THE VARIOUS FACTORS AFFECTING THE EXCHANGE RATE BUSINESS: THE CASE OF THE COMMERCIAL BANKS IN CAN THO CITY

Transcription

1 KAAV INTERNATIONAL JOURNAL OF ARTS, HUMANITIES & SOCIAL SCIENCES THE VARIOUS FACTORS AFFECTING THE EXCHANGE RATE BUSINESS: THE CASE OF THE COMMERCIAL BANKS IN CAN THO CITY TRAN KIEU NGA Manager of the faculty of Accounting - Finance and Bank at Tay Do University TRAN THI KIEU TRANG Manager of the training center for output standards and human resource development at Tay Do University ABSTRACT Since Vietnam had joined the World Trade Organization (WTO), the Vietnam Government and businesses have been actively trying to take advantage of the strengths, available natural resources, and local labor force to compete with other countries in attracting foreign investment, developing production, and providing services. In addition, the Vietnam Government and businesses especially have paid attention to developing foreign trade, exchange rate because it has brought about tremendous economic benefits. Foreign trade is an economic activity on the international scale, it is no longer restricted to the territory of a country. The objectives of this paper were not only to look into the relevant literature of exchange rate but also to find common ground regarding the foreign trade business development at the commercial banks in Can Tho City and reports the results of a survey of 150 enterprises related to the commercial banks in Can Tho City. In this paper, the researchers used analytical method of explore factor analysis to determining that are components of the exchange rate business in Can Tho City. This paper conducted during the time from December 2014 to June The research result showed that there were 150 enterprises related to the commercial banks interviewed but 136 enterprises processed and answered 15 questions. The researcher had analyzed KMO test, the result of KMO analysis used for multiple regression analysis. Enterprises responses were measured through an adapted questionnaire on a 5-point Likert scale. Hard copy and online questionnaire were distributed among enterprises related to the commercial banks. In addition, the regression analysis results showed that there were three factors, which included of factors 59

2 following: the Risk of contracting contents (RC), the Legal risks (LR) and the Payment by L/C (PA) actually affected the exchange rate business with 5 % significance level. The research results were processed from SPSS 20.0 software. The parameters of the model estimated by Least - Squares Method tested for the model assumption with 5% significance level. Keywords: The bank, commercial bank, exchange rate and Tay Do University. Introduction Economic integration, strengthening international trade is always associated with the increased legal risks. The enterprises can not eliminate all the risks but the enterprises can complete it by the limited understanding of law and sanity while making each transaction in international trade. In fact, there are many risks as possible in the process of international trade. The lawyers have listed a series of legal risk from all aspects of international trade transactions. We can list a series of different risks as related to the establishment of rights and the transfer of ownership, property management rights under foreign law; barriers related to trade and technical the Government risks related to the agreement on tax risk relating to the enterprises anti-dumping lawsuits, subject to dumping duties... This is understandable because each country are building a legal system and policies to protect the market, companies and their consumers. If you do not know enough about these regulations, the companies of Vietnam will not enter the market, even going to have serious consequences. In addition, the risks related to intellectual property would have split many forms such as trademarks relating to trademarks; issues related to the invention; related technical know -how and technology transfer; related to copyright issues... each type of risk related to a series of regulations forensic and technical depth is set on the legal system characteristics of each different country. This shows the complexity of international law and the high risk of commercial risk. This is indeed a difficult and a major challenge for companies when reaching the world market. The above mentioned things and combination with the practical requirements of the teaching career, the author had boldly chosen the theme: "The various factors affecting the exchange rate business: the case of the commercial banks in Can Tho City". As a paper for researching in the risk of the exchange rate business in the bank sector. Literature review Ricardo model: Ricardo model in studying comparative advantage, a concept is considered most important in international trade theory. Ricardian model, countries concentrate on producing specialized products they can produce most efficiently. Unlike other theories, Ricardo's model predicts that countries will completely specialize in one type of goods instead of producing many different commodities. In addition, Ricardo did not consider the model directly to the resources, such as the relative relations between labor and capital within a country. Heckscher-Ohlin model: Heckscher-Ohlin model was built to replace the basic model of Ricardo's comparative advantage. Although it is more complex and potentially more accurate predictions, it still is idealized. It is ignoring the labor value theory and the association of neoclassical price mechanism into international trade theory. Hechscher-Ohlin model argues that the structure of international trade is determined by the difference between the resource factors. It predicts that a country will export the product using a variety of factors including water resources, but strong, and import products using a variety of factors including water resources, but scarce. However, many research projects aimed at re-testing HO models offer conflicting results, including 60

