Credit quality for small and medium sized enterprises: Research model and situation in Hanoi-based commercial banks

his is the reserve relationship between cus- tomers and the credit innovating system of commercial banks; "Level of communication and training to raise the ability of customers in borrowing and exploiting the supplied val- ues of credit service to customers", this is the typical feature of service supplying system in which customers are an integral part and unless improved, it may negatively impact on the credit quality. Fourthly, if standard deviations are taken into consideration, the ratios of standard devi- ation/mean of 3 functional, positioning and relation quality were all above 20/0%, indi- cating that there exists a high dispersion degree in commercial banks in the research sample and this degree may be higher in the overall system of commercial banks. This also shows that if research sample were extended to the total commercial bank sys- tem, only 12 - 14% of commercial banks reached the quality scores equal to correspon- ding foreign commercial bank. But the distri- bution and harmony were not ensured, a quite large proportion of commercial banks (20 - 22%) had functional, positioning, relation quality evaluated as low and poor. 20 Trade Science Review TRADE SCIENCE REVIEW ’S TSR Source: Data processed via SPSS 20.0 RQ2 RQ3 RQ4 RQ5 RQ7 Level of utilizing mobilized capital and equity capital compared to credit growth quality Level of customer loyalty to brands provided in the market - locality Level of sympathy and supports of customer community in the market - locality Level of customer relationship management (CRM) and getting customer feedback, even customer complaints to improve the quality of credit service Level of enhancing credit service quality and capacity of lending and getting back the loans 3.04 3.06 3.08 2.95 2.98 0.609 0.621 0.618 0.603 0.628 4.31 4.08 4.17 4.29 4.18 5.3. Evaluation of overall credit quality efficiency in commercial banks This is the dependent variable in the research model in which credit service of commercial banks is considered as an entire entity, a system supplying credit service in a given marketplace. This component is measured by the level of sat- isfying purposes of credit from 3 angles: enter- prise - commercial banks; customers - SMEs, SME community and socio-economic system in the location. The results of data processing are presented in Table 5. From Table 5, some conclusions can be made as follows: Firstly, the initial achievements in busi- ness restructuring and commercial banking system have resulted in some improvement in the quality and competitiveness of credit products in general and SME credit in par- ticular. Besides, the enhancement in macro- economy and recovery of markets of com- modities, services, real estate and stocks have formed a healthy trend shifting from growth in quantity and scale to growth in quality and speed. Secondly, in credit structure there has been strong progress in technical quality but there still remain inadequacies in balancing between maintaining safety and developing credit; between investing in technical quality and investing in functional, positioning and relation quality. This situation result from 2 sides: macro policies and macro regulation in currencies, credit and inadequate awareness and inefficient implementation of marketing management and technological renewal in commercial banks in general and credit serv- ice SBU in particular. Thirdly, in general, the current overall credit quality efficiency scored 3.01, classi- fied as 'average'. Specifically, 3/5 overall credit quality indicators scored above 3.0, in which the overall satisfaction with credit quality of SMEs reached the highest score (3.12, above average). The quality of contri- bution of credit service has also increased. However, 2/5 indicators still scored below 3.0, they are level of satisfying demand for credit in terms of quantity, structure, quality and time; level of attractiveness, reputation and loyalty to credit services of commercial banks by SMEs as customers as it is lower 21 Trade Science Review TRADE SCIENCE REVIEW ’S TSR Table 5: Evaluation of overall credit quality in commercial banks Source: Data processed via SPSS 20.0 No. Observation variables Scores of research samples Mean of corresponding sample Mean Stan.deviation HQP Overall credit quality efficiency HQP 1 Level of customer satisfaction with current overall credit quality 3.12 0.612 4.28 HQP 2 Level of meeting loans demand of customers 2.99 0.606 4.32 HQP 3 Level of satisfaction with the contribution of current credit quality to the safety and quality of credit growth of commercial banks. 3.03 0.625 4.21 HQP 4 Level of competitiveness of current credit service in comparison with the most advanced commercial banks in the same marketplace. 