Determinants of non-performing loans in Vietnam commercial banks
Abstract
In recent years, the problem of Non-Performing Loans in Vietnam banking system is becoming more and more serious. Due to the financial crises in the world, although Vietnam was not affected too badly, but any financial crisis generates bad debts for banks. When the economy becomes difficult, businesses and households borrow a large amount of money, then the inability of paying debts is high, resulting in the increase of banks’ Non-Performing Loans. There are many determinants that may affect the Non-Performing Loans in both positive and negative side. In this thesis, the researcher collects data from 10 large commercial banks of Vietnam in the period of 10 years from 2005 to 2014 then uses the quantitative method and secondary data to run regression by Random Effect Model in panel data to examine the determinants that affect NPLs the most and then give out some solutions to help solving this problem.
The result shows that the Return on Asset and Gross Domestic Product annual growth rate have negative effects while the Capital Adequacy Ratio has positive effect on the Non-Performing Loans in Vietnam banking system.