Determinants of credit risk in Vietnamese Commercial Bank

Abstract

For credit operations, the changes in macroeconomic conditions, such as the economic cycle or the economic stability,
directly impact on the repayment capacity of borrowers, thus, affect the level of credit risk of commercial banks. Besides,
the individual characteristics in its business of each bank, such as capacity management, operational scale and efficiency
will influence on its management efficiency as well as credit risk control. Therefore, to provide an overview of the factors
affecting the credit risk, it is essential to consider macroeconomic factors, which represent the impact of the economic
environment, as well as microeconomic factors, which represent bank-specific. Basing on these requirements, it is urgent
to conduct further studies of factors influencing on the credit risk in the business operations of Vietnam commercial banks.
Those studies will help to find the answers for the questions: “Why has the rate of credit risk of Vietnam commercial
banks increased so sharply recently?”, “How have bank-specific factors and macroeconomic factors impacted on credit
risk of banks?” From this practice, the article will study the factors affecting the credit risk in the business operations
of commercial banks in Vietnam.