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Solutions to promote export credit financing activities at the Bank for Foreign Trade of Vietnam - 2


1.2. General issues of bank credit (TDNH).

1.2.1. Concept and characteristics of TDNH.

1.2.1.1. Concept.

In real life, the term credit is understood in many different ways. Even in financial relations, depending on the specific context, the term credit has its own content.

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From the perspective of transferring loan funds from subjects with surplus savings to subjects with deficit savings, credit is considered a method of transferring funds from lenders to borrowers.

In a specific financial relationship, credit is a transaction of assets on the basis of repayment between two subjects.

Solutions to promote export credit financing activities at the Bank for Foreign Trade of Vietnam - 2

Credit also means a loan amount that financial institutions provide to customers. In some specific contexts, the term credit is synonymous with the term loan.

The ultimate goal is to consider credit as a basic function of the bank. Therefore, based on the functional approach of the bank, credit is understood as follows: "Credit is a transaction of assets (money or goods) between the lender (bank and other financial institutions) and the borrower (individuals, businesses and other entities), in which the lender transfers assets to the borrower for use within a certain period of time according to the agreement, the borrower is responsible for unconditionally repaying the principal and interest to the lender when the payment is due."

In a market economy, if we use the criterion of “transfer” as the basis for dividing credit forms, there are two types: commercial credit and bank credit. Commercial credit is a form of lending in goods; Bank credit is a credit relationship between banks, other credit institutions and individuals and businesses.

1.2.1.2. Characteristics of bank credit.

Originating from the concept of bank credit, bank credit has a number of


following characteristics:

Firstly, in credit relations, banks clearly demonstrate their role as financial intermediaries, as the middlemen in performing capital mobilization from entities with idle capital in the economy (banks are borrowers) and using investment capital for businesses, banks are lenders.

Second, commercial banks, with their lending objects being money, are not subject to any restrictions on direction, meaning they can lend to all economic sectors (those sectors operate effectively and have feasible production plans). On the other hand, with their large capital scale, commercial banks can meet the demand for large loans at different scales with different terms: short-term, medium-term and long-term.

Third, commercial credit is different from commercial credit in form, scale and duration of operation, but there is a close relationship between them, supporting and complementing each other. Commercial credit helps overcome some limitations of commercial credit in terms of space and geography, credit scale, and cases when payment is due if for some reason the buyer does not have or does not have enough money to pay. This close relationship is thanks to the implementation of discounting and rediscounting of commercial bills at banks when partners have commercial bills and need their money.

The development of credit forms, especially commercial banks, over the past decades and up to now in the world has had many changes and developments both in breadth and depth. The process of operation and development of commercial banks is closely linked to the operation and development of the social reproduction process. In the market economy, commercial banks play an increasingly important role as an intermediary in coordinating the flow of money so that the economy can operate stably and develop.

1.2.2. The role of bank credit.

The role of bank credit is demonstrated through the following aspects:

1.2.2.1. Bank credit contributes to promoting the development of social productive forces.

In the process of business production, businesses do not always have enough capital to meet their development needs, so to


To ensure normal production and business, they turn to banks or financial institutions to receive funding. Thus, through providing capital to businesses, bank credit has contributed to helping businesses not only ensure production and business activities but also expand production scale, innovate equipment, apply scientific and technical advances and new technologies, improve product quality, create capacity and encourage investment in industries, fields and large projects that are meaningful to the national economy and people.

Moreover, banking credit activities also create conditions to maintain the organic connection between production, circulation of goods and social consumption. It makes the circulation of goods expand the domestic and foreign markets.

Nowadays, science, engineering and technology are developing and exploding like a storm, the product cycle is getting shorter and shorter, so bank credit is becoming more and more important. Thanks to bank credit, businesses can access advanced and modern technologies, thereby helping developing and underdeveloped countries to successfully carry out the industrialization and modernization of the country with a shortcut strategy.

Thus, bank credit contributes to promoting the development of productive forces.

rapid development is undeniable.

