. Perceived behavioral control, together with behavioral intention, can be used directly to predict behavioral achievement (Ajzen, 1991). Participants were asked to indicate their level of confidence in a financial plan‟s capacity to help them meet their long-term needs and the likelihood that they would implement such a plan (Murphy & Yetmar, 2010). Ajzen (2006) also categorized the items directly measure people‟s perception are capability of performing the behavior, and controllability which addresses people‟s belief that they have control over the behavior, that its performance is or is not up to them. Kapoor et al. (2012) stated that personal financial planning information sources can be: i. The internet. ii. Financial institutions, such as banks, credit unions, and investment companies. - 28 - iii. Media sources, such as newspaper, magazines, television, etc. iv. Financial specialists, such as financial planners, insurance agents, investment advisers, credit counselors, lawyers, and tax preparers. Rutherford and Devaney (2009) researched the factors influencing convenience use of credit cards with perceived behavioral control construct with source of financial credit advices such as financial experts, friends and family, media and self-advice (reference). The findings of Murphy and Yetmar (2010) indicated that, while most respondents feel both that financial planning is important and that they are interested in developing a financial plan, very few feels that they have the necessary skills and knowledge to prepare their own plan. In addition, the participants indicated a strong preference for professional personal financial planning advice. The study also indicates that less than 13 percent have prepared a comprehensive personal financial plan. When asked to identify the one professional from whom they would seek advice, certified financial planners were the preferred resource. The lack of active involvement in personal financial planning by individuals implies that there is a great need of awareness of well-planned and sophisticated financial planning. The demand of personal financial planning professional has opened an additional avenue for financial practitioners (Lai & Tan, 2009). From the above literature review for two components of perceived behavioral control, the third hypotheses would be: H3: There is significant and positive relationship between perceived behavioral control and intentions to personal financial planning. - 29 - H4: There is significant and positive relationship between perceived behavioral control and behaviors to personal financial planning. 4.4. Behavioral intentions As in the original TRA, a central factor in the TPB is the individual‟s intentions to perform a given behavior (Ajzen, 1991). Ajzen (1991) stated that intentions are assumed to capture the motivational factors that influence a behavior; they are indications of how hard people are willing to try, of how much of an effort they are planning to exert, in order to perform the behavior. Armitage and Conner (2001) mentioned that desires, intentions and self-predictions were coded according to the criteria discussed in Bagozzi (1992), Fishbein and Stasson (1990), Norman and Smith (1995), Sheppard et al. (1988) and Warshaw and Davis (1985). Briefly, „desire‟ was coded if studies employed items such as „I want to perform behaviour x‟; „self-prediction‟ was coded for measures such as „I will perform behaviour x‟ or „How likely is it that you will perform behaviour x?‟ and „intention‟ was coded for studies that employed only measures such as „I intend to perform behaviour x‟. Where studies employed some combination of the above, these were coded as „mixed‟ measures. And this research is applying the mixed measure with three questions to evaluate intentions towards personal financial planning. 4.5. Behavior Explaining human behavior in all its complexity is a difficult task. It can be approached at many levels, from concern with physiological processes at one extreme to concentration on social institutions at the other. Social and personality psychologists have - 30 - tended to focus on an intermediate level, the fully functioning individual whose processing of available information mediates the effects of biological and environmental factors on behavior. Intentions to perform behaviors of different kinds can be predicted with high accuracy from attitudes toward the behavior, subjective norms, and perceived behavioral control; and these intentions, together with perceptions of behavioral control, account for considerable variance in actual behavior (Ajzen, 1991). Lusardi and Mitchell (2007) found out that planners in both cohorts arrive close to retirement with much higher wealth levels and display higher financial literacy than nonplanners and instrumental variables estimates show that planning behavior can explain the differences in savings and why some people arrive close to retirement with very little or no wealth. Murphy and Yetmar (2010) asked respondents whether they had prepared components of a financial plan such as comprehensive personal financial plan, current year tax liability analysis and plan, educational funding analysis, estate plan, insurance needs analysis, retirement plan and will. In the scope of this research, the current year tax liability analysis and plan is skipped as this term hasn‟t been applied in the context of Vietnam tax and laws. Lai and Tan (2009) asked a series of questions on a five-point Likert-type scale comprising how to manage for various aspects of personal financial planning on the frequency of engagement in managing for their money, insurance, investment, retirement, and estate. - 31 - As a general rule, the stronger the intention to engage in a behavior, the more likely should be its performance (Ajzen, 1991). This leads to the next hypotheses as below: H5: There is significant and positive relationship between behavioral intentions and behaviors to personal financial planning. H6: Attitudes will be positively correlated with subjective norms. H7: Subjective norms will be positively correlated with perceived behavioral control. H8: Attitudes will be positively correlated with perceived behavioral control. 