Evaluation Criteria for Expanding Bank Credit to Small and Medium Enterprises

International economic integration will further increase the number of commercial banks operating and providing capital for the economy. Therefore, SMEs will be more proactive in choosing banks to borrow capital with reasonable costs and the ability to meet appropriate capital needs, thereby contributing to increasing profits for businesses.

1.3.2.2. For commercial banks

In terms of efficiency, expanding credit to SMEs not only benefits small and medium enterprises but also helps banks.

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trade expands investment credit and stable development. Facing the environment

The increasingly fierce competition in the banking sector and in credit activities has forced commercial banks to constantly innovate their business activities, diversify credit types, enhance modern banking services, expand customers, innovate and improve customer service style, etc. In particular, research on expanding credit and diversifying customer groups is an important direction, helping commercial banks not only to disperse risks but also contribute to profit growth. Approaching and lending to SMEs is a popular trend of commercial banks today because this is a very potential group with a large number and high-scale funding needs. SMEs are the right group for commercial banks to seek, exploit and expand credit relations. Moreover, with the large number of SMEs, along with the expansion of credit, the accompanying needs such as using payment services, consulting, money transfer, etc. are increasing, thereby helping to increase revenue for banks and continuously expand the customer base for banks, helping to disperse risks in business operations. These are important factors that help commercial banks maintain and develop sustainably.

1.3.2.3. For the economy

It can be said that an economy is stable and developing when each constituent element is

Therefore, it must also be stable and developed. The expansion of credit for SMEs by commercial banks contributes to increasing the effective circulation of capital, enhancing the production and business rhythm, increasing capital turnover, on the one hand promoting the development of the enterprises themselves, on the other hand is a way to increase revenue for the State Budget through tax payments and other obligations of SMEs to the State. In addition, the expansion of credit for SMEs forces banks to maximize their operational capacity, thereby increasing the concentration of idle capital sources in society, contributing to making all capital resources optimally exploited to serve the cause of socio-economic development.

1.3.3. Criteria for evaluating the expansion of bank credit to small and medium enterprises

1.3.3.1. Qualitative indicators

The expansion of credit to SMEs is demonstrated

present through ability

power

satisfy more and more the increasingly diverse needs of SME customers, shown through aspects such as: expanding credit granting methods (single loans, loans according to credit limits, loans according to investment projects, etc.); expanding loan term frames (short-term, medium-term, long-term loans); expanding credit guarantee conditions (with real estate collateral, movable property collateral, third-party guarantees, unsecured loans), expanding types of credit products for

SMEs (loans to supplement working capital, loans to purchase fixed assets, guarantee certificates, discounting of goods documents, etc.); ...

1.3.3.1. Quantitative indicators

 Expand the number of SMEs having credit relationships with banks

Increase in the number of SMEs having credit relationships with banks:

determine, develop

MSL = St St1

In there:

MSL: is the increase in the number of SMEs having credit relationships with banks.

St: is the number of SMEs having credit relationships with banks in period t.

St1: is the number of SMEs having credit relationships with banks in period t1.

This indicator shows the increase in the number of SMEs having bank credit relationship (if > 0) and the decrease (if < 0). This is one of the indicators reflecting the level of credit expansion of banks for SMEs.

Growth rate of the number of SMEs having credit relationships with banks (TL SL):

TLSL

MSL

100%

t 1

This indicator reflects the rate of change in the number of SME customers with credit relationships in this period compared to the previous period.

Proportion of number of SMEs having credit relationship with banks:

In there:

TTSL

S* 100% S

TTSL: Rate

row.

weight

number of SMEs involved

credit with bank

S*: Number of SME customers having credit relationship with the bank.

S: Total number of customers having credit relationship with the bank.

This indicator reflects the percentage of SME customers in the total number of customers with credit relationships at the bank.

 Expand credit balance for SMEs

Outstanding credit for SMEs reflects the scale of bank credit for SMEs at a given point in time.

Credit balance increase for SMEs:

MDN = DNt DNt1

In there:

MDN: is the increase in outstanding credit for SMEs.

DNt: is the outstanding credit balance for SMEs in the tth period.

DNt1: is the outstanding credit balance for SMEs in period t1.

This indicator reflects the change in absolute number of outstanding credit balances for SMEs. Outstanding credit balances for SMEs are the credit value that banks provide to SMEs at a certain point in time during the period. This is also an indicator reflecting the bank's operating capacity, especially the ability to use capital.

