To clarify the theoretical framework for the relationship between ownership structure and performance of the banking system; analyze the current status of ownership in relation to the level of effectiveness of the commercial banking system in Vietnam. To measure the impact of ownership ratios and the quality of corporate governance on the performance of the bank using econometric models; make recommendations on ownership structure to improve the performance of Vietnameses commercial banks.
MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM BANKING ACADEMY OF VIETNAM oOo DANG HOAI LINH BANK CREDIT FOR PANGASIUS VALUE CHAIN IN VIETNAM Major: Finance - Banking Code: 9.34.02.01 SUMMARY OF DOCTORAL DISSERTATION IN ECONOMICS HA NOI – 2019 THE DISSERTATION WAS COMPLETED AT BANKING ACADEMY OF VIETNAM Academic Supervisors: Assoc Prof., Dr LE VAN LUYEN Dr NGUYEN TIEN DONG Referee 1: Referee 2: Referee 3: The dissertation is defended against University-level Examination Board at Banking Academy of Vietnam Time: ………… date …… month …… year 2019 The dissertation could be found at: - Library of Banking Academy of Vietnam - National Library of Vietnam INTRODUCTION Significance of the research In the context of complicated climate change, increasingly scarce resources for growth and great competitive pressure from international integration, to achieve the set objectives, the construction of the closed agricultural value chain from the stages of input, production and processing to distribution and consumption is necessary Several policies of the Communist Party and the Government have been issued to support the operation of the agricultural value chain, including many policies related to capital support After more than years of implementing agricultural value chain financing, compared to rural and agricultural finance, the volume of loan disbursement for the agricultural value chain is still limited, accounting for a small proportion, ranging from 0.18% to 0.78% in the period from 2014 to 8/2018 Obviously, the above rate is low, the loan capital has not been effective in agricultural value chain investment Due to the broad research scope of agricultural value chain bank loans, pangasius, a key agricultural product in Vietnam shall be chosen to study From the aforementioned reasons, doctoral dissertation entitled "Bank credit for pangasius value chain in Vietnam" has been chosen 2.Research overview 2.1 International researches All over the world, there are several finance-related studies concerning agricultural value chain which are classified into two research trends as follows: Typical researches on models, characteristics, structure, management methods and relationships among members of the agricultural value chain include the studies of Miller and Jones (2010); Christen and Anderson (2013); Rubeena (2013) and so on The success of these studies is to systematize the theoretical ideas related to the agricultural value chain financing, with a detailed analysis of the model structure of the agricultural value chain, characteristics of value chain finance, implementation process, risks and measures to reduce them This group of authors also emphasized the role of management and made some recommendations The research trend focuses on clarifying the role and efficiency of bank loans as a source of capital in the agricultural value chain associated with specific contexts In general, most research results have confirmed the importance of bank capital in the agricultural production value chain and the need to develop this lending activity 2.2 Researches in the country Scientific researches on this matter in Vietnam still fall behind in comparison to the worldwide trend, including the research of Nguyen Van Phan, Nguyen Khac Minh and Le Phan Thanh Hoa (2017) about the role of bank finance in developing agricultural value chains in Vietnam; the author group of Pham Xuan Hoe and Nguyen Thi Minh Hang (2014) on a guide to providing value chain loans; the scientific article by Nguyen Tien Dong (2015) on solutions for value chain development and high-tech application in agricultural production and several other studies by authors Quang Canh (2014), Ha Quang Trung (2014), To Ngoc Hung (2015), Le Van Luyen and Dang Hoai Linh (2015), to name but a few The success of these studies is to analyze the situation of implementation and propose solutions that are appropriate to the Vietnamese agricultural value chain from 2014 to the present However, the assessment of factors affecting the bank finance in the agricultural value chain in Vietnam is relatively small although this issue plays an important role in the sustainable development of Vietnamese agricultural value chain Objectives of the research - To clarify the theoretical framework for the relationship between ownership structure and performance of the banking system - To analyze the current status of ownership in relation to the level of effectiveness of the commercial banking system in Vietnam - To measure the impact of ownership ratios and the quality of corporate governance on the performance of the bank using econometric models - To make recommendations on ownership structure to improve the performance of Vietnnamese commercial banks Subjects and scope of the research The subject of research: Theoretical issues, practical deployment, and factors affecting the development of pangasius value chain finance at commercial banks - Scope of research in terms of space: Financing the pangasius value chain in An Giang, Dong Thap and Can Tho - Scope of research in terms of time: from 2014 to 2018 Chapter Layout of Dissertation In addition to the introduction, conclusions, references, and appendices, the thesis has chapters: Chapter 1: Literature review for bank financing for the agricultural value chain Chapter 2: Research methods of the thesis Chapter 3: The current situation of bank credit activities for Vietnam pangasius value chain Chapter 4: Solutions to develop bank lending services for Vietnam pangasius value chain New contributions of the thesis 6.1 In terms of academic - The research outcome will provide readers with a basic theoretical framework for Vietnamese agricultural value chain finance - Based on the evaluation results, the thesis provides an overview of the implementation of the Vietnamese pangasius value chain finance for the period of 2014 2018 which is not effective and commensurate with the scale of the Vietnamese pangasius industry - The thesis is an applied research project to carry out surveys, collect data and verify via SEM model and evaluate factors affecting the deployment of banking finance in the value chain of Vietnamese pangasius industry - Proposing a set of solutions for commercial banks and a set of proposals for Ministries, Departments, Industries and SBV to aim at the sustainable development of pangasius value chain finance 6.2 In terms of practicality The thesis is a research project that helps scientists, managers, and commercial banks have an overview of the Vietnamese pangasius value chain finance using measurement and evaluation methods based on the inspection process At the same time, it identifies influential factors when implementing pangasius value chain finance This is a condition to deploy applied research and appropriate solutions to enhance the pangasius value chain finance in the coming time This is an important and practical contribution of the thesis CHAPTER LITERATURE REVIEW ON BANK CREDIT FOR AGRICULTURAL VALUE CHAIN 1.1 LITERATURE REVIEW ON BANK CREDIT FOR AGRICULTURAL VALUE CHAIN 1.1.1 The definition of the agricultural value chain Currently, there is no consistent definition of the agricultural value chain Agricultural value chain studies use the term "value chain" or "supply chain" to describe agricultural value chains FAO (2010) defines: “The agricultural value chain consists of a set of agents and activities that take an agricultural product from production to the end consumer, whereby the value of the product is increased in each intermediate stage A value chain can be a vertical link or a network of independent agents on the stages of processing, packaging, storage, transport, and distribution Most subjects in the agricultural value chain are small producers The relationship between buyers and sellers in agriculture includes: Instantaneous - sellers directly provide their products to buyers at unstable selling prices; Seasonal sales contracts - This is a contract of agricultural products signed in each period; Long-term buying and selling - This is a longterm non-contractual trading relationship, based on mutual trust and belief; The buyer contributes capital in the production activities of the seller; The company operates all stages in the value chain vertically without purchasing goods from any buyer 1.1.2 Subjects participating in the agricultural value chain Key actors in the agricultural value chain include Input suppliers; Farming unit; Collection unit; Processing/processing unit; Distribution unit; Value chain support and promotion unit 1.1.3 Characteristics of the agricultural value chain The value chain has five basic characteristics: The value chain is affected by the characteristics of agricultural products; Seed production and farming play a key role in the chain with the participation of farmer households, cooperatives and companies; The price of agricultural products is more stable in the value chain; Based on the target customers, the value chain is distributed according to four channels; Food safety is a decisive factor for the operation and survival of the agricultural value chain 1.1.4 The purpose of the agricultural value chain - Limit the complexity of the exchange process; - Stabilize product quality and establish the status; - Improving professional, technological and competitive qualifications 1.2 BANK FINANCING FOR THE AGRICULTURAL VALUE CHAIN 1.2.1 The definition of bank financing and bank financing for the agricultural value chain 1.2.1.1 Bank financing Financing is a mutual loan relationship based on trust and that capital will be returned on a certain day in the future It can be said that credit is the transfer of a value amount from one person to another to own it and after a certain time is recovered with a value greater than the original value 1.2.1.2 Bank financing for the agricultural value chain Agricultural value chain credit is a form of transferring the right to use a value amount from the lender which is the bank to one or more entities using capital who are members of the agricultural value chain for the purposes in line with the borrowers’ production and business activities in the value chain in a certain time A value chain of agricultural products includes the following five basic stages: raw material supply, farming, purchasing, processing/production and distribution To meet diverse financial needs, there are two forms of credit financing: - Credit financing from within the value chain: This is a form of financing between an entity in the value chain together - Credit financing outside the value chain: This is a form of financial support for actors in the value chain from units outside the value chain, including government, credit funds, banks In this thesis, the credit source that the author mentioned is the credit source from the bank Bank credit in the value chain for the agricultural sector is understood as a credit in the agricultural value chain 1.2.1.3 Conditions for credit deployment in the agricultural value chain - Oriented development; - Understanding the value chain; - Subjects represented in the value chain 1.2.2 Characteristics of BANK CREDIT FOR THE AGRICULTURAL VALUE CHAIN 1.2.2.1 The rotation of credit capital Debt collection source of the previous stage is the disbursement source of the following stage The bank only actually collects its investment capital when it acquires customer loans at the final stage of the value chain of the agricultural sector invested Therefore, the credit source of the bank is circulated faster in the agricultural value chain 1.2.2.2 The allocation of credit capital The natural allocation area of agricultural products is often concentrated in some areas with natural conditions and climate suitable for farming Therefore, credit capital in the agricultural value chain is often concentrated in some areas 1.2.2.3 Appraisal work Credit in the agricultural value chain focuses