Summary of PhD thesis: Bank credit contributes to the development of the agricultural economy in the Mekong River Delta key economic region

Researching the situation of bank credit for agricultural economy development in the MRD KER in the recent time to offer solutions about strengthening bank credit for developing the agricultural economy in the MRD KER.

MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM

BANKING UNIVERSITY OF HO CHI MINH CITY

-oo0oo -

LE PHAN THANH HOA

BANK CREDIT CONTRIBUTES TO THE DEVELOPMENT

OF THE AGRICULTURAL ECONOMY

IN THE MEKONG RIVER DELTA KEY ECONOMIC REGION

SUMMARY OF PHD THESIS

HO CHI MINH CITY – 2018

MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM

BANKING UNIVERSITY OF HO CHI MINH CITY

-oo0oo -

LE PHAN THANH HOA

BANK CREDIT CONTRIBUTES TO THE DEVELOPMENT

OF THE AGRICULTURAL ECONOMY

IN THE MEKONG RIVER DELTA KEY ECONOMIC REGION

SUMMARY OF PHD THESIS

Major: Finance and Banking

Code: 9 34 02 01

Science Instructor: PROF., DR NGUYEN THANH TUYEN

HO CHI MINH CITY – 2018

Cửu Long, Kỷ yếu hội thảo khoa học Các Mác và thời đại ngày nay do Đại học

Quốc gia TP HCM, Đại học Khoa học Xã hội và Nhân văn, Đại học Kinh tế - Luật, TP HCM, trang 236

thống tài chính”, Kỷ yếu hội thảo khoa học cấp quốc gia: Văn kiện đại hội XII

của Đảng: Một số vấn đề lý luận và thực tiễn, Phần thứ hai: Quán triệt, vận dụng quan điểm của Đại hội XII vào thực tiễn do Học viện Hành chính Quốc

gia Hồ Chí Minh phối hợp với Bộ biên tập Tạp chí Cộng sản và Viện Hàn lâm Khoa học Xã hội Việt Nam tổ chức, Hà Nội, trang 217-225

5

Lê Phan Thanh Hòa, Nguyễn Đắc Hưng (2013), “Cần tiếp tục có các giải pháp đồng bộ cho mở rộng tín dụng ngân hàng thúc đẩy phát triển bền vững kinh tế -

xã hội vùng đồng bằng sông Cửu Long”, Kỷ yếu hội thảo: Hoạt động tín dụng

ngân hàng thúc đẩy phát triển kinh tế - xã hội vùng đồng bằng sông Cửu Long

do Ngân hàng Nhà nước Việt Nam phối hợp với Ban chỉ đạo Tây Nam Bộ và

Ủy ban nhân dân tỉnh Vĩnh Long tổ chức, Vĩnh Long, trang 200-213

http://www.tapchicongsan.org.vn/Home/kinh-te/2013/24831/Giai-phap-mo-8

Lê Phan Thanh Hòa, Lê Phan Thanh Hiệp (2013), “Để phát triển thị trường trái

phiếu ở Việt Nam”, Tạp chí Kinh tế và Dự báo, số 22, tháng 11/2013, trang

Thành viên đề tài nghiên cứu khoa học cấp trường “Nghiên cứu hành vi của

nhà đầu tư cá nhân trên thị trường chứng khoán Thành phố Hồ Chí Minh dựa vào lý thuyết tài chính hành vi” (2012), Trường Đại học Ngân hàng Tp.HCM,

Chủ nhiệm đề tài Lê Đình Hạc

11

Thành viên đề tài nghiên cứu khoa học cấp trường“Đánh giá khả năng đáp ứng

nhu cầu vốn của ngân hàng thương mại trên địa bàn Thành phố Hồ Chí Minh đến năm 2020” (2011), Trường Đại học Ngân hàng Tp.HCM, Chủ nhiệm đề tài

Nguyễn Thế Bính

12

Lê Phan Thanh Hòa (2011), “Nâng cao năng lực cạnh tranh cho các doanh

nghiệp nhỏ và vừa khu vực Đồng bằng sông Cửu Long trong hội nhập”, Kỷ yếu

hội thảo: Thực trạng và các giải pháp nâng cao năng lực cạnh tranh cho các doanh nghiệp nhỏ và vừa trên địa bàn Thành phố Cần Thơ do Trường Đại học

Ngân hàng Tp.HCM phối hợp với UBND Thành phố Cần Thơ tổ chức, Cần Thơ, trang 122-127