Growth rate of outstanding credit for SMEs (TL DN):

TLDN

MDN

100%

This indicator shows the growth rate of outstanding credit for SMEs in this period compared to the previous period.

If this ratio > 0, it shows that the bank's credit activities for SMEs are growing.

If this ratio is < or = 0, it shows that this bank activity is not growing.

Credit balance ratio for SMEs:

In there:

TTDN

DN* DN

100%

TTDN: is the ratio of outstanding credit to SMEs.

DN*: is the outstanding credit balance for SMEs.

DN: is the total outstanding credit balance of the bank.

This indicator reflects the percentage of outstanding credit for SMEs in the total outstanding credit of the bank. The higher this ratio is, the more important the credit activities for SMEs play in the credit activities of the bank.

 Expand credit sales for SMEs

Credit growth for SMEs:

MDS = DSt DSt1

In there:

MDS: is the increase in credit sales for SMEs.

DSt: is the total credit turnover for SMEs in period t.

DSt1: is the total credit turnover for SMEs in period t1.

This indicator reflects the change in absolute number of credit turnover for SMEs. Credit turnover for SMEs in the period is the total credit value

What the bank actually grants to SMEs for a certain period is usually

in a year, a month, a quarter... This is just a usage.

aggregate credit reflects the scale of credit

Credit growth rate for SMEs (TL DS):

TLDS

MDS

100%

This indicator reflects

speed light

t 1

change in credit sales for SMEs

this period compared to the previous period.

Credit turnover ratio for SMEs:

In there:

TTDS

DS* DS

100%

TTDS: is the ratio of credit sales to SMEs.

DS*: is total credit turnover for SMEs.

DS: is the total credit turnover of the bank.

This indicator shows what percentage of total lending sales are provided to SMEs.

1.3.4. Factors affecting the expansion of bank credit to small and medium enterprises

1.3.4.1. Factors from commercial banks

Bank capital size

The scale of a bank's capital is a factor that provides financial capacity and is the foundation for credit activities. The scale of capital plays a decisive role in the growth process; expanding the scale and scope of a bank's business activities. The capital mentioned is mainly mobilized capital and the bank's own capital. The capital used mainly in credit granting is mobilized capital. Banks can only expand credit when they mobilize a large amount of capital and are diverse in terms of terms and scale. Mobilized capital is constrained by the capital mobilization limit coefficient. Therefore, in order to mobilize a large amount of capital, it is necessary to maintain a sufficiently large source of equity capital. In addition, commercial banks must also maintain a minimum capital safety ratio - CAR, comply with credit limits for a customer or a group of related customers during the operation process. These limits all depend on equity capital. Thus, large capital is a factor that increases the scale of credit activities for SMEs.

Bank credit policy

A bank's credit policy is a system of measures related to credit expansion or credit restriction to achieve planned goals for each specific period and limit risks, ensuring safety in the bank's credit business activities. Credit policy is the basic principles governing credit expansion. Therefore, this is a factor originating from the bank that has a great influence on the ability to expand credit to SMEs.

Credit policy includes specific contents that have a direct impact on the expansion of credit such as: credit scale, credit limit, credit structure, credit term, credit price, credit guarantee.

Credit analysis and appraisal process

This is an important step in deciding whether or not to grant credit to customers. A credit analysis process that has to go through many unnecessary and cumbersome steps will be a barrier to customers' access to credit. On the contrary, if the credit process is quick, simple, and effective, it is an advantage in attracting customers. Because the specific products of banks are quite similar, the competitive factor that creates an advantage for banks is the quality of customer service. A quick credit process with reasonable procedures will save time and costs, creating sympathy from customers.

Credit interest rate

Credit interest rate is the price of using capital for a certain period of time that the user must pay. Normally, the deposit interest rate must be lower than the loan interest rate and the loan interest rate must be lower than the average profit rate of the enterprise, at the same time the deposit interest rate must be positive (greater than the inflation rate). This is to ensure the rights of customers who deposit savings, ensure profits for credit institutions and promote enterprises to expand production. The interest rate depends on each customer, loan term, currency, scale.

credit. Interest rate policy is a factor affecting credit expansion for

SMEs of banks, because if interest rates are low, it will encourage businesses to use bank credit funding and vice versa.

Qualities and capacities of credit staff

People are one of the decisive factors for the success of a credit institution. Therefore, when talking about expanding credit activities for SMEs, it is impossible not to mention the contributions and impacts of credit officers. Credit officers are the ones who directly deal with customers, and are the bridge for customers to access the bank's credit products. Subjects

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