5. Research model In psychology literature, intention has been proved to be the best predictor of planned behavior, especially when the behavior is rare, difficult to observe, or involves time lags that cannot be predicted (Astuti & Martdianty, 2012). This theory not only helps us to understand how we can predict and change the behavior of others but also implies that one‟s intention are factors that influence behavior (Bakotic, et al., 2010). Personal financial planning is the process of managing money to achieve personal economic satisfaction. This planning process allows people to control financial situation. Every person, family, or household has a unique situation; therefore, financial decisions must be planned to meet specific needs and goals (Kapoor et al., 2012). Therefore, personal financial planning is considered as planned behavior. From the above literature review, research model is based on TPB and modified as below: - 32 - Attitude s H1 H6 Subjective Norms H5 H2 Intentions Behaviors H8 H7 H3 H4 Perceived Behavioral Control Figure 6: Research model based on the Theory of Planned Behavior (Ajzen, 1991) - 33 - 6. Research hypotheses From the above literature review and research model, the hypothesis statements of this research are summarized as the below tables. Table 1: Research hypotheses There is significant and positive relationship between attitudes and intentions to H1 personal financial planning There is significant and positive relationship between subjective norms and H2 intentions to personal financial planning. There is significant and positive relationship between perceived behavioral H3 control and intentions to personal financial planning. There is significant and positive relationship between perceived behavioral H4 control and behaviors to personal financial planning. There is significant and positive relationship between behavioral intentions and H5 behaviors to personal financial planning. H6 Attitudes will be positively correlated with subjective norms. H7 Subjective norms will be positively correlated with perceived behavioral control. H8 Attitudes will be positively correlated with perceived behavioral control. - 34 - Chapter Three – Research Methodology 1. Research design As cited in Castellan (2010), “from a quantitative aspect, the goal of research is collecting facts of human behavior, which when accumulated will provide verification and elaboration on a theory that will allow scientists to state causes and predict human behavior" (Bogdan & Biklen, 1998) and “In more succinct terms, the goal of quantitative research can be: to show relationships between variables, statistical description, establishing facts (Bogdan & Biklen, 1998), validation (Krathwohl, 1998), prediction and control (Gage, 1989), and testing hypotheses (Gall, et al., 1996)”. In many quantitative studies, the research question or hypotheses usually follows the review of the literature. The researcher uses the theories, results, and findings of other studies in order to form a hypothesis to test. McMillan (2000) stated that a hypothesis is an informed guess or prediction that indicates what the researcher thinks the results will be before the study is carried out (as cited in Castellan, 2010). For the case of this research, quantitative research method is used to identify the factors effecting on intentions and behaviors towards personal financial planning and testing eight researched hypotheses. 2. Research process Research process started with literature review for coming up with research model and hypotheses. The pilot test helped to get feedbacks from respondents before completing measurement and questionnaire for collecting primary data. In the analysis - 35 - stage, reliability test, EFA, SEM and ANOVA were performed on practical data. Finally, discussions and conclusion aimed to wrap up the findings. Literature review Pilot test Reliability test Research model Redesign questionnaire EFA Hypotheses Collecting data SEM Questionnaire design Descriptive analysis Discussions and conclusions Figure 7: Research process 3. Sample and data collection method 3.1. Sample statistics A substantial portion of quantitative research is performed to examine what are the factors contribute to adults‟ intentions and behaviors towards personal financial planning. There are age groups such as 18-24, 25-34, 35-44, 45-54, 55-64 and over 65 with common financial goals and activities that affect financial planning (Kapoor et al., 2012). In the scope of this research, the age group 25-34 is selected to investigate based on their diversified goals and activities such as having income to establish financial independence, consider home purchase, carefully manage the increased need for the use of credit, obtain an appropriate amount of life insurance, etc. Furthermore, regarding - 36 - personal financial knowledge and planning skills, the respondents were classified from university graduation and above. Therefore, respondent selection criteria are as following table: Table 2: Respondent selection criteria No. Criteria Respondents characteristics 1 Gender Male and female 2 Age 25-34 years old 3 Education University graduated and above 4 Marital status Single & married 5 Nationalities Vietnamese The respondents are recruited from researcher‟s friends on social network. Researcher explained to the respondent the purpose of the survey and give clear instructions to assure that all questionnaires will be completed anonymously. The respondents are being asked to be as honest as possible in giving the answers as the data will not be traced back to specific respondent. 