tăng trưởng tín dụng ngân hàng đối với doanh nghiệp nhỏ và vừa ở việt nam trong điều kiện kinh tế vĩ mô bất ổn bản tóm tắt tiếng anh

AND TRAINING BANKING ACADEMY OF VIETNAM ------ NGUYEN VAN LE BANK CREDIT TO SMALL AND MEDIUM ENTERPRISES IN THE VIETNAMESE UNSTABLE MACROECONOMY MAJOR: FINANCE - BANKING CODE: 62

AND TRAINING

BANKING ACADEMY OF VIETNAM

- -

NGUYEN VAN LE

BANK CREDIT TO SMALL AND MEDIUM

ENTERPRISES IN THE VIETNAMESE UNSTABLE MACROECONOMY

MAJOR: FINANCE - BANKING

CODE: 62.34.02.01

SUMMARY OF ECONOMIC PHD DISSERTATION

HANOI, 2014

BANKING ACADEMY OF VIETNAM

Academic Supervisors:

1 ASSOC.PROF.DR TO NGOC HUNG

Banking Academy of Vietnam

2 DR DAO MINH PHUC

State bank of Vietnam

Reviewer 1: Assoc.Prof.Dr Tran Thi Ha

State Council for Professor Title

Reviewer 2: Assoc.Prof.Dr Nguyen Huu Tai

National Economics University

The dissertation will be defended at University level Council of Dissertation Assessment at Banking Academy of Vietnam

Time: ………… date …… month …… year 2014

The dissertation could be found at:

- Library of Banking Academy of Vietnam

- Vietnamese National Library

INTRODUCTION

1 Significance of the research

In every country, small and medium enterprises (SMEs) always play an important part in the socio-economic development of the country, and Vietnam is not an exception Recently, SMEs in Vietnam have ascertained their positions in the national economy as they account for 98% of the total number of nationwide enterprises, being the vital drive to create new jobs, mobilize social resourses for development investments, contributing to the cause of poverty elimination and poverty reduction in local provinces as well

as actively supporting the development of other economic players in the economy

As for the development of SMEs, bank credit has an undebatably important role, especially as the Vietnamese economy is a bank-based market Aware of this fact and the potential of SMEs, commercial banks have increasingly paid more attention to provide credit to this segment of enterprises However, because of their peculiarities in terms of size and busisness activities, SMEs often experience some difficulties in gaining access to credit from commercial banks In addition, the instabilities of the global economy and the inherent weaknesses of the domestic economy have badly impacted on the business environment of SMEs in Vietnam since

2008 The rising inflation and interest rates accompanied by falling aggregate demand have caused a big number of Vietnamese SMEs to run into difficulty, shrink their business activities, or even stop doing business and go bankrupt Consequently, SMEs are faced with more difficulties in getting bank credit to recover their affected business activities due to the negative impacts of the unstable macroeconomy At the same time, the deeper integration into the global economy of the Vietnamese economy has imposed some opportunites and threats on both SMEs and bank service providers to adapt to the new economic playground

That is the reason that I have chosen “Bank credit to SMEs in the Vietnamese unstable macroeconomy” as the topic of my dissertation with a

view to promoting bank credit to SMEs The dissertation shall provide the theoretical framework of, current situations of, and solutions to promote bank credit to SMEs, partly creating the solid foundation of the sustainable development of this segment of enterprises in the context of the current current challenging business environment in Vietnam

2 Literature review

2.1 Foreign researches

A number of research papers on bank credit to SMEs have been done worldwide They have provided quite standard theories about bank credit to SMEs in various respects such as credit products, effects of bank credit, the dependence of SMEs on bank credit, etc in different economic conditions

3 Research Objective

3.1 In theory: (i) To provide systematically theoretical framework of bank

credit to SMEs in unstable macroeconomy, and (ii) To draw the most valuable and suitable lessons for bank credit to SMEs in Vietnam from international

experiences

3.2 In practice: (i) To analyse the environment for bank credit to SMEs in

the unstable macroeconomy of Vietnam; (ii) To analyse and evaluate comprehensively the bank credit to SMEs in the unstable macroeconomy of Vietnam; (iii) To propose some solutions and recommendations to promote

bank credit to SMEs in the unstable macroeconomy of Vietnam

4 Subjects and scope of the research

The dissertation focuses on bank credit to SMEs in the unstable macroeconomy of Vietnam from 2008 to 2013, the period in which the banking activities in general and bank credit to SMEs in particular were suffered from remarkable impacts of the domestic macroeconomic instabilities

