Research On Credit Risk Management Of Vietnamese Banking System

In Vietnamese banking system credit risk is one of the most common kindamong all risk categories since the past. According to statistical data,1990s NPL ratio(Non-Performing Loan) of Vietnam were always from15%to20%, much higherthan international standard. However in recent10years the Government seems toincreasingly consider controlling this target, take it more closer to internationalstandard. This means that the Government has already been aware of credit riskmanagement’s important role. In term of data, Vietnamese bad debt situation has beenundergone a better change, but the actual situation whether has really positivetransformation or not?To find out the truth I first studied the basic theory on credit risk as well asresearched on measures and models that developed countries have been applied formanagement of credit risk. In this chapter author also carried out study about the basicof the Basel agreement on credit risk management.Considering in banking system,lending business is that brings back to the bank most profit, hence most of the creditrisk of banking system comes from lending business. The third chapter of this thesisshowed current NPL situation of Vietnamese banking system by analizing a numberof real data. After that Vietnamese commercial banks’ credit risk management levelwould be introduced including: credit risk management organization model, creditrisk measurement model, credit risk supervision model and credit risk treatmentmethods. As a result of analyzing it can be admitted that credit risk situation ofVietnamese commercial banks has positively changed, but some potential risks stillexist, which can cause serious consequence to banking sector in particular and toentire economy in general.To see more clearly which level Vietnamese commercial banks’ credit riskmanagement are, the fourth chapter researched on Chinese commercial banks’ creditrisk state and credit risk management level as well. Why did this thesis want to makecomparison with Chinese banking system? The reason is, if in regards to scale ofbanking industry, Vietnamese baking scale is too small in compare with Chinese’s,but if considering to banking reform process these two countries have manysimilarities. Therefore through study of characteristics of credit risk in China and its banking system credit risk management degree, author withdrew a few of valuableexperience which Vietnamese commercial bank should apply for. Even though someof Chinese scholars said that Chinese credit risk management level lags far behind thelevel of western countries, but in my opinion may be due to some particularities of theeconomy so china has not developed full of management ability. No matter how chinahas already achieved a great deal of success in this field, and that is worthy to learn.In the last chapter some proposals of author not only to every commercial bankbut to senior management level were given. Firstly, at the micro level eachcommercial bank should build for themselves an inventory figures includingfollowing features: full quantity, accurate quality and in time. If bank has like thisinventory data, it is not difficult to construct internal credit rating system and applyestimated credit losses method which was introduced in the Basel agreement. On theother hand commercial bank should choose the credit risk measure model thatmatches the real situation of the bank. At the macro level, author suggests that thenational bank should review their inspection and supervise on activities. Moreover,they should design either effective or saving supervision programs. Furthermore, theGovernment should encourage participation of external credit rating organization inevaluating banking credit in order to improve commercial banks of businessefficiency.