The Impact of Capital Requirement on Bank Performance: Empirical Evidence from Vietnamese Commercial Banks

• 발행기관: 한국유통과학회
• 저자명: Trung Hai LE Ngan Bich NGUYEN Duong Thuy NGUYEN
• 간행물 정보: 『The Journal of Asian Finance, Economics and Business(JAFEB)』Vol. 9 No.6, 23~32쪽, 전체 10쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2022.06.30

영문 초록

This paper examines the effects of regulatory capital on a bank’s profitability and risk. We employ annual data from Vietnamese commercial banks from 2005 to 2020 and use the dynamic GMM regression method to address the potential endogeneity issue, more suitable for panel data with relatively low time dimensions. Our panel regressions indicate that higher regulatory capital would significantly improve the bank’s profitability and lower the bank risks. In particular, a one percent increase in the regulatory capital would significantly increase the bank’s return on assets by 1.9%. We further explore the heterogeneous impacts of regulatory capital on the Vietnamese bank’s performance across bank characteristics. We find that smaller, non-state-owned and non-listed banks would benefit from stringent regulatory capital requirements. The improvements in bank performance are mainly driven by reductions in the risk premium of the banks, resulting in lower funding costs and higher profitability. These findings are essential since Vietnam, as an emerging market, has only implemented the Basel II reform recently on a stable and fast-growing background rather than as a reaction to the global financial crisis. Thus, our empirical results support stringent regulatory capital in emerging countries to ensure a stable banking sector and boost economic growth.

목차

1. Introduction

2. Literature Review

3. Data and Method

4. Empirical Results

5. Discussion

6. Conclusion

References

키워드

Financial Institutions Emerging Market Bank Regulation