13

Lê Phan Thanh Hòa, Lê Phan Thanh Hiệp (2011), “Hoàn thiện cơ chế điều

hành lãi suất ngân hàng ở Việt Nam”, Tạp chí Công nghệ Ngân hàng, số 67,

tháng 10/2011, trang 39-43

14

Lê Phan Thanh Hòa, Lê Phan Thanh Hiệp (2011), “Quản lý vốn khả dụng của

ngân hàng thương mại tại Ngân hàng Nhà nước”, Tạp chí Công nghệ Ngân

hàng, số 68, tháng 11/2011, trang 15-19

15

Lê Phan Thanh Hòa, Lê Phan Thanh Hiệp (2011), “Hoàn thiện cơ chế điều

hành lãi suất tín dụng ngân hàng ở nước ta trong giai đoạn hiện nay”, Tạp

chí Phát triển kinh tế, số 253, tháng 11/2011, trang 49-56

lý rủi ro tín dụng”, Tạp chí Ngân hàng, số 9, tháng 05/2011, trang 37-41

ABSTRACT

This thesis researchs about the missing of the capital for developing the agricultural economy in the Mekong River Delta (MRD) key economic region (KER) which is the urgent problem both of theory and practice nowadays The target researchs of this topic are aggregating and adding contribute to the theory on strengthening bank credit for developing the agricultural economy, proposing the effective solutions about strengthening bank credit for developing the agricultural economy in the MRD KER Qualitative research method is primary, and it combines with the descriptive statistical method which bases on the factual surveys The research result points out that bank credit for developing the agricultural economy in the MRD KER is not strong enough, not much enough, not tigh enough; it’s fragmented and lack of focus so that it can’t create a capital breakthrough for the development of agricultural economy in the KER There are many solutions, ways of providing bank credit for developing the agricultural economy but they are not completely fit in the new conditions such as, the impact of industrial revolution 4.0, new demand for agricultural products, climate change is getting deeper and deeper Therefore it requires a new approach of bank credit in developing natural, organic, ecological, and high-tech agriculture The new contributions of this thesis are: new approach of agricultural economy development and strengthening bank credit in new conditions Introducing new concepts are agricultural economys, the agricultural economy in the KER, agricultural economy bank credit, strengthening the bank credit for developing the agricultural economy, and the indicators reflect the strengthening of the bank credit, The practical contribution is introducing the new solutions such as formalizing informal credit; stopping spread loans, focusing on lending new technology agricultural economy, especially high technology; focusing on the agricultural economy loans of “the key economic infrastructure project”; focusing the totally investment capital on “the key economic infrastructure project”; establishing agricultural industrial zones; establishing public agricultural economy companies The results of this thesis can be used as a reference material for policy-makers and bankers in practice

Key words: agricultural economy, bank credit, KER, the MRD, strengthen, stronger, more, tighter, credit solutions, the development of agricultural economy

INTRODUCTION

1 Scientific basis and reasons of choosing this research topic

MRD has the advantage that is the large agricultural area of Vietnam Every year, the MRD produces more than 55% of paddy rice, 69% of fishery output, 70% of fruit production, contributes more than 90% of rice output, 60% of fishery export output of Vietnam On April 16, 2009, the Prime Minister issued Decision 492/QD-TTg establishing the KER of the MRD; on Feb 12, 2014, the Prime Minister issued Decision 245/QD-TTg approving the master plan for socio-economic development in the MRD KER up to 2020 with orientation to 2030; The MRD KER (hereinafter referred to as the KER or Region) will be the dynamic development zone with modern economic structure, synchronous infrastructure, contributing to building the MRD rich and strong One of the urgent issues, however, is that the Mekong Delta and the KER still face many difficulties in accessing capital, lacking capital for development, with that practice I chose the topic

“Bank credit contributes to the development of the agricultural economy in the MRD KER” as a doctoral thesis in economics, this research meets the need of both theoretical and practicality

2 Research overview and research issues

2.1 Research overview

2.1.1 The studies of foreign

2.1.2 The studies in Vietnam

2.2 Remaining gaps and research issues

2.2.1 The basic unification of previous studies

2.2.2 Remaining gaps and research issues

First Remaining gaps in research: - There has been no study which have built systematically about the

theory on agricultural economy development, and bank credit in the new circumstances with the influence of climate change, water scarcity, invasions salinity, landslides, the impact of new technologies, new requirements of commodity agricultural markets; - There has been no study how to make breakthrough from bank credit for contributing to agricultural economy development in the KER; - There has been no systematically in-depth study on strengthening bank credit for developing the agricultural economy in the Mekong Delta KER The remaining gaps will be continued to study with the content bank credit contributes

to the development of the agricultural economy in the Mekong delta KER The title, purpose, objectives, content of the thesis are not overlap with other published topics

Second Research issues: Why the agricultural economy in the Mekong Delta KER still lack of capital for

development, the KER has not become driving force for economic development Therefore, researching into strengthening bank credit for agricultural economy development in the Mekong Delta KER is a new scientific issue that has the theoretical and practical meanings

3 Research purposes, research objectives

3.1 Research purposes: Towards making bank credit becomes one of the most effective sources of capital for

agricultural economy development in the MRD KER which contributes to make the KER is really the driving

force for the development of the Mekong Delta and the economy

3.2 Research objectives

3.2.1 Overall objectives: Researching the situation of bank credit for agricultural economy development in the

MRD KER in the recent time to offer solutions about strengthening bank credit for developing the agricultural

economy in the MRD KER

3.2.2 Specific objectives: - Aggregating, and adding to contribute to clarify the theory of the agricultural

economy in the KER, and the agricultural economy development in the KER; agricultural economy credit, and strengthening the bank credit for developing the agricultural economy in the KER which are used to be the theoretical basis for the research of this topic - Identifying the existing constraints, the impact factors and the specific causes that restrict bank credit for agricultural economy development in the MRD KER - Proposing the effective solutions to contribute to strengthen bank credit for developing the agricultural economy in the MRD

KER up to 2025 and a vision to 2030

4 Research questions and research hypotheses

4.1 Research questions

- Whether or not it is necessary to supplement the basic theory on the agricultural economy in the KER, the theory on strengthening bank credit for developing the agricultural economy in the KER? - Whether or not there are still certain constraints of bank credit for agricultural economy development in the MRD KER? - What are the impact factors and the limited causes of strengthening bank credit for developing the agricultural economy in the MRD KER? - Whicht solutions and what to do, how to do to strengthen bank credit for developing the agricultural economy in the MRD KER?