1.2.2.2. Bank credit plays an active role in promoting the process of accumulation and production concentration.

In an open economy, businesses have to face increasingly fierce competition. They not only compete with domestic manufacturers but also with foreign rivals. To win in competition, businesses must have strong financial resources to carry out activities such as innovating technological lines, purchasing raw materials, improving product quality, reducing product costs, etc. Therefore, businesses with strong financial resources often have more advantages, and they have large capital sources so they can easily expand production and business and dominate the market. As a result, companies


The larger the company, the stronger it becomes, and small businesses, due to their inability to compete, may go bankrupt or be acquired by larger companies. In order to survive, small businesses have voluntarily entered into joint ventures, associations or mergers with each other or together with larger companies to establish joint stock companies, pooling capital together to create large amounts of capital. Thus, competition leads to these associations or mergers, and bank credit is a means to concentrate idle money in society, promoting the process of accumulation and production concentration.

On the other hand, to expand production and business, enterprises must allocate a portion of profits to establish reserve funds, development investment funds, and business reproduction. However, due to the characteristics of capital circulation, enterprise capital is always continuously circulated to create profits, so when a business opportunity appears, waiting for a large enough source of capital to carry out reproduction will take a long time, and sometimes miss the business opportunity. Meanwhile, enterprises can use bank credit capital. Thus, bank credit plays a role in accumulating capital one step ahead, helping enterprises save time in production and business, and promptly grasp business opportunities.

1.2.2.3. Bank credit contributes significantly to the process of saving social circulation costs.

With the rapid growth of international transactions, and the increasing requirements for ensuring safety and minimizing risks for the parties involved in the transaction, international payment activities are also increasingly developing with more diverse, fast and convenient payment methods and means. Thanks to that, through the clearing mechanism between banks, cash transactions are reduced, so a cost for cash circulation can be realized. At the same time, thanks to other means of payment such as checks, commercial papers, bills of exchange, it is possible to expand the scale of goods circulation; save cash in circulation, preserve money, record books, increase the speed of capital circulation, and ensure more safety for social assets. This is the most important saving step that credit has achieved through the operation of


banking system

On the other hand, bank credit regulates capital sources and redistributes capital in society. This is the distribution function of bank credit. It is expressed in the "suction" and "push" mechanism implemented through the task of mobilizing capital for lending (attracting idle capital sources, dispersed in society) and the task of lending (to push capital into production, business and consumption activities) or through the interbank market. Regardless of the form, the capital regulation of bank credit helps society reduce excess capital in many places with excess capital and reduces difficulties in places with capital shortage, at the same time developing the speed of circulation of goods and capital, reducing the need to issue more money, overcoming the situation of monetary inflation, thereby contributing to stabilizing monetary circulation and stabilizing prices. All of these effects of bank credit help save a large amount of circulation in society.

1.2.2.4. Bank credit contributes to the implementation of social policies and is a means

convenient for the State to implement macroeconomic goals.

Through bank credit, the State finances social policy subjects such as students, poor farmers, production households, and traditional handicrafts with funds. Bank credit is an important tool in organizing people's lives. People use credit to save, increase their wealth reserves, and also through credit to improve their living standards.

In addition, bank credit is a tool to balance the State budget revenue and expenditure and contributes to adjusting the amount of money in circulation, ensuring the balance of money and goods, maintaining the economic growth rate at a reasonable level and controlling the market price and purchasing power of money. It is also a means used to finance key economic sectors and fields to expand into foreign markets, improving the competitiveness of the economy.

1.3. Overview of export finance banking credit activities

export (TDTTXK).


1.3.1. Concept of export finance bank credit.

Nowadays, export is always considered by countries (regardless of development level) as the "driving force" of the national economy. As export competition becomes increasingly fierce, exporters need the support of modern and strong financial structures to gain competitive advantage in conditions of increasing risks. The bank is a reputable and effective financial intermediary, which leads to a borrowing relationship between the bank on one side and the enterprise in need of capital on the other.

