Predicting Factors Affecting The Loan Repayment Abilities Of Small And Medium-Sized Enterprise Customers. Evidence At Joint Stock Commercial Bank For Investment And Development Of Vietnam - Nam Dong Nai Branch

Abstract

Title: Factors affecting the debt repayment capacity of small and medium-sized enterprise customers at Joint Stock Commercial Bank for Investment and Development of Vietnam – Nam Dong Nai Branch. Abstract: For many SMEs and entrepreneurs, credit is the most common source of external capital, and they are typically excessively dependent on traditional debt to satisfy their start-up, cash flow, and investment requirements (Nairobi, 2015) . Commercial banks and financial organizations are potential sources of financing for small businesses. However, Lending to SMEs is a time-consuming and difficult undertaking since several factors influence their viability and loan repayment behavior. Therefore, assessing the debt repayment ability of customers is considered one of the most important tasks of commercial banks. Currently, both domestic and foreign, there have been many studies related to this issue. However, those studies are mainly related to assessing the loan repayment ability of individual customers, the number of studies related to corporate customers, especially small and medium enterprises - accounting for 98% of the country's total number of businesses and contribute about 48% to the country’s GDP (An Empirical Analysis of Credit Accessibilty of Small and Medium Sized Enterprises in Vietnam, n.d.) – still limited. At BIDV Nam Dong Nai, SME customers outstanding loans account for roughly 40% of total outstanding loans, but the proportion of bad debts accounts for more than 79% of the proportion of bad debts of the whole branch. While reality shows, the economy's bad debt mainly comes from corporate customers. As a result, it is critical to investigate and comprehend the aspects influencing SME loan repayment abilities. This thesis identifies and examines the factors influencing the loan repayment abilities of small and medium-sized firm customers at the Nam Dong Nai Branch of the Joint Stock Commercial Bank for Investment and Development of Vietnam.