Factors affecting non-performing loan of commercial banks in Vietnam

Abstract

The primary objective of this study was to explore the impact of factors on non-performing loan (NPL) of commercial banks in Vietnam over the period 2006-2016, using data for 25 commercial banks in Vietnam. The study used the Pooled OLS, FEM, REM and then chose the appropriate FEM model. The defect tests of the model were carried out, detecting the FEM model with heteroskedasticity phenomena. To overcome this situation, the study used the Feasible Generalized Least Squares (FGLS) regression model to ensure the effectiveness of the model. These results of empirical research revealed that with statistically significant 1%, economic growth rate, credit growth of the bank and the unemployment rate have a negative impact on the NPLs ratio. And the inflation and the NPLs ratio in the previous year are positively correlated with the NPLs ratio. However, the relationship between bank size and ROE with the NPLs ratios has not been found.

Keywords

• fgls
• ngân hàng thương mại
• nợ xấu