Up to now, there is still no unified view on TDTTXK in the world, even though it is only conceptual. This will of course make it difficult to use the concept of TDTTXK. Researchers also give different concepts of TDTTXK depending on the topics and contents. However, TDTTXK can be understood as the bank's financing activities for enterprises in the export sector to help these enterprises purchase, process, produce and consume export goods on the basis of bank credit activities. This is a general view of TDTTXK, however, in particular, each country has its own implementation method, but according to the current trend of integration, TDTTXK activities of countries are increasingly following many common standards of the world.

Along with the development of international trade activities, TDTTXK is also increasingly diverse and rich. The first simple form is that banks lend directly to export enterprises such as loans to supplement working capital, purchase, process, produce export goods according to signed contracts; loans to pay for raw materials... Banks expand the form of medium and long-term loans to finance export business activities. Banks lend to purchase equipment, improve technology, apply advanced scientific and technological achievements to improve product quality, increase competitiveness in the international market.

The bank also acts as a guarantee for exporting units to help.


so that they can carry out large international trade contracts. With the bank's guarantee, foreign import enterprises can eliminate concerns for export enterprises (reputation, ability to perform contracts), and export enterprises will not miss good business opportunities. If the enterprise has a bill of exchange or valuable documents in hand, it can bring them to the bank for discount. The bank will buy back the set of documents and has the right to claim the importer according to the bill of exchange and those documents.

Thus, due to the increasingly developed technical level and increasingly diverse international payment methods, the TDTTXK activities also develop strongly with the emergence of many forms, actively and effectively serving export activities.

1.3.2. The role of export finance credit.

If we consider the TDTTXK activities from each perspective of the bank, the enterprise and the economy, we will see its important role clearly expressed.

1.3.2.1. For the national economy.

TDTTXK contributes to the country's economic growth in both quantity and quality. Through capital mobilization and lending, import-export financing credit in general and TDTTXK in particular directly affects the relationship between accumulation - consumption and investment - savings, making an important contribution to the exploitation of social resources to achieve real GDP equal to potential GDP, thereby affecting economic growth. For developing countries, the speed of industrialization

- Modernization depends on bank credit. Especially for large projects and programs serving export production, requiring the import of new and modern technological equipment, export financing sources often account for 70% - 80% of the total investment capital. With preferential interest rate mechanisms and medium- and long-term sources, banks can focus on these projects to accelerate the country's industrialization and modernization.

We also know that when a country participates in the international division of labor,


In fact, the foreign trade mechanism will create efficiency for the participating parties. That mechanism is born from comparative advantages based on the difference between the opportunity costs of a commodity of the participating countries. TDTTXK contributes to exploiting comparative advantages and increasing export turnover, diversifying export commodities according to market demand, the circulation of export goods takes place more smoothly, thereby increasing the dynamism of the economy. With the export financing capital of the bank, enterprises have the conditions to innovate technological lines, machinery and equipment for producing export goods, so the quality of goods is improved, product costs are reduced, creating the ability to compete with goods of other countries and profitable business. The development of enterprises in particular has impacted the development of the economy in general.

1.3.2.2 For businesses.

In foreign trade transactions, there are foreign trade contracts signed with large shipment values, and can be implemented in a relatively long period of time. That requires exporters to have a relatively large and stable source of capital to meet the requirements from the process of purchasing input materials, processing, manufacturing, and transporting to the importer - this process can last for years, sometimes more. Enterprises cannot concentrate all their resources on one activity, but they also need to allocate capital to other production and business activities, so the need for capital financing from banks for enterprises is very necessary.

In any foreign trade activity, payment terms are also given great attention. If a business has received funding from a bank, which means identifying a bank that serves it, the business will gain an advantage in the process of negotiating, bargaining and signing contracts. Because with the funding of a bank, the business has great support not only in terms of capital but also in payment experience and reputation in the international arena - this helps the importing business feel more secure and confident in the ability of the exporting business to perform the contract. Thus, TDTTXK is the solution.

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