Foreign ownership and national governance quality affect liquidity risk – case in Vietnam

Pham Tien Dat and Kim Quoc Trung Nguyen

Cogent Business & Management, 2023, vol. 10, issue 2, 2244752

Abstract: The paper aim to examine the impact of foreign ownership and national governance quality on liquidity risk in Vietnam’s listed commercial banks from 2010 to 2021, covering the COVID-19 outbreak. Using the two-step generalized method of moments regression model (GMM), the findings indicate that foreign ownership deteriorates liquidity risk, while national governance quality has a positive effect on liquidity risk. In particular, the study highlights the positive impact of COVID-19 on liquidity risk because of the unpredicted demand for cash withdrawals by customers, which led to a shortage of cash holdings in commercial banks. Consistent with agency and neo-institutional theories, the findings are robust to a series of endogenous checks using an alternative regression method, such as pooled ordinary least squares, and the generalized method of the moments regression model.

Date: 2023
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DOI: 10.1080/23311975.2023.2244752

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