Applying discriminant model to manage credit risk for consumer loans in Vietnamese commercial bank

Nguyen Thuy Duong, Do Thi Thu Ha and Nguyen Bich Ngoc
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Nguyen Thuy Duong: Banking Academy of Vietnam
Do Thi Thu Ha: Banking Academy of Vietnam
Nguyen Bich Ngoc: Banking Academy of Vietnam

Review of Business and Economics Studies, 2016, issue 4, 5-16

Abstract: This study estimates a two-group discriminant function to determine the expected financial health of the consumer credit customers’ of a bank of Vietnam by using five demographic, socio-economic, and loan characteristics of the sample borrowers. The estimated function is significant at one per cent level of significance and the model estimates financial health/group membership with average seventy-three per cent accuracy. Like developed countries, it is expected that use of the estimated discriminant function in the consumer credit decision making will decrease bad debts, will help to set risk based credit pricing for the clients and will make the credit granting faster and more accurate.

Keywords: CONSUMER CREDIT; FINANCIAL DISTRESS; PREDICTION; DEMOGRAPHIC AND SOCIO-ECONOMIC CHARACTERISTICS; TWO-GROUP DISCRIMINANT ANALYSIS; ПОТРЕБИТЕЛЬСКИЙ КРЕДИТ; ФИНАНСОВОЕ НЕБЛАГОПОЛУЧИЕ; ДЕМОГРАФИЧЕСКИЕ И СОЦИАЛЬНО-ЭКОНОМИЧЕСКИЕ ХАРАКТЕРИСТИКИ; БИНАРНЫЙ ДИСКРИМИНАЦИОННЫЙ АНАЛИЗ (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:scn:031730:16946467

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