The role of control and power in the relationship between ownership structure and credit risk: a study from Vietnamese banks

Thi Kieu Khanh Pham, Thanh Tam Le, Duyen Thi Bich Pham and Phong Hoang Nguyen

Journal of Economics and Development, 2025, vol. 27, issue 2, 129-143

Abstract: Purpose - The paper aims to examine the moderating role of factors such as foreign leadership and listing on the relationship between ownership structure and credit risk (CR) in Vietnamese commercial banks. Design/methodology/approach - Research data were collected from 28 commercial banks in Vietnam over the period 2009–2023. The system-generalized method of moments was employed to generate the estimated results. Findings - The research results revealed that (1) the negative impact of foreign ownership (FO) on CR was stronger for banks with foreign board members and (2) the positive impact of ownership concentration on CR was weaker for listed banks. Research limitations/implications - Recommendations are proposed to regulatory agencies and commercial banks to mitigate credit risks. Originality/value - This research develops theories related to the role of control and empowerment of foreign shareholders in mitigating CR in banks. Specifically, the developed theories emphasize that (1) the governance mechanism towards empowering and responsibilities of foreign shareholders would help utilize FO to mitigate CR and (2) the control and monitoring mechanism would mitigate the impact of concentrated ownership in increasing CR.

Keywords: Credit risk; Foreign ownership; Ownership concentration; Ownership structure; State ownership; G10; G21; C23 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jedpps:jed-09-2024-0322

DOI: 10.1108/JED-09-2024-0322

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