4.2 Research hypotheses

- There have been major changes in production patterns, the impact of climate change, the new demand for consumption of the market and the impact of the industrial revolution 4.0 It is necessary to make additional contributions to improve the basic theory on agricultural economys, the KER, strengthening bank credit for

developing the agricultural economy in the KER - In fact, there are still some certainly limitations of bank credit for developing the agricultural economy which need to be reseached to solve These restrictions are due to commercial banks themselves, customers, macro management policies and other unwanted effects - Factors such as small scale production, outdated technology, unstable production, poor asset security, financial capacity, production management, knowledge of basic financial knowledge, are factors that limit access to bank credit capital of farmers in the KER - If giving the feasible solutions about enhancing internal banks and boost the power of customers, along with the effective support of macro management, strengthening bank credit for developing the agricultural economy in the MRD KER can be done

5 Research object, research scope

5.1 Research object: Researching on strengthening bank credit for developing the agricultural economy in the

MRD KER

5.2 Research scope:

5.2.1 Scope of space: Researching in the zone of the MRD KER include Kien Giang province, An Giang

province, Ca Mau province, and Can Tho city

5.2.2 Scope of time: From 2011 to 2017

5.2.3 Scope of research content: This thesis only researchs bank credit of the branches of the commercial

banks in the MRD KER to develope the agricultural economy of the MRD KER, the major is to mobilize the idle funds and make the agricultural economy development loans in the MRD KER Other problems which are mentioned in this thesis are served for specifying the research purposes, and the research objectives

6 New contributions of the thesis

6.1 Theoretically: Aggregating, selecting, and adding to contribute to complete the theoretical framework on

strengthening bank credit for developing the agricultural economy in the KER First build the new concepts of the agricultural economy, the agricultural economy in the KER; strengthening the bank credit for developing the agricultural economy in the KER; and the indicators reflect the strengthening of the bank credit for the agricultural economy development

6.2 Practically:

- Analyzing and evaluating the current situation of agricultural economys and the situation of bank credit for developing the agricultural economy in the new conditions that are abnormal climate change, strongly developing new industry 4.0, changed demands of the market and when old solutions are no longer suitable completely for agricultural economy development in the KER; the new contributions are also points out that previous loans are lack of the necessary synchronization, spread loans without the breakthrough needed, lack

of firm steps of bank credit along with other capitals for the agricultural economy development in the KER

- New solutions are simultaneously concentrated loans make bank credit stronger, focus and more to meet the needs of reasonable loans Together with the concentrated investment capital for “the key economic infrastructure project” are strengthening bank credit have to create a breakthrough in lending, but at the same time, it must be closely linked with limitation of risk to ensure safety for both borrowers, banks and the society; giving the indicators evaluate the strengthening of the bank credit; for the agricultural economy development; the banking credit associated with social responsibility solution

- The results of this study can be used as reference materials for related fields and as reference basis for management organizations, actual activists in planning as well as in the agricultural economy development bank activities

7 Limitations of the thesis

- Bank credit for agriculture is quite common, so it is difficult to avoid certain duplications in the data - Due to

the lack of the data source and the uniformity unit, mismatched datas including statistics so that it is difficult to select the data, it has to be collate data sources to get the most reliable data - Actual survey data is chosen from

a large number of random objects, so there may be restrictions on the absolute accuracy of the primary data

8 Methodology, research methodology

8.1 Methodology: Thesis uses the materialistic methodology led in research help the research process to be

reviewed, assessed in a comprehensive, specific way and developed

8.2 Research methodology: Research methodology of this thesis is mixed, but mainly qualitative research,

descriptive statistical method and expert method

8.2.1 Qualitative research methodology: The thesis uses qualitative research is primarily to approach the

nature of the research problem

8.2.2 Descriptive statistical methodology:

First Details of the descriptive statistics research survey data: (i) The thesis has conducted field surveys

with questionnaires for individuals in the field of agriculture, banking in the MRD KER (Table 0.1 Situation of collecting individual surveys for each locality in the MRD KER) The content of the questionnaire consists of two parts: part one is evaluating the degree of influence of the factors on access to bank credit capital, and part two is evaluating the degree of influence of the elements (in each of the above factors ) with access to bank credit capital for developing the agricultural economy in the KER (ii) The author conducted a survey for 28 experts, scientists through the Experimental Method Vouchers Personal questionnaires and expert questionnaires were developed in accordance with the Likert scale with five levels

of impact assessment Collected data is cleaned, synthesized and processed using software such as Excel and SPSS The results from the survey will be used in the study

