Hệ thống cảnh báo sớm rủi ro tín dụng tại các ngân hàng thương mại việt nam tt tieng anh

MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM BANKING ACADEMY DO THI THU HA EARLY WARNNING SYSTEM OF CREDIT RISK IN VIETNAMESE COMMERCIAL BANKS ECONOMICS PHILOSOPHY DOCTOR THESIS HA NOI - 2020 THIS THESIS IS MADE AT BANKING ACADEMY Professional Adviser: Associate Professor, PHD DO THI KIM HAO PHD NGUYEN DANH LƯƠNG EARLY WARNNING SYSTEM OF CREDIT RISK IN VIETNAMESE COMMERCIAL BANKS Critic 1: Critic 2: Critic 3: This Thesis will be presented to the Thesis Committee at Banking Academy at …., the … day … year 2020 INTRODUCTION THE URGENCY OF THE SUBJECT Credit risk is one of the main risks, having a strong impact on the business operations of commercial banks The bank's credit risk management system is responsible for ensuring the bank always controls risk at a reasonable level (the level of risk the bank can accept) following its size, calculation, quality of the bank, the bank's credit business, and the highest profit To achieve that goal, the construction of a credit risk early warning system is of great significance in post-landing surveillance Theoretical and practical studies show that many banks around the world a good job of early warning of credit risks and building an effective credit risk early warning system to detect credit risks early, loans have a high potential for early risk prevention and mitigation The current situation of credit risk management at commercial banks in Vietnam today is mostly focused on credit risk management but has not paid adequate attention to the prevention of credit risks, especially credit supervision after lending to detect credit risks early to take appropriate measures Precautions to be taken to minimize possible credit losses and risks Due to the limited credit risk warning, credit risk is usually only detected when overdue loans and bad debts make Credit risk management measures are not as effective as expected Many commercial banks have not built up credit risk early warning systems During the period of restructuring and efforts to meet safety standards following international practices, to improve the operational efficiency as well as the position of Vietnamese commercial banks in the region and the world, the construction Credit risk early warning system plays a vital role in the operation of Vietnamese commercial banks Therefore, the study: "Early warnning system of credit risk in Vietnamese commercial banks" is urgent in both theoretical and practical aspects OVERVIEW The problem of early warning of credit risk at commercial banks has had many domestic and international works and topics in the form of research articles in magazines, dissertations, In the study of the Slovenian lineage (2015), Mahen Priyanka Peiris (2016) introduces the concept of credit risk early warning system While Accenture (2014) McKinsey (2012) agrees on the important role of this system in risk management Besides, according to Yidan Luo (2013) and M Yaghini, T Zhiyan, and M Fallahi (2011), the risk early warning system also aims to provide specific guidance on the principles of public responsibility, building a system of indicators for early warning of credit risk with borrowers, Typical credit risk measurement and forecasting models have differentiated analysis models to measure and forecast the default and early warning of credit risk for typical science and technology such as Awh & Waters (1974), Grablowsky (1975), Wiginton (1980), Beaver (1966), and Altman (1968), Ohlson (1980) was the first to apply logistic regression analysis (Logit) to predict risks and He affirmed that this method is more preeminent and less restrictive than the MDA method He has successfully built a logit risk prediction model with predictor variables After that, many other studies also used his method in place of MDA such as (Zavgren 1983; Altman and Sabato 2007; Altman, Sabato and Wilson 2008) In Vietnam, several studies are applying quantitative models to customer ratings or credit scores such as Nguyen Truong Sinh (2009), Vuong Quan Hoang, Dao Gia Hung, Nguyen Van Huu, Tran Minh Ngoc, and Le Hong Phuong (2006) However, the practical application of credit risk early warning tools is not complete and most administrators choose the Alman model or the logit model to build the customer signal rating system to evaluate customers before lending, but little attention to assessing customers after lending to detect credit risk early and propose appropriate measures RESEARCH GAPS Credit risk early warning is a problem that many scientists and banks around the world are interested in researching Many commercial banks in Vietnam have been building and operating this system, but there is not yet a comprehensive scientific study on the credit risk early warning system at commercial banks in Vietnam However, studies published in Vietnam only focus on liquidity risk management in general and measures to prevent and deal with bad debts, in which early warning of credit risks is considered to be the legal