Policy Recommendations for Improving Credit Risk Management: A Case Study of Commercial Banks in Vietnam

Background: Credit risk management is essential in ensuring the safety of banks' credit activities and contributing to minimising risks in banking operations. It involves identifying and analysing risk factors, measuring risk levels, and choosing to deploy measures and manage credit activities to limit risk. Objective: The study evaluates critical factors affecting credit risk management at commercial banks in Vietnam. On that basis, the author proposes policy implications that contribute to improving credit risk management. Methodology: The researcher used a quantitative method and surveyed 700 credit officers in 20 commercial banks. The questionnaire served as the instrument for data collection. The data were processed by testing Cronbach's alpha, exploratory factor analysis, confirmatory factor analysis, and structure equation model with the support of SPSS 20.0 software. Result: Research shows that five factors: (1) credit policy, (2) macro environment, (3) credit information, (4) credit process, and (5) digital technology are essential for effective credit risk management. Therefore, evaluating and measuring credit risk management is necessary for banks' survival and development. Conclusion: Credit risk management is crucial to the bank's governance, operations, and development. Effective risk management minimises credit risk - an essential activity in Vietnamese commercial banks. Unique Contribution: This study could benefit both theory and practice in credit risk management in commercial banks. This information could be useful for banks in their efforts to ensure profits and enhance their reputation and operational capacity. Key Recommendation: From the above results, the researcher proposes five policy recommendations to improve the quality of credit risk management at commercial banks in the context of development and integration.