Second Descriptive research datas: - Individual survey form: Survey on the impact of factors on access to

bank credit capital for agricultural development in the MRD KER (Appendix 0.4 of the thesis) - Expert method form: Survey on the impact of limited causes and solutions on strengthening bank credit for developing the agricultural economy in the MRD KER (Appendix 0.2 of the thesis)

8.2.3 Expert research methodology

8.2.4 Other research methodologies

9 Research data, research process, research framework

9.1 Research data: Secondary data collects from primary data and materials from the actual survey

9.2 Research process

Table 0.2 Research process

Step 1 Identifying the topic, on the basis of identifying the issues to study, developing research proposals, hypothesizing and

determining the preliminary answers

Step 2 Learning, examining summarily the relevant research to determine the remaining gaps in the research, establishing the

basis for confirming the title and content of the research do not overlap with the previous studies

Step 3 Coleecting secondary datas, design, make questionnaires and carry out actual collection surveys to collect primary datas Step 4 Collecting and processing datas

Step 5 Selecting to build and add theories, building the research theory framework while adding, constructing, expressing some

new concepts before practical changes

Step 6 Analysis, evaluation, discussion to give and confirm the results of the study

Step 7 Based on the results of the research to be discussed, solutions and recommendations for policy recommendations and

practical guidance will be presented (Completion of the dissertation report to the training institution for protection)

9.3 Analysis framework in researching

Chapter 1: The basic theory on strengthening bank credit for developing the agricultural economy in KER 1.1 The basic theory on agricultural economy development in the KER

1.1.1 The concerned primary theories

1.1.1.1 Concept of sustainable development

The concept of sustainable development places demands on socio-economic development in general and on agricultural economy development as well as bank credit for agricultural economy development needs positive changes to implement sustainable development

1.1.1.2 The theory of absolute advantage of A Smith and the comparative advantage of D Ricardo

Their theories suggests for the issue of applying to the actual selection of the region which has comparative advantages in each country to build up and develop the KER for improving the economic of the region and the economy effectively

1.1.1.3 Marxist theory of reproduction of social production

The Marx theory on social reproduction indicates the need for investment to carry out agricultural economy reproduction or agricultural economy development in depth is primary

1.1.1.4 The theory of balanced development or "growth poles" by A Hirschman, F Perrons and G Pestane de Bernis

Applying the theory on balanced development in development investment in small-scale agriculture to large production by focusing investment in key economic areas to create a driving force for the economy

1.1.2 Basic theory of agricultural economy development in the KER

1.1.2.1 The concept of agricultural, rural

1.1.2.2 The concept of agricultural economy

Agricultural economy is an economic branch of the national economy, which refers to the activities of agricultural production, agricultural product processing and agricultural services, which are specialized in producing high quality, friendly, safe, and tied to the market based on new technology, thus creating high labor productivity and high production efficiency, meeting the high demand for socio-economic efficiency and ecological environment protection

ANALYSIS FRAMEWORK STRENGTHENING BANK CREDIT FOR DEVELOPING THE AGRICULTURAL ECONOMY

IN THE MEKONG RIVER DELTA KEY ECONOMIC REGION

RESEARCH PURPOSES, RESEARCH OBJECTIVES

RESEARCH METHODOLOGIES Qualitative research Descriptive statistical research Expert research methodology

Theoretical on strengthening bank

credit for developing the agricultural

economy in the Mekong River delta

key economic region

The current situation of bank credit for developing the agricultural economy in the Mekong River delta key economic

SYSTEM OF SOLUTIONS AND RECOMMENDATIONS

- Solutions for commercial banks

- Solutions for customers

- Solutions and recommendations for macro management

1.1.2.3 Concept of agricultural economy development in the KER

- Concept of the KER: The KER is a part of the national territory, which may include the boundaries of many

provinces and cities, and the boundaries may change over time depending on the country's socio-economic development strategy The KER converges on favorable development conditions and factors with great economic potentials, acting as a driving force for the general development of the region and the whole country

- Concept of agricultural economy in the KER: Agricultural economy in the KER is the agricultural

economy, which has a comparative advantage over other places in high-tech agricultural commodity production, which is an important center for biotechnology transfer, breed, technical services of producing and processing hi-tech agricultural products for other regions, for the whole country and for export, and agricultural economy in the KER also makes the KER fastly become a driving force boosting other regions and the economy developing

- Concept of agricultural economy development in the KER: Agricultural economy development in the

KER is the development of agricultural economy based on comparative advantage, high technology, intelligent and high-level human resources, resulting in the growth in both quantity and quality of commodity agricultural products which are clean, safe, high quality yield, value and high value chain associated with the actual market, at the same time, ensure the sustainable development of the socio-economic environment and the ecological environment, justice, form the dynamic zone boosting other regions and the country's economy developing

1.1.3 Characteristics of agricultural economy and implications for bank credit

1.1.3.1 High seasonality

1.1.3.2 Productivity is limited by biological attributes, limited quantity of products, hard to maintain, stockpiles are strongly impacted by the market