importance solution However, there has not been any in-depth study on the current status of the credit risk early warning system and measures to complete the credit risk early warning system at commercial banks in Vietnam That is the gap the author headed for in this study RESEARCH OBJECTIVES AND QUESTIONS Overall objectives: The overall goal is to study the theory and practice of the credit risk early warning system at Vietnamese commercial banks to provide solutions and recommendations to complete the credit risk early warning system at commercial banks in Vietnam Detail goal: - Systematize the theoretical basis of credit risk early warning system at commercial banks - Assess the current status of credit risk early warning system at commercial banks in Vietnam - Apply the quantitative model in early warning of credit risk at commercial banks in Vietnam - Develop and propose solutions to complete the credit risk early warning system at commercial banks in Vietnam Research question (i) Current situation of credit risk early warning system in Vietnamese commercial banks? (ii) What has been the success of the credit risk early warning system of Vietnamese commercial banks? What limitations still exist? (iii) Ability to apply the quantitative model in credit risk early warning system in Vietnamese commercial banks? (iv) What are the solutions to complete the credit risk early warning system at commercial banks in Vietnam? SUBJECTS AND SCOPE OF RESEARCH 5.1 Research subjects The research object of the thesis is the credit risk early warning system at commercial banks 5.2 Research scope - Space scope: Early warning system and credit risk early warning for customers who borrow money at commercial banks in Vietnam - Scope of time: 2008-2018 period RESEARCH DESIGN 6.1 Analytical framework Research on the theoretical basis of the credit risk early warning system includes The purpose and principles of the credit risk early warning system; The structure of the credit risk early warning system, the process of building a credit risk early warning system, and the real conditions for building and implementing the credit risk early warning system From the theoretical basis, the study analyzed the current situation of the credit risk early warning system in Vietnamese commercial banks and applied the quantitative model in credit risk early warning at Vietnamese commercial banks, thereby proposing solutions for solutions and proposals to complete the credit risk early warning system at commercial banks in Vietnam NEW CONTRIBUTIONS OF THE THESIS 7.1 Theoretical contribution The study systematized the theoretical basis of credit risk early warning systems at commercial banks Which research has fully codified the theoretical basis of the credit risk early warning systems for customers who borrowed money from commercial banks? This study has synthesized and systematized the full theoretical basis of the concept, principles, purpose, structure, construction process, and the conditions for implementing the early warning system at commercial banks in general 7.2 Practical contribution The study has made a detailed assessment of the current status of the credit risk early warning system at commercial banks in Vietnam The study has built up a quantitative model for early warning of credit risk based on the actual data on credit at commercial banks in Vietnam Based on the combination of theory and practice, the research has given solutions and recommendations to improve the credit risk early warning system at commercial banks in Vietnam The results of the study are highly applicable to building credit risk early warning models at commercial banks in Vietnam The study has proposed a set of credit risk early warning indicators with relevant groups of customers, which can be the basis for Vietnamese commercial banks to complete the credit risk early warning system for this object at their banks 7.3 Contribution to method The research has used a variety of research methods such as using questionnaires, consulting experts, and building quantitative research models: differential analysis (LDA) and Logit The collection of data directly at Vietnamese commercial banks helps the study to have a unique set of data, so the result of the model is a new contribution THESIS CONCLUSION In addition to the introduction, conclusion, and references, the thesis includes chapters: Chapter 1: Theoretical basis of credit risk early warning system at commercial banks Chapter 2: Current status of credit risk early warning system in commercial banks in Vietnam Chapter 3: Applying the quantitative model in credit risk early warning system at commercial banks in Vietnam Chapter 4: Solution to complete the credit risk early warning system at commercial banks in Vietnam CHAPTER THEORETICAL BACKGROUND ON CREDIT EARLY ALARM SYSTEM IN COMMERCIAL BANK 1.1 Overview of credit risk management and credit risk early warning system at commercial banks 1.1.1 Overview of credit risk management According to research by Accenture (2014), the model of risk management