The effect of credit risk management on profitability of VietNamese commercial banks
Abstract
Banks are the most important financial institution of global economy and
also in Vietnam, theirs branches and subsidiaries are allocated nation -wide.
By the side, commercial banks are facing with many kinds of risk when they
running business. Risk from credit activities is supposed critical risk even the
main source of income in commercial banks is comes from credit activities.
Therefore, the management of risks, especially credit risk will effect on the
profitability of the banks.
The objective of this research is to observe the correlation between C redit
risk management and Commercial Banks’ profit. To testing this issue , I used
ratios of Return on equity and Return on assets as a representative for
profitability and NPLR (non-performed loan ratio) and CAR (capital
adequacy ratio) to represent for credit risk management. I chose 27 of
prestigious commercial banks in Vietnam and formulize two hypotheses
which related to research questions. The result of data analysis will answer
the questions that I assumed above.
Keyword: credit, profitability, ROE, ROA, CAR, NPLR