Finance and Banking Behavior Patterns of Thai Generation Y

Available online at www.buuconference.buu.ac.th

The 5th Burapha University International Conference 2016

“Harmonization of Knowledge towards the Betterment of Society”

Finance and Banking

Behavior Patterns of Thai Generation Y

Assoc. Prof. Dr. Hermann Gruenwald & Sudip Debkumar Chatterji *

Burapha University International College (BUUIC), Long Hard Road, Bangsaen, Chonburi 20013, Thailand

Abstract

Finance is getting a lot of attention in the media with financial tycoons like Donald Trump trying to conquer the

world and even the US presidency. Many dream of being the next Rockefeller or the Wolf of Wall street. There is an

increasing desire to be in finance, but few have the basic financial knowledge of accounting or even understand the

principals of banking. This quantitative research surveyed generation Y male (56) and female (156) Thai college students

from various international business degree programs. The research questions which were explored the limited knowledge

of common banking products and finance. Like no other generation, today's youth are growing up in a culture of debt

facilitated by expensive lifestyles and easy credit. The objective of this research was to examines college students’ basic

financial management knowledge and banking habits using quantitative data. Specifically, the research investigates how

college students acquire financial and banking knowledge and identifies certain factors that might later put some of these

very students at greater financial risk than others. The results provide important insight into the lack of awareness of these

students about basic financial literacy and inadequate knowledge of banking. This research will be of great importance to

finance faculty who investigate the questions about how are college students obtain their financial knowledge and skills,

and how can they bridge the gap in helping these students acquire a working knowledge of banking and the advantages

that they could obtain from such knowledge and make appropriate use of e-banking today and tomorrow. One of the key

research questions was how we can prepare business students to gain a better understanding of finance and apply the

knowledge in their personal life as well as in their studies of finance through problem based learning?

© 2016 Published by Burapha University.

Keywords: banking behavior; finance appitude; financial literacy; finance majors

* Corresponding author: Assoc. Prof. Dr. Hermann Gruenwald

E-mail address: [email protected]

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Proceedings of the Burapha University International Conference 2016, 28-29 July 2016, Bangsaen, Chonburi, Thailand

1. Introduction

Finance and wealth go hand in hand and people have been fascinated by finance and its rewards for

centuries, so there is no wonder that many would like to be financial tycoons but few have the skill set to

achieve that goal or the desire and drive to acquire the financial knowledge which is based on rigor and

analytical skills.

―Financial literacy‖ simply defined as possession of knowledge and understanding of financial matters. But

why do students need it? Well for one student do need to have a basic understanding about savings and that

brings them straight into banking. Students incur various expenses and costs during their course of graduate

studies. These are mostly made either from parental finances or borrowings under various schemes to further

their education. In Thailand most students avail of education loans. They avail this and it carries a general

moratorium for 2 years post their completion of the degree program. Then they pay back in installments not

over 4 years. Now it is essential that these students understand basics of banking and finance. In US and

elsewhere this financial literacy In US and elsewhere abroad this financial literacy is taught right inside

schools to juniors and seniors. So by the time a student graduated, they already know about the importance of

budgets, interest rates and avoiding using credit cards due to high interests.

Now in general it was observed that for Thai Generation Y not much serious research has been done in this

field. This study therefore focuses students already enrolled in their graduation programs primarily on student

awareness of personal finance and on basic banking knowledge and internet banking which offers services via

internet. These services save on cost and service fees and also a huge savings of down time involved in

making regular trips to the bank of choice.

Education in Thailand is free and compulsory for all Thai citizens between the ages of six and fifteen.

Children between three and five also have the option of attending nursery and preschool. The first university

in Thailand, Chulalongkorn University, was established in 1917. This was done by bringing together the

School of Civil Servants, the Royal Medical College and the Engineering School. In the time since this fairly

early start for the region, higher education in Thailand has grown considerably. Thailand until 2010 had a total

of 150 higher education institutions and 19 community colleges with approximately 2 million students

(UNESCO 2011). There are 80 public higher education institutions consisting of 14 autonomous universities,

16 traditional universities, 40 Rajabhat universities, nine Rajamangala Technical universities and one

Pathumwan Institute of Technology. Besides, there are 71 private higher education institutions and 19

community colleges. Nearly 2 million students were enrolled in higher education institutions in 2010, of

which almost 90% were enrolled in public higher education institutions. According to the 15-year Long Range

Plan on Higher Education (2008-2022) developed by the Thai government, it is projected that demographic

changes will result in a decrease of participation in higher education, and the main focus of higher education

will shift to quality issues.

