INTRODUCTION
Rationale
Since the Doi Moi reform in the 1990s, Vietnam has consistently embraced a multi-sector economic structure, transitioning from a centralized bureaucracy to a socialist-oriented market economy This shift has led to the emergence of private enterprises, with small and medium-sized enterprises (SMEs) playing a vital role in stabilizing and developing the market economy SMEs now constitute the majority of the economy and are rapidly increasing in number However, these enterprises face limitations in capital size, human resources, employee qualifications, and access to external funding, particularly bank credit.
VietinBank Hanoi Branch, a well-established institution within the Vietnam Joint Stock Commercial Bank for Industry and Trade, boasts a strong credit balance and high credit quality for corporate clients However, the growth of small and medium enterprise (SME) customers has not matched the branch's potential, resulting in a notably low total credit line for SMEs This shortfall impacts the branch's overall efficiency and business stability.
The credit decisions for small and medium-sized enterprises (SMEs) have long been a focal point for researchers and organizations While several studies have been conducted, many suffer from insufficient data, flawed assumptions, and questionable statistical methods Each factor influencing credit decisions plays a distinct role, but the degree of influence is crucial It is essential to recognize that these factors may not always behave as anticipated Therefore, further quantitative research is necessary to draw specific conclusions regarding both the individual factors and their levels of influence on credit decisions for SMEs.
To contribute effectively to the business activities of SMEs in the sector, it is essential to leverage my practical exposure and accumulated knowledge By gathering data and insights from colleagues, I can enhance my research on various aspects of small and medium enterprises.
Based on the aforementioned statements, I come up to the topic:
"Research on factors affecting credit decisions for small and medium-sized enterprises in Vietnam Joint Stock Commercial Bank for Industry and Trade – Hanoi Branch".
Research Objectives
This research focuses on identifying the factors influencing credit decisions for SMEs at VietinBank's Hanoi Branch and aims to quantify the impact level of each specific factor using a quantitative model.
Research findings serve as a crucial tool for assessing the creditworthiness of small and medium-sized enterprises (SMEs) and provide valuable insights for VietinBank in Hanoi when making credit approval decisions for these businesses.
The research findings serve as a foundation for small and medium-sized enterprises (SMEs) to enhance their credit accessibility from VietinBank specifically, as well as from the broader commercial banking system Furthermore, I provide recommendations aimed at both the State Bank of Vietnam and the Hanoi Branch of VietinBank.
Subjectives and Scope
Factors that impact on SME credit decision at VietinBank , Hanoi Branch
In terms of space: Hanoi Branch and trading room both have credit extension activities for SMEs
Between 2019 and 2021, VietinBank focused on enhancing its resources to achieve robust growth and secure a dominant position in the credit market for small and medium-sized enterprises (SMEs).
Methodology
There is applied a combination of qualitative and quantitative research methods, including:
Statistics method: Synthesis, analysis and evaluation of factors affecting SME credit decisions at Hanoi Branch
Quantitative method: using Logit regression model and discrete linear regression model to determine the factors influencing the decision Credit and credit levels for SMEs at VietinBank – Hanoi Branch
Sampling method: the research sample was collected through a poll to the subjects who were credit officers These people directly managed SME customers at Hanoi Branch.
Structure
The research is structuralized into 4 chapters:
Chapter 3: Overview of Vietnam Joint Stock Commercial Bank for
Industry and Trade – Hanoi Branch
Chapter 5: Estimation results and major findings
LITERATURE REVIEW
Small and medium-sized enterprises
2.1.1 Small and medium-sized enterprises definition
In Vietnam, the Law on Enterprises, passed by the National Assembly in
In 2014, an enterprise was defined as an organization that operates under its own name, possesses assets, maintains a transaction office, and is legally registered for business purposes It is characterized as an economic entity, whether or not it has legal status, that engages in business activities in compliance with legal regulations to achieve specific objectives Enterprises can take various legal forms, including joint stock companies, limited liability companies, partnerships, state-owned enterprises, and private enterprises.
Regarding small and medium-sized enterprises (SMEs):
Currently, the definition of small and medium-sized enterprises (SMEs) remains inconsistent across international financial institutions and countries, leading to varying classifications even within the same nation This discrepancy primarily arises from the differing criteria used to assess enterprise scale, which typically rely on quantitative measures such as revenue, total assets, and employee count.
