摘要：Introduction Lending in low-income countries is notoriously risky because of the information asymmetry problems which are potentially higher than that of developed countries (Menkhoff et al. 2006). Therefore, collateral has been widely used as a mechanism to reduce equilibrium credit rationing and the asymmetric information between borrowers and lenders (Haselmann and Wachtel 2007). Theoretical frameworks focus on the different channels that predict the role of collateral in bank lending and credit risk. For example, theories relating to ex post contracting frictions (Stiglitz and Weiss 1981) explain the positive relation between collateral and loan risk with the lender selection effect. Alternatively, negative effects of collateral can be explained by a borrower selection effect (an ex ante theory) or by the dominance of risk-shifting and loss-mitigating effects in ex post theories (Berger et al. 2016). Empirical studies provide even more diversified evidence about this relationship, resulting in conflicting implications and challenges for policy makers. Berger et al. (2016) argue that the strength of each channel is not only dependent on whether loans are protected by collateral, but also on the characteristics of loans and types of collateral. We revisit this puzzle in the context of a transition economy, Vietnam, where the banking sector is heavily reliant on collateral-based lending and where credit risk has always been a major concern. Non-performing loans (NPLs) increased sharply after 2011 and remain serious despite the State Bank of Vietnam's (SBV) strong efforts in bank restructuring and bad debt resolution. Loans in the Vietnamese banking sector are primarily secured loans; therefore, collateral plays an essential role in the control of NPLs. Although Vietnamese banks insist that lending decisions are based on their assessment of borrowers' payment ability, in practice, collateral is the most important consideration in the decision to approve a loan. Banks always request highly liquid collateral from risky borrowers to reduce moral hazard and other ex post frictions and protect themselves from loan risks. However, anecdotal evidence shows that heavy reliance on collateral may lead to negligence in screening and monitoring processes; consequently, leading to substantial increases in bad debt. Since the process of collateralized property foreclosure is costly and time-consuming, banks' loss recovery from collateral liquidation has been considered uncertain and unpromising. A different view is that collateral is usually a valuable asset in a low-income country like Vietnam. Therefore, people tend to make an effort to prevent their asset losses, especially in the case of highly desirable collateral. While role of collateral is still debated in the literature and practice, empirical studies linking loan risk and collateral in Vietnam may provide useful policy implication for bank managers and SBV authorities.