1.1.3.3 Dependent on water source, natural environment and regional nature

1.1.3.4 Land is the main means of production

1.1.3.5 From agricultural production to agricultural economy is often lack of capital

1.1.4 The role of the KER in the economy

1.1.4.1 Providing key products with high competitiveness for the economy and export

1.1.4.2 Job creation for employees

1.1.4.3 Strengthening technical infrastructure for the economy

1.1.4.4 Ship in application, disseminate science and technology to other regions

1.1.4.5 Increasing revenues for the State budget

For the KER, the agricultural economy is strong, the agricultural economy of the KER serves as the basic role of agriculture but at a higher level, more focused

1.2 Overview of the theory of banking credit strengthening for agricultural economy development in the KER 1.2.1 Fundamentals of commercial bank credit

1.2.1.1 The concept of commercial bank credit

Commercial bank credit is a type of credit that is either a borrowing or a property transaction in the economy between a bank transferring a certain amount of property to the borrower under the commitment of the borrower must repay both capital and interest unconditionally to the bank on the basis of the agreement of the parties through commercial banking operations

1.2.1.2 The essence of commercial bank credit

The nature of bank credit is showed in the movement process of credit in the economy through three key stages: [i] the loan period [ii] using the loan and [iii] the loans and interest repayment period So the nature of bank

credit is expressed in terms of its credibility, timing and repayment Reimbursement is characteristic of the nature of credit movement, which is a hallmark to distinguish credit categories from other economic categories

1.2.1.3 The role of bank credit in the economy

- Promoting the process of accumulation and concentration of capital, providing capital to maintain the business process continuously and contributing to investing for economic development - It is a funding tool for underdeveloped economic sectors and promoting the key industries of the country - Contributing to impacting the enterprises on enhancing the economic accounting regime for efficient use of capital to improve operation efficiency - It is an important tool in organizing the improvement of people's lives - Contributing to facilitating the development of economic relations with foreign enterprises

1.2.1.4 Classification of bank credit

Classifying bank credit so that there are appropriate management practices for each type of credit

1.2.2 The basic theory of credit strengthening for agricultural economy development

1.2.2.1 Concept of agricultural economy credit

Agricultural economy credit is a commercial bank credit used to refer to a credit relationship in which the relationship is mainly between the commercial banks and the parties involved in agricultural economy production and business to satisfy capital needs for production and business in a certain period of time as agreed between the commercial bank and the borrower with the commitment of the borrower to repay the principal and interest to commercial banks (lenders) unconditionally through commercial banking operations

1.2.2.2 The concept of credit strengthening for agricultural economy development

The concept of credit strengthening for agricultural economy development in this study is understood as: Agricultural economy credit strengthening is commercial banks which are able in fact to implement in a purposeful manner of meeting credit needs for agricultural economy production and business purposes of every subject in the economy whom meets the prescribed conditions fastly, spaciously, focusedly, strongly, tighterly for the purpose of promoting the agricultural economy development

The intension of agricultural economy credit strengthening includes: (i) Strengthening the bank's capital to increase the ability to fully and promptly meet capital demands of subjects in the economy in terms of both quantity and number of loans (ii) Increasing more concentration, more strength and more tightness to ensure the safety and efficiency of credit (iii) Strengthening the transaction point, expanding the area of operation

to bring the bank closer to customers, helping the transactions happen quickly, conveniently, safely, cost savings (iv) Strengthening the number of borrowers based on the basis of ensuring compliance with bank’s lending regulations to control credit risk (v) Strengthening banking services related agricultural economy credit to be able to provide customers with one or a complete set of banking products and services throughout their agricultural economy process of production and bussiness business

1.2.3 Characteristics of agricultural economy credit

1.2.3.1 High seasonal loans

1.2.3.2 Dependent so much on the market loans

1.2.3.3 Complex, regional and highly dependent on natural loans for production organization

1.2.3.4 Dependent on primary land collateral loans

1.2.3.5 Loans of production that products are essentially limited by biological attributes

1.2.3.6 The cost of the loans is high

1.2.3.7 Requiring bank staffs have knowledge of agricultural economy sector

1.2.4 The role of bank credit in agricultural economy development in KER

1.2.4.1 Contributing to promoting the reasonable movement of agricultural economy structure in the KER

1.2.4.2 Contributing to equipping new technology and techniques for the agricultural economy in the KER 1.2.4.3 Contributing to promoting the development of agricultural economy infrastructure in the KER 1.2.4.4 Contributing to boosting the training of human resource development in the key agricultural economy region

1.2.4.5 Contributing to developing the market

1.2.5 Indicators reflect agricultural economy credit strengthening

1.2.5.1 Group of indicators reflect credit size

(i) Borrowed customers expanding indicators, formula [1.1]; (ii) The growth of agricultural economy outstanding loans, formula [1.2]; (iii) The growth rate of agricultural economy outstanding loans, formula [1.3]; (iv) The proportion of agricultural economy outstanding loans, formula [1.4]

1.2.5.2 Group of indicators reflect credit structure

(v) Structure of outstanding loans divided by lending profession sector, formula [1.5]; (vi) Structure of outstanding loans divided by the duration of loan, formula [1.6] and [1.7]; (vii) Structure of outstanding loans divided by economic sectors, formula [1.8]; (viii) Structure of outstanding loans divided by the type of customers, formula [1.9]

