Fourth , propose a system of solutions and recommendations to improve QTTK at Agribank by 2025, ensuring effective business operations, stable and sustainable development.
4. Research object and scope
- Research object: QTTK of commercial banks
- Research scope:
+ Regarding content: The thesis studies the financial management of commercial banks, focusing mainly on the organization and financial management process of commercial banks.
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+ Regarding space: The thesis focuses on researching QTTK at Agribank (excluding subsidiaries, joint ventures, and associates of Agribank).
+ About time: Survey and analyze the current status of QTTK at Agribank in the period 2013 - 2018. Solutions until 2025.
5. Research methods
To achieve the proposed research objectives, the thesis uses a combination of several scientific research methods:
Firstly , on the basis of dialectical materialism and historical materialism, the thesis uses a synthesis of traditional research methods as follows:
- Statistical method: The thesis collects and compiles data related to liquidity and QTTK in the period 2013 - 2018 from audited financial statements and annual reports of Agribank, of Vietnamese commercial banks and reports of the State Bank.
- Analysis method: The thesis analyzes quantitative criteria and qualitatively analyzes the current liquidity and QTTK situation at Agribank.
- Comparative method: compare research issues between years, between Agribank and other commercial banks.
- Other scientific thinking methods such as induction, interpretation, synthesis...
Second , questionnaire survey method
Because secondary data at Agribank does not fully reflect the current liquidity and QTTK situation. Therefore, to clarify the current situation in chapter 2 and propose solutions in chapter 3, the researcher collected additional primary data on liquidity and QTTK at Agribank through a questionnaire survey.
The researcher has developed a questionnaire to survey and collect opinions from two groups of subjects: staff working at Agribank branches/transaction offices and individual customers of Agribank. The content of the questionnaires was developed and completed based on the requirements for primary data for the thesis and expert opinions from bank staff, bank managers and scientists. ` .
+ For the questionnaire for branch staff: NCS distributed the survey forms directly and via email to Agribank staff at 7 branches/transaction offices: Hanoi branch, Ha Tinh branch, Bac Ninh branch, Phu Tho branch, Hung Yen branch, Nghe An branch, Ho Chi Minh City branch. The selected branches have representatives of type 1 and type 2 branches and transaction offices in different locations including both urban and rural areas.
+ For the questionnaire for individual customers of Agribank: The customers selected for the survey are guaranteed to use various services of Agribank in the following locations: Nghe An, Ha Tinh, Hanoi, Bac Ninh. The selected locations include both urban and rural areas.
The above methods are used in combination to review and evaluate the issues related to the research subject of the thesis. In addition, the thesis also inherits and applies some research results of domestic and foreign scientific works related to the research content.
6. New contributions of the thesis
6.1. Theoretical contributions
Firstly , the thesis deepens the theoretical basis of QTTK of commercial banks that previous research works have not mentioned or have not mentioned systematically and completely. Specifically:
(i) Clarifying liquidity issues of commercial banks: concept of liquidity and liquidity regulation mechanism of commercial banks; (ii) Clarifying the content of "Quality of commercial banks" and basic issues of modern liquidity management of commercial banks: liquidity management strategy and liquidity risk appetite, liquidity management policy, organizational model and liquidity management process.
Second, by studying and surveying the experience of handling situations in QTTK of some domestic and foreign banks, the thesis affirms: To effectively QTTK, banks need to establish a strong enough QTTK system, improve
Macroeconomic forecasting, having an action plan in case of emergency, implementing a prudent business strategy, building trust from customers and investors, paying attention to the relationship between other risks and RRTK, clearly recognizing the regulatory role of the State Bank and the support of other commercial banks in handling liquidity incidents and RRTK. These are truly meaningful lessons for Agribank in QTTK to meet the requirements of safety and sustainable development.
6.2. Practical contributions
Firstly , the thesis correctly assesses the current situation of QTTK at Agribank in the period of 2013 - 2018 and points out: Agribank has built a QTTK strategy and RRTK taste, QTTK policies and procedures, but compared to the requirements of modern QTTK, QTTK at Agribank is still limited in terms of organizational structure, database system, methods and tools, and capacity of staff serving QTTK. The assessments of the results achieved, limitations and causes of limitations in QTTK at Agribank are scientifically and practically based because they closely follow the theoretical basis in chapter 1 and the data has a clear origin, high reliability, which are audited financial statements, Agribank's annual reports in the period of 2013 - 2018 and questionnaire survey results.
