The impact of credit appraisal on lending efficiency of Vietnamese commercial banks



DOI:  10.5110/77. 1080               Page:   05-22            Vol: 18    Issue: 10   Year: 2023

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Commercial banks play a very important role in the economic growth of nations, in which lending is the largest source of income for banks but they face the risk of default from borrowers. This indicates credit appraisal plays a very important role in reducing non-performing loan and increasing the efficiency of banks’ lending activities.  However, there are no studies focusing on the influence of appraisal on the loan performance of Vietnam commercial banks. This study aims to evaluate the impact of credit appraisal on the lending efficiency of Vietnamese commercial banks, explicitly assessing six factors including borrower’s character, capacity, capital, purpose of the loan, collateral and conditions for lending efficiency. The primary data was collected from the heads of the customer relations department, individual customer relation officers, corporate customer relation officers, credit appraisers and debt collection managers of 31 Vietnamese commercial banks with 540 questionnaires. The Statistical Software Package for Science Society (SPSS) software was used for data analysis and the research findings presented using frequency and percentage tables. Regression coefficients show that there is only one negative factor which is the purpose of the loan, the remaining five factors have a positive influence on lending efficiency: the borrower’s character, capacity, capital source, purpose of using the loan, collateral, and other conditions. The study recommends that banks should conduct thorough credit appraisal before lending because this helps improve their profitability by reducing non-performing loan.


Credit appraisal; Lending efficiency; Vietnam commercial banks

Received: 09 November 2023

Accepted: 24 November 2023

Published: 01 December 2023