includes risk prevention and risk treatment Source: Accenture (2014) Figure 1.1: Risk Management Model 1.1.2 An overview of the credit risk early warning system 1.1.2.1 The concept of early warning system for credit risks As defined by the bank Slovenia (2015), the early warning system for credit risk is understood as: “The system aims to early warning the increase of credit risk, the early warning system of credit risk also has the purpose to take effective and timely actions to combat the transition to the insolvency of borrowers ” 1.1.2.2 The purpose of the credit risk early warning system Firstly, providing tools to support early detection, control, and early warning of credit risk at commercial banks This system works to identify and early detect potential liabilities of borrowers at commercial banks Second, evaluate the customer after credit extension, classify the loan portfolio to provide timely measures to reduce the higher ratio of transferring the debt group Third, this system aims to support business units at commercial banks to improve debt quality control through regular assessment and management of the postloan portfolio such as: finding out, discovering, and evaluating The event harms the business performance of the Customer Fourthly, to guide the order, implementation procedures, and responsibilities of the departments involved in identifying, evaluating, monitoring, and dealing with customers with higher signs of debt group conversion At the same time, the system also aims to monitor and warn the compliance of business units in the implementation of post-loan checks 1.1.2.3 Principle of operation of the credit risk early warning system (i) Relevant units must update fully, accurately, and on time according to the post-loan check results in the credit risk early warning system (ii) Early warning of credit risk must ensure objectivity and independence (iii) The early warning of credit risk must be organized and periodically evaluated according to the frequency of post-loan checking of customers or unexpectedly (iv) Early warning of credit risk must be implemented in a uniform manner (v) Abnormal signs for the customer in the early warning process must be promptly reported to the credit approval level 1.2 Structure of credit risk early warning system 1.2.1 Input database for the credit risk early warning system Source: Accenture (2014) Figure 1.2: Input database for the credit risk early warning system 1.2.2 The system of indicators and early warning thresholds for credit risks 1.2.2.1 Criteria and early warning threshold system for credit risks for individual customers 1.2.2.2 Criteria and early warning threshold system for credit risks for corporate customers 1.2.3 Measuring credit risk 1.2.3.1 Qualitative method The most common credit risk early warning method is the expert approach This is a method of collecting and processing predictive assessments by gathering and consulting excellent experts in a narrow field of science (Wang, 2013; Li, 2015) 1.2.3.2 Quantitative method Statistical method is one of the correct research methods Statistical method is a process, including statistical survey, generalization of information (also called statistical synthesis), analysis and prediction This is the process of mathematical modeling of problems to be analyzed according to the goal of the study Depending on the statistical method used in the early risk warning, we can approach the following statistical models: - Discriminant Analysis (DA) model; - Logit and Probit regression models; - Neutral network; - The closest neighbor method K; - Genetic Algorithm; - Classification Tree Analysis In which technical analysis and logit regression are the most widely used methods 1.2.3.3 Combination method 1.2.4 Assessment and risk classification of loans After using an appropriate set of risk early warning indicators and credit risk measurement methods to assess the risk level of each client, the risk early warning system will classify clients into different levels of risk, usually denoted by green, yellow, and red 10 - Green warning area: Customer has a low level of risk - Yellow warning area: Customer has an average level of risk - Red warning zone: High-risk customers 1.2.5 Behavior for risky loans In the book "Credit Risk Management" by Ken Brown (2014), the solutions for handling risky loans after credit risk early warning are Additional lending, debt structure, Collateral liquidation, use of derivative tools, debt sale, corporate liquidation, lawsuit Each of the selected measures will depend on analyzing the actual situation of each case such as: Can customers save the repayment situation or not? Cash flow status of the customer like? Is the company leader qualified or not? 1.3 The process of building an early warning system for credit risks According to research by Accenture (2014), the credit risk early warning system of commercial banks should be built in five steps as follows: Source: Accenture (2014) 1.4 Conditions for building and implementing an early credit risk warning