3 the work of Leontief Wassili, also known called Leontief Paradox. Using the balance model interdisciplinary IO (input-output) to its U.S. data in 1947, Leontief found that although the U.S. national rate of capital-labor ratio is high but capital-labor equivalence of items of U.S. imports is higher than the rate of capital / labor of exports. Factor model default: Economists distinguish classical production factors used in the production of goods: Land or natural resources (natural resources) - the product of natural origin is such as land and minerals. An expense is for the rent of land use. Labor force - the activities of man are used in production. Expenses paid for their labor is paid. Capitalism or capital - products made by humans or tools of production) is used in the manufacture of other products. Capital includes machinery, equipment and buildings. In a general sense, the payment for capital costs as interest rates. These factors were first codified in the analysis of Adam Smith, 1776, David Ricardo, 1817, and later John Stuart Mill contributed as part of a coherent theory of economic production politics. In the classical analysis, capital is generally viewed as tangible objects such as machinery, equipment and facilities. With the emergence of knowledge economy, the more modern analysis often distinguish between physical capital with other forms of capital such as "human capital" (economic terms to refer to education, knowledge or skilled). In addition, some economists say there is business to the concept of organizational skills, personal capitalism or simply a "leadership" as a factor Wednesday. However, this seems to be a form of labor or "human capital". When there is discrimination, cost factors of production are called profit. Methods of research This study used of quantitative research methods to survey the factors affecting the exchange rate business in Can Tho City. The results obtained from quantitative research processed by SPSS statistical software version Quantitative research methods describe and measure the level of occurrences based on numbers and calculations. Quantitative research is the collection of numerical data and exhibiting the view of relationship between theory and research as deductive, a predilection for natural science approach, and as having an objectivist conception of social reality. Therefore, this specific form of research uses the quantitative data to analysis. After preliminary investigations, formal research is done by using quantitative methods questionnaire survey of 150 enterprises related the exchange rate business in Can Tho City and answered nearly 15 questions. The reason tested measurement models, model and test research hypotheses. Data collected were tested by the reliability index (excluding variables with correlation coefficients lower < 0.30 and variable coefficient Cronbach's alpha < 0.60), factor analysis explored (remove the variable low load factor < 0.50). The hypothesis was tested through multiple regression analysis with linear Enter method. Present research relies on self-reported data, but socially desirable responses have been found to be a major challenge when dealing with self-reported data (Thompson and Phua, 2005). In order to get more reliable research data, a short form of the Marlowe-Crowne social desirability scale (developed and validated by Rudmin, 1999) was used in the questionnaire as well. Besides, the 61

