CREDIT RISK MANAGEMENT

Credit Risk Management in the Context of Post WTO- the case of Vietnam Bank for Industry and Trade

Credit Risk Management in the Context of Post WTO- the case of Vietnam Bank for Industry and Trade

Background to the problem/issue

Bank risk management is one of the most significant facets of the financial form and riches lifetime in the up to date world. From a investment idea viewpoint, it is usually identified to engage the administration of four major dangers in the balance sheet, encompassing liquidity risk, interest rate risk, capital risk and borrowing risk (Hempel et al, 1989). Among these dangers, borrowing risk has routinely been advised as the major risk in periods of its leverage on bank presentation (Sinkey, 1992, p.279) and bank malfunction (Spadaford, 1988). Hence, good borrowing risk administration has habitually been a key constituent to the achievement of the financial bank as it could help to increase earnings while minimize risk and bypass awful loans.

As effectively evolving a 150th authorized constituent of the Word Trade Organization (WTO) on January 2007, there is an pressing obligation for Vietnam to completely integrate to the international financial and economic system. In alignment to acclimatize with this new position, Vietnam need to convey out farther restructures to enhance the capability for organising monetary scheme, organising borrowing value command, double-checking security for the economic scheme and advancing the competitiveness of the financial banks. Hence, it can be glimpsed that Vietnamese financial banks are now experiencing a harder affray with foreign banks in the rush of sustaining customary clientele commitment and appealing new customers. The most key issue is that Vietnamese banks have a reduced beginning grade in market development, feeble capital causes, in turn around expertise and association and reduced administration level. Thus, in alignment to boost economic capability and value of borrowing risk administration of banks to approach worldwide measures is one of centre goals for Vietnamese financial bank to accomplish in the new time span of mail WTO.

The aim of this study is to advance the information of borrowing risk administration in general and the method of borrowing risk administration in one of the large-scale financial bank in Vietnam in specific, which is Vietnam bank for Industry and Trade (Viettin bank). This will be accomplished by carrying out a theoretical and empirical study to assess and find out the cause behind the reduced borrowing value and the awful liability number in Viettin bank. This study will furthermore focus on the significance of befitting development and discovery in Vietnamese banking market in period of borrowing risk administration in the starting time span of the WTO.

The administration of borrowing risk in banking commerce is the method of risk identification, estimation, evaluation, supervising and control. This method is directed inside the strategic and operational structure of the bank. In supplement, managing borrowing risk of most financial banks in the world can be examined as the “bread and butter'. There is a natural detail in banking part that every lending engages ...