tailieunhanh - The impact of income diversification on liquidity creation and financial performance of Vietnamese Commercial Banks

This research is conducted to investigate the impact of income diversification on bank liquidity creation and the financial performance of Vietnamese commercial banks from 2007 to 2017. Data were collected from 21 Vietnamese commercial banks. Panel OLS with fixed effects and GMM estimations were employed to process data. | The impact of income diversification on liquidity creation and financial performance of Vietnamese Commercial Banks Accounting 6 2020 553 568 Contents lists available at GrowingScience Accounting homepage ac The impact of income diversification on liquidity creation and financial performance of Vietnamese Commercial Banks Cuong Van Hoanga Loan Quynh Thi Nguyena Manh Dung Trana and Tuan Dung Hoanga aNational Economics University Vietnam CHRONICLE ABSTRACT Article history This research is conducted to investigate the impact of income diversification on bank liquidity Received March 2 2020 creation and the financial performance of Vietnamese commercial banks from 2007 to 2017. Data Received in revised format March were collected from 21 Vietnamese commercial banks. Panel OLS with fixed effects and GMM 29 2020 estimations were employed to process data. The results show that diversification had a negative impact Accepted April 8 2020 Available online on both bank liquidity creation and bank profitability and thus support the view that Vietnamese April 9 2020 commercial banks should remain focusing on their traditional lines of business rather than diversifying Keywords towards nontraditional activities since this may lead to both a lower level of liquidity creation and Diversification profitability. The findings of this study could draw broad inferences for researchers policy makers Liquidity creation and bank managers towards more focusing strategies to ensure the health of the banking system. Performance Risk Vietnam 2020 by the authors licensee Growing Science Canada 1. Introduction The modern theory of financial intermediation suggests that a critical function of banks in the economy is to create liquidity and thereby provide funding for investment as well as generate other crucial financial services to customers. Accordingly banks can create liquidity on the balance sheet by financing relatively illiquid assets with relatively .