3.2. Sample size This study applies the structural equation modeling (SEM) to investigate the research model. At least 100 cases are required for SEM generally and preferably 200 (Loehlin, 1992 as cited in Lee, 2008). A desirable goal is to have the ratio of the number of cases to the number of free parameters be 20:1; however, a 10:1 ratio may be a more realistic target (Kline, 2005 as cited in Lee, 2008). It is suggested that a sample size of 50 is very poor, 100 is poor, 200 is fair, 300 is good, 500 is very good, and 1,000 is excellent (Comrey & Lee, 1992 as cited in Gannon-Cook, 2010). - 37 - From the above suggestions, the quantitative research design to be used is survey research with the research sample as 300 for a good same size. 3.3. Data collection method Pilot studies can serve many purposes, in the case of this study, questions related to personal financial intentions, behaviors and status are considered sensitive; therefore, a pilot test should be performed to investigate respondents‟ responses for later questionnaire redesign stage. Hertzog (2008) stated that “Specific sample size depended on the nature of the decision based on the estimate, with samples as small as 10-15 per group sometimes being sufficient” and Kieser and Wassmer (1996) also indicated that “10-20 participants per group would be sufficient to implement to size of sampling” (as cited in Haron, Hamid & Talib, 2011). From the above suggestions, the questionnaire is pilot tested with 10 Vietnamese respondents. After the pilot test, adjustment would be made on the survey questions. The questionnaires are completed via online version to reach the desired sample size. There are Vietnamese versions of the questionnaire that being created via Survey Monkey tool for online data collection. The data collection process was executed from personal contacts with directly request via messaging, emailing and following up with the report from respondents and Survey Monkey system. After nearly two months, the research reached more than 400 participants with 382 valid records for further analysis. 4. Operationalization of variables Operationalization is the process of showing out how to measure the interested concepts. Many of the most common concepts are intangible. We cannot really point to - 38 - them directly. Instead, we have to find a way to measure them, often indirectly (Operationalization, n.d). From the literature review, below is the operationalization of variables in the research model. - 39 - Table 3: Operationalization of variables Variables Indicators Sources Attitude towards behavior Important – Interested in – Had time to do so – Had skills – Has Murphy & Yetmar (2010) knowledge Subjective norms 1. Life situation: marital status, employment status, number and age of Carpenter & Reimers (2005) household. Kapoor et al. (2012) 2. Economic factors: income, global influences, inflation, and interest rates. Perceived behavioral control 1. Perception: difficulty, capability, and controllability. Ajzen (1991) & Ajzen (2006) 2. Personal financial information sources: - Friends and family, self-advice Rutherford & Devaney (2009) - The media, financial institutions, financial specialists Kapoor et al. (2012) Personal financial planning Desires – Intentions – Self-predictions Armitage & Conner (2001) intention Personal financial planning - Money management Lai & Tan (2009) - 40 - behavior Financial knowledge - Insurance planning - Investment planning - Estate planning - Retirement planning - Education planning Murphy & Yetmar (2010) Interest compounding, interest rate movements and financial Alhenawi & Elkhal (2013) decisions, assets liquidity, risk-return trade-off and age, diversification, and interest-inflation relation. 5. Measurement All the variables are measured by 5 point Likert scales (Strongly disagree – Disagree – Neither agree nor disagree – Agree – Strongly agree). Table 4: Measurement of the variables No. Variable 1 Att 2 Attidutes1 Measurement Attitude Important No. 19 20 Variable Infor Information1 Measurement Personal financial Friends and family information sources - 41 - 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Attidutes2 Attidutes3 Attidutes4 Attidutes5 SN Life1 Life2 Life3 Economic1 Economic2 Economic3 Economic4 PBC Perception1 Perception2 Perception3 Interested in Had time to do so Had skills Has knowledge Subjective norms Marital status Employment status Number and age of Income household Global influences Inflation Interest rates Perceived behavioral Difficulty control Capability Controllability 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Information2 Information3 Information4 Information5 Int Intentions1 Intentions2 Intentions3 Beha Behaviors1 Behaviors2 Behaviors3 