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http://dx.doi.org/10.13106/jafeb.2020.vol7.no9.179

Bank-Specific Determinants of Loan Growth in Vietnam: Evidence from the CAMELS Approach  

NGUYEN, Hoang Dieu Hien (Department of Accounting and Auditing, University of Economicsand Law, Vietnam National University)
DANG, Van Dan (Department of Finance, Banking University of Ho Chi Minh City)
Publication Information
The Journal of Asian Finance, Economics and Business / v.7, no.9, 2020 , pp. 179-189 More about this Journal
Abstract
The paper empirically examines the bank-specific determinants of loan growth in the Vietnamese banking system for the period from 2007 to 2019. We approach the CAMELS framework and employ the dynamic panel regression to determine the effects of each CAMELS factor on bank lending. To ensure the robustness of results, we also use alternative definitions of the variables and different specifications with and without full sets of CAMELS components. With these settings, we display multiple important results. (i) We find that a large capital buffer tends to boost bank lending expansion faster. (ii) High asset quality might positively contribute to high loan growth; in other words, banks subject to high credit risk are discouraged from making loans. (iii) Less efficiently managed banks are more likely to adopt an aggressive lending strategy, highlighting the moral hazard incentives of Vietnamese banks. (iv) More profitable banks with excellent competitive advantages could expand their lending activities to a larger extent. (v) Liquidity is positively related to the loan growth of banks. (vi) Perceived interest rate risk tends to suppress loan growth since interest-rate-sensitive banks might be concerned about the adverse effects of unpredictable adverse changes in interest rates in the future.
Keywords
CAMELS; Capital; Liquidity; Loan Growth; Management Efficiency;
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Times Cited By KSCI : 8  (Citation Analysis)
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