Second , the thesis proposes a system of solutions and recommendations to improve the QTTK at Agribank by 2025, ensuring effective business operations, stable and sustainable development. The solutions focus on the following issues: restructuring the QTTK apparatus, organizing the implementation of a centralized capital management mechanism, arranging and perfecting personnel, perfecting QTTK tools, improving liquidity measurement methods, improving the effectiveness of liquidity monitoring and control, and enhancing the position and prestige of Agribank. The solutions and recommendations are meaningful and highly feasible because they are scientifically based and closely follow the practice of QTTK at Agribank.
7. Thesis structure
In addition to the introduction, conclusion, list of published scientific research works, appendix and list of references, the thesis consists of 3 chapters:
Chapter 1 : Theoretical basis of liquidity management of commercial banks.
Chapter 2 : Current status of liquidity management at Vietnam Bank for Agriculture and Rural Development.
Chapter 3 : Solutions to improve liquidity management at the Bank for Agriculture and Rural Development of Vietnam.
CHAPTER 1. THEORETICAL BASIS OF LIQUIDITY MANAGEMENT OF COMMERCIAL BANKS
1.1. Basic issues on liquidity of commercial banks
1.1.1. Some features of commercial banks
1.1.1.1. Concept of commercial bank
Commercial banks were born and existed with the birth and development of the commodity economy. The concept of commercial banks in different approaches and at different times has changed a lot. Specifically:
According to Associate Professor, Dr. Nguyen Thi Mui [32]: " Commercial banks are special enterprises, operating in the field of currency and credit - a major and effective capital supply organization of the economy".
According to Associate Professor, Dr. Nguyen Dang Don [31]: “Commercial banks are banks that transact directly with various types of enterprises, social organizations and individuals, by mobilizing capital in the form of receiving term deposits, periodic deposits, money from issuing promissory notes and bonds, and at the same time using the mobilized capital to lend, discount, provide means of payment and provide banking services to the above subjects”.
According to the Law on Credit Institutions 2010 [39]: "A commercial bank is a type of credit institution that is allowed to carry out all banking activities and other related business activities for profit purposes according to the provisions of the Law on Credit Institutions and other provisions of law". In which, banking activities include: Receiving deposits, granting credit and providing payment services through accounts. Specifically:
- Deposit receiving activities: this activity is closely associated with the creation of the most important capital source of commercial banks, so it is carried out regularly by banks by providing many diverse and rich deposit products.
- Credit activities: credit is a typical business activity, accounting for the largest proportion of total assets in most commercial banks, but it is an asset with very low liquidity and high risk. Therefore, when granting credit, banks must ensure the highest profit with an acceptable level of risk. Nowadays,
Banks provide credit to customers in cash or assets in many diverse and rich forms, including: lending, discounting, guaranteeing and financial leasing. In which, lending service is considered the main profit-making service of commercial banks.
- Payment services: banks on behalf of customers make payments for the value of goods and services through many convenient and standardized non-cash payment methods. In addition, banks also make clearing payments with each other through the central bank or payment centers. Payment services increasingly bring large sources of income to commercial banks and have turned banks into important and effective payment centers, effectively serving the economy.
It can be seen that, although the concepts of commercial banks are not completely identical, the concepts all refer to the following basic contents: (i) being a financial intermediary organization; (ii) operating for profit; (iii) providing diverse financial services, of which 3 specific services are receiving deposits, granting credit and providing payment services.
Thus, it can be understood that: A commercial bank is a monetary business organization with basic and regular activities of receiving deposits, granting credit and providing banking services in the national economy, including payment services.
Compared to other financial intermediaries, commercial banks always play an extremely important role: (i) Providing diverse banking services; (ii) Being an important bridge between supply and demand for capital, especially in developing economies, commercial banks are still the main channel to attract and provide capital for the economy; (iii) Being an important subject transmitting the monetary policy of the Central Bank: To implement monetary policy, the Central Bank must use tools such as rediscount interest rate, required reserves, open market... to affect money supply, and ultimately affect inflation. In addition, deposits at commercial banks are a basic component of money supply in the economy. Therefore, money supply can be adjusted through adjusting deposits of the banking system. Therefore, the monetary policy of the Central Bank can be transmitted to the economy through the banking system.
1.1.1.2. Business characteristics of commercial banks
Compared with businesses operating in other fields, banking business has the following basic characteristics:
Firstly , the business object of commercial banks is currency.
