Dealing With Non-Performing Loans During The Bank Restructuring Process in Vietnam: Assessment Using The AHP and TOPSIS Methods

  • Anh Thi Van Tran University of Economics and Business (UEB) – Vietnam National University (VNU)
  • Nhung Thi Nguyen University of Economics and Business (UEB) – Vietnam National University (VNU)
  • Tu Thi Thanh Tran University of Economics and Business (UEB) – Vietnam National University (VNU)
Keywords: analytic hierarchy process (AHP), fuzzy technique for order preference by similarity to ideal solution (fuzzy TOPSIS), non-performing loan(s) (NPLs), Vietnam

Abstract

This article aims to assess the solutions that have been implemented in Vietnam to deal with non-performing loan(s) (NPLs) in the banking system. By trying to build evaluation criteria through a literature review and an expert survey, as well as using the analytic hierarchy process (AHP) and technique for order preference by similarity to ideal solution (TOPSIS), this research measures the effectiveness of the resolution of NPLs in Vietnam through many factors. The empirical results show that, in the past, the banking system in Vietnam has not dealt very well with bad debt, as it mostly uses traditional methods such as NPL write-offs by loan loss reserves or the liquidation of collateral. Based on our consideration of the NPLs’ resolutions that the Vietnamese banking system has implemented recently, we propose some suggestions to improve the necessary conditions for applying more market-based solutions, such as debt-equity swaps and securitization to thoroughly resolve the NPLs in Vietnam

Author Biographies

Anh Thi Van Tran, University of Economics and Business (UEB) – Vietnam National University (VNU)

Dr. Tran Thi Van Anh currently is working as a lecturer and researcher at University of Economics and Business, Vietnam National University. She graduated from Hanoi National Economics University with a major in banking. She received a master's degree in economics and a PhD in economics from Hiroshima University, Japan. She has 17 years of experience in banking management as a senior expert at the Ministry of Finance of Viet Nam. This topic is her current research focus as well as the subject of some of her research papers published in several Vietnamese and international journals.

Nhung Thi Nguyen, University of Economics and Business (UEB) – Vietnam National University (VNU)

Graduated from the Hanoi Foreign Trade University in Vietnam, Dr. Nguyen Thi Nhung received the Scholarships from French Government for Master and Doctoral Degrees about Finance and Banks at University of Bordeaux in France. Dr. Nhung is currently a lecturer at the Faculty of Finance and Banking, University of Economics and Business (UEB) – Vietnam National University (VNU). Research fields that Dr. Nhung is interested in are Derivatives, Financial Analysis and Investment, Green Finance…

Tu Thi Thanh Tran, University of Economics and Business (UEB) – Vietnam National University (VNU)

Prof. Dr. Tran Thi Thanh Tu received her Master degree in International Accounting from the Swinburne University - Australia and the PhD degree in Finance at the National Economics University. She has nearly 20-year experience as a teacher, researcher and consultant in the field of banking and finance. Prof. Tu has led and participated in many projects with various domestic and international financial institutions, such as the World Bank, Asian Development Bank, State Bank of Vietnam, Securities Commission, Ministry of Finance, etc. Besides, she has been a senior consultant for many commercial banks in Vietnam.

References

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Published
2020-12-24
How to Cite
Tran, A. T. V., Nguyen, N. T., & Tran, T. T. T. (2020). Dealing With Non-Performing Loans During The Bank Restructuring Process in Vietnam: Assessment Using The AHP and TOPSIS Methods. Gadjah Mada International Journal of Business, 22(3), 323-347. Retrieved from https://journal.ugm.ac.id/v3/gamaijb/article/view/15739