1.2.5.3 Group of indicators reflect credit quality

(ix) Bad debt ratio indicator, formula [1.10]; (x) Debt collection coefficient indicator, formula [1.11]; (xi) Credit capital turnover indicator, formula [1.12]

1.2.6 Asymmetric information and factors affecting credit strengthening for agricultural economy development

1.2.6.1 Apply asymmetric information theory in credit market

Authors who are well-known with asymmetric information theory include George Akerlof, Michael Spence and Joseph Stiglitz Asymmetric information theory indicates the two most common behaviors occurring as a result of asymmetric information, namely: [i] adverse selection, adverse selection is the action that occurs before signing the contract of the party who have more information and that may harm the less informed party; [ii] moral hazard, moral hazard is the act of the more informed party make after signing the contract that may harm the less informed party In fact, in the credit market, banks are always the ones who have less information about the project and the purpose of using loans than customers

1.2.6.2 Factors limiting access to credit and effecting bank credit strengthening

- First Group of credit policy of the bank - Second Group of property and own property - Third Group of

factor of income or financial capability - Fourth Social capital or relationship and taking participation in social work - Fifth Knowledge of financial - Sixth Group of demographic factors - Seventh Group of

other factors and external conditions

1.3 Limiting the risks of bank credit strengthening for agricultural economy development

1.3.1 The concept of bank credit risk

Bank credit risk is the risk of losing a part of the bank's loan capital as the borrower fails to fulfill the obligation to repay both of principal and interest of the loan in accordance with the commitment

1.3.2 Identifying the potential risks in strengthening bank credit for agricultural economy development

1.3.2.1 The potential risks from the banks

Risks from commercial banks are basically operational risk, moral risk, tool risk

1.3.2.2 The potential risks from the customers

Due to weaknesses in capacity, organization level, production and business management, the use of loans is often ineffective, usustainable, easy to fall into losses Don’t exclude cases where the customer intentionally used capital for the the wrong purposes, even the lack of repayment goodwill, deliberately appropriated the loans

1.3.2.3 The potential risks from other causes

The risks comes from macro policies because of sudden change or slow change leading to stagnation, due to the instability of the economy, the fluctuation in politics and society at home and abroad, the fluctuation in interest rates, exchange rates, high inflation or deep deflation, risks from natural disasters, risks due to seasonal factors, market risks

1.4 Lessons learned from some countries on strengthening bank credit for agricultural economy development 1.4.1 Specific lessons learned from a number of countries

1.4.1.1 Lessons learned from Thailand

1.4.1.2 Lessons learned from Malaysia

1.4.1.3 Lessons learned from Indonesia

1.4.2 Lessons learned referring to bank credit strengthening for agricultural economy development in Vietnam and the KER

Conclusion Chapter 1

The thesis synthesized the basic theory on strengthening bank credit for agricultural economy development

in the KER This refers to the basic theory of for agricultural economy development in the

KER The new concepts are introduced include: concept of agricultural economys, concept of the agricultural economy development in the KER

agricultural economy credit, strengthening the bank credit for developing the agricultural economy in the KER, and the indicators reflect the strengthening of the bank credit for the agricultural economy development Characteristics of agricultural economy and the impacts on bank credit Describe the role of the KER in the economy Theoretical part of banking credit strengthening for agricultural economy development in the KER has been concentratedly clarified as commercial bank, concept, characteristic, role and classification of bank credit The basic theory of bank credit strengthening for developing the agricultural economy was presented, in which the new concepts are first introduced by the thesis include, concept of agricultural economy credit, concept of credit strengthening for the agricultural economy development, characteristics of agricultural economy credit, the role of bank credit for agricultural economy development in the KER; the indicators reflect agricultural economy credit strengthening Content of asymmetric information and factors limiting access to credit and affecting credit strengthening for agricultural economy development are presented as the basis for developing a real survey questionnaire on the limitations, the limited causes of bank credit strengthening for agricultural economy development This thesis mentioned the content of credit strengthening for agricultural economy development should be closely linked with strengthening to limit the credit risk The thesis mentioned the lessons learned have reference valuable for Vietnam and the KER from some countries in the region for bank credit strengthening for agricultural economy development as Thailand, Malaysia, Indonesia

Chapter 2: Bank credit situation for agricultural economy development in the KER of the MRD (2011 - 2017) 2.1 Socio-economic situation of the KER of the MRD – the impacts effect on bank credit strengthening 2.1.1 Overview of socio-economic of the MRD

The MRD is the largest agricultural production center in Vietnam, accounting for 12% of the total area and 19% of the national population, and have the advantage natural conditions for developing agriculture,food processing industry, tourism, renewable energy It annually contributes 50% of rice production, 65% of aquaculture production and 70% of fruits of all the country; 95% of rice and 60% of export fish output

In general, the MRD has great potential for agricultural development, agricultural product processing

industry, and has the most difficult is the impact of climate change, lack of high-level human resources, the medical culture is still low, the transportation has lots of limit, they are both favorable and obstacles impacts

to the development process

2.1.2 Socio-economic characteristics of the MRD economic region - implications for bank credit

2.1.2.1 The formation of the MRD KER

On April 16, 2009, the Prime Minister issued Decision No 492/QD-TTG approving the project on establishment of the MRD KER, including Can Tho city, An Giang province, Kien Giang province and Ca Mau province, of which Can Tho city is the nucleus of the region The KER with total area of about 16.589

km2, accounting for about 5% of the country's natural area and 41% of the MRD, is considered to have many advantages in agricultural economy development

