Determinants Influencing Non-Performing Loan Ratio of Joint Stock Commercial Banks in Vietnam

Abstract

This study investigates macro and micro determinants of the ratio of non-performing loans (NPL ratio) of Vietnam commercial banks between 2015 and 2021. Data were collected from fifteen banks with total assets accounting for 62.9% of the total banking industry assets. The regression analytical technique is used to determine the impact of some independent variables on the NPL ratio of sample banks. The results reveal that the non -performing loan ratio is negatively correlated with the bank's asset size and loan growth rate but positively correlated with the net interest margin and the credit risk. The variable of Covid-19 has no statistically significant correlation with the non-performing loans ratio. Although a range of previous studies on that topic has been carried out, none of them digs deeper into the impact of these explanatory variables on the ratio of non-performing loans of Vietnamese commercial banks, especially the impact of Covid-19, whereas the banking industry of Vietnam is far-affected by that epidemic. Therefore, these findings can be used by creditors, investors, bank managers, and policy-makers when they have to give decisions relating to commercial banks in this complex period.