CREDIT RISK MANAGEMENT AND EFFECTIVENESS OF CREDIT ACTIVITIES: EVIDENCE FROM VIETNAM

Abstract

The research aims to assess the effects of credit risk management on the effectiveness of credit activities at Vietnamese state-owned commercial banks. Based on the literature review and empirical studies, the aspects of credit risk management practices include four factors proposed in the research model, such as: credit terms, client appraisal, credit risk control, and collection policies. The author implements the descriptive statistical method and linear regression model on SPSS with data from a survey of credit officers from state-owned commercial banks in Vietnam. The findings show that credit term, client appraisal, and credit risk control positively influence loan performance at a 95% confidence interval. The paper also highlights the role of internal control as the mechanism for reducing credit risk and improving the effectiveness of credit activities.