01 10 18 tom tat luan an ncs than ngoc minh tieng anh

REASON FOR PREPARATION Credit activities in the real estate sector of commercial banks are closely related to the real estate market and the real estate market is affected by many facto

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THAN NGOC MINH

BANK CREDIT FOR THE DEVELOPMENT OF REAL ESTATE MARKET IN

THE HO CHI MINH CITY

ECONOMIC DOCTRINE THERAPY

HO CHI MINH CITY, 2018

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BANK CREDIT FOR THE DEVELOPMENT OF REAL ESTATE MARKET IN

THE HO CHI MINH CITY

ECONOMIC DOCTRINE THERAPY

Major: Finance - Banking

Code: 9.34.02.01

Science instructor: Dr NGUYEN VAN LUONG

Dr NGUYEN VAN PHUC

HO CHI MINH CITY, 2018

CHAPTER 1 NTRODUCTION TO RESEARCH PROJECT

1.1 REASON FOR PREPARATION

Credit activities in the real estate sector of commercial banks are closely related to the real estate market and the real estate market is affected by many factors such as management, regulating the state of the real estate to the elements of participants such as buyers, sellers, in which the NH is a participant in the market Bank credit, as well as a channel to provide real estate investment in the form of real estate investment projects (real estate stimulus), as well as commercial real estate lending (demand real estate) TP Ho Chi Minh City is the place where real estate credit activities are always active and the growth of outstanding loans in this field is highest in the country The growth of credit capital for real estate in addition to the positive signs in bringing about quite large profits, diversifying the investment portfolio of banks and meet the social needs, this activity also brings Risks are quite high

The real estate market in our country has contributed significantly to the country's socio-economic growth The real estate market has attracted many investment capital sources and contributes to urban renewal, stimulus and step by step improvement of housing demand of the people Through the operation of the real estate market, the regulatory system regulating the operation of the market has been gradually improved A number of important legal documents such as real estate business law, land law, investment law, enterprise law, housing law have been issued to facilitate the development of the real estate market, creating favorable investment environment for domestic and foreign investors as well as users to have more direct access to this special commodity Besides the positive aspects, the real estate market in our country has many limitations, unhealthy and unsustainable development Specifically, the land has not been exploited and not used effectively, but waste, large losses Negative phenomena, corruption related to real estate is much

Real estate development market is spontaneous, lack transparency, informal transactions also occupy a high proportion Supply and demand for real estate is unbalanced, especially in terms of housing needs of the people Real estate speculation,

stimulus demand "virtual" to increase the price of real estate to make the market fluctuate, many fever of housing prices have occurred very complex, unpredictable resulting in business enterprises Real estate is difficult to continue business, increasing the bad debt ratio for commercial banks lending real estate business, housing demand for the majority of population is facing difficulties, especially workers earning Low import affecting the socio-economic development of the country There are many reasons leading to the above situation, which is caused by the source of bank credit, from the land planning policy, the economic development, tax policy related to real estate still many inadequacies processing

Credit supply to the real estate market tends to create more supply, creating demand over a long period of time is one of the important reasons for the imbalance between supply and demand This shows that the impact of bank credit policy on the real estate market After a period of hot growth, supply and demand asymmetry, the implication is that real estate companies have suffered a large inventory in recent years Real estate inventory has buried large amounts of capital in real estate projects, which

is the main reason for increasing the bad debt ratio of banks

However, as credit activity is twofold, it can bring about efficiency for borrowers, the economy and the bank itself, which can both cause asset loss and impair the operational capacity of the bank Bank On the other hand, the efficiency of credit has not yet been seen as a tool for regulating the economy in order to promote the development of a stable, healthy and sustainable real estate market, attracting foreign investment to create capital for development investment national economy

Therefore, to overcome the problems mentioned above to develop the real estate market That's why I chose the subject "Bank credit for developing real estate market in the city HCM "to study the relationship between bank credit efficiency for the development of the real estate market to do his doctoral dissertation