on the entire chain Lending and lending decisions are based on criteria such as the flow of assets, execution capacity, risk management, chain competitiveness and the quality of interactions and interdependencies between cities chain members, not just based on the ability and financial ability of an independent customer 1.2.2.4 Loan products In this thesis, credit products according to the agricultural value chain include loan provision, credit limit, and installment loan 1.2.2.5 1.2.2.5 Disbursement and debt collection are seasonal The disbursement and determination of debt repayment schedule of customers in credit activities according to the agricultural value chain based on the completion and circulation timeline of each stage in the chain 1.2.2.6 Credit risk Credit risk by value chain is a potential loss when a bank grants credit to a customer in the value chain In credit activities according to the agricultural value chain, the causes of credit risk include Risks outside the agricultural value chain; Risks within the agricultural value chain; Risks from agricultural value chain support units Criteria for reflecting credit risk in the agricultural value chain and solutions include Production activities of the value chain; Liquidity of sales contracts; Financial situation of entities in the value chain; The volatility of agricultural product prices; Climate change; Policies and guidelines of the Government 1.2.3 Subjects participating in agricultural value chain credit Two subjects involved in credit in the agricultural value chain include borrowers and lenders 1.2.3.1 Lenders - Financial institutions - Credit providers in the process of selling products and services (Input suppliers, equipment suppliers, service providers ) 1.2.3.2 Borrowers Borrowers include Research and support centers, professional associations, state management agencies; Units supplying materials for production; Production unit; Purchasing unit; Processing unit; Distribution unit 1.2.4 Credit deployment process according to the agricultural value chain of the bank Credit deployment steps in the agricultural value chain include value chain analysis; financial assessment; value chain evaluation Applying the above research results, the author performs the analysis of the credit organization process according to the agricultural value chain as follows: a Before lending: Analyzing the value chain’s characteristics; Evaluating the development potential of the value chain; Determining the role of credit capital for the value chain; Identifying the risks while lending b While lending: Receiving loan documents; Appraising; Lending c After lending: Monitoring loans, supporting customers; Monitoring and urging the collection of loan debt 1.2.5 Factors affecting the implementation of bank credit in the agricultural value chain Inheriting the Belassi and Tukel research model (1996), the author analyzes the factors affecting credit deployment in the agricultural value chain as follows: Development capacity; Profitability 1.2.5.1 Group of internal factors within the bank - Benefits of agricultural value chain credit for banks; - The tangibility of the bank 1.2.5.2 Group of factors outside the bank - Liquidity of receivables in the value chain; - Operational risks of the value chain; - Operational advantages of the value chain ; - The capacity for joining the global value chain of the agricultural industry; - Macroeconomic environment; -The operation of non-credit support units 1.2.6 The set of criteria to evaluate the results of bank credit deployment according to the agricultural value chain The results of credit deployment in the agricultural value chain are reflected in the following criteria: Customer growth rate; The ratio of agricultural value chain credit disbursement turnover compared to the agricultural and rural credit disbursement turnover; the Growth rate of outstanding loans; Rate of interest collection; Overdue debt ratio; Bad debt ratio 1.2.7 The basic difference between bank credit model for value chain and traditional bank credit model Based on the characteristics of agricultural value chain credit, the author compares the difference between this lending model and the traditional credit model, specified in table 1.1 Table 1.1: Table 1.1: Differences between agricultural value chain credit and traditional credit in the agricultural sector Criteria Bank credit for the agricultural value chain Traditional credit Proximity to Customers are in the vicinity of Customers can be far away the bank for convenient customers monitoring Character -The customer's credit is reflected in the timely + The credit history of performance of obligations to independent units in the value the bank chain + Individual approach + How long has this value chain + How long does it take for each existed? individual to work with the + How stable is this value bank? chain? How long have the + How well does the account parties worked together? work? + How strong is the relationship + Have all previous obligations between the parties? been performed? + How many parties are the risks related to and how to deal + Are there commercial and with risks related to several business reference information parties? available? - The credit of value chain + Are the parties in this value + Is there a report of the credit chain customers of the bank? management agency? Capacity Cash flow in the value chain Ability to repay the loan Capital Capitalization of the value chain Own capital of customers 21 Dong Thap is one of four provinces in the key economic region of the Mekong Delta With the advantage of natural conditions including suitable land for agricultural development of abundant water resources and non-saline water, Dong Thap's agricultural sector thrives and becomes one of the key agricultural production provinces in Vietnam 3.2.1.3 Can Tho City Can Tho is located in the tropical monsoon climate area, with little storms, hot and humid all year round without cold season This advantage is very favorable for the growth and development of organisms, can create a system of high-yield tropical agriculture, with many types of seedlings, creating diversity in production and production