Table 2.1: Criteria for identifying SMEs by country
Country Employee (people) Annual revenue
Yi =0
The value of m is usually equal to 0
Research model and research hypothesis
Chapter II of the research identifies three key groups of factors that influence credit decisions for SMEs: first, enterprise-specific features such as operational period, educational background, and experience of business executives; second, relationship factors including the number of credit institutions involved, the duration of bank relationships, and collateral; and third, financial and business performance indicators like net revenue, profits after tax, total assets, short-term solvency, debt ratio, return on equity (ROE), and the quality of financial statements.
Table 4.1: Description of variables in the research model
The value is 1 if the bank agreed to grant credit
The value is 0 if the bank did not agree to grant credit
2 Line of credit LOC Dependent The line of credit granted to customers
3 Operation period OP Independent The time between establishment and credit review
The number of credit institutions in relation with the enterprise
The number of credit institutions an enterprise is establishing transactions with
5 The duration of bank relationship DBR Independent
The number of years from the establishment to the time of credit review at VietinBank
6 Quality of financial statements FS Independent
The value is 1 if the enterprise had audited financial statements
The value is 0 if the enterprise did not have audited financial statements
Educational background of the business executives
The value is 1 if the business executives had University/Undergraduate degree
The value is 0 if the business executives had different educational level
8 Experience of the business executives EX Independent The years of the business executives’ experience
9 Short-term solvency STS Independent Calculated according to the ratio of total short-term assets/short-term liabilities
10 Debt ratio DR Independent Liabilities/Total Assets
11 Return on equity ROE Independent Profit after tax/Equity
12 Net Revenue NR Independent Net revenue in the most recent year
13 Profit after tax PAT Independent PAT in the latest year
14 Total assets TA Independent TA in the latest year
The value is 1 if there was a collateral
The value is 0 if there was not a collateral
Several key factors significantly influence a bank's credit decision, including the enterprise's operational history, the educational and experiential background of its executives, the number of credit institutions associated with the business, and the length of the bank's relationship with the enterprise Additionally, important considerations encompass collateral, net revenue, profit after tax, total assets, short-term solvency, debt ratio, return on equity (ROE), and the overall quality of financial statements.
The author employs a Logit model to evaluate how various factors influence a bank's decision to extend credit to small and medium-sized enterprises (SMEs) In this model, the dependent variable represents the credit decision, with a value of 1 indicating approval and 0 signifying rejection.
The author investigates the factors influencing the credit lines provided by banks to small and medium-sized enterprises (SMEs) using the Tobit regression model This model is particularly suited for analyzing bounded dependent variables, ensuring that the credit line values remain non-negative.
Table 4.2: Variables included in the regression model
No Representative variable Symbol Variable Type
1 Line of credit LOC Dependent
4 The number of credit institutions in relation with the enterprise CI Independent
5 The duration of bank relationship DBR Independent
6 Quality of financial statements FS Independent
7 Educational background of the business executives EB Independent
8 Experience of the business executives EX Independent
9 Short-term solvency STS Independent
11 Return on equity ROE Independent
13 Profit after tax PAT Independent
Hypothetical model of factors affecting the decision to grant credit to small and medium-sized enterprises
Expectations of Tobit model sign
The line of bank credit granted to enterprises having a long operation period is higher than that of enterprises with a short operation period
(2017), “Factors affecting access to credit by small and medium enterprises in Hanoi”, International Economics Magazine
Educational background of the business executives
The line of bank credit granted to enterprises whose executives have higher levels of education is higher than that of enterprises whose executives have lower levels of education
(2017), “Factors affecting access to credit by small and medium enterprises in Hanoi”, International Economics Magazine
Experience of the business executives
The line of bank credit granted to enterprises whose executives have more experience is higher than that of enterprises whose executives have less experience
(2017), “Factors affecting access to credit by small and medium enterprises in Hanoi”, International Economics Magazine
The number of credit institutions in relation with the enterprise
The line of bank credit granted to enterprises having relationships with multiple credit institutions is higher than that of enterprises having relationships with a few
The duration of bank relationship
The line of bank credit granted to enterprises with which they have had a long-standing relationship is higher than that of enterprises with which they have had a shorter relationship
Nguyen Van Thuy, Ngo Thi Xuan Binh, Nguyen Quoc Buu, và Nguyen Thi Kim Phung (2020) đã thực hiện nghiên cứu mang tên “Các nhân tố ảnh hưởng đến khả năng tiếp cận vốn vay ngân hàng: Phân tích các bằng chứng thực nghiệm đối với các doanh nghiệp nhỏ và vừa tại Việt Nam” Nghiên cứu này cung cấp cái nhìn sâu sắc về các yếu tố quyết định khả năng vay vốn của doanh nghiệp nhỏ và vừa, từ đó góp phần nâng cao hiểu biết về tình hình tài chính trong bối cảnh kinh tế Việt Nam.
