Abnormal loan growth and bank risk-taking in Vietnam: A quantile regression approach

Tin H Ho, Tu DQ Le and Dat T Nguyen

Cogent Business & Management, 2021, vol. 8, issue 1, 1908004

Abstract: We empirically investigate and present evidence of nonlinearity and heterogeneity in the impact of abnormal loan growth on risk-taking in the Vietnamese banking system between 2007 and 2019, using a quantile regression method. Our results showed that abnormal loan growth initially helped banks to reduce risk-taking. However, this relationship was U-shaped and heterogeneous. The effect of abnormal loan growth was more significant for banks at the upper tail of the risk-taking distribution. Our findings also demonstrated that the turning point of abnormal loan growth increased throughout the risk-taking distribution. Hence, our findings suggest that the pursuit of excessive lending is more likely to result in greater bank risk-taking.

Date: 2021
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DOI: 10.1080/23311975.2021.1908004

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