The Application of Discriminant Model in Managing Credit Risk for Consumer Loans in Vietnamese Commercial Bank

Nguyen Duong, Do Thi Thu Ha and Nguyen Bich Ngoc

Asian Social Science, 2017, vol. 13, issue 2, 176

Abstract: The study focus on analysing financial status of consumer credit customers of Vietnamese commercial banks through two group discriminant function. Five independent variables were used in which some variables are related with the loan and the others are related with the demographic and socio-economic conditions of the borrower. Particularly, the variables related with the demographic and socio-economic conditions of the borrower are age; number of dependents; years at present job and salary while the independent variable related with the loan is loan amount. The result indicates that the estimated function is significant at 1 per cent level of significance and could forecast financial health with average 72.3 per cent accuracy. Therefore, in this study, the demographic, socio-economic and loan related variables can be used to determine the expected group membership of the borrowers in Vietnam.

Date: 2017
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