Behaviors4 Behaviors5 Behaviors6 - Self-advice The media Financial institutions Financial specialists Personal financial Desires planning intention Intentions Self-predictions Personal financial Money management planning Insurancebehavior planning Investment planning Education planning Estate planning Retirement planning - 42 - 6. Questionnaire design Questionnaire design includes six parts as below: i. Demographic information ii. Attitudes towards personal financial planning iii. Subjective norms towards personal financial planning iv. • Life situation • Economic factors Perceived behavioral control towards personal financial planning • Perception • Personal financial information sources v. Intentions towards personal financial planning vi. Behaviors towards personal financial planning 7. Data analysis To solve research questions and examine hypotheses, adequate data from the primary research is investigated via the below analysis stages and methods. Table 5: Data analysis Stage Analysis Purpose 1 Descriptive analyses Investigation of sample demographic characteristics 2 Reliability test Reliability test on each set of constructs to determine the consistency or stability of all scales via Cronbach‟s alpha value - 43 - 3 4 Exploratory Factor Exploration of loadings and removal of items with low Analysis loadings and high cross-loadings Accessing the Goodness-of-fit measurement model Construct validity (Confirmatory Factor Analysis – CFA) 5 Accessing the strutural Goodness-of-fit which is how the model that best model (SEM) represents the data reflects underlying theory Significant and meaningful structural relationships 6 One-way Anova test Test for differences in the means of the dependent variable (behaviors towards personal financial planning) broken down by the levels of the independent variables (gender and marital status) Data were analyzed by using descriptive and inferential statistics using SPSS 16 and AMOS 20 software. - 44 - Chapter Four – Data Analysis and Discussions 1. Sample demographic Via questionnaire, the research has got 382 valid observations which ranked as good sample size. Below figures are some demographic characteristics of the collected sample with participants‟ gender, marital status, education level, employment status, and total annual net income. Due to being generated mostly from researcher‟s personal contacts, the number of female respondents participated into the survey made up 63% and also married participants seized 59% of the sample size. Gender 37% Male Female 63% Figure 8: Participants' gender Marital Status 41% 59% Single Married Figure 9: Participants' marital status - 45 - Participants were asked about education level and 81% of sample size was ranked as bachelor holders. And next, the respondents who are doctoral degree holders also occupied 11% of the sample size. Education Level 7% 1% 11% Bachelor Master Doctoral 81% Postdoctoral Figure 10: Participants' education level 82% of sample size was employed people that mean their work payoff is generated on a monthly basis. Business owners were counted as 9% of the sample size, they definitely need to well-handle financial resources for their business. Employment Status 5% 3% 1% Employed 9% Own business Unemployed Housewife 82% Student Figure 11: Participants' employment status - 46 - VND 10 million per month was the most popular net income of the respondents that hold 35% and VND 15 million was the second most popular net income with 21% of the sample size. They are ranked as average payment. The highs net income was VND 420 million per month and seized 13% of the sample size. Total Annual Net Income 13% 3% No income within 6 months Less than VND 120 mil 5% 3% 35% VND 120 mil - 179 mil VND 180 mil - 239 mil 8% VND 240 mil - 299 mil VND 300 mil - 359 mil VND 360 mil - 419 mil 12% Over VND 420 mil 21% Figure 12: Participants' total annual net income 2. Overall of collected data Statistics is a set of procedures for gathering, measuring, classifying, computing, describing, synthesizing, analyzing, and interpreting systematically acquired quantitative data. Statistics has major two components: the Descriptive Statistics and the Inferential Statistics. Descriptive statistics gives numerical and graphic procedures to summarize a collection of data in a clear and understandable way (Jaggi, n.d.). The empirical data shows that the attitudes to personal financial planning of Vietnamese adults are moderate. Mean of five scores is 2.64 telling that respondents - 47 - seem to agree with the statements as “consider personal financial planning is important, having interest and enough time, skills as well as knowledge to perform the planning”. Table 6: Attitudes The empirical data shows that the subjective norms to personal financial planning of Vietnamese adults are high with mean of seven scores is 4.03. The indicators within subjective norms are grouped into personal life situations and economic factors and respondents seem to rate subjective norms with high scores. Table 7: Subjective norms The empirical data shows that the perceived behavioral control to personal financial planning of Vietnamese adults is high with mean of eight scores is 3.62. The indicators within perceived behavioral control are categorized into two groups as personal perceptions towards financial planning and the information sources for personal financial planning. - 48 - Table 8: Perceived behavioral control The empirical data shows that the intentions towards personal financial planning of Vietnamese