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MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM BANKING UNIVERSITY HO CHI MINH CITY NGUYEN THI THU UYEN DETERMINANTS OF CONSUMER LOAN REPAYMENT PERFORMANCE OF CUSTOMERS IN VIETNAM PROSPERITY[.]
MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM BANKING UNIVERSITY HO CHI MINH CITY NGUYEN THI THU UYEN DETERMINANTS OF CONSUMER LOAN REPAYMENT PERFORMANCE OF CUSTOMERS IN VIETNAM PROSPERITY BANK HUYNH TAN PHAT BRANCH MAJOR: FINANCING AND BANKING MAJOR NUMBER: 7340201 GRADUATION THESIS HO CHI MINH - 2018 MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM BANKING UNIVERSITY HO CHI MINH CITY NGUYEN THI THU UYEN DETERMINANTS OF CONSUMER LOAN REPAYMENT PERFORMANCE OF CUSTOMERS IN VIETNAM PROSPERITY BANK HUYNH TAN PHAT BRANCH MAJOR: FINANCING AND BANKING MAJOR NUMBER: 7340201 GRADUATION THESIS SUPERVISOR: Assoc Prof PhD HA THI THIEU DAO HO CHI MINH - 2018 i DECLARATION OF AUTHENCITY Full name: Nguyen Thi Thu Uyen Student class: HQ02-GE01, faculty of Banking and Finance, Banking University of Ho Chi Minh city Student code: 030630140790 I declare that this thesis has been composed solely by myself and that it has not been submitted, in whole or in part, in any previous application for a degree Except where states otherwise by reference or acknowledgment, the work presented is entirely my own Ho Chi Minh City, May 29th 2018 Author Nguyen Thi Thu Uyen ACKNOWLEDGEMENTS First of all, I would like to thank all lecturers at Banking University of HCMC Your enthusiastic and devoted instruction helped me to improve my logical thinking ability and knowledge In addition, I would like to thank Ms.Ha Thi Thieu Dao who enthusiastically instructed and encouraged me to complete this graduation thesis However, due to limited knowledge and practical experience and limited research time, the study cannot avoid certain shortcomings The author wishes to receive the comments of members in the committee to complete the thesis Ho Chi Minh City, May 29th 2018 Author Nguyen Thi Thu Uyen ABSTRACT Author UYEN, Thu Thi NGUYEN Title Determinants of consumer loan repayment performance in VPBank Huynh Tan Phat Branch Language English Instructor DAO, Thieu Thi HA Banking credit plays a very important role in the economy of every country in the world and is especially important for countries with underdeveloped financial markets like Vietnam because it is a main source of funding for not only businesses but also personal customers In the process of international integration, competition among commercial banks will make the banking system more efficient and effective However, this also makes banks tend to loosen their credit policies, lowering lending conditions, resulting in evaluating incorrectly customers‟ repayment probability, particularly in the consumer loan segment Minimizing customers to incur an overdue debt or even loss of solvency is always a challenge which requires commercial banks need to pay attention and also find solutions to apply to the management This thesis examines determinants of consumer loan repayment performance of customers in Vietnam Prosperity Bank Huynh Tan Phat Branch Quantitative approaches are applied, in which Logit model is employed to investigate probability of consumer loan be repaid The results express that the factors including career characteristics, income, ratio of collateral on loan size, the number of dependent people, credit history as well as purpose of taking loan will affect the probability of consumer customers ‟ loan repayment in the bank A number of recommendations are introduced to promote the repayment performance of these borrowers Key words: Consumer loans, Consumer customers, Logistics model, Probability of repayment, VPBank Huynh Tan Phat TABLE OF CONTENTS LIST OF TABLE AND FIGURES vii LIST OF ACRONYMS viii CHAPTER 1: INTRODUCTION 1.1 Research background 1.2 The necessity of the topic 1.3 Research objectives 1.4 Research question 1.5 Subject and Scope of research 1.5.1 Subject of study 1.5.2 Scope of study 1.6 Analytical methods 1.7 Contributions of research 1.8 Thesis structure CHAPTER 2: LITERATURE REVIEW AND FACTORS AFFECTING THE REPAYMENT OF CONSUMER BORROWERS IN COMMERCIAL BANKS 2.1 Literature review on consumer loans 2.1.1 Consumer loan definition 2.1.2 Consumer loan features 2.2 Factors affecting the repayment of consumer borrowers 2.2.1 Definition of consumer loan repayment 11 2.2.2 Previous experimental studies on determinants of loan repayment performance 11 2.3 Aggregation of factors affecting customers‟ consumer loan repayment 15 CHAPTER 3: DATA AND METHODOLOGY 20 3.1 Models researching