The market is still very limited. This is because the administrative procedures when participating in the market are relatively complicated and need to be simplified, as well as the level of classification and subdivision of bad debts is not appropriate and must be implemented as discussed above. Therefore, in addition to the disclosure and transparency of information related to the market, the simplification of administrative procedures, classification and appropriate subdivision of bad debts are also important factors to promote market participants and stimulate market development. In particular, the classification and subdivision of bad debts can be based on the time of bad debts, types of mortgaged assets, liquidity of mortgaged assets, expectations of future increases in prices of mortgaged assets, prospects for the investment sector related to bad debts, support policies for the investment sector and investment needs of enterprises in the investment sector related to bad debts.
In addition, there should be policies to encourage private enterprises to participate in the bad debt market. In fact, most of the interviewed enterprises willing to participate in the bad debt market mainly focus on the group of enterprises with small labor and capital operating in the fields such as; (i) real estate business; (ii) basic construction investment; (iii) processing and manufacturing industry; (v) wholesale and retail; and (vi) transportation and warehousing. Therefore, policies to encourage enterprises to participate in the market should focus on small and medium enterprises in the above fields to accelerate the development of the bad debt market according to the market mechanism.
5.3.3 Need to organize a centralized market in the form of a debt trading floor
The research results show that the majority of interviewees believe that it is necessary to establish a debt trading floor with 207 (48.9%) answers at the total level of 8,9,10; and the establishment of a debt trading floor has a positive impact on the seller's decision to participate in the market with a correlation coefficient of 1.106 at the 1% significance level. This means that when organizing a centralized market in the form of a debt trading floor, it will stimulate sellers to decide to sell debts. Currently, in Vietnam, there is no specialized debt trading floor. The establishment of a debt trading center like a current stock exchange will provide necessary information for both buyers and sellers in the bad debt market, which is necessary to resolve the remaining bad debts in the economy. There will be a central system to manage information related to bad debts such as information related to the debtor enterprise, secured assets, debt collection history and transaction history; and there conduct public bad debt purchase offer or bidding
bad debt trading. Debt trading floor is operated like a stock exchange with modern online trading technology.
5.3.4 Building a system of basis for determining bad debt selling price
Price has a positive and strong influence on the seller's ability to participate in the market with a correlation coefficient of 0.534 at 1% statistical significance level. This implies that when the price increases, the seller's ability to participate in the market will increase and vice versa. An increase in price will lead to an increase in the seller's benefit and as a result, stimulate the seller to participate and supply products, goods and services in the market. On the contrary, price has a negative and strong influence on the buyer's purchase decision with a correlation coefficient of -0.468 at 1% statistical significance level. This implies that when the price increases, the buyer's ability to participate in the market will decrease. Therefore, the offer price is much higher than the accepted purchase price, which will prolong the negotiation time and lead to transaction failure. Currently, due to differences in valuation criteria and valuation methods among valuation organizations, debt valuation has not followed a unified standard as discussed in Chapter 3. Buyers and sellers have difficulty in choosing a suitable reference price for the transaction. Therefore, the State Bank, the Ministry of Finance and relevant agencies need to unify in building a system of bases for determining the value of bad debts. In addition, it is necessary to form and develop independent debt valuation companies to conduct debt valuation on a support basis.
5.3.5 Focus on industry development policies
The analysis results showed that the growth rate of the industry has a positive and strong influence on the seller's decision to participate in the market with a correlation coefficient of 33.994 at the 5% statistical significance level. This implies that, for industries with increasing economic growth rates, the probability of the subject operating in that industry participating in the market is higher. Industry development is closely related to risks in the operation process. Increasing the scale of production and business without preparing for the integration period is the risk of collapse of enterprises. Therefore, industries with high growth rates tend to participate in the market more than industries with low growth rates. Along with direct solutions to increase the decision to buy and sell in the market and develop the bad debt market, solutions revolving around issues related to industry development policies also need to be focused on. The fact is that for the most part, bad debt arises mainly from the following industries:
(i) real estate business; (ii) basic construction investment; (iii) finance, banking and
insurance; (iv) Processing and manufacturing industry; (v) wholesale and retail; and (vi) warehousing and transportation, mainly due to the lack of competitiveness and experience before the integration period. Therefore, it is necessary to provide information related to these industries, develop training programs to improve knowledge and skills, and issue policies to motivate these enterprises to develop. In addition, commercial banks and credit institutions need to strictly implement the lending process for enterprises. Improve the capacity to investigate, monitor, and appraise information related to projects, project feasibility, and especially closely monitor the flow of loans invested in projects to prevent businesses from investing for the wrong purposes. Issue regulations prohibiting collusion, cross-ownership, and backdoors between businesses and banks, and between banks to ensure accurate identification of real project investors.