adults are high. Mean of three scores is 3.79 meaning that respondents nearly agreed with the statements of “desire, intent and will perform personal financial planning”. Table 9: Intentions The empirical data shows that the behaviors towards personal financial planning of Vietnamese adults are high with mean of six scores is 3.95 telling us that participants almost agreed with the statements of “performing money management, investment, estate, insurance, education and retirement planning”. Table 10: Behaviors - 49 - The empirical data shows that the behaviors towards personal financial planning of Vietnamese adults are high. 3. Testing reliability of the measurement scale The reliability of a scale indicates how free it is from random error. Two frequently used indicators of a scale‟s reliability are test-retest reliability (also referred to as „temporal stability‟) and internal consistency (Pallant, 2011). In 1951, Cronbach‟s alpha was developed by Lee Cronbach to provide a measurement of the internal consistency of a test scale. It is represented as a number between 0 and 1. Internal consistency describes the extent to which all the items in a test measure the same concept and therefore it is connected to the inter-relatedness of the items within the test. Internal consistency must be determined before a test can be performed to ensure validity of the test. In addition, reliability estimates show the amount of measurement error in a test (Tavakol & Dennick, 2011). Values above .7 are considered acceptable; however, values above .8 are preferable (Pallant, 2011). With practical data, SPSS shown that Cronbach‟s alpha value for Attitude variables in Reliability Statistics table is .842, suggesting very good internal consistency reliability for the scale. Table 11: Reliability statistics for Attitude variables - 50 - Cronbach's Alpha N of Items .842 5 In the Item-Total Statistics table for Attitude variables, column headed Cronbach‟s Alpha if Item Deleted demonstrates the impact of removing each item from the scale. If any of the values in this column are higher than the final alpha value, this item may be considered to be removed from the scale (Pallant, 2011). The Corrected Item-Total Correlation values in the Item-Total Statistics table give an indication of the degree to which each item correlates with the total score. Low values (less than .3) here indicate that the item is measuring something different from the scale as a whole (Pallant, 2011). Table 12: Item-Total Statistics for Attitude variables Scale Mean if Scale Corrected Cronbach's Variance if Item-Total Alpha if Item Correlation Deleted Item Deleted Item Deleted Attitudes1 10.80 8.198 .743 .783 Attitudes2 10.84 7.870 .776 .772 Attitudes3 10.94 8.088 .797 .767 Attitudes4 10.95 8.409 .789 .773 - 51 - Scale Mean if Scale Corrected Cronbach's Variance if Item-Total Alpha if Item Correlation Deleted Item Deleted Item Deleted Attitudes1 10.80 8.198 .743 .783 Attitudes2 10.84 7.870 .776 .772 Attitudes3 10.94 8.088 .797 .767 Attitudes4 10.95 8.409 .789 .773 Attitudes5 9.36 11.292 .193 .915 In the above table, Attitude5 will be removed from the scale for Attitude variables as it doesn‟t meet both 2 conditions (Pallant, 2011). And the revised acceptable results for Attitude variables are shown in 2 below tables. Table 13: Reliability statistics for Attitude variables after removing Attitude5 Cronbach's Alpha N of Items .915 4 Table 14: Item-Total Statistics for Attitude variables after removing Attitude5 - 52 - Scale Mean if Scale Corrected Cronbach's Variance if Item-Total Alpha if Item Correlation Deleted Item Deleted Item Deleted Attitudes1 6.94 6.534 .785 .898 Attitudes2 6.98 6.286 .806 .891 Attitudes3 7.08 6.510 .823 .885 Attitudes4 7.09 6.793 .818 .888 The same situation happened to Behaviors variables and the Behavior6 variable is removed from the scale. Table 15: Reliability statistics for Behaviors variables Cronbach's Alpha N of Items .900 6 Table 16: Item-Total Statistics for Behaviors variables Scale Scale Mean if Variance Corrected if Item-Total Item Deleted Item Deleted Correlation Behaviors1 19.74 7.990 .812 Cronbach's Alpha if Item Deleted .870 - 53 - Behaviors2 19.75 8.001 .754 .878 Behaviors3 19.77 7.858 .816 .869 Behaviors4 19.77 7.909 .768 .876 Behaviors5 19.75 8.078 .788 .874 Behaviors6 19.88 8.458 .492 .923 Table 17: Reliability statistics for Behaviors variables after removing Behaviors6 Cronbach's Alpha N of Items .923 5 Table 18: Item-Total Statistics for Behaviors variables after removing Behaviors6 Scale Scale Mean if Variance Corrected if Item-Total Item Deleted Item Deleted Correlation Cronbach's Alpha if Item Deleted Behaviors1 15.88 5.609 .798 .906 Behaviors2 15.90 5.574 .755 .915 Behaviors3 15.92 5.403 .839 .898 Behaviors4 15.92 5.422 .797 .907 - 54 - Scale Scale Mean if Variance Corrected if Item-Total Item Deleted Item Deleted Correlation Cronbach's Alpha if Item Deleted Behaviors1 15.88 5.609 .798 .906 Behaviors2 15.90 5.574 .755 .915 Behaviors3 15.92 5.403 .839 .898 Behaviors4 15.92 5.422 .797 .907 Behaviors5 15.90 5.577 .815 .903 Other Cronbach‟s alpha values for the remaining variables are Economic (.883), Life (.903), Perception (.872), Information (.914), Intentions (.870), and they are all considered reliable. 