4 questionnaires were sent to enterprises related to the commercial banks, but it is obvious that there are different types of managers. This also gives evidence to the fact that the results of the study can be generalized to portray the exchange rate business. Research results Descriptive Statistics and Cronbach's Alpha the factors affecting the exchange rate business in Can Tho City Table 1: Descriptive Statistics and Cronbach's Alpha for the Risk of contracting contents (RC) Items N Std. Deviation RC1: The provisions are not detailed, specific RC2: Market information is noise, lack of RC3: Material prices, exchange rate vary RC4: Breach of the contract period, compensation RC5: Capacity of negotiates are weak RC6: Other criteria such as measurement, packaging... changes Reliability Statistics Cronbach's N of Items Alpha Item-Total Statistics Code Scale Mean if Item Deleted Scale Variance Corrected Item-Total Correlation Cronbach's Alpha if Item Deleted RC RC RC RC RC RC Table 1 showed that there were 150 enterprises related the exchange rate business in Can Tho City but 136 enterprises processed and answered 6 questions. Besides, Std. Deviation is around 1.0 and Cronbach's Alpha is (> 0.6). This showed that the Data is very good for the next analysis. Table 2: Descriptive Statistics and Cronbach's Alpha for the Legal risks (LR) Items N Std. Deviation LR1: List of export and import changes LR2: Tax rate changes LR3: Regulations on goods quality inspection changes Reliability Statistics Cronbach's N of Items Alpha Code Scale Mean if Item Deleted Scale Variance Item-Total Statistics Corrected Item- Total Correlation Cronbach's Alpha if Item Deleted LR LR

5 LR Table 2 showed that there were 150 enterprises related the exchange rate business in Can Tho City but 136 enterprises processed and answered 3 questions. Besides, Std. Deviation is around 1.0 and Cronbach's Alpha is (> 0.6). This showed that the Data is very good for the next analysis. Table 3: Descriptive Statistics and Cronbach's Alpha for the Payment by L/C (PA) Items N Std. Deviation PA1: From the bank to open L/C PA2: From the announcement bank PA3: Failing to comply with the L/C terms Reliability Statistics Cronbach's N of Items Alpha Item-Total Statistics Code Scale Mean if Item Deleted Scale Variance Corrected Item- Total Correlation Cronbach's Alpha PA PA PA Table 3 showed that there were 150 enterprises related the exchange rate business in Can Tho City but 136 enterprises processed and answered 3 questions. Besides, Std. Deviation is around 1.0 and Cronbach's Alpha is (> 0.6). This showed that the Data is very good for the next analysis. Table 4: Descriptive Statistics and Cronbach's Alpha for the exchange rate business at the commercial banks in Can Tho city (ER) Items N Std. Deviation ER1: You completely agree the payment by L/C affecting exchange rate business ER2: You completely agree the legal risks affecting exchange rate business ER3: You completely agree the risk of contracting contents affecting exchange rate business Reliability Statistics Cronbach's Alpha N of Items Item-Total Statistics Code Scale Mean if Item Deleted Scale Variance Corrected Item- Total Correlation Cronbach's Alpha if Item Deleted ER ER ER

6 Table 4 showed that there were 150 enterprises related the exchange rate business in Can Tho City but 136 enterprises processed and answered 3 questions. Besides, Std. Deviation is around 1.0 and Cronbach's Alpha is (> 0.6). This showed that the Data is very good for the next analysis. Exploratory Factor Analysis Cronbach s alpha is computed in terms of average inter-correlations among items, which determine the concepts. Although Bryman and Cramer (1990) suggested that, it is just fine when Cronbach s alpha is 0.8 or above 0.8, while Nunnally (1978) stated that it is still acceptable with the value of 0.6, especially for initial investigation like in this research. Therefore, in this research, the value is confirmed when it is greater than 0.7. Table 5: Total Variance Explained for various factors affecting the exchange rate business KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy..845 Approx. Chi-Square Bartlett's Test of Sphericity df 66 Sig..000 Com. Initial Eigenvalues Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings a Total % of Cumulative % Total % of Cumulative % Total Variance Variance The table 5 showed that Kaiser-Meyer-Olkin Measure of Sampling Adequacy was statistically significant and high data reliability (KMO = > 0.6). This result was very good for data analysis. Table 5 showed that Cumulative percent was statistically significant and high data reliability was % (> 60 %). This is factors for independent variables. Table 6: Rotated Component Matrixa for various factors affecting the exchange rate business in Can Tho City Code Component RC2.919 RC