restructuring 3.2.2 Bank credit process according to value chain for pangasius industry Step 1: Determination of the list of customers selected for loans - The customer sends the contract of association and consumption production, the application for approval of the project / plan, the introduction of the project and the application for approval of the project / plan sent to the People's Committee and Provincial Department of Agriculture and Rural Development - Based on the proposal of the provincial/ municipal People's Committee, the State Bank shall coordinate with the Ministry of Agriculture and Rural Development and the Ministry of Science and Technology in approving the list of associated key enterprises - For farmers and cooperatives representing farmers, the SBV coordinated with the Ministry of Agriculture and Rural Development and the Ministry of Science and Technology to approve the list of customers who signed a chain-linked contract with an approved enterprise - List of customers who are allowed to participate in the value chain and have a demand for loans is transferred to the bank to be considered for loan approval Step 2: The bank provides loans according to value chain of the pangasius industry - The bank appraises customers according to the list received from the provincial/ municipal People's Committee In addition to satisfying the conditions for participating in the value chain as mentioned in step 1, customers must also meet the loan conditions: Conditions on legal entity, financial conditions, conditions on feasibility of plans/ projects, conditions on security assets and other conditions, specifically as follows: conditions on legal entity; purpose of capital use; financial conditions; feasibility of the plan/ project; conditions on loan security assets 22 - In case the bank agrees to lend, the bank will notify the customer, the provincial/ municipal People's Committee and specify the loan amount, interest rate, term and other conditions Compared to normal lending programs, value chain credit has more advantages in terms of interest rates and collateral conditions - In case the bank does not agree to lend, the bank will notify the customer, the provincial/ municipal People's Committee, the State Bank and state the reason for the refusal of the loan - Banks, enterprises and farmers sign the tripartite principle contract Accordingly, this contract clearly states the conditions to be complied between the bank, the focus subject and the farmer association - Enterprises and farmer households sign credit contracts and specify criteria for loan purposes, payment methods, payment terms, loan amounts, interest rates and loan terms - Based on the demand for raw materials (Feed, aquatic medicine) of farmer households, the bank will disburse to the focal subject to pay for the purchase of raw materials for the material supplier - Up to months, farmer households harvest fish and sell to enterprises in the value chain who have signed a tripartite principle contract - Enterprises and banks will sign disbursement certificates to pay farmers the amount of pangasius purchases in the form of transfer to farmers’ account opened at the bank - After the money is credited to the farmer's account, the bank performs collection of all farmers' debts Value chain credit will end when the enterprise makes a loan settlement with the bank 3.2.2 Classification of financed products In terms of stages in the value chain of the pangasius industry, stages are financed including: Pre-harvest advance; Harvesting and processing; Consumption and export; Investing assets in service of pangasius production and processing In terms of lending objects, financed products include: Material suppliers (Pangasius feed, medicine); Farming unit; Production - distribution units Accordingly, the banking products supplied in the pangasius value chain include: shortterm loans, long-term loans, payment guarantees, collection at the point, network collection for enterprises or distribution agencies, demand deposits, term deposits, insurance, guarantees, domestic and international payment services, and foreign currency trading 23 3.2.3 The situation of bank credit development according to the value chain for Vietnam pangasius industry 3.2.3.1 Credit scale according to the value chain of pangasius industry Similar to credit according to the agricultural value chain, the loan disbursement turnover according to the pangasius value chain tends to increase gradually from 2014 to 2016 and gradually decreases from 2016 to now, concentrating mainly in State-owned commercial banks The growth rate of credit disbursement according to the value chain of pangasius industry increased 261% from 2014 to 2015 but from 2017 to September 2018 decreased by 27% The reason is that in 2014 was the year when credit was started according to the value chain of pangasius industry, so in 2015, there was a big growth because of the arising new debt By 2016, the pilot program ended and changed to the actual loan program The main beneficiaries of access to loans according to the value chain model of the pangasius industry are enterprises (accounting for 53% to 59% of total disbursement turnover), the remaining beneficiaries of access are farmer households Accordingly, enterprises often operate in the areas of processing, distribution and consumption The cost of forming and maintaining these enterprises' activities is diversified, including factories, machines, equipment, human resources so the demand for loans is high Compared with the disbursement turnover for credit according to the agricultural value chain, the disbursement turnover for credit according to the pangasius value chain accounts for a large proportion, ranging from 63% to 94% in the period of 2014 - 2017 Credit debt according to the value chain of the pangasius industry also decreased gradually in the period of 2014 - 2017, accounting for a very small proportion compared to the debit balance of the agricultural and rural sector, only ranging from 0.07% to 0.2 % in the period of 2014 - 2017 This shows the credit in the agricultural value chain in general and the pangasius industry in particular has not developed corresponding to