system 1.4.1 Legal basis and organization 1.4.2 Information technology system and infrastructure conditions 1.4.3 Resource conditions 1.5 International experience in developing and implementing an early credit risk warning system and lessons for commercial banks in Vietnam 1.5.1 Experience of American Commercial Banks Firstly, identifying the right purpose and the importance of credit risk early warning systems at commercial banks is extremely important Second, commercial banks need to regularly optimize and upgrade credit risk monitoring and early warning activities Third, according to the experience of US commercial banks, factors divided into groups will determine an effective credit risk monitoring and warning system 11 Fourth, Customer management in the warning list is the core issue that determines the effectiveness of the credit risk early warning system 1.5.2 Experience of Czech Commercial Banks Firstly, the Czech commercial banks focused on building a comprehensive internal credit risk control and early warning system Secondly, in the process of handling risks, Czech commercial banks focus on building strategies on different customer segments 1.5.3 Lessons for commercial banks in Vietnam First, the purpose of the risk early warning system must be properly defined to establish appropriate qualitative and quantitative early warning indicators of the threat of an increase in the risk of hazards Second, qualitative and quantitative credit risk early warning indicators should be researched and properly built into the credit risk early warning system at each bank Third, according to the experience of US and Czech commercial banks, the organizational system of credit risk early warning system and assignment of responsibilities is very important in the early warning of credit risk Fourth, the selection of a suitable risk measurement method to apply effectively in the risk early warning system is an important determinant of the effectiveness of the risk early warning system 12 CHAPTER SITUATION OF CREDIT RISK WARNING SYSTEM AT VIETNAM COMMERCIAL BANKS 2.1 Overview of Credit risk and credit risk management at Vietnamese commercial banks 2.1.1 Overview of credit risks at Vietnamese commercial banks lệ nợ xấu NonTỷ Perfoming Loan 5.00% 4.08% 4.00% 3.00% 2.17% 2.00% 3.07% 3.30% 3.61% 3.25% 2.55% 2.20% 2.46% 2.08% 1.99% 1.00% 0.00% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 TỷNon lệ nợPerfoming xấu loan rate Source: Annual report of State Bank of Vietnam Chart 2.1: Non Performing Loan/Total Loan of Vietnamese Commercial Banks 2.1.2 Overview of credit risk management at Vietnamese commercial banks In recent years, the State Bank has issued many regulations and guidelines on credit risk management of commercial banks To meet the requirements of the management, many commercial banks in Vietnam have invested heavily to upgrade technical facilities and database quality, of which two banks, Vietinbank and Vietcombank, announced the construction of the credit risk early warning system was successful, but this system has not been implemented in all commercial banks, and the level of implementation is uneven and limited 2.1.3 An overview of the credit risk early warning system at Vietnamese commercial banks As of December 31, 2018, the Vietnam commercial banking system had 35 commercial banks, including state-owned commercial banks (3 banks were acquired 13 by the state at the price of VND and Agribank); 31 Joint Stock Commercial Banks According to the development level of the credit risk early warning system by the end of 2018, the commercial banking system can be divided into groups: (1) The group announced the completion of the construction and application of the credit risk early warning system; (2) The group has completed apart and is continuing to implement to improve this system; (3) The group has not yet implemented the credit risk early warning system (details Appendix 04) 2.2 Current status of the credit risk early warning system at Vietnamese commercial banks 2.2.1 Structure of the early warning system of credit risks 2.2.1.1 Status of input data of the credit risk early warning system The database used at commercial banks in Vietnam is mainly financial information and financial fee information of borrowers, very few banks use other macro information Methods of gathering information are mainly manual or semiautomatic 2.2.1.2 Current status of the credit risk early warning indicator system The survey results of the early indicator system at commercial banks in Vietnam showed that: the credit risk early warning indicator system was divided by commercial banks by the group of scientists, the most popular being by the group of science and technology, and the enterprise customer Depending on the characteristics of each bank's operations, business strategies, and target customers, the credit risk early warning indicator system of corporate customers is further subdivided according to customer size For example, Vietinbank has an early warning indicator of credit risk for vocational customers