5.4 Solutions to increase social welfare in the bad debt market.
5.4.1 Policy scenarios from a social welfare perspective
As discussed above, increasing social welfare in the bad debt market can reduce the social welfare in the lost credit market which is the foundation for social development. As the analysis results show, the social welfare in the bad debt market is divided into 03 main ranges: [0.68; 0.75], [0.76; 0.83] and [0.84; 0.90], so there are three policy scenarios for social welfare in the bad debt market.
- For the first policy scenario [0.68; 0.75], in order for welfare in the bad debt market to increase; (i) first of all, policy makers need to increase the dissemination of information related to the bad debt market through information channels such as television, seminars, internet, newspapers and magazines and through friends and relatives. This is because all of these factors have a positive and strong influence on social welfare in the bad debt market. An increase in propaganda on television, seminars, internet, newspapers and magazines and friends and relatives will increase social welfare by 0.84; 1.38; 0.98; 0.54; 1.96 (see table 4.12) ceteris paribus. In addition, the change in welfare in the bad debt market also depends on factors such as: the level of information disclosure and transparency, the level of complexity when participating in the market, the level of debt classification and subdivision, debt classification and subdivision, encouragement of non-state enterprises, information disclosure and transparency, removal or reduction of charter capital, decision on asset ownership when buying and selling debt, regulations on tax declaration calculation, industry growth rate 2013 - 2017, GDP contribution ratio of the industry 2017, number of employees of the enterprise, equity of the enterprise, education level and gender. Every
Changes in these factors also change the welfare in the NPL market in a statistically significant way. For the first scenario, the study estimates the social welfare achieved in the NPL market to be 1.10E+10.
- For the second policy scenario [0.76; 0.83], to increase welfare in the bad debt market, it is necessary to first promote information in the bad debt market through the internet, newspapers, magazines and relatives. Because an increase in promotion through the internet, newspapers, magazines and relatives will increase welfare in the debt market by an amount of 1.38, 1.98; 1.96 (see table 4.12) under the condition that other factors remain unchanged. On the other hand, to increase welfare in the bad debt market, it is also necessary to publicize and make transparent information, reduce the complexity of market participation, reduce the level and provisions on charter capital, increase the diversity of market participants, simplify market participation procedures, classify and divide bad debts, publicize and make information transparent. Issue regulations on the time to establish property ownership, regulations on tax declaration methods. This is because when these factors increase by one unit, it will increase social welfare in the bad debt market by 3.1; 1.3; 0.66; 0.55; 1.9; 0.49; 1.3; 2.0 (see table 4.12) under the condition that the factors are unchanged. Besides, the development speed of industries, business lines of enterprises, number of employees, equity and gender are also among the factors that increase social welfare in the bad debt market. The estimated result of welfare in the bad debt market in the second scenario is 4.10E+10.
- For the third policy scenario [0.84; 0.90], to increase welfare in the bad debt market, it is necessary to first disseminate information on the bad debt market through television, newspapers, magazines, and seminars. In addition, policy makers and managers also need to reduce the complexity of market participation, the level of regulations on charter capital, increase the diversity of market participants, establish trading floors, simplify market participation procedures, eliminate or reduce charter capital levels, issue regulations on the time to establish property ownership, regulations on tax declaration calculations, and regulations on unfair recovery behavior. This is because an increase in the above factors will increase welfare in the bad debt market by an amount of 0.71; 0.57; 1.5; 0.43; 0.74; 0.69; 0.48; 0.35; 1.8; 1.0; 5.5; 0.76; 1.2; 1.7 (see
Table 4.12) under the condition that other factors remain unchanged. In addition, policy makers also need to pay attention to factors such as industry growth rate 2013-2017, business sector, equity, education level and gender are also among the causes of increased social welfare in the bad debt market. Social welfare is estimated for the third scenario at 1.70E+12.