College life is an exciting and challenging phase for most students. Moving away from the sheltered

environment of their parents and natural guardians, learning to live on their own and making decisions for

themselves. More importantly in having to manage their own finances and use dependable yet fast changing

banking services are just a few of the hurdles these students will be facing‖. For a majority of these college

students, university attendance is the first time they have experienced financial independence without a

parent's supervision. As students get more independent, they quickly discover that managing your money can

be a little more difficult on your own.

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Now at the top of the pyramid is the moot question-why do student’s need to know about finance and

banking today, especially college kids? Learning to make the most of your money today can help you prepare

for tomorrow. ... Goal setting is your chance to figure out what you want and get it without having to borrow.

There have been very few researches on this top-especially in Thailand and therefore this study has more

significance since it gives a firsthand impression of where Thai kids today are with respect to understanding

basic finance and secondly how deeply are they connected to daily banking and banking products. How can

we help students acquire basic financial knowledge as well as prepare them for a career in finance?

2. Literature Review

Our literature review looked at the following areas: behavior, banking and finance there are rich bodies of

literature in all of these areas as they are established fields. Behavior is defined as the way in which an animal

or person acts in response to a particular situation or stimulus. Finance typically is defined as ―The

management of money, banking, investments, and credit. Banking is defined as ―the business conducted or

services offered by a bank‖. Today’s bankers are very keen to target tomorrow’s customers. Many of these

potential young customer’s will in future lead global conglomerates, some already have huge family

businesses and some of them will join banking services industry. Therefore increasing number of Banks are

offering special packages segmented according to age, schooling and vocational profile. Many of these

students avail of loans and also remittances from parents are considerable and the income addition in the top

line for banks is equally getting more and more attractive to service this segment. On the biggest plus point is

that these students do not avail of any overdrafts hence this segment is a very safe segment for all banks.

Today in most colleges, campuses banks are opening branches for payment of fees, facilitate easy deposits &

withdrawals through CDM (Cash deposit machines) and ATM’s. Bank statements can be available through

net-banking and ATMs. Today the Thai generations Y can open different accounts, transfer funds, make

payments of electricity bills, insurance, and avail services on the go simply by using their mobile phones.

However these students today have to be confident, forward looking, with added skills like being computer

literate, knowledge of finance and banking and banking products and keep track of changing banking world.

An important subfield of finance, Behavioral finances use insights from the field of psychology and applies

them to the actions of individuals in trading and other financial applications.

Financial literature training (Baron-Donovan, C., Wiener, R., Gross, K., & Block-Lieb, S. 2005) in Europe

and the USA starts in the high schools. Borden, L., Lee, S., Serido, J., & Collins, D. (2008) have explored

changing college students’ financial knowledge, attitudes and behaviour through seminar participation. And

Caskey (2006) researched if personal financial management education can promote asset accumulation by the

poor? Along these lines Chang and Lyons (2007) looked at financial education programs and them meeting

the needs of financially disadvantaged consumers? Fox, Bartholomae and Lee (2005) were building the case

for financial education and Johnson and Sherraden (2007) took it a step further from financial literacy to

financial capability among youth. Lyons (2005) looked at financial education and program evaluation:

Challenges and potentials for financial professionals. Morton (2005) looked at the interdependence of

economic and personal finance education and success in finance careers.

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3. Methodology

This quantitative study used an instrument that was developed by the principal investigators and pretested

and revised accordingly. The original hard copy questionnaire that was distributed to the respondents was

designed to gather responsenses in the following three major categories:

A. General Demographics B. Financial Knowledge C. Banking Knowledge and Behavior

The demographic section had 13 questions, financial section 11 and the banking section12. The entire

questionnaire also included two open ended questions which had an option for answering more than one

option. The questionnaires were distributed to solicit responses from various groups of participants based on

major and standing in their studies and finance related courses.

