Applying Discriminant Model to Manage Credit Risk for Consumer Loans in Vietnamese Commercial Bank

Thuy Nguyen, Duong, Do Thi, Thu Ha, Nguyen Bich, Ngoc
2016 Review of Business and Economics Studies   unpublished
This study estimates a two-group discriminant function to determine the expected fi nancial health of the consumer credit customers' of a bank of Vietnam by using fi ve demographic, socioeconomic , and loan characteristics of the sample borrowers. The estimated function is signifi cant at one per cent level of signifi cance and the model estimates fi nancial health/group membership with average seventy-three per cent accuracy. Like developed countries, it is expected that use of the estimated
more » ... scriminant 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.
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