5.4.2 Comparison of social welfare scenarios and development policy options
The social welfare of the three scenarios is shown in Table 5.1, which represents the policy reference point for social welfare in the bad debt trading market:
Table 5.1: Social welfare scenarios and options
Policy scenario
Scenario 01 | Scenario 02 | Scenario 03 | |
Social welfare | 1.10E+10 | 4.10E+10 | 1.70E+12 |
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As shown in Table 5.1, scenario 03 achieves the greatest welfare in the bad debt trading market. Therefore, to develop the bad debt market according to the market mechanism, the solutions in policy scenario 03 are the policy scenarios that achieve the highest results, when approaching from the perspective of the welfare achieved in the bad debt market is the greatest, or in other words, scenario 03 will be the scenario that minimizes the welfare lost in the credit market.
Chapter 5 Conclusion
In chapter 5, the author summarized the main research results of the thesis, pointed out the limitations of the thesis and suggested new research directions in the future. From the research results of the thesis, the author made recommendations and measures to increase the decision to buy and sell in the bad debt market, increase social welfare in the bad debt market and stimulate the development of the bad debt market according to the market mechanism.
CONCLUSION
The study was conducted to explain the mechanism of the formation of the bad debt market, establish a measure of social welfare in the market and build an empirical analysis model. The results of the theoretical study showed that, in order to analyze the factors affecting the bad debt market, it is necessary to look at it through the behavior of deciding to participate or withdraw from the market. On the other hand, the development of the bad debt market cannot be viewed monotonously from the supply or demand side of the bad debt market, but must be viewed from the perspective of social welfare in the bad debt market. The introduction of policies to stimulate the development of the bad debt market must be considered from the perspective of minimizing the welfare in the credit market lost or maximizing the social welfare achieved in the bad debt market. In the empirical analysis, the binomial logistic regression model, the multinomial logistic regression model and the maximum integration method were used for research purposes. The context of Vietnam's bad debt market through questionnaires sent to enterprises, commercial banks and credit institutions is used as data to verify the reliability and suitability of the research model as well as analyze factors affecting the market in order to propose solutions to increase buying and selling decisions in the Vietnam bad debt market, towards the development of Vietnam's bad debt market according to the market mechanism, contributing to reducing the remaining bad debt in the economy. The results of the thesis will be meaningful suggestions for managers, policy makers and scientists as a reference in the process of analyzing and explaining issues related to the market and the development of the bad debt market. However, due to limited research data and research space, the study has not considered the impact of cultural factors on the market participation decision behavior of buyers, sellers and social welfare in the market. On the other hand, the sample size of the survey data used to analyze 423 samples and only investigated within the scope of Hanoi City. Therefore, to have a more general and comprehensive view of the bad debt market, it is necessary to consider cultural factors and expand the sample size as well as conduct surveys to collect data from different areas for the next research direction.
LIST OF SCIENTIFIC WORKS
PUBLICATIONS OF THE AUTHOR RELATED TO THE THESIS TOPIC
[1]. Pham Thi Truc Quynh, Nguyen Viet Hanh (2017), “Model of Bad Debt Trading Market Development”, Journal of Applied Sciences , ISSN 1812-5654 (scopus), pp. 511-517.
[2]. Pham Thi Truc Quynh, Tran Thi Lan Anh (2019), “Analysis of factors affecting demand in the bad debt trading market in Vietnam”, Proceedings of the national scientific conference: Ability and cost of accessing finance of Vietnamese enterprises , Labor and Social Publishing House, pp. 161-173.
[3]. Pham Thi Truc Quynh, Nguyen Viet Hanh (2019), “Influential Factors on Bad Debt Trading Market Participation Behavior of Seller: Experimental Evidence from Vietnam”, International Business Management , pp. 181-188
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