2.1.2.2 The main socio-economic characteristics of the MRD KER

- First, the population structure and per capita income of the KER in the MRD (Table 2.1: Indicators on population and per capita income in the KER in the 2011-2016 period) Table 2.1 shows that the population

of the KER increased from 6,278 thousand people in 2011 to 6,415 thousand in 2016, accounting for 36,3%

of the MRD population and 7.1% of the national population The urban and rural population structure is 35:65 The per capita income of the region is about VND 42 million, lower than that of the whole country

- Second, labor structure (Table 2.2: Labor force indicators in MRD KER in the period 2011 - 2016) Table

2.2 shows that the average age of laborers aged 15 and over is about 56% -59% of the total population, the number of employed people aged 15 and over is about 55% -58%, indicating a high employment rate However, the proportion of working laborers with vocational training and vocational secondary schools is low, an average of 9% -13%

- Third, the status of agricultural land (Table 2.3: Agricultural land structure in the KER as of Dec 31, 2015)

Table 2.3 shows that the region's agricultural land accounts for 87.32% of the total natural area of the region

In particular, land for planting annual crops accounted for 59.53% of the total agricultural land area; land for aquaculture is 18,46%; forestry land is 11,94%; perennial crop land is 10.03% The area of rice cultivation is largest, accounting for 58.17% of agricultural land area

- Fourth, economic structure and economic growth (see Table 2.4):

Table 2.4: GRDP scale in the MRD KER for the period 2011 - 2017

Source: Statistical yearbook from 2011 to 2016

- Fifth, economic infrastructure: There are a number of significant projects, but overall the economic infrastructure is still limited, traffic is almost monotonous and fragmented, so it does not meet the development demand

- Sixth, the urbanization process: In the period 2011-2016, the urbanization rate of the KER reached nearly 35%, corresponding to the urbanization rate of the whole country of about 36%, but still unsustainable

2.1.3 Infulence level situation of socio-economic factors to bank credit for agricultural economy development in the KER

2.1.3.1 The results of the survey on the groups of factors affecting the access to bank credit capital for agricultural economy development in the KER

Infulence level of the groups of factors examined: the seven groups of factors and the elements in each of the investigated groups of factors has a significant effect on access to bank credit from medium to very strong

2.1.3.2 Results of the survey on the infulence level of limited causes and solutions of strengthening bank credit for agricultural economy development in the KER

The infulence level of limited causes and solutions of strengthening bank credit for agricultural economy development in the KER have effect result from medium to very strong

 In general, the results of the survey of individuals and experts are quite similar to the results of the research questions and research hypotheses

2.1.4 Achievements acquired and issues raised in agricultural economy development in the MRD KER

2.1.4.1 Achievements acquired

- First on agriculture: The average yield of rice in the period 2011-2017 is 55.3 quintals/ha, higher than the

average of the MRD (about 50 quintals/ha) It is estimated that in 2017, the area of vegetables and fruits in the KER will reach about 70,000 hectares with an output of nearly 2 million tons of vegetables; The MRD fruit trees account for more than 50% of the total area and contribute over 60% of the country's output, of which the KER contributes to the MRD 70% Cattle-breeding in general mainly dispersed small, spontaneous, however, the number of cattle and poultry in the region area is quite large

- Second, forestry: The total forest area of the KER accounts for 59% of the total forest area of the MRD,

forests have economic value and especially environment, contributing significantly to the ecological balance

- Third, on fisheries and means of catching fishes: By 2017, the KER contributes 24.5 million tons of

fishery, accounting for 57% of the MRD's fishery output For means of catching fishes, the number of fishing vessels with a capacity of 90 CV or more in the KER in 2017 is 5,665 units with a total capacity of 2,119

thousand CV

- Fourth, on the processing industry of agricultural products: In comparison with the previous years, the

processing industry in the KER has made some flourishing, but only 20% of agricultural products have been processed but not branded

- Fifth, services for agricultural economy production: By the end of 2015, the level of mechanization in

the MRD is about 1.6 CV/ha to 1.8 CV/ha, approximately one third compared to Thailand Technical services, biology, chemistry, information technology, product consumption have been progressing, banking

and financial services are quite developed

In summary, the agricultural economy of the MRD KER in the period 2011 - 2017 has seen positive changes and significant achievements These achievements have made a significant contribution to bank credit, as well as put the bank ahead of the advantages and disadvantages of strengthening bank credit for agricultural economy development in the KER of the MRD

2.1.4.2 Limitations and issues raised in agricultural economy development in the KER

- Limitations in the human resources - Limited by the structure and size of agricultural economy - Limitations in the link - Limitations in the new technology - Limitations in the investment capital - Limitations in living with climate change The limitations mentioned above are the issues raised that need to

be researched in order to be able to carry out optimal strengthening bank credit for agricultural economy development in the KER of the MRD in the coming period

