Income diversification, credit risk and bank stability: evidence from an emerging market

Thuy Thu Nguyen and Trang Thu Nguyen

Asia-Pacific Journal of Accounting & Economics, 2024, vol. 31, issue 6, 987-1007

Abstract: With a sample of 28 commercial banks in Vietnam – an emerging market – this study applies the generalized movement model estimation technique (GMM-SYS) to examine the influences of income diversification and credit risk on bank stability (measured by Z-score) spanning from 2010 to 2020. The empirical findings document the significant impacts of income diversification and credit risk, together with specified macroeconomic and bank-specific indicators, on bank stability. A threshold analysis, in addition, quantifies the recommendation changes in NPL and LLP to contribute to bank stability. Some policy implications are subsequently withdrawn to promote the stability of Vietnamese commercial banks.

Date: 2024
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DOI: 10.1080/16081625.2023.2257219

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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