the development of the industry The scale of the number of customers accessing credit capital according to the value chain of pangasius industry also tends to decrease from 2016 up to now, concentrating on the following reasons: have not found the value chain of pangasius industry for investment; customers are not eligible for loans; obstacles to the legal corridor 3.2.3.2 Credit quality The fluctuations in personnel of the representative unit in the chain have led to the failure of enterprises to comply with the tripartite principle contract with banks and 24 farmer households As a result, the company does not pay debts to banks and farmers on time, resulting in bad debts As of 2017, bad debt of pangasius value chain is 215.7 billion, accounting for 21.06% of the total debit balance of the chain In which, the bad debt balance of the enterprise is 107 billion and the bad debt balance of farmers is 108.7 billion The bad debt of farmers arises because the representative unit does not pay for the purchase of fish to the farmers on time, leading to the farmers not paying the debt of the bank on time 3.2.4 Bank credit risk according to the value chain for Vietnamese pangasius industry 3.2.4.1 Risks outside the value chain of pangasius industry Risks from outside the value chain of pangasius industry mainly lead to ineffective value chain activities and affect the ability to repay debts to banks including: Environmental risks; Quality risks and price of feed for pangasius; Market risks 3.2.4.2 Risks within the value chain of pangasius industry - Risks from farming, production and consumption of pangasius chains; - Risk of mortgage assets; - Risks due to customers deliberately not performing their obligations in the chain 3.2.4.3 Risks from units supporting value chain of pangasius industry - Policy risks; - Risks from banks: The fact that bank officials not meeting the capacity requirements will lead to uncontrollable cash flow, evaluate the performance of the value chain, thereby affecting the ability to recover in debt At the same time, if the bank branch does not have enough capital to meet the demand for loans of the value chain as committed, it will affect the operation of the chain 3.3 EVALUATION OF THE RESULTS OF BANK CREDIT DEVELOPMENT ACCORDING TO THE VALUE CHAIN OF PANGASIUS INDUSTRY 3.3.1 Evaluation of the results of bank credit development according to the value chain of pangasius industry based on the set of criteria Credit sales according to the value chain of the pangasius industry compared to credit sales according to value chain of the agricultural sector accounted for a large proportion, the highest value was 94% and the lowest value was 63% in the period of 2014 - 2017 The proportion of credit debt according to the value chain of the pangasius 25 industry compared to the debit balance in the agricultural and rural sector accounts for a very small proportion and tends to decrease, the highest value is 0.2% in 2014 and the lowest value is 0,07% in 2017 The growth in customer numbers only increased during the pilot program implementation period and tended to decrease from 2017 Overdue debt arises from 2016 and bad debt arises from 2017 Bad debt accounts for a large proportion, accounting for 21.06% of the total credit debt according to the agricultural value chain Considering the set of quantitative criteria, credit according to the value chain of pangasius industry is not effective in proportion to the scale of the Vietnamese pangasius industry 3.3.2 Evaluation of the results of bank credit development according to the value chain of pangasius industry based on survey results 87% of banks said that they are interested in learning about the provisions of the law or regulations and guidelines of the Government, ministries and local authorities related to lending in value chains and about 81% of banks plan to develop this lending model over the next five years in case of a clear legal corridor, with specific guidance from the SBV However, 67% of banks not have credit debt according to the value chain of pangasius industry, concentrating on the following reasons: not finding the value chain of pangasius industry for investment; customers are not eligible for loans; obstacles to the legal corridor 91% of surveyed banks believe that the two most important factors in customer appraisal are the customer's income and the security value of the loan, and then the value of consumer goods and services 69% of asked banks answer that they lend without security assets at the common rate of 50-80% of the value of the project, the production and business plan of the customer to the value chain when controlling the cash flow on the basis of a single assessment of credit loss without security assets According to the survey results, banks still determined that credit implementation in the value chain of pangasius industry is in line with the development trend of the agricultural value chain in general and pangasius value chain in particular but the current implementation is less effective Legal and insurance issues need to be thoroughly solved to have a basis for the sustainable development of credit according to the value chain of pangasius industry 3.3.3 Evaluation of the results and limitations of bank credit according to the value chain of pangasius industry 26 3.3.3.1 Results - This lending method creates important conditions in building the value chain from production to consumption, closely linking farmers and enterprises, sharing benefits and risks, helping agricultural products, products with great competitive advantages of Vietnam - Because the agents in the chain have a close communication relationship, the supervision and management of loans of the bank are more convenient, the capital invested in the production plan, farmers pay the loan fully and on time as prescribed; Diversify banking products; Optimizing credit capital 3.3.3.2 Limitations of credit according to the value chain of pangasius industry Credit implementation according to the value chain of the pangasius industry is still limited due to specific limitations of the industry, namely: Issues on agricultural insurance; Issues on planning farming areas; Legal