5 Research methodology

In addition to the methods of dialectical philosophy and historical materialism which are usually used in doing research in general, a complete set of methods of statistics, comparision, analysis, generalization, deduction, induction, and illustration by tables and charts are used to make the dissertation more scientifically convincing An econometric model is also regressed to prove the hypotheses about bank credit to SMEs

6 Contributions of Dissertation

In terms of theory, the dissertation has systematically approached

issues relating to growth of bank credit to SMEs in challenging macroenomic environment

In terms of practice, the dissertation has made use of an econometric

model to conduct an insightful analysis of the ability to promote bank credit

to SMEs in the context of unstable macroeconomy of Vietnam, consequently providing the most suitable solutions to the current situtations in Vietnam The results show that SMEs has had to face substantial financial risks because of their decreasing profits accompanied by increasing interest expenses in the unstable macroeconomy of Vietnam

7 Chapter Layout of Dissertation

Besides the introduction, conclusion, and references, the dissertation is organized in three chapters as follows:

Chapter 1: Theory of growth of bank credit to SMEs in unstable macroeconomy

Chapter 2: Growth of bank credit to SMEs in the unstable macroeconomy of Vietnam

Chapter 3: Solutions and recommendations to promote bank credit to SMEs in the unstable macroeconomy of Vietnam

Chapter 1 THEORY OF GROWTH OF BANK CREDIT TO SMEs

IN UNSTABLE MACROECONOMY

1.1 BANK CREDIT TO SMES

1.1.1 SMEs and their role in economy

1.1.1.1. The concept of SMEs

Table 1.1: Enterprise classification

Microenterprises Small enterprises Medium enterprises

Number of employees

Total capital

Number of employees Total capital

Number of employees

≤ 100 billion VND

≤ 100 billion VND

≤ 50 billion VND

> 50

≤ 100

Source: Decree No 56/2009/NĐ-CP

1.1.1.2. Characteristics of small and medium enterprises

These are main characteristics of SMEs: (i) small scale of operations and financial potential; (ii) varied kinds of enterprises, industries and business sectors; (iii) inefficient business strategy, limited scientific and technical qualifications and weak competitiveness; (iv) heavily dependent on the change

of business environment; (v) simplify and highly flexible management system, but low managerial competency

1.1.1.3. The role of SMEs to economy

SMEs play a vital role in the economic growth and in consider as an indispensable part of the economy of each country Their mission includes: (i) creating jobs and reducing the rate of unemployment; stablizing and stimulating economic growth; (iii) allocating and developing local resources

to restructure the economy; and (iv) increasing economic flexibility

1.1.2 Bank credit to SMEs

1.1.2.1. The concept of bank credit to SMEs

Bank credit to SMEs can be defined as the agreement between banks

and SMEs: banks transfer assets to SMEs through discount loans, underwriting, financial leasing, and other kinds of credit granting; then, SMEs use these assets based on the principle of reimbursement

1.1.2.2. Types of bank credit to SMEs: (i) Based on the form of credit

granting: loans, discount, rediscount, bank guarantee, factoring, leasing; (ii) Based on credit duration: short-term credit, medium and long-term credit; (iii) Based on credit guarantee: secured loans and unsecured loans

1.1.2.3. The role of bank credit to SMEs: (i) stimulating the reproduction

progress, (ii) improving the productivity of capital; (iii) setting optimal capital structure for SMEs; (iv) and increasing the competitivity of SMEs

1.2 FUNDAMENTAL CONTENT OF GROWTH OF BANK CREDIT

TO SMES IN THE MACROECONOMIC CONDITIONS OF UNCERTAINTY

1.2.1 Principle of the unstable macroeconomy

The unstable macroeconomy is reflected through negative changes of the most basic variables, including inflation, growth indicator, rate of unemployment and public debt In particular, these negative changes usually lasts for at least two years with extreme and continuous intensity