The line of bank credit granted to enterprises having collateral is higher than that of enterprises without collateral
Nguyen Thu Thuy, Do Thi Kim Hao, Do Dinh Long
(2019) “Nghien cuu cac yeu to anh huong den su tiep can tin dung ngan hang cua doanh nghiep nho va vua tinh Thai Nguyen”
The line of bank credit granted to enterprises having higher net revenue is higher than that of enterprises with low net revenue
Cassar, G (2004), The financing of business start- ups, Journal of Business
The line of bank credit granted to enterprises having higher PAT is higher than that of enterprises with low PAT
(2017), “Cac nhan to ben trong anh huong den su tiep can nguon von vay chinh thuc cua doanh nghiep nho va vua Ha Noi”
The line of bank credit granted to enterprises having more total assets is higher than that of enterprises with fewer assets
Cassar, G (2004), The financing of business start- ups, Journal of Business
The line of bank credit granted to enterprises having higher short-term solvency is higher than that of enterprises with low short-term solvency
“Cac nhan to anh huong den hoat dong von vay doanh nghiep tu nhan tai tinh Dong Nai”
The line of bank credit granted to enterprises having lower debt ratios is higher than that of enterprises with high debt ratios
(2017), “Cac nhan to ben trong anh huong den su tiep can nguon von vay chinh thuc cua doanh nghiep nho va vua Ha Noi”
The line of bank credit granted to enterprises having higher ROE ratios is higher than that of enterprises with low ROE ratios
Cassar, G (2004), The financing of business start- ups, Journal of Business
The line of bank credit granted to enterprises having audited financial statements is higher than that of enterprises without such statements
(2017), Factors affecting access to credit by small and medium enterprises in Kenya: A case study of agriculture sector in Nyeri
Hypothetical model of factors affecting the line of credit for small and medium-sized enterprises
Table 4.4: The Tobit model hypothesis
Expectations of Tobit model sign
The line of bank credit granted to enterprises having a long operation period is higher than that of enterprises with a short operation period
(2017), “Factors affecting access to credit by small and medium enterprises in Hanoi”, International Economics Magazine
Educational background of the business executives
The line of bank credit granted to enterprises whose executives have higher levels of education is higher than that of enterprises whose executives have lower levels of education
(2017), “Factors affecting access to credit by small and medium enterprises in Hanoi”, International Economics Magazine
Experience of the business executives
The line of bank credit granted to enterprises whose executives have more experience is higher than that of enterprises whose executives have less experience
(2017), “Factors affecting access to credit by small and medium enterprises in Hanoi”, International Economics Magazine
The number of credit institutions in relation with the enterprise
The line of bank credit granted to enterprises having relationships with multiple credit institutions is higher than that of enterprises having relationships with a few
The duration of bank relationship
The line of bank credit granted to enterprises with which they have had a long-standing relationship is higher than that of enterprises with which they have had a shorter relationship
Nguyễn Văn Thủy, Ngô Thị Xuân Bình, Nguyễn Quốc Bửu và Nguyễn Thị Kim Phụng (2020) đã nghiên cứu các nhân tố ảnh hưởng đến khả năng tiếp cận vốn vay ngân hàng Nghiên cứu này dựa trên các bằng chứng thực nghiệm từ các doanh nghiệp nhỏ và vừa tại Việt Nam, được công bố trên Tạp chí Công thương.