1.2 SUMMARY OF RESEARCH SITUATIONS ON THE THESIS

Currently, there are many researches related to "Solutions to improve bank credit efficiency for real estate market development in the city HCM " However,

according to the author's understanding, there are now a number of typical domestic and foreign studies related to the topic as follows:

1.2.1 Research in the country

Firstly, Le Hoang Chau in 2017, real estate market from 2006 to 05/09/2017

This is the report of the real estate market in TP HCM in 2017 [5] The report provided some general insights on the real estate market in Vietnam and HCMC Ho Chi Minh City, the focus is from 2006 to 5/9/2017 The report mentions the real estate market in this period according to the asymmetric SIN diagram, depending on (1) the Value Law, (2) the Competition Law, (3) (4) Macro policy and regulation mechanism, (5) Investment and business behavior of enterprises and investors under the influence of policy, mechanism or demand of the market The real estate market is experiencing several stages of development: growth - stability - warming - freezing - quieting - recovery and growth again The report also mentioned this change over time and causal analysis The report predicted that the real estate market will continue to maintain its recovery momentum and stable growth without major fluctuations [7]

Secondly, Nguyen Van Tuan, a researcher in 2016 on "Solutions to improve

credit quality at Vietnam Bank for Agriculture and Rural Development" [25] The research has combined two qualitative and quantitative methods in the research to find out the factors that affect the credit quality of Agribank in the period 2012 - 2015, from which the author has Proposing suitable solutions to improve credit quality at VBARD

However, the topic of research is only to solve the problem of credit quality

in general but not specifically research credit for real estate loans and have not explained, presented the theory of relevance between credit quality and credit efficiency The argument about the relationship is:

When the bank has built a good credit quality for the loans outstanding This shows that the role of credit has worked effectively for the economy, for customers, for the industries and areas in which the bank has financed and for the bank itself Revenues and profits of credit activities This is also the next research gap that the author has been interested in;

Thirdly, Nguyen Thi Hai Yen in 2016, "The volatility of the real estate

market and the role of credit capital" This is the work published in Finance magazine period 1/2016 [11, 19] Practice shows that the real estate market in Vietnam has experienced many fluctuations with the phenomenon of fever and freezing clear The period 1994-1995 marked the first fever of the market due to the impact of economic growth and the birth of the Land Law 1993 The real estate market is characterized by the early stage, only stop In the form of land purchase and sale and rapid freezing in 1995-1999, the Government intervened and promulgated Decree No 18 / ND-CP dated

13 February 1995 and Decree 87 / ND- CP dated 17 August 1994, together with the impact of the Asian crisis of 1997 In 2006-2007, along with the growth of foreign direct investment (FDI) and the movement of capital inflows From the stock market pouring into the real estate market, real estate demand continued to increase rapidly and pushed up to the peak in 2007 Investment, massive speculation, plus credit growth rapid growth has created bubbles on the market in the years 2007- 2008 However, soon after the "ball" real estate has deflated, because by the impact of the world economic crisis, the real estate market has difficulties in terms of liquidity, speculators withdraw from the market, causing For the bankers and businessmen, standing on the brink of bankruptcy Under that pressure, SBV had to apply tight monetary policy, commercial banks tightened control of real estate credit

Fourth, Le Ha Diem Chi 2014, "Bank credit capital and real estate market."

This is a study published in the Journal of Market - Finance - Money No 9/5/2014 [4] The study on the relationship between bank credit and the real estate market in Vietnam concluded that "there is a two-way relationship between bank credit and the real estate market in Vietnam On the one hand, real estate credit changes the supply and demand of real estate; Real estate credit growth boosts real estate prices On the other hand, when the real estate market contains many negative factors (bad debt real estate, low transaction volume .) will limit the source of credit in this market In addition, the real estate market also makes the demand for real estate credit vary

according to"[6]

Five,, Le Tan Phuoc, in 2013 The researcher on "Improving the efficiency of

real estate credit activities in commercial banks in Ho Chi Minh City HCM from 2013

to 2017 " This is an elaborate research topic at the industry level, summarized by the author and posted in the economics and forecasting journal, No 12 (22) September - 10/2013 [7]

