THE EFFECT OF CREDIT APPRAISAL ON LOAN PERFORMANCE OF VIETNAMESE COMMERCIAL BANKS

Abstract

Credit appraisal plays a very important role in reducing bad debts and increasing the efficiency of banks' lending activities, but there are very few studies on this content in Vietnam. This study aims to evaluate the influence of credit appraisal on the loan performance of Vietnamese commercial banks, specifically, the authors assess the influence of the borrower's personality, ability to repay, the purpose of using the loan, and collateral for loan performance. The data was done by interviewing employees of 30 joint stock commercial banks in An Giang province, with 198 satisfactory questionnaires, coded, using SPSS software. Regression analysis showed that there was a significant positive relationship between credit appraisal factors and loan efficiency at the 95% confidence level and concluded that the customer's ability to repay debt affects loan performance. The study recommends that before loan approvals, factors related to loan repayment ability should be carefully considered to improve customer lending efficiency.