Thi Thu Hien Hoang, Thu Thuy Pham, Thi Thu Ha Do
This paper, based on the guidance a theoretical model, and previous lietrature on loan pricing, examines factors that have most important impacts on how Vietnamese commercial banks decide their lending rates on the transition phase. The Basel II capital accord, which came into effects on Vietnamese commercial banks since beginning of 2019, had have certain impacts on the way in which Vietnamese banks calculate risks, which consequently contribute to the way in which banks decide their interest rates. With the suggestion of the theoretical model about the factors influencing interest rates, we use data of a leading commercial bank to examine how lending interest rates are influenced in the transition phase context. Results show that Vietnamese commercial banks traditionally price a loan based on durations of the loans, loan amounts, and and the value of collaterals. Our paper suggests that, accomplishing the model of internal credit ratings to effectively evaluate potential risks, thus pricing loans based on risks is of the most important steps for Vietnamese banks to approach standards of Basel II.