and SME customers; while VPBank has built a system of warning indicators for SME customers, SME customers, and microenterprise customers; Pvcombank only has early warning indicators for credit risk common for all types of corporate customers Vietnamese commercial banks have only focused on building credit risk early warning indicators systems with customers, individual loans, no credit risk early warning indicator system with related customer groups 14 Besides, for customers in each different business sector, there are also separate warning indicators, especially specific customers 2.2.1.3 The status of credit risk measurement methods Up to now, according to the survey results, two banks have announced the completion of credit risk early warning systems, namely Vietinbank and Vietcombank Survey results show that these two banks use credit risk measurement methods using a combination of both qualitative and quantitative methods Most of the remaining commercial banks have been building an internal credit rating system as a basis for the classification of customers as well as the assessment of credit risk The internal credit rating system is considered as one of the most basic bases for the bank to calculate the risk measures of PD, LGD for each customer, thereby calculating the parameters EL, UL, and VaR Credit However, most commercial banks have only initially applied the internal credit rating system to classify and make credit decisions with borrowers, but have not yet exploited this system to quantify risks 2.2.1.4 Current situation of implementing credit risk early warning system at commercial banks in Vietnam The survey results were performed on 392 credit risk management officers at Vietnamese commercial banks to evaluate the credit risk early warning system at their working banks as follows: Table 2.10: Evaluation about Early warning system of credit risk at Vietnamese Commercial banks Evaluation about Early warning system of credit risk at Vietnamese Sample Mean Commercial banks (Min - Max 5) Question The reasonableness of appying early warning system of credit 392 3.10 II.7 risk Question The need of appying early warning system of credit risk 392 3.82 Question Do you think the methodology of measuring the risks at your 392 3.54 II.9 bank will change in the next two years? II.8 15 Source: Survey results of the author Table 2.11: evaluating of compliance and transparency when implementing the early warning system of credit risk Compliance and transparency when implementing the early warning system of credit risk Mean Sample (Min - Max 5) Question IV.14 Implementing early warning of credit risk, banks need to 392 3.47 392 3.45 392 3.52 392 3.50 make more reports to the State Bank Question IV.15 All input information on the credit risk early warning system is available on the customer information system Question IV.16 When the deadline for submitting the report is over, the State Bank will remind or sanction Question IV.17 The State Bank periodically organizes training courses on credit risk early warning Nguồn: Kết khảo sát tác giả Table 2.12: compliance and full responsibility of related units implementing the credit risk early warning system Compliance and full responsibility of related units implementing the credit risk early warning system (Min - Max 5) N Mean (Mẫu) (Điểm TB) Question IV.18a Compliance level of the credit monitoring bureau 392 3.65 Question IV.18b Compliance of business units 392 3.42 Question IV.18c Compliance level of debt management center, debt 392 3.84 392 3.55 collection, debt structure department Question IV.18d the level of compliance with the full responsibility of the information technology sector Source: Survey results of the author 2.2.1.5 Current behavior of measures for the loans in the early warning list 16 In the research process of internal regulations of some Vietnamese commercial banks on credit risk early warning system, the researcher found that Vietnamese commercial banks are applying some basic measures to clients in the Risk warning books are as follows: (i) Transfer to early debt collection (ii) Stop disbursement and collect a debt when it is due (iii) Maintaining the credit limit for months, then reassessment (iv) Early debt structure (v) Additional management measures for customers with early warning signs of credit risks 2.2.2 Current status of conditions for building and implementing credit risk early warning system Table 2.13: Favorable conditions when implementing the credit risk early warning system Favorable conditions when implementing the credit risk early warning system (Min - Max 5) Question III.11.a Clear legal framework from Sample Mean 392 3.42 392 3.54 392 3.52 392 3.45 Government to Ministries Question III.11.b Get support from SBV and international organizations Question III.11.c Get support from shareholders / Board of Directors Question III.11.d Investment cost at the moment is low Source: Survey results of the author 17 Table 2.14: Benefits of banks when implementing credit risk early warning systems N Benefits of