issues on security assets; Issues on food safety and hygiene; Accessibility to end consumers; The barriers related to pangasius export issues are increasing In addition, the lack of a commercial arbitration mechanism for signing contracts is a big challenge when implementing credit according to the value chain 3.4 ANALYSIS OF FACTORS AFFECTING BANK CREDIT IMPLEMENTATION TO VALUE CHAIN OF VIETNAMESE PANGASIUS INDUSTRY 3.4.1 Assignment and identification of models Based on the theoretical basis of Chapter 1, the research model that the author proposed consists of 20 hypotheses 3.4.2 Estimation of model 3.4.2.1 Descriptive statistical analysis The variation value of scales from the lowest value (Min) to the highest value (Max) ranges from to The average value of these values revolves around 2.5 3.4.2.2 Evaluation of scale a Cronbach's Alpha coefficient of reliability The results show that scales not meet the variable correlation coefficient - total Cronbach's Alpha > 0.3 include TK2 (0,277), LT3 (0,263), LT4 (0,25), NL1 (0,047), VM2 ( 0.245), LI4 (0.212) 27 The author performs the scale of TK2, LT3, LT4, NL1, VM2, LI4 and re-analyzes the reliability The results show that all scales meet the requirement of variable correlation coefficients - total Cronbach's Alpha b Analysis of EFA discovery factor KMO and Bartlett statistics for factors of value 0.921 are between the allowable range of 0.5 to Analysis results show that the variables included in the analysis are divided into main factors, namely: - Group of tangible and benefit factors (HH_LI) includes observed variables; - Group of risk and liquidity factors (RR_TK) includes observed variables; - Group of support and macro factors (HT_VM) includes observed variables; - Group of capacity and advantage factor (NL_LT) includes observed variables; - Development group (PT) includes observed variables; - Group of profit factors (SL) includes observed variables; - Successful implementation group (TC) includes observed variables The author performs reliability analysis, the results show that these scales meet the required correlation coefficient - total Cronbach's Alpha is greater than 0.3 and Cronbach's Alpha coefficient is greater than 0.6 Through factor analysis, the author calculates the factors (values of the composites) for each observation case and the ith factor is calculated by the following formula: Fi = Wi1X1 + Wi2X2 + Wi3X3 + + WikXk 3.4.2.3 Adjustment model After collecting the group of factors, the research model is adjusted 3.4.3 Evaluation of models and report of results 3.4.3.1 Scale test by CFA analysis and composite reliability coefficient Testing of the appropriateness of the model 28 CFA results show that the model is compatible with data Only the GFI index (Goodness of fixindex) is near the benchmark Thus, the testing model is statistically significant and appropriate Convergence value The standardized weights of the scale are high (greater than 0.5) and statistically significant (P-value = 0,000) so the concepts reach convergent values Testing of composite reliability and variance extracted The composite reliability and variance extracted is calculated based on the estimated factor weighting of CFA model The above results show that all scales meet the requirement of composite reliability greater than 0.7 and variance extracted greater than 0.5 3.4.3.2 Testing of theoretical models and hypotheses with SEM Testing of theoretical models SEM results show that most of the measurements are met Only the GFI (Goodness of fix index) is near the benchmark Testing of hypotheses The research results show that the factors LI_HH, TK_RR, VM_HT, LT_NL all work in the same way with factors PT and SL; The PT factors affect in the same way with the SL and TC factors; The PT factor affects the same factor with TC factor Therefore, the hypotheses H21, H22, H23, H24, H25, H26, H27, H28, H9, H19 and H20 are acceptable Testing of models by bootstrapping method To determine the deviation in the estimated parameters, the author performs a model test using bootstrapping method The results show that C.R of hypotheses is less than 1.96 so the deviation is very small, not statistically significant at the 95% confidence level Therefore, the estimation model is reliable 3.4.3.3 Report of results The analytical results show that in the two factors affecting the success of the credit implementation according to the value chain of the pangasius industry which is the development capacity and profitability, the development ability has a stronger influence This can be explained by the credit according to the agricultural value chain in general and the pangasius industry newly developed in Vietnam The restriction on the legal 29 framework and the way to implement it will make the bank unable to achieve the expected profitability but need time to complete On the contrary, the ability to develop has a great influence on the success of credit implementation in the value chain of the pangasius industry One of the great advantages of implementing this lending model is that the Government and the State determine that lending according to the agricultural value chain is a new trend to be achieved Through surveying bank officials, they believe that credit according to value chain is a new lending method, so it is necessary to help customers according tostand and become familiar with the lending model rather than the level of profit they will have This is also the reason that this lending model is mainly implemented in State-owned commercial banks or commercial banks with capital contributed by the State The group of tangible and benefit factors has a great impact on the development cability of the loan model It is difficult to explain here that the group of advantage and capacity factors does not affect the profitability of banks when implementing credit in the value chain of pangasius industry CHAPTER 4: SOLUTIONS FOR DEVELOPMENT OF BANK CREDIT IN VALUE CHAIN FOR VIETNAMESE PANGASIUS INDUSTRY 4.1 ORIENTATION OF BANK CREDIT DEVELOPMENT IN VALUE CHAIN FOR VIETNAMESE PANGASIUS INDUSTRY 4.1.1 The view of bank credit development in value chain for pangasius industry The value chain of the pangasius