The research content of the author refers to factors affecting the real estate market and present real estate credit activities of commercial banks in the city HCM The author has analyzed the changes in real estate loans in the city HCM and present the status of bad debt in lending for real estate in the city HCM However, the research

of the author does not mention the effectiveness of bank credit for the development of the real estate market It has not shown the shortcomings, limitations and causes of credit shortage and existence of the development of the real estate market of the city HCM This is also a gap in the study of the subject and it is also the direction of research that NCS chose to offset the gap that study

Sixth, Nguyen Thi My Linh, in 2012 author of research on "tax policy for the

development of real estate market in Vietnam" This is the doctoral thesis of the author [12] The study focused on tax policy for real estate market development in Vietnam in the period 1993 to 2011 The topic was studied by two qualitative and quantitative methods, from which specific analysis The tax policy for the development of the real estate market in Vietnam

Research has shown that tax policy will directly affect the price (supply and demand) of the property market and the real estate market is one of the "output" for banking operations As a result, real estate market fluctuations have a direct impact on financial and monetary markets

As the real estate market declines, it will negatively affect the banking system and vice versa The financial-monetary market is the source of capital for real estate investment financial-currency market, immediately impacted the real estate market However, this is a research study of tax policy of the State for the development

of real estate market in Vietnam should still have a gap in the research on credit

efficiency for real estate market development Vietnam and HCMC This is also the research direction of PhD student

Seven, Luu Van Nghiem, 2008 study author on "Real estate valuation in

Vietnam" Ministry research project [6] The author has generalized the basics in general pricing and real estate valuation in particular in Vietnam However, this topic has just stopped in researching corporations in the model 90-91 in the process of asset valuation to determine the value of enterprises after equitization Therefore, besides valuing the real estate of equitized enterprises, enterprises also need to determine the value of other assets to form the capital assets of enterprises Moreover, valuation of equitized firms has different characteristics than valuation of assets in general In addition to tangible assets there are many other intangible assets such as trademarks and commercial advantages Therefore, the value of real estate valuation is different from the actual value in the market

Property valuation is the basis to go to the transaction of buying, selling, leasing, inheritance, real estate mortgage For commercial banks, valuation is the basis for the bank to receive collateral and decide the loan ratio on the value of the collateral

On the other hand, real estate valuation is a very important task for banks to have the basis for the sale of mortgaged property as property to recover bad debts However, real estate valuation in Vietnam Formation of organizations and professional associations to unify the way of implementation

Currently commercial banks or companies operating in the field of real estate often build independent units for their valuation departments to serve business operations, so there is no uniform evaluation methods lead to Appraisal results of different units make it difficult to access trading decisions of market participants This

is a barrier in the study that the topic is to propose solutions to improve real estate evaluation in the coming time

Eight, Nguyen Tien Phong, 2008, researcher on "Improving credit

performance for small and medium enterprises in Vietnam Joint Stock Commercial Joint Stock Bank." This is the doctoral thesis of the author [15]

The topic has systematized the theoretical issues on improving the efficiency

of credit activities for small and medium enterprises and analyzing the current status of credit performance for small and medium enterprises through which proposals Solutions to improve the efficiency of credit operations for small and medium enterprises at Joint Stock Commercial Joint Stock Bank of Vietnam However, there are still gaps in the research:

The scope of the study is limited to the performance of credit outside of the State Bank of Vietnam and generally refers only to the effects of credit activity on small and medium enterprises without mentioning the effectiveness of credit For specific areas such as the real estate sector or the agricultural sector, economic restructuring This is the gap in the study of the topic should be further research to supplement and complete

1.2.2 Study abroad

Firstly, Aluko, Bioye Tajudeen (2000), studied the "effect of mortgage real

estate prices on lending activity of credit institutions in Nigeria" The authors conclude that real estate market value is a fundamental basis for estimating the value of real estate mortgages The authors have applied the multivariate regression model to estimate the market value of real estate This value will set the maximum limit that credit institutions can not exceed to avoid the risk of lending However, in this study, the authors point out that this price level is a price index that shows us the level of risk before the loan is made but there is no guarantee that the price will is maintained in the future The authors conclude that mortgage rates are highly dependent on the development of the property market at the time of valuation and valuation of the valuer Therefore, valuation is only time-based The changes outside the valuation time affect the value of real estate

