Factors Affecting Bank Risks in Vietnam

The research identifies the determinants of credit risk and insolvency risk in the Vietnamese banking sector. Using the data sample of 25 commercial banks over ten years (2008-2017), we examine the relationship between internal variables, external variables, and bank risks. In this study, the independent variables are bank size, bank capitalization, return on asset, return on equity, loan loss provision, capital adequacy ratio, inflation rate, and GDP growth rate. In contrast, non-performing loans and Z-score are the dependent variables. The empirical results show that all factors have an effect on bank risks except liquidity ratio.