1.2.2 Growth of bank credit to SMEs in the macroeconomic conditions

1.2.2.2. Bank credit accessbility of SMEs in the macroeconomic conditions

The unstable macroeconomy could make SMEs more vulnerable and

an enormous number of enterprises fall into depression, loss, even bankruptcy In this context, credit growth to SMEs is not only protecting

these enterprises from bankruptcy but also creating jobs, stimualting production activities and stablizing macroeconomy Furthermore, growth of bank credit in the unstable macroeconomy helps commercial banks to broaden their market and increase their profit

1.2.2.4. The criteria of credit growth to SMEs in the unstable macroeconomy

* Criteria of credit balance to SMEs, including: The increase in credit

to SMEs; Growth rate of credit to SMEs; Proportion of credit to SMEs

* Criteria of credit structure to SMEs, including: credit balance based

on form of credit; credit balance based on types of enterprises; credit balance based on industries

* Criteria of credit quality to SMEs: overdue loans to SMEs; Ratio of

overdue loans to SMEs to Total lending to SMEs; NPL to SMEs; Ratio of NPL to SMEs to Total lending to SMEs

1.2.3 Factors affect bank credit growth to SMEs

1.2.3.1. The factors derived from banks: the credit policies of banks,capital

mobilization capacity, human resources, credit information, credit process,

credit risk management capacity

1.2.3.2. The factors of economic, legal and social context: Economic factor,

social factor, legal factor

1.2.3.3. The factors derived from SMEs: financial ability, managerial

competency, development strategy, knowledge and information about

bank credit

1.3 INTERNATIONAL EXPERIENCES IN GROWTH OF BANK CREDIT TO SMES IN THE UNSTABLE MACROECONOMY AND LESSIONS FOR VIETNAM

In this part, the dissertation presents the experience in stimulating growth of bank credit to SMEs, especially after the effects of crisis in several countries including Taiwan, Korea and Ireland which provide lessons for Vietnam Government and banks

1.3.1 Experiences of several countries

1.3.2 Lessons for Vietnam

The dissertation draws some lessons for Vietnam, which are these following:

* For State administrative organs: (i) Vietnam Government can

coorporate with commercial banks to set up a framework for measuring, ranking and garanteeing SMEs which facilitate the access of bank capital in

the current unstable macroeconomy (ii) Government and State administrative

organs have to make connection between banks and enterprises, especially SMEs in the lending process as well as assure the operational security for the

whole banking system; (iii) Government should stimulate the development of

capital market in order to encourage SMEs to raise capital through issuing shares, stocks and via investmend funds, reduce the denpendence on bank

credit; (iv) Along with financial assistance, government have to

synchronously, flexibly and effectively implement a wide range of solutions

to technology, human resources, market and product quality in order to encourage the development of SMEs

* For commercial banks: (i) diversifying the form of credit granting

by designing suitable product packages for different enterprises in different

economic circumstances; (ii) In lending process, banks should frequently

keep contact with customers in order to draw exact conclusion and avoid

credit risks; (iii) proactively preventing risks from customers by using a wide

range of solutions such as assisting, consulting for SMEs in improving

financial management ability; (iv) collaborate with SME Association,

industry associations và local SME development fund to take advantages of

these organs and expand customer network

Chapter 2 GROWTH OF BANK CREDIT TO SMEs

IN THE UNSTABLE MACROECONOMY OF VIETNAM

2.1 GROWTH ENVIROMENT FOR BANK CREDIT FOR SMES IN VIETNAM IN UNSTABLE MACROECONOMY

2.1.1 The unstable macroeconomicbackground

In the global economic crisis, Vietnam’s economy faced many instabilities, such as slow growth in quantity, low growth in quality; fluctuatedand potentially higher inflation; despite an improvement, trade balance was in deficitand instability; total of investment sharply dropped because of unfavorable investment environment and pessimistic outlook of the economy as far as other developing countries In spite of the fact that the government has madeto supportproduction, resolve difficulties, the results is preliminary The weakness in financial capacity, the ability producing goods and competingneed a long time to be able to overcome This situation implies that businesses, especially SMEs having a high sensitivity to the economic cycle will face many difficulties in maintaining their business

