Credit risk indentification methods for loan portfolios of Vietnamese commercial banks

Abstract

 Risk indentification is an important step in credit risk management process of loan portfolio, which includes: building framework for risk management, risk identification, risk measurement and using tools for risk management. In loan portfolio range, credit risk identification has distingished characteristics with this for individual loan. With current theoretical and practical literatures, there are not many studies focusing on methods and tools in the purpose of credit risk identification in loan portfolio. This paper gives overview on theories of methods applied to identify credit risk in loan portfolio. Based on which, the authors evaluate facts of methods used in loan portfolio risk indentification by survey and professional interview. The final contribution of this paper is giving solutions for Vietnamese commercial banks in order to improve credit risk indentification methods for loan portfolios, from that banks could reduce credit risk level in their operations.