TAILIEUCHUNG - Effects of bank capital on profitability and credit risk: The case of Vietnam’s commercial banks

This paper seeks to examine the effects of bank capital on profitability and credit risk of 30 Vietnam’s commercial banks from 2007 to 2014. Using the system generalized method of moments (GMM), the paper conducts several tests on the moral hazard and regulatory hypotheses on the relationships among bank capital, profitability, and credit risk. | Nguyen Thi Hong Vinh & Le Phan Thi Dieu Thao / Journal of Economic Development 23(4) 117-137 117 Effects of Bank Capital on Profitability and Credit Risk: The Case of Vietnam’s Commercial Banks NGUYEN THI HONG VINH Banking University HCMC – vinhnth@ LE PHAN THI DIEU THAO Banking University HCMC – dieuthaodhnh@ ARTICLE INFO ABSTRACT Article history: This paper seeks to examine the effects of bank capital on profitability and credit risk of 30 Vietnam’s commercial banks from 2007 to 2014. Using the system generalized method of moments (GMM), the paper conducts several tests on the moral hazard and regulatory hypotheses on the relationships among bank capital, profitability, and credit risk. With no regard to other determinants, its results indicate that the effects are evident, . bank risk is found to impact differently on bank returns, and it is also negatively associated with credit risk of commercial banks in Vietnam. Received: Nov. 27, 2015 Received in revised form: Mar. 18, 2016 Accepted: Sep. 23, 2016 Keywords: Bank capital, credit risk, profitability, commercial banks. 118 Nguyen Thi Hong Vinh & Le Phan Thi Dieu Thao / Journal of Economic Development 23(4) 117-137 1. Problem statement After the 2008 financial crisis the Basel Committee on Banking Supervision (BCBS) developed Basel III with new proposals concerning capital, leverage, and other standards on liquidity, which add in further measures on risk governance to enhance the regulation, monitoring, and management of risk in the banking industry (BIS, 2011). The newly introduced standards on capital and capital buffers demand more capital holding and higher quality capital, compared to those required in Basel II. In addition, credit crunches emphasized an urgent need to further capture the determinants of bank risk in the event of downturns in capital adequacy (Festic et al., 2011). Not surprisingly, the relations among bank capital, profitability, and credit risk become a .

• Ngân hàng - Tín dụng
• Bank capital
• Credit risk
• Commercial banks
• Vietnam’s commercial banks
• Generalized method of moment
• Access to capital
• Capital situation
• Accessing bank credit
• Small and medium enterprises
• Basel III
• Government capital injection
• Bank interest margin
• Failure probability
• Reduced margin
• Summary of the Economics dissertation
• Economics dissertation
• Strengthen access to bank credit capital
• Bank credit capital
• Medium sized enterprises
• Thai Nguyen province
• Luận văn Thạc sĩ
• Summary of Doctoral Thesis
• Summary of Doctoral Economic Management
• Capital mobilization of VietNam bank
• Strategic planning for capital mobilization
• Mobilizing capital in Agribank
• Bank regulation
• Bank business models
• Bank capital requirements
• Cost of capital
• Leverage ratio
• Bank disclosure
• Core capital
• Bank risk
• Capital ratios
• Bank transparency
• Commercial bank of ethiopia
• Evidence from SNNPR district
• The research methodology
• Intellectual capital components
• The targeted bank district
• Determinants of capital structure
• Selected private Bank
• Leverage and Profitability
• Dividend Payout Ratio
• Appropriate capital structure
• Capital budgeting as a tool of management decision making
• National investment bank limited
• Management decision making
• Long term effect
• The firm’s value
• Bank trading
• Findings provide empirical support
• Undermine bank profitability
• Reduces profitability for banks
• Bank profitability depends
• Mẫu đơn xin việc
• Đơn xin việc vào ngân hàng
• Mẫu đơn ứng viên ngân hàng
• ngân hàng VIET CAPITAL BANK
• đơn xin việc làm
• Bank capital affects profitability
• Two step GMM
• Return on assets
• Return on equities
• Net interest margin
• Effect of bank capital
• Moderation of asset quality
• Banking sector listed
• Indonesia Stock Exchange
• Fixed Effect Model
• Capital adequacy ratio
• Punjab National Bank
• Implementation period of Basel II
• Dividend per Share
• Social Sciences
• ASEAN countries
• Bank lending channel
• Banking sector development
• Capital market development
• Monetary policy
• Capital markets
• Lecture Money and capital markets
• Financial institutions
• Global marketplace
• Financial system
• Central bank monetary policy
• Capital structure
• Trade off theory
• Pecking order theory
• Capital adequacy
• Global financial crisis
• Working capital management
• Small and medium size enterprises
• Egyptian SMEs
• National Bank of Egypt
• Banking Sector
• Buffer Capital
• Business cycle
• Pakistan banking sector
• Dynamic stochastic general equilibrium model
• News shock
• Economic boom bust cycles
• Bank efficiency
• DEA financial ratios
• Vietnamese banking system
• Financial stability
• Bank size
• Regulatory capital
• Credit exposure
• Bank funding
• Corporate governance
• Profitability bank
• Return on asset
• Return on equity
• Non Performing loan
• Loan to deposit ratio
• agency services
• credit activity
• bank credit
• capital formally endorsed
• collateral
• capital use