3.1. Demographics

All the respondents who took part in the survey were Thai nationals from various parts of Thailand. There

were 56 males (28%) and 146 females. (72 %) a total of 202 participants in the study which ranged in age

from 18 to 25 years old. The female/male distribution is representative of the gender distribution in Thai

institutions of higher learning.

28% Male 72% Female Respondents

The study looked at housing as indication of income level and wealth the following accommodation

categories were explored:

Accommodation:

Apartment 66

House 55

Condominium 77

The parental background which is an essential part of analyzing the student’s home conditions and

development of educational attachment showed the following results. Out of the 2 parents, the fathers profile

was 54.04% were employed in the private sector, 25.76% self-employed and 18.69% in government service

and 1.515 retired. On the mothers profile 48.72% private sector, 30.30% private sector,15.15% government

service, 2.02% retired while 4.545% deceased.

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Table 1. Parents

Father Mother

Retired 3 4

Self-employed 51 60

Government Employees 37 30

107 95

3.2. Data Analysis

The collected data was summarized and entered in Excel in table format that was further analysed

using SPSS to gather the statistical data in terms of demographics and responses to the individual questions

for each of the sub categorise as summarized in the findings below.

4. Findings

The findings of the study can be summarized in the following research questions:

4.1 Bank of Choice

4.2 Types of Accounts

4.3 Duration of the Account

4.4 Distance to the Bank

4.5 Frequency of Branch Visits

4.6 Reasons for Branch Visits

4.7 Minimum Account Balance

4.1. Bank of Choice

Among the Generation Y clearly the bank of choice was ―Kasikorn Bank ― (38.5%) which came

much ahead of Thailand's largest bank by assets, Bangkok Bank PCL which came in at the bottom.(8.56%) in

the survey, while at third spot was Siam commercial Bank (14.97%) which is the oldest bank in the country.

Krung Thai Bank PCL,(17.11%) Thailand's second largest bank by assets was at exactly at 2nd

spot position

and the main reason when asked was since it’s a government bank, Generation Y needed to have an account

here since the all government organizations open account with Krung Thai bank and the university also is a

government legal entity.

Table 2. Bank Preference among Generation Y

Preferred

Bank

Kasikorn

Bank

Siam

Commercial

Krung

Thai

Bank

Thai

Military

Bank

Krungsri

Bank

Bangkok

Bank

Other

Banks

Total

Responses

Respondents 72 28 32 16 10 16 13 187

Percentage 38.50% 14.97% 17.11% 8.56% 5.35% 8.56% 6.95% 100.00%

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4.2. Types of Accounts

An overwhelming 94.50% of the surveyed respondents held Savings account, followed by a Current

account @4.26%.among the respondents were 3 foreign students who by default held Non-resident Baht

account since opening an account depends upon your stay and type of Visa. The NR Baht account is a non-

Resident Baht account useful if you plan to transfer funds to Thailand for investment purposes and intend to

repatriate your funds in the future. Transactions are recorded in accordance with Bank of Thailand

regulations.

Table 3. Type of Account held

Account Type

Savings Current Fixed Deposit

FCD Non Resident

Baht

Others TOTAL

Respondent 177 8 0 0 3 0 188

Percentage 94.15% 4.26% 0.00% 0.00% 1.60% 0.00% 100.00%

4.3. Duration of the Accounts

The duration of these accounts coincided with the period of study except in case of local students

where they were opened earlier. Around 40.35% held accounts between 1-2 years, 22.22% between 6months

to a year, and 16.37% less than 6 months.

Table 4. Duration of Account was held

Duration

Account held < 6mths 6-12mth 1-2 year 2-3yr 3-5 yr >5 yr Total

Respondent 28 38 69 19 17 0 171

Percentage 16.37% 22.22% 40.35% 11.11% 9.94% 0.00% 100.00%

4.4. Distance to Bank

This was a very vital question since it highlighted how far the respondents were willing to travel

without resorting to other mans to operate their accounts. 35.95% of the respondents had selected bank

wihin100-500 met from their residences, 18.30% 500-1000met, 14.38% travelled more than a Km, while

10.46% travelled between 1-3 Km. Only 11.11% had found banks within 100 met of their residences.6.54%

had banks which were over 5 Km away.