3.04 0.618 4.68 HQP 5 Level of priorities of choice and long-lasting use of customers given the current credit quality in comparison with other loans sources 2.98 0.603 4.23 Total 3.01 0.617 4.34 than strategic expectations of commercial banks and desires of SMEs. Fourthly, the evaluation of the impacts of 4 credit quality components on overall credit quality efficiency. The research data were inserted into and processed by AMOS soft- ware to produce forecast results of multiple linear regression with 4 independent vari- ables: technical quality (TQ), functional qual- ity (FQ), positioning quality (PQ) and rela- tion quality (RQ) of credit services; depend- ent variable: overall credit quality efficiency (HQP) (Table 6). From Table 6, some conclusions can be made as follows: Firstly, the model has statistic significance at p<0.001, F= 69.187, indicating that the multiple regression model is suitable with the set of collected data. Secondly, the value of adjusted coefficient of determination (adjusted R2) in this model is 0.863, showing that the compatibility of this model is 86.3%, in other words, about 86% of variation of dependent variables are accountable to 4 independent variables (TQ,FQ,PQ,RQ). Thirdly, standardized coefficient Beta (?) ranges from 0.207 to 0.301 with P<0.05 showing that 4 quality components are fore- cast indicators to "overall credit quality effi- ciency - HQP". Fourthly, the multiple regression model of this research is: HPQ = 0.268TQ + 0.301FQ + 0.207PQ + 0.225RQ. The above regression equation indicate that the importance orders or impact levels on over- all credit quality efficiency are functional qual- ity ' technical quality ' relation quality ' posi- tioning quality, in which there is clear classifi- cation between 2 groups of components: - Group 1: functional quality and technical quality. - Group 2: relation quality and positioning quality. However, the scores contributing to the current overall quality efficiency show that Vietnam commercial banks are paying more attention to technical quality than functional quality, which is reverse to what is done by corresponding foreign commercial bank - cares more for and scores higher in function- al quality than technical quality, thereby con- tributing more to overall credit quality effi- ciency than Vietnam commercial banks. Here are the results of a research project into the quality of credit services of Vietnam commercial banks based in Hanoi. The research set up model and measurement scale, collected and processed data to evalu- 22 Trade Science Review TRADE SCIENCE REVIEW ’S TSR Table 6: Forecast results of multiple linear regression model for overall credit quality Note: * : significance level p<0,05; ** : significance level p < 0,00 Source: Data processed via AMOS Independent variables Standardized Coefficients Beta R T Significance level of t Dependent Independent HQP TQ 0.286 0.267 8.136** 0 FQ 0.301 0.323 10.012** 0 PQ 0.207 0.194 6.248* 0.013 RQ 0.225 0.228 7.673** 0.019 adjustedR2 =0.836; Value of F=69.187**; Significance level of F= 0 ate the quality components and impacts of each component on the overall credit quality efficiency of Vietnam commercial banks and one corresponding foreign bank in the same marketplace of Hanoi. Due to limited time and research conditions, this project was only conducted in Hanoi rather than nationwide, it is therefore open to further research to make more contributionin the future. Summary Thôøi gian qua coù moät soá nghieân cöùu veà chaát löôïng tín duïng cuûa caùc ngaân haøng thöông maïi (NHTM) nhöng chuû yeáu thoâng qua phaân tích thoáng keâ moät soá chæ tieâu “ñaàu ra” cuûa heä thoáng tín duïng. Ñieàu ñoù laø ñuùng nhöng chöa ñuû, chöa ñi vaøo thöïc chaát quaûn trò chaát löôïng vaø quaûn trò kinh doanh dòch vuï hieän ñaïi. Baøi baùo naøy seõ ñöa ra moät tieáp caän nghieân cöùu chaát löôïng tín duïng bao goàm caû ñaùnh giaù trong vaø ngoaøi; xaây döïng moâ hình nghieân cöùu 4 thaønh phaàn chaát löôïng dòch vuï tín duïng vaø hieäu suaát chaát löôïng tín duïng toång theå, töø ñoù xaây döïng boä thang ño goàm 30 bieán quan saùt cuûa boán thaønh phaàn chaát löôïng - bieán ñoäc laäp vaø 5 bieán quan saùt cho hieäu suaát chaát löôïng tín duïng toång theå - bieán phuï thuoäc. Vaän duïng moâ hình vaø thang ño nghieân cöùu naøy ñaùnh giaù thöïc traïng caùc thaønh phaàn chaát löôïng vaø ñaùnh giaù möùc taùc ñoäng moãi bieán ñoäc laäp ñeán bieán phuï thuoäc cuûa moâ hình. References: 1. Phan Thi Cuc (2008), Bank credit, Statistics Publishing House, Hanoi. 2. Nguyen Thi Mui (2008), Commercial Banking Professionals, Finance Publishing House, Hanoi. 3. Nguyen Bach Khoa (2014), Trade Maketing, Statistics Publishing House, Hanoi. 4. P. Kotter & K.K eller (2007), Maketing Management, Prentice Hall-NY 5. K. Keller (2004), Strategic Brand Management, Prentice Hall-NY. 6. Nguyen Hoang Viet (2014), Research Model on Service Value and Quality for Vietnam Enterprises, Trade Science Review 8/2014. 23 Trade Science Review TRADE SCIENCE REVIEW ’S TSR NGUYEN HOANG VIET 1. Personal Profile: - Name: Nguyen Hoang Viet - Date of birth: 26.04.1980 - Title: Associate Professor - Workplace: Vietnam University of Commerce - Position: Head of Strategic Management 2. Major research directions: Strategic management - Marketing - Trade policies 3. Publications the author has published his works: - Journal of Business Studies - Journal of Economic Development - Journal of Development Economics - Journal of Economics Studies - Journal of Marketing - International Journal of Business and Management - International Journal of Marketing Studies