2.1.2 Impact ofthe unstable macroeconomic background on SMEs activities

For the business environment in Vietnam, the world economic crisis impacts considerably on SMEs, as well as banking services for these businesses The number of businesses, most of which are SMEs, dissolved or deactivated increased Whereas, businesses start entering also cautiously in theunstable macroeconomic situation.The businesses currently exists also faced difficulties in declining revenues and profits They produced moderately, focused on resolving inventory instead of investing to expand production are common This situation impacts negatively on credit growth, especially credit for SMEs

2.1.3 The situation of SMEs raise capital in the macroeconomic conditions of uncertainty

The macroeconomic instability from 2008 up to now has greatly influenced the ability to access capital to maintain and expand production and business activities of SMEs There are many characteristics and

difficulties in accessing and raising capital of SMEs Firstly, appropriated

funds from partners, customers, tax debt in SMEs account for a large

proportion Secondly, SMEs is difficult to access to the borrowing funds,

particularly borrowing from the banking system In the third place, the equity having by issuing bonds and shares is very low in total capital Finally,

returnonly meetspartially the investment needs of SMEs

Therefore, raising capital of SMEs in Vietnam has been difficult in recent years The channels for capital mobilization have not made stable and sustainable to meet the needs of SMEs for production and business activities Moreover, unreasonablenessin SMEs’ capital structure also makes it to do not take advantage of debt to increase corporate value

2.1.4 The government’s policies to growth bank credit for SMEs in the macroeconomic conditions of uncertainty

2.1.4.1. The general policies to support for SMEs

In recent years, the macroeconomic instability has made the operating environment for SMEs worse, which has leaded to the difficulties in the business operations of these enterprises Recognizing the importance of SMEs in the economy, the government has issued many policies to support enterprises in general and SMEs in particular

2.1.4.2. The mechanisms and policies of bank credit for SMEs

The implementation of a Decision No 1231 / QD-TTgin 09/07/2012 of Prime Minister on SMEs Development Plan from 2011 to 2015, State Bank

of Vietnam cooperated with otherconcerned ministries building and issuing documents and policies to encourage banks to expand credit to SMEs for removing difficulties in operating capital for SMEs

2.1.4.2.1 The ordinary commercial credit policies

2.1.4.2.2 The policy of interest

2.1.4.2.3 The foreign exchange policy

2.1.4.2.4 The specific credit policies apply for SMEs: (1) The policies relate

to underwriting activities (including guarantees of Development Bank to borrow from the commercial bank and through credit guarantee Fund for SMEs), (2) the specific credit policies for SMEs (in the field of agriculture,

in disadvantaged areas and in investment, exportssectors)

2.1.4.3. The other solutions of the SBV to support credit growth for SMEs

In the period between 2011 and now, the most recent is from 2013, the State Bank of Vietnam has actively implemented solutions operating monetary policy, credit policy, that not only controlled inflation, but contributed to unfreeze credit for removing difficulties for production and business activities of enterprises in general and SMEs in particular

2.2 CURRENT SITUATION OF BANK CREDIT GROWTH OF SMES

IN UNSTABLE MACROECONOMIC CONDITIONS

2.2.1 Overall evaluation on services provided for SMEs:

Table 2.1: Assessment on providing capabilities of banking services:

(scale from 1 to 5)

Categories

Average categories score

Northern region

Middle region

Southern region

owned commercial bank

State-Joint-stock commercial bank

service 2.92 2.91 2.82 2.95 3.09 2.90 Guaranteed

service 3.25 3.26 3.13 3.31 3.19 3.16 Foreign

Exchange service 3.11 3.15 2.84 3.20 3.16 3.11 Newly developed

service 2.90 2.92 2.74 2.97 2.87 3.06 Average service

Source: Institute of Financial Sciences

Together with the expansion of Vietnam commercial banking system, banking services are becoming well-diversified with increasing quality This development has created a positive effect on the ability to approach and consume banking services of SMEs However, from an objective perspective, services provided by commercial banks in Vietnam have just started in asymptotic point compared with traditional services offered by foreign banks The main profit source for commercial banks in Vietnam mostly come from credit facilities Other services such as guaranteed transactions, leasing, co-financing contribute modestly to the total income, while the diversification process of other modern services is still at low rate Payment services still expand at slow pace due to the incomplete modernization of