4. Exploratory Factor Analysis (EFA) Factor analysis is a multivariate statistical procedure that has many uses in which include reducing a large number of variables in to a smaller set of variables (also referred as factors). Factor analysis has two major classes in which EFA is being used in this research‟s data analysis for exploring the main dimensions to generate a theory, or model from a relatively large set of latent constructs often represent by a set of items (Williams, Brown & Onsman, 2010). Prior to the extraction of the factors, several tests should be used to access the suitability of the respondent data for factor analysis. The tests include Kaiser-Meyer- 55 - Olkin (KMO) Measure of Sampling Adequacy, and Bartlett‟s Test of Sphericity. The KMO index ranges from 0 to 1, with 0.5 considered suitable for factor analysis. The Bartlett‟s Test of Sphericity should be significant (p< .05) for each factor analysis to be suitable (Williams et al., 2010). In the first rotated round, 27 items were grouped into 5 components with KMO .931 which is less than 1, Sig .000 which is less than .05, and Total Variance Explained is 75.596%. These figures prove the required conditions to run EFA were matched. Table 19: KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Sphericity Approx. Chi-Square .931 8.541E3 df 351 Sig. .000 In order to determine how many components to extract, we consider information provided in the output. Using Kaiser‟s criterion, we are interested only in components that have an eigenvalue of 1 or more. To determine how many components meet this criterion, in Total Variance Explained table, columns labeled Initial Eigenvalues with the eigenvalues for each component are listed (Pallant, 2011). In this practical data, only the first five components recorded eigenvalues above 1 (10.994, 3.047, 2.776, 2.406, 1.188). These five components explain a total of 75.596% of the variance (see Cumulative % column). - 56 - Table 20: Total Variance Explained Rotation Sums of Extraction Sums of Squared Squared Loadings Loadingsa Initial Eigenvalues Factor Total % of Cumulative Variance % Total % of Cumulative Variance % Total 1 10.994 40.719 40.719 10.697 39.618 39.618 7.863 2 3.047 11.286 52.005 2.755 10.205 49.823 7.972 3 2.776 10.281 62.286 2.505 9.277 59.101 7.114 4 2.406 8.909 71.196 2.112 7.824 66.924 4.140 5 1.188 4.400 75.596 .885 3.278 70.202 5.981 6 .671 2.486 78.082 7 .520 1.928 80.010 8 .460 1.702 81.712 9 .425 1.576 83.288 10 .387 1.433 84.720 - 57 - 11 .362 1.341 86.062 12 .352 1.305 87.367 13 .332 1.230 88.597 14 .329 1.219 89.816 15 .294 1.090 90.906 16 .288 1.066 91.971 17 .273 1.010 92.981 18 .251 .931 93.912 19 .247 .913 94.825 20 .225 .832 95.657 21 .217 .803 96.460 22 .199 .737 97.197 23 .184 .681 97.878 24 .163 .602 98.481 25 .158 .584 99.065 - 58 - 26 .136 .504 99.569 27 .116 .431 100.000 However, item Information5 is loaded on both factor 1 and factor 3. Matsunaga (2011) stated that on a conventional liberal-to-conservative continuum, setting the cutoff at .40 (i.e items with a factor loading of .40 or greater is retained) is perhaps the lowest acceptable threshold and on the discrepancy between the primary and secondary factor loadings, retain items if their primary-secondary discrepancy is sufficiently large (usually .3 to .4). According to this statement, Information5 is considered to be removed from the items pool as its factor loading (.362) and primary-secondary discrepancy (.603 - .362) is not large enough to be retained. Table 21: Pattern Matrix Factor 1 2 Information4 .915 Perception2 .873 Information2 .846 Information3 .845 3 4 5 - 59 - Information1 .837 Perception3 .790 Perception1 .676 Information5 .603 .362 Life3 .918 Life2 .887 Economic1 .847 Life1 .826 Economic3 .788 Economic2 .784 Economic4 .759 Behaviors5 .850 Behaviors3 .842 Behaviors1 .838 Behaviors4 .833 - 60 - Behaviors2 .751 Attitudes4 .876 Attitudes3 .876 Attitudes2 .855 Attitudes1 .819 Intentions3 .828 Intentions2 .820 Intentions1 .704 Extraction Method: Principal Axis Factoring. Rotation Method: Promax with Kaiser Normalization. a. Rotation converged in 6 iterations. The revised Pattern Matrix table after removing Information5 is shown as below. Table 22: Pattern Matrix after removing Information5 Factor 1 Life3 2 3 4 5 .924 - 61 - Life2 .887 Economic1 .849 Life1 .827 Economic3 .788 Economic2 .782 Economic4 .757 Information4 .880 Perception2 .875 Information2 .847 Information1 .845 Information3 .829 Perception3 .791 Perception1 .682 Behaviors5 .874 Behaviors3 .847 - 62 - Behaviors4 .841 Behaviors1 .824 Behaviors2 .757 Attitudes4 .876 Attitudes3 .876 Attitudes2 .854 Attitudes1 .820 Intentions3 .850 Intentions2 .824 Intentions1 .718 Extraction Method: Principal Axis Factoring. Rotation Method: Promax with Kaiser Normalization. a. Rotation converged in 5 iterations. 5. Structural equation model (SEM) SEM approach is chosen because of its ability to test casual relationships between constructs with multiple measurement items and numerous researchers have proposed a two stage model-building process for applying SEM (Joreskog & Sorbom, 1996 as cited - 63 - in Lin, 2007). The goal is to determine whether a hypothesized theoretical model is consistent with the data collected to reflect this theory (Lei & Wu, 2007). The measurement model is first examined for instrument validation using CFA (Anderson & Gerbing, 1992 as cited in Lin, 2007), followed by an analysis of the structural model for testing associations hypothesized in the research model (Lin, 2007). Paswan (2009) stated that SEM is actually tested via below criteria: - Accessing the measurement model  Goodness-of-fit  Construct validity o Face o Convergent o Discriminant o Nomological - Accessing the structural model  Goodness-of-fit  Significant