The Impact of Methods of Presenting Cash Flow Statement on Loan Decision: Evidence from Vietnam

Abstract

The paper aims to investigate the impact of presenting statements of cash flow using the direct method and the indirect method on loan decision by credit officers at Vietnamese banks. The data was collected from 150 credit officers of commercial banks in Vietnam based on the questionnaire about making loan decision when the cash flow statement is presented in different methods, namely, direct and indirect methods. This research uses T-tests to check whether using the direct or indirect method affects the accurate calculation of loan criteria, affects the loan decision by credit officers, and compare these two methods in the aspects of information provision. The research has pointed out that: 1) the direct method helps the calculation of indicators related to loans more accurately; 2) credit officers say that, while the direct method of presenting cash flow statement provides clearer information, the use of either the direct method or the indirect method does not affect the banks' loan decision. Since then, the author recommends that cash flow statements should be provided with information in a direct method to present the information needed for loan decision more accurately so as to improve the quality of cash flow statement.

Factors Affecting Corporate Investment Decision: Evidence from Vietnamese Economic Groups

“…This result is also matched with the findings of Aivazian et al (2005), Azzoni and Kalatzis (2006), Adelegan and Ariyo (2008), Jangili and Kumar (2010), Nair (2011), Ruiz-Porras andLopez-Mateo (2011). In Vietnam, the method of presenting cash flow statement does not affect the information users in making loan decisions (Nguyen, 2020) Second, investment opportunities have a negative impact on the investment decisions of the economic group with a significance of 5%. This result shows that an increase of 1% in investment opportunities to a decrease of 5.1% in investment whilst other independent variables are constant.…”

“…Because Vietnamese economic groups are quite large in size compared to other businesses. In Vietnam, firm size (SIZE) is positively related to the company's business performance (Nguyen & Nguyen, 2020), the longer the enterprises have been in operation, the larger the scale of capital (Xuan, 2020).…”