Secondly, Kwong Chaw, Wailai (2002), has studied "real estate valuation

methods as collateral for loans in China's banks and credit institutions" [30] This topic mainly delves into the methods used in mortgage pricing, in which Kwong and Wai went into two basic methodologies: costing and income method to determine the value

of mortgage real estate According to him, the value of real estate is calculated by the income (the gain from the use of real estate) and the costs constituting it This topic is only in the valuation method, not in depth study of the process as well as the organization of valuation Real estate mortgage In general, these studies were carried out in a fairly well-informed and applied context in which the legal system was quite rigorous and complete.

1.3 OBJECTIVES OF THE STUDY

1.3.1 Overall objectives

The general objective of the project is "To improve the credit effectiveness of commercial banks for the development of real estate market in the city HCM’

1.3.2 Detail goal

First, the thesis has systematized the basic theoretical issues of credit

efficiency for real estate market development;

Secondly, assess the current state of bank credit efficiency for real estate

market development in the city Detailed HCM:

- Analysis of factors affecting the development of real estate market in the city HCM;

- Evaluating the actual state of bank credit activity (lending activities) for the development of the real estate market in the city HCM;

- Thirdly, proposing groups of solutions to improve credit efficiency for real estate market development in the city HCM in the coming time

3 The real situation of bank credit for the development of the real estate market How is HCM today? What are the results and what are the shortcomings? What are the causes of these constraints?

4 In order to improve the credit effectiveness for the development of the real estate market What solutions do you need?

1.5 OBJECT AND SCOPE OF THE STUDY

1.5.1 Research subjects

The object of the thesis is the efficiency of banking credit for real estate market development; In particular, the credit activity studied in the thesis is the lending activity and the credit efficiency that the research thesis is the efficiency of lending to real estate market development

1.5.2 Research scope

- Scope of study space:

Credit efficiency (loan effectiveness) for real estate market development of commercial banks in the city HCM

- Scope of study:

+ Secondary data collected during 2012 - 2016

+ Primary data: Survey time from October 2016 to November 2017

1.6 TRUE IMPLICATIONS OF THESIS

From the research results of the thesis, there are new contributions in terms of science and practice as follows:

(i) Research thesis to present basic content of theory on real estate market and effectiveness of bank credit for development of real estate market in a comprehensive and comprehensive manner It clarifies the factors that affect the efficiency of banking credit activities for the development of the real estate market This is a significant theoretical issue that is oriented in the research process to improve credit efficiency for the development of the real estate market in Vietnam and the city HCM in particular

(ii) Analyze and systematically assess the current status of banking lending (lending) for the development of the property market in HCMC HCM The basis of reliable

secondary data sources collected from commercial banks in Ho Chi Minh City The thesis has drawn the results achieved, the limited and especially the causes leading to restrictions

of bank credit activities on the development of real estate market TP HCM

(iii) Based on the experience gained in improving the credit performance of countries in the world The thesis has learned lessons learned from other countries in improving credit efficiency for developing the real estate market HCM;

(iv) The thesis proposed groups of solutions to improve credit efficiency for the development of the real estate market HCM in the coming time

1.7 STRUCTURE OF THESIS

The dissertation consists of 5 chapters as follows:

Chapter 1: Introduction to research topics;

Chapter 2: General Theory of Bank Credit Effectiveness for Real Estate Market Development;

Chapter 3: Research Methods;

Chapter 4: Research and discussion results;

Chapter 5: Solutions, recommendations and conclusions

CHAPTER 2 THE GENERAL AGREEMENT ON THE EFFICIENCY OF THE BANK CREDIT FOR REAL ESTATE MARKET DEVELOPMENT 2.1 OVERVIEW OF CREDIT

