Determinants Of Loan Repayment on Time of Individual Customers at the Hau Giang Branch of Construction Bank of Vietnam

Abstract

This paper investigates of factors affecting the ability of individual borrowers to repay loans on time at The Construction Bank - Hau Giang Branch. Data used were interviewed 200 individual borrowers directly at the bank. The model is built on credit allocation theory, credit score theory, insolvent risk assessment theory, and factors influencing the probability of repayment. Logistics model is used to predict factors affecting customers' ability to repay loans on time. The findings show that factors affecting the probability of on-time repayment of individual borrowers at Construction Bank – Hau Giang Branch include gender, education level, loan interest rate, total income payment which are negatively affecting on the probability of repayment on time and loan amount, the field of real estate lending is in favorable correlation with the probability of repayment on time. The remaining variables include: age, other income, number of dependents, number of supervisions, proper use of purposes, repayment period, and the field of consumer loans are not statistically significant. The results also make recommendations to bank administrators in the risk management of the ability to repay loans of individual borrowers at the Construction Bank - Expenditure Hau Giang branch.