and meaningful structural relationships 5.1. Accessing the measurement model (Confirmatory Factor Analysis) In structural equation modeling, the CFA is imposed on the data. In this case, the purpose of structural equation modeling is twofold. First, it aims to obtain estimates of the parameters of the model, i.e. the factor loadings, the variances and covariance of the factor, and the residual error variances of the observed variables. The second purpose is to assess the fit of the model, i.e. to assess whether the model itself provides a good fit to the data (Hox & Bechger, n.d.). CFA differs from EFA in that factor structures are - 64 - hypothesized a priori and verified empirically rather than derived from the data. The number of factors in CFA is assumed to be known and CFA allows an indicator to load on multiple factors (Lei & Wu, 2007). 5.1.1. Goodness-of-fit AMOS software was used for CFA and the diagram of variables was drawn as below figure. At the first stage, the model fit indices do not meet the guidelines in Table 18. Given the complexity of structural equation modeling, it is not uncommon to find that the fit of a proposed model is poor. However, some modification indices can be made locally that can substantially improve results. It is good practice to assess the fit of each construct and its items individually to determine whether there are any items that are particularly weak (Hooper, Coughlan & Mullen, 2008). Therefore, the modification between e8 and e9 has made to improve the model fit and the result of this is shown below. - 65 - Figure 13: The diagram of variables in CFA The next table summarizes the fit indices for the test model result in CFA stage. The conclusions are based on the guidelines from Hooper, Coughlan & Mullen (2008) and all the fit indices are fitted. Table 23: Fit indices for the test model result (CFA) - 66 - Fit indices Guideline Model testing Conclusion result Chi-square significant (CMIN) P < 0.05 Chi-square/Degree of freedom < 2 is preferred P = .000 Fitted 1.851 Fitted (CMIN/DF) 2 – 5 is acceptable Goodness of fit (GFI) > 0.9 0.906 Fitted Root mean square error of < 0.1 0.047 Fitted approximation (RMSEA) Comparative fit index (CFI) > 0.9 0.970 Fitted Tucker – Lewis index (TLI) > 0.9 0.965 Fitted 5.1.2. Construct validity From the literature review, the content of the items is considered being consistent with the construct definition, based solely on the researcher‟s judgment, and meets the face validity (Paswan, 2009). There are three measures for convergent validity: - Factor loadings - Average variance extracted (AVE) - Construct reliability (CR) In CFA step, according to Standardized Regression Weights table below, the indicators have loadings (as stated in Estimate column) on the predicted factors that are higher than 0.5 (Paswan, 2009) indicates convergent validity. This results that all observed variables are kept in the diagram. - 67 - Table 24: Standardized Regression Weights When examining convergent validity, we look at two additional measures such as average variance extracted (AVE) by each construct and construct reliabilities (CR). This information is not provided by AMOS software so they have to be calculated. AVE is computed as the sum of the squared standardized factor loadings divided by the number - 68 - of items. CR is computed from the sum of factor loadings, squared for each construct and the sum of the error variance terms for a construct (Paswan, 2009). An AVE of .5 or higher indicates adequate convergent validity and a construct reliability estimate is that .7 or higher suggests good reliability which means the measures all are consistently representing something (Paswan, 2009). The below results show good variance extracted values (all are above 0.658) and high construct reliabilities (all are above 0.871) which means the model convergent validity. Table 25: Average variance extracted (AVE) and construct reliabilities (CR) Then we need to calculate the SIC (squared interconstruct correlations) from the IC (innerconstruct correlations) obtained from the correlations table on the AMOS printout. Discriminant validity compares the average variance extracted (AVE) estimates for each - 69 - factor with the squared interconstruct correlations (SIC) associated with that factor. All variance extracted (AVE) estimates in the above table are larger than the corresponding squared interconstruct correlation estimates (SIC). This means the indicators have more in common with the construct they are associated with than they do with other constructs (Paswan, 2009). Therefore, the five constructs CFA model demonstrates discriminant validity. Table 26: Discriminant validity Nomological validity is tested by examining whether the correlations between the constructs in the measurement model make sense. The construct correlations are used to assess this. The P-values as *** indicate that all correlations are significant and the interconstruct correlations are all positive. Table 27: Covariances Table 28: Correlations - 70 - 5.2. Accessing the structural model 5.2.1. Goodness-of-fit Figure 14: Structural equation model The first step in model estimation is to examine the goodness-of-fit of the hypothesized model. After calculating via AMOS, the below table summarizes the fit indices for the test model result in SEM stage. The conclusions are based on the guidelines from Hooper, Coughlan & Mullen (2008) and all the fit indices are fitted. Table 29: Fit indices for the test model result (SEM) Fit indices Guideline Model testing Conclusion result - 71 - Chi-square significant (CMIN) P < 0.05 Chi-square/Degree of freedom < 2 is preferred P = .000 Fitted 1.887 Fitted (CMIN/DF) 2 – 5 is acceptable Goodness of fit (GFI) > 0.9 0.903 Fitted Root mean square error of < 0.1 0.048 Fitted approximation (RMSEA) Comparative fit index (CFI) > 0.9 0.968 Fitted Tucker – Lewis index (TLI) > 0.9 0.964 Fitted 5.2.2. Significant and meaningful structural relationships The second step in model estimation is to examine the significance of each hypothesized path in the research model. The results found that all the influences have significance in statistics based on a two-tailed test with P-value less than 0.05 as shown below. The hypotheses H1, H2, H3, H4, and H5 are supported. Table 30: Regression Weights Estimate S.E. C.R. P Int [...]