Impact the internal control of the credit operations on the credit effectiveness of commercial banks: A case of HCMC and Dong Nai province

Abstract

The internal control of the credit activities at commercial banks in Vietnam is essential to prevent the risk of asset loss in the bank's credit operations. The objective of this study is to identify and measure the influence of factors on internal control of credit operations at commercial banks in Ho Chi Minh City (HCMC) and Dong Nai province. The study conducted on 600 staff related to credit activities at 10 commercial banks. The Data got from June 2019 to February 2020. Credit staffs answered 29 items, and 568 samples processed. The research method combines qualitative and quantitative with the use of SPSS 20.0 software. Analytical techniques include descriptive statistics, scale reliability testing, exploratory factor analysis (EFA), and Structural Equation Model (SEM). The research results showed that 5 factors are affecting the internal control of the credit operations at 10 commercial banks in Ho Chi Minh City and Dong Nai province, including: (1) Control environment; (2) Risk assessment; (3) Control activities; (4) Information and communication; (5) Supervision activities. Besides, the internal control of the credit operations affecting the credit effectiveness with significance level 0.01.