banks when implementing credit risk early warning systems (Min - Max 5) (Mẫu ) Mea n (Điể m TB) Question III.19.a Ensuring capital safety against risks 392 3.70 Question III.19.b Increase profits 392 3.5 Question III.19.c More efficient rating and pricing system 392 3.75 Question III.19.d Improve reputation, thereby increasing 392 3.44 392 3.72 competitiveness Question III.19.e Integration according to international standards Source: Survey results of the author Table 2.15: Unfavorable conditions when implementing a credit risk early warning system Unfavorable conditions when implementing a credit risk early warning system (Min - Max 5) Question III.13.a Initial investment costs and operating costs are N (Mẫ u) 392 Mea n (Điể m TB) 3.46 high Question III.13.b Lack of historical data for risk measurement 392 3.73 392 3.44 392 3.58 392 3.47 392 3.72 methods Question III.13.c Lack of professional credit rating agencies to reference results Question III.13.d Lack of knowledgeable personnel to build and operate Basel II Question III.13.e Lack of business capital due to high rate of provisioning Question III.13.f Reduce competitiveness / Reduce profits Nguồn: Kết khảo sát tác giả 18 2.3 General assessment of credit risk early warning system at commercial banks in Vietnam 2.3.1 Result Firstly, most commercial banks in Vietnam have been aware of the importance of credit risk quantification and early warning of credit risk Second, the current commercial banks have also tried many efforts in technology application Third, some commercial banks have built a fairly elaborate and complete set of early warning indicators that are considered to have a certain level of relevance to each object and target customer segment of their bank Fourthly, several commercial banks have developed a detailed early warning process for each customer 2.3.2 Limitations and the cause of the restriction First, the method of early warning of the credit risk of Vietnamese commercial banks is mainly qualitative rather than quantitative Second, the function of making early warning according to its nature is almost impossible for Vietnamese commercial banks The credit risk early warning system usually only gives a list of warning customers after the customer has jumped the debt group (late repayment of principal interest), but has not detected the early warning signs of credit risk to take preventive measures Third, most of the credit risk early warning systems of Vietnamese commercial banks are based on the advice of foreign experts Fourth, the set of early warning indicators of commercial banks is not much different, proving that commercial banks have not clearly defined their target customer segments and their risk appetite compared to other commercial banks Fifth, for commercial banks that have completed building an early warning system, the issue of regular information updates is left open 19 CHAPTER APPLICATION OF THE QUANTITATIVE MODEL IN THE EARLY RISK ALARM SYSTEM IN VIET NA M COMMERCIAL BANK 3.1 Apply a quantitative model to credit risk early warning systems with science and technology at commercial banks in Vietnam 3.1.1 Model methodology 3.1.1.1 Research model and hypothesis 3.1.1.2 Data collection 3.1.2 Model results 3.1.2.1 Descriptive Statistics 3.1.2.2 Standard distribution test, correlation matrix analysis between independent variables 3.1.2.3 Distinguishing function results The focus group is the average of the Z-values calculated by the model estimate, which can be used to assess the expected location of the consumer credit customer (Uddin, 2013) As can be seen in Table 10, the focus of the bad borrower is 1,380 and the focus for the regular group is 0.671 Therefore, if the customer's estimated Z value is negative, then the customer's expected state is insolvency because the centroid value is negative for the default group and if the estimated value of the case is If the value is positive, then the customer's expected position is good since the central value is positive for the solvency group The classification matrix of the original sample (Table 2.12) shows that 81.5% of the cases are predicted correctly by the model 3.2 Applying a quantitative model to early credit risk warning system for corporate customers at commercial banks in Vietnam 3.2.1 Model methodology 3.2.1.1 Research model and hypothesis 3.2.1.2 Data collection 3.2.2 Model results 3.2.2.1 Descriptive Statistics 20 3.2.2.2 Multicollinearity test 3.2.2.3 Multivariate Logistic Regression From the distribution graph, the author noticed that the Pi values were distributed unevenly, so the author did not build the credit risk rankings according to the equally spaced debt repayment capacity, but proposed a suitable classification table The distribution properties are as follows: 21 CHAPTER SOLUTIONS TO COMPLETE EARLY RISK WARNING SYSTEM IN VIETNAM COMMERCIAL BANKING 4.1 Orientation on credit risk management and early warning of credit risks at commercial banks in Vietnam 4.1.1 Domestic and international contexts affecting credit risk management and early