7 RC3.780 RC4.697 RC6.621 RC5.612 PA PA1.999 PA3.841 LR1.946 LR3.928 LR2.809 The table 6 showed that Structure Matrix for the various factors affecting the exchange rate business in Can Tho City. We had three components. Component 1 (X1) was the Risk of contracting contents (RC), Component 2 (X2) was the Legal risks (LR) and Component 3 (X3) was the Payment by L/C (PA). We can call Y: the exchange rate business (HR). Table 7: Regression for various factors affecting the exchange rate business in Can Tho City (HR) Model R R Square Adjusted R Square Std. Error of the Estimate Durbin- Watson ANOVA a Model Sum of Squares df Mean Square F Sig. Regression Residual Total Coefficients a Model Unstandardized Coefficients Standardized Coefficients t Sig. Collinearity Statistics B Std. Error Beta Tolerance VIF (Constant) E X X X The table 7 showed the coefficient of adjustment R 2 = (verification F = , significance < 0.05); which means 52.5 % of the variable Y shift is explained by three independent variables (Xi). The coefficient of Durbin - Watson (d) = Results showed that all independent variables affecting the exchange rate business in Can Tho City (HR) with significance level 5 %. Verifying the conformity of the model showed the multicollinearity did not violate (VIF < 10). Conclusions and recommendations Conclusions The research results showed that there were 150 enterprises related to the commercial banks in Can Tho City interviewed but 136 enterprises processed and answered 15 questions. The researcher had analyzed KMO test, the result of KMO analysis used for multiple regression analysis. In addition, the regression analysis results showed that there were three factors, which included of 65

8 factors following: the Risk of contracting contents (RC), the Legal risks (LR) and the Payment by L/C (PA) actually affected the exchange rate business in Can Tho City with 5 % significance level. The research results were processed from SPSS 20.0 software. The parameters of the model estimated by Least - Squares Method tested for the model assumption with 5% significance level. The regression coefficients were positive. This showed that the effects of independent variables in the same direction with the exchange rate business in Can Tho City with significance level 5 %. We had three the findings following: First of all, we had the component 1 (X1): the Risk of contracting contents (RC) affecting on the exchange rate business with significance level 5 %. Secondly, we had the component 2 (X2): the Legal risks (LR) affecting on the exchange rate business with significance level 5 % and Finally, we had the component 3 (X3): the Payment by L/C (PA) affecting on the exchange rate business with significance level 5 %. Recommendations Recommendations for improving the Risk of contracting contents (RC) The enterprises in Can Tho City should continue improving the principles of language that use must be accurate: That is the meaning of terms used in contracts must reflect the will of the contracting parties, this requires the drafting of contracts must have the professional vocabulary richness, depth can be built in close agreement on terms, do not cause confusion, regrettably, the cost of much money and effort, especially when the agreement about the quality and specifications Goods must be careful when choosing to use the term. Recommendations for the improving the Legal risks (LR) The enterprises in Can Tho City should continue improving the product quality not only works to increase the competitiveness of the products of Vietnam on the international market but more important is to create products with high quality and stability, from which to continue to build and affirm the prestige of Vietnam in the international arena. Besides, economic contracts actually do have plans for testing the two sides, dominate one another, in which course content can not accept the description at length, lack of seriousness, lack of coherent and explicit. Recommendations for the improving the Payment by L/C (PA) The enterprises in Can Tho City should continue improving construction distribution channel is reasonable shortest way to penetrate a new market and choosing proper forms of export will help businesses quickly asserted his place on that market. If the decision exports to international markets, the optimal strategy is outlined to be exported directly. Direct export business will help to control the entire export process, establish direct relationships with distribution networks and consumers. REFERENCES: 1. Berg, B. (2001). Qualitative research methods for the social sciences. Boston: Allyn and Bacon. 2. Berg, Bruce L., (2009). Qualitative Research Methods for the Social Sciences. Boston MA: Pearson Education Inc. 3. Bertram (2006). Improving efficiency, effectiveness and anti-corruption outcomes. Customs reforms in the Philippines. 66

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