Can foreign ownership reduce bank risk? Evidence from Vietnam

Le, Tu

doi:10.2139/ssrn.3878912

Cited by 2 publications

(2 citation statements)

References 43 publications

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“…NIM has a significant and positive relationship with Zscore, implying that as commercial bank profitability increases, so does bank stability (Wang and Lin, 2021). Moreover, LIQUIDITY is found to have a negative impact on Zscore, implying that the higher the liquidity ratio, the greater the risks the bank confronts (Le, 2021a, 2021b). Finally, the negative impact of INF on Zscore implies that higher inflation rates may increase the risk of loan repayment by affecting borrowers' budgets, threatening their liquidity and reducing their repayments (Pervan et al , 2015).…”

Section: Resultsmentioning

confidence: 98%

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Market structure, institutional quality and bank stability: evidence from emerging and developing countries

Son

Nguyen

2022

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Purpose The purpose of this study is to carry out an empirical investigation about how the level of market concentration or competitiveness of the banking system and institutional quality are associated with bank’s financial stability. Design/methodology/approach This study uses dynamic panel data techniques on the sample of 133 developing and emerging countries over the years 2002–2020. Findings The authors document several significant findings. First, there is evidence that bank stability is positively associated with the level of market concentration. The result is in line with the concentration–stability view that banks operating in a more concentrated market tend to be more stable than those in a less concentrated market. Second, the results confirm that the quality of the institutional environment plays a critical role in improving the stability of banks in developing and emerging countries. Third, the authors find that institutional development can moderate the effect of market concentration (or competitiveness of the banking system) on bank stability. Specifically, the results show that better institutional quality enhances the positive influence of bank concentration on the bank’s financial stability in developing and emerging countries. These results are robust to different specifications with the alternative measures of bank stability and market concentration. Originality/value This study provides further understanding regarding the effects of the level of market concentration or competitiveness of the banking system and institutional quality on bank stability in 133 developing and emerging countries over the years 2002–2020.

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Section: Resultsmentioning

confidence: 98%

“…Following earlier studies by Le (2017), Le (2021aLe ( , 2021b and Stiroh and Rumble (2006), NonII is used to adjust for the income diversification impact, as assessed by the ratio of noninterest income to total net income.…”

Section: Methodsmentioning

confidence: 99%