Factors Affecting Non-performing Loans of Vietnamese Banks in the Context of the Covid-19 Pandemic

Lai Cao Mai Phuong ()
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Lai Cao Mai Phuong: Industrial University of Ho Chi Minh City

A chapter in Contemporary Economic Issues in Asian Countries: Proceeding of CEIAC 2022, Volume 1, 2023, pp 529-542 from Springer

Abstract: Abstract The purpose of this study is to determine the factors affecting non-performing loans (NPLs) of banks in the context of the COVID-19 pandemic. The feasible generalized least square (FGLS) regression method is used to quantify the impact of groups of macro-factors, specific characteristics of banks, and the impact of the COVID-19 pandemic on the NPLs of 25 banks listed in Vietnam in the period 2016–2021 according to three research models. The results show that higher unemployment rate, higher bank size, and higher profitability of banks lead to lower NPL ratio, but higher credit growth rate and higher credit provision ratio lead to higher NPL ratio. The study found that the COVID-19 pandemic in Vietnam has a significant negative impact on the NPL ratio in 2020, a significant positive impact on the NPL ratio in 2021, but the coefficient is negative but not statistically significant when combining the effects of both 2020 and 2021, has shown the complex and unexpected impact of the pandemic on the NPL ratio of the banking system. This result is an early warning and suggests some suggestions for regulators and banks to control the NPL ratio in the near future.

Keywords: Credit growth; Return on equity; Provision for credit risk; Unemployment; Vietnam (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-19-9669-6_32

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DOI: 10.1007/978-981-19-9669-6_32

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