2.1.6 Bank credit for developing the real estate market

2.2 EFFICIENCY OF COMMERCIAL BANKING CREDIT

2.2.1 The concept of bank credit efficiency

(i) Commercial bank credit performance is an economic category, reflecting the level of resources used to achieve the highest results with the lowest total cost, in other words the comparison between the inputs and output, between cost and efficiency;

(ii) Credit effectiveness is one of the performance of commercial banks, expressing and reflecting the level of credit performance of the economy This contribution depends on the quantity and quality of service that this activity brings to the customer;

(iii) Credit effectiveness of commercial banks is the result of credit granting by commercial banks to benefit borrowers, the Bank and the whole society

2.2.2 Creditworthiness for customers

2.2.3 Credit efficiency for socio-economic development

2.2.4 Credit effectiveness for commercial banks

2.3 EFFICIENCY OF BANK CREDIT FOR REAL ESTATE MARKET

DEVELOPMENT

2.3.1 OVERVIEW OF REAL ESTATE MARKET DEVELOPMENT

2.3.1.1 Concept of real estate

Real estate is land, buildings, buildings and assets attached to land Assets attached

to land are real estate when they exist on land with a certain function This function is lost when separated from the ground

2.3.1.2 The concept of real estate market Real estate

market is the process of trading real estate goods among related parties, where the activities of purchasing, selling, transferring, leasing, mortgaging and other services related

to real estate between the subject in the market where the role of the state has a decisive impact on the development or slowing down business activity in the property market 2.3.1.3 The concept of real estate market development

Developing the real estate market is the development of a market for land use rights and real estate attached to the land, making the land truly a source of diversified sources of investment capital, making a real contribution to the construction process The market in the countryside is competitive with the regional market and attractive to investors

2.3.2 The effect of bank credit on the real estate market

The effectiveness of banking credit activities for real estate market development is reflected in the following principles:

Firstly, attract the capital savings and promote the capital concentration process,

meet the capital needs for real estate market development

Secondly, credit activities contribute to the impacts of the state on macroeconomic

targets, affecting the aggregate demand of the economy, facilitating the development of the real estate market

Thirdly, credit activities contribute to structural change towards industrialization and

modernization

Fourthly, credit capital contributes to building infrastructure, creating favorable

conditions for enterprises to improve their competitiveness, apply science and technology in business and production to meet the requirements of development real estate market

Fifthly, credit activities contribute to strengthening and expanding external

economic relations and economic exchanges to facilitate the development of the real estate market

2.3.3 Criteria for evaluating bank credit efficiency for real estate market development

- Group of norms:

+ Group of indicators reflecting credit efficiency for borrowers;

+ Group of indicators reflect credit effect from real estate loans forcommercial banks and the whole society

- Group of qualitative targets:

+ Preferential credit for strategic economic sectors

+ Completion of the legal system in real estate transactions

+ Preferential credit for the key economic region

+ Preferential credit for economic sectors

+ Preferential loan procedures, credit policies, customer satisfaction

2.3.4 Factors affecting the development of the real estate market

- Objective:

First: Economic development

Second: Land policy of the state and local government

Third: Tax policy

Fourth: bank credit

Fifth: Financial capacity

Friday: Population growth Saturday:

Legal Elements

- Subjective factor:

First: Traditions, traditions and tastes

Second: Information and beliefs

2.3.4 Factors affecting the efficiency of credit for the development of the real estate market

EFFICIENCY FOR REAL ESTATE MARKET DEVELOPMENT AND LESSONS FOR VIETNAM COMMERCIAL BANKS

2.4.1 Experiences from the real estate credit crisis in the US and lessons for commercial banks in Vietnam

2.4.2 Experiences in processing real estate "bubble" of Japan and lessons for commercial banks in Vietnam

2.4.3 Singapore's experience and lessons for Vietnamese commercial banks

2.4.4 The experience of China and lessons for the commercial banks of Vietnam 2.4.5 Lessons learned for commercial banks in Ho Chi Minh City