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Table 5. Distance to Bank from Residence.

Distance to

Bank <100m 100-500m 500-800m >1km 1-3km 3-5km >5km TOTAL

Respondent 17 55 28 22 16 5 10 153

Percentage 11.11% 35.95% 18.30% 14.38% 10.46% 3.27% 6.54% 100.00%

4.5. Frequency of Bank Visits

It was found that most of Generation Y operated their bank accounts almost every week. In fact it

was seen that 77.21% operated their accounts from a couple of times a week to as much as 4-6 times a week.

35.29% operated their accounts1-2 times a week, 27.94 2.4 times and 13.97% 4-6 times a week. What was

very interesting to note that 22.79 % were operating their accounts over 6 times a week. It also gave an insight

that generation Y spending pattern might not stable or carefully planned.

Table 6. Frequency of Bank Branch Visits

Frequency of bank visits 1-2/week 2-4/week 4-6/week

More than 6/week

Never Visist Total

Respondent 48 38 19 31 0 136

Percent 35.29% 27.94% 13.97% 22.79% 0.00% 100.00%

4.6. Reasons for Branch Visit

This question clearly exposed the most important reasons of the Generation Y why they needed to

visit the branch. The No 1 reason was for depositing cash (42.16%).Second most important reason was

payment of Bills (17.84%),, while the third reason was to check or withdraw funds received from parents.

15.14% .Around 9.19% respondents also informed that they operated the account to check loan balance.

Operating the account and visiting the branch was considered as an equivalent response.

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Table 7. Reason to Branch Visit

Reason to

visit branch Deposit Bills

Check loan

account

Tfr from

Parent Draw cash Others TOTAL

Respondent 78 33 17 28 18 11 185

Percent 42.16% 17.84% 9.19% 15.14% 9.73% 5.95% 100.00%

4.7. Minimum Account Balance

This question also threw up an important fact which bankers especially should be aware of. Unlike

what people expect to find with student accounts that there would hardly be an balance left over, hence ignore

this segment as a value added customer, it was found that 28.88% of the respondents had on an average

between 5k-10k Thai baht, 26.74% each who had between 10k-50k and 1k-5k respectively. Another 4.28%

had over 50k in these accounts. Only 3.21% of the respondents had less than 100Baht. Given the nature of the

accounts which were mostly savings, this was a very important finding that bankers were having such large

deposits in these accounts where interest payments were negligible yet the bank was collecting other fees on

them when they were being operated.

Table 7. Minimum account Balance

Minimum

balance <100 100-500

500-

1000 1K-5K 5-10K 10-50K >50K TOTAL

Respondent 6 10 9 50 54 50 8 187

Percent 3.21% 5.35% 4.81% 26.74% 28.88% 26.74% 4.28% 100.00%

5. Discussion

The findings of the study are of great value both to the finance industry as well as colleges and

universities offering various finance related degree programs. Banking knowledge an literacy has been found

to be low even among finance majors and the participants showed limited interest in on-line banking despite a

growing use of multimedia and smart phones in a personal setting. We addressed most of the issues in the

finding section and would like to further our discussion here. Kasikorn bank was clearly seen as first

preference by most customers due to the forced banking relationship through the affiliation with the

university, which is quite different from the banking behaviour in other countries due to different banking

regulations. 94.5% of the respondents held savings accounts in their own names this is a much higher

percentage than in the USA. Also the ownership of the account coincides with the duration of study at the

given university. The majority of students prefer branches less than one kilometre from their place of

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residence. The close proximity may also be the reason why the majority of respondents visit the bank one to

four time per week and some even more often. Interestingly enough the main reason for visiting the branch

was to deposit money, which raises the question where do college students get the money from? From what

person or type of activity. The students maintained relative high account balances without getting high interest

payments from the bank. The banking behaviour that was discovered in this study raises questions regarding

the financial literacy of the students and their financial savvy.

6. Conclusion

In conclusion we find that financial literacy is quite low and banking habits need to be developed

both in terms of personal savings and loan habits. It is concluded that a good basic understanding of finance

and banking leads not only to personal wealth but also to academic success especially in finance related

courses and in particular in studying finance. Thai universities play a major role in shaping the banking habits

of their students and heavily influence the choice of bank and type of banking and financial relationship. This

research is limited to reflect the students of the upper income families who can afford pricy higher education

in international colleges which cater predominantly to the wealthy upper class which has a different

perspective on finance and banking than low income students.