The line of bank credit granted to enterprises having collateral is higher than that of enterprises without collateral
Nguyen Thu Thuy, Do Thi Kim Hao, Do Dinh Long
(2019) “Nghiên cứu các yếu tố ảnh hưởng đến sự tiếp cận tín dụng ngân hàng của doanh nghiệp nhỏ và vừa tỉnh Thái Nguyên
The line of bank credit granted to enterprises having higher net revenue is higher than that of enterprises with low net revenue
Cassar, G (2004), The financing of business start- ups, Journal of Business
The line of bank credit granted to enterprises having higher PAT is higher than that of enterprises with low PAT
(2017), “Các nhân tố bên trong ảnh hưởng đến sự tiếp cận nguồn vốn vay chính thức của các doanh nghiệp nhỏ và vừa Hà Nội”
\ The line of bank credit granted to enterprises having more total assets is higher than that of enterprises with fewer assets
Cassar, G (2004), The financing of business start- ups, Journal of Business
The line of bank credit granted to enterprises having higher short-term solvency is higher than that of enterprises with low short-term solvency
“Các nhân tổ ảnh hưởng đến hoạt động vay vốn doanh nghiệp tư nhân tại tỉnh Đồng Nai”
The line of bank credit granted to enterprises having lower debt ratios is higher than that of enterprises with high debt ratios
(2017), “Các nhân tố bên trong ảnh hưởng đến sự tiếp cận nguồn vốn vay chính thức của các doanh nghiệp nhỏ và vừa Hà Nội”
The line of bank credit granted to enterprises having higher ROE ratios is higher than that of enterprises with low ROE ratios
Cassar, G (2004), The financing of business start- ups, Journal of Business
The line of bank credit granted to enterprises having audited financial statements is higher than that of enterprises without such statements
(2017), Factors affecting access to credit by small and medium enterprises in Kenya: A case study of agriculture sector in Nyeri
ESTIMATION RESULTS AND MAJOR FINDINGS 49 5.1 The Logit model regression results identify factors affecting credit
5.1 The Logit model regression results identify factors affecting credit decisions
To tackle multicollinearity and eliminate statistically insignificant variables, the author employs a gradual elimination method, specifically the Backward Wald approach in SPSS This technique allows for the automatic removal of unsuitable variables from the model Conversely, when utilizing Eviews, the process requires manual removal of variables.
Experimental results on samples (using Binary Logit regression in SPSS software)
Table 5.1: Omnibus Tests of Model Coefficients
We test the hypothesis pair H0: ò1= ò2= = òk=0
This pair of hypotheses examines potential explanations for the dependent variable that results from the combination of independent variables
After 14 steps of gradual elimination and checking the elimination of variables based on the probability of the Wald statistic, it shows that the overall fit has the observed significance level Sig.0 Therefore, we reject H0, which means the combination of linear relationship of all coefficients in the model is significant in explaining the dependent variable
Step -2 Log likelihood Cox & Snell R Square Nagelkerke R Square
The model demonstrates a relatively good fit, as indicated by a -2LL value of 9,016 Furthermore, the Nagelkerke R Square coefficient of 0.981 reveals that the independent variable accounts for 98.1% of the variance in the dependent variable, with the remaining variation attributed to other factors.
Overall Percentage 98.8 a The cut value is 500
Table 5.4 shows that the model achieved an impressive accuracy rate of 98.8%, correctly predicting 82 out of 83 risky enterprises This high percentage highlights the model's effectiveness and strong predictive capabilities.
Table 5.4 Variables in the Equation
The results of Wald's test, which tests for the existence of a non-zero regression, are shown in Table 5.5
We test the hypothesis pair: H0: òi=0 (i=(0,k))
In conclusion, the Wald test conducted with 14 steps identified four significant observable variables—EX, C, STS, and ROE—each demonstrating a regression coefficient significance level below 10%.
