1. Rationale: In the context of economic crisis recently, the Government has implemented monetary policy and fiscal policy to encourage domestic demands. Experience from the economic development of Vietnam and of other countries around the world has shown that stable economic growth should be based on the increase in domestic demand rather than the increase in trade, especially import Policy stimulating domestic demand, especially consumption demand, is considered key economic development policy which helps reduce dependence on imports. Therefore, the banking system – which provides channels to meet the needs of the economy’s capital – will play an important role in providing credit for consumer activities. Also, under the situation of harsh competition in the context of international integration, Vietnamese commercial banks must diversify forms of credit in order to spread, limit, and control risks at the lowest level. Although in recent years, the State Bank of Vietnam has paid considerable attention to the field of consumer credit, this form of credit is still underdeveloped, accounting for a modest proportion of total outstanding loans. Therefore, to expand and enhance consumer credit growth, there is a need to promote this type of credit. After consulting my academic supervisor and taking everything into consideration, I decided to title this thesis “Solutions to improve effectiveness of consumer credit in Vietnam”. 2. Research purposes Firstly, the thesis is aimed at generalizing basic fundamentals of consumer credit. Secondly, the thesis targets to outline the overall picture of consumer credit activities in VN. Thirdly, based on the fundamentals and the situation shown, the thesis is expected to give solutions and recommendations which may make a small contribution to the development of consumer credit in VN. 1. Research scope In terms of space, the thesis will focus on studying consumer credit activities in Vietnam’s commercial banks. In terms of time, the thesis will focus on researching consumer credit activities in Vietnam’s commercial banks from 2006 until March 2010. 4. Research methodology This thesis approaches the research topic in combination with comparative analysis, which in one hand, points out common concepts, understandings and practices in Vietnam with appropriate adjustments through quantitative and qualitative methods. With regard to its scope, as an introduction to an emerging industry, this study only concentrates on consumer credit in Vietnam’s commercial banking system. Therefore, “overview” is the word that can tell exactly the scope of this thesis, which in turn, reflects the overall purpose of the thesis. 5. Research structure: This thesis is divided into three main chapters. CHAPTER 1: THE FUNDAMENTALS OF CONSUMER CREDIT. CHAPTER 2: CONSUMER CREDIT ACTIVITIES IN VIETNAM’S COMMERCIAL BANK SYSTEM. CHAPTER 3: SOLUTIONS AND RECOMMENDATIONS TO IMPROVE EFFECTIVENESS OF CONSUMER CREDIT IN VIETNAM.