... research explores factors which impact adults intentions and behaviors towards personal financial planning which could be important to newly affluent young Vietnamese adults for responsible financial behaviors It encourages people to practice personal financial planning for better financial management and brighter future It also suggests academia and public sectors to consider on monitoring and improving... objectives are as following: - Investigate the factors that influence adults personal intentions and behaviors towards personal financial planning - Analyze the linkage between intentions and behaviors towards personal financial planning - Encourage public sectors and educational academia on building up personal financial knowledge that will help adults achieve financial success in their life Limitations... subjective norms and perceived behavioral control are the important elements affecting adults intentions and behaviors towards personal financial planning 4 Research questions The research question that will be investigated in this study is: “What factors contribute to Vietnamese adults intentions and behaviors towards personal financial planning? ” 5 Research objectives and limitations In order to answer... of the factors contribute to adults intentions and behavior towards personal financial planning such as budgeting, savings, insurance, education, investments and retirement And then, the second part explores the differences in levels Vietnamese s personal financial knowledge on behaviors towards personal financial planning - 15 - 3 Statement of the problem Research indicates the objective factors such... attitudes towards personal financial planning, factors influencing various aspects of personal financial planning decision, and frequency of managing for various aspects of personal financial planning The results show that the job status of a respondent is the primary factor in influencing attitudes towards personal financial planning and the frequency in managing for various aspects of personal financial planning. .. no support and education that is necessary for granting a developed world One of the - 14 - practices of financial literacy is personal financial planning Figuring out the factors contributing to the intentions and behaviors of adults towards personal financial planning in order to identify opportunities for improvement is calling for action of this research 2 Background of the problem Financial literacy,... credit card debts, financial crisis and prevent families from achieving important long-term goals such as buying a home and raising kids as their wishes This thesis examines the factors contributing to adults intentions and behaviors towards personal financial planning which could be important to newly affluent young Vietnamese adults for responsible financial behaviors Quantitative research method... There is significant and positive relationship between perceived behavioral control and intentions to personal financial planning - 29 - H4: There is significant and positive relationship between perceived behavioral control and behaviors to personal financial planning 4.4 Behavioral intentions As in the original TRA, a central factor in the TPB is the individual‟s intentions to perform a given behavior... Fishbein and Ajzein Using the convenience sample of 382 Vietnamese people participating into online survey, the research tries to answer one question and explore eight hypotheses Through analysis of practical data via using SPSS 16 and AMOS 20 software, the results show that TPB is significant to predict to intentions and behaviors towards personal financial planning Future research is needed to further... necessary knowledge to prepare a personal financial plan Lai and Tan (2009) examined the attitudes of the Malaysians toward personal financial planning which encompasses money management, insurance planning, investment planning, retirement planning, and estate planning A survey data was obtained from 400 Malaysians by using a set of structured questionnaire They associated personal financial planning efforts ... the factors that influence adults personal intentions and behaviors towards personal financial planning - Analyze the linkage between intentions and behaviors towards personal financial planning. .. Attitudes towards personal financial planning iii Subjective norms towards personal financial planning iv • Life situation • Economic factors Perceived behavioral control towards personal financial planning. .. explores factors which impact adults intentions and behaviors towards personal financial planning which could be important to newly affluent young Vietnamese adults for responsible financial behaviors