Credit Risk in Group Lending Model at the Bank for Social Policies in Hau Giang Province

This article analyses the factors affecting the group credit risk at the Bank for Social Policies in Hau Giang Province. A survey of over 105 borrowers in Chau Thanh A, Long My and Chau Thanh districts of Hau Giang Province (35 groups of loans) who receive loans in groups from the Vietnam Bank for Social Policies has been conducted. Results of Binary logistic regression show that 4 of the 8 factors reduce bad debt in borrowing groups (i.e. group leader knows his/her members as they enter the group, group leader educational attainment, members of a group know each other as they enter the group, and group size) while the remaining 4 factors covariate with overdue debt (i.e. distance from the group leader's house to the houses of group members, educational attainment of group members, group charter and frequency of visits among group members). If we know how to take advantage of these factors, group lending risk may be partially reduced at the Bank for Social Policies.