A research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration, School of Management

Research report (M.Sc.) - Asian Institute of Technology, 2003

Many banks failed in the crisis, and many others are technically bankrupt, largely as a result of poor lending practices- particularly in commercial lending, the dominant element of most loan books. To improve the quality of such loans, banks must have suitable risk assessment systems. However, banks in emerging markets generally employ credit officers with limited skills and do not have high-quality financial information on customers. Lending decision based on qualitative assessment and generic solutions don't work. We should have a credit analysis system in place. To create such a system, it is necessary to answer two key questions: how good is the judgment of the credit officers and what is the quality and availability of the information (financial and non-financial) that can be used to assess risk quantitatively? The responses largely determine the type of risk assessment system that should be developed. Having worked for HSBC offices in Vietnam and Paris, I wish to study in depth about a framework for "Credit Analysis" currently adopted at HSBC Bank. The result of this research will obviously add significant value to my continued job at HSBC Vietnam and also to the banking industry in Vietnam in general.