Bank Characteristics And Bank Financial Stability: A Case Study Of Vietnam

Abstract

This study aims to examine the impact of several financial characteristics (Bank Size, Return on Equity, Gross Non-performing Loans, Interest Income, Loan Loss Reverse ratio, Credit Growth) and some macroeconomic factors on Banks Stability in VietNam. This research has utilized a dataset of 15 commercial banks banks which are selected and also listed in Stock Exchange. The purpose of this study targets to fulfill possible limitations or gaps in the liturature using the multiple linear regression and panel data from 2003-2023. The results are indicated in the whole observing process and several of period which contains noticeable events related to finance and might affects to Bank financial stability. The findings revealed that Bank size; Interest Income; Loan Loss Reverse; Credit Growth have positively contributes to the stability of Vietnamese banks. However, factors such as the ROE and Gross Non-performing Loans often exhibit a negative impact. When analyzing data in other distinct periods, post global financial crisis in 2008 and pre of publishing the circular amending and supplementing No. 24/2015/TT-NHNN regulating foreign currency lending by credit institutions and foreign bank branches to borrowers, there is similarity between them is that both two outcomes show a negative impact of Loan Loss Reverse and Credit Growth to Bank Stability. These outcomes suggest that bank-specific variables play a crucial role in enhancing stability within the banking sector. Nevertheless, the Loan Loss Reverse ratio and Credit Growth negatively influences stability, implying a potential adverse impact on revenue before tax, financial loss and NPLs during this period. In practical terms, this suggests that, despite challenges such as the negative influence of the Loan Loss Reverse and Credit Growth, banks may strategically increase their amount of funds to mitigate the risk of default on loans and lending expansion with supervision, aiming to enhance overall business efficiency.