tailieunhanh - Determinants of banking crisis: The case of Vietnam

This paper identifies determinants associated with probability of banking crisis in Vietnam. By using data sample of more than 30 commercial banks from 2005 to 2013, the results from our multivariate logit model indicate that banking crisis tends to erupt as non-performing loans, borrowings from government and State bank of Vietnam are high. | 64 Journal of Science Ho Chi Minh City Open University - No. 4 16 2015 - December 2015 DETERMINANTS OF BANKING CRISIS THE CASE OF VIETNAM Luong Duy Quang Ho Chi Minh City Open University Email Received 09 06 2015 Revised 07 08 2015 Accepted 07 12 2015 ABSTRACT This paper identifies determinants associated with probability of banking crisis in Vietnam. By using data sample of more than 30 commercial banks from 2005 to 2013 the results from our multivariate logit model indicate that banking crisis tends to erupt as non-performing loans borrowings from government and State bank of Vietnam are high. Moreover we also find that most risk in Vietnam s banking sector from period 2005-2013 lies in private commercial bank which is highly manipulated by large shareholders. Keywords Banking crisis bank manipulation event method large shareholders Vietnam. 1. Introduction The banking crises that erupted in the US in 2007 are the latest in the series of such episodes that have been experienced by economies in various regions of the world in recent years. In the 1990s banking crises occurred in Europe the 1992-93 crises in the European Monetary System s exchange rate mechanism Latin America the middle of 1990s as well as in East Asia the 1997-98 crises in Indonesia Korea Malaysia the Philippine and Thailand . These crises have been costly in varying degrees both in lost output and in the fiscal expense to rescue financial sectors. In Vietnam the term banking crisis has become familiar to people in recent years. Before 2008 Vietnam banking sector is recognized as one of the most increasingly developed industries. However from beginning of 2008 picture of the banking system get worse and in the period of 20082012 the banking system has experienced the most destructive period than ever before with series of unexpected scenarios of banking crisis including nonperforming loans liquidity shortage low profitability and poor corporate governance and risk management .

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