consumer loan repayment performance 20 3.1.1 Model 5C 20 3.1.2 Binary Logistics Regression model 22 3.1.2.1 Multicollinearity testing 25 3.1.2.2 Testing the fiting of model 25 3.1.2.3 Testing the statistical significance of the coefficients .26 3.2 Research model at VPBank Huynh Tan Phat 27 3.2.1 Data collection 27 3.2.2 Logit regression model 28 CHAPTER 4: RESEARCH RESULT 32 4.1 Consumer loan in Vietnam Prosperity Bank Huynh Tan Phat Branch 32 4.2 Descriptive statistic results 35 4.3 Research results 39 CHAPTER 5: CONCLUSION, RECOMMENDATIONS AND LIMITATIONS 48 5.1 Conclusion and Recommendations 48 5.1.1 Group of positive effects 48 5.1.2 Group of negative effects 49 5.1.3 Other recommendations 50 5.2 Limitations and suggestions for further researches 52 REFERENCES 54 APPENDIX 57 LIST OF TABLES AND FIGURES Name Page Table 2.1: Research models relating to the subject .14 Table 2.2: Main determinants of consumer loan repayment performance 18 Table 3.1: Analyze sample data according to consumer repayment 27 Table 3.2: Variables in the research model 30 Table 4.1: Consumer loans classified by purpose of borrowing 35 Table 4.2: Classification of consumer loan groups .36 Table 4.3: Descriptive Statistics 37 Table 4.4: Correlation matrix of variables in model 42 Table 4.5: Collinearity Statistics 43 Table 4.6: Model Logistic with variables 43 Table 4.7: Model Logistic with variables 44 Table 4.8: Omnibus Tests of model coefficients 44 Table 4.9: Testing the fiting of model 45 Table 4.10: Testing accuracy level of model .45 Table 4.11: Logistic regression result 46 Table 4.12: Simulation of customer repayment probability 46 Figure 4.1: Average income of customers 40 LIST OF ACRONYMS Abbreviations Full meaning CIs Credit Institutions CIC Credit Information Center KPI Key Performance Indicator IMF International Monetary Fund NPL Non-performing loan SPSS Statistical package for Social Sciences VND Vietnam Dong VPBank Vietnam Prosperity Bank VIF Variance Inflation Factor CHAPTER 1: INTRODUCTION 1.1 Research background In many countries in the whole world, consumer price index is considered as a key signal of economic growth in the medium term Consumption reflects people ‟s expectations of future income Even consumer demands such as cars, houses, appliances or cosmetics are closely related each other and cannot be separated from the expected income This is also the driving force of production Thus, consumer lending has been deemed as an important business of retail banking for a long time In 2015, World Bank‟s survey also showed that although consumer lending accounted for only 30% to 35% of total loans, it generated over 60% of the commercial bank ‟s profit in Asia in general and Vietnam banks in particular The total population in Vietnam was estimated at 92.7 million people along with a per capita income of about $3,000 by 2020 (World Bank, 2018) In addition, the market size has increased steadily with an annual average growth rate of over 6% in the last 30 years That is reason why Vietnam is considered as a very large consumer market High and sustainable incomes along with macroeconomic stability are two essential factors for people to increase their consumer debt The young population structure with 70% of the population aged 15-64 is also a favorable aspect for the development of consumer credit, as they are normally willing to borrow for spending The consumer credit market in Vietnam began to flourish in the last five years, stemming from changes in consumer habits and high demand for property of middleincome class Instead of accumulating enough money to buy their desired products, people would like to satisfy their demand immediately by taking on loan and repay for lenders later Nowadays, borrowing from relatives, friends or the informal financial market has gradually shifted to borrowing from financial institutions, such as banks This is an area with great potential for development in Vietnam by factors such as the rapidly growing middle class, large consumer demand With the development of ... examine the determinants of consumer loan repayment in Huynh Tan Phat Branch Overall, thanks to some statements of the thesis ? ?Determinants of consumer loan repayment performance in VPBank Huynh. .. Identify determinants of the repayment of consumer borrowers in VPBank Huynh Tan Phat Branch Investigate influence level of these determinants on the repayment of consumer borrowers in VPBank Huynh Tan. .. repayment of customers in VPBank Huynh Tan Phat Branch? 1.5 Subject and Scope of research 1.5.1 Subject of study Determinants of consumer loan repayment performance of customers in VPBank Huynh Tan Phat