• Journal of Distribution Science
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• v.18 no.5
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• pp.5-13
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• 2020

Purpose: The aim of this article is to test the link between growth of loan distribution and Bank Valuation in Vietnam's banking sector. At the same time, the study also compared the differences in the effect of growth of loan to valuation bank in banks of different sizes, ownership rates and bank values. Research design, data and methodology: With panel data estimation techniques along with robust standard error for a sample of the banks listed on Vietnam stock exchange from 2012 to 2019. Results: Growth of loan has a positive impact on Bank Valuation (by Tobin's Q). A closer investigation provides evidence for the differential valuation effect of loan growth depending on different features of banks. Specifically, loan growth is found positively and significantly associated with Bank Valuation in small and non-state-owned banks only. Besides, bank size, deposit, and return on equity are found negatively associated with Tobin's Q, while loan loss provisions exhibit a positive relation with this measure of Bank Valuation. Conclusions: These findings provide contributions to the literature on the existence of the effect of loan growth on Bank Valuation. At the same time, the study also provides practical implications for policy makers in banks and investors.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.8
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• pp.365-373
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• 2021

Loan monitoring is a fundamental element of credit control. The importance of loan monitoring is to reduce loan defaults and to increase loan repayment performance. The ex-post monitoring can also increase the loan quality and thus a concern to many creditors in the market economy. This study identifies the role of ex-post monitoring on loan repayment performance in the context of rural Vietnam. Employing primary data from rural areas of Vietnam, this study investigates the impacts of ex-post monitoring on loan repayment performance of individual borrowers in terms of on-time loan repayment and the rate of loan repayment. Descriptions of borrower demographics, loan information, and ex-post monitoring show the initial picture of borrowers and loans in Vietnam's rural areas. Quantitative estimations that use the Probit and the Tobit model confirm the argument that better ex-post monitoring would result in better loan repayment performance in both on-time repayment and repayment rate. Thus, some policy suggestions have been made to improve the monitoring system in each financial institution. The study also indicates that some other factors too affect loan repayment performance such as borrower's characteristics (education, agricultural working area, and income) as well as loan's characteristics (loan size, maturity, and loan purpose).

• The Journal of Asian Finance, Economics and Business
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• v.9 no.3
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• pp.303-309
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• 2022

The goal of this research is to examine how credit (loan) can help rural households in Tra Vinh province create jobs in the wake of the COVID-19 outbreak in Vietnam over the last two years. The authors performed a direct survey, using a questionnaire, with 300 customers who had loan records at the Tra Vinh VBSP branch under the loan programs. From January to April 2021, jobs will be available at 07 transaction offices in districts and cities (Cau Ngang; Duyen Hai, Tieu Can, Cang Long, Tra Vinh City, Chau Thanh, Tra Cu). Using the multivariate regression method, the research has found 12 factors affecting the ability to access the employment loan program: Age, Educational Level, Occupation of households, Income, Household land area, Asset, Loan, Interest rates, Loan procedures, Loan purpose, Credit relations. From the above research results, the authors have proposed solutions to improve the ability to access credit to create jobs for each subject group at Viet Nam Bank for Social Policies, Tra Vinh Province in the future.

• The Journal of Asian Finance, Economics and Business
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• v.6 no.3
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• pp.9-18
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• 2019

The purpose of this study is to investigate the relation between conservative loan loss accounting practice of banks, defined as accounting behavior that increases loan loss allowances against expected credit losses, and bank lending. Furthermore, we specify the macroeconomic conditions reflecting debtors' borrowing environments and analyze how these conditions affect the relation between conservative loan loss allowances and bank lending. Although existing literature reports that accounting conservatism has a direct effect on non-financial firms' investment behavior, there is little evidence about an effect of conservatism on banks' lending behavior. By exploiting data showing the links between individual Japanese firms and their individual lenders to control both loan demand and supply, we estimate OLS regressions to test the relationships among conservative loan loss allowance, bank lending, and macroeconomic conditions using a unique dataset containing bank-firm-year observations between 2001 and 2013. We find banks that have conservative loan loss allowances tend to provide fewer loans to firms with financing needs when macroeconomic conditions are good and these conservative banks are likely to provide more loans to firms when macroeconomic conditions are bad. Our findings suggest that reflecting expected credit loss into loan loss allowances can mitigate the procyclical behavior of banks.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.9
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• pp.105-115
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• 2020

