GMM Method Assessing Factors Affecting Capital Adequacy Ratio of Commercial Banks: A Case Study in Vietnam
(Pages 395-402)Hong-Thuy Le Thi1, Hong-Nham Nguyen Thi2,*, and The-Dong Phung3
1Academy of Finance, Hanoi 100000, Vietnam
2University of Economics Ho Chi Minh City, Ho Chi Minh 70000, Vietnam
3National Financial Supervisory Commission, Hanoi 100000, Vietnam
DOI: https://doi.org/10.55365/1923.x2021.19.41
Abstract:
The GMM estimation method is used for a data sample of 21 commercial banks in Vietnam (excluding overseas branches) from 2008 to 2019 to evaluate the factors affecting commercial banks' capital adequacy ratio (CAR). The results show that not only do bank-specific factors such as size, leverage ratio, loan ratio, deposit ratio, and profitability affect CAR adjustment, but so do macro factors such as GDP growth rate, regulatory pressure, and banking system restructuring. As a result, the study will help commercial banks develop more solid foundations for CAR implementation strategies. Simultaneously, The State Bank of Vietnam will have a basis with the regulatory agency to introduce and/or adjust capital adequacy regulations in line with the reality of commercial banks in Vietnam.
Keywords:
Capital adequacy ratio (CAR), commercial banks, Vietnam, GMM method.
JEL Classification:
C13, D24
How to Cite:
Hong-Thuy Le Thi, Hong-Nham Nguyen Thi, and The-Dong Phung. GMM Method Assessing Factors Affecting Capital Adequacy Ratio of Commercial Banks: A Case Study in Vietnam. [ref]: vol.19.2021. available at: https://refpress.org/ref-vol19-a41/
Licensee REF Press This is an open access article licensed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/licenses/by-nc/3.0/) which permits unrestricted, non-commercial use, distribution and reproduction in any medium, provided the work is properly cited.