warning of credit risks at Vietnamese commercial banks 4.1.1.1 International context 4.1.1.2 Domestic Context 4.2 Solution to complete the early credit risk warning system at Vietnamese commercial banks 4.2.1 Solutions for completing the structure of the credit risk early warning system 4.2.1.1 Complete the input database for the credit risk early warning system Vietnamese commercial banks need to perfect their internal credit rating system and an early warning indicator system for credit risk It is necessary to add a database related to macro factors such as GDP, Inflation to the input database of the credit risk early warning system To this well, the database system of the risk risk early warning system needs to be linked with the national macro database system to regularly and continuously update the latest changes macro factors There is a data filtering and analysis department to meet requirements for completeness, accuracy, and reliability of data sources Vietnamese commercial banks need to step by step to automate the collection and update of input data of credit risk early warning systems 4.2.1.2 Complete the early warning system of credit risks The system of credit risk early warning indicators for each customer group, each customer segment should be further built and completed by commercial banks The risk of early warning indicators should cover the main causes of default for corporate customers In addition to the individual credit risk early warning indicators for each customer group, commercial banks also need to develop a set of credit risk early warning indicators for relevant customer groups 4.2.1.3 Perfecting the early measurement method of credit risk 22 4.2.2 Group of solutions for the completion of conditions 4.2.2.1 Completion of legal conditions and organizational structure Specific regulations on the development of a credit risk early warning system should be developed and issued Documentation of regulations, regulations, specific implementation guidance procedures to relevant departments to synchronously and effectively perform credit risk early warning Commercial banks need to quickly improve their organizational structure in risk management in the banking business in particular and in general credit risk management It is necessary to have a specialized department in charge of risk early warning in the organizational structure of the risk management department 4.2.2.2 Complete the information system and infrastructure 4.2.2.3 Completing human resource conditions Vietnamese commercial banks need to focus on fostering and improving human resources to be able to proactively implement the construction and deployment of credit risk early warning systems suitable for their banks Building an effective high-quality human resource management system 4.3 Some recommendations to the State Bank and regulatory agencies 23 THE AUTHOR'S PUBLISHED SCIENTIFIC WORKS RELATED TO THE THESIS Do Thi Thu Ha & Nguyen Thi Minh Nguyet (2013), “The ability to handle bad debts of Vietnamese commercial banks nowadays”, Journal of Economic Management, No 52, page 70-80 Do Thi Thu Ha & Pham Thu Thuy (2013), 'Building credit risk measurement models according to statistical methods at Vietnamese commercial banks', Journal of Banking Science and Training, No 135, page 46- 53 Do Thi Thu Ha & Nguyen Thi Quynh Huong (2013), „The role of internal audit in risk management‟, Journal of audit science, No 69, page 38-47 Do Thi Thu Ha & Nguyen Thi Quynh Huong (2013), 'Ethical Risks - Issues to be Solved in Vietnam Commercial Banking', Journal of Auditing Science, No 72, page 29- 31 Do Thi Thu Ha, Nguyen Thuy Duong & Nguyen Bich Ngoc (2017), „The application of Discriminant in Managing Credit Risk for Consumer Loan in Vietnamese Commercial Bank‟, Asian Social Science, episode 13, volume 2, page 176-187 Do Thi Thu Ha (2019), „Early warning of credit risks for credit granted to customers and related persons of commercial banks in Vietnam, Journal of Banking Science & Training‟ No 208, page 24-32 Do Thi Thu Ha, Nguyen Thuy Duong & Nguyen Bich Ngoc (2019), 'Early Warning System for Credit Risk by statistic method for Consumer Loans in Vietnamese Commercial Banks', The 1st International Conference on Financial Banking, page 296-398 To Ngoc Hung et al (2014), 'Promoting credit growth in the context of economic recession', a scientific research project between Banking Academy and Bank for Investment and Development of Vietnam (BIDV)  ... before lending, but little attention to assessing customers after lending to detect credit risk early and propose appropriate measures RESEARCH GAPS Credit risk early warning is a problem that many... THESIS IS MADE AT BANKING ACADEMY Professional Adviser: Associate Professor, PHD DO THI KIM HAO PHD NGUYEN DANH LƯƠNG EARLY WARNNING SYSTEM OF CREDIT RISK IN VIETNAMESE COMMERCIAL BANKS Critic 1:... system in Vietnamese commercial banks and applied the quantitative model in credit risk early warning at Vietnamese commercial banks, thereby proposing solutions for solutions and proposals to