industry is usually large-scale, needs a lot of capital, the investment time for fixed assets is long and risky The quality of human resources of the bank affects the credit development in the pangasius value chain Improving professional skills, professional ethics, communication ability, conduct, awareness of value chain of pangasius industry in order to create a change in awareness and action is essential On that basis, the search for customers, appraisal and loan management will be more effective Strengthening cooperation and close links with supporting units for the value chain of the pangasius industry, including Departments, Divisions, Sectors, Universities, research institutes, cooperatives, etc The State has implemented pioneering role in creating a favorable environment for development of pangasius value chain 4.1.2 Orientation of bank credit development in value chain for Vietnamese pangasius industry 4.1.2.1 Basis for determination of credit development orientation in value chain for Vietnamese pangasius industry 30 In order to promote agricultural production towards goods, increase added value and sustainable development, a series of government policies have been issued Decree No 41/2010 /ND-CP, Decree No 55/2015 / ND-CP, Resolution No 14 / NQ-CP are the foundation to promote lending activities in the value chain for pangasius industry after finishing pilot lending program 4.1.2.2 Orientation of credit development in value chain model for Vietnamese pangasius industry In terms of overview, the credit capital in the value chain for pangasius industry is aimed at the following purposes: Firstly, the credit in the value chain for pangasius industry is a new development trend, requiring the cooperation of organizations, divisions and sectors, including the banking sector Secondly, the bank has a role to monitor the operation of the whole value chain Thirdly, improving the credit quality through closer loan supervision and management Fourthly, optimizing the credit capital, reducing opportunity costs for credit capital Fifthly, diversifying banking products Based on the overall objective, the proposed plans for credit deployment in the pangasius value chain are: Firstly, more commercial banks need to deploy and implement this lending model Secondly, the bank strengthens the application of technology in management tools and translation products Thirdly, improving the capacity and knowledge of officials for the credit in the pangasius value chain Fourthly, completing the legal framework related to the credit in the value chain and the pangasius industry Fifthly, there should be close links between banks for government agencies, associations and cooperatives Sixthly, determining the lending in the agricultural and rural sector is the bank's responsibility in the process of modernizing rural agriculture of Vietnam reducing poverty and creating jobs for people 31 4.2 SOLUTIONS FOR BANK CREDIT DEVELOPMENT IN VALUE CHAIN FOR VIETNAMESE PANGASIUS INDUSTRY IN COMMERCIAL BANKS 4.2.1 Solutions for building credit policies in the value chain for pangasius industry in commercial banks Credit policy is the viewpoint, direction and way to make a general credit decision of a commercial bank This is the foundation for individuals and units in commercial bank to capture and implement the credit work in accordance with the strategy, scale and risk appetite of commercial bank Therefore, a strong and consistent credit policy is essential for the commercial bank The credit strategy of commercial bank is built based on the orientation of the State and the development objectives of the commercial bank 4.2.2 Solutions for growth of the number of customers On the one hand, the bank needs to have a policy of linking with the supporting units of pangasius value chain in the process of implementing this credit model On the other hand, the commercial bank needs to strengthen the credit promotion in the value chain for the customers 4.2.3 Solutions for cross-selling products Request for opening a non-term account, payment account is a mandatory requirement for borrowers In order to facilitate withdrawal, the bank can encourage the customers to issue ATM cards for themselves and their families and friends, etc Consumer lending, opening credit cards for employees at companies in the value chain, and paying bank payrolls are credit products that can be cross-deployed It is necessary to force the customers to buy loan insurance, credit security plan is essential With the bank, this helps to reduce the credit risks, especially in unsecured loans For companies exporting and distributing finished pangasius products to foreign countries, for convenience of monitoring, the bank needs to force the customers to use international payment products such as L / C, vouchers, receiving money from abroad, remittances 4.2.4 Solutions for credit risk management For the new lending model, the bank's risk management needs to be implemented more closely through the following methods: Conducting the research and analysis of pangasius consumption to make plan of credit issuance for this lending model; Researching, monitoring and regularly evaluating the impact of factors inside and outside 32 the pangasius value chain; Strengthening the contingent of officials working in the credit work; Enhancing post-lending inspection of pangasius value chain; Controling and standardizing input data of the customer information, collateral information, relevant information on the credit rating system; Developing a schedule for disbursement for farmer households through a focal point enterprise 4.2.5 Solutions for selection and coordination with the representative entity in the pangasius value chain The bank needs to closely and carefully select the focal point unit in the chain Some suggestions on the solutions are as follows: Selecting the unit at the phase of procurement function; The representative entity must be a prestigious unit in the chain; Production and business activities of entity units are effective; Actively coordinating with the banks to provide operational information in the value chain, support the bank in finding other customers to join the chain; Having ability to