The impact of house prices on banking stability in Vietnam: the moderating role of investor sentiment

Nguyen Thi Nhung (), Nguyen Thi Thanh Huyen (), Vo Hoai Anh (), Nguyen Phuong Thao () and Trinh Thao Van ()
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Nguyen Thi Nhung: VNU University of Economics and Business
Nguyen Thi Thanh Huyen: VNU University of Economics and Business
Vo Hoai Anh: VNU University of Economics and Business
Nguyen Phuong Thao: VNU University of Economics and Business
Trinh Thao Van: VNU University of Economics and Business

Journal of Banking Regulation, 2025, vol. 26, issue 2, No 5, 176-195

Abstract: Abstract This article aims to examine the moderating role of investor sentiment in the impact of house prices on banking stability over the period from 2017 to 2022 in Vietnam. The research tries to build a banking stability index by combining the principal components of an international rating system of financial institutions stability (CAMELS) through principal component analysis, while the average apartment price index in Hanoi and Ho Chi Minh City is used as a variable of house prices in Vietnam, and investor sentiment is measured using the Google search volume index. By using panel corrected standard errors, the research gives evidence of the positive impact of house prices on banking stability in Vietnam, and the moderating role of investor sentiment on this positive effect. Moreover, the research indicates the positive roles of bank efficiency, regulatory quality, and GDP growth for boosting banking stability, while the opposite impact can be seen in the case of bank concentration. In addition, there is no evidence of any influence of bank size on banking stability in Vietnam.

Keywords: House prices; Banking stability; Bank stability; Investors sentiment; Real estate market (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1057/s41261-024-00252-z

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