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10 (2) 2020

Factors affecting Non-Performing Loans (NPLs) of banks: The case of Vietnam


Author - Affiliation:
Vo Minh Long - Ho Chi Minh City Open University , Vietnam
Nguyen Thi Yen - Ho Chi Minh City Department of Finance , Vietnam
Pham Dinh Long - Ho Chi Minh City Open University , Vietnam
Corresponding author: Vo Minh Long - long.vm@ou.edu.vn

Abstract
This study aims to identify factors affecting Non-Performing Loans (NPLs) of commercial banks in Vietnam. To address the research problem, data of commercial banks in Vietnam from 2008 to 2017 were collected. This study applied a fixed-effects model in comparison with a random-effects model on a panel data of 200 observations. Results from the firmly fixed-effects model indicated that NPLs were positively affected by its lag of the previous year, capital structure, and interest rate. Additionally, returns on asset, inflation rate, and credit growth were found to have negative impacts on NPLs. However, impacts of firm size and gross domestic product were not found across the models. Based on the results, this research suggested several policy recommendations for the management of NPLs in the commercial banks.

Keywords
Non-Performing Loans; longitudinal data; commercial banks; firmly fix-effects model

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Cite this paper as:

Vo, M. L., Nguyen, T. Y., & Pham, D. L. (2020). Factors affecting Non-Performing Loans (NPLs) of banks: The case of Vietnam. Ho Chi Minh City Open University Journal of Science – Economics and Business Administration, 10(4), 83-93. doi:10.46223/HCMCOUJS.econ.en.10.2.967.2020


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DOI: https://doi.org/10.46223/HCMCOUJS.econ.en.10.2.967.2020
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