predict fluctuations in pangasius prices in domestic and internation countries 4.2.6 Solution for capacity of officials The capacity of officials - individuals having direct transaction with the customers is a major factor affecting the credit deployment in the pangasius value chain The work of improving knowledge for bank officials is done through the following methods: onsite training, organizing the coach, organizing the train, organizing cross-training and checking, etc Managing many borrowers in rural areas also affects the concentration of officials in monitoring, appraisal and post-lending inspection of the customers The commercial bank should have regulations requiring the maximum number of customers, which an official in charge to ensure the quality of the work 4.2.7 Solutions for support of pangasius industry value chain The bank cooperates with agencies of sectors, research institutes, associations, etc It is necessary to propagate deeply and extensively to factors in the chain, especially those of households and individual facilities understanding the roles and benefits of participating in the value chain and brand development In order to strengthen the link of factors in the value chain, the bank cooperates with the focal point unit to promote the sharing of production experiences The scope of this link does not stop at an economic organization but it should expand into a regional link 33 4.3 SOME RECOMMENDATIONS 4.3.1 Recommendations to the State - Promulgating the regulations on the implementation of sales contracts for agricultural product, including clearly stating the sanctions with participants - Regulating the insurance in production and farming of pangasius industry - Implementing land law amendments towards the recognition of assets formed on land in agricultural production - Building material facilities, creating favorable conditions for operation in the pangasius value chain - Completing the planning of pangasius farming and processing areas - Implementing the regulations on food safety and accessing to international certificate system - Encouraging the commercial bank to develop the credit in the pangasius value chain - Promulgating mechanisms for monitoring the export pangasius prices - Strengthening the role of the People's Committee, relevant departments, divisions and sectors in the locality where the credit is deployed in the value chain of pangasius industry 4.3.2 Recommendations to the State Bank - Promulgating mechanisms and regulations to guide the commercial bank in deploying the credit in the pangasius value chain - Promulgating the policies to encourage the commercial bank to deploy the credit in the pangasius value chain - Promulgating specific procedures for lending activities in the value chain - Promulgating a special support mechanism for the customers participating in the credit in the pangasius value chain ‘ 34 CONCLUSION After years of implementation, it can be seen that the credit in the pangasius value chain has an initial foundation in transforming from idea to pilot program and putting into practice However, the credit balance of this lending model is not commensurate with the scale and potential of the pangasius industry While deploying, the bank has had difficulty for finding the customers because the customers have not had much knowledge about chain finance and they are familiar with the traditional credit model At the same time, the difficulties in the legality of collateral, a lack of commercial arbitration in dealing with sales contracts not complied with by parties, agricultural insurance issues, specific guidelines from the State Bank are great difficulties making the bank shy for continuing to implement the credit in the pangasius value chain To overcome this, there should be the participation of all levels of authorities from the central to local levels, the coordination of the pangasius industry associations and from universities and research institutes Thence, the bank's investment credit capital into the value chain of the pangasius industry has been highly effective Implementing the objectives, contents, scope of the study, the thesis has completed the following main issues: - Systematizing reasoning realted to the credit in the pangasius value chain - Implementing statistics of relevant policies and legal documents - Identifying the factors affecting the credit deployment in the value chain of the pangasius industry, in particular, the group of tangible factors and benefits have a great impact on the development ability of the lending model - After providing the credit development orientation in the Vietnamese pangasius value chain, the author has proposed a group of solutions for the commercial bank and recomemdations to the ministries, divisions, sectors and the State Bank 35 LIST OF THE AUTHOR'S PUBLICATIONS IN ASSOCIATION WITH THE DISSERTATION [1] Le Van Luyen and Dang Hoai Linh, 2015, “Solutions to develop bank lending services for Vietnam coffee value chain”, Banking Science and Training Review (7/2015) [2] Dang Hoai Linh and Dam Nguyen Anh Khoa, 2015, “Bank credit for coffee replanting in The Tay Nguyen”, Banking Science and Training Review (12/2015) [3] Dang Hoai Linh, 2016, “Solutions to develop bank lending services for clean agriculture in Vietnam”, The State level Science Seminar “Research policies and credit solutions for rural households in new rural construction ” , (12/2016), publication number 39585/QĐXB/NXBDT [4] Member of Ministerial level research project of State Bank of Vietnam: “Developing bank credit for agriculture in Vietnam” ... two forms of credit financing: - Credit financing from within the value chain: This is a form of financing between an entity in the value chain together - Credit financing outside the value chain: ... pangasius industry CHAPTER 4: SOLUTIONS FOR DEVELOPMENT OF BANK CREDIT IN VALUE CHAIN FOR VIETNAMESE PANGASIUS INDUSTRY 4.1 ORIENTATION OF BANK CREDIT DEVELOPMENT IN VALUE CHAIN FOR VIETNAMESE PANGASIUS. .. qualifications 1.2 BANK FINANCING FOR THE AGRICULTURAL VALUE CHAIN 1.2.1 The definition of bank financing and bank financing for the agricultural value chain 1.2.1.1 Bank financing Financing is a mutual loan