THE IMPACT OF CREDIT RISK ON OPERATIONAL EFFICIENCY OF VIETNAMESE COMMERCIAL BANKS

Abstract

In banking business, credit is the activity that brings the bank's main profit but also the potential risk. This is a major risk in banking business, so all credit and credit risk impacts on profitability as well as banking efficiency. This article is intended to study the impact of credit risk on operational efficiency through return on assets, return on equity, technical efficiency by regression models: Pooled Ordinary Least Squares, Fixed Effect Model, Random Effect Model, Feasible Generalized Least Squares. The results of the study show that credit risk has the opposite effect on the operational efficiency, from which the author proposes solutions to limit credit risk to improve operational efficiency of commercial banks in Vietnam.

Keywords: Credit, credit risk, commercial bank, profitability, operational efficiency.