Currency is a special business object. The value of currency is very volatile when there is a change in the business environment. When there is a change in the state's policy mechanism, fluctuations in macro factors such as inflation, interest rates, exchange rates or fluctuations in the economy, politics, and society, all have a certain impact on the value of money. Therefore, with the business object being currency, banks always face risks when there is any fluctuation in the business environment.
Second, commercial banks' business products are similar, easy to imitate and associated with time factors.
The products and services that commercial banks provide to customers are very diverse. However, most of the products of banks are quite similar and easy to imitate. When a commercial bank has a new product that is different in the market, that product quickly becomes popular because other banks can deploy similar products. On the other hand, money is always associated with the time factor, so time is an important factor in realizing the value of the product and determining the price of the product.
Third, the bank's business capital is mainly mobilized from outside, the equity ratio is much lower than that of enterprises in other business fields.
Because the main and regular activities of commercial banks are to mobilize capital for lending and investment, the main business capital of commercial banks is based on external capital, the proportion of equity capital is very low (usually under 10%). The characteristics of capital structure have created a much higher financial leverage of commercial banks than other enterprises. Therefore, banking activities always face higher financial risks than other sectors.
Fourth, banking activities affect all aspects of the national economy.
With the characteristics of a financial intermediary providing 3 basic service groups: receiving deposits, granting credit and providing payment services, the activities of commercial banks
affecting all aspects of the national economy and a large part of the population. Most subjects in the national economy, whether individuals or economic organizations, more or less use banking services. Therefore, a small change in banking operations can have a certain impact on the interests of individuals and economic organizations in the national economy. In the event that such changes have a strong impact on the entire economy, it can cause economic recession or economic crisis.
Fifth , the business operations of commercial banks are closely related to each other.
Commercial banks in particular and credit institutions in general have a close relationship with each other through related activities such as deposits, loans, etc. Therefore, when a bank has difficulties in its business operations, depending on the level, it can have a negative impact on other commercial banks. Financial crises around the world have shown that a bankrupt bank can lead to the bankruptcy of the entire commercial banking system and a crisis in the financial system.
Sixth, commercial banks' business activities are based on the word "trust".
Banking practice shows that only when banks gain the trust of customers can they retain and attract customers. Therefore, in all cases, keeping their "trust" is always a matter of survival for banks. If a bank loses its "trust", customers will transfer their deposits to banks with better reputations, resulting in difficulties in raising capital, lending and a decrease in income. Worse, if customers withdraw money en masse, the bank may go bankrupt.
The unique characteristics of commercial bank business activities show that risks in banking business are very diverse and complex, and risks always arise in all banking activities. Risks that occur can have serious consequences for the bank itself and the national economy. Because of this, banking activities are always under the strict control of banking supervision agencies and must always ensure safety limits to limit risks for each bank and systemic risks.
1.1.2. Liquidity of commercial banks
1.1.2.1. Concept of liquidity of commercial banks
From an asset perspective, liquidity is a concept that refers to the ability of an asset to be converted into cash. A highly liquid asset means that the asset can be easily converted into cash through sale on the market with the fastest time and lowest cost.
In the operations of commercial banks, the term "liquidity" has been mentioned quite a lot, but the concepts are not completely the same due to the approach.
According to Author Rudolf Duttweiler [40]: “ Liquidity represents the ability to fulfill all payment obligations when due - to the maximum extent and in the specified currency”.
According to the Basel Committee (2008)[62]: “ Liquidity is the ability of a bank to both increase assets and meet its obligations as they come due without incurring excessive losses”.
According to Associate Professor, Dr. Phan Thi Thu Ha [33]: “ Bank liquidity is the bank's ability to meet customers' payment needs, created by asset liquidity and source liquidity. A bank has high liquidity when it has many liquid assets or the ability to expand resources quickly at low cost, or both, in accordance with liquidity needs ”.
According to Associate Professor, Dr. Nguyen Dang Don [31]: "The liquidity of commercial banks is considered the immediate ability to meet the demand for deposit withdrawals and disbursement of committed credits".
In general, it can be understood that: " The liquidity of a commercial bank is the ability to promptly and fully meet financial obligations arising in the course of the bank's business operations such as withdrawing deposits, disbursing committed loans, paying operating expenses or other cash payment needs at reasonable costs". The liquidity of a commercial bank is reflected in the correlation between cash inflow and cash outflow at a certain point in the bank's operations, due to the liquidity of assets and liquidity of capital sources.