Determinants of consumer loan repayment performance of customers in Vietnam prosperity banks Huynh Tan Phat Branch: Khóa luận tốt nghiệp Đại học / Nguyen Thi Thu Uyen

MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM

BANKING UNIVERSITY HO CHI MINH CITY

NGUYEN THI THU UYEN

DETERMINANTS OF CONSUMER LOAN

REPAYMENT PERFORMANCE OF CUSTOMERS IN

VIETNAM PROSPERITY BANK HUYNH TAN PHAT BRANCH

MAJOR: FINANCING AND BANKING

MAJOR NUMBER: 7340201

GRADUATION THESIS

HO CHI MINH - 2018

MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM

BANKING UNIVERSITY HO CHI MINH CITY

NGUYEN THI THU UYEN

DETERMINANTS OF CONSUMER LOAN

REPAYMENT PERFORMANCE OF CUSTOMERS IN

VIETNAM PROSPERITY BANK HUYNH TAN PHAT BRANCH

MAJOR: FINANCING AND BANKING

MAJOR NUMBER: 7340201

GRADUATION THESIS

SUPERVISOR: Assoc. Prof. PhD. HA THI THIEU DAO

HO CHI MINH - 2018

i

DECLARATION OF AUTHENCITY

Full name: Nguyen Thi Thu Uyen

Student class: HQ02-GE01, faculty of Banking and Finance, Banking University of Ho

Chi Minh city.

Student code: 030630140790

I declare that this thesis has been composed solely by myself and that it has not been

submitted, in whole or in part, in any previous application for a degree. Except where

states otherwise by reference or acknowledgment, the work presented is entirely my

own.

Ho Chi Minh City, May 29th 2018

Author

Nguyen Thi Thu Uyen

ii

ACKNOWLEDGEMENTS

First of all, I would like to thank all lecturers at Banking University of HCMC. Your

enthusiastic and devoted instruction helped me to improve my logical thinking ability

and knowledge.

In addition, I would like to thank Ms.Ha Thi Thieu Dao who enthusiastically instructed

and encouraged me to complete this graduation thesis.

However, due to limited knowledge and practical experience and limited research time,

the study cannot avoid certain shortcomings. The author wishes to receive the

comments of members in the committee to complete the thesis.

Ho Chi Minh City, May 29th 2018

Author

Nguyen Thi Thu Uyen

iii

ABSTRACT

Author UYEN, Thu Thi NGUYEN

Title Determinants of consumer loan repayment performance in

VPBank Huynh Tan Phat Branch

Language English

Instructor DAO, Thieu Thi HA

Banking credit plays a very important role in the economy of every country in the

world and is especially important for countries with underdeveloped financial markets

like Vietnam because it is a main source of funding for not only businesses but also

personal customers. In the process of international integration, competition among

commercial banks will make the banking system more efficient and effective.

However, this also makes banks tend to loosen their credit policies, lowering lending

conditions, resulting in evaluating incorrectly customers‟ repayment probability,

particularly in the consumer loan segment. Minimizing customers to incur an overdue

debt or even loss of solvency is always a challenge which requires commercial banks

need to pay attention and also find solutions to apply to the management. This thesis

examines determinants of consumer loan repayment performance of customers in

Vietnam Prosperity Bank Huynh Tan Phat Branch. Quantitative approaches are

applied, in which Logit model is employed to investigate probability of consumer loan

be repaid. The results express that the factors including career characteristics, income,

ratio of collateral on loan size, the number of dependent people, credit history as well

as purpose of taking loan will affect the probability of consumer customers‟ loan

repayment in the bank. A number of recommendations are introduced to promote the

repayment performance of these borrowers.

Key words: Consumer loans, Consumer customers, Logistics model, Probability of

repayment, VPBank Huynh Tan Phat.

iv

TABLE OF CONTENTS

LIST OF TABLE AND FIGURES ..........................................................................vii

LIST OF ACRONYMS ...........................................................................................viii

CHAPTER 1: INTRODUCTION..............................................................................1

1.1. Research background..........................................................................................1

1.2. The necessity of the topic ...................................................................................2

1.3. Research objectives............................................................................................4

1.4. Research question...............................................................................................4

1.5. Subject and Scope of research ............................................................................5

1.5.1. Subject of study............................................................................................5

1.5.2. Scope of study..............................................................................................5

1.6. Analytical methods.............................................................................................5

1.7. Contributions of research....................................................................................5

1.8. Thesis structure ..................................................................................................6

CHAPTER 2: LITERATURE REVIEW AND FACTORS AFFECTING THE

REPAYMENT OF CONSUMER BORROWERS IN COMMERCIAL BANKS ...7

2.1. Literature review on consumer loans ..................................................................7

2.1.1. Consumer loan definition .............................................................................7

2.1.2. Consumer loan features................................................................................8

2.2. Factors affecting the repayment of consumer borrowers.....................................9

2.2.1. Definition of consumer loan repayment......................................................11

2.2.2. Previous experimental studies on determinants of loan repayment

performance.........................................................................................................11