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

Authors

  • Vo Minh Long
    Ho Chi Minh City Open University, VN
  • Nguyen Thi Yen
    Ho Chi Minh City Department of Finance, VN
  • Pham Dinh Long
    Ho Chi Minh City Open University, VN

DOI:

10.46223/HCMCOUJS.econ.en.10.2.967.2020

Keywords:

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

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.

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References

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Received: 09-09-2020
Accepted: 09-09-2020
Published: 31-08-2020

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How to Cite

Long, V. M., Yen, N. T., & Long, P. D. (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(2), 83–93. https://doi.org/10.46223/HCMCOUJS.econ.en.10.2.967.2020

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Copyright (c) 2020 Vo Minh Long; Nguyen Thi Yen; Pham Dinh Long

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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.