2.2 Bank credit situation of agricultural economy development in the KER of the MRD

2.2.1 About the network of branches of commercial banks in the KER

Currently, the MRD KER has more than 40 active credit institutions In general, the KER with a wide banking network is significant advantage in the implementation of bank credit strengthening for agricultural economy development

2.2.2 Capital mobilization of branches of commercial banks in the MRD KER (2011 - 2017)

2.2.2.1 General results of mobilization activities

Over the past years, commercial banks in the KER have made great efforts in mobilizing capital (Table 2.13)

Table 2.13 Mobilized capital of commercial banks in the KERs (2011 - 2017)

the situation of capital mobilization of commercial banks in the KER with whole MRD (See Table 2.14)

Table 2.14 Comparison of scale of capital mobilization of commercial banks in the MRD and the KER

3 Proportion of mobilizing capital of the KER /

Source: Collected from Statistical Office and branches of local banks in the KER

The data from Table 2.14 shows that mobilized capital has increased over the years, but the mobilization situation is still not enough for lending to commercial banks in the MRD and the KER In fact, in the years 2011-2017, mobilized capital only meets about 80% of the loan balance of the MRD and 70% of the

outstanding loans in the KER (see Table 2.15)

Table 2.15 Comparing the ratio of capital mobilization / outstanding loans of commercial banks in the MRD

and the MRD KER (2011 - 2017)

(Unit: billion)

No Target

Year

2011 2012 2013 2014 2015 2016 2017

1 Mobilization of Mekong Delta/

2 Capital mobilized in the

Source: Collected from Statistical Office and branches of local banks in the KER

2.2.2.2 Capital mobilization results by type of mobilization

- Capital mobilized by term: Capital mobilized by term reflects the structure of mobilized capital of commercial

banks (Table 2.16 Mobilized capital by term of commercial banks in the MRD KER (2011 - 2017))

The data from Table 2.16 shows that in the period 2011 - 2017, short-term deposits account for a large proportion, the next are deposits with term of over 12 months, the rest are demand deposits In the years

2013-2015, the SBV of Vietnam (SBV) has adjusted the ceiling deposit interest rates, where long term interest rates are higher than short terms, leading to the proportion of deposits with term of less than 12 months decreased, the proportion of deposits with term of over 12 months increased but not significant The evolution of term deposit in the economy showed an important aspect, that is the belief in the stability of the economy, the banking system in the public is not high so they don’t dare to choose medium and long term deposits due to fear of risk Commercial banks have to use part of their short-term capital for medium and long-term loans according to the SBV (using short-term capital for medium and long-term loans from 30% to 60%, down from 60% to 50% in 2017 , down to 45% in 2018 and down to 40% in 2019) The use of up to 45% of short-term capital, sometimes higher for medium and long-term loans, poses a threat to the liquidity

of the bank Therefore, the commercial banks in the KER should promote the mobilization of medium and long-term capital to ensure the balance of mobilization term with the loan term in order to strengthen bank credit for agricultural economy development in the KER of the MRD in the coming years

- Mobilized capital by type of deposit: Capital mobilized from the population increases gradually (Table 2.17: Mobilized capital by type of deposit of commercial banks in the KER (2011 - 2017)) Table 2.17 shows

that deposits from residential savings from 2011 to 2017 account for the majority of total deposits with the proportion in 2017 of 79.24% and the rest is savings deposits from economic organizations and other deposits in the form of gold and foreign currencies have been converted to the same amount The capital mobilized from the population increases is favorable for strengthening bank credit for agricultural economy development in the KER, but in fact agricultural economy in the region is still thirsty capital, that confirms the need to increase capital mobilization more, more suitable in the coming years

- Capital mobilized by value: VND deposits increase period 2011-2017 (Table 2.18 Mobilized capitals by type of value of commercial banks in the MRD KER (2011 - 2017)) Table 2.18 shows that VND deposits

account for a large proportion of total mobilized capital and gradually increase over the years, accounting for 89.48% in 2011 and 97.66% in 2017 The proportion of foreign currency deposits decreased year by year, from 10.52% in 2011; to 2.34% in 2017 The size of deposits in foreign currency is low and decreasing because the SBV has repeatedly adjusted the ceiling deposit interest rate, from the end of 2015 till it is 0% Increased mobilization of capital, mainly domestic currency, shows that the monetary policy of the SBV has been corrected Capital mobilization from the local currency increased accompanied by increased lending is favorable for strengthening bank credit for agricultural economy development in the KER of the MRD

2.2.3 The outstanding loans in the form of lending by branches of commercial banks in the KER (2011 - 2017)

2.2.3.1 Outstanding loans by term: Over the years, outstanding loans of branches of commercial banks in

the MRD region (2011-2017) are mainly short-term (see Table 2.19)

Table 2.19 Credit outstanding balance by term of branches of commercial banks in the KERs (2011 - 2017)

Proportion / total outstanding loans (%) 26.02 30.08 31.94 33.09 35.12 35.52 40.02

Source: Synthesis Report of the provincial branches of the SBV Apply formula [1.6] and [1.7] with the data in table 2.19 to calculate the ratio of short-term and medium-term credit debt to total outstanding loans; short-term loans accounted for 65% to 74% of total outstanding