5.2 The Tobit model regression results identify factors affecting credit line
Table 5.5: 1st regression results of the Tobit model
Variable Coefficient Std Error z-Statistic Prob
Mean dependent var 15218.67 S.D dependent var 24945.68
S.E of regression 17897.59 Akaike info criterion 11.91230
Sum squared resid 4.84E+10 Schwarz criterion 12.19351
Log likelihood -973.7213 Hannan-Quinn criter 12.02645
Left censored obs 83 Right censored obs 0
Since the p-values for the variables PAT, STS, CI, EB, DR, and EX are relatively high, they will be manually eliminated from the regression model
After removing the variables PAT, STS, CI, EB, DR, and EX from the model, the following regression results were obtained:
Table 5.6: 2nd regression results of the Tobit model
Variable Coefficient Std Error z-Statistic Prob
Mean dependent var 15218.67 S.D dependent var 24945.68
S.E of regression 18100.00 Akaike info criterion 11.88311
Sum squared resid 5.14E+10 Schwarz criterion 12.05183
Log likelihood -977.2983 Hannan-Quinn criter 11.95160
Left censored obs 83 Right censored obs 0
The Tobit model's second regression results indicate an increase in the reliability of the included variables Notably, the Return on Equity (ROE) variable shows statistical significance at the 10% level, while the Debt-to-Business Ratio (DBR) and variable C exhibit statistical significance at the 5% level Additionally, the variables Total Assets (TA), Net Revenue (NR), and Operating Profit (OP) demonstrate statistical significance at the 1% level.
5.3 Comment on the regression results
Regression analysis at the VietinBank Hanoi branch identifies four key factors influencing credit decisions for small and medium enterprises: the experience of business executives, collateral, short-term solvency, and the return on equity (ROE) ratio Additionally, six factors impact the line of credit for these businesses: operational period, duration of the banking relationship, collateral, net revenue, total assets, and ROE.
The operation period (OP) has no effect on the decision to grant credit
The length of time a company has been in operation significantly influences the line of credit for SMEs at VietinBank's Hanoi branch According to the Tobit model regression results, the operational period (OP) variable shows a positive coefficient with a 1% significance level (p-value = 0.0042), indicating that longer operational durations lead to higher bank credit approvals for these companies.
The experience of business executives significantly influences credit granting decisions, as indicated by a positive and significant coefficient for the EX variable in the Logit model (sig=0.022) Banks show a greater willingness to extend credit to businesses led by experienced managers, particularly benefiting small and medium-sized enterprises that typically face less market competition Therefore, the experience of business operators plays a crucial role in the bank's evaluation process for these customers.
The duration of the bank relationship (DBR) significantly influences the credit line available to businesses, as indicated by the Tobit model, which shows a positive correlation at a 5% significance level (p-value=0.0159) This suggests that banks are more inclined to extend higher credit lines to businesses with longer-established relationships At VietinBank Hanoi Branch, loyal customers are primarily traditional clients, allowing the bank to gather transaction data, evaluate their product and service needs, and implement strategies to enhance customer relationships and optimize benefits.
Collateral (C): The coefficients of the C variable in both Logit and
Tobit models demonstrate a significant positive impact at the 5% level, with a Logit model p-value of 0.043 and a Tobit model p-value of 0.0132 Collateral plays a crucial role in influencing both the credit decision criteria and the credit limits set by banks for enterprises It serves as a safeguard for banks against potential losses when extending credit While unsecured credit options exist, collateral remains a vital consideration for small and medium-sized enterprises (SMEs) seeking loans from VietinBank's Hanoi branch Overall, banks are generally more inclined to approve credit for businesses that offer collateral.
Net revenue (NR) affects the credit line a bank approves for a business
The Tobit model indicates a significant positive relationship between the NR variable and net revenue, with a p-value of 0.0003, highlighting that as net revenue increases, the demand for working capital and investment also rises Consequently, businesses not only utilize their own capital but also seek external financing options, such as bank loans, to support their operations.
Total assets (TA) play a crucial role in determining a business's credit line, as evidenced by the positive coefficient of the TA variable in the Tobit model, which holds a significance level of 1% (p-value=0.0033) This indicates that banks are more likely to extend higher credit lines to businesses with larger total assets.
The Return on Equity (ROE) ratio plays a crucial role in credit decisions for small and medium-sized enterprises (SMEs), as evidenced by its positive and significant coefficients in both Logit and Tobit models (Logit model p-value = 0.076; Tobit model p-value = 0.0662) A higher ROE indicates greater business profitability, which increases the likelihood of credit approval and the amount of credit extended to the business.