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Thai Institutions of Higher Education as the Foundation of the Banking Habits

of Thai Generation Y

Fig. 1. Finance/Banking Literacy – Finance Major Success Model

7. Recommendations

It is recommended to replicate this study with a larger sample of students from various institutions of

higher learning from throughout Thailand. It also would be of interest to compare various majors as well as

students in graduate programs and alumni. Also the ASEAN context is of great interest and a comparative

study of other ASEAN member countries is highly encouraged, and additional funding requests are under way

to explore this critical topic of finance in an ASEAN context.

Acknowledgements

The authors would like to acknowledge the role the Burapha University International College (BUUIC)

and Dean Rana played in supporting this research project and the continuous focus of BUUIC on research and

academic inquiry.

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About the Authors

Associate Professor Dr. Hermann Gruenwald received his first degree in Architectural Engineering Dipl. Ing.

(FH) from Germany, he also holds an Master of Architecture from the University of Houston (UofH), a

Master of Education in Continuing and Professional Education from the University of Oklahoma (OU) an

Master of Business Administration (MBA) from Southern Methodist University (SMU) in Dallas, Texas and a

Ph.D. from the University of Oklahoma, Norman Oklahoma USA.

Dr. Gruenwald has numerous publications in peer reviewed journals and conferences as well as several book

publications. He received millions in research funding from various government and industry sources and has

an active research agenda related to information technology (IT) and logistics. He has taught and conducted

research at the University of Oklahoma, University of Phoenix, and University of Alaska and has guest

lectured around the world and helped to establish logistics departments in the USA, the former Soviet Union,

the Philippines and Thailand.

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http://www.networksfinancialinstitute.org/Lists/Publication%20Library/Attachments/60/2007-WP-02_Chang-Lyons.pdf

http://www.clevelandfed.org/research/workpaper/2008/wp0803.pdf


Dr. Gruenwald received several research and teaching awards as well as a Fulbright scholarship and has

extensive higher education experience in teaching, research, service and administration as dean. His industry

experience ranges from project manager, Director R&D, VP and Senior VP working in Asia, Europe and the

USA.

Mr. Sudip Debkumar Chatterji received his first Bachelor’s degree In Commerce from Nagpur University,

India and then second Bachelors in Law. He then received his MBA majoring in Marketing and Finance. He

then qualified as a Chartered Accountant from the prestigious Institute of Chartered Accountants of India

where now he is a very senior and respected member of the profession with over 2 decades experience in the

industry. Mr. Sudip is now perusing his doctorate in Business Economics.

Mr Sudip who is an Australian resident also holds associate membership from CPA Australia and from

―Certified Management Accountants‖ Australia.

Sudip who has worked in the industry in various positions in very high profile organization (both in India and

abroad), including Lloyds Metal PCL India as internal Audtor, Nipon Dendroispat, and also as an empanelled

auditor for the Indian banks directly appointed by the Reserve Bank of India. Overseas he worked in Phoenix

Pulp PCL (Siam cement Group) Thailand, Precious shipping PCL (Both Thailand) as one of their Chief

Accountants, Marriott Sukhumvit Park as their CFO, and Tune hotels (brand of Air Asia) as the Group CFO

among others.

Mr Sudip due to his interest in sharing his experience with the student fraternity also continued to teach or

hold other posts including that of external examiner in various prestigious venues as a visiting faculty. Among

the universities where he has delivered lectures include Nagpur University (MBA), Institute of Chartered

accountants as an examiner, Assumption University and college Thailand, St Theresa college (MBS, BA

programs) and had also been invited as a visiting faculty at Asian Institute of technology Thailand. His

teaching experience now spans over 20 years (both in full time and as visiting faculty)

Sudip’s forte is in project finance, private equity and company start up arcos the regions and is a well-known

and respected in the industry and bank’s across Asia. Coauthor: Sudip D.Chatterji

E-mail address: [email protected]

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Mr. Sudip Debkumar Chatterji

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Finance and Banking Behavior Patterns of Thai Generation Y

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