EVALUATION OF CREDIT RISK MANAGEMENT POLICIES AND PRACTICES IN A VIETNAMESE JOINTSTOCK COMMERCIAL BANK‟S TRANSACTION OFFICE
Business Economics and Tourism 2010
At this moment, the financial sector still attracts a lot of controversy both at the regulator and the banker level. The regulators have been discussing on tighter banking rules. At the same time, the banks have also been strengthening their own health with stricter supervision, one of which is to reinforce credit risk management practices. I have long wanted to conduct a real research in finance, the field in which I am really interested and want to pursue my future career. This is a great opportunity for me to realize that wish. Beyond that it provides me with excellent knowledge of risks in the lending industry, operations of a bank, and particularly its credit risk management. Thanks to this research, my future direction moves closer to the special field of financial risk management. And I hope that this thesis will be of great help to the bank when it comes to procedure review and improvement. I would like to send a thousand thanks to my cousin, Ms. Tran Thu Thuy, who is working at the investigated bank. She recommended the research idea to me and helped me a great deal in collecting secondary data for the research. But the thesis would never be complete without the enthusiasm and kindness of 3 credit officers at the transaction office. I wish to give my deepest gratitude to Ms. Rosmeriany Nahan-Suomela, my supervisor, for her great support, constructive feedback and thorough understanding to keep me diligent and speed up my progress on the work. I also thank Ms. Satu Lautamäki and Ms. Camilla Harald for their valuable contribution in improving the final written version of this thesis. And finally, I am very grateful of my family and my friends for their mental encouragement and practical suggestions during the research process. Thank all of you for making this thesis a reality!
Vaasa, November 10, 2010. Dam, Dan Luy.
VAASAN AMMATTIKORKEAKOULU VAASA UNIVERSITY OF APPLIED SCIENCES Degree Programme of International Business
Author Title Dam, Dan Luy Evaluation of Credit Risk Management Policies and Practices in a Vietnamese Joint-Stock Commercial Bank‟s Transaction Office 2010 English 112 + 4 Appendices Nahan-Suomela, Rosmeriany
Year Language Pages Name of Supervisor
Concerns about distressing credit activities and vulnerable credit risk management system have been climbing these years, from the United States‟ troubled mortgage lending (2008) to the European debt crisis (2010). In the little country Vietnam, small banks are also facing the big question of establishing a strong credit risk management framework in order to maximize their profits and to gain competitive advantage over their rivalries. This is where the research problem for this thesis arises. The biggest objective of this research is to provide the investigated bank with an insight into its credit risk management framework and the effectiveness of the credit risk management practices at both the bank‟s and a transaction office‟s level. In addition, the readers will also get familiar with the risks inherent in banking business, realize the importance of credit risk management in banks, and understand the facts about the Vietnamese credit conditions. Four research questions will step by step guide the audience on how these objectives are achieved. In order to give out an evaluation of credit risk management practices, this thesis has tried to build a list of assessment criteria deriving from the literature that has been revised during the study. The criteria are grouped into four categories: credit culture, credit policies, credit organization & personnel and credit practices & performance. The research was mainly done at a small transaction office of the bank with three credit staffs (two relationship managers and one credit...