The quality of financial statements (FS) significantly impacts the financing available to SMEs, as evidenced by a positive coefficient in the Tobit model with a 5% significance level (p-value = 0.0382) This indicates that, holding other factors constant, businesses with audited financial statements receive higher credit lines compared to those without Banks are more inclined to extend credit when a company's financial situation is transparently presented, as audited financial statements offer an objective assessment of a business's financial health, enabling banks to make informed lending decisions.
RECOMMENDATIONS
Recommendations to the state bank
Completing the data system on the transaction history of the business
Transaction history data is crucial for banks to evaluate the size and reputation of businesses In Vietnam, the Credit Information Center (CIC) offers a system that provides banks with access to the credit transaction history of enterprises This system enables banks to track relationships with credit institutions, understand the credit models of businesses, and review their transaction histories, facilitating informed credit decision-making.
To reduce asymmetric information among banks, products, and businesses, it is recommended that the State Bank and relevant agencies establish a system for collecting transaction data from enterprises to tax authorities, as well as transaction information from enterprises to customers.
The State Bank should establish a comprehensive set of criteria for evaluating and ranking enterprises using collected data, which will enable business stakeholders to make informed decisions and reduce their risk of engaging with less reputable businesses.
Recommendations to small and medium-sized enterprises
Non-financial and financial information from enterprises play a crucial role in the customer due diligence process for banks A robust financial position enables businesses to secure funding more readily, particularly from banking institutions However, in Vietnam, many small and medium-sized enterprises continue to exhibit low levels of financial transparency, highlighting a significant area for improvement.
Businesses generate a variety of financial statements, including tax agency reports, management reports, and loan reports Small and medium-sized enterprises utilize these different types of statements for various purposes, often leading to an inconsistent and unclear understanding of the company's financial health.
The professionalism of SME accounting teams is often limited, impacting the quality of financial statements Small businesses without a robust accounting system frequently resort to seasonal outsourcing, resulting in outdated financial information that hinders effective decision-making for executives and banks Consequently, it is essential for SMEs to enhance their management and finance-accounting systems to ensure timely and accurate financial reporting.
Many small and medium-sized enterprises (SMEs) often overlook the importance of financial statement audits Currently, banks are providing unsecured loans to SME clients, but they mandate the submission of audited financial statements as a prerequisite for credit approval Despite this requirement, numerous businesses face challenges that prevent them from obtaining these essential audited statements.
Improving transaction credibility is essential for businesses, as their reputation is intertwined with customer trust, government prestige, and bank relationships A company cannot thrive in isolation; it must cultivate connections with various entities Businesses with a strong transaction history gain a competitive edge when engaging with stakeholders, especially when forming new relationships For banks, maintaining a good reputation in transactions is crucial; issues such as overdue debts or repayment failures can severely hinder a business's ability to secure capital.
Solutions to improve the accuracy of credit decisions for smes at
Regarding the appraisal process of SME customers
Research indicates that credit decisions for customers are based on information obtained during the credit analysis stage Therefore, it is crucial for VietinBank Hanoi Branch to prioritize the appraisal process for small and medium-sized enterprise (SME) customers.
Assessing the creditworthiness of corporate customers can be challenging, as businesses typically highlight only their positive financial aspects when seeking credit, often omitting negative information This challenge is amplified for small and medium-sized enterprises (SMEs), which are often young with limited operating histories and low financial transparency To address these issues, VietinBank Hanoi Branch must conduct regular in-depth training and enhance the qualifications of its credit and customer appraisal officers, particularly in the loan guarantee process.
Chapter 5 reveals that collateral significantly impacts credit decisions for small and medium-sized enterprises (SMEs) at VietinBank Hanoi Branch, influencing both loan approval and credit limits While collateral is a critical factor in lending, many SMEs struggle to provide sufficient assets due to substantial investments in their operations, which limits their ability to secure loans Consequently, the branch is inclined to offer unsecured or partially guaranteed credit to reputable SMEs demonstrating strong debt repayment capabilities.