The study empirically examines the effects of loan portfolio diversification on bank risk and return in the nascent banking market of Vietnam. Loan portfolio diversification is captured through the Hirschman-Herfindahl index and the Shannon Entropy with sectoral exposures. We access each bank's financial reports to collect the required data, especially the breakdown of sectoral loan portfolios, thus constituting a unique dataset. To compute bank return, we use the traditional accounting indicators, including return-on-assets, return-on-equity, and net-interest margin. For bank risk, we utilize the loan-loss provisions and non-performing loans relative to gross customer loans. Using a sample of 30 commercial banks over the period from 2008 to 2019 and the system generalized method of moments estimator for the dynamic panel, we indicate the downsides of portfolio diversification. Concretely, we observe that all diversification measures exhibit significantly negative signs in all regressions across different bank return proxies. At the same time, the estimates display the significant and positive impact of diversification on the non-performing loan ratio. Hence, sectoral loan portfolio diversification significantly hampers bank performance in both aspects of lower return and higher credit risk. The results are robust across a rich set of bank performance and portfolio diversification measures.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.8
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• pp.87-94
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• 2020

The paper aims to investigate the impact of presenting statements of cash flow using the direct method and the indirect method on loan decision by credit officers at Vietnamese banks. The data was collected from 150 credit officers of commercial banks in Vietnam based on the questionnaire about making loan decision when the cash flow statement is presented in different methods, namely, direct and indirect methods. This research uses T-tests to check whether using the direct or indirect method affects the accurate calculation of loan criteria, affects the loan decision by credit officers, and compare these two methods in the aspects of information provision. The research has pointed out that: 1) the direct method helps the calculation of indicators related to loans more accurately; 2) credit officers say that, while the direct method of presenting cash flow statement provides clearer information, the use of either the direct method or the indirect method does not affect the banks' loan decision. Since then, the author recommends that cash flow statements should be provided with information in a direct method to present the information needed for loan decision more accurately so as to improve the quality of cash flow statement.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.10
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• pp.697-706
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• 2020

This study investigates the relationship between related loan, ownership concentration and real estate firm performance. The data was collected from 35 real estate firms listed on Indonesia Stock Exchange from 2007 to 2012. Related loans are viewed from the angle of related lending and loan. Related lending and loan is measured by the related lending on total lending ratio and related loan on total loan ratio. Firm performance is measured by the asset turnover ratio and return on assets ratio. Ownership concentration is measured by the right cash flow. The data analysis was done with regression analysis and panel data. The results of the study found that related loans had a positive effect on sales but had no effect on profits. This supports the efficient transaction hypothesis. On the other hand, related lending has a positive effect on profits that supports opportunistic transactions. Ownership concentration moderates the effect of related loan on company's performance. The related lending are beneficial for mutually supporting activities in the real estate sector business group in Indonesia, but related loans have the potential to be used in tunneling activities. The paper contributes to the related party transaction in benefits-risks of related lending and related loan in uncertainty context.

• The Journal of Asian Finance, Economics and Business
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• v.7 no.9
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• pp.179-189
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• 2020

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.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.5
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• pp.109-115
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• 2021

This study aims to examine the effect of Operating Costs and Income, Loan to Deposit Ratio on the Return on Asset (ROA) of Public-Private Foreign Exchange Banks listed on the Indonesia Stock Exchange (IDX) during the 2015-2018 period. This study is a quantitative study using financial reports of Public-Private Foreign Exchange Banks listed on the IDX as a data source. This study's population is 25 Public-Private Foreign Exchange Banks listed on the IDX. This study uses purposive sampling to determine the sample to produce 21 banking companies. Data was analyzed using multiple linear regression methods and descriptive statistics. The F Test calculation results state that all the variables of free operating expenses, operating income, and the loan to deposit ratio simultaneously and significantly affect the return on assets (ROA) variable in Public-Private Foreign Exchange Banks listed on the IDX. This study's results indicate that simultaneously Operational Costs, Operational Income, and Loan to Deposit Ratio have a significant effect on ROA. Operational Costs and Operational Income have a significant negative impact on Return on Assets. The third hypothesis shows that the Loan to Deposit Ratio has a positive and insignificant effect on Return on Assets.

• The Journal of Asian Finance, Economics and Business
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• v.9 no.8
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• pp.145-155
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• 2022

Since 2014, the IFRS 9 has been the focus of the attention of many scholars across disciplines. The futuristic prediction of bank loan provision via a flexible ECL model has been observed as a game changer from the prior models offered in IAS 39. This study has two objectives; the first is to examine the impact on loan loss provisions (LLP), nonperforming loans (NPL), and the impairment loan losses (ILL) after the IFRS 9 in gulf banks. The second is to capture any variation in LLP, NPL, and ILL before and after IFRS9. The study used the two-way fixed effect model (TWFE) estimation and the DiD approach to attain its objectives. 54 gulf banks were selected from the periods between 2012 and 2020. The results indicate that LLP has significantly increased after the transition to IFRS 9, while the NPL has significantly decreased. The results did not capture a significant change in ILL after IFRS9 implementation. The results also indicate more consistency in LLP and NPL reporting after implementing the ECL model adopted in IFRS9. The study concluded that ECL model outcomes are in tandem with prior observation worldwide and pointed out some improvement opportunities for the future.