Regarding the assessment of the enterprise's financial statements quality
The quality of financial statements plays a crucial role in credit decisions for SMEs at VietinBank Hanoi, particularly as the branch evaluates the extension of unsecured or partially secured credit to qualifying SMEs based on their most recent audited financial accounts With numerous auditing firms in the market, including some lacking credibility, it is essential for the Hanoi branch to identify and recommend a list of reliable and reputable auditing companies approved by the Vietnam Joint Stock Commercial Bank for Industry and Trade to ensure the integrity of financial statements.
Regarding the quality of banking services
Research indicates that the line of credit extended to businesses by banks is influenced by the strength of their relationships Companies leverage established connections with banks to access necessary services and capital Consequently, it is crucial for VietinBank Hanoi to continuously innovate and upgrade its technology, develop products and services specifically designed for SMEs, and prioritize comprehensive service packages that address the varied needs of their clientele.
To sustain its customer base and attract new clients, VietinBank Hanoi Branch must diversify its product offerings and enhance the quality of its banking services Traditional customers significantly contribute to the bank's income, making it essential to improve service delivery Furthermore, maintaining transaction history data is crucial for evaluating the creditworthiness of enterprise loan applicants.
Small and medium-sized enterprises have always been playing an important role in Vietnamese economic growth because of its popularity
VietinBank Hanoi Branch stands out as a leader in operational scale and business efficiency within the VietinBank system across Vietnam However, the branch has encountered several limitations in its small and medium-sized enterprises (SMEs) department.
This research investigates the factors influencing credit decisions for SMEs at VietinBank – Hanoi Branch, utilizing the Logit Model to identify key determinants such as the experience of enterprise executives, collateral, short-term solvency, and return on equity ratio Additionally, the Tobit model highlights the importance of operation period, duration of bank relationships, net revenue, and the quality of financial statements in determining the line of credit Based on these findings, recommendations are provided for the State Bank of Vietnam, SMEs, and VietinBank – Hanoi Branch to enhance credit quality and improve SMEs' access to bank loans.
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16 Nick Govers, Single versus Multiple Bank Relationships,
17 Olekamma Kingsley Chinonso, Tang Zhen (2016), The Influence of Entrepreneurial Characteristics on Small and Medium-Sized Enterprise Accessibility to Debt Finance in Nigeria, International Journal of Managerial
Studies and Research (IJMSR), Volume 4, Issue 10, October 2016, pp 83-92
1 The Logit model regression results
DR -24.967 7561.064 000 1 997 000 ROE 424.262 210419.624 000 1 998 1.797E+184 Constant -124.909 26816.496 000 1 996 000 Step 7a OP 7.153 557.628 000 1 990 1278.369
C 4.722 2.336 4.085 1 043 112.436 STS 12.656 6.710 3.557 1 059 313585.774 ROE 345.038 194.279 3.154 1 076 7.047E+149 Constant -31.554 13.493 5.469 1 019 000 a Variable(s) entered on step 1: OP, EB, EX, CI, DBR, C, NR, PAT, TA, STS,
DR, ROE, FS b Variable(s) entered on step 11: EX c Variable(s) entered on step 14: C
2 The Logit model regression results
Method: ML - Censored Normal (TOBIT) (Quadratic hill climbing)
Left censoring (value) at zero
Covariance matrix computed using second derivatives
Variable Coefficient Std Error z-Statistic Prob
Mean dependent var 15218.67 S.D dependent var 24945.68 S.E of regression 17897.59 Akaike info criterion 11.91230 Sum squared resid 4.84E+10 Schwarz criterion 12.19351 Log likelihood -973.7213 Hannan-Quinn criter 12.02645 Avg log likelihood -5.865791
Left censored obs 83 Right censored obs 0
Method: ML - Censored Normal (TOBIT) (Quadratic hill climbing)
Left censoring (value) at zero
Covariance matrix computed using second derivatives
Variable Coefficient Std Error z-Statistic Prob
Mean dependent var 15218.67 S.D dependent var 24945.68 S.E of regression 18100.00 Akaike info criterion 11.88311 Sum squared resid 5.14E+10 Schwarz criterion 12.05183 Log likelihood -977.2983 Hannan-Quinn criter 11.95160 Avg log likelihood -5.887339
Left censored obs 83 Right censored obs 0